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, 1997 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, 1997
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, 1997 and December 31, 1996 3
Statements of Operations -
For the Six Months Ended June 30, 1997 and 1996 4
Statement of Operations -
For the Three Months Ended June 30, 1997 and 1996 5
Statements of Partners' Equity -
For the Six Months Ended June 30, 1997 and 1996 6
Statements of Cash Flows -
For the Six Months Ended June 30, 1997 and 1996 7
Notes to Financial Statements 8-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
<TABLE>
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
<CAPTION>
BALANCE SHEET
June 30, 1997 December 31, 1996
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,249,431 $22,209,901
Less - Accumulated Depreciation (6,031,356) (5,759,354)
16,218,075 16,450,547
Cash and Cash Equivalents 1,264,961 1,069,572
Prepaid Expenses 22,674 10,818
TOTAL ASSETS $17,505,710 $17,530,937
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,462,850 $16,196,565
Accounts Payable 173,270 29,541
Security Deposits 88,676 93,797
Unearned Rent 19,860 55,837
TOTAL LIABILITIES 17,744,656 17,375,740
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ June 30, 1997 and
December 31, 1996 8,491 382,927
General Partner's Equity (247,437) (227,730)
TOTAL PARTNERS' EQUITY (238,946) 155,197
TOTAL LIABILITES AND PARTNERS' EQUITY $17,505,710 $17,530,937
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30
<S> 1997 1996
Property Operations : <C> <C>
Rental Income $1,738,873 $1,677,225
Miscellaneous 49,972 54,482
1,788,845 1,731,707
Expenses:
Depreciation 272,002 346,002
Payroll 170,238 162,891
Real Estate Taxes 141,463 140,508
Utilities 99,012 96,243
Repairs & Maintenance 116,088 126,569
Property Management - General Partner 90,147 88,389
Landscaping 44,507 42,782
Other 59,116 51,822
992,573 1,055,206
Income from Property Operations 796,272 676,501
Interest Income 23,675 23,197
819,947 699,698
Other Exenses:
Interest 808,580 786,772
General & Administrative - Affiliate 1,504 2,710
Other General & Administrative 7,922 3,812
818,006 793,294
Net Income (Loss) $ 1,941 $(93,596)
Allocation of Net Income (Loss) -
Limited Partners $ 1,844 $(88,916)
General Partners 97 (4,680)
$ 1,941 $(93,596)
Net Income (Loss) Per
Limited Partnership Unit $ .20 $ (9.45)
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> 1997 1996
Property Operations: <C> <C>
Rental Income $862,289 $821,656
Miscellaneous 27,112 26,195
889,401 847,851
Expenses:
Depreciation 99,001 171,002
Payroll 86,115 86,784
Real Estate Taxes 70,732 71,454
Utilities 49,285 48,919
Repairs and Maintenance 70,878 75,702
Property Management - General Partner 45,530 43,498
Landscaping 21,100 17,744
Other 29,131 27,673
471,772 542,776
Income from Property Operations 417,629 305,075
Interest Income 12,445 11,842
430,074 316,917
Other Expenses:
Interest 404,918 394,797
General and Administrative -Affiliate 690 2,050
Other General and Administrative 3,356 2,859
408,964 399,706
Net Income (Loss) $ 21,110 $(82,789)
Allocation of Net Income (Loss)-
Limited Partners $ 20,054 $(78,649)
General Partners 1,056 (4,140)
$ 21,110 $(82,789)
Net Income (Loss) Per
Limited Partnership Unit $ 2.13 $ (8.36)
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, 1997 AND 1996
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
<S> <C> <C> <C>
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
Balance, December 31, 1996 $ 382,927 $ (227,730) $ 155,197
Distribution to Partners (376,280) (19,804) (396,084)
Net Income 1,844 97 1,941
Balance, June 30, 1997 $ 8,491 $ (247,437) $ (238,946)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<S> 1997 1996
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ 1,941 $ (93,596)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 272,002 346,002
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (11,856) (22,514)
Increase in Accounts Payable 143,729 122,729
Increase (Decrease) in Security Deposits (5,121) 300
Increase (Decrease) in Unearned Rents (35,977) (12,138)
Net Cash Provided by Operating Activities 364,718 340,783
Cash Flows from Investing Activities:
Improvements to Apartment Properties (39,530) (42,786)
Net Cash Used in Investing Activities (39,530) (42,786)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 285,804 262,321
Payments from Notes Payable (19,519) (17,845)
Distributions to Partners (396,084) (389,846)
Net Cash used by Financing Activities (129,799) (145,370)
Increase (Decrease) in Cash 195,389 152,627
Cash and Cash Equivalents at Beginning of period 1,069,572 978,730
Cash and Cash Equivalents at End of period 1,264,961 1,131,357
Supplemental Cash Flow Information:
Interest Paid $ 522,777 $ 524,451
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable $ 285,804 $ 262,321
</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 $215,333 at June 30, 1997 and
$108,773 at December 31, 1996 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$88,676 at June 30, 1997 and $93,797 at December 31, 1996 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, 1997.
Property Management Fees $ 90,147
General and Administrative Costs 1,504
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
1997 1996
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,809,803 1,770,273
Apartment Properties, at Cost 22,249,431 22,209,901
Less: Accumulated Depreciation (6,031,356) (5,759,354)
16,218,075 16,450,547
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, 1996. 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 or about August 15, 1997, the Partnership will pay 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, 1997 was
$1,738,873 as compared to $1,677,225 for the comparable period ended
June 30, 1996. Income from property operations for the six months
ended June 30, 1997 was $796,272 as compared to $676,501 for the
comparable period ended June 30, 1996. The increase in rental
income was a result of higher rental rates being in effect in 1997 and
a slight increase in the apartment occupancy levels.
Depreciation expense decreased from $346,002 for the six month period
ended June 30, 1996 to $272,002 for the comparable period ended
June 30, 1997. The 21% decrease is attributable to the furniture and
fixtures which were purchased in 1988 had become fully depreciated in 1996.
Interest income changed from $23,197 for the six months ended
June 30, 1996 to $23,675 for the comparable period in 1997. There has been
little change in the investment balance and rate of interest earnings
over the last twenty-four months.
Interest expense increased from $786,772 for the six months ended June
30, 1996 to $808,580 for the six months ended June 30, 1997.
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 income for the six months ended June 30, 1997 was $1,941 or
$.20 per Limited Partnership Unit outstanding as compared to a
loss of $93,596 or $9.45 per Limited Partnership Unit for the compar-
able period ended June 30, 1996.
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,
which will include a refinancing of the property mortgages during the next
quarterly reporting period. Long-term capital resources will be necessary
to cover the refinanced mortgage balloon payments. In management's opinion,
proposed sources of funding to meet its long-term obligations will be a
property sale.
Cash provided by operating activities increased by $23,935 for the
six month period ended June 30, 1997 as compared to the six month
period ended June 30, 1996. The change resulted from a decrease in
depreciation expense and resultant increase in net income offset by
decreases in unearned rents and security deposits.
Cash used by financing activities decreased by $15,571 from the six
month period ended June 30, 1997 when compared to the six month
period ended June 30, 1996. An increase in the Oakwood Village
purchase money first mortgage interest accrual of $23,483 for the
period offset both an increase in partner distributions of $6,238 and
principal payments on the Oakwood Village purchase money record
mortgage of $1,674 to account for this change.
ITEM 6 - EXHIBIT AND REPORTS ON FORM 8-K
a) Exhibits - NONE
b) Reports on Form 8-K - NONE
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
8/10/97 J. Robert Love - President
Date (Signature)
8/10/97 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> $1,264,961
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,287,635
<PP&E> $22,249,431
<DEPRECIATION> $6,031,356
<TOTAL-ASSETS> $17,505,710
<CURRENT-LIABILITIES> $281,806
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($238,946)
<TOTAL-LIABILITY-AND-EQUITY> $17,505,710
<SALES> 0
<TOTAL-REVENUES> $1,812,520
<CGS> 0
<TOTAL-COSTS> $992,573
<OTHER-EXPENSES> $9,426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $808,580
<INCOME-PRETAX> $1,941
<INCOME-TAX> 0
<INCOME-CONTINUING> $1,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $1,941
<EPS-PRIMARY> $.20
<EPS-DILUTED> $.20
</TABLE>
