SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITES EXCHANGE ACT OF 1934
For Quarter Ended September 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
September 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 September 30, 1998
and December 31, 1997 3
Statements of Operations -
For the Nine Months Ended September 30, 1998 and 1997 4
Statement of Operations -
For the Three Months Ended September 30, 1998 and 1997 5
Statements of Partners' Equity -
For the Nine Months Ended September 30, 1998 and 1997 6
Statements of Cash Flows -
For the Nine Months Ended September 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
September 30, 1998 December 31, 1997
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,356,519 $22,299,095
Less - Accumulated Depreciation (6,788,543) (6,304,794)
15,567,976 15,994,301
Cash and Cash Equivalents 1,250,433 981,983
Prepaid Expenses 13,057 549
Deferred Loan Cost (Net of Accumulated
Amortization of $31,166 and $10,389) 249,324 280,490
TOTAL ASSETS $17,080,790 $17,257,323
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,778,424 $17,898,206
Accounts Payable 280,908 49,114
Security Deposits 91,523 89,601
Unearned Rent 32,082 26,137
TOTAL LIABILITIES 18,182,937 18,063,058
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ September 30, 1998 and
December 31, 1997 (833,891) (533,486)
General Partner's Equity (268,256) (272,249)
TOTAL PARTNERS' EQUITY (1,102,147) (805,735)
TOTAL LIABILITES AND PARTNERS' EQUITY $17,080,790 $17,257,323
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
<S> 1998 1997
Property Operations : <C> <C>
Rental Income $2,664,904 $2,604,624
Miscellaneous 61,149 72,198
2,726,053 2,676,822
Expenses:
Depreciation 483,749 409,003
Payroll 253,770 260,970
Real Estate Taxes 218,709 212,193
Utilities 160,025 160,093
Repairs & Maintenance 207,816 308,852
Property Management - General Partner 136,333 132,623
Landscaping 55,254 61,495
Other 86,414 95,022
1,602,070 1,640,251
Income from Property Operations 1,123,983 1,036,571
Interest Income 26,895 33,053
1,150,878 1,069,624
Other Exenses:
Interest 1,027,000 1,219,074
Amortization 31,166 0
General & Administrative - Affiliate 880 2,174
Other General & Administrative 11,964 10,569
1,071,010 1,231,817
Net Income (Loss) $ 79,868 $ (162,193)
Allocation of Net Income (Loss) -
Limited Partners $ 75,875 (154,083)
General Partners 3,993 (8,110)
$ 79,868 (162,193)
Net Income (Loss) Per
Limited Partnership Unit $ 8.07 (16.38)
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> 1998 1997
Property Operations: <C> <C>
Rental Income $ 866,034 865,751
Miscellaneous 20,235 22,226
886,269 887,977
Expenses:
Depreciation 161,250 137,001
Payroll 87,118 90,732
Real Estate Taxes 72,903 70,730
Utilities 61,998 61,081
Repairs and Maintenance 93,997 192,764
Property Management - General Partner 43,368 42,476
Landscaping 13,236 16,988
Other 29,089 35,906
562,959 647,678
Income from Property Operations 323,310 240,299
Interest Income 8,613 9,378
331,923 249,677
Other Expenses:
Interest 341,568 410,494
Amortization 10,389 0
General and Administrative -Affiliate 210 670
Other General and Administrative 3,818 2,647
355,985 413,811
Net Income (Loss) $ (24,062) (164,134)
Allocation of Net Income (Loss)-
Limited Partners $ (22,859) (155,927)
General Partners (1,203) (8,207)
$ (24,062) (164,134)
Net Income (Loss) Per
Limited Partnership Unit $ (2.43) (16.58)
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, 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 (564,420) (29,706) (594,126)
Net Loss (154,083) (8,110) (162,193)
Balance, September 30, 1997 $ (335,576) $(265,546) $ (601,122)
Balance, December 31, 1997 $ (533,486) $ (272,249) $ (805,735)
Distribution to Partners (376,280) 0 (376,280)
Net Income 75,875 3,993 79,868
1,941
Balance, September 30, 1998 $ (833,891) $ (268,256) $(1,102,147)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<S> 1998 1997
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ 79,868 $ (162,193)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 483,749 409,003
Amortization 31,166 0
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (12,508) (800)
Increase in Accounts Payable 231,794 291,674
Increase (Decrease) in Security Deposits 1,922 (1,166)
Increase (Decrease) in Unearned Rents 5,945 (64,225)
(Increase) in Deferred Loan Cost 0 (378,492)
Net Cash Provided by Operating Activities 821,936 93,801
Cash Flows from Investing Activities:
Improvements to Apartment Properties (57,424) (79,280)
Net Cash Used in Investing Activities (57,424) (79,280)
Cash Flows from Financing Activities:
Proceeds from Notes Payable 0 433,529
Payments from Notes Payable (119,782) (26,222)
Distributions to Partners (376,280) (594,126)
Net Cash used by Financing Activities (496,062) (186,819)
Increase (Decrease) in Cash 268,450 (172,298)
Cash and Cash Equivalents at Beginning of period 981,983 1,069,572
Cash and Cash Equivalents at End of period 1,250,433 897,274
Supplemental Cash Flow Information:
Interest Paid $1,027,000 $ 696,839
Supplemental Disclosure of Non-Cash
Financing Activities:
Deferred Interest on Mortgage Note Payable $ 0 $ 433,529
</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 $332,587 at September 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
$91,523 at September 30, 1998 and $89,601 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 nine months ended September 30, 1998:
Property Management Fees $136,333
General and Administrative Costs 880
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
1998 1997
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,916,891 1,859,467
Apartment Properties, at Cost 22,356,519 22,299,095
Less: Accumulated Depreciation (6,788,543) (6,304,794)
15,567,976 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 October 31, 1998, the Partnership will pay distributions of
$105,879 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, 1998 was
$2,664,904 as compared to $2,604,624 for the comparable period ended
September 30, 1997. Income from property operations for the nine months
ended September 30, 1998 was $1,123,983 as compared to $1,036,571 for the
comparable period ended September 30, 1997. The increase in rental
income was a result of higher rental rates being in effect in 1998 which
offset a slight decrease in the apartment occupancy levels.
Interest expense decreased from $1,219,074 for the nine months ended
September 30, 1997 to $1,027,000 for the nine months ended September 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 nine months ended September 30, 1998 was $79,868 or
$8.07 per Limited Partnership Unit outstanding as compared to a loss of
$162,193 or $16.83 per Limited Partnership Unit for the comparable period
ended September 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 $728,135 for the
nine month period ended September 30, 1998 as compared to the nine month
period ended September 30, 1997. The change resulted primarily from
increased net income attributable to the debt restructuring which resulted
in a $192,074 decrease in interest expense for the nine month period ended
September 30, 1998 verse the nine month period ended September 30, 1997 and
and the costs incurred to refinance the partnership debt. The increase is
secondarily attributable to increases in unearned rents of $70,170 and
depreciation expense of $74,746 for the nine month period indicated above
and the $101,036 reduction in repair and maintenance expense as a result
of the Springfield repainting which occurred in 1997.
Cash used by investing activities totaled $57,424 at September 30, 1998
as compared to $79,280 at September 30, 1997. The $21,856 decrease for
the nine month period ended September 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 $309,243 from the nine month
period ended September 30, 1998 when compared to the nine month period
ended September 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 $527,089 of the increase. The
increased amount was offset by a decrease in partner distributions for the
comparative nine month period of $217,846.
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
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 contigency 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
02/08/99 J. Robert Love - President
Date (Signature)
02/08/99 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> $1,250,433
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,512,814
<PP&E> $22,356,519
<DEPRECIATION> $6,788,543
<TOTAL-ASSETS> $17,080,790
<CURRENT-LIABILITIES> $404,513
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($1,102,147)
<TOTAL-LIABILITY-AND-EQUITY> $17,080,790
<SALES> 0
<TOTAL-REVENUES> $2,752,948
<CGS> 0
<TOTAL-COSTS> $1,602,070
<OTHER-EXPENSES> $12,844
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $1,027,000
<INCOME-PRETAX> $79,868
<INCOME-TAX> 0
<INCOME-CONTINUING> $79,868
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $79,868
<EPS-PRIMARY> $8.07
<EPS-DILUTED> $8.07
</TABLE>
