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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q/A
AMENDMENT TO GENERAL FORM FOR REGISTRATION OF SECURITIES
Filed pursuant to Section 12(g)
THE SECURITIES EXCHANGE ACT OF 1934
ASSOCIATED PLANNERS REALTY GROWTH FUND
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 2
File No. 33-13983
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its General Form for Registration
of Securities on Form 10-Q as set forth in the pages attached hereto:
10-Q for the Quarter ending June 30, 1995
Item 2
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
ASSOCIATED PLANNERS REALTY GROWTH FUND
(Registrant)
Date:
By: West Coast Realty Advisors, Inc. (General Partner)
By: Michael G. Clark, Vice President/Treasurer
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ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California Limited Partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
Associated Planners Realty Growth Fund (the "Partnership") was
organized in December 1986, under the California Revised Limited Partnership
Act. The Partnership began offering units for sale on October 20, 1987. As
of December 31, 1989, the Partnership had raised $2,061,000 in gross capital
contributions. The Partnership netted approximately $1,820,000 after sales
commissions and syndication costs.
The Partnership was organized for the purpose of investing in,
holding, and managing improved, leveraged income-producing property, such as
residential property, office buildings, commercial buildings, industrial
properties, and shopping centers. The Partnership intends to own and operate
such properties for investment over an anticipated holding period of
approximately five to ten years.
The Partnership's principal investment objectives are to invest in
rental real estate properties which will:
(1) Preserve and protect the Partnership's invested capital;
(2) Provide for cash distributions from operations;
(3) Provide gains through potential appreciation; and
(4) Generate Federal income tax deductions so that during the early
years of property operations, a portion of cash distributions
may be treated as a return of capital for tax purposes and,
therefore, may not represent taxable income to the limited
partners.
The ownership and operation of any income-producing real estate is
subject to those risks inherent in all real estate investments, including
national and local economic conditions, the supply and demand for similar
types of properties, competitive marketing conditions, zoning changes,
possible casualty losses, and increases in real estate taxes, assessments,
and operating expenses, as well as others.
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ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California Limited Partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Partnership is operated by West Coast Realty Advisors, Inc.
("WCRA") (the corporate General Partner) and Mr. W. Thomas Maudlin Jr. (an
individual General Partner), collectively the "General Partner," subject to
the terms of the Amended and Restated Agreement of Limited Partnership. The
Partnership has no employees, and all administrative services are provided by
WCRA, the corporate General Partner.
Results of Operations
Operations for the quarter ended June 30, 1995, reflect an entire
period of operations for the Partnership's properties. Rental revenue for the
three and six months ended June 30, 1995, decreased from the three and six
months ended June 30, 1994 by approximately $16,374 and $38,207. Part of
this decrease was a result of a vacancy at the San Marcos building from
January 8, 1995 to February 13, 1995. The effect of this vacancy was a
decrease in rent of approximately $3,000 for the quarter and six months. In
addition, the new tenant (No Fear Inc.) entered into a lease at a rate that
was 30% less than the rate on the lease of the prior tenant (Professional
Care Products). This has resulted in approximately $4,000 less rent for the
first six months of 1995 in comparison to the first six months of 1994. The
remaining $31,000 decrease in rental revenue is the result of lower occupancy
and lower rent rates at the Santa Ana office building. Total costs and
expenses related to the properties' operation were similar for the quarter
ended June 30, 1995 and the quarter ended June 30, 1994. These same costs
were $4,783 lower for the six months ended June 30, 1995 vs. the six months
ended June 30, 1994, as a result of lower interest expense (greater principal
repayments on mortgage loan) and property management fees expenditures.
General and administrative expenses were approximately equal for both the
three and six months ended June 30, 1995 and June 30, 1994, as was
depreciation and amortization expense. Property management fees tracked the
level of rental revenue. Proeprty operating costs were slightly higher for
the three and six months ended June 30, 1995 in comparison to the prior year
($741 for the quarter and $2,436 for six months), due to slightly higher
office maintenance costs.
At June 30, 1995, the Parkcenter Building was 98% occupied by nine
tenants. The San Marcos property, which is 10% owned the Partnership, was
100% occupied by one tenant.
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In an effort to secure a debt reduction and/or restructure from the
holder of the first deed of trust on the Parkcenter Office Building property
("Parkcenter Property"), the Partnership elected to pay real estate taxes due
April 10, 1995 on the Parkcenter Property on June 30, 1995. Despite the 70%
to 80% occupancy level at the property, it has been unable to generate a
positive cash flow. As a result the Partnership's General Partner has been
paying certain administrative costs of the Partnership, i.e., property
management fees, legal and accounting costs, general and administrative fees,
as well as certain leasehold improvement costs. As of June 30, 1995, the
amount of cash advanced to the Partnership by the General Partner was
$150,000. In addition, the General Partner and its affiliates have deferred
collection of fees and expenses totaling $177,971. The General Partner is
also pursing alternative solutions to improve the cash flow of the Parkcenter
Property and the Partnership.
Liquidity and Capital Resources
During the quarter ended June 30, 1995, the Partnership's cash
reserves decreased by $7,836 primarily due to the payment of property taxes
and the 30% lower rate on the new tenant lease at the San Marcos property.
Cash reserves are defined as cash balances in checking and money market
accounts.
For the six months ended June 30, 1995, the change in cash and cash
equivalents decreased by $3,056. This can be accounted for as follows:
1) $4,720 in cash was provided by operating activities. This was
largely the result of cash being provided by an increase in accounts payable of
$21,928 as payments of amounts due to third-party vendors and (particularly)
affiliates was postponed until later periods. In addition, Other Assets
decreased $17,609, effectively resulting in an increase in cash. This
decrease was primarily the result of a decrease in prepaid expense balances,
resulting from the write-off of amounts (primarily insurance) paid in the last
quarter of 1994. These increases to cash were greatly offset by $35,613 use
of cash resulting from the cash basis net loss for the first six months of the
year ($68,811 net loss with $33,198 in depreciation added back). Management
realizes that this increase in cash was unusual, and it expects that
operating activities for the rest of the year will result in a net use of
cash.
2) $7,776 in cash was used by financing activities. This was entirely
the result of the payback of principal on the outstanding mortgage note
payable.
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ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California Limited Partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Partnership had a net loss of $30,100, or $14.46 per limited
partnership unit, after depreciation expense of $16,599 for the quarter
ended June 30, 1995.
The Partnership's small cash reserve is invested primarily in a bank
money market account. This reserve is invested to provide stability and
safety of principal, competitive interest rates, and quick availability of
funds, in that order of importance.
Due to the large amount of vacancies and an increase in maintenance
and repair expenses at the Santa Ana Property, the 3% reserve remained
depleted during the first six months of 1995. In addition, the General
Partner has made loans to the Partnership and deferred collection of
miscellaneous amounts owed to it by the Partnership. For this reason, there
were no distributions made to the limited partners during the first six
months. It is the Partnership's intention to eliminate partner distributions
until such time as the reserves are built back up to acceptable levels and
various deferred liabilities due to the Advisor and its affiliates are paid.
The Partnership's properties are currently operating at a loss on a cash
basis, though the level of vacancy at the properties has stabilized. It is
uncertain at this point how long it will take the Partnership to rebuild cash
reserves and operate profitably on a cash basis. The Partnership's ability to
meet cash requirements in the short-run is dependent upon the willingness of
the General Partner and its affiliates to defer collection of amounts due for
property management fees and overhead allocations, and the stabilization of
the tenant base and rental rates at the Santa Ana property. In the long run,
the Partnership's cash requirements will be further affected by the need to
pay off the Deed of Trust that secures the Santa Ana property. This note is
due on January 1, 2000, and is projected to have a balance of approximately
$1,500,000 at that time. A sale or refinance of the property will of course
be necessary prior to that date. The San Marcos property has no debt
financing. In the short-term, the fact that this property has a quality
tenant and operates under a triple net lease, allows the Partnership to
collect a nominal amount of cash from the operations of this Property. In
the long-run, the Partnership expects to benefit from the sale of this
property when it is sold. The General Partner anticipates that the San
Marcos property will be sold prior to the year 2000.
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The condition of the properties is relatively good, therefore there
are no projected capital improvements or unusually large repair costs that
would severely deplete the cash reserves. The General Partner believes in
the long-term the property can generate positive cash flows. The General
Partner is committed to maintaining the economic viability of the Partnership
and is exploring alternatives to maintaining sufficient operating capital.
This includes advancing small loans to the Partnership as needed ($5,000 to
$10,000), soliciting additional Limited Partner contributions to paydown the
mortgage balance, or other forms of debt relief. The General Partner is a
wholly owned subsidiary of Associated Financial Group (the "Parent"), which
consolidated, as of December 31, 1994, had $6.3 million in assets, $2.0
million in cash and cash equivalents, and $3.0 million in equity, and had net
income of $.3 million for the year ended December 31, 1994. The ability of
the General Partner to obtain these advances is dependent upon the liquidity
of the Parent company of the General Partner.
The General Partner is aware that the economic conditions in the
area in which the Santa Ana property is located are not good. There have
been several foreclosures of office buildings in the same general area.
Buildings have had to compete for a dwindling supply of viable tenants by
lowering the rental rates they are offering, to rates that will allow owners
to compete in a difficult marketplace, that is considered to have an
oversupply of available office space. The General Partner is of the opinion
that the surplus of office space in the area has deterred new building in the
general area, and that eventually, given a turnaround in the local economy,
the demand for office space will improve, driving up market rents, and
improving the value of the Santa Ana property. It is the intention of the
General Partner to sell the Santa Ana property when it is reasonably
feasible, given the facts that:
1) The price it could be sold for now would be less than the balance
on the outstanding mortgage debt on the property, thus giving Partnership
incentive to substantially lease-up and maintain the property prior to sale,
2) The debt service on the property is so high that given the long-
term realities of low inflation in the U.S. economy and long-term economic
sluggishness in the Southern California economy (due to Orange and Los
Angeles county fiscal problems, aerospace and defense layoffs, lower personal
income figures, higher than U.S. average unemployment, etc.), rents could
never increase enough in the foreseeable future for this property to generate
significant enough positive cash flow to maintain the viability of the
Partnership, and pay certain accrued and accruing expenses due to the General
Partner and Affiliates.
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In March 1995, the Financial Accounting Standards Board approved
adoption of Statement of Financial Accounting Standards No. 121 (SFAS 121 -
Accounting for the Impairment of Long-lived Assets and for Long-Lived
Assets to Be Disposed of). This statement is effective for fiscal years
beginning December 15, 1995, with restatement of previously issued financial
statements not permitted. SFAS 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived
assets and certain intangibles to be disposed of. Previous to this
pronouncement, accounting standards had not addressed when impairment losses
should be recognized or how impairment losses should be measured. The
Partnership has not previously recognized any impairment in the value of the
property in Santa Ana. If SFAS 121 were to be applied to the financial
statements of the Partnership prior to the required implementation date, the
General Partner feels that a $1,700,000 decrease in the value of the Santa
Ana property would be required, resulting in an equivalent decrease in
earnings and a substantial net loss for the year. This loss would be
unrealized, and thus would not flow through to the partners for tax purposes,
and may not flow through until the building is sold or otherwise disposed of.
The recording of this loss allowance, in itself, would not directly affect
the liquidity of the Partnership, which as previously discussed, is poor.
As previously discussed, the Partnership has a 10% interest in a
building in San Marcos, California. Subsequent to yearend, the building was
leased to a tenant at a rate 70% of the previous rental rate. Because the
Partnership has such a small percentage interest in this property, the
decrease in rent results in only a $750 per month decrease in cash flow.
This decrease is not expected to have a material impact on operations.
The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation
Acts of 1990 and 1993 did not have a material impact on the Partnership's
operations.
During the years of the Partnership's existence, inflationary
pressures in the U.S. economy have been minimal, and this has been consistent
with the experience of the Partnership in operating rental real estate in
California. The Partnership has several clauses in its leases with some of
its properties' tenants that will help alleviate some of the negative impact
of inflation. However, as previously alluded to, the lack of inflation is
hurting the Partnership due to the stagnation of office rental rates.
The Partnership completed its acquisition program in 1990.
There are currently no plans for any material renovation,
improvement or further development of the properties.
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ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California Limited Partnership)
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ASSOCIATED PLANNERS REALTY GROWTH FUND
A California Limited Partnership
(Registrant)
January 4, 1996 By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
A General Partner
William T. Haas
William T. Haas
Director and Executive Vice President / Secretary
January 4, 1996
Michael G. Clsrk
Michael G. Clark
Vice President / Treasurer
