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, 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
June 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 June 30, 1999 and December 31, 1998 3
Statements of Operations -
For the Six Months Ended June 30, 1999 and 1998 4
Statement of Operations -
For the Three Months Ended June 30, 1999 and 1998 5
Statements of Partners' Equity -
For the Six Months Ended June 30, 1999 and 1998 6
Statements of Cash Flows -
For the Six Months Ended June 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
June 30, 1999 December 31, 1998
(Unaudited) Audited
ASSETS
<S> <C> <C>
Aparment Properties, at Cost $22,449,403 $22,381,940
Less - Accumulated Depreciation (7,130,128) (6,855,016)
15,319,275 15,526,924
Cash and Cash Equivalents 1,107,262 1,057,375
Prepaid Expenses 20,571 2,774
Deferred Loan Cost (Net of Accumulated
Amortization of $72,720 and $51,943) 218,159 238,936
TOTAL ASSETS $16,665,267 $16,826,009
LIABILITIES AND PARTNERS' EQUITY
Liabilites:
Notes Payable $17,650,970 $17,736,343
Accounts Payable 233,126 41,444
Security Deposits 98,377 87,647
Unearned Rents 9,609 53,655
TOTAL LIABILITIES 17,992,082 17,919,089
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ June 30, 1999 and
December 31, 1998 (1,063,200) (830,569)
General Partner's Equity (263,615) (262,511)
TOTAL PARTNERS' EQUITY (1,326,815) (1,093,080)
TOTAL LIABILITES AND PARTNERS' EQUITY $16,665,267 $16,826,009
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30
<S> 1999 1998
Property Operations : <C> <C>
Rental Income $1,784,950 $1,798,870
Miscellaneous 42,387 40,914
1,827,337 1,839,784
Expenses:
Depreciation 275,112 322,499
Payroll 188,897 166,652
Real Estate Taxes 140,772 145,806
Utilities 109,705 98,027
Repairs & Maintenance 179,010 113,819
Property Management - General Partner 90,533 92,965
Landscaping 42,671 42,018
Other 74,252 57,325
1,100,952 1,039,111
Income from Property Operations 726,385 800,673
Interest Income 14,085 18,282
740,470 818,955
Other Exenses:
Interest 679,149 685,432
Amortization 20,777 20,777
General & Administrative - Affiliate 670 670
Reserve Expense 54,102 0
Other General & Administrative 7,849 8,146
762,547 715,025
Net Income (Loss) ($22,077) $ 103,930
Allocation of Net Income (Loss) -
Limited Partners ($ 20,973) $ 98,734
General Partners (1,104) 5,196
($22,071) $103,930
Net Income (Loss) Per
Limited Partnership Unit ($ 2.23) $ 10.50
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 JUNE 30
<S> 1999 1998
Property Operations: <C> <C>
Rental Income $891,051 $890,587
Miscellaneous 23,461 20,917
914,512 911,504
Expenses:
Depreciation 137,556 161,249
Payroll 91,734 80,479
Real Estate Taxes 70,386 72,903
Utilities 65,502 51,205
Repairs and Maintenance 104,947 72,082
Property Management - General Partner 45,528 46,805
Landscaping 28,671 21,926
Other 44,033 29,173
588,357 535,822
Income from Property Operations 326,155 375,682
Interest Income 6,417 9,275
332,572 384,957
Other Expenses:
Interest 339,167 342,338
Amortization 10,388 10,388
General and Administrative -Affiliate 560 580
Reserve Expense 27,051 0
Other General and Administrative 2,558 6,543
379,724 359,849
Net Income (Loss) ($ 47,152) $ 25,108
Allocation of Net Income (Loss)-
Limited Partners ($ 44,794) $ 23,853
General Partners (2,358) 1,255
($ 47,152) $ 25,108
Net Income (Loss) Per
Limited Partnership Unit ($ 4.77) $ 2.54
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, 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 (246,934) 0 (246,934)
Net Income(Loss) 98,734 5,196 103,930
Balance, June 30, 1998 $(681,686) $(267,053) $(948,739)
Balance, December 31, 1998 $(830,569) $(262,511) $(1,093,080)
Distribution to Partners (211,658) 0 (211,658)
Net Income (20,973) (1,104) (22,077)
Balance, June 30, 1999 $(1,063,200) $(263,615) $(1,326,815)
</TABLE>
<TABLE>
FOUNDATION REALTY FUND, LTD.
<CAPTION> (A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<S> 1999 1998
Net Cash Provided by Operating Activities: <C> <C>
Net Income (Loss) $(22,077) 103,930
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 275,112 322,499
Amortization 20,777 20,777
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (17,797) (20,201)
Increase in Accounts Payable 191,682 177,843
Increase (Decrease) in Security Deposits 10,730 (3,303)
Increase (Decrease) in Unearned Rents (44,046) (1,104)
Net Cash Provided by Operating Activities 414,381 600,441
Cash Flows from Investing Activities:
Improvements to Apartment Properties (67,463) (25,110)
Net Cash Used in Investing Activities (67,463) (25,110)
Payments from Notes Payable (85,373) (79,089)
Distributions to Partners (211,658) (246,934)
Net Cash used by Financing Activities (297,031) (326,023)
Increase (Decrease) in Cash 49,887 249,308
Cash and Cash Equivalents at Beginning of period 1,057,375 981,983
Cash and Cash Equivalents at End of period 1,107,262 1,231,291
Supplemental Cash Flow Information:
Interest Paid $ 679,149 $ 685,432
</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 $244,471 at June 30, 1999 and
$328,122 at December 31, 1998 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$98,377 at June 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 six months ended June 30, 1999.
Property Management Fees $ 90,533
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
1999 1998
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 2,009,775 1,942,312
Apartment Properties, at Cost 22,449,403 22,381,940
Less: Accumulated Depreciation (7,130,128) (6,855,016)
15,319,275 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 August 9, 1999, the Partnership will pay distributions of
$47,035 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, 1999 was
$1,784,950 as compared to $1,798,870 for the comparable period ended
June 30, 1998. Income from property operations for the six months
ended June 30, 1999 was $726,385 as compared to $800,673 for the
comparable period ended June 30, 1998. The decrease in income from
property operations was due primarily to higher payroll and maintenance
and repair costs.
Interest expense decreased from $685,432 for the six months ended June
30, 1998 to $679,149 for the six months ended June 30, 1999. A reserve
expense accrual was begun in 1999 and amounted to $54,102 on June 30,
1999. This reserve accrual was set up to set aside operational proceeds
for up coming capital expense items at both apartment properties.
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 risk 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 $186,060 for the six
month period ended June 30, 1999 as compared to the six month period ended
June 30, 1998. The change resulted primarily from a decrease in net
income of $126,007 attributable to the higher operating expenses described
above, including the addition of the $54,102 reserve accrual. The decrease
is secondarily attributed to a decrease in unearned rents of $42,942
and a decrease in depreciation of $47,387.
Cash used by investing activities totaled $67,463 at June 30, 1999 as
compared to $25,110 at June 30, 1998. The $42,552 increase for the six
month period ended June 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 $28,992 from the six
month period ended June 30, 1999 when compared to the six month period
ended June 30, 1998. The decrease was primarily attributed to a $35,276
decrease in distribution paid to limited partners.
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
8/10/99 J. Robert Love - President
Date (Signature)
8/10/99 Alan G. Lee - Secretary
Date (Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> $1,107,262
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $1,345,992
<PP&E> $22,449,403
<DEPRECIATION> $7,130,128
<TOTAL-ASSETS> $16,665,267
<CURRENT-LIABILITIES> $341,112
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> ($1,326,815)
<TOTAL-LIABILITY-AND-EQUITY> $16,665,267
<SALES> 0
<TOTAL-REVENUES> $1,841,422
<CGS> 0
<TOTAL-COSTS> $1,175,831
<OTHER-EXPENSES> $8,519
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $679,149
<INCOME-PRETAX> ($22,077)
<INCOME-TAX> 0
<INCOME-CONTINUING> $(22,077)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $(22,077)
<EPS-BASIC> ($2.23)
<EPS-DILUTED> $(2.23)
</TABLE>
