FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 2000 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 Number)
2350 North Forest Road
Suite 12A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
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 [ ]
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Form 10-Q
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page
----
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets - June 30, 2000 and December 31, 1999 3
Statements of Operations - Three and six months ended
June 30, 2000 and 1999 4
Statement of Partners' Equity (Deficit)- Six months ended June 30, 2000 5
Statements of Cash Flows - Six months ended June 30, 2000 and 1999 6
Notes to Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2 - 5. Not applicable 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I - Item 1. Financial Statements
--------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Balance Sheets
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
Assets 2000 1999
------ ---- ----
<S> <C> <C>
Property and equipment:
Land and land improvements $ 2,159,398 2,159,398
Buildings 17,467,784 17,404,242
Furniture and fixtures 1,108,532 1,103,695
------------ ------------
20,735,714 20,667,335
Less accumulated depreciation 7,590,711 7,316,721
------------ ------------
Net property and equipment 13,145,003 13,350,614
Cash and cash equivalents 220,263 264,353
Escrow deposits 403,546 301,288
Mortgage costs, less accumulated amortization of
$ 245,910 in 2000 and $211,791 in 1999 397,030 430,972
Other assets 35,040 97,556
------------ ------------
Total assets $ 14,200,882 14,444,783
============ ============
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable 11,839,891 11,893,713
Accounts payable and accrued expenses 396,156 268,421
Accrued interest payable 98,883 101,417
Payable to affiliated parties 364,994 233,042
Security deposits and prepaid rents 211,216 214,997
------------ ------------
Total liabilities 12,911,140 12,711,590
------------ ------------
Losses of unconsolidated joint ventures in excess of investment,
net of unamortized excess purchase price of $160,463 in
2000 and $165,063 in 1999 90,606 198,174
------------ ------------
Partners' equity (deficit):
General partners (365,804) (355,728)
Limited partners 1,564,940 1,890,747
------------ ------------
Total partners' equity 1,199,136 1,535,019
------------ ------------
Contingency
------------ ------------
Total liabilities and partners' equity $ 14,200,882 14,444,783
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statements of Operations
Three and six month periods ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
(As restated)
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental $ 1,013,616 1,049,415 2,021,590 2,078,687
Interest and other income 44,295 78,128 101,922 148,269
----------- ----------- ----------- -----------
Total income 1,057,911 1,127,543 2,123,512 2,226,956
----------- ----------- ----------- -----------
Expenses:
Property operations 708,664 679,058 1,376,607 1,300,125
Interest :
Affiliated parties 13,254 2,679 25,826 2,679
Other 276,266 271,350 553,263 586,879
Depreciation 130,689 170,458 273,990 344,665
Administrative:
Affiliated parties 87,575 88,055 180,163 172,981
Other 94,548 71,539 166,628 167,600
----------- ----------- ----------- -----------
Total expenses 1,310,996 1,283,139 2,576,477 2,574,929
----------- ----------- ----------- -----------
Loss before equity in earnings of
joint ventures (253,085) (155,596) (452,965) (347,973)
Equity in earnings of joint ventures 38,067 11,965 117,082 19,432
----------- ----------- ----------- -----------
Net loss (215,018) (143,631) (335,883) (328,541)
=========== =========== =========== ===========
Net loss per limited partnership unit $ (1.33) (0.89) (2.07) (2.02)
=========== =========== =========== ===========
Weighted average number of limited
partnership units outstanding 157,378 157,378 157,378 157,378
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statement of Partners' Equity (Deficit)
Six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
General Limited Partners
Partners Units Amount
-------- ----- ------
<S> <C> <C> <C>
Balances at January 1, 2000 $ (355,728) 157,378 1,890,747
Net loss (10,076) -- (325,807)
---------- ---------- ----------
Balances at June 30, 2000 $ (365,804) 157,378 1,564,940
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statements of Cash Flows
Six months ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
----------------
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(335,883) (328,541)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 308,109 380,916
Equity in joint venture operations (117,082) (19,432)
Changes in:
Accounts receivable -- (8,701)
Escrow deposits (102,258) (97,580)
Other assets 62,516 28,815
Accounts payable and accrued expenses 127,735 95,876
Accrued interest payable (2,534) (5,153)
Payable to affiliated parties 61,466 (371,822)
Security deposits and prepaid rents (3,781) 13,844
--------- ---------
Net cash used in operating activities (1,712) (311,778)
--------- ---------
Cash flows from investing activities:
Distributions received from joint ventures 80,000 330,000
Additions to property and equipment (68,379) (6,993)
--------- ---------
Net cash provided by investing activities 11,621 323,007
--------- ---------
Cash flows from financing activities:
Mortgage acquisition costs (177) (15,000)
Principal payments on mortgage loans (53,822) (44,378)
--------- ---------
Net cash used in financing activities (53,999) (59,378)
--------- ---------
Net decrease in cash and cash equivalents (44,090) (48,149)
Cash and cash equivalents at beginning of period 264,353 87,551
--------- ---------
Cash and cash equivalents at end of period $ 220,263 39,402
========= =========
Supplemental disclosures:
Cash paid during the period for interest $ 547,504 528,460
========= =========
Increase in equity in joint venture acquired in
exchange for assumption of debt $ 70,486 --
========= =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements
Six months ended June 30, 2000 and 1999
(Unaudited)
(1) Basis of Presentation
--------------------------
The accompanying interim financial statements have been prepared in
accordance with generally accepted accounting principles and, in the
opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set
forth in its December 31, 1999 Form 10-K. The interim financial
statements should be read in conjunction with the financial statements
included therein. The interim results should not be considered
indicative of the annual results. Certain reclassifications of prior
period numbers may have been made to conform to the current period
presentation.
(2) Organization
-----------------
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. 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 shareholder 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.
(3) Investment in Joint Ventures
---------------------------------
The Partnership has a 40% interest in a joint venture with Realmark
Property Investors Limited Partnership (RPILP), an entity affiliated
through common general partners, owning 60%. The venture was formed to
own and operate the Carriage House of Englewood located in Englewood,
Ohio. During the six months ended June 30, 2000, the Partnership
increased its investment by assuming $70,486 of the joint venture's
payable to affiliated parties.
In July 1996, management of the joint venture established a plan to
dispose of its property. The Carriage House property is carried at the
lower of depreciated cost or fair value less costs to sell and is not
depreciated during the disposal period. Depreciation expense not
recorded in the six months ended June 30, 2000 and 1999 was
approximately $60,000 in each period and $30,000 in each of the three
month periods.
7
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(3) Investment in Joint Ventures, Continued
--------------------------------------------
A summary of the assets, liabilities and partners' deficiency of the
Carriage House of Englewood Joint Venture as of June 30, 2000 and
December 31, 1999 and the results of its operations for the six months
ended June 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
Assets 2000 1999
------ ---- ----
<S> <C> <C>
Property and equipment, net of accumulated depreciation $ 1,277,851 1,271,321
Cash and cash equivalents 14,607 6,818
Other assets 233,630 265,449
----------- ----------
Total assets $ 1,526,088 1,543,588
=========== ==========
Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 2,855,281 2,867,486
Accounts payable to affiliated parties 500,928 768,924
Other liabilities 234,150 272,331
----------- ----------
Total liabilities 3,590,359 3,908,741
Partners' deficiency (2,064,271) (2,365,153)
----------- ----------
Total liabilities and partners' deficiency $ 1,526,088 1,543,588
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six months ended
----------------
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Income:
Rental $ 415,910 337,367
Other income 139,988 35,804
----------- ----------
Total income 555,899 373,171
----------- ----------
Expenses:
Property operations 249,073 225,930
Interest 133,506 129,815
Depreciation and amortization -- 2,871
Administrative 48,651 100,859
----------- ----------
Total expenses 431,231 459,475
----------- ----------
Net income (loss) $ 124,668 (86,304)
=========== ==========
Allocation of net income (loss):
The Partnership 49,867 (34,522)
RPILP 74,801 (51,782)
----------- ----------
Total $ 124,668 (86,304)
=========== ==========
</TABLE>
8
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(3) Investment in Joint Ventures, Continued
--------------------------------------------
The Partnership has a 50% interest in Research Triangle Industrial Park
Joint Venture with Realmark Property Investors Limited Partnership-II
(RPILP-II), an entity affiliated through common general partners,
owning 50%.
A summary of the assets, liabilities and partners' deficiency of the
Research Triangle Joint Venture as of June 30, 2000 and December 31,
1999 and the results of its operations for the six months ended June
30, 2000 and 1999 follows.
<TABLE>
<CAPTION>
June 30, December 31,
Assets 2000 1999
------ ---- ----
<S> <C> <C>
Property net of accumulated depreciation $ 1,523,627 1,573,886
Cash and cash equivalents 42,324 149,508
Escrow deposits 775,983 694,740
Other assets 328,678 271,914
-------------- ----------
Total assets $ 2,670,612 2,690,048
============== ==========
Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 5,380,358 5,418,498
Accounts payable and accrued expenses 109,361 74,287
-------------- ----------
Total liabilities 5,489,719 5,492,785
Partners' deficiency (2,819,107) (2,802,737)
-------------- ----------
Total liabilities and partners' deficiency $ 2,670,612 2,690,048
============== ==========
</TABLE>
<TABLE>
<CAPTION>
Six months ended
----------------
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Income:
Rental $ 510,996 493,973
Interest 10,401 7,091
-------------- ----------
Total income 521,397 501,064
-------------- ----------
Expenses:
Property operations 63,477 70,275
Interest 225,921 224,617
Depreciation and amortization 50,259 63,107
Administrative 38,110 35,157
-------------- ----------
Total expenses 377,767 393,156
-------------- ----------
Net income $ 143,630 107,908
============== ==========
</TABLE>
9
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(3) Investment in Joint Ventures, Continued
--------------------------------------------
<TABLE>
<CAPTION>
Six months ended
----------------
June 30, June 30,
2000 1999
---- ----
<S> <C> <C>
Allocation of net income:
The Partnership $ 71,815 53,954
RPILP - II 71,815 53,954
----------- --------
Total $ 143,630 107,908
=========== ========
</TABLE>
(4) Going Concern Considerations
----------------------------------
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. The Partnership has
sustained recurring losses from operations and has experienced
operating cash flow difficulties. Additionally, the Partnership is
currently not in compliance with certain debt covenants which allows
the mortgagees to accelerate repayment of the mortgages payable. These
issues raise substantial doubt about the Partnership's ability to
continue as a going concern.
The improvements were completed at Countrybrook Estates and management
plans to increase rents charged. Management intends to closely monitor
and control expenses at all complexes. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
(5) Long-Lived Assets
-----------------------
Assets covered by a sales plan are carried at the lower of depreciated
cost or fair value less costs to sell and are not depreciated during
the disposal period. During the first three months of 2000 (through
March 31, 2000), management had a plan to sell the assets of Pomeroy
Park. Effective April 1, 2000, management discontinued the plan and
instituted a plan to sell the Countrybrook property. Total
depreciation expense not recorded on properties covered by a sales
plan was approximately $75,000 for the six months ended June 30,
2000 and approximately $45,000 for the three months then ended.
(6) Prior Period Adjustment
----------------------------
The net loss for the three month period ended June 30, 1999 has been
corrected to give effect to a March 31,1999 adjustment as follows:
<TABLE>
<CAPTION>
<S> <C>
As previously reported $ (128,631)
Increase of interest expense in joint venture (15,000)
-------------
As restated $ (143,631)
=============
</TABLE>
The net loss per limited partnership unit increased $.10 to $.89 for the
three months ended June 30, 1999.
10
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(7) Current Accounting Pronouncements
--------------------------------------
In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 - "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an Amendment of
Statement No. 133" which amends certain provisions of Statement of
Financial Accounting Standards No. 133 - "Accounting for Derivative
Instruments and Hedging Activities." These statements establish
accounting and financial reporting standards for derivative instruments
and hedging activities. These statements become effective for the
Partnership on January 1, 2001. The effect, if any, that Statement No.
133 and 138 will have on the Partnership's operations and financial
position will not be material.
(8) Contingency
----------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the General
Partners, the liquidation of the Partnership and the appointment of a
receiver to supervise the liquidation, and damages. The General
Partners and the officers and directors of the Corporate General
Partner have filed a motion to dismiss the first complaint and are
presently reviewing the second complaint and intend to vigorously
pursue their defense.
11
<PAGE>
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Liquidity and Capital Resources
-------------------------------
The Partnership continued to have difficulty in 2000 in generating sufficient
funds to cover its cash obligations without relying on affiliated parties. There
were no distributions to partners in either the first quarter of 1999 or 2000,
and none are anticipated in the foreseeable future.
Results of Operations
---------------------
Before considering the Partnership's equity in the operations of joint ventures,
the results of operations in the three months ended June 30, 2000 were
approximately $97,000 worse than the comparable 1999 period and for the six
months ended June 30, 2000 the loss increased by approximately $105,000 to
$453,000. Decreases in rental income of $36,000 and $67,000 in the three and six
month periods, respectively, were experienced at all of the Partnership's
properties with the exception of Stonegate. Various fees and charges declined in
the periods, particularly at Countrybrook, accounting for the decrease in other
income.
Property operations expense increased approximately $30,000 and $76,000 in the
three and six month periods, respectively, principally because of increased
maintenance payroll at Countrybrook and Pomeroy Park and an increase in utility
expense at Stonegate. Depreciation decreases in the periods were attributed to
the lack of depreciation on properties covered by a sales plan as described in
note 5 to the financial statements. Administrative expenses rose in the quarter
because of higher professional fees.
The Partnership's joint venture investees showed improved results in the quarter
and six month period as detailed in note 3 to the financial statements. It
should be noted that a significant portion ($120,000) of the increase in
six-month net income at Carriage House of Englewood is the result of an
adjustment of prior period expenses at the property level, eliminated at the
Partnership level.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's cash equivalents are short-term, interest-bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered
into any derivative contracts. Therefore, it has no market risk
exposure.
12
<PAGE>
PART II - OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
--------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the
General Partners, the liquidation of the Partnership and the
appointment of a receiver to supervise the liquidation, and damages.
The General Partners and the officers and directors of the Corporate
General Partner have filed a motion to dismiss the first complaint and
are presently reviewing the second complaint and intend to vigorously
pursue their defense.
Items 2, 3, 4 and 5
-------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
The Partnership reported a change in independent accountants under item 4
of Form 8-K, filed on January 19, 2000 and amended on February 3, 2000,
April 17, 2000 and May 2, 2000.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP VI-A
By: /s/ Joseph M. Jayson 12/01/00
----------------------------------- ----------------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
13
