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, 1998 33-17579
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
(Exact Name of Registrant as specified in its charter)
Delaware 16-1309988
(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12 A
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_____
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-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1998 the registrant had 78,625.10 units of limited partnership
interest outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I: FINANCIAL INFORMATION
- ------ ---------------------
Balance Sheets -
June 30, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended June 30, 1998 and 1997 4
Statements of Operations -
Six Months Ended June 30, 1998 and 1997 5
Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997 6
Statements of Partners' (Deficit) Capital -
Six Months Ended June 30, 1998 and 1997 7
Notes to Financial Statements 8 - 23
PART II: MANAGEMENT'S DISCUSSION & ANALYSIS OF
- ------- -------------------------------------
FINANCIAL CONDITION & RESULTS OF OPERATIONS 24 - 26
-------------------------------------------
</TABLE>
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
BALANCE SHEETS
--------------
June 30, 1998 and December 31, 1997
-----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 780,500 $ 780,500
Buildings and improvements 6,028,430 6,028,430
Furniture, fixtures and equipment 255,652 255,652
------------------ ------------------
7,064,582 7,064,582
Less accumulated depreciation 1,737,878 1,614,323
------------------ ------------------
Property, net 5,326,704 5,450,259
Investments in real estate joint ventures 293,546 347,225
Cash 1,082,446 1,422,361
Escrow deposits 429,854 408,808
Accounts receivable - affiliate 41,726 57,902
Mortgage costs, net of accumulated amortization
of $46,835 and $5,925 respectively 327,977 333,780
Other assets 29,557 14,424
------------------ ------------------
Total Assets $ 7,531,810 $ 8,034,759
================== ==================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgages payable $ 5,330,951 $ 5,345,640
Accounts payable and accrued expenses 359,988 274,627
Security deposits and prepaid rents 89,781 141,659
------------------ ------------------
Total Liabilities 5,780,720 5,761,926
------------------ ------------------
Partners' (Deficit) Capital:
General partners (131,994) (116,342)
Limited partners 1,883,085 2,389,175
------------------ ------------------
Total Partners' Capital 1,751,090 2,272,833
------------------ ------------------
Total Liabilities and Partners' Capital $ 7,531,810 $ 8,034,759
================== ==================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended June 30, 1998 and 1997
-----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 352,906 $ 388,059
Interest and other income 21,694 49,139
------------------
-------------
Total income 374,600 437,198
------------- ------------------
Expenses:
Property operations 307,059 281,505
Interest 113,552 55,196
Depreciation and amortization 64,608 144,844
Administrative:
Paid to affiliates 41,867 43,356
Other 61,527 63,942
------------- ------------------
Total expenses 588,613 588,843
------------- ------------------
Loss before allocated loss from joint venture (214,013) (151,645)
Allocated income (loss) from joint ventures (25,293) 6,526
------------- ------------------
Net loss $ (239,306) $ (145,119)
============= ==================
Loss per limited partnership unit $ (2.95) $ (1.79)
============= ==================
Distributions per limited partnership unit $ - $ 3.08
============= ==================
Weighted average number of
limited partnership units
outstanding 78,625.1 78,625.1
============= ==================
</TABLE>
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30 June 30
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 764,329 $ 784,920
Interest and other income 38,836 71,860
------------------
------------------
Total income 803,165 856,780
------------------ ------------------
Expenses:
Property operations 711,229 492,011
Interest 229,536 160,010
Depreciation and amortization 129,216 217,800
Administrative:
Paid to affiliates 83,330 86,685
Other 117,918 120,969
------------------ ------------------
Total expenses 1,271,229 1,077,475
------------------ ------------------
Loss before allocated (loss) income from joint venture (468,064) (220,695)
Allocated (loss) income from joint ventures (53,679) 13,997
------------------ ------------------
Net loss $ (521,743) $ (206,698)
================== ==================
Loss per limited partnership unit $ (6.44) $ (2.55)
================== ==================
Distributions per limited partnership unit $ - $ 3.08
================== ==================
Weighted average number of
limited partnership units
outstanding 78,625.1 78,625.1
================== ==================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (521,743) $ (206,698)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 129,216 217,800
Net loss (income) from joint ventures 53,679 (13,997)
Changes in operating assets and liabilities:
Escrow deposits (21,046) (405,126)
Other assets (15,133) 95,855
Accounts payable and accrued expenses 85,361 (88,517)
Security deposits and prepaid rent (51,878) (14,410)
--------------- ------------------
Net cash (used in) operating activities (341,544) (415,093)
--------------- ------------------
Cash flow from investing activities:
Accounts receivable - affiliates 16,176 (81,913)
--------------- ------------------
Net cash provided by (used in) investing activities 16,176 (81,913)
--------------- ------------------
Cash flows from financing activities:
Mortgage acquisition costs 142 (166,845)
Principal payments on mortgages (14,689) (15,266)
Net proceeds from mortgage refinancing - 667,357
Distributions to partners - (250,000)
--------------- ------------------
Net cash (used in) provided by financing activities (14,547) 235,246
--------------- ------------------
Decrease in cash (339,915) (261,760)
Cash - beginning of period 1,422,361 1,508,588
--------------- ------------------
Cash - end of period $ 1,082,446 $ 1,246,828
=============== ==================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 232,431 $ 167,917
=============== ==================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General
Partners Limited Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
Balance, January 1, 1997 $ (88,613) 78,625.1 $ 3,285,762
Distributions to partners (7,500) - (242,500)
Net loss (6,201) - (200,497)
---------------- ---------------- -----------------
Balance, June 30, 1997 $ (102,314) 78,625.1 $ 2,842,765
================ ================ =================
Balance, January 1, 1998 $ (116,342) 78,625.1 $ 2,389,175
Net loss (15,652) - (506,090)
---------------- ---------------- -----------------
Balance, June 30, 1998 $ (131,994) 78,625.1 $ 1,883,085
================ ================ =================
</TABLE>
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
(Unaudited)
1. GENERAL PARTNERS' DISCLOSURE
----------------------------
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership VI-B, all adjustments necessary for a fair presentation
of the Partnership's financial position, results of operations and changes
in cash flows for the six month periods ended June 30, 1998 and 1997, have
been made in the financial statements. Such financial statements are
unaudited and subject to any year-end adjustments which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
--------------------------------------
Realmark Property Investors Limited Partnership VI-B (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 1988, the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to 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 2, 1989. The offering
was concluded on February 28, 1990, at which time 78,625.1 units of limited
partnership interest were sold and outstanding. The General Partners are
Realmark Properties, Inc., a wholly-owned subsidiary of J.M. Jayson &
Company, Inc. and Joseph M. Jayson, the Individual General Partner. Joseph
M. Jayson is the sole shareholder 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.
-8-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
--------------------------------------------------
Net income or loss and proceeds arising from a sale or refinancing shall be
distributed first to the limited partners in amounts equivalent to a 7%
return on the average of their adjusted capital contributions, then an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a 3% property disposition fee. 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, 1989, an
additional cumulative annual return (not compounded) equal to 2% based on
their average adjusted capital contributions, and to limited partners whose
subscriptions were accepted between February 1, 1989 and June 30, 1989, an
additional cumulative annual return (not compounded) equal to 1% based on
their average adjusted capital contributions commencing with the first
fiscal quarter following the termination of the offering of units, then to
all partners in 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.
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.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
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.
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
-9-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------------------
Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System and Modified Accelerated
Cost Recovery System are used to determine depreciation expense for tax
purposes.
Mortgage Costs
--------------
Mortgage costs incurred in obtaining property mortgage financing have been
deferred and are being amortized over the terms of the respective
mortgages.
Unconsolidated Joint Ventures
-----------------------------
The Partnership's investment in affiliated real estate joint ventures are
accounted for on the equity method.
Rental Income
-------------
Leases for residential properties have terms of one year or less. Rental
income is recognized on the straight line method over the term of the
lease.
Rents Receivable
----------------
Due to the nature of these accounts, residential rents receivable are fully
reserved as of June 30, 1998 and 1997.
Income (Loss) per Limited Partnership Unit
------------------------------------------
The income (loss) per limited partnership unit is based on the weighted
average number of limited partnership units outstanding during the period.
-10-
<PAGE>
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In June 1991 the Partnership acquired a 192 unit apartment complex (the
Villa) located in Greenville, South Carolina for a purchase price of
$3,165,456, which included $373,493 in acquisition fees.
In June 1991 the Partnership acquired a 144 unit apartment complex (Players
Club) located in Lutz, Florida for a purchase price of $3,070,800, which
included $190,737 in acquisition fees.
5. MORTGAGES PAYABLE
-----------------
In connection with the acquisition of rental property, the Partnership
obtained mortgages as follows:
The Villa
---------
A mortgage with a balance of $2,635,392 and $2,650,000 at June 30, 1998 and
1997, respectively, providing for monthly principal and interest payments
of $19,864, bearing interest at 8.30%. The note matures June 2027. The
mortgage is secured by the assets of The Villa Apartment complex.
Players Club
------------
A mortgage with a balance of $2,695,946 at June 30, 1998, providing for
principal and interest payments of $20,824, bearing interest at 8.48%. The
note matures June 2027. The mortgage is secured by the assets of Players
Club Apartment complex.
A mortgage with a balance of $2,360,000 at June 30, 1997, providing for
monthly principal and interest payments of $18,297, bearing interest at
8.59%. The note was to mature June 2027, but was re-sized into the note
described above.
-11-
<PAGE>
MORTGAGES PAYABLE (CONTINUED)
-----------------------------
The aggregate maturities of mortgages payable for each of the next five
years are as follows:
Year Amount
---- ------
1998 $ 33,077
1999 36,455
2000 39,686
2001 43,213
2002 47,039
Thereafter 5,146,170
-------------
TOTAL $ 5,345,640
=============
6. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partners. The management
agreement provides for 5% of gross monthly receipts of the complexes to be
paid as fees for administering the operations of the properties. These fees
totaled $40,182 and $42,542 for the six months ended June 30, 1998 and
1997, 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. There were no such
fees paid or accrued for the six months ended June 30, 1998 or 1997.
-12-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
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 are for the Partnership's allocated share of such
costs and expenses as payroll, travel, communication costs related to
partnership accounting, partner communication and relations, and
acquisition of properties. Partnership accounting, communication, marketing
and acquisition expenses are allocated based on total assets, number of
partners and number of units, respectively.
Accounts receivable - affiliates amounted to $41,726 and $81,913 at June
30, 1998 and 1997 respectively. This balance is in the process of being
reimbursed.
Computer service charges for the partnerships are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $3,168 for the six months ended June 30, 1998
and 1997.
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.
-13-
<PAGE>
INCOME TAXES (CONTINUED)
-----------------------
The reconciliation of net loss for the six months ended June 30, 1998 and
1997 as reported in the statements of operations, and as would be reported
for tax purposes, is as follows:
June 30, June 30,
1998 1997
---- ----
Net loss - statement of operations $ (521,743) $ (206,698)
Add to (deduct from):
Difference in depreciation 100 13,574
Tax basis adjustments -
Joint Ventures (250) (7,368)
Other non-deductible expenses 9,000 36,600
------------ -------------
Net loss - tax return purposes $( 512,893) $ (163,892)
============ =============
The reconciliation of Partners' Capital as of June 30, 1998 and December
31, 1997 as reported in the balance sheet, and as reported for tax
purposes, is as follows:
June 30, December 31,
1998 1997
---- ----
Partners' Capital - balance sheet $ 1,751,090 $ 2,272,833
Add to (deduct from):
Accumulated difference in
depreciation (39,782) (39,882)
Tax basis adjustment -
Joint Ventures (60,789) (60,539)
Syndication fees 1,179,381 1,179,381
Other non-deductible expenses 277,885 268,885
------------- -------------
Partners' Capital - tax return purposes $ 3,107,785 $ 3,620,678
============= =============
-14-
<PAGE>
8. INVESTMENT IN JOINT VENTURES
----------------------------
On September 27, 1991 the Partnership entered into an agreement to form 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 the
Foxhunt Apartments located in Dayton, Ohio and owned by RPILP II. Under the
terms of the original 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 RPILP II returned RPILP VI-A's entire capital contribution
and $580,000 of the capital originally invested by the Partnership. The
amended joint venture agreement now provides that any income, loss, gain,
cash flow or sale proceeds be allocated 88.5% to RPILP II and 11.5% to the
Partnership. Prior to the buyout the allocations were 63.14% to RPILP II,
26.82% to the Partnership and 10.04% to the RPILP VI-A. The allocated net
loss of the joint venture has been included in the statements of operations
of the Partnership.
In July of 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Foxhunt Apartments with a carrying amount
of $2,886,577. Management has determined that a sale of the property is in
the best interest of the investors. As of June 30, 1997, the agreement,
with an anticipated sales price of $7.4 million, was canceled by the buyer.
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
Partnership, 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. Depreciation expense, not recorded during the disposal period, for
the six months ended June 30, 1997 totaled approximately $93,000.
-15-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
The following financial statements of the joint venture are presented on a
historical-cost basis. 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 net assets at the date of inception.
A summary of the assets, liabilities and partner's capital of the joint
venture as of June 30, 1998 and December 31, 1997 and the results of its
operations for the six months ended June 30, 1998 and 1997 is as follows:
-16-
<PAGE>
FOX HUNT JOINT VENTURE
----------------------
BALANCE SHEETS
--------------
June 30, 1998 and December 31, 1997
-----------------------------------
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 591,331 $ 548,089
Property, net of accumulated depreciation 2,512,657 2,658,269
Accounts receivable - affiliates - 34,007
Mortgage costs 241,345 245,542
Other assets 389,980 371,277
--------------- ---------------
Total Assets $ 3,735,313 $ 3,857,184
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Mortgage payable $ 4,482,579 $ 4,498,327
Accounts payable and accrued expenses 228,969 232,968
Accounts payable - affiliates 14,958 -
Other liabilities 114,991 54,882
--------------- ---------------
Total Liabilities 4,841,497 4,786,177
--------------- ---------------
Partners' Capital (1,106,184) (928,993)
--------------- ---------------
Total Liabilities and Partners' Capital $ 3,735,313 $ 3,857,184
=============== ===============
</TABLE>
-17-
<PAGE>
FOX HUNT JOINT VENTURE
----------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 679,086 $ 682,362
Interest and other income 57,921 46,035
--------------- ---------------
Total income 737,007 728,397
--------------- ---------------
Expenses:
Property operations 426,001 247,642
Depreciation and amortization 149,809 4,197
Interest 206,279 203,391
Administrative 132,109 119,266
--------------- ---------------
Total expenses 914,198 574,496
--------------- ---------------
Net income (loss) $ (177,191) $ 153,901
=============== ===============
Allocation of net income (loss):
The Partnership $ (20,377) $ 17,699
Other Joint Venturer (RPILP II) (156,814) 136,202
--------------- ---------------
$ (177,191) $ 153,901
=============== ===============
</TABLE>
-18-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
A reconciliation of the Partnership's investment in the joint venture is as
follows:
1998 1997
---- ----
Investment in joint venture, January 1 $ 375,900 $ 371,119
Allocation of net (loss) income (20,377) 17,699
----------- ----------
Investment in joint venture, June 30 $ 355,523 $ 388,818
=========== ==========
On August 30, 1992 the Partnership entered into a joint venture agreement
with Realmark Property Investors Limited Partnership IV (RPILP IV) for the
purpose of operating the Lakeview Apartment complex located in Milwaukee,
Wisconsin and owned by RPILP IV. Under the terms of the agreement, the
Partnership contributed $175,414 while RPILP IV contributed the property
net of the outstanding mortgage.
The joint venture agreement provides that any income, loss, cash flow or
sale proceeds be allocated 16.22% to the Partnership and 83.78% to RPILP
IV. The allocated net loss of the joint venture for the six month period
ended June 30, 1997 has been included in the statement of operations for
the Partnership.
In July of 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Lakeview Village Apartments with a
carrying amount of $2,507,241. Management has determined that a sale of the
property is in the best interest of the investors. As of June 30, 1997, the
agreement with an anticipated sales price of $4,090,000, was terminated by
the buyer.
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
Partnership, 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. Depreciation expense, not recorded during the disposal period, for
the six months ended June 30, 1997 totaled approximately $84,000.
-19-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
The equity ownership percentage 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 net assets at the date of inception.
A summary of the assets, liabilities and partners' capital of the joint
venture as of June 30, 1998 and December 31, 1997 and the results of its
operations for the six months ended June 30, 1998 and 1997 is as follows:
-20-
<PAGE>
LAKEVIEW JOINT VENTURE
----------------------
BALANCE SHEETS
--------------
June 30, 1998 and December 31, 1997
-----------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
Property, net of accumulated depreciation $ 2,292,300 $ 2,359,318
Other assets 325,030 192,873
--------------- ---------------
Total Assets $ 2,617,330 $ 2,552,191
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Cash overdraft $ 163,124 $ 97,360
Mortgage payable 2,486,604 2,487,288
Accounts payable and accrued expenses 164,246 229,389
Accounts payable - affiliates 281,140 123,894
Other liabilities 152,538 39,270
--------------- ---------------
Total Liabilities 3,247,652 2,977,201
--------------- ---------------
Partners' (Deficit) (630,322) (425,010)
--------------- ---------------
Total Liabilities and Partners' (Deficit) Capital $ 2,617,330 $ 2,552,191
=============== ===============
</TABLE>
-21-
<PAGE>
LAKEVIEW JOINT VENTURE
----------------------
STATEMENTS OF OPERATIONS
------------------------
Six Months Ended June 30, 1998 and 1997
---------------------------------------
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 142,122 $ 361,977
Interest and other income 6,131 22,882
--------------- ---------------
Total income 148,253 384,859
--------------- ---------------
Expenses:
Property operations 165,244 188,258
Depreciation and amortization 72,906 6,974
Interest 85,509 133,326
Administrative 29,906 79,120
--------------- ---------------
Total expenses 353,565 407,678
--------------- ---------------
Net loss $ (205,312) $ (22,819)
=============== ===============
Allocation of net loss:
The Partnership $ (33,302) $ (3,701)
Other Joint Venturer (172,010) (19,118)
--------------- ---------------
$ (205,312) $ (22,819)
=============== ===============
</TABLE>
-22-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
A reconciliation of the Partnership's investment in the joint venture is as
follows:
1998 1997
---- ----
Investment in joint venture, January 1 $ (28,675) $ 18,479
Allocation of net loss (33,302) (3,701)
----------- ------------
Investment in joint venture, June 30 $ (61,977) $ 14,778
=========== ============
9. SUBSEQUENT EVENTS
-----------------
In July 1998, the mortgage on the Foxhunt Apartments was successfully
refinanced and the old mortgage was paid off in full. No significant gain
or loss on the refinancing occurred.
The new loan has a principal balance of $6,000,000 and a two year term in
which interest only payments are to be made at a rate equivalent to 350
basis points over the thirty-day LIBOR rate. The loan may at any time
during the two years be converted to a thirty year fixed mortgage.
-23-
<PAGE>
PART II MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership continues to maintain sufficient cash balances to enable it to
provide for future capital improvements. Management has plans to replace all
worn carpets and old appliances at both Players Club and The Villa Apartments.
Other capital improvements and/or physical improvements planned include both
interior and exterior painting and completion of roof repairs at The Villa
Apartments. During the quarter ended June 30, 1998, new siding was installed at
The Villas and the parking area was sealed and re-striped at Players Club.
Management continues to stress to its on-site employees the importance of
physical appearance as a means of attracting new tenants.
No distribution was made during the six months ended June 30, 1998; a
distribution of $3.08 per limited partnership unit was made during the quarter
ended June 30, 1997. The General Partner does hope to make additional
distributions during either the last six months of 1998 or early in 1999.
Management has been concentrating heavily on increasing occupancies and at the
same time controlling expenses. Occupancy at The Villa Apartments has declined
severely during the first six months of 1998 to a low of 70%. The General
Partner feels that the Partnership will see improvements in the next several
months of 1998 due to the improvements being made to the property and new, more
experienced and aggressive on-site staff (both managers and maintenance
supervisors).
During 1998, Lakeview Apartments located in Milwaukee, Wisconsin was put into
receivership by the lender. This was done as a result of the Partnership's
failure to make regular principal and interest payments on its mortgage. Due to
the poor financial condition of this property and the extremely low occupancy,
management is putting all of its efforts into selling the property.
The General Partners successfully refinanced the mortgage on Foxhunt Apartments
in July 1998. The new mortgage calls for interest only payments for two years,
so management feels the additional cash flow from not making principal payments
will help the Partnership complete the needed capital improvements at the
properties.
-24-
<PAGE>
Result of Operations
- --------------------
For the quarter ended June 30, 1998, the Partnership's net loss was $239,306 or
$2.95 per limited partnership unit. Net loss for the quarter ended June 30, 1997
amounted to $145,119 or $1.79 per unit. For the six month period ended June 30,
1998, the net loss was $521,743 or $6.44 per limited partnership unit as
compared to $206,698 or $2.55 per limited partnership unit for the six month
period ended June 30, 1997.
Partnership revenue for the quarter ended June 30, 1998 totaled $374,600, a
decrease of just under $62,600 from the 1997 amount of $437,198. Total rental
revenue during this quarter dropped just over $35,000, with the majority of the
decrease being attributed to increased concessions offered at The Villas in
order to increase falling economic occupancy. For the first six months of 1998,
rental revenue dropped by almost $21,000; other income decreased by over $33,000
mostly due to decreased laundry income from Players Club due to several of the
machines at the property being out of service (note: these machines have now
either been repaired or replaced).
For the quarter ended June 30, 1998, Partnership expenses amounted to $588,613
which is virtually unchanged from those incurred in the same quarter in 1997.
For the six month period ended June 30, 1998, Partnership expenses amounted to
$1,271,229 which is an increase of almost $194,000, a considerable increase as
compared to the same period in 1997 when expenses totaled $1,077,475. The most
notable increase was found in property operations expenditures. Such expenses
increased due to the amount of maintenance work being done at the properties to
improve their appearance as a means of attracting new tenants. There was also a
corresponding increase in payroll and related expenses due to much of the work
being performed by on-site personnel. Administrative expenses remained fairly
consistent between the two six month periods with only a small decrease of
$6,400 being recorded.
For the six month period ended June 30, 1998, the Foxhunt Joint Venture had a
loss of $177,191 as compared to income of $153,901 for the same period in 1997.
This property suffered from lower occupancies and difficulty in collections
during the six month period ended June 30, 1997, but management expects the
property to show improvement during the remainder of 1998. The Partnership was
allocated $20,377 of the total net loss for the six month period ended June 30,
1998.
-25-
<PAGE>
Results of Operations (continued):
- -----------------------------------
The Lakeview Joint Venture incurred a net loss of $205,312 for the six month
period ended June 30, 1998. For the six month period ended June 30, 1996, this
joint venture generated a net loss of $22,819. The Partnership was allocated
$33,302 and $3,701 of the loss for the six month periods ended June 30, 1998 and
1997, respectively.
On a tax basis, the Partnership loss totaled $512,893 or $6.33 per limited
partnership unit for the six month period ended June 30, 1998 as compared to the
tax loss for the six month period ended June 30, 1997 which was $163,892 or
$2.02 per limited partnership unit.
-26-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B
----------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not party to, nor is it the subject of, any material pending
legal proceedings other than ordinary routine litigation incidental to the
Partnership's business.
Item 2, 3, 4 and 5
- ------------------
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
None.
-27-
<PAGE>
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 PARTNERSHIP VI-B
/s/ Joseph M. Jayson 8/13/98
By: ------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/ Joseph M. Jayson 8/13/98
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer 8/13/98
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Realmark Property Investors Limited Partnership
VI-B for the six months ended June 30, 1998, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,082,446
<SECURITIES> 0
<RECEIVABLES> 41,726
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,583,583
<PP&E> 7,064,582
<DEPRECIATION> 1,737,878
<TOTAL-ASSETS> 7,531,810
<CURRENT-LIABILITIES> 449,769
<BONDS> 5,330,951
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,531,810
<SALES> 0
<TOTAL-REVENUES> 803,165
<CGS> 0
<TOTAL-COSTS> 1,271,229
<OTHER-EXPENSES> 53,679
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 229,536
<INCOME-PRETAX> (521,743)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (521,743)
<EPS-PRIMARY> (6.44)
<EPS-DILUTED> 0
</TABLE>
