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, 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
September 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 September 30, 1997
and December 31, 1996 3
Statements of Operations -
For the Nine Months Ended September 30, 1997 and 1996 4
Statement of Operations -
For the Three Months Ended September 30, 1997 and 1996 5
Statements of Partners' Equity -
For the Nine Months Ended September 30, 1997 and 1996 6
Statements of Cash Flows -
For the Nine Months Ended September 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
September 30, 1997 December 31, 1996
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,289,181 $22,209,901
Less - Accumulated Depreciation (6,168,357) (5,759,354)
16,120,824 16,450,547
Cash and Cash Equivalents 897,274 1,069,572
Deferred Loan Costs 378,492 0
Prepaid Expenses 11,618 10,818
TOTAL ASSETS $17,408,208 $17,530,937
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,603,872 $17,196,565
Accounts Payable 321,215 29,541
Security Deposits 92,631 93,797
Unearned Rent (8,388) 55,837
TOTAL LIABILITIES 18,009,330 17,375,740
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ September 30, 1997 and
December 31, 1996 (335,576) 382,927
General Partner's Equity (265,546) (227,730)
TOTAL PARTNERS' EQUITY (601,122) 155,197
TOTAL LIABILITES AND PARTNERS' EQUITY $17,408,208 $17,530,937
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<S> 1997 1996
Property Operations : <C> <C>
Rental Income $2,604,624 $2,515,032
Miscellaneous 72,198 73,114
2,676,822 2,588,146
Expenses:
Depreciation 409,003 519,003
Payroll 260,970 242,127
Real Estate Taxes 212,193 210,382
Utilities 160,093 158,101
Repairs & Maintenance 308,852 209,432
Property Management - General Partner 132,623 129,337
Landscaping 61,495 60,922
Other 95,022 79,959
1,640,251 1,609,263
Income from Property Operations 1,036,571 978,883
Interest Income 33,053 34,536
1,069,624 1,013,419
Other Exenses:
Interest 1,219,074 1,184,455
General & Administrative - Affiliate 2,174 3,660
Other General & Administrative 10,569 8,533
1,231,817 1,196,648
Net Income (Loss) $ (162,193) $ (183,229)
Allocation of Net Income (Loss) -
Limited Partners $ (154,083) $ (174,068)
General Partners (8,110) (9,161)
$ (162,193) $ (183,229)
Net Income (Loss) Per
Limited Partnership Unit $ (16.38) $ (18.50)
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> 1997 1996
Property Operations: <C> <C>
Rental Income $ 865,751 $ 837,807
Miscellaneous 22,226 18,632
887,977 856,439
Expenses:
Depreciation 137,001 173,001
Payroll 90,732 79,236
Real Estate Taxes 70,730 69,874
Utilities 61,081 61,858
Repairs and Maintenance 192,764 82,863
Property Management - General Partner 42,476 40,948
Landscaping 16,988 18,140
Other 35,906 28,137
647,678 554,057
Income from Property Operations 240,299 302,382
Interest Income 9,378 11,339
249,677 313,721
Other Expenses:
Interest 410,494 397,683
General and Administrative -Affiliate 670 950
Other General and Administrative 2,647 4,721
413,811 403,354
Net Income (Loss) $(164,134) $ (89,633)
Allocation of Net Income (Loss)-
Limited Partners $(155,927) $ (85,151)
General Partners (8,207) (4,482)
$(164,134) $ (89,633)
Net Income (Loss) Per
Limited Partnership Unit $ (16.58) $ (9.05)
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 SEPTEMBER 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 (558,494) (29,394) (587,888)
Net Loss (174,068) (9,161) (183,229)
Balance, September 30, 1996 $ 539,610 $ (219,483) $ 320,127
Balance, December 31, 1996 $ 382,927 $ (227,730) $ 155,197
Distribution to Partners (564,420) (29,706) (594,126)
Net Income (154,083) (8,110) (162,193)
1,941
Balance, September 30, 1997 $ (335,576) $ (265,546) $ (601,122)
$ (238,946)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<S> 1997 1996
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ (162,193) $(183,229)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 409,003 519,003
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (800) (64,814)
Increase in Accounts Payable 291,674 87,968
Increase (Decrease) in Security Deposits (1,166) 76
Increase (Decrease) in Unearned Rents (64,225) (10,572)
(Increase) in Deferred Loan Cost (378,492) 0
Net Cash Provided by Operating Activities 93,801 348,432
Cash Flows from Investing Activities:
Improvements to Apartment Properties (79,280) (78,100)
Net Cash Used in Investing Activities (79,280) (78,100)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 433,529 398,084
Payments from Notes Payable (26,222) (27,072)
Distributions to Partners (594,126) (587,888)
Net Cash used by Financing Activities (186,819) (216,876)
Increase (Decrease) in Cash (172,298) 53,456
Cash and Cash Equivalents at Beginning of period 1,069,572 978,730
Cash and Cash Equivalents at End of period 897,274 1,032,186
Supplemental Cash Flow Information:
Interest Paid $ 696,839 $ 786,372
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable $ 433,529 $ 398,084
</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 $250,853 at September 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
$92,631 at September 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 nine months ended September 30, 1997:
Property Management Fees $132,623
General and Administrative Costs 2,174
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
1997 1996
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,849,553 1,770,273
Apartment Properties, at Cost 22,289,181 22,209,901
Less: Accumulated Depreciation (6,168,357) (5,759,354)
16,120,824 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 October 31, 1997, the Partnership will pay distributions of
$70,553 to the Limited 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, 1997 was
$2,604,624 as compared to $2,515,032 for the comparable period ended
September 30, 1996. Income from property operations for the nine months
ended September 30, 1997 was $1,036,571 as compared to $978,883 for the
comparable period ended September 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 $519,003 for the nine month period ended September 30, 1996
to $409,003 for the comparable period ended September 30, 1997. The 21%
decrease is attributable to the fact that the fixed assets purchased at
acquisitionn have been fully depreciated. Repairs and maintenance expense
increased from $209,432 for the nine month period ended September 30, 1996 to
$308,852 for the comparable period ended September 30, 1997. This increase
was a result of repairs and improvements to the exterior of the buildings
of the Springfield Apartments.
Interest income changed from $34,536 for the nine months ended
September 30, 1996 to $33,053 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 $1,184,455 for the nine months ended
September 30, 1996 to $1,219,074 for the nine months ended September 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 loss for the nine months ended September 30, 1997 was $162,193 or
$16.38 per Limited Partnership Unit outstanding as compared to a
loss of $183,229 or $18.50 per Limited Partnership Unit for the compar-
able period ended September 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.
A mortgage refinancing is planned to cover the upcoming
mortgage balloon payments of $8,779,077 in 1997 and $8,825,000 in 1998.
Cash provided by operating activities decreased by $254,631 for the
nine month period ended September 30, 1997 as compared to the nine month
period ended September 30, 1996. The change resulted from an increase
in deferred loan costs and a decrease in unearned rents of $53,653 which
was offset by an increase in accounts payable of $203,706 for the
comparable nine month period.
Cash used by financing activities of $78,100 at September 30, 1996
remained stable when compared to $79,280 at September 30, 1997.
Cash used by financing activities decreased by $30,057 from the nine month
period ended September 30, 1997 when compared to the nine month period
ended September 30, 1996. An increase in the Oakwood Village purchase
money first mortgage interest acrual of $35,445 for the period was offset by
an increase in partner distributions of $6,238.
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
11/13/97 J. Robert Love - President
Date (Signature)
11/13/97 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> $897,274
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,287,384
<PP&E> $22,289,181
<DEPRECIATION> $6,168,357
<TOTAL-ASSETS> $17,408,208
<CURRENT-LIABILITIES> $405,458
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($601,122)
<TOTAL-LIABILITY-AND-EQUITY> $17,408,208
<SALES> 0
<TOTAL-REVENUES> $2,709,875
<CGS> 0
<TOTAL-COSTS> $1,640,251
<OTHER-EXPENSES> $12,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $1,219,074
<INCOME-PRETAX> ($162,193)
<INCOME-TAX> 0
<INCOME-CONTINUING> ($162,193)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ($162,193)
<EPS-PRIMARY> ($16.38)
<EPS-DILUTED> ($16.38)
</TABLE>
