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 March 31, 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
March 31, 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 March 31, 1999 and December 31, 1998 3
Statements of Operations -
For the Three Months Ended March 31, 1999 and 1998 4
Statements of Partners' Equity -
For the Three Months Ended March 31, 1999 and 1998 5
Statements of Cash Flows -
For the Three Months Ended March 31, 1999 and 1998 6
Notes to Financial Statements 7-9
Management's Discussion and Analysis if Financial
Condition and Results of Operations 10-11
<TABLE>
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
<CAPTION>
BALANCE SHEET
March 31, 1999 December 31, 1998
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,405,524 $22,381,940
Less - Accumulated Depreciation (6,992,571) (6,855,016)
15,412,953 15,526,924
Cash and Cash Equivalents 1,100,495 1,057,375
Prepaid Expenses 32,687 2,774
Deferred Loan Cost (Net of Accumulated
Amortization of $62,332 and $51,943) 228,547 238,936
TOTAL ASSETS $16,774,682 $16,826,009
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,694,065 $17,736,343
Accounts Payable 148,096 41,444
Security Deposits 90,902 87,647
Unearned Rent 15,423 53,655
TOTAL LIABILITIES 17,948,486 17,919,089
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ March 31, 1999 and
December 31, 1998 (912,577) (830,569)
General Partner's Equity (261,227) (262,511)
TOTAL PARTNERS' EQUITY (1,173,804) (1,093,080)
TOTAL LIABILITES AND PARTNERS' EQUITY $16,774,682 $16,826,009
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31
<S> 1999 1998
Property Operations : <C> <C>
Rental Income $893,899 $908,283
Miscellaneous 18,926 19,997
912,825 928,280
Expenses:
Depreciation 137,556 161,250
Payroll 97,163 86,173
Real Estate Taxes 70,386 72,903
Utilities 44,203 46,822
Repairs & Maintenance 74,063 41,737
Property Management - General Partner 45,005 46,160
Landscaping 14,000 20,092
Other 30,219 28,152
512,595 503,289
Income from Property Operations 400,230 424,991
Interest Income 7,668 9,007
407,898 433,998
Other Exenses:
Amortization 10,389 10,389
Interest 339,982 343,094
General & Administrative - Affiliate 110 90
Reserve Expense 27,051 0
Other General & Administrative 5,291 1,603
382,823 355,176
Net Income (Loss) $ 25,075 $ 78,822
Allocation of Net Income (Loss) -
Limited Partners $ 23,821 $ 74,881
General Partners 1,254 3,941
$ 25,075 $ 78,822
Net Income (Loss) Per
Limited Partnership Unit $ 2.53 $ 7.96
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 THREE MONTHS ENDED MARCH 31, 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 (117,588) 0 (117,588)
Net Loss 74,881 3,941 78,822
Balance, March 31, 1998 $(576,193) $ (268,308) $ (844,501)
Balance, December 31, 1998 $(830,569) $ (262,511) $(1,093,080)
Distribution to Partners (105,829) 0 (105,829)
Net Income 23,821 1,284 25,105
Balance, March 31, 1999 $(912,577) $(261,227) $(1,173,804)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<S> 1999 1998
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $ 25,075 $ 78,822
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 137,556 161,250
Amortization 10,389 10,389
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (29,884) (31,274)
Increase in Accounts Payable 106,652 77,303
Increase in Security Deposits 3,255 2,004
(Decrease) in Unearned Rents (38,232) (2,487)
Net Cash Provided by Operating Activities 214,811 296,007
Cash Flows from Investing Activities:
Improvements to Apartment Properties (23,584) (12,199)
Net Cash Used in Investing Activities (23,584) (12,199)
Cash Flows from Financing Activities:
Payments from Notes Payable (42,278) (39,174)
Distributions to Partners (105,829) (117,588)
Net Cash used by Financing Activities (148,107) (156,762)
Increase (Decrease) in Cash 43,120 127,046
Cash and Cash Equivalents at Beginning of period 1,057,375 981,983
Cash and Cash Equivalents at End of period 1,100,495 1,109,029
Supplemental Cash Flow Information:
Interest Paid $ 339,982 $ 343,094
Supplemental Disclosure of Non-Cash
Financing Activities:
</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 $166,999 at March 31, 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
$90,902 at March 31, 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 three months ended March
31, 1999.
Property Management Fees $ 45,005
General and Administrative Costs 110
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:
March 31, December 31
1999 1998
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 1,965,896 1,942,312
Apartment Properties, at Cost 22,405,524 22,381,940
Less: Accumulated Depreciation (6,992,571) (6,855,016)
15,412,953 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 April 30, 1999, the Partnership paid distributions of $105,829
to the Limited Partners and $-0- 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 three months ended March 31, 1999 was
$893,899 as compared to $908,283 for the comparable period ended
March 31, 1998. Income from property operations for the three months
ended March 31, 1999 was $400,230 as compared to $424,991 for the
comparable period ended March 31, 1998. The decrease in rental
income was a result of lower occupancy levels achieved at the Spring-
field Apartments in Durham, North Carolina. The decrease was offset
somewhat by rent increases instituted at both apartment properties
during the last twelve months.
Interest expense decreased from $343,094 for the three months ended
March 31, 1998 to $339,982 for the three months ended March 31, 1999.
This decrease in interest expense is a result of a refinancing of the
original debt to new 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 three months ended March 31, 1999 was $25,075 or
$2.53 per Limited Partnership Unit outstanding as compared to income
of $78,822 or $7.96 per Limited Partnership Unit for the comparable
period ended March 31, 1998. The $53,747 decrease in net income was a
product of income being down by $16,794 as explained above and an
increase in repairs and maintenance expense of $32,326. The repair and
maintenance expense increase is attributable to an $18,289 increase in
carpet and appliances purchased at the Springfield Apartments and a
$13,257 increase in apartment repairs and maintenance supplies purchased
at the Springfield Apartments.
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
-All home office and field computers upgraded to pentium level
-The Y2K compliant version of accounts payable and general ledger loaded
-The Y2K compliant version of revenue software ordered and received
-The Y2K compliant version of revenue software is installed on the home
office computers and installation has begun on the field computers
The progress to date is even with 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,
these 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 riskd of not meeting the Year 2000 issues are also
considered minimal from an operations standpoint assuming the represen-
tations made by our outside vendors are correct. The outside vendors
supply electricity, water, gas, etc. to our customers. The non-interrup-
tion of these services are not within the partnership's control and no
contingency plans have been developed.
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 $81,196 for the
three month period ended March 31, 1999 as compared to the three month
period ended March 31, 1998. The change resulted primarily from the
generation of net operating income of $25,075 for the three months ended
March 31, 1999 verse income of $78,822 for the three months ended
March 31, 1998. Furthermore depreciation expense declined $23,694 for
the three weeks ended March 31, 1999 verses March 31, 1998.
Cash used by investing activities totaled $23,584 at March 31, 1999 as
compared to $12,199 at March 31, 1998. The $11,385 increase for the three
month period ended March 31, 1999 is solely attributable to the increase
in the number of carpets replaced in the apartment units of the Springfield
Apartments.
Cash used by financing activities decreased by $8,655 from the three
month period ended March 31, 1999 when compared to the three month
period ended March 31, 1998. A decrease in partner distributions of
$11,759 for the three months ended March 31, 1999 verses March 31, 1998
is the primary cause of the decrease.
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
5/10/99 J. Robert Love - President
Date (Signature)
5/10/99 Alan G. Lee - Assitant Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> $1,100,495
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,361,729
<PP&E> $22,405,524
<DEPRECIATION> $6,992,571
<TOTAL-ASSETS> $16,774,682
<CURRENT-LIABILITIES> $254,421
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (1,173,804)
<TOTAL-LIABILITY-AND-EQUITY> $16,774,682
<SALES> 0
<TOTAL-REVENUES> $920,493
<CGS> 0
<TOTAL-COSTS> $512,595
<OTHER-EXPENSES> $32,452
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $339,982
<INCOME-PRETAX> $ 25,075
<INCOME-TAX> 0
<INCOME-CONTINUING> $25,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $25,075
<EPS-PRIMARY> $2.53
<EPS-DILUTED> $2.53
</TABLE>
