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, 2000
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, 2000 and December 31, 1999
(UNAUDITED)
June 30 December 31
2000 1999
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,546,613 $ 5,216,326
Certificates of deposit 50,000 250,000
Loans secured by trust deeds 208,174,928 200,356,517
Less: Allowance for loan losses (4,000,000) (4,000,000)
----------- -----------
204,174,928 196,356,517
Real estate held for sale, net of allowance
for losses of $1,336,000 in 2000 and 1999 14,745,125 12,397,722
Interest receivable 2,060,831 2,150,952
Notes receivable from General Partner 1,178,000 -
----------- -----------
Total Assets $226,755,497 $216,371,517
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued distributions payable $ 606,129 $ 577,281
Due to General Partner 620,433 751,759
Accounts payable and accrued liabilities 491,180 430,664
----------- -----------
Total Liabilities 1,717,742 1,759,704
----------- -----------
PARTNERS' CAPITAL:
General partners 2,197,641 2,104,936
Limited partners (Subject to Redemption) 222,840,114 212,506,877
----------- -----------
Total Partners' Capital 225,037,755 214,611,813
----------- -----------
Total Liabilities and Partners' Capital $226,755,497 $216,371,517
=========== ===========
</TABLE>
See accompanying notes to interim 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, 2000 and 1999 (Unaudited)
For the Three Months Ended For the Six Months Ended
June 30 June 30 June 30 June 30
2000 1999 2000 1999
---- ---- ---- ----
REVENUES:
<S> <C> <C> <C> <C>
Interest income on loans secured by trust deeds $ 5,878,120 $ 4,768,312 $ 11,446,222 $ 9,457,032
Gain on sale of real estate - 18,324 - 18,324
Other income 41,926 95,255 121,226 250,197
----------- ----------- ------------ -----------
Total revenues 5,920,046 4,881,891 11,567,448 9,725,553
----------- ----------- ------------ -----------
OPERATING EXPENSES:
Management fees to General Partner 868,121 523,157 1,961,659 923,328
Servicing fees to General Partner 130,493 119,093 257,432 232,120
Promotional interest to General Partner 23,172 6,053 46,857 30,370
Administrative 7,875 5,000 15,750 12,500
Legal and accounting 45,768 23,684 90,877 110,157
Real estate operations, net (108,705) (38,995) (240,141) (67,876)
Other 16,993 2,309 21,969 62,760
------------ ` ----------- ------------- ------------
Total operating expenses 983,717 640,301 2,154,403 1,303,359
------------ ----------- ----------- -----------
Net income $ 4,936,329 $ 4,241,590 $ 9,413,045 $ 8,422,194
============ =========== =========== ===========
Net income allocated to General Partner $ 48,514 $ 41,177 $ 92,518 $ 83,166
============ =========== =========== ===========
Net income allocated to limited partners $ 4,887,815 $ 4,200,413 $ 9,320,527 $ 8,339,028
============ =========== =========== ===========
Net income allocated to limited partners
per weighted average limited partnership unit $.022 $.021 $.043 $.041
==== ==== ==== ====
Weighted average limited partnership units 221,217,000 203,848,000 218,768,000 203,080,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
Interim Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
(UNAUDITED)
June 30 June 30
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 9,413,045 $ 8,422,194
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on sale of real estate properties - (18,324)
Changes in operating assets and liabilities:
Interest receivable 90,121 (43,081)
Other receivables - 59,074
Accounts payable and accrued liabilities 60,516 (128,668)
Due to General Partner (131,326) 120,677
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Net cash provided by operating activities 9,432,356 8,411,872
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of loans secured by trust deeds (37,893,048) (49,097,872)
Principal collected 657,350 839,383
Loan payoffs 21,388,374 31,838,247
Sales of loans secured by trust deeds at face value 6,165,913 4,529,000
Investment in real estate properties (34,646) (75,763)
Net proceeds from disposition of real estate properties 237,113 327,398
Investment in corporate joint venture (2,446,120) (57,067)
Repayment received from corporate joint venture 581,250 56,141
Proceeds from maturities of certificates of deposit 200,000 184,006
Proceeds from maturity of commercial paper - 3,084,044
------------ -------------
Net cash used in investing activities (11,143,814) (8,372,483)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of partnership Units 12,782,404 9,709,152
Accrued distributions payable 28,848 14,972
Partners' cash distributions (3,560,158) (3,202,651)
Partners' capital withdrawals (8,209,349) (9,519,365)
------------ -------------
Net cash used in financing activities 1,041,745 (2,997,892)
------------- --------------
INCREASE IN CASH AND CASH
EQUIVALENTS (669,713) (2,958,503)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,216,326 8,260,599
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,546,613 $ 5,302,096
============ ===========
</TABLE>
See note 2 for supplemental disclosure of non-cash investing and financing
activities.
See accompanying notes to interim financial statements
<PAGE>
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(1) Summary of Significant Accounting Policies
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, 1999 filed with the Securities and Exchange Commission.
The results of operations for the three-month and six-month periods
ended June 30, 2000 are not necessarily indicative of the operating
results to be expected for the full year.
(2) Loans Secured by Trust Deeds
The Partnership's investment in loans delinquent greater than ninety
days is $8,281,000 and $7,415,000 as of June 30, 2000 and December 31,
1999, respectively. As of June 30, 2000, $6,017,000 of the delinquent
loans has a specific related allowance for credit losses totaling
$1,135,000. There is a non-specific allowance for credit losses of
$2,865,000 for the remaining delinquent balance and for other current
loans. The Partnership has discontinued the accrual of interest on all
loans that are delinquent greater than ninety days.
As of June 30, 2000 and December 31, 1999, loans past maturity totaled
approximately $40,705,000 and $29,451,000, respectively. Of the past
maturity loans at June 30, 2000, $6,441,000 represent loans for which
interest payments are delinquent more than ninety days.
During the quarter ended June 30, 2000 and 1999, the Partnership
refinanced loans totaling $11,148,000 and $0, respectively.
During the quarter ended June 30, 2000, the Partnership sold for cash
full and partial interests in four loans to third parties and to
related parties in the amounts of $2,710,000 and $300,000,
respectively. The sale of these loans resulted in no gain or loss in
the accompanying financial statements.
During the quarter ended June 30, 2000, the Partnership foreclosed on a
loan in the amount of $685,000.
During the six months ended June 30, 2000, the Partnership sold two
delinquent loans at book value to the General Partner for notes
receivable in the total amount of $1,178,000. The General Partner
subsequently foreclosed on the loans.
OWENS MORTGAGE INVESTMENT FUND
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(3) Transactions with Affiliates
The General Partner of the Partnership, Owens Financial Group, Inc.
(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.
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.
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 particular 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 may not exceed
the stated limits. Management fees amounted to approximately $868,000
and $523,000 for the three months ended June 30, 2000 and 1999,
respectively, and $1,962,000 and $923,000 for the six months ended June
30, 2000 and 1999, respectively. Service fee payments to OFG
approximated $130,000 and $119,000 for the three months ended June 30,
2000 and 1999, respectively, and $257,000 and $232,000 for the six
months ended June 30, 2000 and 1999, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements
Some of the information in this Form 10-Q may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue" or
other similar words. These statements discuss future expectations, contain
projections of results of operations or of financial conditions or state other
forward-looking information. When considering such forward-looking statements
you should keep in mind the risk factors and other cautionary statements in the
Partnership's Prospectus. Although management of the Partnership believes that
the expectations reflected in such forward-looking statements are based on
reasonable assumptions, there are certain factors, in addition to these risk
factors and cautioning statements, such as general economic conditions, local
real estate conditions, adequacy of reserves, or weather and other natural
occurrences that might cause a difference between actual results and those
forward-looking statements.
Results of Operations
Three Months Ended June 30, 2000 Compared to 1999
The net income increase of $695,000 (16.4%) for 2000 compared to 1999, was due
to:
an increase in interest income on loans secured by trust deeds of
$1,110,000;
an increase in net income from real estate operations of $70,000; and
The net income increase in 2000 as compared to 1999, was offset by:
a decrease in other income of $53,000; and
an increase in management fees to General Partner of $345,000.
Interest income on loans secured by trust deeds increased $1,110,000
(23.3%) for the three months ended June 30, 2000, as compared to the same period
in 1999. This increase was a result of an increase in the weighted average yield
of the loan portfolio from 10.81% for the three months ended June 30, 1999 to
11.17% for the three months ended June 30, 2000. In addition, the average loan
portfolio grew by 9.6% for the quarter ended June 30, 2000 as compared to 1999.
Real estate operations resulted in an increase in net income of $70,000
during the three months ended June 30, 2000 as compared to 1999. This increase
in income is a result of increased occupancy and rental rates on several of the
Partnership's properties during the end of 1999 and the first quarter of 2000.
Management fees to the General Partner are paid pursuant to the
Partnership Agreement between the General Partner and Limited Partners.
Other income decreased by $53,000 (56.0%) due primarily to a decrease
in interest income earned on investments (money market funds, certificates of
deposit, etc.) as the Partnership was able to remain fully invested in loans
secured by deeds of trust during most of the three months ended June 30, 2000.
Six Months Ended June 30, 2000 Compared to 1999
The net income increase of $991,000 (11.8%) for 2000 compared to 1999, was due
to:
an increase in interest income on loans secured by trust deeds of
$1,989,000;
an increase in net income from real estate operations of $172,000;
a decrease in legal and accounting expenses of $19,000; and
a decrease in other expenses of $41,000.
The net income increase in 2000 as compared to 1999, was offset by:
a decrease in other income of $129,000; and
an increase in management fees to General Partner of $1,038,000.
Interest income on loans secured by trust deeds increased $1,989,000
(21.0%) for the six months ended June 30, 2000, as compared to the same period
in 1999. This increase was a result of an increase in the weighted average yield
of the loan portfolio from 10.76% for the six months ended June 30, 1999 to
11.24% for the six months ended June 30, 2000. In addition, the average loan
portfolio grew by 10.9% for the quarter ended June 30, 2000 as compared to 1999.
Real estate operations resulted in an increase in net income of
$172,000 during the six months ended June 30, 2000 as compared to 1999. This
increase in income is a result of increased occupancy and rental rates on
several of the Partnership's properties during the end of 1999 and the first
quarter of 2000.
Legal and accounting expenses and other expenses decreased by $19,000
(17.5%) and $41,000 (65.0%), respectively, during the six months ended June 30,
2000 as compared to 1999. These decreases were due primarily to legal and
registration expenses incurred during the six months ended June 30, 1999 as a
result of a new Form S-11 Registration Statement filed with the Securities and
Exchange Commission and changes made to the Partnership Agreement during that
period.
Management fees to the General Partner are paid pursuant to the
Partnership Agreement between the General Partner and Limited Partners.
Other income decreased by $129,000 (51.5%) due primarily to a decrease
in interest income earned on investments (money market funds, certificates of
deposit, etc.) as the Partnership was able to remain fully invested in loans
secured by deeds of trust during the six months ended June 30, 2000.
Financial Condition
June 30, 2000 and December 31, 1999
Loan Portfolio
The number of Partnership mortgage investments decreased from 142 to
126 and the average loan balance increased from $1,411,000 to $1,652,000 between
December 31, 1999 and June 30, 2000.
Approximately $8,281,000 (4.0%) and $7,415,000 (3.7%) of the loans
invested in by the Partnership were more than 90 days delinquent in payment as
of June 30, 2000 and December 31, 1999, respectively. Of these amounts,
approximately $1,162,000 (0.6%) and $850,000 (0.4%) were in the process of
foreclosure. Loans more than 90 days delinquent increased by $866,000 (11.7%)
from December 31, 1999 to June 30, 2000. A loan loss reserve in the amount of
$4,000,000 was maintained on the books of the Partnership as of June 30, 2000
and December 31, 1999, respectively.
As of June 30, 2000 and December 31, 1999, approximately 37% and 40% of
the Partnership's mortgage loans are secured by real property 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 of those
loans and the purchase of new loans secured by properties outside of Northern
California. As the real estate market in Southern California and other parts of
the Western United States has improved, more loans secured by real estate in
those areas 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, and the General Partner has
increasingly sought loans in areas outside of this region.
The Partnership's investment in construction loans rose by $10,076,000
(44.4%) since December 31, 1999. Improvement in real estate market conditions
have made development and, thus, construction loans more attractive. All but one
of the Partnership's construction loans are first trust deeds and none of these
loans is delinquent in payments more than 90 days as of June 30, 2000.
The Partnership's investment in unimproved land rose by $5,261,000
(34.1%) since December 31, 1999. All of the Partnership's loans secured by
unimproved land are first trust deeds. In addition, only one of these loans, in
the amount of $802,000, is more than 90 days delinquent in payment as of June
30, 2000.
Real Estate Properties Held for Sale
The Partnership currently holds title to fourteen properties that were
foreclosed on from January 1, 1993 through June 30, 2000 in the amount of
$10,658,000, net of allowance for losses of $1,336,000. Since 1993, the
Partnership's investment in real estate held for sale has increased due to the
General Partner's decision to stop acquiring from the Partnership all property
subject to foreclosure. When the Partnership acquires property by foreclosure,
it typically earns less income on those properties than could be earned on
mortgage loans and may not be able to sell the properties in a timely manner.
During the three months ended June 30, 2000, the Partnership acquired one
property through foreclosure. In addition, during the three months ended June
30, 2000, no properties were sold by the Partnership.
Seven of the Partnership's fourteen properties do not currently
generate revenue. Expenses from rental properties have increased from
approximately $122,000 to $164,000 (34.4%) for the three months ended June 30,
1999 and 2000, respectively, and revenues associated with these properties have
increased from $161,000 to $273,000 (69.6%), thus generating a net income from
real estate held for sale of $109,000 during the three months ended June 30,
2000. The increase in income is a result of increased occupancy and rental rates
on several of the Partnership's properties during the end of 1999 and the first
quarter of 2000.
Investment in Corporate Joint Venture
In 1995, the Partnership foreclosed on a $571,853 loan and obtained
title to a commercial lot in Los Gatos, California that secured the loan. In
1997, the Partnership contributed the lot to a limited liability company (the
Company) formed with an unaffiliated developer to develop and sell a commercial
office building on the lot. The Partnership is providing construction financing
to the Company at prime plus two percent.
During the three months ended June 30, 2000 and the year ended December
31, 1999, the Partnership advanced an additional $1,503,000 and $1,417,000,
respectively, to the Company for development. In addition, the Partnership
received repayment of advances from the Company in the amount of $581,000 during
the three months ended June 30, 2000. The total investment in the Company was
$4,087,000 and $2,222,000 as of June 30, 2000 and December 31, 1999,
respectively.
The Company began construction in July 1999 which was substantially
completed in June 2000. In April 2000, the Company entered into a contract to
sell the completed building and entered into a reverse, like-kind exchange,
whereby the proceeds attributable to the Partnership's interest in the Company
from the sale of the building (appoximately $3,333,000) will be reinvested into
the purchase of a retail commercial development in Greeley, Colorado. The sale
of the building took place in July 2000 and the exchange was completed. A new
shareholder that will act as the property manager of the Greely property will be
admitted to the Company in August, 2000.
Notes Receivable from General Partner
Notes receivable from General Partner increased by $1,178,000 (100%)
during the six months ended June 30, 2000 as a result of the Partnership selling
two delinquent loans at book value to the General Partner for notes receivable
in the total amount of $1,178,000. The General Partner subsequently foreclosed
on the loans.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities increased from approximately
$431,000 as of December 31, 1999 to $491,000 as of June 30, 2000 ($60,000 or
13.9%) due primarily to a higher progress billing payable on the Los Gatos
office building construction as of June 30, 2000.
Asset Quality
Some losses are normal when lending money and the amounts of losses
vary as the loan portfolio is affected by changing economic conditions and
financial experiences of borrowers. There is no precise method of predicting
specific losses or amounts that ultimately may be charged off on particular
segments of the loan portfolio.
The conclusion that a Partnership loan may become uncollectible, in
whole or in part, is a matter of judgment. Although lenders such as banks and
savings and loans are subject to regulations that require them to perform
ongoing analyses of portfolio, loan to value ratios, reserves, etc., and to
obtain current information regarding its borrowers and the securing properties,
the Partnership is not subject to these regulations and has not adopted these
practices. Rather, management of the General Partner, in connection with the
quarterly closing of the accounting records of the Partnership and the
preparation of the financial statements, evaluates the Partnership's mortgage
loan portfolio. Based upon this evaluation, a determination is made as to
whether the allowance for loan losses is adequate to cover potential losses of
the Partnership. As of June 30, 2000, management believes that the allowance for
loan losses of $4,000,000 is adequate. As of then, loans secured by trust deeds
include $8,281,000 in loans delinquent over 90 days, of which $1,162,000 was
invested in loans that were in the process of foreclosure. Due to the
loan-to-value criteria established by the General Partner, in its opinion, the
mortgage loans held by the Partnership appear in general to be adequately
secured.
The General Partner's judgment of the adequacy of loan loss reserves includes
consideration of:
economic conditions;
borrower's financial condition;
evaluation of industry trends;
review and evaluation of loans identified as having loss potential; and
quarterly review by Board of Directors.
Liquidity and Capital Resources
Purchases of Units and loan payoffs provide the capital for mortgage
investments. A substantial increase in general market interest rates could have
an adverse affect on the Partnership, because then the Partnership's investment
yield could be lower than other debt-related investments. In that event,
purchases of additional Units could decline, which, in turn, would reduce the
liquidity of the Partnership and its ability to make additional mortgage
investments. In contrast, a significant increase in the dollar amount of loan
payoffs and/or additional limited partner investments without the origination of
new loans of the same amount would increase the liquidity of the Partnership.
This increase in liquidity could result in a decrease in the yield paid to
limited partners as the Partnership would be required to invest the additional
funds in lower yielding, short term investments. The Partnership has not and
does not intend to borrow money for investment purposes.
There was little variation in the percentage of capital withdrawals to
total capital invested by the limited partners between 1994 and 1998, excluding
regular distributions of net income to limited partners. The annualized
withdrawal percentage increased during 1999 and 2000 primarily due to an
increase in the maximum quarterly amount which could be withdrawn by limited
partners from $75,000 to $100,000 as a result of a change in the Partnership
Agreement in December 1998. Withdrawal percentages have been 7.37%, 6.11%,
7.85%, 6.63%, 7.33%, and 7.99% for the years ended December 31, 1994, 1995,
1996, 1997, 1998 and 1999 and 7.55% (annualized) for the six months ended June
30, 2000. These percentages are the annual average of the limited partners
capital withdrawals in each calendar quarter divided by the total limited
partner capital as of the end of each quarter.
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 61 to 91 days after written notices are delivered
to the General Partner, subject to the following limitations, among others:
No withdrawal of Units can be requested or made until at least one year
from the date of purchase of those Units, for Units purchased on or after
February 16, 1999, other than Units received under the Partnership's
Reinvested Distribution Plan.
Any such payments are required to be made only from net proceeds and
capital contributions (as defined) during said 91-day period.
A maximum of $100,000 per partner may be withdrawn during any calendar
quarter.
The General Partner is not required to establish a reserve fund for the
purpose of funding such payments.
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, cash equivalents and marketable
securities as contingency reserves in an aggregate amount of 2% of the limited
partners' capital accounts to cover expenses in excess of revenues or other
unforeseen obligations of the Partnership. Although the General Partner believes
that contingency reserves are adequate, it could become necessary for the
Partnership to sell or otherwise liquidate certain of its investments to cover
such contingencies on terms which might not be favorable to the Partnership.
Current Economic Conditions
The current economic climate in Northern California and the Western
United States is generally strong. Despite the Partnership's ability to purchase
mortgage loans with relatively strong yields which has resulted in increased net
yields paid to the limited partners, increased competition or changes in the
economy could again have the effect of reducing mortgage yields in the future.
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, if there is less demand by borrowers for loans and, thus,
fewer loans for the Partnership to invest in, it will invest its excess cash in
shorter-term alternative investments yielding considerably less than the current
investment portfolio.
The General Partner has the ability to purchase delinquent loans from
the Partnership as long as certain criteria outlined in the Partnership
Agreement are met. Although the General Partner has purchased delinquent loans
and foreclosed properties from the Partnership in the past, they are not
required to do so; therefore, the Partnership could sustain losses with respect
to loans secured by properties located in areas of declining real estate values.
This could result in a reduction of the net income of the Partnership for a year
in which those losses occur. There is no way of making a reliable estimate of
these potential losses at the present time.
Year 2000 Issues
The General Partner so far has experienced no disruptions in the
operations of its internal information systems during its transition to the year
2000. The General Partner is not aware that any of its vendors experienced any
disruptions during their transition to the year 2000. The General Partner will
continue to monitor the transition to year 2000 and will act promptly to resolve
any problems that occur. If the General Partner or any third parties with which
it has business relationships experience problems related to the year 2000
transition that have not yet been discovered, it could have a material adverse
impact on the General Partner and the Partnership.
<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
A report on Form 8-K was filed by the Partnership on May 5, 2000. This Form 8-K
reported the change in the Partnership's certifying accountant from KPMG LLP to
Grant Thornton LLP effective April 28, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: August 11, 2000 OWENS MORTGAGE INVESTMENT FUND,
a California Limited Partnership
By: Owens Financial Group, Inc,
General Partner
Dated: August 11, 2000 By: /William C. Owens/
--------------- ------------------
William C. Owens, President
Dated: August 11, 2000 By: /Bryan H. Draper/
--------------- -----------------
Bryan H. Draper, Chief Financial Officer
Dated: August 11, 2000 By: /Melina A. Platt/
--------------- -----------------
Melina A. Platt, Controller