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
March 31, 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 [ ]
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VIA
Form 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
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<S> <C> <C>
Item 1. Financial Statements
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Operations - Three months ended March 31, 2000 and 1999 4
Statement of Partners' Equity (Deficit)- Three months ended March 31, 2000 5
Statements of Cash Flows - Three months ended March 31, 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 13
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
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2
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PART I - Item 1. Financial Statements
--------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited)
March 31, 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 7,460,618 7,316,721
------------ ------------
Net property and equipment 13,275,096 13,350,614
Cash and cash equivalents 213,400 264,353
Escrow deposits 372,579 301,288
Mortgage costs, less accumulated amortization of
$ 228,903 in 2000 and $211,791 in 1999 414,037 430,972
Other assets 69,040 97,556
------------ ------------
Total assets $ 14,344,152 14,444,783
============ ============
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable 11,865,991 11,893,713
Accounts payable and accrued expenses 342,132 268,421
Accrued interest payable 101,258 101,417
Payables to affiliated parties 328,855 233,042
Security deposits and prepaid rents 208,089 214,997
------------ ------------
Total liabilities 12,846,325 12,711,590
------------ ------------
Losses of unconsolidated joint ventures in excess of investment,
net of unamortized excess purchase price of $162,763 in
2000 and $165,063 in 1999 83,673 198,174
------------ ------------
Partners' equity (deficit):
General partners (359,354) (355,728)
Limited partners 1,773,508 1,890,747
------------ ------------
Total partners' equity 1,414,154 1,535,019
------------ ------------
Contingency
------------ ------------
Total liabilities and partners' equity $ 14,344,152 14,444,783
============ ============
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See accompanying notes to financial statements.
3
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statements of Operations
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
(As restated)
March 31, March 31,
2000 1999
---- ----
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Income:
Rental $ 1,007,974 1,029,272
Interest and other income 57,627 70,141
----------- -----------
Total income 1,065,601 1,099,413
----------- -----------
Expenses:
Property operations 667,943 671,067
Interest:
Affiliated parties 12,572 --
Other 276,997 282,403
Depreciation 143,301 157,333
Administrative:
Affiliated parties 92,588 84,926
Other 72,080 96,061
----------- -----------
Total expenses 1,265,481 1,291,790
----------- -----------
Loss before equity in earnings of
joint ventures (199,880) (192,377)
Equity in earnings of joint ventures 79,015 7,467
----------- -----------
Net loss $ (120,865) (184,910)
=========== ===========
Net loss per limited partnership unit $ (.74) (1.14)
=========== ===========
Weighted average number of limited partnership
units outstanding 157,378 157,378
=========== ===========
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See accompanying notes to financial statements.
4
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statement of Partners' Equity (Deficit)
Three months ended March 31, 2000
(Unaudited)
Limited Partners
General ------------------------
Partners Units Amount
-------- ----- ------
<S> <C> <C> <C>
Balances at January 1, 2000 $ (355,728) 157,378 1,890,747
Net loss (3,626) -- (117,239)
----------- ------- ----------
Balances at March 31, 2000 $ (359,354) 157,378 1,773,508
=========== ======= ==========
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See accompanying notes to financial statements.
5
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
(As restated)
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(120,865) (184,910)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 161,009 190,458
Equity in joint venture operations (79,015) (7,467)
Changes in:
Accounts receivable -- (5,155)
Escrow deposits (71,291) (45,029)
Other assets 28,516 12,228
Accounts payable and accrued expenses 73,711 60,975
Accrued interest payable (159) (14,689)
Payable to affiliated parties 25,327 5,496
Security deposits and prepaid rents (6,908) 12,910
--------- ---------
Net cash provided by operating activities 10,325 24,817
--------- ---------
Cash flows from investing activities:
Distributions received from joint ventures 35,000 --
Additions to property and equipment (68,379) (4,993)
--------- ---------
Net cash used in investing activities (33,379) (4,993)
--------- ---------
Cash flows from financing activities:
Mortgage acquisition costs (177) --
Principal payments on mortgage loans (27,722) (24,299)
--------- ---------
Net cash used in financing activities (27,899) (24,299)
--------- ---------
Net decrease in cash and cash equivalents (50,953) (4,475)
Cash and cash equivalents at beginning of period 264,353 87,551
--------- ---------
Cash and cash equivalents at end of period $ 213,400 83,076
========= =========
Supplemental disclosures:
Cash paid during the period for interest $ 272,615 164,656
========= =========
Increase in equity in joint venture acquired in
exchange for assumption of debt $ 70,486 --
========= =========
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See accompanying notes to financial statements.
6
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements
Three months ended March 31, 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 Joint Venture was
formed to own and operate the Carriage House of Englewood located in
Eaglewood, Ohio. During the three months ended March 31, 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 the property of the joint venture. 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 three months ended March 31,
2000 and 1999 was approximately $30,000 in each period
7
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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 March 31, 2000 and
December 31, 1999 and the results of its operations for the three
months ended March 31, 2000 and 1999 is as follows:
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March 31, December 31,
Assets 2000 1999
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<S> <C> <C>
Property and equipment, net of accumulated depreciation $ 1,271,321 1,271,321
Cash and cash equivalents 7,801 6,818
Other assets 247,892 265,449
---------- ----------
Total assets $ 1,527,014 1,543,588
========== ==========
Liabilities and Partners' Deficiency
Liabilities:
Mortgage loan payable 2,861,452 2,867,486
Accounts payable to affiliated parties 479,133 768,924
Other liabilities 257,567 272,331
---------- ----------
Total liabilities 3,598,152 3,908,741
Partners' deficiency (2,071,138) (2,365,153)
--------- ---------
Total liabilities and partners' deficiency $ 1,527,014 1,543,588
========= =========
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Three months ended
------------------
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Income:
Rental $ 197,939 161,940
Other income 133,019 14,783
------- --------
Total income 330,958 176,723
------- -------
Expenses:
Property operations 120,499 113,632
Interest 65,854 64,950
Depreciation and amortization -- 1,436
Administrative:
Affiliated parties 10,164 --
Other 16,640 56,116
-------- --------
Total expenses 213,157 236,134
------- -------
Net income (loss) $ 117,801 (59,411)
======= ========
Allocation of net income (loss):
The Partnership 47,120 (23,764)
RPILP 70,681 (35,647)
-------- --------
Total $ 117,801 (59,411)
======= ========
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8
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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 March 31, 2000 and December 31,
1999 and the results of its operations for the three months ended March
31, 2000 and 1999 follows. The March 31, 1999 results have been changed
to correct the calculation of interest expense.
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March 31, December 31,
Assets 2000 1999
------ ---- ----
<S> <C> <C>
Property net of accumulated depreciation $ 1,548,757 1,573,886
Cash and cash equivalents 78,691 149,508
Escrow deposits 734,907 694,740
Other assets 337,349 271,914
---------- ----------
Total assets $ 2,699,704 2,690,048
========= =========
Liabilities and Partners' Deficiency
------------------------------------
Liabilities:
Mortgage loan payable 5,399,030 5,418,498
Accounts payable and accrued expenses 105,021 74,287
----------- -----------
Total liabilities 5,504,051 5,492,785
Partners' deficiency (2,804,347) (2,802,737)
--------- ---------
Total liabilities and partners' deficiency $ 2,699,704 2,690,048
========= =========
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Three months ended
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(As restated)
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Income:
Rental $ 255,497 265,029
Interest 1,526 75
--------- --------
Total income 257,023 265,104
--------- --------
Expenses:
Property operations 29,089 34,666
Interest 113,342 114,913
Depreciation and amortization 25,129 35,310
Administrative 21,073 17,753
--------- --------
Total expenses 188,633 202,642
--------- --------
Net income $ 68,390 62,462
========= ========
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9
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(3) Investment in Joint Ventures, Continued
--------------------------------------------
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Three months ended
------------------
(As restated)
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Allocation of net income:
The Partnership $ 34,195 31,231
RPILP - II 34,195 31,231
-------- --------
Total $ 68,390 62,462
======== ========
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(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.
Management believes that the sale of Pomeroy Park is in the best interests
of the limited partners. With the improvements completed at
Countrybrook Estates, 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
-----------------------
In the third quarter of 1999, the Partnership established a plan to
dispose of the property of Pomeroy Park with a carrying amount of
$2,671,167 and $2,605,021 at March 31, 2000 and December 31, 1999,
respectively. Pomeroy Park incurred net losses of approximately
$65,000 and $75,000 for the three months ended March 31, 2000 and
1999, respectively. Management had determined that the sale of the
property is in the best interests of the limited partners. Pomeroy
Park 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 for the three months ended March 31,
2000 was approximately $30,000.
10
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Notes to Financial Statements, Continued
(6) 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.
(7) Subsequent Event - 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
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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 the first quarter of 2000 in
generating sufficient funds to cover its cash obligations without relying on
affiliated parties. If the sale of the Pomeroy Park property were to occur, it
would help to relieve some of the cash flow pressure the Partnership has been
experiencing. 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 first quarter 2000 operations were similar to those of 1999's
first quarter. While there were some increases in gross rental income, they were
more than offset by collection problems, particularly at Pomeroy Park and Beaver
Creek. The result was a 2% reduction in rental income in 2000. Fluctuations in
several fee categories led to a net decrease of $12,000 in other income in 2000.
All expense line items were consistent between the two quarters.
The Partnership's joint venture investees showed significantly improved results
in the first quarter leading to a decrease in the Partnership's net loss of
approximately $65,000. However, it should be noted that a significant portion
($120,000) of the increase in 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.
12
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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.
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.
13
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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 11/15/2000
-------------------------------------- ----------
Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
14
