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 June 30, 1998
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)
(925) 935-3840
(Registrant's Telephone number,
including area code)
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
June 30, 1998 and December 31, 1997
June 30 December 31
1998 1997
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents (Note 2) $ 14,469,028 $ 3,073,115
Certificates of deposit (Note 2) 1,000,000 1,000,000
Loans secured by trust deeds (Notes 2 and 3) 173,831,159 174,714,607
Less: Allowance for loan losses (Note 2) (3,500,000) (3,500,000)
Real estate held for sale, net of allowance
for losses (Notes 2 and 4) 10,254,784 14,151,141
Interest receivable (Note 7) 2,247,968 1,773,608
Other receivables 59,074 112,583
-------------- -------------
Total Assets $198,362,013 $191,325,054
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued distributions payable (Note 5) $ 531,063 $ 544,385
Accounts payable and accrued liabilities 126,672 49,534
------------- --------------
Total Liabilities 657,735 593,919
------------- -------------
PARTNERS' CAPITAL:
General partners (Note 5) 1,954,038 1,864,033
Limited partners (Note 5) (Units Subject to Redemption) 195,750,240 188,867,102
----------- -----------
Total Partners' Capital 197,704,278 190,731,135
----------- -----------
Total Liabilities and Partners' Capital $198,362,013 $191,325,054
=========== ===========
</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 Six Months Ended June 30, 1998 and 1997 (Unaudited)
For the Three Months Ended For the Six Months Ended
June 30 June 30 June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
REVENUES:
<S> <C> <C> <C> <C>
Interest income on loans secured by trust deeds $ 4,541,925 $ 4,336,941 $ 9,237,100 $ 8,679,110
Gain on sale of real estate (Note 4) 83,705 779,541 1,254,018 1,800,127
Other income 210,578 107,288 345,856 334,238
----------- ----------- ------------ ------------
Total revenues 4,836,208 5,223,770 10,836,974 10,813,475
----------- ----------- ------------ ------------
OPERATING EXPENSES:
Management fees paid to General Partner (Note 7) 188,189 926,109 772,839 2,225,567
Servicing fees paid to General Partner (Note 7) 105,326 118,421 248,733 238,658
Promotional interest (Note 5) 6,738 17,679 38,460 40,653
Administrative 13,752 14,129 32,591 28,258
Legal and accounting 531 37,442 56,317 77,854
Real estate operations, net (21,694) 49,385 19,526 72,276
Other 9,662 8,613 13,097 8,843
----------- ----------- ----------- -----------
Total operating expenses 302,504 1,171,778 1,181,563 2,692,109
----------- ----------- ----------- -----------
Net income $ 4,533,704 $ 4,051,992 $ 9,655,411 $ 8,121,366
=========== =========== =========== ===========
Net income allocated to general partner $ 44,888 $ 38,465 $ 95,598 $ 78,781
=========== =========== =========== ===========
Net income allocated to limited partners $ 4,488,816 $ 4,013,527 $ 9,559,813 $ 8,042,585
=========== =========== =========== ===========
Net income allocated to limited partners
per weighted limited partnership unit (Note 8) $.023 $.022 $.049 $.044
==== ==== ==== ====
</TABLE>
The accompanying notes are an
integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
6
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1998 and 1997 (Unaudited)
June 30 June 30
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 9,655,411 $ 8,121,366
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate by limited partnership (1,229,145) (1,800,127)
Gain on sale of real estate properties (24,873) -
Changes in operating assets and liabilities:
Interest receivable (474,360) (32,924)
Other receivables 53,509 -
Accrued distributions payable (13,322) (6,442)
Accounts payable and accrued liabilities 77,138 10,421
Deferred income - 69,895
------------- -------------
Net cash provided by operating activities 8,044,358 6,362,189
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of loans secured by trust deeds (34,539,107) (41,741,933)
Principal collected 936,019 960,583
Loan payoffs 35,127,850 29,046,332
Investment in real estate properties (39,172) 952,289
Net proceeds from disposition of real estate properties 90,035 -
Investment in limited partnership (926,487) (2,415,369)
Distributions received from limited partnership 5,457,464 4,893,212
Investment in corporate joint venture (72,778) -
Unsecured loan to General Partner - 488,764
Investments in Certificates of deposit (net) - (150,000)
------------ ------------
Net cash provided by (used in) investing activities 6,033,824 (7,966,122)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of partnership Units 8,015,888 9,007,634
Partners' cash distributions (3,162,264) (3,046,271)
Partners' capital withdrawals (7,535,893) (5,831,143)
------------ ------------
Net cash (used in) provided by financing activities (2,682,269) 130,220
------------- ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 11,395,913 (1,473,713)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 3,073,115 11,386,661
----------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 14,469,028 $ 9,912,948
=========== ==========
</TABLE>
See notes 3, 4 and 5 for supplemental disclosure of non-cash investing and
financing activities.
The accompanying notes are an
integral part of these financial statements.
<PAGE>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(1) Organization
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, wraparound and construction
mortgage loans and leasehold interest mortgages. 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) and
certain individuals who are OFG's shareholders and officers. 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 for eventual sale and the subsequent servicing of those
mortgages for the Partnership and other third-party investors.
The general partners are authorized to offer and sell units in the
Partnership up to an aggregate of 250,000,000 units outstanding at
$1.00 per unit, representing $250,000,000 of limited partnership
interests in the Partnership. Limited partnership units outstanding
were 195,945,988 and 189,063,122, at June 30, 1998 and December 31,
1997, respectively.
(2) Summary of Significant Accounting Policies
(a) General
In the opinion of the management of the Partnership, the
accompanying unaudited financial statements contain all
adjustments, consisting of normal, recurring adjustments,
necessary to present fairly the financial information included
therein. These financial statements should be read in
conjunction with the audited financial statements included in
the Partnership's Form 10-K for the fiscal year ended December
31, 1997 filed with the Securities and Exchange Commission. The
results of operations for the three-month and six-month periods
ended June 30, 1998 are not necessarily indicative of the
operating results to be expected for the full year.
(b) Management 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.
(2) Summary of Significant Accounting Policies, Continued
(c) Loans Secured by Trust Deeds
Loans secured by trust deeds are acquired from OFG and are
recorded at cost. Interest income on loans is accrued by the
simple interest method.
In accordance with the Financial Accounting Standards Board's
Statement No. 114, Accounting by Creditors for Impairment of a
Loan, and No. 118, Accounting by Creditors for Impairment of a
Loan--Income Recognition and Disclosures. Under Statement No.
114, a loan is impaired when, based on current information and
events, it is probable that a creditor will be unable to collect
the contractual interest and principal payments of a loan
according to the contractual terms of the loan agreement.
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. Statement No.
118 clarifies interest income recognition and disclosure
provisions of Statement No. 114.
The Partnership does not recognize interest income on loans once
they are determined to be impaired until the interest is
collected in cash. Cash receipts are allocated to interest
income, except when such payments are specifically designated as
principal reduction or when management does not believe the
Partnership's investment in the loan is fully recoverable.
(d) Allowance for Loan Losses
The Partnership maintains an allowance for loan losses equal to
$3,500,000 as of June 30, 1998 and December 31, 1997. 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.
The outstanding balance of all loans delinquent greater than
ninety days is $12,330,000 and $5,236,000 and as of June 30,
1998 and December 31, 1997, respectively. The Partnership
discontinues the accrual of interest on loans when, in the
opinion of management, there is significant doubt as to the
collectibility of interest or principal from the borrower or
when the payment of principal or interest is ninety days past
due, unless OFG purchases the interest receivable from the
Partnership. As of June 30, 1998 and December 31, 1997, the
aforementioned loans totaling $12,330,000 and $5,236,000,
respectively, are classified as non-accrual loans.
OFG advances certain payments to the Partnership on behalf of
borrowers, such as property taxes, mortgage interest pursuant to
senior indebtedness, and development costs. Purchases of
interest receivable and payments made on loans by OFG during the
six months ended June 30, 1998 and the year ended December 31,
1997 but not collected as of June 30, 1998 and December 31,
1997, respectively, totaled approximately $134,000 and $219,000,
respectively.
<PAGE>
(2) Summary of Significant Accounting Policies, Continued
(e) Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash
equivalents include interest-bearing and noninterest-bearing
bank deposits and short-term certificates of deposit with
original maturities of three months or less.
(f) Certificates of Deposit
Certificates of deposit are held with various financial
institutions with original maturities of up to one year.
(g) 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, inclusive of any senior indebtedness, or
the property's estimated fair value, less estimated costs to
sell.
Certain real estate held for sale acquired by the Partnership is
held in a limited partnership and corporate joint venture. The
Partnership accounts for its investments in the limited
partnership and corporate joint venture under the equity method
of accounting. The limited partnership and corporate joint
venture investment in real estate is carried at the lower of
cost or estimated fair value, less estimated costs to sell. The
Partnership increases its investment by advances made to the
limited partnership and corporate joint venture. Any profit
generated from the investment in limited partnership and
corporate joint venture is recorded as a gain on sale of real
estate.
In accordance with Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-lived Assets and
Long-lived Assets to Be Disposed Of", the Partnership
periodically compares the carrying value of real estate held for
sale to expected future cash flows for the purpose of assessing
the recoverability of the recorded amounts. If the carrying
value exceeds future cash flows, the assets are reduced to fair
value. There were no required reductions to the carrying value
of real estate held for sale made for the quarter and six months
ended June 30, 1998 and 1997.
(h) 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.
<PAGE>
(3) Loans Secured by Trust Deeds
Loans secured by trust deeds as of June 30, 1998 and December 31,
1997 are as follows:
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
<S> <C> <C>
Income-producing properties $ 157,109,041 $ 165,201,582
Single-family residences 1,985,615 2,088,606
Unimproved land 14,736,503 7,424,419
----------- -----------
$ 173,831,159 $ 174,714,607
=========== ===========
First mortgages $ 155,811,661 161,275,350
Second mortgages 15,946,934 12,744,274
Third mortgages or all-inclusive deeds of trust 2,072,564 694,983
--------------- -------------
$ 173,831,159 $ 174,714,607
=========== ===========
</TABLE>
Scheduled maturities of loans secured by trust deeds as of June 30,
1998 and the interest rate sensitivity of such loans is as follows:
<TABLE>
<CAPTION>
Fixed Variable
Year ending interest interest
June 30, rate rate Total
<S> <C> <C> <C>
1998 (Past Maturity) $ 23,478,337 4,025,141 27,503,478
1999 28,358,625 6,343,462 34,702,087
2000 40,201,841 19,824,591 60,026,432
2001 3,816,574 5,102,511 8,919,085
2002 1,817,865 6,234,757 8,052,622
2003 847,026 9,721,242 10,568,268
Thereafter (through 2012) 7,672,429 16,386,758 24,059,187
------------- ------------- -------------
$ 106,192,697 67,638,462 173,831,159
============= ============= ==============
</TABLE>
Variable rate loans use as indices the one and five year Treasury
Constant Maturity Index (5.38% and 5.46%, respectively, as of June 30,
1998), the prime rate (8.50% as of June 30, 1998) and the weighted
average cost of funds index for Eleventh District savings institutions
(4.881% as of June 30, 1998). Premiums over these indices have varied
from 250-550 basis points depending upon market conditions at the time
the loan is made.
The scheduled maturities for 1998 include approximately $27,503,000 of
loans which are past maturity as of June 30, 1998, of which $7,177,000
represents loans for which interest payments are delinquent over 90
days. During the six months ended June 30, 1998 and the year ended
December 31, 1997, the Partnership refinanced loans totaling $7,581,000
and $2,741,000, respectively, thereby extending the maturity dates of
such loans.
(3) Loans Secured by Trust Deeds, Continued
The Partnership's total investment in loans delinquent over 90 days is
$12,330,000 and $5,236,000 as of June 30, 1998 and December 31, 1997,
respectively. Of these amounts, approximately $3,094,000 and $3,279,000
were in the process of foreclosure as of June 30, 1998 and December 31,
1997. OFG has purchased the Partnership's receivables for delinquent
interest of $56,000 and $54,000, related to delinquent loans for the
six months ended June 30, 1998 and 1997, respectively.
The Partnership's investment in delinquent loans as of June 30, 1998
totals approximately $12,330,000, of which $8,194,000 has a specific
related allowance for credit losses totaling approximately $2,205,000.
There is a non-specific allowance for credit losses of $1,295,000 for
the remaining balance of $4,136,000 and for other current loans. There
was no additional allowance for credit losses during the six months
ended June 30, 1998.
Interest income received on impaired loans during the six months ended
June 30, 1998 and the year ended December 31, 1997, totaled
approximately $380,000 and $722,000, respectively, $350,000 and
$670,000 of which was paid by borrowers and 963949075$30,000 and
$52,000 of which related to purchases of interest receivable by OFG,
respectively.
As of June 30, 1998 and December 31, 1997, the Partnership's loans
secured by deeds of trust on real property collateral located in
Northern California totaled approximately 53% ($92,909,000) and 67%
($117,352,000), respectively, of the loan portfolio. The Northern
California region (which includes the following counties and all
counties north: Monterey, Fresno, Kings, Tulare and Inyo) is a large
geographic area which has a diversified economic base. The ability of
borrowers to repay loans is influenced by the economic strength of the
region and the impact of prevailing market conditions on the value of
real estate. Such loans are secured by deeds of trust on 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) Real Estate Held for Sale
Real estate held for sale includes the following components as of
June 30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
---- ----
<S> <C> <C>
Real estate properties held for sale $ 9,032,352 $ 9,699,656
Investment in limited partnership 510,291 3,812,122
Investment in corporate joint venture 712,141 639,363
----------- -----------
$ 10,254,784 $ 14,151,141
========== ==========
</TABLE>
<PAGE>
(4) Real Estate Held for Sale, Continued
Gain on sale of real estate includes the following components for the
six months ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
June 30 June 30
1998 1997
<S> <C> <C>
Gain on sale of real estate properties $ 24,873 $ -
Gain on sale of real estate by limited partnership 1,229,145 1,800,127
--------- -----------
$ 1,254,018 1,800,127
========== ===========
</TABLE>
(a) Real Estate Properties Held for Sale
Real estate properties held for sale at June 30, 1998 and
December 31, 1997 consists of the following properties
acquired through foreclosure in 1993 through 1998:
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
<S> <C> <C>
Light industrial warehouse, Merced, California, net of valuation
allowance of $350,000 $ 650,000 650,000
Commercial lot/residential development, Vallejo, California 1,039,116 1,030,566
Commercial lot, Sacramento, California, net of valuation
allowance of $250,000 299,828 299,828
Office building and undeveloped land, Monterey, California,
net of valuation allowance of $200,000 1,885,054 1,902,855
Manufactured home subdivision development, Ione, California,
net of valuation allowance of $384,000 2,443,203 2,451,286
Self storage, Oakland, California 444,467 444,063
Undeveloped land, Reno, Nevada 215,420 230,000
Manufactured home subdivision development, Sonora,
California, net of valuation allowance of $712,000 as
of December 31, 1997 --- 1,149,807
Light industrial building, Paso Robles, California 1,546,522 1,541,251
Commercial building, Sacramento, California 30,000 ---
Commercial building, Gresham, Oregon 425,557 ---
22% interest in 6-unit residential building, Oakland,
California 53,185 ---
--------- ---------
$ 9,032,352 9,699,656
========= =========
</TABLE>
The acquisition of certain of these properties resulted in
non-cash increases in real estate held for sale and non-cash
decreases in loans secured by trust deeds of $508,742 for the
six months ended June 30, 1998. There were no acquisitions in
the six months ended June 30, 1997.
In February 1998, OFG purchased the manufactured home
subdivision development property located in Sonora, California,
from the Partnership for $1,150,000. The Partnership carried
back a loan secured by a trust deed on the property for the full
purchase price. The note bears interest at 8% per annum and is
due on demand.
(4) Real Estate Held for Sale, Continued
During 1997, the Partnership sold three properties for a sales
price of approximately $1,659,000. On one of the three
properties, the Partnership took back a loan secured by a trust
deed in the amount of $840,000.
During 1997, the Partnership sold two loans secured by second
deeds of trust to OFG for $600,000 (face value). The Partnership
subsequently purchased the property (located in Paso Robles,
California) securing the loans at the senior lienholders trustee
sale for $1,350,000; thus, wiping out OFG's junior deeds of
trust. OFG recorded a loss of $600,000 as a result of this
transaction.
(b) Investment in Limited Partnership
In 1993, the Partnership foreclosed on a loan in the amount of
$600,000 secured by a junior lien on 30 residential lots located
in Carmel Valley, California, and in 1994, paid off the senior
loan in the amount of $500,000. The Partnership incurred
additional costs of $502,798 in 1994 to protect its investment,
increasing the carrying value of the lots to $1,602,798. The
Partnership began to develop the lots and incurred an additional
$671,118 in costs during 1995.
During 1995, the Partnership entered into a limited partnership,
WV-OMIF Partners, L.P. (WV-OMIF Partners) with an unrelated
developer/builder, Wood Valley Development, Inc. (Woodvalley),
for the purpose of constructing single-family homes on the 30
lots. The Partnership contributed the lots to WV-OMIF Partners
in 1996 in exchange for a limited partnership interest. The
$671,118 in capitalized costs incurred in 1995 was considered an
advance to WV-OMIF Partners pursuant to the limited partnership
agreement in 1996 when the lots were contributed. The
Partnership provides advances to the WV-OMIF Partners to develop
and construct the homes. The Partnership is entitled to receive
interest at a rate of prime plus 2% on the advances to WV-OMIF
Partners.
OFG and Woodvalley have the option of purchasing and developing
34 similar lots which are interspersed among the 30 lots being
developed by WV-OMIF Partners. WV-OMIF Partners is incurring the
infrastructure costs which benefit all 64 lots, including the 34
lots that can be developed by OFG and Woodvalley. OFG and
Woodvalley are reimbursing WV-OMIF Partners their pro rata share
of the infrastructure costs with the funds received from the
sale of the developed homes. As of June 30, 1998, Woodvalley had
purchased all 34 lots and developed and sold 22 of them. As of
June 30, 1998, OFG and Woodvalley had reimbursed $735,673 in
development costs to WV-OMIF Partners from the sale of homes.
The balance of development costs due by OFG and Woodvalley
totals $15,002 as of June 30, 1998.
<PAGE>
(4) Real Estate Held for Sale, Continued
During 1997 and 1996, the Partnership advanced an additional
$4,152,918 and $2,895,261, respectively, to WV-OMIF Partners for
the continued development and construction of the homes. During
the six months ended June 30, 1998, the Partnership advanced an
additional $926,487 to WV-OMIF. WV-OMIF sold twelve homes during
the six months ended June 30, 1998 for proceeds of $5,972,110,
and the net gain allocable to the Partnership was $1,229,145,
including interest income of $148,420. WV-OMIF Partners
distributed $5,457,464 (including $87,577 in reimbursements from
OFG and Woodvalley) to OMIF during the six months ended June 30,
1998. WV-OMIF Partners sold eleven homes during the six months
ended June 30, 1997 for proceeds of $5,910,261 and the net gain
allocable to the Partnership was $1,800,127, including interest
income of $206,715. WV-OMIF Partners distributed $4,893,212
(including $264,921 in reimbursements from OFG and Woodvalley)
to OMIF during this period. The Partnership's investment in
WV-OMIF Partners totaled $510,291 and $3,812,122 as of June 30,
1998 and December 31, 1997, respectively.
WV-OMIF Partners is distributing cash received from the sale of
the lots in the following priority: (1) to third parties, such
as real property taxes and assessments, lenders, contractors,
etc.; (2) to pay the Partnership the amount of $70,000 per lot,
as each lot sells; (3) to pay the Partnership the interest on
the cash advances in full, as each lot sells; (4) to reimburse
the Partnership for its out-of-pocket cash advances for each
lot, as each lot sells; and (5) the remainder to Woodvalley and
the Partnership at a rate of 30% to Woodvalley and 70% to the
Partnership.
The WV-OMIF Partners Partnership Agreement states that the
Partnership shall take no part in the conduct or control of
WV-OMIF Partner's business or in the operation, right or
authority to act for WV-OMIF Partners. Thus, the Partnership
does not have control of WV-OMIF Partners and accounts for its
investment in WV-OMIF Partners under the equity method of
accounting.
(c) Investment in Corporate Joint Venture
In 1995, the Partnership foreclosed on a loan in the amount of
$571,853 secured by a senior lien on a commercial parcel of land
located in Los Gatos, California. During 1997, the Partnership
contributed the land into 720 University, LLC (the Company), a
corporate joint venture formed between the Partnership and BGC
Properties, LLC (BGC). The purpose of the Company is to develop,
construct and operate a commercial office building or R&D
facility on the land to be held for investment and eventual
sale. The Partnership may provide loans to the Company to
develop and construct the building or the Partnership will
obtain loans from third parties for such purposes. The
Partnership is entitled to receive interest at a rate of prime
plus 2% on the loans it makes to the Company.
<PAGE>
(4) Real Estate Held for Sale, Continued
During 1997, the Partnership capitalized $56,889 in costs
incurred prior to the property being contributed to the Company
and advanced $10,621 to the Company for development. During the
six months ended June 30, 1998, the Partnership advanced an
additional $72,778 to the Company for development. The total
investment in the corporate joint venture totals $712,141 and
$639,363 as of June 30, 1998 and December 31, 1997,
respectively.
The net cash flows from the operations of the Company are to be
distributed in accordance with the following priorities: 1) 70%
to the Partnership and 30% to BGC until the sum of all current
and prior distributions of net cash flows equals the members'
priority return on capital as of the end of the calendar quarter
immediately preceding distribution; and 2) thereafter, 70% to
the Partnership and 30% to BGC.
The distribution upon dissolution shall be made in accordance
with the following priorities: 1) to third parties to pay all
debts; 2) to the members to pay all debts; 3) to the members in
accordance with and to the extent of their respective positive
capital account balances; 4) 70% to the Partnership and 30% to
BGC.
The Company is considered a corporate joint venture, and, thus,
the Partnership accounts for its investment in the Company under
the equity method of accounting.
(5) Partners' Capital
(a) Contributions
Limited partners of the Partnership contributed $1.00 for each
unit subscribed. Registration costs incurred by the Partnership
have been offset against contributed capital. Such costs, which
were incurred in 1989, amounted to approximately $198,000.
(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 general partners in proportion to their respective
capital contributions.
Distributions are made monthly to the limited partners in
proportion to their respective units as of the last day of the
preceding calendar month. Accrued distributions payable
represent amounts to be paid in January and July, 1998 based on
their capital balances as of December 31, 1997 and June 30,
1998, respectively.
<PAGE>
(5) Partners' Capital, Continued
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 $5,221,488 and
$4,933,183 for the six months ended June 30, 1998 and 1997,
respectively. Reinvested distributions are not shown as
partners' cash distributions or proceeds from sale of
partnership units in the accompanying statements of cash flows.
The limited partners may withdraw, or partially withdraw, from
the Partnership and obtain the return of their outstanding
capital accounts at $1.00 per unit (book value) within 91 days
after written notices are delivered to the general partners,
subject to the following limitations:
o 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.
o A maximum of $75,000 per partner may be withdrawn during any
calendar quarter (or $100,000 in the case of a deceased
limited partner).
o The general partners are not required to establish a reserve
fund for the purpose of funding such payments.
o No more than 10% of the outstanding limited partnership
interest may be withdrawn during any calendar year except upon
dissolution of the Partnership.
(c) Promotional Interest of General Partners
The general partners contributed capital to the Partnership 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 recorded as an expense of
the Partnership and credited as a contribution to the general
partners' capital account as additional compensation. As of June
30, 1998, the general partners had made cash capital
contributions of $995,622 to the Partnership. The general
partners are required to continue cash capital contributions to
the Partnership in order to maintain their required capital
balance.
The promotional interest expense charged to the Partnership was
$38,460 and $40,653 for the six months ended June 30, 1998 and
1997, respectively.
<PAGE>
(6) Contingency Reserves
In accordance with the partnership agreement and to satisfy the
Partnership's liquidity requirements, the Partnership is required to
maintain cash as contingency reserves (as defined) in an aggregate
amount of at least 1-1/2% of the gross proceeds of the sale of limited
partnership units. The cash capital contribution of the general
partners (amounting to $995,622 at June 30, 1998), up to a maximum of
1/2 of 1% of the limited partners' capital contributions, will be
available as an additional contingency reserve, if necessary.
The contingency reserves required at June 30, 1998 and December 31,
1997 were approximately $3,975,000 and $3,829,000, respectively.
Certificates of deposit and certain cash equivalents as of the same
dates were accordingly maintained as reserves.
(7) 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 rendered as manager of the Partnership. The maximum management
fee is reduced to 1.75% per annum if OFG has not provided during the
preceding 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 up to .25% per annum of the unpaid principal
balance of the loans. Servicing fees are paid from the interest income
of the loans collected from the borrowers.
Interest income on loans secured by trust deeds is collected by OFG and
is remitted monthly to the Partnership, net of servicing fees earned by
OFG. Interest receivable from OFG amounted to $2,247,968 and $1,773,608
at June 30, 1998 and December 31, 1997, respectively.
OFG, at its sole discretion may, on a monthly basis, adjust the
management and servicing fees as long as they do not exceed the
allowable limits calculated on an annual basis. In determining the
management and servicing fees and hence the yield to the Partnership,
OFG may consider a number of factors, including the then-current market
yields. Even though the fees for a month may exceed one-twelfth of the
maximum limits, at the end of the calendar year the sum of the fees
collected for each of the twelve months is equal to or less than the
stated limits. Management fees amounted to approximately $773,000 and
$2,226,000 for the six months ended June 30, 1998 and 1997,
respectively, and are included in the accompanying statements of
income. Service fee payments to OFG approximated $249,000 and $239,000
for the six months ended June 30, 1998 and 1997, respectively, and are
included in the accompanying statements of income.
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 $193,000 and $113,000 for the six
months ended June 30, 1998 and 1997, respectively.
<PAGE>
(7) Transactions with Affiliates, Continued
OFG originates all loans the Partnership invests in and receives an
investment evaluation fee from borrowers. Such fees earned by OFG
amounted to approximately $702,000 and $1,138,000 for the six months
ended June 30, 1998 and 1997, respectively.
During the six months ended June 30, 1998, OFG purchased the
manufactured home subdivision development in Sonora Vista from the
Partnership at a loss of approximately $2,000. An allowance for loss on
this property in the amount of $712,000 had been recorded in 1997,
therefore, the loss for the six months ended June 30, 1998 was an
additional $2,000. The Partnership carried back a loan from OFG for the
entire purchase price of $1,150,000.
During the six months ended June 30, 1998, OFG purchased one loan
secured by a trust deed from OMIF at face value in the total amount of
$273,000 for assumption of a loan of the same amount. OFG subsequently
foreclosed on the loan.
Included in loans secured by trust deeds at June 30, 1998 and December
31, 1997 are notes totaling $1,915,332 and $2,215,549, respectively,
which are secured by properties owned by OFG. The loans bear interest
at 8% per annum and are due on demand. The Partnership earned interest
income of approximately $62,000 and $91,000 during the six months ended
June 30, 1998 and 1997, respectively, from OFG under loans secured by
trust deeds.
(8) Net Income Per Limited Partner Unit
Net income per limited partnership unit is computed using the weighted
average of limited partnership units outstanding during the three and
six month periods. These amounts were approximately 196,095,000 and
185,445,000 for the three months ended June 30, 1998 and 1997,
respectively, and 194,387,000 and 183,555,000 for the six months ended
June 30, 1998 and 1997, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Three Months Ended June 30, 1998 Compared to Three
Months Ended June 30, 1997
The net income increase of approximately $482,000 (11.9%) for the three months
ended June 30, 1998 as compared to the three months ended June 30, 1997 was
primarily attributable to the decrease in management fees paid to the Corporate
General Partner from approximately $926,000 to $188,000 ($738,000 or 79.7%) for
the three months ended June 30, 1997 and 1998, respectively. The decrease in
management fees was partially offset by the decrease in total revenues of
approximately $388,000 (7.4%) which was primarily attributable to the decrease
in gain on sale of real estate of $696,000 (89.3%). Management fees paid are
pursuant to the Partnership Agreement (maximum of 2.75% annually of average
mortgage loans). The decrease in gain on sale of real estate was a result of a
decrease in gain on sales of homes from the development limited partnership
between the Partnership and Wood Valley Development, Inc. (see "Investment in
Development Limited Partnership" below). Although only one fewer home was sold
in the three months ended June 30, 1998 as compared to the three months ended
June 30, 1997, the income earned by the Partnership decreased by 89.3% due to
the fact that the homes sold in the quarter ended June 30, 1998 were less
expensive homes with smaller profit margins and due to increased construction
costs.
Results of Operations - Six Months Ended June 30, 1998 Compared to Six Months
Ended June 30, 1997
The net income increase of approximately $1,534,000 (18.9%) for the six months
ended June 30, 1998 as compared to the six months ended June 30, 1997 was
primarily attributable to the decrease in management fees paid to the Corporate
General Partner pursuant to the Partnership Agreement from approximately
$2,226,000 to $773,000 ($1,453,000 or 65.3%) for the six months ended June 30,
1997 and 1998, respectively. Gain on sale of real estate decreased approximately
$546,000 (30.3%) during the six months ended June 30, 1998 as compared to the
six months ended June 30, 1997 due to the factors discussed above. In addition,
interest income on loans secured by trust deeds increased approximately $558,000
(6.4%) due primarily to the growth in the loan portfolio.
Loan Portfolio
The number of Partnership mortgage investments decreased from 215 to 198 and the
average loan balance increased from approximately $813,000 to $878,000 as of
December 31, 1997 and June 30, 1998, respectively. The average mortgage
investment made by the Partnership during the period of December 31, 1997 to
June 30, 1998 was approximately $1,498,000 showing a trend of increasing average
mortgage investments. These average loan increases reflect the Partnership's
ability to invest in larger mortgage loans meeting the Partnership's objectives.
The Corporate General Partner had previously purchased all interest receivable
of 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 purchase delinquent interest or principal. As of June 30, 1998 and
December 31, 1997, there were approximately $10,674,000 and $3,751,000,
respectively, in loans held by the Partnership on which payments were more than
90 days delinquent and on which such delinquent interest was not being purchased
by the Corporate General Partner. The Corporate General Partner purchased
approximately $56,000 and $54,000 in delinquent interest receivables of the
Partnership during the six months ended June 30, 1998 and 1997, respectively,
that had not been collected from borrowers by the Corporate General Partner as
of June 30, 1998 or 1997.
Approximately $12,330,000 (7.1%) and $5,236,000 (3.0%) of the loans invested in
by the Partnership were more than 90 days delinquent in payment as of June 30,
1998 and December 31, 1997, respectively. Of these amounts, approximately
$3,094,000 (1.8%) and $3,279,000 (1.9%) were in the process of foreclosure as of
June 30, 1998 and December 31, 1997, respectively. Loans more than 90 days
delinquent increased by $7,094,000 (135%) from December 31, 1997 to June 30,
1998 primarily due to two large loans which became delinquent during 1998.
Management believes that there is adequate security in one of the loans with an
outstanding principal balance of approximately $3,751,000, and that an
additional loan loss reserve for this loan is not needed. The other loan with an
outstanding principal balance of approximately $4,235,000 may result in a loss
of principal to the Partnership, and, therefore, management has established a
loan loss reserve for this loan in the amount of $450,000.
A loan loss reserve in the amount of $3,500,000 was maintained on the books of
the Partnership as of June 30, 1998 and December 31, 1997. The Corporate General
Partner has determined that this loan loss reserve is adequate.
As of June 30, 1998 and December 31, 1997 approximately 53% and 67%,
respectively, of the mortgage loans made or invested in by the Partnership are
secured by real property located in Northern California. The decrease in the
percentage of loans secured by real property in Northern California has
primarily been due to the payoff of several loans secured by properties in
Northern California and the purchase of new loans secured by properties outside
of Northern California. In particular, the Partnership made one loan in the
amount of $10,600,000 during the six months ended June 30, 1998 which is secured
by two income-producing properties located in the states of Washington and
Montana. Also, as the real estate market in Southern California has gradually
improved over the past six to eighteen months, more loans secured by real estate
in Southern California have been invested in by the Partnership. In general,
there has been increased competition in the lending business in Northern
California, particularly in the San Francisco Bay Area, which has required the
Corporate General Partner to expand its pursuit of loans in areas outside of
this region.
<PAGE>
The following table sets forth the principal amount of mortgage investments, by
classification of property securing each loan, held by the Partnership on June
30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
Principal Amount
June 30 December 31
1998 1997
---- ----
(000) (000)
<S> <C> <C>
Single-Family Dwellings $ 1,986 $ 2,089
Income-Producing Property 157,109 165,202
Unimproved Land 14,736 7,424
-------- --------
$173,831 $174,715
======== ========
First Mortgages $155,812 $161,275
Second Mortgages 15,947 12,745
Third Mortgages or All-inclusive
Deeds of Trust 2,072 695
-------- --------
$173,831 $174,715
======== ========
</TABLE>
The Partnership's investment in loans secured by unimproved land has increased
by 98% since December 31, 1997 primarily due to an overall improvement in real
estate market conditions in the past six to twelve months which have made
development and, thus, loans on unimproved land more attractive. All of the
Partnership's loans secured by unimproved land or land in the process of being
developed are first trust deeds. In addition, only one of these loans in the
amount of $802,200 is more than 90 days delinquent in payment as of June 30,
1998. The Partnership's investment in loans secured by third mortgages has
increased by 198% due to the purchase of one loan in the amount of $1,500,000 by
the Partnership during the six months ended June 30, 1998. This loan was paid
off in full in July 1998.
The following amount of delinquent loans held by the Partnership have been
acquired and foreclosed upon by the Corporate General Partner from January 1,
1994 through June 30, 1998:
Delinquent Year
Principal Interest Foreclosed
58,000 4,417 1994
1,184,223 252,810 1995
2,320,000 86,981 1996
613,400 50,625 1997
-- -- 1998
The Corporate General Partner has purchased all delinquent interest receivable
from the Partnership on the loans foreclosed on in 1994 and 1995. The delinquent
interest on the loans foreclosed on in 1996 and 1997 was not purchased from the
Partnership by the Corporate General Partner. Of these foreclosed loans, the
Partnership held three mortgages totaling $765,332 as of June 30, 1998 on which
the Corporate General Partner was making payments which were current. In
addition, the Partnership held a mortgage in the amount of $1,150,000 secured by
a property sold to the Corporate General Partner during the six months ended
June 30, 1998, on which the payments were current.
Real Estate Properties Held for Sale
The Partnership currently holds title to eleven properties which were foreclosed
on from January 1, 1993 through June 30, 1998. Since 1993, the Partnership's
investment in real estate held for sale has increased due to the Corporate
General Partner's policy to generally not acquire property subject to
foreclosure on which the Partnership has a trust deed investment. During the six
months ended June 30, 1998, the Partnership acquired through foreclosure a 22%
interest in a multi-unit residential building in Oakland, California, a light
industrial warehouse located in Sacramento, California and a commercial building
located in Gresham, Oregon on which it had trust deed investments of $53,185,
$30,000 and $425,000, respectively. In addition, in February 1998, the
Partnership sold the manufactured home subdivision development property located
in Sonora, California to the Corporate General Partner for $1,150,000, resulting
in a loss of approximately $2,000.
The properties located in Merced, Vallejo and Sacramento, California, Reno,
Nevada and Gresham, Oregon do not currently generate revenue. Although expenses
from rental properties have increased from $131,000 to $159,000 (21.4%) for the
three months ended June 30, 1997 and 1998, respectively, revenues associated
with these properties have also increased from $83,000 to $181,000 (118%) for
the three months ended June 30, 1997 and 1998, respectively, thus generating net
income from real estate held for sale of $22,000 during the quarter ended June
30, 1998. The increase in expenses is primarily attributable to the increased
number of real estate properties owned. The increase in rental revenues is
attributable to the increased number of properties held which are generating
income as of June 30, 1998 as compared to June 30, 1997.
Investment in Development Limited Partnership
The development limited partnership is building single-family residences of
between approximately 2,200 and 2,800 square feet on the lots. During the three
months ended June 30, 1998 and 1997, three and four homes, respectively, were
sold for aggregate proceeds of $1,431,772 and $2,251,997, respectively, and the
development limited partnership distributed $1,851,818 and $971,074,
respectively, (including $68,461 and $117,911, respectively, from the joint
venture formed between the Corporate General Partner and Wood Valley, Inc.) to
the Partnership, $83,705 and $672,402, respectively, of which represented profit
and interest. During the six months ended June 30, 1998 and 1997, twelve and
eleven homes, respectively, were sold for aggregate proceeds of $5,972,110 and
$5,910,261, respectively, and the development limited partnership distributed
$5,457,464 and $4,893,212, respectively, (including $87,577 and $264,921,
respectively, from the joint venture formed between the Corporate General
Partner and Wood Valley, Inc.) to the Partnership, $1,229,145 and $1,800,127,
respectively, of which represented profit and interest. As of June 30, 1998, a
total of 28 homes had been completed and sold and construction had been nearly
completed on the remaining two lots.
During the six months ended June 30, 1998, the Partnership had advanced
additional development costs aggregating $926,487 to WV-OMIF Partners. The
Partnership's investment in WV-OMIF Partners totaled $510,291 and $3,812,122 as
of June 30, 1998 and December 31, 1997, respectively.
As of June 30, 1998, OFG and Woodvalley had reimbursed $735,673 in development
costs to WV-OMIF Partners (an additional $87,604 since December 31, 1997). The
balance of development costs due by OFG and Woodvalley is $15,002 as of June 30,
1998.
Investment in Corporate Joint Venture
During the six months ended June 30, 1998, the Partnership advanced an
additional $72,778 to the corporate joint venture for development. The total
investment in the corporate joint venture was $712,141 and $639,363 as of June
30, 1998 and December 31, 1997, respectively. The Company expects to obtain all
development approvals by the Fall of 1998 and have construction completed in
1999.
Cash and Cash Equivalents
Cash and cash equivalents of the Partnership have increased from approximately
$3,073,000 as of December 31, 1997 to $14,469,000 as of June 30, 1998,
respectively. This increase is primarily attributable to the pay off of trust
deed investments and distributions received from the development limited
partnership during the six months ended June 30, 1998 without the origination of
new loans of the same amount during the period and from continuing limited
partner contributions (including rollover of limited partner income) during the
period.
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.
There has been little variation in the percentage of capital withdrawals to
total capital invested by the limited partners in recent years excluding
distributions of net income to limited partners. This withdrawal percentage has
been 7.37%, 6.11%, 7.85% and 6.63% for the years ended December 31, 1994, 1995,
1996 and 1997 and 7.72% (annualized) for the six months ended June 30, 1998.
These percentages are calculated by averaging, on an annual basis, the sum of
the capital withdrawals for each calendar quarter divided by the total limited
partner capital as of the end of each quarter. Management of the Partnership
does not expect the trend of capital withdrawals in relation to total capital
invested to change substantially in subsequent periods.
The limited partners may withdraw, or partially withdraw, from the Partnership
and obtain the return of their outstanding capital accounts within 91 days after
written notices are delivered to the general partners, subject to the following
limitations:
o 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.
o A maximum of $75,000 per partner may be withdrawn during any calendar
quarter (or $100,000 in the case of a deceased limited partner).
o The general partners are not required to establish a reserve fund for
the purpose of funding such payments.
o No more than 10% of the outstanding limited partnership interest may be
withdrawn during any calendar year except upon dissolution of the Partnership.
Contingency 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
Although the current economic climate in Northern California is generally
strong, many areas outside of the San Francisco Bay Area continue to experience
depressed values created by the real estate recession of the early 1990's. Other
than the loss incurred in February 1998 on the sale to the Corporate General
Partner of the Sonora property acquired by the Partnership through foreclosure,
the Partnership has not sustained any material losses to date due primarily to
the Corporate General Partner's prior practice of purchasing delinquent interest
and purchasing loans prior to foreclosure. The Corporate General Partner has
ceased such practices, with very limited exceptions. Assuming the Corporate
General Partner continues in this manner, the Partnership is likely to sustain
losses with respect to loans secured by properties located in areas of declining
real estate values.
Despite the Partnership's ability to purchase mortgage loans with relatively
strong yields during 1997 and 1998 from the Corporate General Partner, there is
increased competition from a variety of lenders that has had the effect of
reducing mortgage yields in the past twelve months and could have the affect of
reducing mortgage yields further in the future. As such, current loans with
relatively high yields could be replaced with loans with lower yields, which in
turn could reduce the net yield paid to the Limited Partners. In addition, when
there is a reduction in the demand by borrowers for loans originated by the
Corporate General Partner and, thus, fewer loans for the Partnership to invest
in, the Partnership will invest its excess cash in shorter term investments
yielding considerably less than the current investment portfolio.
Effective May 1, 1998, the Partnership became generally closed to new
investments on a temporary basis and remained closed as of June 30, 1998.
However, when the Partnership is open, additional investments from new and
existing Limited Partners are received on a monthly basis which provide capital
for loans, purchases of existing notes and redemption of existing Limited
Partnership Units.
Year 2000
The Corporate General Partner depends on the use of computers to provide timely,
accurate information essential to the management and operation of the
Partnership. The computer programs used by the Corporate General Partner to
account for mortgage loan investments, investments in Units and other items is
in the process of being reviewed, remedied and tested by independent consultants
engaged to determine whether these programs are able to recognize the year 2000.
To the extent the programs recognize calendar years by their last two digits
only, there exists what commonly is referred to as a Year 2000 issue.
Based on the preliminary results of the consultants' testing, the Corporate
General Partner does not anticipate significant costs, uncertainties or problems
associated with becoming Year 2000 compliant. The total costs to remedy Year
2000 issues will be paid by the Corporate General Partner. None of such costs
will be reimbursed by the Partnership. The consultants expect all problems to be
remedied by December 31, 1998. Although not anticipated by the Corporate General
Partner, a failure to adequately address the Year 2000 issue, however, could
result in the misstatement of reported information, the inability to accurately
track mortgage investments and payments due or other operational problems.
<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: August 15, 1998 OWENS MORTGAGE INVESTMENT FUND
a California Limited Partnership
(Registrant)
By: Owens Financial Group, Inc.
a General Partner
By: \s\ William C. Owens
William C. Owens
President
By: \s\ Bryan H. Draper
Bryan H. Draper
Chief Financial Officer
Principal Financial Officer
By: \s\ Melina A. Platt
Melina A. Platt
Controller
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 841501
<NAME> OWENS MORTGAGE INVESTMENT FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 14,469,028
<SECURITIES> 0
<RECEIVABLES> 2,307,042
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,776,070
<PP&E> 10,254,784
<DEPRECIATION> 0
<TOTAL-ASSETS> 198,362,013
<CURRENT-LIABILITIES> 657,735
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 197,704,278
<TOTAL-LIABILITY-AND-EQUITY> 198,362,013
<SALES> 0
<TOTAL-REVENUES> 4,836,208
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 302,504
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,533,704
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,533,704
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,533,704
<EPS-PRIMARY> .023
<EPS-DILUTED> .023
</TABLE>
