SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
Commission file number O-17248
OWENS MORTGAGE INVESTMENT FUND,
a California Limited Partnership
(Exact Name of Registrant as specified In Its charter)
California 68-0023931
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.)
2221 Olympic Boulevard
Walnut Creek, California 94595
(Address of principal executive office) (Zip Code)
Registrant's Telephone number,
including area code (510) 935-3840
Indicate by 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>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
BALANCE SHEETS -- SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
September 30 December 31
1995 1994
ASSETS
<S> <C> <C>
Cash and cash equivalents (Note 2) $ 7,632,247 $ 2,153,706
Certificates of Deposit 1,100,000 1,100,000
Loans secured by trust deeds (Notes 2 and 3) 146,622,445 145,050,213
less: Allowance for loan losses (Note 2) (2,750,000) (2,750,000)
Real estate held for sale (Note 5) 7,034,583 4,628,325
Unsecured Loan to General Partner (Note 4) 1,452,533 1,249,989
Interest receivable 1,434,736 1,193,764
Total Assets $ 162,526,544 $ 152,625,997
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued distributions payable $ 483,863 $ 446,625
Accounts payable 241,747 332,644
Total Liabilities 725,610 779,269
PARTNERS' CAPITAL:
General partners (Note 6) 1,597,112 1,488,360
Limited partners (Note 6) 160,203,822 150,358,368
Total Partners' Capital 161,800,934 151,846,728
Total Liabilities and Partners' Capital $ 162,526,544 $ 152,625,997
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
September 30 September 30 September 30 September 30
1995 1994 1995 1994
REVENUES:
<S> <C> <C> <C> <C>
Interest income on loans secured by trust deeds $ 3,862,766 $ 3,685,049 $11,447,010 $11,291,392
Other interest income 117,711 104,007 197,224 182,102
Income from Real Estate 64,896 0 146,526 0
Total revenues $ 4,045,373 $ 3,789,056 $11,790,760 $11,473,494
OPERATING EXPENSES:
Management Fees (Note 6) $ 361,832 $ 201,211 $ 846,600 $ 1,269,750
Promotional interest (Note 3) 12,553 22,695 48,853 55,386
Administrative 14,129 14,129 42,387 42,387
Legal and accounting 18,430 75,195 54,690 142,915
Real Estate Owned expenses 57,718 190,651 199,586 209,546
Other 10,996 21,392 10,996 26,362
Total operating expenses $ 475,658 $ 525,273 $ 1,203,112 $ 1,746,346
Net income $ 3,569,715 $ 3,263,783 $10,587,648 $ 9,727,148
Net income allocated to general partner $ 35,275 $ 31,933 $ 104,158 $ 94,495
Net income allocated to limited partners $ 3,534,440 $ 3,231,850 $10,483,490 $ 9,632,653
Net income per limited partnership
unit (Note 8) $.022 $.022 $.067 $.067
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnersbip)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1995 and 1994
September 30 September 30
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $10,587,648 $ 9,727,148
Adjustments to reconcile net Income
to net cash provided by operating activities
(Increase) in interest receivable (240,972) (264,617)
Increase (decrease) in accrued distribution
payable 37,238 10,583
Increase (decrease) in accounts payable (90,897) 152,394
Increase (decrease) in deferred interest 0 (4,731)
Total adjustment (294,631) (101,640)
Net cash provided by operating activities 10,293,017 9,625,508
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of loans secured by trust deeds (42,683,144) (41,470,529)
Principal collected 1,066,547 1,633,253
Loan payoffs 39,841,821 39,690,012
Investments in real estate (2,405,258) (1,950,000)
Investments in Certificates of Deposit (net) 0 400,000
Net cash provided by (used in)
investing activities (4,180,034) (1,697,264)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of partnership Units 11,213,731 14,369,752
Cash distributions (4,295,801) (3,917,862)
Capital withdrawals (7,551,372) (8,273,517)
Net cash provided by (used in)
financing activities (634,442) 1,678,373
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,478,541 8,991,201
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,153,706 1,640,818
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 7,632,247 $10,632,019
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) ORGANIZATION AND OPERATIONS
Owens Mortgage Investment Fund (the Partnership), a California limited
partnership, was formed on June 14, 1984 to invest in loans secured by first,
second and third trust deeds and wraparound mortgage loans. The Partnership
commenced operations on the date of formation and will continue until December
31, 2034 unless dissolved prior thereto under the provisions of the partnership
agreement. The general partners include Owens Financial Group, Inc. (OFG), a
California Corporation, and certain individuals who are OFG's
shareholders/officers and/or employees. The individual partners have assigned to
OFG their interest in any present or future promotional allowance from the
Partnership. OFG is a California corporation engaged in the origination of real
estate mortgage loans and the subsequent servicing of these mortgages for the
Partnership and for other third-party investors. The general partners are
authorized to offer and sell and have outstanding up to an aggregate of
250,000,000 units outstanding at $1.00 per unit, representing $250,000,000 of
limited partnership interest in the Partnership. Limited Partnership Units
outstanding were 163,269,755 at September 30, 1995. As of September 30, 1995,
the Partnership had registered $321,570,324 of limited partnership interests
with the Securities and Exchange Commission.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following items comprise the significant accounting policies that the
Partnership follows in preparing and presenting its financial statements.
(a) Loans Secured by Trust Deeds
Loans secured by trust deeds are acquired from OFG and are recorded at
cost, which includes fees paid to OFG for origination, evaluation, and
acquisition services. The cost to the Partnership approximates the principal
amount outstanding. Interest income on loans is accrued by the simple interest
method. In May 1993, the Financial Accounting Standards Board issued Statement
No. 114, Accounting by Creditors for Impairment of a Loan. Statement No. 114
requires that impaired loans be measured on the present value of expected future
cash flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. The Partnership will be required
to implement this new standard by 1995. Management of the Partnership has not
yet evaluated the impact that implementation of this standard will have on the
financial statements of the Partnership.
(b) Allowance for Loan Losses
The Partnership maintains an allowance for loan losses equal to $2,750,000
as of September 30, 1995. Management of the Partnership believes that based on
historical experience and a review of the loans and their respective collateral,
the allowance for loan losses is adequate in amount.
Through October 31, 1994, OFG made all delinquent interest payments on
Partnership loans originated prior to May 1, 1993 on a non-recourse basis.
However, effective November 1, 1994, OFG discontinued its practice of making
such payments for certain loans totaling $2,533,000 as of September 30, 1995
which were originated prior to May 1, 1993 and which were more than 90 days
delinquent. The Partnership discontinues the accrual of interest on loans when,
in the opinion of management, there is a significant doubt as to the
collectibility of interest or principal from either the borrower or OFG or when
the payment of principal or interest is ninety days past due, unless OFG
continues to advance interest payments to the Partnership. As of September 30,
1995 and December 31, 1994, the Partnership had loans totaling $3,924,000 and
$4,923,000, respectively, classified as non-accrual loans.
The Partnership's investment in loans for which OFG has provided advances
for delinquent interest payments over 90 days was $5,849,000 and $8,781,000 at
September 30, 1995 and December 31, 1994, respectively.
Advances for delinquent interest payments and other payments, such as
property taxes and mortgage interest pursuant to senior indebtedness, made to or
on behalf of the Partnership by OFG for the nine months ended September 30, 1995
and for the twelve months ended December 31, 1994 which had not been reimbursed
by the borrower as of the same date, totaled approximately $897,000 and
$1,149,000, respectively. The Partnership has no obligation to repay these
advances to OFG. During 1994, OFG assumed through foreclosure one Partnership
loan totaling $58,000. In addition, the Partnership was foreclosed out of a loan
by a senior lienholder in the amount of $591,000. OFG assumed one Partnership
loans through foreclosure in the amount of $14,463 for the three and nine month
periods ended September 30, 1995.
c) Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents
include interest-bearing or non interest-bearing bank deposits and short-term
certificates of deposit with original maturities of three months or less.
(d) Certificates of Deposit
Certificates of Deposit are held with various financial institutions with
original maturities of up to one year.
(e) Real Estate Held for Sale
Real estate held for sale includes real estate acquired through foreclosure
and is carried at the lower of the recorded investment in the loan plus ,any
additional capitalized costs, inclusive of any senior indebtedness, or the
property's estimated fair market value, less estimated cost to sell. (f) Income
Taxes No provision is made for income taxes since the Partnership is not a
taxable entity. Accordingly, any income or loss is included in the tax returns
of the partners.
(3) LOANS SECURED BY TRUST DEEDS
Loans secured by trust deeds as of September 30, 1995 and December 31, 1994
were as follows:
September 30 December 31
1995 1994
Income-producing properties $137,513,110 $135,128,661
Single-family residences 2,599,383 3,179,945
Unimproved land 6,509,952 6,741,607
$146,622,455 $145,050,213
First mortgages $132,399,433 $131,139,007
Second mortgages 13,625,618 13,228,818
Third mortgages or all-inclusive
deeds of trust 597,394 682,388
$146,622,445 $145,050,213
Loan maturities range from 1995 to 2011, with approximately 28%
($40,359,000) of the loan principal outstanding at September 30, 1995 maturing
in 1995 and 1996. These maturities include $14,141,000 in loans which are past
maturity as of September 30, 1995, of which $5,946,000 represents loans for
which interest payments are delinquent over 90 days. The Partnership refinanced
loans totaling $11,465,000 and $11,266,000 during the nine months ended
September 30, 1995 and the year ended December 31, 1994, respectively, thereby
extending the maturity dates of such loans.
The Partnership's total investment in loans delinquent over ninety days is
$9,774,000 and $13,704,000 at September 30, 1995 and December 31, 1994,
respectively. As of September 30, 1995 and December 31, 1994, OFG is providing
non-recourse advances for the delinquent interest payments on $5,849,000 and
$8,781,000, respectively, of such loans.
As of September 30, 1995 and December 31, 1994, the Partnership's loans
secured by deeds of trust on real property collateral located in Northern
California totaled approximately 79% ($116,238,000) and 82% ($118,462,000),
respectively of the loan portfolio. The Northern California region is a large
geographic area which has a diversified economic base. The ability of the
borrowers to repay loans is influenced by the strength of the region and the
impact of prevailing forces on the value of real estate. Such loans are secured
by deeds of trust in real estate properties and are expected to be repaid from
the cash flow of the properties or proceeds from the sale or refinancing of the
properties. The policy of the Partnership is to require real property collateral
with a value, net of senior indebtedness, that exceeds the carrying amount of
the loan balance and to record a deed of trust on the underlying property.
(4) UNSECURED LOANS DUE FROM GENERAL PARTNER
During 1993, OFG sold various properties that it had acquired from the
Partnership through foreclosure proceedings on Partnership loans assumed in 1992
and 1993. The sales proceeds were insufficient to repay the Partnership's
investment in the related mortgage notes; accordingly, OFG executed an unsecured
note payable to the Partnership in the aggregate amount of $1,411,111 to satisfy
OFG's obligation pursuant to an expired Limited Indemnification Agreement.
During 1994, OFG sold one property acquired through foreclosure proceedings
on a Partnership loan assumed in 1993 incurring a loss of $369,512. In addition,
the Partnership was foreclosed out of the second position of another loan by the
holder of the first deed of trust at a loss of $591,000.
During 1995, the Partnership sold a loan with a principal balance of
$1,425,085 at a discounted price of $900,000. In addition, the Partnership was
foreclosed out of the second position of a loan by the holder of the first deed
of trust. The property securing this junion loan made up part of the security
for the Partnership's entire loan, and $377,272 of the entire loan amount was
allocated to this property Although not obligated to do so, OFG assumed the
losses associated with these transactions and added the losses to the
outstanding balance of the unsecured note payable. As of September 30, 1995, OFG
has repaid $1,821,447 in principal on this unsecured loan leaving a balance due
of $1,452,533. The note carries an interest rate of 8% and is current.
(5) REAL ESTATE HELD FOR SALE AND MORTGAGE PAYABLE
Real estate held for sale at September 30, 1995 consists of the following
properties acquired through foreclosure in 1993, 1994 and 1995:
Warehouse, Merced, California, net of valuation
allowance of $200,000 as of September 30, 1995 $ 800,000
Residential lots, Carmel, California 1,639,851
Light industrial, Emeryville, California 925,000
70% interest in undeveloped land, Vallejo, California 568,569
Commercial lot, Sacramento, California, net of valuation
allowance of $200,000 as of September 30, 1995 349,828
Office building, Monterey, California 2,094,247
Undeveloped land, Los Gatos, California 571,853
Residential lot, Grass Valley, California 55,380
Apartments/Commercial Use, Oakland, California 29,855
Total $7,034,583
Real estate held for sale has increased in recent years due to the
Corporate General Partner's policy to not acquire such properties through
foreclosure.
(6) PARTNER'S CAPITAL
(a) Contributions
The limited partners contribute $1.00 for each unit subscribed.
Registration costs incurred by the Fund have been offset against contributed
capital. Such costs, which were incurred in 1989, amounted to approximately
$198,000.
Prior to September 1, 1986, the general partners contributed cash in an
amount equal to 1% of the aggregate capital contribtions of the limited
partners. After such date, the general partners are required to make cash
capital contributions in the amount of 1/2 of 1% of the limited partners'
aggregate capital contributions.
(b) Allocations, Distributions and Withdrawals
In accordance with the partnership agreement, the Partnership's profits,
gains and losses are allocated to each limited partner and the corporate general
partner in proportion to their respective capital contributions.
Distributions are made monthly to the partners in proportion to the
respective units owned during the preceding calendar month. Accrued
distributions payable represent amounts to be paid to the partners in October,
1995 and January, 1995 on their capital balances at September 30, 1995 and
December 31, 1994, respectively.
The Partnership makes cash distributions to those limited partners who
elect to receive such distributions. Those limited partners who elect not to
receive cash distributions have their distributions reinvested in additional
limited partnership units. Such reinvested distributions totaled $6,296,933 and
$5,750,359 for the nine months ended September 30, 1995 and 1994, respectively.
The limited partners may withdraw, or partially withdraw, from the Fund and
obtain the return of their outstanding capital accounts within 91 days after
written notices are delivered to the corporate general partner, subject to the
following limitations:
Any such payments are required to be made only from cash available for
distribution, net proceeds and capital contributions (as defined) during said
91-day period.
A maximum of $75,000 may be withdrawn during any calendar quarter (or
$100,000 in the case of an estate of a deceased limited partner).
The general partners are not required to establish a reserve fund for the
purpose of funding such payments.
No more than 10% of the outstanding limited partnership interests nay be
withdrawn during any calendar year except upon dissolution of the Fund.
(c) Promotional Interest of General Partners
The general partners contributed cash to the Partnership's capital in the
amount of 0.5% of the limited partners aggregate capital contributions and,
together with their promotional interest, the general partners have an interest
equal to 1% of the limited partners contributions. This promotional interest of
the general partners of up to 1/2 of 1% is expensed monthly to the Partnership
and credited as a contribution to the general partners capital account as
additional compensation. As of September 30, 1995, the general partners had made
cash capital contributions of $818,320 to the Partnership. The general partners
have agreed not to withdraw any portion of this capital from the Partnership,
even though it exceeds the 1/2 of 1% requirement, but they are not required to
make any further cash capital contributions to the Partnership until the amount
falls below the 1/2 of 1% requirement.
The promotional interest expense charged to the Partnership was $12,553 and
$22,695 for the three months ended September 30, 1995 and 1994, respectively and
$48,853 and $55,386 for the nine months ended September 30, 1995, respectively.
(7) CONTINGENCY RESERVES
In accordance with the partnership agreement and to satisfy the
Partnership's liquidity requirements, the Partnership is required to maintain
contingency reserves (as defined) in an aggregate amount of at least 1.5% of the
gross proceeds of the sale of limited partnership units. The cash capital
contribution of the general partners (amounting to $818,320 at September 30,
1995), up to a maximum of .5% of the limited partners' capital contributions,
will be available as additional contingency reserve, if necessary.
The contingency reserves required at September 30, 1995 and December 31,
1994 were $3,261,830 and $3,055,784, respectively. Cash and cash equivalents as
of the same dates were restricted accordingly.
(8) TRANSACTIONS WITH AFFILIATES
OFG is entitled to receive from the Partnership a management fee of up to
2.75% per annum of the average unpaid balance of the Partnership's mortgage
loans at the end of each of the preceding twelve months for services redered as
manager of the Partnership. The maximum management fee is reduced to 1.75% per
annum if OFG has not provided during the preceeding calendar year any of the
certain services defined in the limited partnership agreement.
All of the Partnership's loans are serviced by OFG, in consideration for
which OFG receives fees up to .25% per annum of the unpaid principal balance of
the loans. Such servicing fees are paid from the interest income of the loans
collected from the borrowers. In consideration for management services provided,
OFG receives fees up to 2.75% per annum of the average unpaid balance of the
Partnership's mortgage loans at the end of each of the 12 months in the then
current calendar year.
Interest income on loans secured by trust deeds is collected by OFG and,
along with advances on delinquent loans, is remitted to the Partnership.
Interest receivable amounted to $1,434,736 and $1,193,764 at September 30, 1995
and December 31, 1994, respectively.
OFG may, at its sole discretion and on a monthly basis, adjust the
servicing and management fees as long as such fees do not exceed the allowable
.25% and 2.75% annual limits, respectively. In determining the servicing and
management fees, and hence the yield to the Partnership, OFG may consider a
number of factors, including the then-current market yields. Service fee
payments to OFG approximated $102,000 and $81,000 for the three months ended
September 30, 1995 and 1994, respectively and $301,000 and $261,000 for the nine
months ended September 30, 1995 and 1994, respectively. Management fee income to
OFG earned on loans invested in by the Fund approximated $362,000 and $201,000
for the three months ended September 30, 1995 and 1994, respectively, and
$847,000 and $1,270,000 for the nine months ended September 30, 1995 and 1994,
respectively.
OFG is the obligor on a note payable to the Partnership in the amount of
$490,322 which is secured by a property owned by OFG as of September 30, 1995.
This note is interest only, due on demand and is current. Although the terms of
the loan between the Partnership and OFG may or may not be at market rate, they
are considered adequate and reasonable.
OFG originates all loans the Partnership is invested in and receives an
investment evaluation fee payable by borrowers or the Partnership. Such fees,
payable by borrowers, earned by OFG amounted to approximately $500,000 and
$550,000 for the three months ended September 30, 1995 and 1994, respectively
and $1,397,000 and $1,075,000 for the nine months ended September 30, 1995 and
1994, respectively.
OFG receives late payment charges from borrowers who make delinquent
payments. Such charges are in addition to the normal monthly loan payments and
totaled approximately $78,000 and $37,000 for the three months ended September
30, 1995 and 1994, respectively and $147,000 and $153,000 for the nine months
ended September 30, 1995 and 1994, respectively.
(9) NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per limited partnership unit is computed using the weighted
average of limited partnership units outstanding during the three month periods.
These amounts were $163,073,491 and $149,161,161 for the three months ended
September 30, 1995 and 1994, respectively and $157,356,326 and $143,138,629 for
the nine months ended September 30, 1995 and 1994, respectively.
<PAGE>
Item 2. Management's Discussion and Ana1ysis of Financial Condition and
Results of Operations
Results of Operations
The net income increases of $306,000 (9.37%) for the three months ended
September 30, 1995 as compared to the three months ended September 30, 1994 and
of $861,000 (8.85%) for the nine months ended September 30, 1995 and compared to
the nine months ended September 30, 1994 were primarily attributable to
increases in the average mortgage investments and other notes receivable from
$135,247,000 to $145,176,000 for the three months ended September 30, 1994 and
1995, respectively and from $134,503,000 to $146,747,000 for the nine months
ended September 30, 1995 and 1994, respectively.
The Partnership experienced a decrease in its average net yield from 8.80%
to 8.77% for the three months ended September 30, 1994 and 1995, respectively
and a decrease in its average net yield from 8.87% to 8.83% for the nine months
ended September 30, 1994 and 1995, respectively. The net yield represents the
net income of the Partnership after all expenses with the exception of the
provision for losses on loans or Real Estate Owned. These variations in yield
are minor; however, the gross income of the Partnership has been reduced due to
the fact that, as of November 1, 1994, the Corporate General Partner
discontinued its previous practice of making payments on certain delinquent
loans held by the Partnership which were originated prior to May 1, 1993. As of
September 30, 1994 the Partnership held no non-performing loans which were not
being advanced on by the Corporate General Partner. However, the Partnership had
$3,924,000 of non-performing loans as of September 30, 1995 on which the
Corporate General Partner was not advancing payments. These decreases in income
have been offset by decreases in expenses. The Corporate General Partner has
significantly reduced the management fees it collects to offset the loss of
revenue to the Partnership. Management fees paid to the Corporate General
Partner decreased from $1,270,000 to $847,000 for the nine months ended
September 30, 1994 and 1995, respectively.
Portfolio Review
The number of Partnership mortgage investments decreased from 256 to 237 as
of Sepatember 30, 1994 and 1995, respectively. The average loan balance in this
period increased from $520,562 to $618,660 as of September 30, 1994 and 1995,
respectively. This average loan increase reflects the Partnership's ability to
invest in larger mortgage loans meeting the Partnership's objectives. In
addition, it appears that the Corporate General Partner's market for placing
larger loans has grown while the market for smaller loans has diminished. The
Corporate General Partner does not know why this has happened, but it appears
that other lenders are increasingly competing for commercial loans of less than
$1,000,000.
The Corporate General Partner had previously made all periodic interest
payments to the Partnership on all delinquent loans made or invested in by the
Partnership. However, on loans originated by the Corporate General Partner on or
after May 1, 1993, and effective November 1, 1994, for certain other loans
originated prior to May 1, 1993, the Corporate General Partner has adopted the
policy to not advance delinquent interest or principal. As of September 30,
1995, there were $3,924,000 in loans held by the Partnership on which payments
were more than 90 days delinquent and on which payments were not being advanced
by the Corporate General Partner. The Corporate General Partner has advanced
approximately $386,000 in delinquent interest payments to the Partnership from
January 1, 1995 to September 30, 1995 that had not been collected from the
borrower by the Corporate General Partner as of September 30, 1995.
Approximately $9,774,000 (6.7%) and $13,704,000 (9.4%) of the loans
invested in by the Fund were more than 90 days delinquent in payment as of
September 30, 1995 and December 31, 1994, respectively. Of these amounts,
approximately $3,794,000 (2.6%) and $7,963,000 (5.5%) were in the process of
foreclosure as of September 30, 1995 and and December 31, 1994, respectively.
A loan loss reserve in the amount of $2,750,000 was maintained on the books
of the Partnership as of September 30, 1995 and 1994. As of this date the
General Partners have determined that this loan loss reserve is adequate.
As of September 30, 1995 and December 31, 1994 approximately 79% and 82%,
respectively of the mortgage loans made or invested in by the Partnership are
secured by real property located in Northern California. The following table
sets forth the principal amount of mortgage investments, by classification of
property securing each loan, held by the Partnership on September 30, 1995 and
December 31, 1994:
Principal Amount
September 30 December 31
1995 1994
(000) (000)
Single-Family Dwellings $ 2,599 $ 3,180
Income-Producing Property 137,513 135,129
Unimproved Land 6,510 6,741
$146,622 $145,050
First Mortgages $132,399 $131,139
Second Mortgages 13,626 13,229
Third Mortgages or All-inclusive
Deeds of Trust 597 682
$146,622 $145,050
The following amount of delinquent loans held by the Partnership have been
acquired and foreclosed upon by the Corporate General Partner from January 1,
1991 through September 30, 1995:
Delinquent Year
Principal Interest Foreclosed
$2,890,000 $258,602 1991
5,220,925 787,591 1992
1,025,581 150,295 1993
58,000 8,417 1994
14,463 0 1995
The Corporate General Partner has advanced all delinquent interest to the
Partnership on these foreclosed loans. Of these foreclosed loans the Partnership
held one mortgage in the amount of $490,322 as of September 30, 1995.
Real Estate Owned
The Partnership currently holds title to the following nine properties
which were foreclosed on during 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Fund Additional
Loan Capitalized Delinquent Senior
Description Amount Costs Interest (1) Loans
60,000 S.F. Light
Industrial Warehouse
<S> <C> <C> <C> <C>
Merced, CA $ 800,000 (2)$ $ 0 $175,333 $ 0
Residential Lots
Carmel Valley, CA $ 600,000 $1,039,851 (3) $141,750 $ 0
Light Industrial Warehouse
Emeryville, CA $ 925,000 $ 0 $235,721 $ 0
Commercial Lot/Residential
Development
Vallejo, CA $ 525,000 $ 43,569 $ 83,949 $ 0
Commerical Lot
Sacramento, CA $ 300,000 (2) $ 49,828 $ 36,500 $ 0
Office Building
Monterey, CA $ 550,000 $1,544,247 (4) $ 30,077 $ 0
Residential Lot
Grass Valley, CA $ 55,000 $ 380 $ 6,302 $ 0
Commercial Space
Oakland, CA $ 29,855 $ 0 $ 31,708 $ 0
Undeveloped Land
Los Gatos, CA $ 571,853 $ 0 $134,878 $ 0
<FN>
(1) The delinquent interest was advanced by OFG to the Partnership. The $83,949
of delinquent interest advanced by OFG on the Vallejo, California property
has been reimbursed by the Partnership.
(2) This amount is net of a loss allowance of $200,000.
(3) Included in this balance is the payoff of a senior loan in the amount of
$500,000.
(4) Included in this balance is the payoff of a senior loan in the amount of
$1,425,000. This senior loan was originally $2,102,646 including late
charges and fees. The Corporate General Partner arranged for this loan to
be discounted at payoff.
</FN>
</TABLE>
With the exception of the light industrial warehouse located in Emeryville,
California, these properties do not currently generate revenue and, as such, are
operating at a deficit. The General Partners believe that due to the values of
these properties, the Partnership should not sustain any losses of principal on
their ultimate disposition.
The Partnership has entered into partnership, as a limited partner, with a
licensed general contractor on the the residential lots located in Carmel
Valley, California to build and sell detached, single family residences. It is
anticipated that all infrastructure woek including roads and utilities will be
completed by the end of 1995. The joint venture owns 30 residential lots with an
opttion to purchase 34 additonal lots at $90,000 per lot. Sales of residential
units is anticipated to begin in 1996.
The Partnership has fully leased out the office building located in
Monterey, California with the most recent lease beginning on October 1, 1995.
The Partnership's investment in Real Estate Owned has increased during
1993, 1994 and 1995 due to the Corporate General Partner's policy to not acquire
property subject to foreclosure on which the Partnership has a trust deed
investment.
Liquidity and Capital Resources
The Partnership relies upon purchases of limited partnership interests and
loan payoffs for the creation of capital for mortgage investments. The
Partnership has not and does not intend to borrow money for investment purposes.
Continency Reserves
The Partnership maintains cash and certificates of deposit as contingency
reserves in an aggregate amount of at least 2% of the gross proceeds of the sale
of Limited Partners' Units. To the extent that such funds are not sufficient to
pay expenses in excess of revenues or to meet any obligation of the Partnership,
it may be necessary for the Partnership to sell or otherwise liquidate certain
of its investments on terms which may not be favorable to the Partnership.
Current Economic Conditions
The Partnership has been affected by regional declines in commercial
property values and general economic conditions; however, the Partnership has
not sustained any principal losses to date. Due to the conservative
loan-to-value criteria established by the Corporate General Partner, the
mortgage loans held by the Partnership appear in general to be, in the opinion
of the General Partners, adequately secured.
The Partnership generally invests in relatively short-term commercial loans
(1-7 years) which large financial institutions typically do not invest in. Due
to this, the net income of the Partnership has in recent years remained in the
range of 9-10 percent per year. If there were a reduction in the demand for
loans originated by the Corporate General Partner and, thus, fewer loans for the
Partnership to invest in, the Partnership would have to invest excess cash in
shorter term investments yielding considerably less than the current investment
portfolio.
The Partnership continues to receive substantial additional investments
from new and existing Limited Partners which provide capital for loans,
purchases of existing notes and redemption of existing Limited Partnership
Units.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not presently involved in any material legal
proceedings.
Item 6(b). Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
<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.
Dated: November 15, 1995 OWENS MORTGAGE INVESTMENT FUND
a California Limited Partnership
(Registrant)
By: Owens Financial Group, Inc.
a General Partner
By: \s\ David Adler
David Adler
President
By: \s\ Bryan H. Draper
Bryan H. Draper
Controller
Principal Financial and
Accounting Officer
<TABLE> <S> <C>
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<LEGEND>
(Replace this text with the legend)
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<CIK> 841501
<NAME> OWENS MORTGAGE INVESTMENT FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
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<SECURITIES> 0
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<ALLOWANCES> 2,750,000
<INVENTORY> 0
<CURRENT-ASSETS> 155,491,961
<PP&E> 7,034,583
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<TOTAL-ASSETS> 162,526,544
<CURRENT-LIABILITIES> 725,610
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0
0
<OTHER-SE> 161,800,934
<TOTAL-LIABILITY-AND-EQUITY> 162,526,544
<SALES> 4,045,373
<TOTAL-REVENUES> 4,045,373
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