UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
for the Quarterly Period ended June 30, 1998
Commission File No. 0-19963
TMP LAND MORTGAGE FUND, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0451040
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive office) (Zip Code)
(714) 836-5503
(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether Registrant has [1] 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 such shorter period that the registrant was required
to file such reports) and [2] has been subject to such filing requirement for
the past 90 days.
Yes [ X ] No [ ]
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TMP LAND MORTGAGE FUND, LTD
INDEX
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets as of June 30, 1998
(unaudited) and December 31, 1997 3
Statements of Operations for the Three Months and
Six Months ended June 30, 1998 and 1997. (unaudited) 4,5
Statements of Cash Flows for the Six Months ended
June 30, 1998 and 1997.(unaudited) 6
Notes to Financial Statements (unaudited) 7,8
Item 2. Management's Discussion and Analysis of Financia
Condition and Results of Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Balance Sheets
June 30, December 31,
1998 1997
(unaudited) (audited)
----------- ---------
Assets
------
<S> <C> <C>
Cash $ 402,517 $ 786,576
Due from Affiliate 165,000 0
Other Receivable 13,661 15,201
Investments in Joint Ventures 2,348,837 2,165,625
Properties held for sale (Note 3) 13,154,056 12,836,570
------------- ---------------
Total Assets $ 16,084,071 $ 15,803,972
============== ===============
Liabilities and Partners' Capital
Accounts payable $ 861 $ 0
Due to Affiliates 3,476 29,294
Due to Manager (Note 1) 4,513 0
Accrued expenses (Note 5) 4,102,158 3,824,166
------------- -------------
Total Liabilities 4,111,008 3,853,460
------------- -------------
Partners' Capital (Deficit)
General Partners (37,472) (37,697)
Limited Partners, 20,000 units (at $1,000/unit)
authorized; 15,715 units outstanding as of
June 30, 1998 and December 31, 1997 12,010,535 11,988,209
------------- -------------
Total Partners' Capital 11,973,063 11,950,512
------------ -------------
Total Liabilities and Partners'
Capital $ 16,084,071 $ 15,803,972
============ ============
See Accompanying Notes to Financial Statements
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
Statements of Operations
(Unaudited)
Three Months ended
June 30 June 30
1998 1997
---------------------------------------
<S> <C> <C>
Income:
Interest Income $ 0 $ 3,696
Joint Venture Income 0 481,813
Other Income 600 900
----------- ------------
Total Income 600 486,409
----------- ------------
Expenses:
Operating Expenses 5,441 0
Outside Services 10,023 11,460
Joint Venture Expense 0 9,266
----------- ------------
Total Expenses 15,464 20,726
----------- ------------
Net Income (Loss) $ (14,864) $ 465,683
============ ============
Allocation of Net Income (Loss) (Note 2)
General Partners: $ (149) $ 4,657
============ ============
Limited Partners: $ (14,715) $ 461,026
============ ============
Limited Partners, per equity unit: $ (.93) $ 29.33
============ ============
See Accompanying Notes to Financial Statements
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
Statements of Operations
(Unaudited)
Six Months ended
June 30 June 30
1998 1997
--------------------------------------
<S> <C> <C>
Income
Interest Income $ 7,716 $ 6,301
Joint Venture Income 50,000 550,048
Other Income 1,800 1,800
-------------- -----------
Total Income 59,516 558,149
-------------- -----------
Expenses
Operating Expenses 26,941 --
Outside Services 10,023 12,480
Joint Venture Expense 0 9,266
-------------- -----------
Total Expenses 36,964 21,746
-------------- -----------
Net Income $ 22,552 $ 536,403
============== ===========
Allocation of Net Income (Note 2)
General Partners: $ 226 $ 5,364
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Limited Partners: $ 22,326 $ 531,039
============== ===========
Limited Partners, per equity unit: $ 1.42 $ 33.79
============== ===========
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
Statements of Cash Flows
(Unaudited)
Six Months ended
June 30 June 30
1998 1997
----------------------------------
Cash Flow From Operating Activities
<S> <C> <C>
Net Income $ 22,552 $ 536,403
Adjustments to reconcile net income to net
Cash provided by operating activities:
Due to changes in:
Accounts Payable 861 78,748
Accrued Expenses 277,992 534,565
Other Receivable 1,540 (43,202)
Due to/from Affiliates (190,818) 0
Due to Manager 4,513 0
----------- -----------
Net Cash provided by Operating Activities 116,640 1,106,514
----------- -----------
Increase in Properties Held for Sale (317,487) (606,155)
Decrease (Increase) in Investments in
Joint Ventures (183,212) 826,362
------------ -----------
Net Cash Provided By (Used In) Investing
Activities (500,699) 220,207
------------ -----------
Distribution to partners 0 (1,000,045)
----------- -------------
Net Cash Used In Financing Activities 0 (1,000,045)
----------- -------------
Net Increase (Decrease) in Cash (384,059) 326,676
Cash at the Beginning of Period 786,576 131,405
----------- ------------
Cash at the End of Period $ 402,517 $ 458,081
=========== ============
See Accompanying Notes to Financial Statements
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TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Financial Statements
(Unaudited)
The accompanying unaudited interim financial statements include all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary to present fairly the financial position of the
Partnership as of June 30, 1998 and the results of its operations, and cash
flows for the period then ended in accordance with generally accepted accounting
principles for interim financial information.
NOTE 1 - The Partnership and its Significant Accounting Policies
TMP Land Mortgage Fund, Ltd. (the Partnership) was organized in accordance with
the provisions of the California Uniform Limited Partnership Act for the purpose
of acquiring, developing and operating real property. The General Partners in
the Partnership are illiam O. Passo, Anthony W. Thompson, Scott E. McDaniel of
TMP Properties, a California General Partnership and TMP Investments Inc.
On March 12, 1998, the General Partners of the Partnership entered into an
agreement (the Agreement) with PacWest Inland Empire, LLC (PacWest), a
Delaware limited liability company, whereby PacWest paid the GeneralPartners
of the Partnership and ten other related partnerships, a total of $300,000;
and agreed to pay up to a total of $300,000 for any deficit capital accounts for
these 11 partnerships in exchange for the rights to distributions from the
General Partners; referred to as a "distribution fee" as defined by the
Agreement.
PacWest entered into a management, administrative and consulting agreement as of
April 1, 1998, with the General Partners of the Partnership to provide the
Partnership with overall management, administrative and consulting services.
PacWest currently contracts with Preferred Partnership Services, Inc. and other
entities to perform certain of the financial, accounting and investor relation
services for the Partnership. As of June 30, 1998 the Partnership owes PacWest
$4,513 relating to this agreement. PacWest has also agreed to provide certain
liquidity to the Partnership as discussed in the MD&A section of this report.
The following is a summary of the Partnership significant accounting policies.
Basis of Presentation - The Partnership prepares its financial statements on the
accrual basis of accounting.
Properties Held for Sale
Allowance for Losses on Loans - No provision has been made for an allowance for
losses on loans.
Income Taxes - The entity is treated as a partnership for income tax purposes
and any income or loss is passed through and taxable at the partner level.
Accordingly, no provision for federal income taxes is provided.
NOTE 2 - Allocation of Profits, Losses and Cash Distributions
Profits, losses, and cash distributions are allocated 99 percent to the limited
partners and one percent to the general partners until the limited partners have
received an amount equal to their capital contributions plus a cumulative,
non-compounded return of eight percent per annum based on their adjusted capital
account balances. At that point, remaining profits, losses and cash
distributions are allocated 76 percent to the limited partners and 24 percent to
the general partners.
As of June 30, 1998 and 1997, profits, losses and cash distributions were
allocated 99 percent to the limited partners and one percent to the general
partners.
NOTE 3 - Properties Held for Sale
The Partnership had made twelve land loans as of June 30, 1998. Three of the
loans had been repaid in full, and nine of the loans had defaulted. On all the
defaults which had occurred, the Partnership foreclosed on the properties
securing the loans.
NOTE 4 - Investments in Joint Ventures
The Partnership has contributed property as an investment in five single family
development joint ventures. The Partnership has a controlling interest in the
entities and the equity method is used to account for its share of the entities'
earnings.
NOTE 5 - Property Taxes Payable
As of June 30, 1998, the Partnership owed approximately $4,100,000 in property
taxes payable on the PR Equities properties. This includes approximately
$3,000,000 of Mello-Roos tax. In addition, the Partnership owed approximately
$36,000 in property taxes on the other Partnership properties. If the property
taxes remain delinquent for five years, the County can foreclose on the
property.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information that the
Partnership's management believes is relevant to an assessment and understanding
of the Partnership's results of operations and financial condition. This
discussion should be read in conjunction with the financial statements and
footnotes which appear elsewhere in this Report.
This discussion and analysis contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933, which are subject to the "safe harbor" created by
that section. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
works are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this Report.
Additionally, statements concerning future matters such as the features,
benefits and advantages of the Partnerships properties regarding matters that
are not historical are forward-looking statements. Such statements are subject
to certain risks and uncertainties and the Partnership's actual future results
could differ materially from those projected in the forward-looking statements.
The Partnership assumes no obligation to update the forward-looking statements.
Readers are urged to review and consider carefully the various disclosures made
by the Partnership in this Report, which attempts to advise interested parties
of the risks and factors that may affect the Partnership's business, financial
condition and results of operations.
TMP Land Mortgage Fund, Ltd., is a California Limited Partnership formed in
April, 1992, of which TMP Investments, Inc., a California corporation, and TMP
Properties, a California general partnership, are the General Partners (the
"General Partners"). The Partnership was formed principally to make short-term
loans to unaffiliated parties secured by first trust deeds on unimproved
properties, primarily in the Inland Empire area of Southern California and in
some instances, in other areas of Southern California, and to provide cash
distributions to the Limited partners, primarily from interest earned on the
mortgage loans. The Partnership is not a mutual fund or any other type of
investment company within the meaning of, and is not subject to regulations
under, the Investment Company Act of 1940.
As of June 30, 1998, the Partnership had received and accepted subscriptions of
15, 715 Units, representing total subscription proceeds in the amount of
$15,715,000. All proceeds had been committed to the twelve mortgage loan
investments made by the Partnership and to working capital reserves. During
1992, the Partnership funded five mortgage loans. Four loans were funded in 1993
and three loans were funded in 1994.
As a consequence of adverse changes in market conditions and other factors,
three of the loans were repaid and nine of the loans were foreclosed upon. As of
June 30, 1998, the following activity occurred on the properties which the
Partnership owns:
PR Equities Loan/San Jacinto #1 and #2
The Partnership foreclosed on the property securing these loans during 1995 and
now owns the property. The current outstanding payments due as a result of the
regular tax and Mello-Roos tax assessments against the partnership's lots taken
back in foreclosure is over $3,000,000. This debt, plus the continuing tax
accrual makes the property unsaleable in the current real estate market. The
city of San Jacinto received the overall appraisal of the properties in the
Community Facilities District during the first week of July 199 . The low land
values reflected in the appraisal confirmed the General Partners' opinion that
the bonds should be restructured, with the overall bonded indebtedness and
the annual debt service reduced.
The city was forced by the terms of the bonds to schedule a sale of the property
for delinquent bond assessments. The buyer would be required to pay the full
unpaid assessment, penalties, and interest as well as assume the full amount of
the emaining assessment. The sale occurred in April 1997 but there was no buyer
for the properties; therefore, the Partnership continues to own these parcels.
During the third quarter of 1997, the bonds were purchased at a deep discount
and the General Partners believe that the land will ultimately be foreclosed
upon by the new bondholder(s).
Environmental Development Loan
This is a mortgage for land acquired through foreclosure from Environmental
Development and has been developed into a 181-lot subdivision. All entitlements
on the property are complete and a construction loan is considered imminent.
Grading should commence by mid-June 1998.
Peppertree Loan
In satisfaction of its $1.5 million loan to Peppertree, the Partnership received
the $1.5 million principal together with 4138,000 in accrued interest and
charges in cash on July 1996, along with a 33% joint venture interest in
Peppertree Park, the property being developed as residential housing. The first
phase of that project has been sold to a prominent homebuilder; and the proceeds
were used to pay off the initial development loan. As future phases are sold,
proceeds should be available to the Partnership, which can be distributed to the
Limited Partners. It is expected that approximately $500,000 will ultimately be
received from this joint venture.
Sunset Crossing
42.48 commercial acres, Banning, California. The Partnership's initial goals for
this property involve the preparation of a new site plan which would allow a
lot-line adjustment in order to sell the corner of the parcel to a gas station
or fast food user, and create new interest for a Wal-Mart or other major
retailer to consider this site. As those efforts achieve results, the property
will be offered for sale. It is not presently intended that the Partnership
would be involved in developing this property.
Fox Olson Loan #2
10.84 commercial acres, Sun City California. Formerly owned by Fox-Olsen, this
property is listed for sale for $1.5 million. TMP has received an offer for $1.2
million and will counter at $1.5 million. It is adjacent to the 45 lots acquired
through foreclosure from Fox-Olsen, which are being developed as a 45-home sub-
division in joint venture with TMP Homes, LLC. The project is known as Flower-
field Sun City. The construction loan is in place and grading commenced in April
1998.
LaMonte Loan
The Partnership acquired this 6.5 acre commercial property through foreclosure
in April, 1996. During September 1997, the property was sold for a profit of
approximately $500,000.
Distributions to the investors began August 1, 1992, and continued monthly
through May, 1995. On June 1, 1995, the General Partners suspended distributions
due to the default and subsequent foreclosure on several of the mortgage loans.
During 1997, the Partnership made two distributions from the proceeds of the two
1997 property sales.
Results of Operations
Partnership revenue during the three months period ended June 30, 1998 and 1997
consisted primarily of interest income and joint venture income. During the year
ended December 31, 1997, the Partnership generated approximately $3,000,000 of
cash from the sale of the Hollywood Studio Club Apartments and the `LaMonte"
land. There was no interest received on mortgage loans. Approximately $2,200,000
was distributed to investors from the proceeds of these two sales.
Liquidity and Capital Resources
Management believes there is sufficient cash to meet anticipated Partnership
cash needs for the next 12 months. However, management does not plan to pay the
Mello-Roos taxes on the PR Equities properties unless the bonds can be
restructured under more favorable terms. PacWest has agreed to loan and/or
secure a loan for the six TMP Land Partnerships in the total amount of
$2,500,000. Loan proceeds will be allocated to eleven (11)TMP Land Partnerships,
based on partnership needs, from recommendations made by PacWest, and under the
approval and/or direction of the General Partners. A portion of these funds will
be made available to TMP Land Mortgage Fund, Ltd., at 12% simple interest over a
24 month period beginning April 1, 1998, secured by the Partnership's
properties, as funds are needed in the opinion of the General Partners. These
funds are not to exceed 50% of the 1997 appraised value of the properties, and
will primarily be used to pay or on-going property maintenance, pay down
existing debt, back taxes and appropriate entitlement costs. It is not the
General Partners' intention to use any of the PacWest loans for this
Partnership.
PacWest, at their option, can make additional advances with the agreement of the
General Partners; however, the aggregate amount of cash loaned to all TMP
partnership is limited to a maximum of $2.5 million.
TMP properties and TMP Investments, Inc. will remain as General Partners,
however, PacWest has acquired the General Partner's unsubordinated 1% interest
in the Partnership and assumed responsibility for all partnership
administration. PacWest will charge a fee for its administrative services equal
to an amount not to exceed the average reimbursements to the general Partner for
such services over the past five years.
As Partnership properties are sold, cash will be used to first repay any PacWest
loans, then other creditors, then to accrued by unpaid Partnership indebtedness.
Sale proceeds in excess of the amount necessary to pay Partnership indebtedness
shall be split as follows:
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PacWest Property Partnership
<S> <C> <C> <C>
3% FlowerField, 97%
Remmington and
Peppertree
13% San Jacinto, 87%
Sun City and
Sunset Crossing
</TABLE>
Year 2000 Compliance
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date codes fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by organizations may need to upgraded to comply
with the "Y2K" requirements. There is significant uncertainty in the software
and information services industries concerning the potential effects associated
with such compliance. While the Partnership believes that its systems are
compatible with Y2K applications, there can be no assurance that all Partnership
systems will function properly in all operating environments and on all
platforms. The failure to comply with Y2K requirements by systems not designed
by the Partnership may also have a material adverse on the Partnership's
business, financial condition and results of operations. The Partnership is
currently developing and implementing a plan to identify and address potential
difficulties associated with Y2K issues and does not expect to expend any
significant funds as a result of these issues.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None..
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
<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.
Date: (date)
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
By: TMP Investments, Inc., as General Partner
By: \s\ William O. Passo
-------------------------------------------
William O. Passo, President
By: \s\ Anthony W. Thompson
-------------------------------------------
Anthony W. Thompson, Exec. V.P.
By: \s\ Richard Hutton, Jr.
-------------------------------------------
Richard Hutton, Jr., Controller
By: TMP Properties, a California General
Partnership as General Partner
By: \s\ William O. Passo
-------------------------------------------
William O. Passo, General Partner
By: \s\ Anthony W. Thompson
-------------------------------------------
Anthony W. Thompson, General Partner
By: \s\ Scott E. McDaniel
-------------------------------------------
Scott E. McDaniel, General Partner
