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, 1999 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, 1999
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, 1999
and December 31, 1998 3
Statements of Operations -
For the Nine Months Ended September 30, 1999 and 1998 4
Statement of Operations -
For the Three Months Ended September 30, 1999 and 1998 5
Statements of Partners' Equity -
For the Nine Months Ended September 30, 1999 and 1998 6
Statements of Cash Flows -
For the Nine Months Ended September 30, 1999 and 1998 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, 1999 December 31, 1998
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,473,564 $22,381,940
Less - Accumulated Depreciation (7,267,683) (6,855,016)
15,205,881 15,526,924
Cash and Cash Equivalents 1,301,817 1,057,375
Prepaid Expenses 9,580 2,774
Deferred Loan Cost (Net of Accumulated
Amortization of $83,109 and $51,943 207,770 238,936
TOTAL ASSETS $16,725,048 $16,826,009
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,607,044 $17,736,343
Accounts Payable 325,630 41,444
Security Deposits 101,054 87,647
Unearned Rent 36,211 53,655
TOTAL LIABILITIES 18,069,939 17,919,089
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ September 30, 1999 and
December 31, 1998 (1,082,724) (830,569)
General Partner's Equity (262,167) (262,511)
TOTAL PARTNERS' EQUITY (1,344,891) (1,093,080)
TOTAL LIABILITES AND PARTNERS' EQUITY $16,725,048 $16,826,009
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<S> 1999 1998
Property Operations : <C> <C>
Rental Income $2,693,270 $2,664,904
Miscellaneous 74,092 61,149
2,767,362 2,726,053
Expenses:
Depreciation 412,668 483,749
Payroll 271,368 253,770
Real Estate Taxes 211,158 218,709
Utilities 147,328 160,025
Repairs & Maintenance 293,946 207,816
Property Management - General Partner 136,753 136,333
Landscaping 60,378 55,254
Other 106,985 86,414
1,640,584 1,602,070
Income from Property Operations 1,126,778 1,123,983
Interest Income 21,026 26,895
1,147,804 1,150,878
Other Exenses:
Interest 1,017,483 1,027,000
Amortization 31,166 31,166
Reserve Expense 81,153 0
General & Administrative - Affiliate 970 880
Other General & Administrative 10,150 11,964
1,140,922 1,071,010
Net Income (Loss) $ 6,882 $ 79,868
Allocation of Net Income (Loss) -
Limited Partners $ 6,538 75,875
General Partners 344 3,993
$ 6,882 79,868
Net Income (Loss) Per
Limited Partnership Unit $ .70 8.07
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> 1999 1998
Property Operations: <C> <C>
Rental Income $ 908,320 $ 866,034
Miscellaneous 31,705 20,235
940,025 886,269
Expenses:
Depreciation 137,556 161,250
Payroll 82,471 87,118
Real Estate Taxes 70,386 72,903
Utilities 37,623 61,998
Repairs and Maintenance 114,936 93,997
Property Management - General Partner 46,220 43,368
Landscaping 17,707 13,236
Other 32,733 29,089
539,632 562,959
Income from Property Operations 400,393 323,310
Interest Income 6,941 8,613
407,334 331,923
Other Expenses:
Interest 338,334 341,568
Amortization 10,389 10,389
General and Administrative -Affiliate 300 210
Other General and Administrative 2,301 3,818
Reserve Expense 27,051 0
378,375 355,985
Net Income (Loss) $ 28,959 (24,062)
Allocation of Net Income (Loss)-
Limited Partners $ 27,511 (22,859)
General Partners 1,448 (1,203)
$ 28,959 (24,062)
Net Income (Loss) Per
Limited Partnership Unit $ 2.92 (2.43)
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, 1999 AND 1998
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
<S> <C> <C> <C>
Balance, December 31, 1997 $ (533,486) $ (272,249) $ (805,735)
Distribution to Partners (376,280) 0 (376,280)
Net Income (Loss) 75,875 3,993 79,868
Balance, September 30, 1998 $ (833,891) $ (268,256) $(1,102,147)
Balance, December 31, 1998 $ (830,569) $ (262,511) $(1,093,080)
Distribution to Partners (258,693) 0 (258,693)
Net Income 6,538 344 6,882
Balance, September 30, 1999 $(1,082,724) $ (262,167) $(1,344,891)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<S> 1999 1998
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ 6,882 $ 79,868
Adjustments to Reconcile Net Income (Loss)
to Net Cash
Provided by Operating Activities
Depreciation: 412,668 483,749
Amortization 31,166 31,166
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (6,806) (12,508)
Increase in Accounts Payable 284,186 231,794
Increase (Decrease) in Security Deposits 13,407 1,922
Increase (Decrease) in Unearned Rents (17,445) 5,945
(Increase) in Deferred Loan Cost 0 0
Net Cash Provided by Operating Activities 724,058 821,936
Cash Flows from Investing Activities:
Improvements to Apartment Properties (91,624) (57,424)
Net Cash Used in Investing Activities (91,624) (57,424)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 0 0
Payments from Notes Payable (129,299) (119,782)
Distributions to Partners (258,693) (376,280)
Net Cash used by Financing Activities (387,992) (496,062)
Increase (Decrease) in Cash 244,442 268,450
Cash and Cash Equivalents at Beginning of period 1,057,375 981,983
Cash and Cash Equivalents at End of period 1,301,817 1,250,433
Supplemental Cash Flow Information:
Interest Paid $1,017,483 $1,027,000
</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 $319,192 at September 30, 1999 and
$328,132 at December 31, 1998 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$101,054 at September 30, 1999 and $87,647 at December 31, 1998 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, 1999:
Property Management Fees $136,753
General and Administrative Costs 970
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,
1999 1998
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 2,033,936 1,942,312
Apartment Properties, at Cost 22,473,564 22,381,940
Less: Accumulated Depreciation (7,267,683) (6,855,016)
15,205,881 15,526,924
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, 1998. 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, 1999, the Partnership will pay distributions of
$94,070 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, 1999 was
$2,693,270 as compared to $2,664,904 for the comparable period ended
September 30, 1998. Income from property operations for the nine months
ended September 30, 1999 was $1,126,778 as compared to $1,123,983 for the
comparable period ended September 30, 1998. The increase in rental
income was a result of higher rental rates being in effect in 1999 which
offset a slight decrease in the apartment occupancy levels.
Interest expense decreased from $1,027,000 for the nine months ended
September 30, 1998 to $1,017,483 for the nine months ended September 30,
1999. 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 nine months ended September 30, 1999 was $6,882 or
$.70 per Limited Partnership Unit outstanding as compared to a net income of
$79,868 or $8.07 per Limited Partnership Unit for the comparable period
ended September 30, 1998.
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 decreased by $97,878 for the
nine month period ended September 30, 1999 as compared to the nine month
period ended September 30, 1998. The change resulted primarily from
a decrease in net income caused by higher operating expenses in the
repair and maintenance, payroll and advertising areas.
Cash used by investing activities totaled $91,624 at September 30, 1999
as compared to $57,424 at September 30, 1998. The $34,200 increase for
the nine month period ended September 30, 1999 is attributable to
an increase in the number of carpets replaced in the apartment units of
both apartment communities and landscaping work performed at the
Springfield Apartments.
Cash used by financing activities decreased by $108,070 from the nine month
period ended September 30, 1999 when compared to the nine month period
ended September 30, 1998. The decrease is attributed to a $117,587
decrease in distributions to limited partners offset by a $9,517 increase
in principal payments on the partnership's notes payable.
Year 2000 Disclosure
The partnership continues to make progress on the steps outlined in its
Y2K Plan Summary. The steps completed to date include:
-Y2K Plan written and approved
-SEC Form ADV-Y2K - Part 1 completed and submitted
-All home office and field computer upgraded to pentium level
-The Y2K compliant version of accounts payable and general ledger loaded
-The Y2K compliant version of revenue software ordered and the installation
process has begun
The progress to date is slightly ahead of the Y2K Plan Summary schedule.
The costs the partnership expects to incur in order to meet its Y2K
financial accounting and financial reporting
issues is between five and seven thousand dollars. Because of the
immateriality of these amounts, the costs are being expensed as
incurred. There are no significant costs anticipated from an operations
standpoint relative to Y2K issues.
The risks of not meeting the year 2000 issues are minimal from a
financial accounting and financial reporting standpoint. The
partnership's contingency plans will allow it to continue to process
and report financial information. The risks of not meeting the
year 2000 issues are also considered minimal from an operations
standpoint assuming the representations made by our outside vendors
are correct. The outside vendors supply electricity, water, gas, etc.
to our customers. The non-interruption of these services are not
within the partnership's control and no contingency plans have been
developed.
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
11/06/99 J. Robert Love - President
Date (Signature)
11/06/99 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> $1,301,817
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,519,167
<PP&E> $22,473,564
<DEPRECIATION> $7,267,683
<TOTAL-ASSETS> $16,725,048
<CURRENT-LIABILITIES> $462,895
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($1,344,891)
<TOTAL-LIABILITY-AND-EQUITY> $16,725,048
<SALES> 0
<TOTAL-REVENUES> $2,788,388
<CGS> 0
<TOTAL-COSTS> $1,721,737
<OTHER-EXPENSES> $11,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $1,017,483
<INCOME-PRETAX> $6,882
<INCOME-TAX> 0
<INCOME-CONTINUING> $6,882
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $6,882
<EPS-BASIC> $.70
<EPS-DILUTED> $.70
</TABLE>
