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, 1998 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, 1998
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, 1998 and December 31, 1997 3
Statements of Operations -
For the Six Months Ended June 30, 1998 and 1997 4
Statement of Operations -
For the Three Months Ended June 30, 1998 and 1997 5
Statements of Partners' Equity -
For the Six Months Ended June 30, 1998 and 1997 6
Statements of Cash Flows -
For the Six Months Ended June 30, 1998 and 1997 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, 1998 December 31, 1997
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,324,205 $22,299,095
Less - Accumulated Depreciation (6,627,293) (6,304,794)
15,696,912 15,994,301
Cash and Cash Equivalents 1,231,291 981,983
Prepaid Expenses 20,750 549
Deferred Loan Cost (Net of Accumulated
Amortization of $20,777 and $10,389) 259,713 280,490
TOTAL ASSETS $17,208,666 $17,257,323
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,819,117 $17,898,206
Accounts Payable 226,957 49,114
Security Deposits 86,298 89,601
Unearned Rents 25,033 26,137
TOTAL LIABILITIES 18,157,405 18,063,058
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ June 30, 1998 and
December 31, 1997 (681,686) (533,486)
General Partner's Equity (267,053) (272,249)
TOTAL PARTNERS' EQUITY (948,739) (805,735)
TOTAL LIABILITES AND PARTNERS' EQUITY $17,208,666 $17,257,323
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30
<S> 1998 1997
Property Operations : <C> <C>
Rental Income $1,798,870 $1,738,873
Miscellaneous 40,914 49,972
1,839,784 1,788,845
Expenses:
Depreciation 322,499 272,002
Payroll 166,652 170,238
Real Estate Taxes 145,806 141,463
Utilities 98,027 99,012
Repairs & Maintenance 113,819 116,088
Property Management - General Partner 92,965 90,147
Landscaping 42,018 44,507
Other 57,325 59,116
1,039,111 992,573
Income from Property Operations 800,673 796,272
Interest Income 18,282 23,675
818,955 819,947
Other Exenses:
Interest 685,432 808,580
Amortization 20,777 0
General & Administrative - Affiliate 670 1,504
Other General & Administrative 8,146 7,922
715,025 818,006
Net Income (Loss) $103,930 $ 1,941
Allocation of Net Income (Loss) -
Limited Partners $ 98,734 $ 1,844
General Partners 5,196 97
$103,930 $ 1,941
Net Income (Loss) Per
Limited Partnership Unit $ 10.50 $ .20
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> 1998 1997
Property Operations: <C> <C>
Rental Income $890,587 $862,289
Miscellaneous 20,917 27,112
911,504 889,401
Expenses:
Depreciation 161,249 99,001
Payroll 80,479 86,115
Real Estate Taxes 72,903 70,732
Utilities 51,205 49,285
Repairs and Maintenance 72,082 70,878
Property Management - General Partner 46,805 45,530
Landscaping 21,926 21,100
Other 29,173 29,131
535,822 471,772
Income from Property Operations 375,682 417,629
Interest Income 9,275 12,445
384,957 430,074
Other Expenses:
Interest 342,338 404,918
Amortization 10,388 0
General and Administrative -Affiliate 580 690
Other General and Administrative 6,543 3,356
359,849 408,964
Net Income (Loss) $ 25,108 $ 21,110
Allocation of Net Income (Loss)-
Limited Partners $ 23,853 $ 20,054
General Partners 1,255 1,056
$ 25,108 $ 21,110
Net Income (Loss) Per
Limited Partnership Unit $ 2.54 $ 2.13
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, 1998 AND 1997
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
<S> <C> <C> <C>
Balance, December 31, 1996 $ 382,927 $(227,730) $ 155,197
Distribution to Partners (376,280) (19,804) (396,084)
Net Income(Loss) 1,844 97 1,941
Balance, June 30, 1997 $ 8,491 $(247,437) $(238,946)
Balance, December 31, 1997 $(533,486) $(272,249) $(805,735)
Distribution to Partners (246,934) 0 (246,934)
Net Income 98,734 5,196 103,930
Balance, June 30, 1998 $(681,686) $(267,053) $(948,739)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<S> 1998 1997
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ 103,930 $ 1,941
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 322,499 272,002
Amortization 20,777 0
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (20,201) (11,856)
Increase in Accounts Payable 177,843 143,729
Increase (Decrease) in Security Deposits (3,303) (5,121)
Increase (Decrease) in Unearned Rents (1,104) (35,977)
Net Cash Provided by Operating Activities 600,441 364,718
Cash Flows from Investing Activities:
Improvements to Apartment Properties (25,110) (39,530)
Net Cash Used in Investing Activities (25,110) (39,530)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 0 285,804
Payments from Notes Payable (79,089) (19,519)
Distributions to Partners (246,934) (396,084)
Net Cash used by Financing Activities (326,023) (129,799)
Increase (Decrease) in Cash 249,308 195,389
Cash and Cash Equivalents at Beginning of period 981,983 1,069,572
Cash and Cash Equivalents at End of period 1,231,291 1,264,961
Supplemental Cash Flow Information:
Interest Paid $ 685,432 $ 522,777
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable $ 0 $ 285,804
</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 $245,005 at June 30, 1998 and
$243,556 at December 31, 1997 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$86,298 at June 30, 1998 and $89,6001 at December 31, 1997 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, 1998.
Property Management Fees $ 92,965
General and Administrative Costs 670
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
1998 1997
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,884,577 1,859,467
Apartment Properties, at Cost 22,324,205 22,299,095
Less: Accumulated Depreciation (6,627,293) (6,304,794)
15,696,912 15,994,301
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, 1997. 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 July 31, 1998, the Partnership will pay distributions of
$129,346 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 six months ended June 30, 1998 was
$1,798,870 as compared to $1,738,873 for the comparable period ended
June 30, 1997. Income from property operations for the six months
ended June 30, 1998 was $800,673 as compared to $796,272 for the
comparable period ended June 30, 1997. The increase in rental
income was a result of higher rental rates being in effect in 1998 and
a slight increase in the overall apartment occupancy levels.
Interest expense decreased from $808,580 for the six months ended June
30, 1997 to $685,432 for the six months ended June 30, 1998.
This decrease in interest expense is a result of a refinancing of the
original debt to loans with a lower interest rate and a replacement
of the Oakwood Village First Purchase Money Mortgage with a traditional
amortizing loan.
Net income for the six months ended June 30, 1998 was $103,930 or
$10.50 per Limited Partnership Unit outstanding as compared to an
increase of $1,941 or $.20 per Limited Partnership Unit for the compar-
able period ended June 30, 1997.
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.
Cash provided by operating activities increased by $211,788 for the six
month period ended June 30, 1998 as compared to the six month period ended
June 30, 1997. The change resulted primarily from increased net income
attributable to the debt restructuring which resulted in a $123,148
decrease in interest expense for the six month period ended Juune 30, 1998
verse the six month period ended June 30, 1997. The increase is
secondarily attributable to increase in trade accounts payable of $34,114
and depreciation expense of $50,497 for the six month period indicated
above.
Cash used by investing activities totaled $25,110 at June 30, 1998 as
compared to $39,530 at June 30, 1997. The $14,420 decrease for the six
month period ended June 30, 1998 is solely attributable to the decrease
in the number of carpets replaced in the apartment units of both apartment
communities.
Cash used by financing activities increased by $196,224 from the six
month period ended June 30, 1998 when compared to the six month period
ended June 30, 1997. The loan refinancings of Oakwood Village purchase
money first mortgage and the Springfield purchase money first mortgage
with traditional amortizing loans accounted for $345,374 of the increase.
The increased amount was offet by a decrease in partner distributions for
the comparative six month period of $149,150.
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
8/10/98 J. Robert Love - President
Date (Signature)
8/10/98 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> $1,231,291
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,252,041
<PP&E> $22,324,205
<DEPRECIATION> $6,627,293
<TOTAL-ASSETS> $17,208,666
<CURRENT-LIABILITIES> $338,288
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($948,739)
<TOTAL-LIABILITY-AND-EQUITY> $17,208,666
<SALES> 0
<TOTAL-REVENUES> $1,858,066
<CGS> 0
<TOTAL-COSTS> $1,059,888
<OTHER-EXPENSES> $8,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $685,432
<INCOME-PRETAX> $103,930
<INCOME-TAX> 0
<INCOME-CONTINUING> $103,930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $103,930
<EPS-PRIMARY> $10.50
<EPS-DILUTED> $10.50
</TABLE>
