ITEM 1. BUSINESS
Associated Planners Realty Income Fund (the "Partnership"), was organized in December 1986, under the California Revised Limited Partnership Act. West Coast Realty Advisors, Inc. ("WCRA"), a California corporation, and W. Thomas Maudlin Jr., an individual, are general partners (collectively referred to herein as the "General Partner").
The Partnership was organized for the purpose of investing in, holding, and managing improved, unleveraged income-producing property, such as residential properties, office buildings, commercial buildings, industrial properties, mini- warehouse facilities, and shopping centers ("Properties"), which are believed to have potential for cash flow and capital appreciation. The Partnership intends to own and operate such Properties for investment over an anticipated holding period of approximately five to ten years. At December 31, 1995, the Partnership had no employees.
The Partnership's principal investment objectives are to invest the net proceeds in real properties which will:
1. Preserve and protect the Partnership's invested capital; 2. Provide for cash distributions from operations; 3. Provide gains through potential appreciation; and 4. Generate federal income tax deductions so that a portion of cash distributions may be treated as a return of capital for tax purposes and, therefore, may not represent taxable income to the Limited Partners.
On October 25, 1988. the Partnership acquired a 100% interest in a shopping center located in Chino, California. On January 9, 1990, the Partnership, together with Associated Planners Realty Growth Fund (an affiliate), purchased a one-story building located in San Marcos, California. The acquisition was paid for entirely in cash totaling $3,118,783 of which $2,806,905 was provided by the Partnership and $311,878 by the affiliate. The Partnership owns a 90% undivided interest in the property.
The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments. These include national and local economic conditions, the supply of and demand for similar types of real property, competitive marketing conditions, zoning changes, possible casualty losses, and increases in real estate taxes, assessments, and operating expenses, as well as others. In addition, the real estate market at this date is in a general state of uncertainty, and there is no assurance as to how long it might continue or its possible effect on the Partnership.
This uncertainty is evidenced by the following conditions:
1. Downtrends in the real estate market in various areas of the country as evidenced by high vacancy rates in the commercial sector, and a large unsold inventory of new homes, particularly in California.
2. Economic recession, as evidenced by higher unemployment, slow consumer spending, and low increases in gross national product figures.
3. The effect of current or proposed tax reform legislation which has slowed the level of sale and development of real estate and the formation of real estate partnerships, in many areas of the country. 4. Availability and cost of financing to allow for the purchase and sale of properties and to maintain overall real estate values.
Although these factors have not materially affected the current financial results of the Partnership, there is a potential for them to have material effects on the Partnership's operations over the long-term.
The Partnership is subject to competitive conditions that exist in the local markets where it operates rental real estate. These conditions are discussed in ITEM 2
ITEM 2 - - "PROPERTIES".
The Partnership is operated by the General Partner, subject to the terms of the Amended and Restated Agreement of Limited Partnership. The Partnership has no employees, and all administrative services are provided by West Coast Realty Advisors Inc.(" WCRA") the co-General Partner.
On February 26, 1988, the Partnership attained its minimum funding requirement with the initial release of escrow funds totaling $1,272,000 and terminated its offering on September 5, 1989. As of December 31, 1989, gross proceeds from sales of Partnership units totaled $5,106,000 and $4,594,101 net of syndication costs and sales commissions.
ITEM 2. PROPERTIES
The properties acquired by the Partnership are described below:
YORBA CENTER
On October 25, 1988, the Partnership purchased Yorba Center, a retail shopping center located in Chino, California.
The Center, constructed in 1987, provides 12,697 rentable square feet located on a .91-acre parcel of land. As of December 31, 1995, the Center was 90% leased to eight tenants. The average monthly rent per occupied square foot was $1.20. All but two tenants are renting space on a "triple net" lease basis, i.e., each tenant being proportionately responsible for payment of all expenses including insurance, taxes, maintenance, and other operating expenses. The remaining two tenants are renting space on a "gross" basis, i.e. the landlord is responsible for payment of all expenses pertaining to these tenants.
The building and improvements are depreciated over 31.5 to 40 years using a straight-line method for both financial and income tax reporting purposes. The financial and income tax basis for the property are the same. In the opinion of the General Partner, the property is adequately insured. The property is managed by West Coast Realty Management, Inc. ("WCRM"), an affiliate of the corporate General Partner.
The Center is dependent upon the vitality of the consumer market in the general area. Since the City of Chino applies strict building regulations on developers, it is expected that new development will be limited, thereby preserving the Center's competitive edge during the Partnership's intended holding period. Although all areas of Southern California have been affected by the economic slowdown, layoffs, plant closings and military cutbacks, these economic factors are not expected to significantly impact the occupancy of the shopping center.
Tenants occupying 10% or more of rental square footage as of December 31, 1995:
Mels Liquor: 15.79% of rental square footage; $45,324 rent per year; lease expires on May 31, 2002; Renewal Options: Lessee has option to extend lease 5 years to May 31, 2007.
Video Club: 13.69% of rental square footage; $17,232 rent per year; lease expires on August 31, 1998; Renewal Options: No renewal options.
San Bernardino County Superintendent Schools: 17.11% of rental square footage; $28,188 rent per year; lease expires on June 30, 1996; Renewal Options: Lessee has 2 options to extend the lease for one additional year.
SAN MARCOS INDUSTRIAL BUILDING
On January 9, 1990, the Partnership together with Associated Planners Growth Fund (a 90%/10% interest, respectively) purchased the San Marcos Industrial Building located in San Marcos, California.
The industrial building, constructed in 1986, consists of 40,720 rentable square feet including 6,000 square feet of office area plus 1,300 square feet of mezzanine above the office area and is located on a 2.66 acre parcel of land. The building was 100% occupied by Professional Care Products, Inc. through January 8th, 1995, on a triple net lease. This lease required the tenant to pay insurance, taxes, maintenance, and all other operating costs.
On February 13, 1995, a new lease was executed with No Fear, Inc., which runs through June 30, 1998. This is also a triple net lease.
The building and improvements are depreciated over 31.5 to 40 years using a straight-line method for both financial and income tax reporting purposes. The financial and income tax basis for the property are the same. In the opinion of the General Partner, the property is adequately insured. The property is managed by WCRM.
The building is located in North San Diego County, in an area of increasing population and desirability for San Diego area professional and skilled workers and significant employers. It is expected the building will benefit from projected growth of the North San Diego County area.
Tenants occupying 10% or more of rental square footage as of December 31, 1995:
No Fear Inc.: 100% of rental square footage; $219,888 rent per year; lease expires on June 30, 1998; Renewal Options: Extend lease for 60 additional months at lessee's option.
SUMMARY
As of December 31, 1995, the combined occupancy rate for all of the Partnership's properties was 97.6%. The properties were nearly fully leased and are generating a level of cash flow consistent with the market conditions in which the properties operate.
The total acquisition cost to the Partnership of each property and the date of acquisition are as follows:
ACQUISITION ACQUISITION DESCRIPTION COST DATE
YORBA CENTER $1,851,147 10/25/88 SAN MARCOS INDUSTRIAL BUILDING $2,806,905 01/09/90
The schedule below indicates the average occupancy rate expressed as a percentage of square feet for the last five years:
YEAR YORBA CENTER SAN MARCOS INDUSTRIAL BUILDING
1995 90 % 88%
1994 90% 100%
1993 61% 100%
1992 61% 100%
1991 61% 100%
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At December 31, 1995, there were 5,096 limited partnership units outstanding and 424 unit holders of record. The units sold are not freely transferable and no public market for the sold units presently exists or is likely to develop.
Distributions totaling $189,361, $222,950 and $242,060 were made in 1995, 1994, and 1993, to unit holders of record at the end of the calendar quarters indicated below. These distributions constituted a return of capital of $49,683, $425, and $49,745 in 1995, 1994, and 1993, respectively. In addition, $63,700 ($12.50/partnership unit) in distributions were paid to unit holders subsequent to year-end in February 1996. The distribution amounts for 1995 and 1994 are summarized below:
RECORD DATE PER UNITS TOTAL DATE PAID UNIT OUTSTANDING PAID
12/31/93 02/09/94 12.50 5,096 63,700 03/31/94 05/05/94 12.50 5,096 63,700 06/30/94 08/02/94 12.50 5,096 63,700 09/30/94 11/03/94 6.25 5,096 31,850 12/31/94 02/03/95 6.25 5,096 31,850 3/31/95 05/05/95 8.4088 5,096 42,851 6/30/95 08/04/95 10.00 5,096 50,960 9/30/95 11/06/95 12.50 5,096 63,700
Distributions are made out of the income from operations, before depreciation and amortization, available as a result of the previous quarter's operations.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with the financial statements and related notes and ITEM 7.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership began offering for sale limited partnership units on October 1987. On February 26, 1988, the Partnership reached its minimum offer level of $1,200,000. The Partnership sold units throughout the remainder of the year, and had raised $3,891,000 in gross proceeds or $3,483,788 net of syndication costs and sales commissions as of December 31, 1988. During 1989, the Partnership continued to raise funds through the sale of Units and had raised $5,106,000 in gross proceeds or $4,594,101 net of syndication costs and sales commissions as of September 5, 1989, the day the Partnership terminated its offering of limited partnership units.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
During the year ended December 31, 1995, the Partnership made distributions to the limited partners totaling $189,361, $49,683 of which constituted a return of capital. On February 6, 1996, the Partnership made distributions of $12.50 to unit holders of record at December 31, 1995. Distributions are determined by management based on cash flow and the liquidity position of the Partnership and anticipated occupancy of the properties. It is the intention of management to make quarterly distributions of cash, subject to maintenance of reasonable reserves.
Management uses cash as its primary measure of a partnership's liquidity. The amount of cash that represents adequate liquidity for a real estate limited partnership depends on several factors. Among them are:
1. Relative risk of the partnership; 2. Condition of the partnership's properties; 3. Stage in the partnership's life cycle (e.g., money -raising, acquisition, operating or disposition phase); and 4. Distributions to partners.
The Partnership has adequate liquidity based upon the above four points. The first point refers to the approximately 1% property reserve requirement of capital funds raised that the Partnership currently has; this relatively low reserve level is appropriate since all Partnership properties are acquired without the use of debt financing. This is a minimum guideline that is disclosed in the Partnership's prospectus; the Partnership had more than enough funds to meet this requirement as of December 31, 1995. Related to the property reserve requirement is the second point, the condition of the Partnership's properties. Since the properties are in good condition, no unusual maintenance and repair expenditures are anticipated. The third point is relevant to the Partnership because after the January 1990 purchase of the San Marcos property, the Partnership had completed its acquisition phase, and entered the operating phase. The fourth point relates to partner distributions. The Partnership makes distributions from operations quarterly. Such distributions are subject to payment of Partnership expenses and reasonable reserves for expenses, maintenance, and replacements.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
During the year ended December 31, 1995 the Partnership paid the General Partner a partnership management fee of $21,092 and distributed $189,361 to the limited partners of which $49,683 constituted a return of capital. In February 1996, the Partnership paid the General Partner a partnership management fee of $7,078 and distributed $63,700 to the limited partners. Partnership management fees were calculated and paid in accordance with the Partnership Agreement.
The Tax Reform Acts of 1986 and 1987 and the Revenue Reconciliation Acts of 1990 and 1993 did not have a material impact on the Partnership's operations.
The effects of the slowdown in the economy, inflation and changing prices have not had a material impact on the Partnership's revenues and income from operations. During the years of the Partnership's existence, inflationary pressures in the U.S. economy have been minimal, and this has been consistent with the experience of the Partnership in operating rental real estate in California. The Partnership has several clauses in the leases with its properties' tenants that would help alleviate much of the negative impact of inflation.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" (SFAS No. 121) issued by the Financial Accounting Standards Board (FASB) is effective for financial statements for fiscal years beginning after December 15, 1995. The new standard establishes new guidelines regarding when impairment losses on long-lived assets, which include plant and equipment, and certain identifiable intangible assets, should be recognized and how impairment losses should be measured. The Partnership has elected the early adoption of SFAS No. 121. This change had no effect on the statement of income for the year ended December 31, 1995.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
RESULTS OF OPERATIONS - 1995 VS. 1994
Operations for the years ended December 31, 1995 and 1994 reflect full years of rental activities for the Partnership's properties. However, the San Marcos property was not leased from January 8 to February 12, 1995. This was due to vacancy at the property between the time that the Professional Care Products lease terminated and the No Fear lease began. In addition to the vacancy at the property, the lease rate that No Fear entered into was approximately 30% less than the rate that Professional Care Products was paying during its tenancy. Although the occupancy rate at the Yorba center Shopping Center remained relatively steady at 90% as of December 31, 1995 (as compared to 90% at December 31, 1994), the drop in rental rates at the San Marcos property was responsible for a 22% ($100,080) decrease in rental revenue for 1995, as compared to 1994. The drop in rental rates was due primarily to a decrease in demand for commercial space in the general area.
Primarily due to the partial vacancy at the San Marcos property, operating expenses increased 9% ($6,646) as the result of less costs that the Partnership was able to pass on to tenants. However, the Partnership also experienced a 22% decrease in general and administrative costs ($17,481) due to lower insurance costs and lower partnership management fees (due to a decrease in distributions to investors). The Partnership also experienced a 41% ($4,007) increase in interest income due to larger cash reserve balances maintained during 1995 as compared to 1994.
Overall, the Partnership generated $239,359 in income from operations before depreciation expense of $98,076 and loss on government securities of $1,605. This compares unfavorably to 1994 when income from operations totaled $324,597 before depreciation of $97,933 and loss on government securities of $4,139. Net income per limited partnership unit fell from $37.57 in 1994 to $22.94 in 1995. The number of limited partnership units outstanding in each year was 5,096.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
In 1994, the Partnership purposely started reducing the amount of distributions to investors in anticipation of lower rental revenues from the San Marcos property. Up until January 1995, it was not clear to the General Partner as to what rent, if any, could be realized on an ongoing basis from the San Marcos Property. Distributions to limited partners fell from a high of $47.50 per unit in 1993, to $43.75 in 1994, to $37.16 in 1995. With the placement of a tenant in the San Marcos Building (No Fear, Inc.) and the build-up of a track record of rent collections from the tenant, the general partner now feels it would be prudent to make cash distributions to limited partners so that a large portion of the large cash balance is gradually paid out (contingent upon the maintenance of reasonable reserve levels). Therefore, distributions are expected to total between $40.00 and $45.00 per unit for 1996.
During the year, $375,284 in cash was provided by operating activities. This resulted from a net cash basis income of $237,754 from operations (net income plus depreciation expense) plus $163,272 in gross proceeds received in connection with the sale of government securities and $5,991 resulting from a decrease in accounts receivable (primarily from the collection of rents receivable). These amounts were offset by a $26,505 increase in other assets (primarily due to a prepaid leasing fee paid in connection with the re-leasing of the San Marcos property), and a $4,408 decrease in security deposits (primarily due to a decrease in the amount of security deposit required from the new tenant at San Marcos). Cash used in investing activities totaled $9,999 in connection with tenant improvements on the San Marcos property. Cash used in financing activities totaled $189,361 due to the distribution to the limited partners during the year.
The area in which the Yorba Center operates continues to experience a relatively high level of economic vitality, and the General Partner does not foresee significant challenges in keeping the center occupied by various small retailers and service businesses.
The Partnership anticipates continuing to operate properties during 1996 for the purpose of generating the maximum amount of cash available for distribution to the limited partners, while maintaining a reasonable level of cash reserves. There are currently no plans to dispose of either of the two properties.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
RESULTS OF OPERATIONS - 1994 VS. 1993
Operations for the years ended December 31, 1994 and 1993 reflect full years of rental activities for the Partnership's properties. The occupancy of the Yorba Center improved in 1994 as compared to 1993, as the occupancy was 90% in 1994 as compared to 61% at the end of 1993. This accounted for the 8.6% ($36,678) increase in property revenues in 1994, as compared to 1993.
The Partnership generated $324,597 in income from operations before depreciation expense of $97,933 and $4,139 in unrealized loss on government securities for 1994 compared to $290,297 in income from operations for 1993 before depreciation of $97,982. Interest income increased $4,462 (86%) as the result of higher interest rates and higher investable cash balances. An unrealized loss of $4,139 was recognized in 1994 in connection with the Partnership's $163,272 investment in a pool of short-term government securities. Operating and General and Administrative costs increased from 1993 to 1994 by $6,840 (4.8%) primarily due to increased repairs and maintenance and management fee expenditures.
The statement of cash flows reflects proceeds from the sales (purchases) of government securities for 1994 and 1993. These amounts pertain to gross sales and (purchases) of government securities and are not being reflected as net sales or (purchases) for the periods being reported.
5,096 limited partnership units were outstanding in 1994. The net income per limited partnership unit was $37.57 in 1994 vs.. $32.23 in 1993. Total distributions dropped from $242,060 in 1993 to $222,950 in 1994. Much of this decrease was the result of management's decision to hold back distribution of some earnings in anticipation of a vacancy at the San Marcos building beginning in January 1995. (The space was subsequently re-leased in February 1995).
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE Report of Independent Certified Public Accountants.................. 15
Balance Sheets -- December 31, 1995 and 1994 ..................... 16
Statements of Income for the years ended December 31, 1995, 1994, and 1993 ............................... 17
Statements of Partners' Equity for the years ended December 31, 1995, 1994, and 1993 ............................... 18
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 ............................... 19
Summary of Accounting Policies ................................. 20-21
Notes to Financial Statements .................................... 22-27
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Associated Planners Realty Income Fund (a California limited partnership) Los Angeles, California
We have audited the accompanying balance sheets of Associated Planners Realty Income Fund (a California limited partnership) as of December 31, 1995 and 1994 and the related statements of income, partners' equity, and cash flows for each of the three years in the period ended December 31, 1995. We have also audited the schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Associated Planners Realty Income Fund (a California limited partnership), at December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein.
As discussed in the summary of accounting policies, the Partnership changed its method in accounting for investments in 1994 to conform with SFAS No. 115.
BDO SEIDMAN, LLP
Los Angeles, California February 12, 1996
[FN] SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS
[FN] SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS
[FN] See accompanying summary of accounting policies and notes to financial statements.
[FN] See accompanying summary of accounting policies and notes to financial statements.
ASSOCIATED PLANNERS REALTY INCOME FUND SUMMARY OF ACCOUNTING POLICIES
BUSINESS Associated Planners Realty Income Fund ("the Partnership"), a California limited partnership, was formed on December 23, 1986 under the Revised Limited Partnership Act of the State of California for the purpose of developing or acquiring, managing and operating unleveraged income producing real estate. The Partnership met its minimum funding of $1,200,000 on February 26, 1988 and terminated its offering on September 5, 1989. The Partnership was formed to acquire income-producing real property throughout the United States with emphasis on properties located in California and southwestern states. The Partnership purchases such properties on an all cash basis and intends to own and operate such properties for investment over an anticipated holding period of approximately five to ten years.
BASIS OF The financial statements do not give effect to any assets PRESENTATION that the partners may have outside of their interest in the partnership, nor to any personal obligations, including income taxes, of the partners.
RENTAL REAL Assets are stated at cost. Depreciation is computed ESTATE AND using the straight-line method over estimated useful DEPRECIATION lives ranging from 31.5 to 40 years for financial and income tax reporting purposes.
In the event that facts and circumstances indicate that the cost of an asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the carrying amount to determine if a write-down to market value is required.
LEASE Lease commissions which are paid to real estate brokers COMMISSIONS for locating tenants are capitalized and amortized over the life of the lease.
RENTAL Rental revenue is recognized when the amount is due and REVENUE payable under the terms of a lease agreement.
ASSOCIATED PLANNERS REALTY INCOME FUND SUMMARY OF ACCOUNTING POLICIES
INVESTMENTS During 1994, the Partnership changed its method of accounting for Investments. Investments which represent trading securities, are accounted for in accordance with SFAS No. 115. The difference between historical cost and market value are reported as unrealized gains or losses in the statement of income. The effect of this change in accounting policy is not material to the financial statements.
STATEMENTS OF For purposes of the statements of cash flows, the CASH FLOWS Partnership considers cash in the bank and all highly liquid investments purchased with original maturities of three months or less, to be cash and cash equivalents.
USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation.
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
1. NATURE OF The Partnership began accepting subscriptions in October PARTNERSHIP 1987 and closed the offering on September 5, 1989. The Partnership began operations in March 1988.
Under the terms of the partnership agreement, the General Partners (West Coast Realty Advisors, Inc., and W. Thomas Maudlin, Jr.) are entitled to cash distributions from 10% to 15%. The General Partners are also entitled to net income (loss) allocations varying from 1% to 15% and 1% of depreciation and amortization in accordance with the partnership agreement. Further, the General Partners receive acquisition fees for locating and negotiating the purchase of rental real estate, management fees for operating the Partnership and a commission on the sale of the partnership properties.
2. RENTAL REAL The Partnership owns the following two rental real estate ESTATE properties, one is wholly-owned and the second, a 90% undivided interest:
Location Acquisition (Property Name) Date Purchased Cost
Chino, California (Yorba Center) October 25, 1988 $1,851,147 San Marcos, California January 9, 1990 2,806,905
The major categories of rental real estate are:
December 31, 1995 1994
Land $1,282,861 $1,282,861 Buildings and improvements 3,416,326 3,406,327
4,699,187 4,689,188 Less accumulated depreciation 626,340 528,264
Rental real estate, net $4,072,847 $4,160,924
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
2. RENTAL REAL A significant portion of the Partnership's rental revenue ESTATE was earned from tenants whose individual rents (CONTINUED) represented more than 10% of total rental revenue. Specifically:
Two tenants accounted for 12% and 52% in 1995; Two tenants accounted for 10% and 62% in 1994; Two tenants accounted for 10% and 72% in 1993.
3. FUTURE As of December 31, 1995, future minimum rental income MINIMUM under existing leases, excluding month to month rental RENTAL INCOME agreements, that have remaining noncancelable terms in excess of one year are as follows:
Years ending December 31, Amount
1996 $353,234 1997 329,136 1998 163,333 1999 37,903 2000 36,825
Total $920,431
Future minimum rental income does not include lease renewals or new leases that may result after a noncan- celable-lease expires.
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
4. RELATED PARTY (a) In accordance with the partnership agreement, TRANSACTIONS compensation earned by or services reimbursed to the corporate General Partner consisted of the following:
Years ended December 31, 1995 1994 1993
Partnership management fees $21,092 $24,773 $26,896 Administrative services: Data processing 4,709 4,877 4,770 Postage 2,582 2,247 2,460 Investor processing 1,884 1,951 1,908 Duplication 942 975 954 Investor communications 1,413 1,463 1,431 Miscellaneous 471 487 477
$33,093 $36,773 $38,896
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
(b) The Partnership owns a 90% undivided interest in property located in San Marcos, California. The remaining 10% interest is owned by Associated Planners Realty Growth Fund, an affiliate.
(c) Property management fees incurred in accordance with the partner ship agreement with West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $17,568, $24,760 and $22,886 for 1995, 1994 and 1993. Related party accounts payable to West Coast Realty Management, Inc. at December 31, 1995 and 1994 were $4,973 and $206. Related party accounts payable to West Coast Realty Advisors, Inc. at December 31, 1995 was $6,000. Related party accounts payable to Associated Financial Group, Inc. at December 31, 1995 was $11,507.
(d) Related party accounts receivable from Associated Planners Realty Growth Fund, at December 31, 1994 was $2,173.
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
5. NET INCOME The Net Income per Limited Partnership Unit was computed AND CASH in accordance with the partnership agreement on the basis DISTRIBUTIONS of the weighted average number of outstanding Limited PER LIMITED Partnership Units of 5,096 for 1995, 1994 and 1993. PARTNERSHIP UNIT The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows:
Outstanding Amount Total Record Date Units Per Unit Distribution
September 30, 1995 5,096 $ 12.5000 $ 63,700 June 30, 1995 5,096 10.0000 50,960 March 31, 1995 5,096 8.4088 42,851 December 31, 1994 5,096 6.2500 31,850
Total $189,361
September 30, 1994 5,096 $ 6.2500 $ 31,850 June 30, 1994 5,096 12.5000 63,700 March 31, 1994 5,096 12.5000 63,700 December 31, 1993 5,096 12.5000 63,700
Total $222,950
September 30, 1993 5,096 $ 12.5000 $ 63,700 June 30, 1993 5,096 12.5000 63,700 March 31, 1993 5,096 12.5000 63,700 December 31, 1992 5,096 10.0000 50,960
Total $242,060
Distributions are paid in the fiscal quarter following the record date.
ASSOCIATED PLANNERS REALTY INCOME FUND NOTES TO FINANCIAL STATEMENTS
6. NEW Statement of Financial Accounting Standards No. 121, ACCOUNTING "Accounting for the Impairment of Long-Lived Assets and PRONOUNCE- for Long-Lived Assets to Be Disposed of" (SFAS No. 121) MENTS issued by the Financial Accounting Standards Board (FASB) is effective for financial statements for fiscal years beginning after December 15, 1995. The new standard establishes new guidelines regarding when impairment losses on long-lived assets, which include plant and equipment, and certain identifiable intangible assets, should be recognized and how impairment losses should be measured. The Partnership has elected the early adoption of SFAS No. 121. This change had no effect on the statement of income for the year ended December 31, 1995.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is managed by the General Partners and the Limited Partners have no right to participate in the management of the Partnership or its business.
Resumes of the General Partners' principal officers and directors and a description of the General Partners are set forth in the following paragraphs. See description below.
WEST COAST REALTY ADVISORS, INC.
West Coast Realty Advisors, Inc. ("WCRA") is a California corporation formed on May 10, 1983 for the purpose of structuring real estate programs and to act as general partner of such programs. It is a subsidiary of Associated Financial Group, Inc.
PHILIP N. GAINSBOROUGH (Born 1938) is Chairman and a Director of West Coast Realty Advisors, Inc. He is also currently the President of Associated Financial Group, Inc., Associated Securities Corp., Associated Planners Insurance Services, Inc., and Associated Planners Investment Advisory, Inc. In addition, from January 1981 to the present, he has served as President of Gainsborough Financial Consultants, Inc., a financial planning firm located in Los Angeles, California. From January 1981 to December 1982, Mr. Gainsborough served as a Registered Principal of Private Ledger Financial Services, Inc. From January 1977 to December 1980, he was employed by E.F.Hutton & Co. as a Registered Representative.
W. THOMAS MAUDLIN JR. (Born 1936) is a Director and President of West Coast Realty Advisors, Inc. ("WCRA"). He is also co-General Partner (with WCRA) of the Partnership. Mr. Maudlin has been active in the real estate area for over 30 years, serving as co-developer of high-rise office buildings and condominiums. He has structured transactions for syndicators in apartment housing, including sale leasebacks, all-inclusive trust deeds, buying and restructuring transactions to suit a particular buyer, and as a buyer acting as a principal. Mr. Maudlin was co-developer of the Gateway Los Angeles office building, a 165,000 square foot, fourteen-story office building located in West Los Angeles. Form 1980 to 1985, in partnership with the Muller Company, he developed eleven acres in San Bernardino which included a 42,000 square-foot office building, a six-plex movie theater and two restaurants. From 1980 to 1985, Mr. Maudlin was involved in building in San Bernardino, California, a 134- unit condominium development, a shopping center, and a restaurant in Ventura. He is a graduate of the University of Southern California.
WILLIAM T. HAAS (Born 1946 ) is a Director and Executive Vice President/Secretary of West Coast Realty Advisors, Inc., Associated Planners Insurance Services, Associated Securities Corp., and Associated Planners Investment Advisory, Inc. He is also Executive Vice President/Secretary and a Director of Associated Financial Group, Inc. He has been affiliated with various Associated companies since 1982. From December 1977 to December 1982, Mr. Haas was employed by the National Association of Securities Dealers, Inc. in various capacities, including that of Supervisor of Examiners. From 1968 to 1977, he was associated with Merrill Lynch as a branch office operations manager, and in the home office Operations Liaison department.
MICHAEL G. CLARK (Born 1956) is Senior Vice President/Treasurer of West Coast Realty Advisors, Inc., Associated Financial Group, Inc., and Associated Securities Corp. Prior to joining AFG in 1986, he served as Controller for Quest Resources, a Los Angeles-based syndicator and operator of alternative energy projects, from October 1984 to March 1986, and Assistant Controller for Valley Cable T.V., from March 1982 through September 1984. In addition, Mr. Clark served as an auditor for Arthur Young & Co. in Los Angeles, from July 1978 to March 1982. He is a graduate of the University of California, Santa Barbara (BA) and California State University, Northridge (MS).
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
During its last calendar year, the Registrant paid no direct or indirect compensation to directors or officers.
The Registrant has no annuity, pension or retirement plans, or existing plan or arrangement pursuant to which compensatory payments are proposed to be made in the future to directors or officers.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Registrant is a limited partnership and has no officers or directors. The Registrant has no outstanding securities possessing general voting rights.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Registrant was organized in December 1986 as a California Limited Partnership. Its General Partners (collectively referred to herein as the "General Partner") are West Coast Realty Advisors, Inc. and W. Thomas Maudlin Jr., an individual. The Registrant has no executive officers or directors. Philip N. Gainsborough, an officer of the General Partner, made an original limited partnership contribution to the Partnership in March 1987, which was subsequently paid back to him in March 1988 when the Partnership met its minimum funding requirement. The General Partner and its affiliates are entitled to compensation from the Partnership for the following services:
1. For Partnership management services rendered to the Partnership, the General Partner is entitled to receive up to 10% of all distributions of cash from operations. For the year ended December 31, 1995, the amount paid the General Partner was $21,092. In addition, the General Partner is entitled to reimbursement for certain public offering expenses, the cost of certain personnel employed in the organization of the Partnership, and certain administrative services performed by the General Partner. For the year ended December 31, 1995, the Partnership reimbursed $12,000 to the General Partner for these expenditures.
2. For property management services, the General Partner engaged West Coast Realty Management, Inc. ("WCRM") an affiliate of the General Partner. For the year ended December 31, 1995, the Partnership incurred property management fees of $17,568 with WCRM.
3. The General Partner received a 10% allocation of net income before depreciation and amortization and 1% of depreciation and amortization. For the year ended December 31, 1995 this resulted in a $23,774 allocation of net income before depreciation and amortization and a $981 allocation of depreciation and amortization, or a net income allocation of $22,793.
4. On December 31, 1995 the Partnership was indebted to WCRM for $4,973, which was paid subsequent to year-end.
PART IV ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS The following financial statements of Associated Planners Realty Income Fund, a California Limited Partnership, are included in PART II, ITEM 8:
PAGE
Report of Independent Certified Public Accountants................. 15
Balance Sheets -- December 31, 1995 and 1994 ...................... 16
Statements of Income for the years ended December 31, 1995, 1994, and 1993 ......................... 17
Statements of Partners' Equity for the years ended December 31, 1995, 1994, and 1993 ......................... 18
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 ......................... 19
Summary of Accounting Policies ................................ 20-21
Notes to Financial Statements ................................... 22-27
2. FINANCIAL STATEMENT SCHEDULES
Schedule III --Real Estate and Accumulated Depreciation ...... 33
All other schedules have been omitted because they are either not required, not applicable or the information has been otherwise supplied.
(b) REPORTS ON FORM 8-K
NONE
(c) EXHIBITS
NONE
SIGNATURES
Pursuant to the requirements of the 13 or 15(d) 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.
ASSOCIATED PLANNERS REALTY INCOME FUND A California Limited Partnership (Registrant)
W. THOMAS MAUDLIN JR. (A General Partner)
By: WEST COAST REALTY ADVISORS, INC. (A General Partner)
WILLIAM T. HAAS (Director and Executive Vice President/Secretary)
MICHAEL G. CLARK (Vice President/Treasurer)
April 1, 1996