<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-13983
ASSOCIATED PLANNERS REALTY GROWTH FUND
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4119808
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD., SUITE 900
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
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
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 1. FINANCIAL STATEMENTS
In the opinion of the General Partner of Associated Planners Realty
Growth Fund (the "Partnership"), all adjustments necessary for a fair
presentation of the Partnership's results for the three and six months
ended June 30, 1996 and 1995 have been made in the following financial
statements which are normal and recurring in nature. However, such
financial statements are unaudited and are subject to any year-end
adjustments that may be necessary.
BALANCE SHEETS
JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
ASSETS
<S> <C> <C>
REAL ESTATE, net of
accumulated depreciation (Notes 2 & 3) $1,260,088 $1,285,445
CASH AND CASH EQUIVALENTS 18,326 ---
OTHER RECEIVABLES 3,784 26,329
OTHER ASSETS 10,014 16,289
$1,292,212 $1,328,063
LIABILITIES AND PARTNERS' EQUITY
PAYABLE TO AFFILIATES $ 219,990 $ 240,095
BANK OVERDRAFT --- 328
OTHER ACCRUED LIABILITIES 146,403 35,336
NOTE PAYABLE - RELATED PARTY (Note 4(d)) 150,000 150,000
SECURITY DEPOSITS AND PREPAID RENTS 20,559 25,977
NOTE PAYABLE (Note 3) 1,674,918 1,676,385
2,211,870 2,128,121
MENTS AND CONTINGENCIES
PARTNERS' EQUITY:
Limited Partner:
$1,000 stated value per unit;
authorized 10,000 units; issued - 2,061 (902,496) (784,092)
General Partner: (17,162) (15,966)
TOTAL PARTNERS EQUITY (919,658) (800,058)
$1,292,212 $1,328,063
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<CAPTION>
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 $(800,058) 2,061 $(784,092) $(15,966)
Net loss (119,600) --- (118,404) (1,196)
BALANCE, JUNE 30, 1996 $(919,658) 2,061 $(902,496) $(17,162)
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
LIMITED PARTNERS GENERAL
TOTAL UNITS AMOUNT PARTNER
BALANCE, DECEMBER 31, 1994 $1,301,837 2,061 $1,296,785 $5,052
Net loss (68,811) --- (68,123) (688)
BALANCE, JUNE 30, 1995 $1,233,026 2,061 $1,228,662 $4,364
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES:
Rental $61,635 $65,438 $118,597 $121,315
Interest 89 41 95 91
61,724 65,479 118,692 121,406
COSTS AND EXPENSES:
Operating 42,387 19,248 76,029 38,662
Property taxes 2,610 4,495 5,220 8,990
Property management fees 3,117 2,678 5,750 4,977
Interest 68,639 42,360 114,923 83,975
General & administrative 10,665 10,199 20,530 20,415
Depreciation & amortization 7,920 16,599 15,840 33,198
135,338 95,579 238,292 190,217
NET LOSS $(73,614) $(30,100) $(119,600) $(68,811)
NET LOSS PERR
LIMITED PARTNERSHIP UNIT $(35.36) $(14.46) $(57.45) $(33.05)
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
<S> <C> <C>
Cash flow from operating activities:
Net Loss $(119,600) $(68,811)
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation and amortization 15,840 33,198
Accrued interest on notes payable 92,847 ---
Increase (decrease) from changes in:
Other receivables and assets 38,337 17,609
Accounts payable (2,213) 21,928
Security deposits and prepaid rent (5,418) 796
Net cash provided by operating activities 19,793 4,720
Cash flows from financing activities:
Repayments on note payable (1,467) (7,776)
Net cash (used in) financing activities (1,467) (7,776)
Net increase (decrease) in cash &
cash equivalents 18,326 (3,056)
Cash and cash equivalents at
beginning of period --- 5,657
CASH AND CASH EQUIVALENTS AT END OF PERIOD$18,326 $2,601
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
BUSINESS
Associated Planners Realty Growth Fund (the "Partnership"), a California
limited partnership, was formed on March 9, 1987 under the Revised Limited
Partnership Act of the State of California. The Partnership met its
minimum funding of $1,200,00 on August 29, 1988 and terminated its offering
on September 5, 1989. The Partnership was formed to acquire income-producing
real property throughout the United States with emphasis on properties
located in California and southwestern states. The Partnership intends
to purchase such properties by borrowing up to an aggregate of fifty
percent of the purchase price of such properties and intends to own and
operate such properties for investment over an anticipated holding period of
approximately five to ten years.
BASIS OF PRESENTATION
The financial statements do not give effect to any assets that the partners
may have outside of their interest in the partnership, nor to any
personal obligations, including income taxes, of the partners.
The Partnership's financial statements for the six months ended
June 30, 1996 have been prepared on a going concern basis which
contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Partnership has
suffered recurring loses from operations and has a net capital deficiency
of $919,658 at June 30, 1996. The deficiency is attributable to a
$1,912,727 impairment loss recognized in the fourth quarter of 1995 on the
difference between the carrying amount of rental real estate and the fair
value of such real estate less the costs to sell. The Partnership plans to
seek relief from the debt holder, while at the same time seeking to enhance
the value of the property by increasing occupancy and contracting long-term
leases. Failure to obtain additional funding from the General Partner,
relief from the lender, or significantly improved operations could result
in the eventual loss of the building through foreclosure proceedings.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed of" (SFAS No. 121) issued by the Financial Accounting Standards
Board (FASB) is effective for financial statements for fiscal years
beginning after December 15, 1995. The new standard establishes new
guidelines regarding when impairment losses on long-lived assets, which
include plant and equipment, and certain identifiable intangible assets,
should be recognized and how impairment losses should be measured. At
the beginning of the fourth quarter of 1995, the Partnership elected
the early adoption of SFAS NO. 121. Prior to the adoption of SFAS No. 121,
real estate was carried at the lower of cost of net realizable value.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
SUMMARY OF ACCOUNTING POLICIES
RENTAL REAL ESTATE AND DEPRECIATION
Assets are stated at the lower of cost or market. Depreciation is
computed using the straight-line method over estimated useful lives ranging
from 31.5 to 40 years for financial reporting and income tax reporting
purposes.
In the event that facts and circumstances indicate that the cost of an asset
may be impaired, an evaluation of recoverability would be performed.
If an evaluation is required, the estimated future undiscounted cash flows
associated with the asset would be compared to the carrying amount to
determine if a write-down to market value is required. Prior to the
adoption of SFAS 121, the Partnership would not record an impairment in
the value of properties unless circumstances and surrounding facts
dictated that the value of the property could not possibly be recovered
upon future sale. Prior to 1995, there were no circumstances or facts that
dictated the recording of an impairment in value.
LOAN ORIGINATION FEES
Loan origination fees are capitalized and amortized over the life of the
loan.
LEASE COMMISSIONS
Lease commissions which are paid to real estate brokers for locating tenants
are capitalized and amortized over the life of the lease.
RENTAL REVENUE
Rental revenue is recognized on a straight-line basis to the extent that
rental revenue is deemed collectible.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Partnership considers cash
in the bank and all highly liquid investments purchased with original
maturities of three months or less to be cash and cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting priciples requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
NOTE 1 - NATURE OF PARTNERSHIP
The Partnership began accepting subscriptions in October 1987 and closed
the offering on September 5, 1989. The Partnership began operations in
September 1988.
Under the terms of the partnership agreement, the General Partners (West
Coast Realty Advisors, Inc., and W. Thomas Maudlin, Jr.) are entitled
to cash distributions from 10% to 15%. The General Partners are also
entitled to net income or loss allocations varying from 1% to 15% in
accordance with the partnership agreement. Further, the General Partners
will receive acquisition fees for locating and negotiating the purchase of
rental real estate, management fees for operating the Partnership and a
commission on the sale of the partnership properties.
NOTE 2 - RENTAL REAL ESTATE
The Partnership owns the following two rental real estate
properties - one wholly-owned and a 10% undivided interest in the other
property.
Location (Property Name) Date Purchased Original Cost
Santa Ana, California November 17, 1989 $ 3,228,102
San Marcos, California January 9, 1990 311,878
The major categories of property are:
June 30, 1996 December 31, 1995
Land $519,777 $519,777
Building and Improvements 796,951 806,468
1,316,728 1,326,245
Less accumulated depreciation 56,640 40,800
Net rental real estate 1,260,088 1,285,445
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 2- RENTAL REAL ESTATE (CONTINUED)
A significant portion of the Partnership's rental revenue was earned
from tenants whose individual rents represent more than 10% of total rental
revenue. Specifically:
One tenant accounted for 50% in 1996;
Two tenants accounted for 14% and 41%, respectively, in 1995.
In December 1994, the County of Orange (where the Santa Ana Building is
located) declared bankruptcy due to large losses in connection with
unauthorized derivative and bond investment activity. The County's
problems had a trickle down effect on the entire area as a large number
of businesses dependent upon County purchases went out of business or moved
away. This put further pressure on all commercial property owners to
further lower rents to attract or retain tenants. The Partnership saw the
negative cash flow situation on the Santa Ana Building worsen as a result
of these problems.
In December 1995, the property tax assessment on the Santa Ana,
California office building was significantly reduced. It is the intention
of the General Partner to sell the Santa Ana property when it is
reasonably feasible. The Partnership determined that the total expected
future cash flows from operations and disposition of the property are
less than the carrying value of the property. Therefore the property
was deemed to be impaired. As a result, an impairment loss of $1,912,727
was recorded, measured as the amount by which the carrying amount of the
asset exceeded its fair value, less costs to sell. Fair value was
determined based on comparable sales. The Partnership intends to
continue to annually assess the carrying values of its long-lived assets.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31,1995
(CONTINUED)
NOTE 3 - NOTE PAYABLE
The Partnership has a 9.75% promissory note payable secured by a Deed of
Trust. This note is due January 1, 2000, and provides significant
prepayment penalties. Payments are made in monthly installments of $15,088
including principal and interest. The outstanding balance is $1,674,918
and $1,676,385 at June 30, 1996 and December 31, 1995.
The carrying amount is a reasonable estimate of fair value of notes payable
because the interest rates approximate the borrowing rates currently
available for mortgage loans with similar terms and average maturities.
The aggregate annual future maturities at June 30, 1996 are as follows:
Amount
1996 $ 15,344
1997 20,129
1998 22,182
1999 24,443
2000 1,592,820
Total $1,674,918
NOTE 4 - RELATED PARTY TRANSACTIONS
(a) For administrative services rendered by the corporate
General Partner, in accordance with the partnership agreement, the
Partnership incurred $6,000 for the six months ended June 30, 1996 and
June 30, 1995 and $3,000 for the quarter ending June 30, 1996 and 1995 for
these services. These costs were unpaid as of June 30, 1996.
(b) Property management fees incurred in accordance with the
partnership agreement with West Coast Realty Management, Inc., ("WCRM") an
affiliate of the corporate General Partner, totaled $5,750 for the six
months ended June 30, 1996, and $4,977 for the six months ended
June 30, 1995, $3, 117 for the three months ended June 30, 1996 and
$2,678 for the three months ended June 30, 1995. These costs were unpaid
as of June 30, 1996.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
(c) During the year ended December 31, 1990, the Partnership, in a
joint venture with Associated Planners Realty Income Fund (an affiliate),
purchased a one-story office building located in San Marcos, California
(Note 2). The acquisition was paid for entirely in cash totaling
$3,119,000 of which $311,900 was provided by the Partnership and
$2,807,100 by Associated Planners Realty Income Fund. The Partnership
owns a 10% interest in this joint venture.
(d) The Partnership has a note payable to a General Partner of
$150,000 at December 31, 1995 and June 30, 1996. The note bears interest
of 7.5% and is payable in equal installments of principal and interest
amortized over a 10 year period, with all remaining unpaid interest and
principal due on May 1, 1997. Accrued interest payable on the note
was $102,188 and $90,938 as of June 30, 1996 and 1995, respectively.
(e) Related party accounts payables are as follows:
JUNE 30, 1996 DECEMBER 31, 1995
West Coast Realty Advisors 133,184 108,408
West Coast Realty Management 86,806 81,056
Associated Financial Group, Inc. --- 50,631
$219,990 $240,095
NOTE 5 - NET LOSS AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT
The Net Loss per Limited Partnership Unit was computed in accordance with
the partnership agreement using the weighted average number of outstanding
Limited Partnership Units of 2,061 for 1996 and 1995.
No distributions were made in 1996 or 1995.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1995
(CONTINUED)
NOTE 6 - FOURTH QUARTER ADJUSTMENT - 1995
In the fourth quarter of 1995 the Partnership recorded an adjustment to the
carrying value of rental real estate to recognize an impairment loss of
$1,912,727 as discussed in Note 2.
NOTE 7 - SUBSEQUENT EVENT - PARK CENTER OFFICE BUILDING FORECLOSURE
On March 4, 1996 the Partnership requested that the lender re-structure the
loan on the Park Center Office Building. On April 4, 1996, the Partnership
received a reply from the lender denying the request to modify the loan and
also notified the Partnership that an event of default had occurred under
the deed of trust securing the loan due to the Partnership's nonpayment of
the March 1, 1996 loan payment. The Partnership also did not make the
loan payments due April 1, May 1, June 1, July 1, or August 1, 1996.
The Partnership anticipates that the Lender and the Partnership will execute
a deed-in-lieu-of-foreclosure, in connection with the Parkcenter Office
Building, if the Partnership and Lender can come to an agreement regarding
the terms of such transaction. It is anticipated that the ParkCenter
Office Building will be conveyed to the lender in the latter half of the
third calendar quarter of 1996.
<PAGE>
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, increases in real estate taxes,
assessments, and operating expenses, as well as others.
<PAGE>
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.
LIQUIDITY AND CAPITAL RESOURCES
In reading the discussion of operations, the reader should understand that
the Partnership has a 100% interest in an office building in Santa Ana,
California, and a 10% interest in a commercial building in San Marcos,
California. The results of the Partnership's operations have been
dominated by the results of operations for the Santa Ana building; thus,
the discussion of the Partnership's results of operations will emphasize the
operations of that building.
Due to the recurring losses from operations and a net capital deficiency
of $800,058 at December 31, 1995, the Partnership's independent certified
public accountants have included an explanatory paragraph in their report
at December 31, 1995 stating that these factors raise substantial doubt
as to Partnership ability to continue as a going concern.
From 1992 to 1994, the overall operations of the Partnership gradually
improved; however, the Partnership continued to generate net losses and
negative cash flows. (These negative cash flows first started appearing
in calendar 1991). For example, the net loss for 1993 of $123,357 was
$17,737 (13%) less than the $141,094 net loss for 1992, while the negative
cash flow (net loss excluding depreciation and amortization) dropped from
$70,738 to $54,276, a $16,462 (23%) decrease. Progress continued in 1994,
with the net loss of $115,143 that year being $8,214 (7%) less than that
for 1993, and the negative cash flow dropping to $47,779, a $6,497
(12%) decrease from 1993's level. Despite these improvements, the
fact remained that the Partnership's operations were still insufficient
to support the Company without cooperation from the General Partner in
deferring collection of various management fees, interest expense, and
overhead cost allocations.
As of June 30, 1996, the amount payable to the General Partner and
its affiliates for deferred fees, overhead expense allocations, cash
advances, and interest on those advances, was $219,990.
<PAGE>
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 intends to sell the Santa Ana property when conditions, at
a minimum, would result in the full payment of the outstanding debt
on the property. At this time, those conditions are not being met. In the
absence of an impairment in the value of the property, foreclosure by
the lender is inevitable.
1995 was a turning point in terms of the viability of the Partnership.
Although the general economy in which the Santa Ana building is located
was generally poor from 1990 to 1994, the operations of the Partnership's
building were still somewhat stable (if not overly profitable) as
explained above. However, in December of 1994, the County of Orange
(in which the Santa Ana Building is located) declared bankruptcy due to
large losses in connection with unauthorized derivative and bond investment
activity. The County's problems had a trickle down effect on the entire
area as a large number of small businesses dependent upon County purchases
went out of business or moved away. This put further pressure on all
commercial property owners to further lower rents to attract or retain
tenants. The Partnership saw the negative cash flow situation on the
Santa Ana building worsen as a result of these problems. On July 31, 1995,
at the Partnership's request, the holder of the first deed of trust on
the Santa Ana property agreed to provide relief to the Partnership by
deferring collection of debt payments due on the loan for September 1995
to January 1996. The General Partner used this opportunity to
improve the liquidity of the Partnership, and to allow for the
implementation of necessary capital improvements to the Property.
However, the relief offered by the lender in the latter part of 1995 and
the first month of 1996 was not sufficient to improve the operating
results for the Partnership. Largely as a result of the economic problems
in Orange County, the net loss from operations for the Partnership
increased to $189,168 -- a $74,025 (64%) increase in loss. Cash basis loss
(net loss from operations plus depreciation expense) increased from
$47,779 to $122,772 -- a $74,993 (157%) increase. In addition, during the
fourth quarter of 1995, despite the Partnership's best efforts to
enhance the value of the property with tenant improvements and greater
occupancy, it was determined that the surrounding economic conditions of
the area dictated a thorough review of the carrying value of the
property. Using recent comparative building sales data for the general
area in which the building is located, it was determined that a
$1,912,727 impairment loss in the value of the building should be
recorded on the Partnership's Statement of Loss for 1995. This loss
is unrealized, and thus does not flow through to the partners for tax
purposes, and may not flow through until the Park Center Office Building is
sold or otherwise disposed of. This allowance, in itself, does not
directly affect the liquidity of the Partnership, which as previously
set forth, is extremely poor.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
This impairment in value means that the equity of the Partnership is now
a deficit, and the sale of the Santa Ana property would probably result in
less proceeds than what is currently outstanding on the first deed of trust
attached to the building.
In February 1996, the Partnership failed to make the first payment
due following the debt relief period granted by the holder of the first
deed of trust. The Partnership again approached the holder of the first
deed of trust to attempt to obtain additional debt relief. The holder of
the note declined to provide additional relief, and demanded immediate
payment of the installment due to prevent immediate foreclosure of the
property. The Partnership met this demand and default provisions were
not instituted. The General Partner has made no commitment at this time
concerning the availability of further cash advances to the Partnership.
The Partnership will continue to seek relief from the debt holder, while at
the same time seeking to enhance the value of the property by increasing
occupancy and contracting long term leases. Failure to obtain
additional funding from the General Partner, relief from the lender,
or significantly improved operations could result in the eventual loss
of the building through foreclosure proceedings.
Management intends upon increasing occupancy at the Santa Ana property
by offering concessions to potential long term tenants (such as free
rent, no security deposit requirement, generous leasehold improvement
allowances) and by offering to pay local brokers a higher commission for
bringing in qualified, long-term tenants. This plan is intended to enable
the Partnership to operate during the twelve month period following
December 31, 1995, and to operate beyond that 1996 twelve month period
as well. However, there is no assurance that this plan will be successful.
On March 4, 1996 the Partnership requested that the lender re-structure the
loan on the Park Center Office Building. On April 4, 1996, the Partnership
received a reply from the lender denying the request to modify the loan and
also notified the Partnership that an event of default had occurred under
the deed of trust securing the loan due to the Partnership's nonpayment of
the March 1, 1996 loan payment. The Partnership also did not make the loan
payments due April 1, and May 1, June 1, July 1 and August 1, 1996.
The Partnership anticipates that the Lender and the Partnership will execute
a deed-in-lieu-of-foreclosure, in connection with the Parkcenter Office
Building, if the Partnership and Lender can come to an agreement regarding
the terms of such transaction. It is anticipated that the ParkCenter
Office Building will be conveyed to the lender in the latter half of the
third calendar quarter of 1996.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Management uses cash as its primary measure of a partnership's liquidity.
The amount of cash that represents adequate liquidity for a real estate
limited partnership depends on several factors. Among them are:
1. Relative risk of the partnership;
2. Condition of the partnership's properties;
3. Time in the partnership's life cycle (e.g., money-raising,
acquisition, operating or disposing phase) and
4. Partner distributions.
Due to the large amount of vacancies, general economic problems in the area,
and an increase in maintenance and repair expenses at the Santa Ana Property,
the 3% reserve remained depleted during the six months ended
June 30, 1996. 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 six months ended June 30, 1996. 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. It
is uncertain at this point how long it will take the Partnership to
rebuild cash reserves and operate profitably on a cash basis; however,
the possibility of partners receiving future cash distributions or a
significant portion of their original investment back is considered remote.
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, advance cash as needed for ongoing operating
expenses, and the stabilization of the tenant base and rental rates at the
Santa Ana property. In addition, the retention of the Santa Ana
property, or the minimization of cash losses in connection with its
operation, is largely dependent upon the consummation of successful
negotiations with the Lender. The ability of the General Partner to make
advances to the Partnership is also dependent upon the liquidity of the
Parent company of the General Partner. The General Partner is a wholly
owned subsidiary of Associated Financial Group (the "Parent"), which
consolidated, as of December 31, 1995, had $6.2 million in assets, $2.1
million in cash and cash equivalents, and $3.3 million in equity, and had
net income of $.2 million for the year ended December 31, 1995. In
addition, the General Partner must be willing to make advances, and as of
June 30, 1996, the General Partner has no future commitments to do so.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
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 $1,592,820 at that time (assuming the property is
not deeded back to the lender or the loan is not re-negotiated). A sale
or refinance of the property will be necessary prior to that date.
The Partnership has a 10% interest in a building in San Marcos, California.
In February 1995, 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 resulted in only a $750
per month decrease in cash flow. This particular decrease is not
expected to have a material impact on operations.
The San Marcos property has no debt financing and there are currently no
plans by the Partnership or Associated Planners Realty Income Fund to seek
financing on that jointly owned property. 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.
The condition of the properties is relatively good, therefore there are
no unusually large capital improvements or repair costs that would further
deplete the cash reserves.
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 clauses in its leases with some of its
properties' tenants that will help alleviate some of the negative impact of
inflation. However, the lack of inflation is hurting the Partnership due
to the stagnation of office rental rates.
There are currently no plans for any material renovation, improvement or
further development of the properties.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS-SIX MONTHS ENDED JUNE 30, 1996
Operations for the six months ended June 30, 1996 and 1995 reflect a full
six months of rental activities for the Partnership's properties. For
the six months ended June 30, 1996, the return on funds invested in
property was -1.8% vs. -.2% in the six months ended June 30, 1995.
Rental revenue decreased $2,718 (2%) for the six months ending June 30, 1996
vs. June 30, 1995, as a result of timing differences in the recognition of
revenue. Interest expense increased $30,948 (37%) due to an increase
in the size of monthly mortgage obligations on the note payable that is
attributable to the Partnerships deferral of the mortgage payments in
1995 and 1996. Operating expenses increased $37,367 (97%) due to
increased maintenance expenses incurred in order to improve the appearance
of the Santa Ana Building.
The cash basis loss for the six months ended June 30, 1996 was $103,760
vs. $35,613 for the six months ended June 30, 1995. This loss continued to
push the Partnership close to default on its ability to meet its
current loan and property tax obligations. As previously discussed,
continual support from the lender and/or the General Partner and its
affiliates will be necessary to avoid foreclosure of the Partnership's
primary real estate asset.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS-SIX MONTHS ENDED JUNE 30, 1996 (CONT.)
During the six months ended June 30, 1996, $19,793 in cash was provided
by operating activities. This resulted from an $38,337 decrease in
receivables and other assets (primarily due to the write-off of
prepaid insurance and amortization of repairs and maintenance costs
incurred in 1995) plus $92,847 increase in accrued interest on notes
payable (resulting from the relief the Partnership received in making
payments on the debt), offset by the net cash basis loss of $103,760 from
operations (net loss plus depreciation expense) plus a decrease in accounts
payable of $2,213 (primarily resulting a decrease in normal trade
payables) and a $5,418 decrease in security deposits and prepaid rent,
(due to a security deposit refund paid to a vacating tenant during the six
months ending June 30, 1996). In contrast, during the six months ending
June 30, 1995, $4,720 was provided by operating activities. This resulted
primarily from a $17,609 decrease in other assets (primarily the result of
a decrease in prepaid insurance balance) plus a $21,928 increase in
accounts payable (resulting from payments due to third-party vendors
being postponed until later periods), offset by the net cash basis loss
of $35,613 from operations. There were no investing activities during the
six months ending June 30, 1996 and 1995 by the Partnership; in recent
years, some cash had been used for capital improvements to the
properties. Financing activities resulted in a use of cash of $1,467 for
the six months ended June 30, 1996 in connection with the
Partnership's debt payment on the Santa Ana Building. In contrast, $7,776
was used in financing activities for the six months ended
June 30, 1995 in connection with debt payments on the Santa Ana
Building. Cash increased a net $18,326 as a result of the net cash
provided by operating activities for the six months ended June 30, 1996.
The number of limited partnership units outstanding remained at 2,061.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II
O T H E R I N F O R M A T I O N
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Information required under this section has been included in the
financial statements.
(b) Reports on Form 8-K.
None
<PAGE>
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)
August 14, 1996 By: WEST COAST REALTY ADVISORS, INC.
A California Corporation,
A General Partner
Neal E. Nakagiri
Vice President/Secretary
August 14, 1996 Michael G. Clark
Vice President/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000814077
<NAME> ASSOCIATED PLANNERS REALTY GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 18,326
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,631
<PP&E> 1,316,728
<DEPRECIATION> (56,640)
<TOTAL-ASSETS> 1,292,212
<CURRENT-LIABILITIES> 386,952
<BONDS> 1,824,918
0
0
<COMMON> 0
<OTHER-SE> (919,658)
<TOTAL-LIABILITY-AND-EQUITY> 1,292,212
<SALES> 118,597
<TOTAL-REVENUES> 118,692
<CGS> 123,369
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,923
<INCOME-PRETAX> (119,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,600)
<EPS-PRIMARY> (57.45)
<EPS-DILUTED> (57.45)
</TABLE>
