FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934. (NO FEE
REQUIRED)
Commission File Number 0-17466
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
(Exact Name of Registrant as specified in its Charter)
Delaware 16-1309987
- -------- ----------
(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by a 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_____
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.(X)
DOCUMENTS INCORPORATED BY REFERENCE
See page 14 for a list of all documents incorporated by reference
1
<PAGE>
PART I
ITEM 1: BUSINESS
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The Registrant, Realmark Property Investors Limited Partnership-VI A
(the "Partnership"), is a Delaware Limited Partnership organized in September
1987 pursuant to an Agreement and Certificate of Limited Partnership (the
"Partnership Agreement"), under the Revised Delaware Uniform Limited Partnership
Act. The Partnership's General Partners are Realmark Properties, Inc. (the
"Corporate General Partner"), a Delaware corporation, and Joseph M.
Jayson (the "Individual General Partner").
The Registrant commenced the public offering of its limited partnership
units, registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended on November 10, 1987, and concluded the
offering on November 10, 1988, having raised a total of $15,737,790 before
deducting sales commissions and expenses of the offering.
The Partnership's primary business and its only industry segment is to
own and operate income-producing real property for the benefit of its limited
partners. As of December 31, 1997 the Partnership owned four (4) apartment
complexes totaling 680 units. The Partnership also owns an office complex
consisting of three buildings with a combined 92,000 square feet of rentable
space. Additionally, the Partnership is a partner in the Carriage House of
Englewood (formerly Gold Key) and Research Triangle Joint Ventures. The Joint
Venture agreements provide the Partnership with a 40% ownership in a 144 unit
apartment complex located in Dayton, Ohio (Carriage House of Englewood) and a
50% ownership in an office/distribution facility in Raleigh, North Carolina
(Research Triangle).
See also Item 7.
The business of the Partnership is not seasonal. As of December 31,
1998, the Partnership did not directly employ any persons in a full-time
position. All persons who regularly rendered services on behalf of the
Partnership through December 31, 1998 were employees of the Corporate General
Partner or its affiliates.
The Partnership investment objectives are to (1) provide a return of
capital plus capital gains from the sale of appreciated properties; (2) provide
partners with cash distributions until properties are sold; (3) preserve and
protect partners capital and; (4) increase Partnership equity through the
reduction of mortgage loans.
Occupancy for each complex as of December 31, 1998, 1997 and 1996 was
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Properties
- ----------
Beaver Creek 94% 95 % 89 %
Countrybrook Estates (formerly West Creeke) 91% 84 % 83 %
Stonegate Townhouses 95% 91 % 92 %
The Commons on Lewis Ave. 94% 76 % 83 %
Inducon - Columbia 85% 98 % 99 %
Joint Ventures
- --------------
Carriage House of Englewood 77% 72 % 83 %
Research Triangle 100% 100 % 100 %
</TABLE>
2
<PAGE>
ITEM 1: BUSINESS (Con't.)
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The percentage of total Partnership revenue on a consolidated basis
generated from each complex as of December 31, 1998, 1997 and 1996 was as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Beaver Creek 10% 12 % 11 %
Countrybrook Estates (formerly West Creeke) 29% 28 % 29 %
Stonegate Townhouses 19% 20 % 20 %
The Commons on Lewis Ave. 26% 23 % 22 %
Inducon - Columbia 16% 17 % 18 %
</TABLE>
This annual report contains certain forward-looking statements
concerning the Partnership's current expectations as to future results. Such
forward-looking statements are contained in Item 7: Management's Discussion and
Analysis of Financial Conditions and Results of Operations. Words such as
"believes", "forecasts", "intends", "possible", "expects", "estimates",
"anticipates" or "plans" and similar expressions are intended to identify
forward-looking statements.
ITEM 2: PROPERTIES
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Following is a list of properties and joint ventures owned by the
Partnership as of December 31, 1998:
<TABLE>
<CAPTION>
Property
Name and Location General Character of Property Purchase Date
- ----------------- ----------------------------- -------------
<S> <C> <C>
Beaver Creek 80 unit apartment complex on 10 February 1989
Monaca, PA acres of land. The outstanding
mortgage payable at December 31,
1998 was $1,337,685 due July 2027
with monthly payments of $10,137
including interest of 8.23%.
Countrybrook Estates 240 unit apartment complex. The June 1989
(formerly West Creeke) outstanding mortgage payable at
Louisville, KY December 31,1998 was $3,415,000
due July 1999 with monthly payments
of interest only at a rate of 3.50%
above the one month LIBOR rate
(9.0625% at December 31, 1998).
Stonegate Townhouses 130 unit apartment complex. The March 1990
Mobile, AL outstanding mortgage payable at
December 31, 1998 was $2,621,004 due
July 2027 with monthly payments of
$20,207 including interest of 8.43%.
<PAGE>
ITEM 2: PROPERTIES (Con't.)
- ------- -------------------
Property
Name and Location (cont'd.) General Character of Property Purchase Date
- --------------------------- ----------------------------- -------------
The Commons on 230 unit apartment complex. March 1991
Lewis Avenue The mortgage balance at December
Tulsa, OK 31, 1998 was $1,850,350 maturing
April 2001 with monthly principal
and interest payments determined by
an interest rate ranging from 8% -
12% annually (11% at December 31,
1998).
Inducon-Columbia An office complex consisting of May 1989
Columbia, SC three buildings with a combined
92,000 square feet of rentable
space. The property is managed by an
unrelated third party, with Realmark
Corporation, an affiliate of the
General Partners, supervising the
operations. The outstanding mortgage
payable balance at December 31,1998
was $2,168,462 with monthly payments
of $16,787 including interest at
7.867% The maturity date of the
mortgage is October 2022.
Joint Venture
Name and Location (cont'd.) General Character of Property Purchase Date
- --------------------------- ----------------------------- -------------
Carriage House A 144 unit apartment complex. May 1992
of Englewood The mortgage payable at
(formerly Gold Key) December 31, 1998 was $2,890,315
Joint Venture maturing June 2027, and providing
Dayton, OH for monthly principal and interest
payments of $23,503 bearing
interest at 9%.
Research Triangle A 150,000 square foot office August 1992
Joint Venture warehouse financed with a 8.06%
Research mortgage, which provides for monthly
Triangle, NC principal and interest payments of
$43,251. The balance as of December
31, 1998 was $5,504,596.
</TABLE>
With the exception of Inducon-Columbia, the above apartment complexes are
managed for the Partnership by Realmark Corporation, an affiliate of the General
Partner.
4
<PAGE>
ITEM 3: LEGAL PROCEEDINGS
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The Partnership is not a party to, nor is any of the Partnership's
property the subject of, any material pending legal proceedings that would
impact the future financial position and operations of the Partnership.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
- ------- -------------------------------------------
HOLDERS.
--------
None.
PART II
ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST.
- ------- --------------------------------------------------------------
There is currently no established trading market for the units of
Limited Partnership Interest of the Partnership and it is not anticipated that
any will develop in the future.
There were no distributions made during the years ended December 31,
1998, 1997 and 1996. See also Item 7.
As of December 31, 1998, there were 1,809 record holders of units of
Limited Partnership Interest.
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
Realmark Properties Investors Limited Partnership-VI A
------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------------ ------------------ ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Total assets $ 15,106,049 $ 16,284,862 $15,139,125 $16,251,096 $17,198,518
================== ================== ================= ================= ==================
Mortgages and
notes payable $ 11,392,501 $ 11,463,892 $ 9,573,161 $ 9,672,590 $ 9,641,293
================== ================== ================= ================= ==================
- ------------------------------------------------------------------------------------------------------------------------------------
Revenue $ 4,210,922 $ 3,992,130 $ 4,039,286 $ 4,190,474 $ 3,647,476
Expenses 5,314,610 5,209,137 4,860,288 5,312,606 5,021,157
------------------ ------------------ ----------------- ----------------- ------------------
Loss before allocated
(loss) income from
Joint Ventures (1,103,688) (1,217,007) (821,002) (1,122,132) (1,373,681)
Allocated (loss) income
from Joint Ventures (111,443) 95,051 (165,190) (184,772) (186,922)
------------------ ------------------ ----------------- ----------------- ------------------
Net loss $ (1,215,131) $ (1,121,956) $ (986,192) $(1,306,904) $(1,560,603)
================== ================== ================= ================= ==================
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in)
provided by operating
activities $ (387,212) $ (245,265) $ 15,947 $ 307,437 $ (394,141)
Principal payments upon
refinancing - (7,641,618) - - -
Principal payments on
debt (71,391) (78,350) (99,429) (44,715) (42,653)
------------------ ------------------ ----------------- ----------------- ------------------
Net cash (used in)
provided by operating
activities less
principal payments $ (458,603) $ (7,965,233) $ (83,482) $ 262,722 $ (436,794)
================== ================== ================= ================= ==================
- ------------------------------------------------------------------------------------------------------------------------------------
Loss per limited
partnership unit $ (7.49) $ (6.92) $ (6.08) $ (8.06) $ (9.62)
================== ================== ================= ================= ==================
Distributions per
limited partnership
unit $ - $ - $ - $ - $ -
================== ================== ================= ================= ==================
Weighted average
number of limited
partnership units
outstanding 157,378 157,378 157,378 157,378 157,378
================== ================== ================= ================= ==================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources:
- --------------------------------
The Partnership had another poor year financially with cash flow
shortages from operations exceeding $387,000. Management is continuing to focus
its efforts on ways of improving collections and increasing and/or maintaining
occupancy at all of the residential complexes in the Partnership. Incentive
programs have been implemented which reward on-site personnel for increased
occupancy, resident retention and improved collections. Additionally, incentive
packages offering monetary payments for resident referrals are being promoted
heavily. Management continues to offer incentive programs to tenants, such as
free months rent or discounted rents for signed leases. Both resident managers
and leasing specialists at the properties continue to be evaluated and trained
to make sure the property has the best and most capable staff that management
can find. Advertising also continues to be stressed by management as one of the
most effective means of attracting new tenants; several ads a week are placed in
leasing and apartment guides/magazines and local newspapers. Managers
continually monitoring ads and the "traffic" of potential renters that they
attract and report the results to management so that strategies can be
instituted, changed or strengthened.
There were no distributions made for the years ended December 31, 1998,
1997 or 1996. Management for the Partnership has been utilizing its cash to fund
capital improvements; management expects to continue making improvements (e.g.
painting, carpet and appliance replacements, etc.) to the properties in an
effort to increase occupancies. As a result, it is unlikely at this time that
any distributions will be made during 1999.
The bridge loan mortgage placed on Countrybrook Estates Apartments
during the year ended December 31, 1997 is due in July of 1999. Management has
sent financing packages to six lenders and with the current occupancy of
approximately 91%, management is confident that the property will be
successfully refinanced prior to the current loan's maturity date. The result of
the new financing is expected to give the Partnership a lowered interest rate
being paid on the property's mortgage.
Carriage House of Englewood (formerly Gold Key Apartments), of which
this Partnership is a 40% joint venture partner, continued to experience severe
cash flow shortages during the year ended December 31, 1998. Although HUD and
the mortgagee have assisted the Partnership through the release of the escrowed
funds and suspension of future deposits into the escrow reserve, unless the
property shows significant improvement in occupancy and collections, as well as
a decrease in expenses, the property could be in a position to default on its
mortgage, thus throwing it into a foreclosure. With this in mind, the Corporate
General Partner is aggressively marketing the property to potential buyers.
In the meantime, management continues to work with the United States
Department of Housing and Urban Development (HUD) and the mortgagee on the
property to obtain consent for a "partial payment of claim". This would take a
qualifying portion of the existing mortgage and make it a second mortgage with
terms that allow the Partnership to pay the second mortgage as cash flow
improves. Management has requested that not only does the lender accept the
partial payment of claim, but also that they reduce the interest rate being
charged on the current mortgage to a lower, more "market-level" rate, which
would lower the debt service to a more manageable level, and thus increase cash
flow. The additional cash flow is intended to be used to both fund operations
and to do needed capital improvements to the property. Conditions which must be
met for acceptance of this plan include a willing lender (i.e., a mortgagee who
voluntarily accepts partial payments under the loan agreement and is willing to
recast the remaining mortgage under new terms and conditions), which the
Partnership has, and the ability to prove to HUD that the poor performance of
the property is due to market conditions which are beyond the control of the
owner. The Partnership's first application for a partial payment of claim was
initially rejected by HUD, but meetings and discussions between HUD, the
mortgagee and the General Partner continue. Management is optimistic that their
application will be accepted some time during 1999. Management successfully
secured the release of all of the property's replacement reserve funds early in
1998; additionally future reserve payments have been suspended by HUD in an
effort to assist in the funding of the property's operations.
7
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Liquidity and Capital Resources (Con't.):
- -----------------------------------------
The Partnership has conducted a review of its computer systems to
identify the systems that could be affected by the "year 2000 issue" and has
substantially developed an implementation plan to resolve such issues. The year
2000 issue is the result of computer programs being written using two digits
rather than four digits to define the applicable year. Computer programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. Management has discussed with outside
independent computer consultants its readiness for the Year 2000. The majority
of the software in use is either "2000 compliant" or will be with little
adaptation and at no significant cost per information provided by their software
providers. Management has also engaged a computer firm to re-write its tax
software making it Year 2000 compliant. This work is scheduled to begin May 1,
1999 and is expected to take three months. Management has a complete inventory
of its computers and feels that the cost of replacing those which will not be
"2000 compliant" will be relatively minor (i.e., most likely under $20,000).
Non-informational systems have also been evaluated and management feels that
there will be little, if any, cost to preparing these for the Year 2000 (i.e.,
most likely under $20,000). Management expects to be fully Year 2000 compliant
with all testing done by September 30, 1999. The Partnership is working on a
contingency plan in the unlikely event that its systems do not operate as
planned. It is management's belief that in the unlikely event that its
informational systems do not operate as planned in the year 2000, all records
could be maintained manually until the problems with its systems are resolved.
Management feels that its external vendors, suppliers and customers, for the
most part, will be unaffected by the Year 2000 as most do not rely on
information systems in their businesses.
Management is aware of the need to implement corrective action plans in
response to the going concern considerations discussed in Note 11 to the
financial statements. As discussed previously, management believes that
marketing is a vital part of turning around the properties' financial problems.
Additionally, closer monitoring of expenditures, tighter credit policies and
scheduled physical improvements to the properties continue to be priorities. It
is hoped that efforts to correct the continual cash flow shortages and losses
will lead to the ultimate cure of such problems. The future viability of the
Partnership continues to be dependent upon management's efforts to increase
revenues, reduce/control expenses and in some cases, sell properties. Management
feels that the sale of The Commons and Stonegate Townhomes is in the best
interests of the limited partners, and accordingly, these properties will be
marketed for sale during 1999.
Results of Operations:
- ----------------------
For the year ended December 31, 1998, the Partnership incurred a net
loss of $1,215,131 or $7.49 per limited partnership unit. This is an increase
from the year ended December 31, 1997 when losses totaled $1,121,956 or $6.92
per limited partnership unit and an even more substantial increase from the year
ended December 31, 1996 when losses totaled $986,192 or $6.08 per limited
partnership unit.
8
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations (Con't.):
- -------------------------------
Partnership revenues for the year ended December 31, 1998 totaled
$4,210,922, consisting of rental income of $3,873,839, other income, which
includes interest, laundry income, and other miscellaneous sources of income, of
$337,083. The increase in rental revenue from that of the previous year-end is
partially the result of increasing occupancy at The Commons and Countrybrook
which have in the past several years suffered from declining occupancies. At
December 31, 1998, occupancy at The Commons and Countrybrook was 94% and 91%,
respectively, as compared to 76% and 84% respectively at December 31, 1997.
Stonegate, Beaver Creek and the Partnership's joint venture interest in Research
Triangle once again experienced high occupancy and good cash collections.
Occupancy at Inducon-Columbia decreased from its "typically high" level due
primarily to one large tenant vacating their space. Currently, management has a
broker working to fill this space; several prospective tenants have looked at
the space and management is optimistic that by mid-1999, this building will once
again be almost entirely occupied. Rental revenues in the years ended December
31, 1997 and 1996 totaled $3,538,666 and $3,699,350, respectively. Vacancies,
delinquencies, high debt service and operating costs at Carriage House of
Englewood (formerly Gold Key Joint Venture) continue to plague this Partnership
as a joint venturer. Increasing occupancy and decreasing delinquencies remain
the major focus of management. Tighter credit policies, extended incentive
programs and improved cost management continue to be management's means of
improving the cash flow in the Partnership.
Partnership expenses for the year ended December 31, 1998 totaled
$5,311,910, a considerable increase over the expenses of the years ended
December 31, 1997 and 1996 which totaled $5,209,137 and $4,860,288,
respectively. Property operations costs increased just under $28,000 primarily
due to increased payroll and associated costs incurred by the Partnership. These
costs increased by approximately $67,000 at Stonegate and Beaver Creek, offset
by decreases of approximately $41,000 in such costs was noted at The Commons and
Countrybrook.
Additional amortization expense in 1997 was the result of new financing
obtained during the year on several of the residential complexes and the one
commercial building in the Partnership. The new financing led to the write-off
of the majority of the previously capitalized mortgage acquisition costs
amounting to approximately $16,000. Depreciation expense increased for the year
ended December 31, 1998 due to this expense once again being taken on
Countrybrook Estates Apartments (no depreciation was taken during the period of
time during the year ended December 31, 1997 when the apartment building was
considered to be "held for sale") (see Note 15 to the financial statements). The
depreciation recorded on this complex for the year ended December 31, 1998
totaled $180,971. Administrative expenses decreased in total over $96,000 from
1997. This is attributed to lower audit fees of approximately $20,000,
approximately $17,000 less spent in advertising and legal costs at The Commons
(due to the improved occupancy discussed previously), decreases in management
fees of approximately $14,000 at Inducon Columbia and decreases in finance
charges of approximately $16,000 at Beaver Creek. Although there was an overall
decline in administrative expenses paid to affiliates of the General Partners
due to decreased accounting and portfolio management charges, management fees
increased for most complexes due to increased occupancies and improved
collections.
The Partnership anticipates slightly higher property operations
expenses in the first half of the coming year due to the costs associated with
preparing the unoccupied residential units for new tenants (i.e. cleaning,
painting, appliance and carpeting costs). Although this work is necessary in
order to increase rental revenue(s) generated, management continues to keep in
mind that expenditures must be closely monitored so as not to worsen the cash
flow from operations of the Partnership which was negative in 1998 and 1997.
9
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations (Con't.):
- -------------------------------
The Carriage House of Englewood Joint Venture had a net loss of
$265,996 for the year ended December 31, 1998. This loss continues to reflect
the problems the property in this venture has had with high vacancy losses and
exceptionally high delinquencies. The loss for the years ended December 31, 1997
and 1996 were $253,956 and $299,092, respectively. In accordance with the joint
venture agreement, 40% of income and losses is to be passed through to the
Partnership and the balance to the other joint venturer. The property expects
continuing high property operations expenses in the coming months due to the
maintenance work that needs to be done; more work needs to be completed in order
to prepare units for new tenants and to satisfy current tenants (i.e. cleaning,
painting, appliance and carpeting costs), as well as to physically improve the
exterior of the complex. During the year ended December 31, 1998 all exterior
painting and roof repairs were completed. Additionally, all common hallways were
newly painted and problems which put the swimming pool out of use in the
previous year were corrected. For 1999, management intends to do needed asphalt
repairs to the parking lot; although the property needs compete re-paving, cash
flow is not expected to permit this, so patching and resealing is planned.
The Research Triangle Industrial Park West Joint Venture reported net
income of $175,218 for the year ended December 31, 1998. This is a considerable
increase from the year ended December 31, 1997 when the property showed net
earnings of $65,136. This is however, a decrease from the income reported for
the year ended December 31, 1996 which totaled $237,025. Once again, this
property maintained 100% occupancy during 1998 and is expected to do the same in
the coming year. Regular increases in rental income are expected due to rental
escalation clauses in several of the tenants' leases. In accordance with the
joint venture agreement, one-half of the income is allocated to each joint
venturer. During 1998, the Joint Venture made distributions to its owners
totaling $500,000.
For the year ended December 31, 1998, the tax basis loss was $1,350,483
or $8.32 per limited partnership unit compared to a tax loss of $923,925 or
$5.69 per unit for the year ended December 31, 1997 and a tax loss of $600,196
or $3.70 per limited partnership unit for the year ended December 31, 1996. The
Partnership agreement provides for the taxable income or losses to be allocated
97% to the Limited Partners and 3% to the General Partners, and in accordance
with this and the Internal Revenue Code, the loss for the years ended December
31, 1998, 1997 and 1996 were all allocated in this fashion.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
The Partnership does not have investments in instruments which are
subject to market risk (e.g., derivatives, options or other interest sensitive
instruments).
PART III
--------
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ------- --------------------------------------------
Listed under Item 14 of the report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------- ---------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------
None.
10
<PAGE>
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
- ------------------------------------------------------------
The Partnership, as an entity, does not have any directors or officers.
The Individual General Partner of the Partnership is Joseph M. Jayson. The
directors and executive officers of Realmark Properties, Inc., the Partnership's
Corporate General Partner, as of March 1, 1999, are listed below. Each director
is subject to election on an annual basis.
<TABLE>
<CAPTION>
Title of All Positions Year First
Name Held With the Company Elected Director
- ---- --------------------- ----------------
<S> <C>
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice President and Director 1979
Michael J. Colmerauer Secretary N/A
</TABLE>
Joseph M. Jayson, President and Director of Realmark Properties, Inc.
and Judith P. Jayson, Vice President and Director of Realmark Properties, Inc.,
are married to each other.
The Director and Executive Officers of the Corporate General Partner
and their principal occupations and affiliations during the last five years or
more are as follows:
Joseph M. Jayson, age 60, is Chairman, Director and sole stockholder of
J.M. Jayson & Company, Inc. and certain of its affiliated companies: U.S.
Apartments LLC, Westmoreland Capital Corporation, Oilmark Corporation and U.S.
Energy Development Corporation. In addition, Mr. Jayson is Chairman and Director
of Realmark Corporation and President and Director of Realmark Properties, Inc.,
wholly owned subsidiaries of J.M. Jayson & Company, Inc. and co-general partner
of Realmark Properties Investors Limited Partnership, Realmark Properties
Investors Limited Partnership-II, Realmark Properties Investors Limited
Partnership-III, Realmark Properties Investors Limited Partnership-IV, Realmark
Properties Investors Limited Partnership-V, Realmark Properties Investors
Limited Partnership-VI A and Realmark Properties Investors Limited
Partnership-VI B. Mr. Jayson is a member of the Investment Advisory Board of the
Corporate General Partner. Mr. Jayson has been engaged in real estate business
for the last 36 years and is a Certified Property Manager as designated by the
Institute of Real Estate Management ("I.R.E.M."). Mr. Jayson received a B.S.
Degree in Education in 1961 from Indiana University, a Masters Degree from the
University of Buffalo in 1963, and has served on the Educational Faculty of the
Institute of Real Estate Management. Mr. Jayson has for the last 36 years been
engaged in various aspects of real estate brokerage and investment. He brokered
residential properties from 1962 to 1964, commercial and investment properties
from 1964 to 1967, and in 1967, left commercial real estate to form his own
investment firm. Since that time, Mr. Jayson and J.M. Jayson & Company, Inc.
have formed or participated in various ways in forming over 30 real estate
related limited partnerships. For the past seventeen years, Mr. Jayson and J.M.
Jayson & Company, Inc. and an affiliate have also engaged in developmental
drilling for gas and oil.
11
<PAGE>
Judith P. Jayson, age 59, is currently Vice-President and Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 36 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York high school
system. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration. Mrs. Jayson is the wife of
Joseph M. Jayson, the Individual General Partner.
Michael J. Colmerauer, 40, is Secretary and in-house legal counsel for
J.M. Jayson & Company, Inc., Realmark Corporation, Realmark Properties, Inc. and
other companies affiliated with the General Partners. He received a Bachelor's
Degree (BA) from Canisius College in 1980 and a Juris Doctors (J.D.) from the
University of Tulsa in 1983. Mr. Colmerauer is a member of the American and Erie
County Bar Association and has been employed by the Jayson group of companies
for the last 15 years.
ITEM 11: EXECUTIVE COMPENSATION.
- --------------------------------
No direct remuneration was paid or payable by the Partnership to
directors and officers of the Corporate General Partner for the years ended
December 31, 1998, 1997 or 1996 nor was any direct remuneration paid or payable
by the Partnership to directors or officers of Realmark Properties, Inc., the
Corporate General Partner and sponsor, for the years ended December 31, 1998,
1997 or 1996.
The following table sets forth for the years ended December 31, 1998,
1997 and 1996 the compensation paid by the Partnership, directly or indirectly,
to affiliates of the General Partners:
<TABLE>
<CAPTION>
Entity Receiving Type of
Compensation Compensation 1998 1997 1996
------------ ------------ ---- ---- ----
<S> <C> <C> <C>
U.S. Capital, Inc. Loan placement fees $ - $102,878 $ -
=============== =============== ===============
Realmark Properties, Inc. Interest charged on accounts
(the Corporate General Partner) payable - affiliates $ 39,510 $ 11,861 $ -
=============== =============== ===============
Reimbursement for allocated Partnership
administration expenses:
Investor Services Fees $ 11,360 $ 12,060 $ 8,408
Brokerage 25,815 25,882 10,872
Portfolio Management
& Accounting Fees 103,078 150,436 149,231
Partnership Management Fee - - 18,000
Realmark Corporation Property Management Fees 200,937 188,714 175,892
Computer Service Fees 11,460 11,460 11,460
--------------- --------------- ---------------
Total $352,650 $ 388,552 $ 373,863
=============== =============== ===============
</TABLE>
See Notes 1 and 6 to the financial statements for descriptions of the
items detailed above.
12
<PAGE>
The Corporate General Partner is entitled to a continuing Partnership
Management Fee equal to 7% of net cash flow (as defined in the Partnership
Agreement), of which 2% is subordinated to the receipt by the Limited Partners
of a non-cumulative annual cash return equal to 7% of the average of their
adjusted Capital Contributions (as defined in the Partnership Agreement). The
Corporate General Partner is paid its 5% Partnership Management Fee annually as
cash flow allows. The 2% subordinated fee will not be paid or accrued until such
time as the Limited Partners have received their 7% return and payment of the
fee becomes probable. The General Partners are also entitled to 3% of
Distributable Cash (as defined in the Partnership Agreement) and to certain
expense reimbursements with respect to Partnership operations.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -----------------------------------------------------------------------
To the Registrant's knowledge, no person owns of record or beneficially
more than five percent (5%) of the units of Limited Partnership Interest of the
Partnership. The General Partners, as of December 31, 1998, owned no units of
Limited Partnership Interest; however 30 units are held by an affiliate of the
General Partners.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
No transactions have occurred between the Partnership and those in the
management of Realmark Properties, Inc. All transactions between the Partnership
and Realmark Properties, Inc. (the Corporate General Partner) and any other
affiliated organization are described in Item 11 of this report.
13
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a) Financial Statements and Schedules.
----------------------------------
FINANCIAL STATEMENTS PAGE
-------------------- ----
<S> <C>
(i) Independent Auditors' Report 15
(ii) Balance Sheets at December 31, 1998 and 1997 16
(iii) Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 17
(iv) Statements of Partners' Capital (Deficit) for the
years ended December 31, 1998, 1997 and 1996 18
(v) Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 19
(vi) Notes to Financial Statements 20 - 35
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated Depreciation 36 - 37
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
(b) Reports on Form 8-K.
-------------------
(i) None
(c) Exhibits
--------
4. Instruments defining the rights of security holders, including
indentures.
(a) Certificate of Limited Partners filed with the
Registration Statement of the Registrant Form S-11,
filed November 10, 1987, and subsequently amended
incorporated herein by reference.
(b) Partnership Agreement included with the Registration
Statement of the Registrant as filed and amended to
date incorporated herein by reference.
10. Material contracts.
------------------
(a) Property Management Agreement with Realmark
Corporation included with the Registration Statement
of the Registrant as filed and amended to date
incorporated herein by reference.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership - VI A
We have audited the accompanying balance sheets of Realmark Property Investors
Limited Partnership VI A as of December 31, 1998 and 1997, and the related
statements of operations, partners' capital (deficit), and cash flows for each
of the three years in the period ended December 31, 1998. Our audits also
included the financial statement schedule listed in the index at Item 14. These
financial statements and financial statement schedule are the responsibility of
the General Partners. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership-VI A at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
The accompanying financial statements and financial statement schedule have been
prepared assuming that the Partnership will continue as a going concern. As
discussed in Note 11, the Partnership's recurring losses from operations,
operating cash flow deficiencies and mortgages payable due in 1999 raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 11. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Buffalo, New York
April 12, 1999
15
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
BALANCE SHEETS
--------------
DECEMBER 31, 1998 AND 1997
--------------------------
Assets 1998 1997
- ------ ---- ----
<S> <C> <C>
Property, at cost (including assets held for sale, Note 15):
Land and land improvements $ 2,159,398 $ 2,159,398
Buildings 17,307,636 17,197,934
Furniture and fixtures 1,103,695 1,101,500
------------------ ------------------
20,570,729 20,458,832
Less accumulated depreciation 6,555,171 5,831,582
------------------ ------------------
Property, net 14,015,558 14,627,250
Investment in joint ventures, including unamortized excess purchase price of
$174,263 and $266,917 at December 31,
1998 and 1997, respectively 88,197 449,640
Cash 87,551 -
Accounts receivable 4,203 31,085
Escrow deposits 414,762 570,297
Mortgage costs, net of accumulated amortization of $272,395
and $141,547 at December 31, 1998 and 1997, respectively 430,404 561,252
Other assets 65,374 45,338
------------------ ------------------
Total Assets $ 15,106,049 $ 16,284,862
================== ==================
Liabilities and Partners' Capital
- ---------------------------------
Liabilities:
Cash overdraft $ - $ 229,302
Mortgages payable 11,392,501 11,463,892
Accounts payable and accrued expenses 637,504 792,398
Interest payable 122,616 84,918
Accounts payable - affiliates 517,337 35,529
Security deposits and prepaid rents 210,517 238,118
------------------ ------------------
Total Liabilities 12,880,475 12,844,157
------------------ ------------------
Commitments (Note 9)
Partners' Capital (Deficit):
General Partners (335,011) (298,557)
Limited Partners 2,560,585 3,739,262
------------------ ------------------
Total Partners' Capital 2,225,574 3,440,705
------------------ ------------------
Total Liabilities and Partners' Capital $ 15,106,049 $ 16,284,862
================== ==================
</TABLE>
See notes to financial statements
16
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
1998 1997 1996
----------------- ----------------- ------------------
<S> <C> <C> <C>
Income:
Rental $3,873,839 $3,538,666 $3,699,350
Gain from insurance proceeds
on flood loss - 84,002 -
Interest and other income 337,083 369,462 339,936
----------------- ----------------- ------------------
Total Income 4,210,922 3,992,130 4,039,286
----------------- ----------------- ------------------
Expenses:
Property operations 2,597,419 2,569,545 2,295,937
Interest:
Due to affiliates 39,510 11,861 -
Other 1,043,047 1,023,689 933,693
Depreciation and amortization 855,691 739,721 863,577
Administrative:
Due to affiliates 352,650 388,552 373,863
Other 426,293 475,769 393,218
----------------- ----------------- ------------------
Total Expenses 5,314,610 5,209,137 4,860,288
----------------- ----------------- ------------------
Loss before allocated (loss) income
from joint ventures (1,103,688) (1,217,007) (821,002)
Allocated (loss) income from joint ventures (111,443) 95,051 (165,190)
----------------- ----------------- ------------------
Net loss $(1,215,131) $(1,121,956) $ (986,192)
================= ================= ==================
Net loss per limited partnership unit $ (7.49) $ (6.92) $ (6.08)
================= ================= ==================
Distributions per limited partnership unit $ - $ - $ -
================= ================= ==================
Weighted average number of limited
partnership units outstanding 157,378 157,378 157,378
================= ================= ==================
</TABLE>
See notes to financial statements
17
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
-----------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
General
Partners Limited Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C> <C>
Balance, January 1, 1996 $(235,312) 157,378 $ 5,784,165
Net loss (29,586) - (956,606)
---------------- ------------- -----------------
Balance, December 31, 1996 (264,898) 157,378 4,827,559
Net loss (33,659) - (1,088,297)
---------------- ------------- -----------------
Balance, December 31, 1997 (298,557) 157,378 3,739,262
Net loss (36,454) - (1,178,677)
---------------- ------------- -----------------
Balance, December 31, 1998 $(335,011) 157,378 $ 2,560,585
================ ============= =================
</TABLE>
See notes to financial statements
18
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
1998 1997 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,215,131) $(1,121,956) $ (986,192)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Gain from insurance proceeds - (84,002) -
Depreciation and amortization 855,691 739,721 863,577
Allocated loss (income) from joint ventures 111,443 (95,051) 165,190
Changes in operating assets and liabilities:
Accounts receivable 26,882 19,252 7,586
Other assets (21,300) 3,566 (1,709)
Accounts payable and accrued expenses (154,894) 252,257 (64,043)
Interest payable 37,698 7,182 -
Security deposits and prepaid rents (27,601) 33,766 31,538
----------------- ---------------- ----------------
Net cash (used in) provided by operating activities (387,212) (245,265) 15,947
----------------- ---------------- ----------------
Cash flows from investing activities:
Escrow deposits 155,535 (518,768) (14,844)
Accounts receivable-affiliates - - 349,027
Accounts payable - affiliates 481,808 35,529 -
Distribution from joint venture 250,000 - -
Acquisition of rental property (111,887) (913,399) (209,831)
Insurance proceeds on flood loss - 287,571 -
----------------- ---------------- ----------------
Net cash provided by (used in) investing activities 775,456 (1,109,067) 124,352
----------------- ---------------- ----------------
Cash flows from financing activities:
Cash overdraft (229,302) 48,228 6,155
Mortgage costs - (584,627) (47,025)
Proceeds from mortgages - 9,610,699 -
Principal payments upon refinancings - (7,641,618)
Principal payments on debt (71,391) (78,350) (99,429)
----------------- ---------------- ----------------
Net cash (used in) provided by financing activities (300,693) 1,354,332 (140,299)
----------------- ---------------- ----------------
Net increase in cash 87,551 - -
Cash - beginning of year - - -
----------------- ---------------- ----------------
Cash - end of year $ 87,551 $ - $ -
================= ================ ================
</TABLE>
See notes to financial statements
19
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
1. FORMATION AND OPERATION OF PARTNERSHIP:
--------------------------------------
Realmark Property Investors Limited Partnership-VI A (the
"Partnership"), a Delaware Limited Partnership, was formed on September 21,
1987, to invest in a diversified portfolio of income-producing real estate
investments.
In November 1987, the Partnership commenced the public offering of
units of limited partnership interest. Other than matters relating to the
organization, it had no business activities and, accordingly, had not incurred
any expenses or earned any income until the first interim closing (minimum
closing) of the offering, which occurred on February 12, 1988. All items of
income and expense arose subsequent to this date. As of December 31, 1998,
157,378 units of limited partnership interest were sold and outstanding,
including 30 units held by an affiliate of the General Partners. The offering
terminated on November 10, 1988 with gross offering proceeds of $15,737,790. The
General Partners are Realmark Properties, Inc., the Corporate General Partner
and Joseph M. Jayson, the Individual General Partner. Joseph M. Jayson is the
sole stockholder of J.M. Jayson & Company, Inc. Realmark Properties, Inc.
is a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
Under the partnership agreement, the General Partners and their
affiliates can receive compensation for services rendered and reimbursement for
expenses incurred on behalf of the Partnership (see Note 6).
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities, exclusive of
any sale or refinancing activities, are to be allocated 97% to the Limited
Partners and 3% to the General Partners.
Net income or loss and proceeds arising from a sale or refinancing of
property shall be distributed: first, to the Limited Partners an amount
equivalent to a 7% return on the average of their adjusted capital
contributions; second, to the Limited Partners an amount equal to the return of
their capital investment; third, to the Corporate General Partner a 3% property
disposition fee provided, however, that such fees shall be reduced, but not
below zero, by the amounts necessary to pay to Limited Partners whose
subscriptions were accepted by January 31, 1988, an additional cumulative annual
return (not compounded) equal to 2% of their Average Adjusted Capital
Contributions, and to Limited Partners whose subscriptions were accepted between
February 1, 1988 and March 31, 1988, an additional cumulative annual return (not
compounded) equal to 1% of their Average Adjusted Capital Contributions
commencing with the first fiscal quarter following the termination of the
offering of units; fourth, to the Limited Partners, an amount equal to their
capital contributions, then an amount equal to an additional 5% of the average
of their adjusted capital contributions; fifth, to all Partners, an amount equal
to their respective positive capital balances; and finally, in the ratio of 87%
to the Limited Partners and 13% to the General Partners.
20
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
(a) 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.
(b) Cash
----
For purposes of reporting cash flows, cash includes the following
items: cash on hand; cash in checking; and money market savings.
(c) Property and Depreciation:
-------------------------
Expenditures for maintenance and repairs are expensed as incurred;
major renewals and betterments are capitalized. Generally, buildings and
improvements are depreciated over 25 years, and furniture and fixtures are
depreciated over 5 years. Depreciation is provided using the straight-line
method over the estimated useful lives of the respective assets and totaled
$723,579, $618,347 and $783,559 for the years ended December 31, 1998, 1997 and
1996, respectively. The Modified Accelerated Cost Recovery System is used to
calculate depreciation expense for tax purposes.
(d) Unconsolidated Joint Ventures:
-----------------------------
The Partnership's interest in Carriage House of Englewood Joint Venture
and Research Triangle Joint Venture, unconsolidated joint ventures, is accounted
for on the equity method. These joint ventures are not consolidated in the
Partnership's financial statements because the Partnership is not the majority
owner.
(e) Rental Income
-------------
Leases for residential rental properties have terms of one year or
less. Commercial leases have terms ranging from one to five years. Rental income
is recognized on the straight line method over the term of the lease.
(f) Rents Receivable
----------------
Due to the nature of these accounts, residential rents receivable are
fully reserved as of December 31, 1998 and 1997.
(g) Mortgage Costs
--------------
Mortgage costs consist of fees for obtaining financing and are being
amortized over the lives of the respective mortgages.
21
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Con't.):
--------------------------------------------------
(h) Comprehensive Income
--------------------
The Partnership has adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income. SFAS 130 establishes standards
for reporting and display of comprehensive income and its components in a full
set of general purpose financial statements. Comprehensive income is defined as
"the change in equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources". Other than net
income (loss), the Partnership has no other sources of comprehensive income.
(i) Segment Information
-------------------
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the way public business enterprises report
information about operating segments in annual financial statements. The
Partnership's only operating segment is the ownership and operation of
income-producing real property for the benefit of its limited partners.
3. ACQUISITION OF RENTAL PROPERTY:
------------------------------
In February 1989, the Partnership acquired an 80 unit apartment complex
(Beaver Creek) located in Monaca, Pennsylvania for a purchase price of
$1,879,943, which includes $347,404 in acquisition fees.
In June 1989, the Partnership acquired a 240 unit apartment complex
(Countrybrook Estates, formerly West Creeke) located in Louisville, Kentucky for
a purchase price of $5,670,984, which includes $334,285 in acquisition fees. In
September 1992, the Partnership abandoned the sewage treatment station located
on the grounds of the apartment complex which generated a net loss on disposal
for financial statement purposes of $74,671.
Inducon Joint Venture-Columbia (the "Venture") was formed pursuant to
an agreement dated March 16, 1988 between the Partnership and Trion Development
Group, Inc., a New York corporation (the "Corporation"). The primary purpose of
the Venture was to acquire or lease land and construct office/warehouse
buildings as income-producing property. The Partnership contributed initial
capital to the Venture of $1,064,950 which was used to fund the initial
development costs. On May 19, 1989 the Partnership purchased the Corporation's
interest in the Inducon Joint Venture-Columbia for $130,000. The office complex,
located in Columbia, South Carolina, consists of three buildings. The first
building was put into service in July 1989 and has a total cost of $1,891,995
which includes $311,358 in acquisition fees. The second and third buildings were
put into service in December 1991 and have a total cost of $2,778,996 which
includes $48,796 of capitalized interest.
In March 1990, the Partnership acquired a 130 unit apartment complex
(Stonegate) located in Mobile, Alabama for a purchase price of $4,145,367, which
includes $225,620 in acquisition fees.
In March 1991, the Partnership acquired a 230 unit apartment complex
(The Commons on Lewis Avenue, formerly Williamsburg Commons) located in Tulsa,
Oklahoma for a purchase price of $2,965,803, which includes $269,721 in
acquisition fees.
22
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
3. ACQUISITION OF RENTAL PROPERTY (Con't.):
---------------------------------------
In September 1991, the Partnership entered into an agreement and formed
a joint venture with Realmark Property Investors Limited Partnerships II and VI
B (RPILP-II and RPILP-VI B), for the purpose of operating the 250 unit Foxhunt
Apartment complex located in Kettering, Ohio and owned by RPILP II. In April
1992, the Partnership's capital contribution of $389,935 plus interest was
returned by RPILP II and the Partnership's interest in the joint venture ended.
In May 1992, the Partnership entered into an agreement to form a joint
venture with Realmark Property Investors Limited Partnership (RPILP) for the
purpose of operating the 144 unit Carriage House of Englewood, formerly Gold Key
Apartments, an apartment complex located in Dayton, Ohio and owned by RPILP.
In August 1992, the Partnership entered into a joint venture agreement
for the purpose of operating Research Triangle Industrial Park West, a 150,000
square foot office/warehouse facility located in Research Triangle Park, North
Carolina. The original joint venture agreement to develop and operate the
property, created between RPILP-II and Adaron Group (Adaron), was dissolved, and
the Partnership acquired all rights previously held by Adaron. The agreement
provides for 50% of any income or loss to be allocated to both the Partnership
and RPILP II.
4. MORTGAGES AND NOTES PAYABLE:
---------------------------
Countrybrook Estates (formerly West Creeke)
------------------------------------------
A mortgage with a balance of $3,415,000 at December 31, 1998 and 1997
due July 1999 with monthly payments of interest only at a rate of 3.50% above
the one month LIBOR rate (9.0625% at December 31, 1998).
Inducon-Columbia
----------------
The outstanding mortgage payable balance at December 31, 1998 and 1997
was $2,168,462 and $2,195,742, respectively, with monthly payments of $16,787
including interest at 7.867%. The maturity date of the mortgage is October 2022.
Stonegate
---------
The outstanding mortgage payable at December 31, 1998 and 1997 was
$2,621,004 and $2,638,649, respectively, due July 2027 with monthly payments of
$20,207 including interest at 8.43%.
Beaver Creek
------------
The outstanding mortgage payable at December 31, 1998 and 1997 was
$1,337,685 and $1,348,129, respectively, due July 2027 with monthly payments of
$10,137 including interest of 8.23%.
23
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
4. MORTGAGES AND NOTES PAYABLE (Con't.):
------------------------------------
The Commons on Lewis Avenue
---------------------------
A mortgage with a balance of $1,850,350 and $1,866,372 at December 31,
1998 and 1997, respectively, provides for monthly principal and interest
payments calculated based upon an interest rate ranging from 8-12% annually (11%
at December 31, 1998). The mortgage is due April 1, 2001.
The Partnership is currently not in compliance with certain debt
covenants related to the above mortgages.
The aggregate maturities of the mortgages payable for each of the next
five years and thereafter, assuming principal payments will not be accelerated,
are as follows:
Year Amount
1999 $ 3,519,794
2000 95,033
2001 1,869,001
2002 84,789
2003 91,941
Thereafter 5,731,943
-----------------
TOTAL $11,392,501
=================
The mortgages are secured by the properties to which they relate.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS:
-----------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair value of cash,
accounts receivable, accounts payable - affiliates, accounts payable, accrued
expenses and deposit liabilities approximate the carrying value due to the
short-term nature of these instruments.
Management has estimated the following fair values of its mortgages
payable, based on currently available rates for mortgages of similar terms:
Fair Value Carrying Value
---------- --------------
Inducon Columbia $ 2,200,000 $ 2,168,000
Beaver Creek $ 1,400,000 $ 1,338,000
Stonegate $ 2,700,000 $ 2,621,000
The Commons $ 2,000,000 $ 1,850,000
The fair value of the mortgage payable on Countrybrook approximates its
carrying value of $3,415,000 because the mortgage has a variable interest rate.
Refer to Note 4 for a description of the terms of the mortgages
payable.
24
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
6. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partner. The management
agreement provides for 5% of gross monthly rental receipts of the complexes to
be paid as fees for administering the operations of the properties. These fees
totaled $200,937, $188,714 and $175,892 for the years ended December 31, 1998,
1997 and 1996 respectively.
According to the terms of the partnership agreement, the General
Partner is also entitled to receive a partnership management fee equal to 7% of
net cash flow (as defined in the partnership agreement), 2% of which is
subordinated to the limited partners having received an annual cash return equal
to 7% of their adjusted capital contributions. The Corporate General Partner is
paid its 5% partnership management fee annually as cash flow allows. As such, no
fees were charged for the years ended December 31, 1998 and 1997. This fee
totaled $18,000 for the year ended December 31, 1996.
The General Partners are also allowed to collect a property disposition
fee upon the sale of acquired properties. This fee is not to exceed the lesser
of 50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties or 3% of the sales price.
The property disposition fee is subordinate to the Limited Partners receipt of a
cumulative annual return (not compounded) equal to 7% of their average adjusted
capital contributions and to repayment to the Limited Partners of an amount
equal to their original capital contributions. No properties have been sold as
of December 31, 1998 and accordingly, there have been no property disposition
fees paid or earned by the General Partners.
Pursuant to the terms of the partnership agreement, the Corporate
General Partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the corporate general partner and its affiliates in
connection with the administration of the Partnership and acquisition of
properties. These charges were for the Partnership's allocated share of costs
and expenses such as payroll, travel and communication costs related to
partnership accounting, partner communication and relations, and acquisitions of
properties and are included in property operations. Additionally, Partnership
accounting and portfolio management fees, investor services fees and brokerage
fees are allocated based on total assets, number of partners and number of
units, respectively. These costs amounted to $140,253, $188,378 and $168,511 for
the years ended December 31, 1998, 1997 and 1996, respectively.
Accounts payable - affiliates, which are payable on demand, amounted to
$517,337 and $35,529 as of December 31, 1998 and 1997, respectively.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partners. The fee is based upon the number of apartment
units and totaled $11,460 for the years ended December 31, 1998, 1997 and 1996
respectively.
Loan placement fees are paid or accrued to an affiliate of the General
Partners. The fee is calculated as 1% of the mortgage loan amounts. These fees
totaled $102,878 for the year ended December 31, 1997. No such fees were paid
during the years ended December 31, 1998 or 1996.
25
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
7. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of
the partnership is to be included in the tax returns of the individual partners.
The tax returns of the Partnership are subject to examination by the
Federal and state taxing authorities. Under Federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded varying
interpretations and, accordingly, reported Partnership amounts could be changed
as a result of any such examination.
The reconciliation of net loss for the years ended December 31, 1998,
1997 and 1996 as reported in the statement of operations, and as would be
reported for tax purposes, is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------ ---------------- ------------------
<S> <C> <C> <C>
Net loss -
Statement of operations $ (1,215,131) $(1,121,956) $(986,192)
Add to (deduct from):
Difference in depreciation (19,290) (35,280) 109,457
Other nondeductible expenses 35,583 151,955 120,405
Tax basis adjustment - joint ventures (151,645) 81,356 156,134
------------------ ---------------- ------------------
Net loss - tax return purposes $(1,350,483) $ (923,925) $ (600,196)
================== ================ ==================
The reconciliation of Partners' Capital as of December 31, 1998, 1997
and 1996, as reported in the balance sheet and as reported for tax return
purposes, is as follows:
1998 1997 1996
------------------ ------------------ ------------------
Partners' Capital - Balance Sheet $2,225,574 $ 3,440,705 $4,562,661
Add to (deduct from):
Accumulated difference in depreciation 200,993 220,283 255,563
Syndication fees 2,312,863 2,312,863 2,312,863
Other nondeductible expenses 578,745 543,162 391,207
Tax basis adjustment-Joint Ventures 800,244 951,889 870,533
------------------ ------------------ ------------------
Partners' Capital - tax return purposes $6,118,419 $ 7,468,902 $8,392,827
================== ================== ==================
</TABLE>
26
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
8. INVESTMENT IN JOINT VENTURES:
----------------------------
On September 27, 1991, the Partnership entered into an agreement and
formed a Joint Venture with Realmark Property Investors Limited Partnership-II
(RPILP-II), and Realmark Property Investors Limited Partnership-VI B (RPILP-VI
B). The Joint Venture was formed for the purpose of operating an apartment
complex (Foxhunt Apartments located in Dayton, Ohio) owned by RPILP-II. Under
the terms of the original joint venture agreement, the partnership contributed
$390,000 and RPILP-VI B contributed $1,041,568 to buy out the wraparound
promissory note on the property. RPILP-II contributed the property net of the
first mortgage.
On April 1, 1992, the Partnership's interest in the joint venture was
bought out by RPILP-II for $389,935 plus interest at 15%. The joint venture
agreement had provided that any income, loss, gain, cash flow and sale proceeds
be allocated 63.14% to RPILP-II, 10.04% to the Partnership and 26.82% to RPILP-
VI B.
On May 5, 1992, the Partnership entered into an agreement to form a
joint venture with Realmark Property Investors Limited Partnership (RPILP) for
the purpose of operating Carriage House of Englewood (formerly the Gold Key
Apartments), an apartment complex located in Englewood, Ohio and owned by RPILP.
Under the terms of the original agreement, the Partnership contributed $497,912
and RPILP contributed the property net of the outstanding mortgage. On March 1,
1993, the Partnership contributed an additional $125,239 to the joint venture.
The original joint venture agreement provided that any income, loss,
gain, cash flow, or sale proceeds be allocated 68% to RPILP and 32% to the
Partnership. An amended joint venture agreement provides that any income, loss,
gain, cash flow, or sale proceeds be allocated 40% to the Partnership and 60% to
RPILP.
The Partnership accounts for its interest on the equity method. The
equity ownership was determined based upon the cash paid into the joint venture
by the Partnership as a percentage of the General Partner's estimate of the fair
market value of the apartment complex and other assets at the date of inception.
In July 1996, the Partnership entered into a plan to dispose of the
property of the joint venture with a carrying amount of $1,265,469 and
$1,252,779 at December 31, 1998 and 1997, respectively. The Joint Venture
incurred losses of approximately $266,000, $254,000 and $299,000 for the years
ended December 31, 1998, 1997 and 1996, respectively. Management has determined
that a sale of the property is in the best interests of the investors.
Management continues to actively market the property with a sale anticipated in
1999.
27
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
8. INVESTMENT IN JOINT VENTURES (Con't.):
-------------------------------------
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of (the
"Statement") requires that assets to be disposed of be recorded at the lower of
carrying value or fair value, less costs to sell. The Statement also requires
that such assets not be depreciated during the disposal period, as the assets
will be recovered through sale rather than through operations. In accordance
with this Statement, the long-lived assets of the Joint Venture, classified as
held for sale on the balance sheet, are recorded at the carrying amount which is
the lower of carrying value or fair value less costs to sell, and have not been
depreciated during the disposal period. Fair value is determined based on
estimated future cash flows. Depreciation expense, not recorded during the
disposal period, for the years ended December 31, 1998, 1997 and 1996 totaled
approximately $120,000, $122,000 and $44,000, respectively. Management believes
that the property's fair value has not changed significantly since being
classified as held for sale.
The Carriage House of Englewood's mortgage is insured by the Department
of Housing and Urban Development (HUD). The mortgage is subject to a HUD
regulatory agreement which places restrictions on the operations of the joint
venture. As of December 31, 1998, the joint venture was not in compliance with
several of these regulations. The consequences of the non-compliance with these
restrictions could include HUD-imposed sanctions such as fines or interest
charges. Additionally, the violation of the regulatory agreement could be deemed
an event of default by the mortgagor, and HUD could possibly take over as holder
of the mortgage.
Given the uncertainty surrounding the outcome of the noncompliance, the
joint venture's recurring losses from operations, cash flow difficulties, and
partners' deficit, substantial doubt exists about the joint venture's ability to
continue as a going concern.
28
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
8. INVESTMENT IN JOINT VENTURES (Con't.):
------------------------------------
A summary of the assets, liabilities and partners' capital (deficiency)
of the Carriage House of Englewood Joint Venture as of December 31, 1998 and
1997 and the results of its operations for the years ended December 31, 1998,
1997 and 1996 is as follows:
<TABLE>
<CAPTION>
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
-----------------------------------------
BALANCE SHEET
-------------
December 31, 1998 and 1997
--------------------------
Assets 1998 1997
- ------ ----------------- -----------------
<S> <C> <C>
Land and land improvements $ 367,500 $ 367,500
Building 2,487,823 2,475,133
Building equipment 164,141 164,141
----------------- -----------------
3,019,464 3,006,774
Less accumulated depreciation 1,753,995 1,753,995
----------------- -----------------
Property, net 1,265,469 1,252,779
Cash 12,112 -
Cash - security deposits 14,604 30,154
Escrow 65,464 155,194
Mortgage costs, net of accumulated amortization
of $38,278 in 1998 and $32,536 in 1997 162,673 168,415
Other assets 16,737 15,110
----------------- -----------------
Total Assets $ 1,537,059 $ 1,621,652
================= =================
Liabilities and Partners' Deficit
- ---------------------------------
Liabilities:
Cash overdraft $ - $ 286,850
Mortgage payable 2,890,315 2,914,486
Accounts payable and accrued expenses 205,235 211,404
Accounts payable - affiliates 555,404 12,452
Accrued interest 21,677 65,539
Security deposits and prepaid rent 42,470 42,969
----------------- -----------------
Total Liabilities 3,715,101 3,533,700
----------------- -----------------
Partners' Capital (Deficit):
The Partnership 66,200 172,598
RPILP (2,244,242) (2,084,646)
----------------- -----------------
Total Partners' Deficit (2,178,042) (1,912,048)
----------------- -----------------
Total Liabilities and Partners' Deficit $ 1,537,059 $ 1,621,652
================= =================
</TABLE>
29
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
-----------------------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Income:
Rental $ 581,864 $ 583,445 $ 640,124
Other income 41,465 42,620 44,915
-------------- -------------- --------------
Total Income 623,329 626,065 685,039
-------------- -------------- --------------
Expenses:
Property operations 422,898 436,621 455,678
Interest:
Paid to affiliates 55,750 31,966 -
Other 261,029 262,807 264,455
Depreciation and amortization 5,742 5,742 76,031
Administrative:
Paid to affiliates 48,717 55,506 55,889
Other 95,189 87,379 132,078
-------------- -------------- --------------
Total Expenses 889,325 880,021 984,131
-------------- -------------- --------------
Net loss $ (265,996) $ (253,956) $(299,092)
============== ============== ==============
Allocation of net loss:
The Partnership $ (106,398) $ (101,583) $(119,638)
RPILP (159,598) (152,373) (179,454)
-------------- -------------- --------------
Total $ (265,996) $ (253,956) $(299,092)
============== ============== ==============
</TABLE>
A reconciliation of the Partnership's investments in the Carriage House of
Englewood Joint Venture is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Investment in joint venture at beginning of year $256,052 $362,134 $486,272
Amortization of excess purchase price (83,454) (4,499) (4,500)
Allocation of net loss (106,398) (101,583) (119,638)
------------- ------------- -------------
Investment in joint venture at end of year $ 66,200 $256,052 $362,134
============= ============= =============
</TABLE>
30
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
8. INVESTMENT IN JOINT VENTURES (Con't):
-----------------------------------
The excess purchase price included in the investment in Carriage House
of Englewood Joint Venture at December 31, 1997 was fully amortized during the
year ended December 31, 1998 as the asset was determined to be impaired based
upon historical losses being allocated to the Partnership.
On August 20, 1992, the Partnership entered into a joint venture
agreement for the purpose of operating Research Triangle Industrial Park West,
an office/warehouse facility located in Research Triangle Park, North Carolina.
The original joint venture agreement to develop and operate the property,
created between Realmark Property Investors Limited Partnership-II (RPILP-II)
and Adaron Group (Adaron), was dissolved, and the Partnership acquired Adaron's
investment in the joint venture. In the transaction, the Partnership paid
$575,459 to Adaron and acquired the equity and all rights previously held by
Adaron. The agreement provides for 50% of any income or loss to be allocated to
both the Partnership and RPILP-II.
A summary of the assets, liabilities and equity of the Joint Venture as
of December 31, 1998 and 1997 and the results of its operations for the years
ended December 31, 1998, 1997 and 1996 follows.
31
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
RESEARCH TRIANGLE JOINT VENTURE
-------------------------------
BALANCE SHEET
-------------
December 31, 1998 and 1997
--------------------------
Assets 1998 1997
- ------ ---------------- ----------------
<S> <C> <C>
Land $ 338,112 $ 338,112
Land improvements 799,430 799,430
Buildings 4,130,637 4,130,637
---------------- ----------------
5,268,179 5,268,179
Less accumulated depreciation 3,590,813 3,469,458
---------------- ----------------
Property, net 1,677,366 1,798,721
Cash 688,674 1,127,231
Accounts receivable - affiliates 29,925 20,603
Accounts receivable - other - 35,731
Escrow deposits 559,679 330,058
Other assets 257,127 263,149
---------------- ----------------
Total Assets $3,212,771 $3,575,493
================ ================
Liabilities and Partners' Deficit
- ---------------------------------
Liabilities:
Mortgage payable $5,504,596 $5,558,723
Accounts payable and accrued expenses 106,256 90,069
---------------- ----------------
Total Liabilities 5,610,852 5,648,792
---------------- ----------------
Partners' Deficit:
The Partnership (1,298,455) (1,136,064)
RPILP-II (1,099,626) (937,235)
---------------- ----------------
Total Partners' Deficit (2,398,081) (2,073,299)
---------------- ----------------
Total Liabilities and Partners' Deficit $3,212,771 $3,575,493
================ ================
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
RESEARCH TRIANGLE JOINT VENTURE
-------------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
1998 1997 1996
--------------- ------------- ---------------
<S> <C> <C> <C>
Income:
Rental $ 962,352 $ 886,634 $ 1,029,367
Other 6,985 5,496 763
--------------- ------------- ---------------
Total Income 969,337 892,130 1,030,130
--------------- ------------- ---------------
Expenses:
Property operations 114,857 101,896 112,982
Interest 447,457 466,651 436,685
Depreciation and amortization 138,263 170,218 172,099
Administrative:
Paid to affiliates 63,652 60,177 58,987
Other 29,890 28,052 12,352
--------------- ------------- ---------------
Total Expenses 794,119 826,994 793,105
--------------- ------------- ---------------
Net income (loss) $ 175,218 $ 65,136 $ 237,025
=============== ============= ===============
Allocation of net income (loss):
The Partnership $ 87,609 $ 32,568 $ 118,513
RPILP-II 87,609 32,568 118,512
--------------- ------------- ---------------
Total $ 175,218 $ 65,136 $ 237,025
=============== ============= ===============
</TABLE>
A reconciliation of the Partnership's investment in the Research Triangle Joint
Venture is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- --------------- --------------
<S> <C> <C> <C>
Investment in joint venture at beginning of year $193,588 $ 170,220 $ 60,907
Distributions (250,000) - -
Amortization of excess purchase price (9,200) (9,200) (9,200)
Allocation of net income (loss) 87,609 32,568 118,513
------------- --------------- --------------
Investment in joint venture at end of year $ 21,997 $ 193,588 $ 170,220
============= =============== ==============
</TABLE>
33
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
9. LEASES (LESSEE):
---------------
In connection with the development of property in Columbia, South
Carolina, the Partnership entered into a land lease agreement with the
Richland-Lexington Airport District for a period of sixty years. The lease
covers two parcels of land approximately 4.5 acres each, located within the
boundaries of the Columbia Metropolitan Airport in an area designated as a
Foreign Trade Zone. The lease requires minimum monthly rental payments of
approximately $7,400. The lease is being accounted for as an operating lease.
The agreement also includes an option to lease a third parcel of land measuring
approximately 5.5 acres.
Minimum future rental payments for each of the next five years are as
follows:
Year Amount
---- ------
1999 $ 89,000
2000 89,000
2001 89,000
2002 89,000
2003 89,000
10. LEASES (LESSOR):
--------------
In connection with the Inducon - Columbia property, the Partnership has
entered into commercial lease agreements with terms from one to five years.
Minimum future rentals to be received in the future under noncancelable
operating leases are as follows:
Year Amount
---- ------
1999 $409,379
2000 106,574
2001 7,552
11. GOING CONCERN CONSIDERATIONS:
----------------------------
The Partnership has sustained recurring losses and has experienced
operating cash flow difficulties. In addition, the mortgage payable on
Countrybrook Estates of approximately $3,400,000 is due in July 1999. These
factors combined have raised substantial doubt about the Partnership's ability
to continue as a going concern.
Management's plans are to refinance Countrybrook prior to its current
maturity date of July 1999. Management believes that with the current occupancy
at this complex, refinancing this property is probable at a lower interest rate
than is currently being paid. Management also believes that the sale of
Stonegate Townhomes and The Commons is in the best interests of the limited
partners. With the improvements completed at Countrybrook Estates, management
plans to increase rents charged in the coming year. At all complexes, management
intends to closely monitor and control expenses.
34
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Continued)
-----------
12. SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
----------------------------------------------
1998 1997 1996
-------------- ---------------- ----------------
Cash paid for interest $ 1,005,349 $ 1,034,123 $ 922,210
============== ================ ================
13. RECLASSIFICATIONS
-----------------
Certain reclassifications have been made to the 1996 and 1997 balances
to conform to the classifications used in 1998.
14. GAIN FROM INSURANCE PROCEEDS
----------------------------
On March 1, 1997, Countrybrook Estates experienced a flood that
resulted in property damage estimated at a net book value of $203,569. The
Partnership received insurance proceeds totaling $287,751, resulting in a gain
for financial statement purposes of $84,002.
15. LONG-LIVED ASSETS
-----------------
In the third quarter of 1998, the Partnership entered into a plan to
dispose of the property of The Commons with a carrying amount of $2,633,733 and
$2,717,075 at December 31, 1998 and 1997, respectively. The Commons incurred net
losses of approximately $303,000, $470,000 and $395,000 for the years ended
December 31, 1998, 1997 and 1996, respectively. Management has determined that
the sale of the property is in the best interests of the limited partners. The
Partnership anticipates a sale in 1999.
In 1997, the Partnership entered into a plan to dispose of the property
of Countrybrook Estates with a carrying amount of $3,985,743 and $4,047,737 at
December 31, 1998 and 1997, respectively. Countrybrook Estates incurred net
losses of approximately $200,000, $207,000 and $237,000 for the years ended
December 31, 1998, 1997, and 1996, respectively. Management has determined that
the sale of the property is in the best interests of the limited partners. As of
December 31, 1997, an agreement cancelable by the buyer was signed with an
anticipated sales price of approximately $6,060,000. This agreement was canceled
in the first quarter of 1998, and the Partnership discontinued its plans to sell
the property.
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of (the
"Statement") requires that assets to be disposed of be recorded at the lower of
carrying value or fair value, less costs to sell. The Statement also requires
that such assets not be depreciated during the disposal period, as the assets
will be recovered through sale rather than through operations. In accordance
with this Statement, the long-lived assets of the The Commons and Countrybrook
Estates, classified as held for sale on the balance sheet as of December 31,
1998 and 1997, respectively, are recorded at the carrying amount which is the
lower of carrying value or fair value less costs to sell, and have not been
depreciated during the disposal period. Depreciation expense, not recorded
during the disposal period, for the years ended December 31, 1998 and 1997
totaled approximately $71,000 and $175,000, respectively. Management believes
that the property's fair value has not changed significantly since being
classified as held for sale.
35
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
----------------------------------------------------
REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------
DECEMBER 31, 1998
-----------------
Initial Cost to Cost Gross Amounts at which
Partnership Capitalized Carried at Close of Period
---------------------------- Subsequent --------------------------------------
Property to (1)(2)
Description Encumbrances Land Buildings Acquisition Retirements Land Buildings Total
----------- ------------ ---- --------- ----------- ----------- ---- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beaver Creek
Pittsburgh, PA $ 1,337,685 $ 282,000 $ 1,437,944 $ 169,871 $ - $ 317,000 $ 1,572,815 $ 1,889,815
Countrybrook
Estates
Louisville, KY 3,415,000 882,272 4,277,115 439,996 279,908 884,622 4,434,853 5,319,475
Stonegate
Mobile, AL 2,621,004 419,544 3,487,160 323,856 - 427,494 3,803,066 4,230,560
The Commons
Tulsa, OK 1,850,350 525,000 2,304,303 521,609 - 525,000 2,825,912 3,350,912
Inducon-Columbia
Columbia, SC 2,168,462 - 1,503,710 3,172,562 - 5,282 4,670,990 4,676,272
-------------- ------------ -------------- ------------ ----------- ------------- -------------- -------------
$ 11,392,501 $ 2,108,816 $ 13,010,232 $ 4,627,894 $ 279,908 $ 2,159,398 $ 17,307,636 $ 19,467,034
============== ============ ============== ============ =========== ============= ============== =============
Carriage House of
Englewood J.V.
Dayton, OH $ 2,890,315 $ 367,500 $ 2,341,254 $ 146,569 $ - $ 367,500 $ 2,487,823 $ 2,855,323
============== ============ ============== ============ =========== ============= ============== =============
Research Triangle
J.V.
Raleigh, NC $ 5,504,596 $ 338,112 $ 4,920,738 $ 9,329 $ - $ 338,112 $ 4,930,067 $ 5,268,179
============== ============ ============== ============ =========== ============= ============== =============
(RESTUBBED TABLE)
(3)(4)
Accumulated Date of Date
Depreciation Construction Acq'd.
------------ ------------ ------
Beaver Creek
Pittsburgh, PA $ 585,592 1975 2/89
Countrybrook
Estates
Louisville, KY 1,335,601 1972 6/89
Stonegate
Mobile, AL 1,254,532 1985 3/90
The Commons
Tulsa, OK 718,476 1970 3/91
Inducon-Columbia
Columbia, SC 1,560,441 1989 5/89
-------------
$ 5,454,642
=============
Carriage House of
Englewood J.V.
Dayton, OH $ 1,596,577 1972 5/92
=============
Research Triangle
J.V.
Raleigh, NC $ 3,590,813 1983 8/92
=============
</TABLE>
36
<PAGE>
SCHEDULE III
(Continued)
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
------------------------------------------------------
REAL ESTATE AND ACCUMULATED DEPRECIATION
----------------------------------------
DECEMBER 31, 1998
-----------------
(1) Cost for Federal income tax purposes is $ 19,467,034.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Partnership Properties
----------------------
1998 1997 1996
---------------- --------------- ----------------
<S> <C> <C> <C>
Balance at beginning of period $ 19,357,332 $ 18,774,247 $ 18,566,766
Additions 109,702 862,993 207,481
Disposals - (279,908) -
---------------- --------------- ----------------
Balance at end of period $ 19,467,034 $19,357,332 $ 18,774,247
================ =============== ================
</TABLE>
<TABLE>
<CAPTION>
Joint Venture Properties
------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at beginning of period $ 8,110,812 $ 8,049,484 $ 8,031,135
Additions 12,690 61,328 18,349
-------------- -------------- --------------
Balance at end of period $ 8,123,502 $8,110,812 $ 8,049,484
============== ============== ==============
</TABLE>
(3) A reconciliation of accumulated depreciation for the years ended
December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Partnership Properties
----------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at beginning of period $ 4,735,269 $ 4,212,761 $ 3,473,170
Additions charged to cost and expenses
during the period 719,373 598,847 739,591
Accumulated cost and expenses
written -off during the period - (76,339) -
-------------- -------------- --------------
Balance at end of period $ 5,454,642 $4,735,269 $ 4,212,761
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Joint Venture Properties
------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at beginning of period $ 5,066,035 $ 4,935,502 $ 4,431,001
Additions charged to cost and expenses during
the period 121,355 130,533 504,501
-------------- -------------- --------------
Balance at end of period $ 5,187,390 $5,066,035 $ 4,935,502
============== ============== ==============
</TABLE>
(4) Balance applies entirely to buildings.
37
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP - VI A
By:/S/ JOSEPH M. JAYSON 04/14/99
--------------------- --------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By: /S/ JOSEPH M. JAYSON 04/14/99
--------------------- --------
JOSEPH M. JAYSON, President Date
Principal Executive Officer and Director
/S/ MICHAEL J. COLMERAUER 04/14/99
-------------------------- --------
MICHAEL J. COLMERAUER, Date
Secretary
38
<PAGE>
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
The Form 10-K is sent to security holders. No other annual report is
distributed. No proxy statement, form of proxy or other proxy soliciting
material was sent to any of the registrant's security holders with respect to
any annual or other meeting of security holders.
39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Realmark Property Investors Limited Partnership VI-A for
the year ended December 31, 1998, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 87,551
<SECURITIES> 0
<RECEIVABLES> 4,203
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,002,294
<PP&E> 20,570,729
<DEPRECIATION> 6,555,171
<TOTAL-ASSETS> 15,106,049
<CURRENT-LIABILITIES> 1,487,974
<BONDS> 11,392,501
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,106,049
<SALES> 0
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</TABLE>
