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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, 2000 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 Securities Exchange Act of 1934 during
the preceding 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 securities.
Title of Each Class Number of Units
September 30, 2000
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, 2000 and December 31, 1999 3
Statements of Operations -
For the Nine Months Ended September 30, 2000 and 1999 4
Statement of Operations -
For the Three Months Ended September 30, 2000 and 1999 5
Statements of Partners' Equity -
For the Nine Months Ended September 30, 2000 and 1999 6
Statements of Cash Flows -
For the Nine Months Ended September 30, 2000 and 1999 7
Notes to Financial Statements 8-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
BALANCE SHEET
September 30, 2000 December 31, 1999
(Unaudited) Audited
ASSETS
Apartment Properties, at Cost $22,542,605 $22,484,922
Less - Accumulated Depreciation (7,829,586) (7,416,918)
14,713,019 15,068,004
Cash and Cash Equivalents 1,313,106 1,168,611
Prepaid Expenses 23,936 8,096
Deferred Loan Cost (Net of Accumulated
Amortization of $124,663 and $93,497) 166,216 197,382
TOTAL ASSETS $16,216,277 $16,442,093
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes Payable $17,422,047 $17,561,620
Accounts Payable 349,827 39,771
Security Deposits 100,325 96,419
Unearned Rents 15,019 36,722
TOTAL LIABILITIES 17,887,218 17,734,532
Partner's Equity
Limited Partners' Equity (9,407 units
outstanding @ September 30, 2000 and
December 31, 1999) (1,413,049) (1,037,598)
General Partner's Equity (257,892) (254,841)
TOTAL PARTNERS' EQUITY (1,670,941) (1,292,439)
TOTAL LIABILITES AND PARTNERS' EQUITY $16,216,277 $16,442,093
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
2000 1999
Property Operations :
Rental Income $2,712,945 $2,693,270
Miscellaneous 108,626 74,092
2,821,571 2,767,362
Expenses:
Depreciation 412,668 412,668
Payroll 328,109 271,368
Real Estate Taxes 216,027 211,158
Utilities 157,002 147,328
Repairs & Maintenance 349,466 293,946 Management - General Partner 139,816 136,753
Landscaping 62,623 60,378
Other 117,144 106,985
1,782,855 1,640,584
Income from Property Operations 1,038,716 1,126,778
Interest Income 28,749 21,026
1,067,465 1,147,804
Other Expenses:
Interest 1,007,210 1,017,483
Amortization 31,166 31,166
General & Administrative - Affiliate 81,144 81,153
Reserve Expense 1,988 970
Other General & Administrative 6,972 10,150
1,128,480 1,140,922
Net Income (Loss) ($61,015) ($ 6,882)
Allocation of Net Income (Loss) -
Limited Partners ($57,964) ($ 6,538)
General Partners (3,051) 344
($61,015) ($ 6,882)
Net Income (Loss) Per
Limited Partnership Unit ($ 6.16) ($.70)
Number of Limited Partnership Units 9,407 9,407
FOUNDATION REALTY FUND, LTD.
(a Florida Limited Partnership)
STATEMENT OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED September 30
2000 1999
Property Operations:
Rental Income $934,732 $908,320
Miscellaneous 30,691 31,705
965,423 940,025
Expenses:
Depreciation 137,556 137,556
Payroll 127,001 82,471
Real Estate Taxes 72,009 70,386
Utilities 80,246 37,623
Repairs and Maintenance 111,800 114,936
Property Management - General Partner 47,167 46,220
Landscaping 15,347 17,707
Other 30,084 32,733
621,210 539,632
Income from Property Operations 344,213 400,393
Interest Income 9,886 6,941
354,099 407,334
Other Expenses:
Interest 334,845 338,334
Amortization 10,389 10,389
General and Administrative -Affiliate 1,288 300
Reserve Expense 523 2,301
Other General and Administrative 27,048 27,051
374,093 378,375
Net Income (Loss) ($19,994) ($28,959)
Allocation of Net Income (Loss)-
Limited Partners ($18,994) ($27,511)
General Partners (1,000) (1,448)
($19,994) ($28,959)
Net Income (Loss) Per
Limited Partnership Unit ($ 2.02) ($2.92)
Number of Limited Partnership Units 9,407 9,407
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENT OF PARTNERS' EQUITY
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Limited General Total
Partners' Partners' Partners'
Equity Equity Equity
Balance, December 31, 1998 $(830,569) $(262,511) $(1,093,080)
Distribution to Partners (258,693) 0 (258,693)
Net Income (Loss) 6,538 344 6,882
Balance, September 30, 1999 $(1,082,724) $(262,167) $(1,344,891)
Balance, December 31, 1999 $(1,037,598) $(254,841) $(1,292,439)
Distribution to Partners (317,487) 0 (317,487)
Net Income (Loss) (57,964) (3,051) (61,051)
Balance, September 30, 2000 $(1,413,049) $(257,892) $(1,670,941)
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
Net Cash Provided by Operating Activities:
Net Income (Loss) $(61,015) $( 6,882)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operating Activities
Depreciation: 412,668 412,668
Amortization 31,166 31,166
Changes in Operating Assets and Liabilities:
(Increase) in Prepaids (15,840) ( 6,806)
Increase in Accounts Payable 310,056 284,186
Increase (Decrease) in Security Deposits 3,906 13,407
Increase (Decrease) in Unearned Rents (21,703) (17,445)
Net Cash Provided by Operating Activities 659,238 724,058
Cash Flows from Investing Activities:
Improvements to Apartment Properties (57,683) (91,624)
Net Cash Used in Investing Activities (57,683) (91,624)
Payments from Notes Payable (139,573) (129,299)
Distributions to Partners (317,487) (258,693)
Net Cash used by Financing Activities (457,060) (387,992)
Increase (Decrease) in Cash 144,495 244,442
Cash and Cash Equivalents at Beginning of period 1,168,611 1,057,375
Cash and Cash Equivalents at End of period 1,313,106 1,301,817
Supplemental Cash Flow Information:
Interest Paid $1,007,210 $1,017,483
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 wholly 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
Partners 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 recognized 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 $326,979 at September 30, 2000 and
$392,480 at December 31, 1999 of cash held in escrow for the payment
of real estate taxes. Cash and Cash Equivalents also include
$100,325 at September 30, 2000 and $96,419 at December 31, 1999 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 reimbursement for costs and expenses
incurred for the Partnership for the nine months ended September 30, 2000.
Property Management Fees $ 139,816
General and Administrative Costs 1,988
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
2000 1999
Land 3,141,510 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 2,102,977 2,045,294
Apartment Properties, at Cost 22,542,605 22,484,922
Less: Accumulated Depreciation (7,892,586) (7,416,918)
14,713,019 15,068,004
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, 1999. 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, 2000, the Partnership will pay distributions of
$105,829 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, 2000 was
$2,712,945 as compared to $2,693,270 for the comparable period ended
September 30, 1999. Income from property operations for the nine months
ended September 30, 2000 was $1,038,716 as compared to $1,126,778 for the
comparable period ended September 30, 1999. The decrease in income from
property operations was a result of higher payroll and repair and maintenance
costs primarily of the Springfield Apartments offset slightly by a
higher rental and other income achieved at both properties.
Interest expense decreased from $1,017,483 for the nine months ended September
30, 1999 to $1,007,210 for the nine months ended September 30, 2000. A reserve
expense accrual was begun in 1999 and amounted to $54,096 on September 30,
2000. This reserve accrual was set up to set aside operational proceeds
for upcoming capital expense items at both apartment properties.
Net loss for the nine months ended September 30, 2000 was $61,015 or $6.16
per Limited Partnership Unit outstanding as compared to a net income of
$6,882 or $ .70 per Limited Partnership Unit for the comparable period
ended September 30, 1999
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 $64,820 for the nine
month period ended September 30, 2000 as compared to the nine month
period ended September 30, 1999. The change resulted primarily from
a decrease in net income covered by higher operating expenses in the
repair and maintenance and payroll areas.
Cash used by investing activities totaled $57,683 at September 30, 2000 as
compared to $91,624 at September 30, 1999. The $33,941 decrease for the nine
month period ended September 30, 2000 is attributable to a decrease
in the number of carpets replaced in the apartment units of both apartment
communities and landscaping work performed at the Springfield apartments
in 1999.
Cash used by financing activities increased by $69,068 from the nine
month period ended September 30, 2000 when compared to the nine month period
ended September 30, 1999. The increase is attributed to a $58,749 increase
in distribution to limited partners coupled with $10,274 increase in
principal payments on the partnership's notes payable.
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
11/06/00 J. Robert Love - President
Date (Signature)
11/06/00 Alan G. Lee - Secretary
Date (Signature)
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