SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/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-K as set forth in the pages attached hereto:
Item 7 (Management Discussion and Analysis) and Item 8 (Financial Statements
and Supplementary Data)
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: July 30, 1996
By: West Coast Realty Advisors, Inc. (Advisor)
By:
Michael G. Clark, Vice President/Treasurer
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership began offering for sale limited partnership units in
October 1987. On August 29, 1988, the Partnership reached its minimum
offering level of $1,200,000 and funds were released from escrow, to the
Partnership. The Partnership sold units throughout the remainder of 1988,
and had raised $1,362,000 in gross proceeds or $1,219,262 net of syndication
costs and sales commissions as of December 31, 1988. As of
December 31, 1989, gross proceeds from sales of partnership units totaled
$2,061,000 or $1,823,953 net of syndication costs and sales commissions.
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 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 unacceptable 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.
The property tax installment that was due April 15, 1995 was paid on
June 29, 1995. The amount paid was $9,896.71, which included a penalty
of $908.97. The property tax installment due November 10, 1995 ($8,987.74)
was made on a timely basis.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
As of December 31, 1995, the amount payable to the General Partner and
its affiliates for deferred fees, overhead expense allocations, cash
advances, and interest on those advances, was $240,095.
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.
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
from 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 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 less
depreciation expense) increased from $47,779 to $122,772--a $74,993 (157%)
increase. In addition, during the fourth quarter, 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 ParkCenter Office Building is sold or otherwise
disposed of. This allowance, in itself, does not directly
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
affect the liquidity of the Partnership, which as previously set forth, is
extremely poor. 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
Partnership projects that additional cash advances will be necessary from
the General Partner, or one of its affiliates, in order to prevent an
additional liquidity crisis in April 1996 when property taxes become due on
the property. The General Partner has made no commitment at this time
concerning the availability of future 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 tennants (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 tennants. 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.
During the year ended December 31, 1995, the Partnership did not make
distributions to limited partners or pay General Partner management fees, in
an attempt to rebuild cash reserves. Distributions are determined by
management based on cash flow and the liquidity position of the Partnership.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
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 disposition 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 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 year.
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.
The ability of the General Partner to make advances to the Partnership is
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 December 31, 1995, the General Partner has no future
commitments to do so.
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 $1,550,000 at that time. A sale or refinance of the
property will be necessary prior to that date.
The San Marcos property has no debt financing and their are currently no
plans by the
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
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 severely
deplete the cash reserves.
As previously discussed, the Partnership has a 10% interest in a building
in San Marcos, California. Subsequent to year-end, 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 particular 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, 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.
RESULTS OF OPERATIONS - 1995 VS. 1994
Operations for the years ended December 31, 1995 and 1994 reflect full
years of rental activities for the Partnership's properties. For the year
ended December 31, 1995, the return on funds invested in property was (1.8%)
vs. (.2%) in calendar 1994.
As previously discussed, poor economic conditions resulted in a $27,729
(10.2%) decrease in rental revenue. Of this decrease, approximately 25%
($7,000) was due to decreases in rental rates at the San Marcos and Santa Ana
properties, with the remaining 75% ($20,729) due to increased vacancy at the
properties. As a result of the
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
debt relief received, interest expense increased $19,312 (11.4%). However,
the provisions of the debt relief did not require an increase in the use of
cash as a result of this. Operating expenses increased $24,027 (25.4%) due
to increased maintenance expenses incurred in order to improve the
appearance of the Santa Ana Building.
The cash basis loss for 1995 was $122,772 vs. $47,779 in 1994. This
$74,993 (157%) increase pushed 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.
The actual net loss for the year ended December 31, 1995 totaled
$2,101,895--a large increase over the $115,143 net loss recognized in 1994.
Much of this loss was due to the impairment loss ($1,912,727) recognized in
connection with the Santa Ana property. This loss is currently non-cash in
nature, and cash provided by operating activities ($4,468) was actually
$14,111 higher than the $9,443 in cash used by operating activities in 1994.
However, much of the cash provided by operations in 1995 was the result of
an increase in amounts deferred by the General Partner, which is not
indicative of improved operating results.
During the year ended December 31, 1995, $4,468 in cash was provided by
operating activities. This resulted from an increase in accounts payable of
$70,899 (primarily resulting from an increase in the deferral of payment of
amounts due to the General Partner and affiliates) plus the $71,954 increase
in accrued interest on notes payable (resulting from the relief the
Partnership received in making payments on the debt from September 1995
through January 1996), offset by the net cash basis loss of $122,772 from
operations (net loss plus depreciation expense and impairment loss), and
the $16,409 net increase in receivables and other assets (primarily work in
progress pertaining to certain capital improvements to the Santa Ana
Building). There were no investing activities during the year 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 $10,125 in connection with the Partnership's debt on the Santa Ana
Building. Cash decreased a net $5,657 as a result of the net cash used by
operating activities and financing activities. As a result, the net cash at
the end of the year was zero.
The number of limited partnership units outstanding remained at 2,061.
<PAGE>
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
RESULTS OF OPERATIONS - 1994 VS. 1993
Operations for the years ended December 31, 1994 and 1993 reflect full
years of rental activities for the Partnership's properties. For the year
ended December 31, 1994, the return on funds invested in property was (.2%)
vs. (.1%) in calendar 1993. As has been the case for several years, the
Partnership realized an overall cash basis net loss due to the
administrative costs of operating the Partnership (cash basis is net income
plus an addback of depreciation expense). Rental income fell $17,298 (6%)
due to continuing rental rate and occupancy problems at the Santa Ana
Building. Of the $17,298 decrease in rental revenue from 1993, we would
estimate that $12,000 was due to increased vacancy at the Santa Ana property,
with the balance due to lower overall rental rates in the area.
Operating expense decreased $22,400 (19%) as a result of less maintenance
and ongoing operating costs due to lower vacancy at the Santa Ana property
and lower property taxes due to some relief granted by the County of Orange
in 1994.
The cash basis loss decreased from $54,276 in 1993 to $47,779 in 1994.
Although this did represent a $6,497 (12.0%) decrease, the viability of the
Partnership was dependent upon the General Partner and affiliates waiving
collection of certain fees and reimbursements that it was entitled to.
Coupled with prior year (1991-1993) losses, the cash loss for 1994 continued
to put the Partnership in a mode of extremely low liquidity.
During the year ended December 31, 1994, $9,443 in cash was used in
operating activities. This resulted from a net cash basis loss of $47,779
(net loss plus depreciation expense), plus the $11,486 decrease in security
deposits and prepaid rents (primarily resulting decrease in occupancy from
85% in 1993 to 73% in 1994), offset by a increase in accounts payable of
$46,235 (primarily resulting from an increase in the deferral of payment of
amounts due to the General Partner and affiliates), and the $3,887 net
increase in receivables and other assets (primarily work in progress
pertaining to certain capital improvements to the Santa Ana Building).
There were no investing activities during the year 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 $14,464 in
connection with the Partnership's debt on the Santa Ana Building. Cash
decreased a net $23,907 as a result of the net cash used by operating
activities and financing activities. As a result, the net cash at the
end of the year was $5,657.
The number of limited partnership units outstanding remained at 2,061.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Certified Public Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Loss 3
Statements of Partners' Equity (Deficit) 4
Statements of Cash Flows 5
Summary of Accounting Policies 6-7
Notes to Financial Statements 8-12
<PAGE>
Report of Independent Certified Public Accountants
Associated Planners Realty Growth Fund
(a California limited partnership)
Los Angeles, California
We have audited the accompanying balance sheets of Associated Planners
Realty Growth Fund (a California limited partnership) as of December 31, 1995
and 1994 and the related statements of loss, partners' equity (deficit), and
cash flows for each of the three years in the period ended December 31, 1995.
We have also audited the schedules listed in the accompanying index at item
14(a). These financial statements and schedules are the responsibility of
the Partnership's management. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
schedules are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements and schedules. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Associated
Planners Realty Growth Fund (a California limited partnership), at
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
Also, in our opinion, the schedules present fairly, in all material
respects, the information set forth therein.
As discussed in Note 8 to the financial statements, the Partnership
changed its method of accounting for the impairment of long-lived assets
in 1995.
The accompanying financial statements and schedules have been prepared
assuming that the Partnership will continue as a going concern. As
discussed in the summary of accounting policies, the Partnership has
suffered recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described
in the summary of accounting policies. The financial statements and
schedules do not include any adjustments that might result from the outcome
of this uncertainty.
BDO SEIDMAN, LLP
Los Angeles, California
February 12, 1996
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
BALANCE SHEETS
<CAPTION>
December 31, 1995 1994
<S> <C> <C>
Assets
Rental real estate, less accumulated
depreciation (Note 2) $1,285,445 $3,255,051
Cash and cash equivalents --- 5,657
Accounts receivable --- 4,724
Other receivables 26,329 ---
Other assets 16,289 31,002
Total assets $1,328,063 $3,296,434
Liabilities and Partners' Equity (Deficit)
Liabilities
Bank overdraft $ 328 $ ---
Accounts payable:
Trade 35,336 16,725
Related party (Note 4) 240,095 187,807
Note payable - related party (Note 4) 150,000 150,000
Security deposits and prepaid rent 25,977 25,181
Note payable (Note 5) 1,676,385 1,614,884
Total liabilities 2,128,121 1,994,597
Partners' equity (deficit)
Limited partners:
$1,000 stated value per unit - authorized
10,000 units; issued and outstanding 2,061 (784,092) 1,296,785
General partners (15,966) 5,052
Total partners' equity (deficit) (800,058) 1,301,837
Total liabilities and partners'
equity (deficit) $ 1,328,063 $3,296,434
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
STATEMENTS OF LOSS
<CAPTION>
Years ended December 31, 1995 1994 1993
<S> <C> <C> <C>
Revenues
Rental (Notes 2 and 3) $ 243,067 $ 270,796 $ 288,094
Interest 147 472 530
243,214 271,268 288,624
Costs and expenses
Operating 118,523 94,496 116,896
Interest 188,998 169,686 170,849
General and administrative 58,465 54,865 55,155
Depreciation and amortization 66,396 67,364 69,081
Impairment loss (Note 2) 1,912,727 --- ---
2,345,109 386,411 411,981
Net loss $ (2,101,895) $ (115,143) $(123,357)
Net loss per limited partnership
unit (Note 6) $(1,009.64) $(55.31) $ (59.25)
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
<CAPTION>
Limited Partners General
Total Units Amount Partner
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $1,540,337 2,061 $1,532,899 $7,438
Net loss for the year (123,357) --- (122,122) (1,235)
Balance, December 31, 1993 1,416,980 2,061 1,410,777 6,203
Net loss for the year (115,143) --- (113,992) (1,151)
Balance, December 31, 1994 1,301,837 2,061 1,296,785 5,052
Net loss for the year (2,101,895) --- (2,080,877) (21,018)
Balance, December 31, 1995 $(800,058) 2,061 $(784,092) $(15,966)
</TABLE>
[FN]
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>
<TABLE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
STATEMENTS OF CASH FLOWS
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Years ended December 31, 1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $(2,101,895) $(115,143) $(123,357)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Depreciation and amortization 66,396 67,364 69,081
Accrued interest on note payable 71,954 --- ---
Impairment loss 1,912,727 --- ---
Increase (decrease) from changes in:
Accounts receivable 4,724 (2,189) 2,996
Other receivables and assets (21,133) 6,076 (2,512)
Accounts payable 70,899 46,235 33,669
Security deposits and prepaid rent 796 (11,786) 432
Net cash provided by (used in)
operating activities 4,468 (9,443) (19,691)
Cash flows used in investing activities
Additions to rental real estate --- --- (3,519)
Cash flows from financing activities
Bank overdraft 328 --- ---
Decrease in note payable (10,453) (14,464) (13,125)
Proceeds from note payable - related party --- --- 50,000
Net cash provided by (used in)
financing activities (10,125) (14,464) 36,875
Net increase (decrease) in cash
and cash equivalents (5,657) (23,907) 13,665
Cash and cash equivalents, beginning of year 5,657 29,564 15,899
Cash and cash equivalents, end of year $ --- $ 5,657 $ 29,564
</TABLE>
[FN]
See accompanying summary of accounting policies and 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 $1,200,000 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 year ended December 31, 1995
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 losses from
operations and has a net capital deficiency of $800,055 at December 31, 1995.
The deficiency is attributable to a $1,912,727 impairment loss recognized on
the difference between the carrying amount of rental real estate and the fair
value less cost 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.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
SUMMARY OF ACCOUNTING POLICIES
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 121, real estate was carried at the lower of
cost or net realizable value. The adoption of SFAS No. 121 did not have a
material effect on its financial position or result of operations.
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 record an impairment in the value of
assets when circumstances and surrounding facts dictated that the market
value of the property had permanently declined below cost and book value
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 principles 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
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 (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.
2. Rental Real Estate
The Partnership owns the following two rental real estate properties, one
wholly-owned and the second, a 10% undivided interest:
Acquisition
Location (Property Name) Date Purchased Cost
Santa Ana, California November 17, 1989 $ 3,228,102
San Marcos, California January 9, 1990 311,878
The major categories of rental real estate are:
December 31, 1995 1994
Land $519,777 $1,349,900
Buildings and improvements 806,468 2,241,600
1,326,245 3,591,500
Less accumulated depreciation 40,800 336,449
Rental real estate, net $1,285,445 $3,255,051
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS
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:
Two tenants accounted for 14% and 41% in 1995;
Two tenants accounted for 11% and 43% in 1994;
Two tenants accounted for 11% and 43% in 1993.
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.
During 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 cost 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.
3. Future Minimum Rental Income
As of December 31, 1995, future minimum rental income under existing leases,
excluding month to month rental agreements, that have remaining
noncancelable terms in excess of one year are as follows:
Amount
1996 $179,124
1997 48,930
1998 10,383
$238,437
Future minimum rental income does not include lease renewals or new leases
that may result after a noncancelable lease expires.
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS
4. Related Party Transactions
(a) In accordance with the partnership agreement, compensation earned by or
services reimbursed to the corporate General Partner consisted of the
following:
Years ended December 31, 1995 1994 1993
Administrative services:
Data processing $5,645 $5,680 $5,669
Postage 710 640 662
Investor processing 2,258 2,272 2,268
Duplication 1,129 1,136 1,134
Investor communications 1,693 1,704 1,701
Miscellaneous 565 568 566
$12,000 $12,000 $12,000
(b) The Partnership owns a 10% undivided interest in the property located
in San Marcos, California. The 90% interest is owned by Associated
Planners Realty Income Fund, an affiliate.
(c) Property management fees incurred in accordance with the partnership
agreement with West Coast Realty Management, Inc., totaled $10,393,
$12,045 and $12,422 for the years ended December 31, 1995, 1994 and 1993.
(d) The Partnership has a note payable of $150,000 at December 31, 1995
and December 31, 1994 which is payable on demand to the corporate General
Partner and bears interest of 7.5%.
(e) Related party accounts payables are as follows:
December 31, 1995 1994
Associated Planners Realty Income Fund $ --- $2,173
West Coast Realty Advisors 108,408 73,158
West Coast Realty Management 81,056 70,663
Associated Financial Group, Inc. 50,631 41,813
$240,095 $187,807
<PAGE>
ASSOCIATED PLANNERS REALTY GROWTH FUND
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS
5. 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 $1,676,385 and $1,614,884
at December 31, 1995 and 1994.
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 December 31, 1995 are as follows:
Amount
1996 $16,811
1997 20,129
1998 22,182
1999 24,443
2000 1,592,820
Total $1,676,385
6. 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 1995, 1994 and 1993.
No distributions were made in 1995, 1994 or 1993.
7. Fourth Quarter Adjustment
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.
8. Supplemental Disclosures of Cash Flow Information
Cash paid during the years ended December 31, 1995, 1994 and 1993 for
interest was $117,044, $168,731 and $159,565.
Noncash investing and financing activities:
Notes payable was increased by $71,954 of accrued interest relating to a
deferral of loan payments during 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the 13 or 15(d) 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)
W. THOMAS MAUDLIN JR.
(A General Partner)
By: West Coast Realty Advisors, Inc.
(A General Partner)
WILLIAM T. HAAS
(Director and Executive Vice President/Secretary)
MICHAEL G. CLARK
(Vice President/Treasurer)
Date: July 30, 1996
