10-Q 1 v72416e10-q.txt FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission file number 0-16805 ASSOCIATED PLANNERS REALTY FUND (Exact name of registrant as specified in its charter) CALIFORNIA 95-4036980 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5933 W. CENTURY BLVD., SUITE 900 LOS ANGELES, CALIFORNIA 90045 (Address of principal executive offices) (Zip Code) (310) 670-0800 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 [ ] 1 2 ASSOCIATED PLANNERS REALTY FUND INDEX PART I -- FINANCIAL INFORMATION

2 3 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS

See accompanying notes to financial statements. 3 4 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)

See accompanying notes to financial statements. 4 5 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF INCOME

See accompanying notes to financial statements. 5 6 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS

See accompanying notes to financial statements. 6 7 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES BUSINESS Associated Planners Realty Fund (the "Partnership"), a California limited partnership, was formed on November 19, 1985 under the Revised Limited Partnership Act of the State of California. The Partnership was formed to acquire income-producing real property throughout the United States with an emphasis on properties located in California and the southwestern states. The Partnership purchased these properties on an all cash basis or on a moderately leveraged basis and intended on owning and operating such properties for investment over an anticipated holding period of approximately five to ten years. BASIS OF PRESENTATION The consolidated financial statements do not give effect to any assets 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 ESTATE AND DEPRECIATION Assets are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives ranging from 5 to 40 years. 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. RENTAL INCOME Rental revenue is recognized on a straight-line basis to the extent that rental revenue is deemed collectible and collection is probable. STATEMENT OF CASH FLOWS For the purposes of the statements of cash flows, the 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. 7 8 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) SUMMARY OF ACCOUNTING POLICIES 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. COMPREHENSIVE INCOME Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS 130") establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is comprised of net income and all changes to Partners' equity except those due to investments by owners and distribution to owners. The Partnership does not have any components of comprehensive income for each of the three months ended March 31, 2001 and 2000. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is calculated by dividing the limited partners share of net income by the weighted average number of limited partnership units outstanding for the period. NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 2001, the Partnership adopted the requirements of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133", and SFAS No. 138, "Accounting for Derivative Instruments and Certain Hedging Activities - an amendment of FASB Statement 133", and supplemented by implementation guidance issued by FASB's Derivative Implementation Group. SFAS No. 133 requires, among other things, that all derivatives be recognized as either assets or liabilities and measured at estimated fair value. The corresponding derivative gains and losses should be reported based upon the hedge relationship, if such a relationship exists. Changes in the estimated fair value of derivatives that are not designated as hedges or that do not meet the hedge accounting criteria in SFAS No. 133 are required to be reported in income. Implementation of SFAS No. 133, as amended, did not have a material impact on the Partnership's financial statements. 8 9 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2000 NOTE 1 -- PRESENTATION OF INTERIM INFORMATION In the opinion of the General Partner of Associated Planners Realty Fund (the "Partnership"), the accompanying unaudited financial statements include all normal adjustments considered necessary to present fairly the financial position as of March 31, 2001, and the results of operations and cash flows for the three months ended March 31, 2001 and 2000. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Partnership's audited financial statements and notes for the fiscal year ended December 31, 2000. NOTE 2 -- RENTAL REAL ESTATE HELD FOR SALE As of March 31, 2001, the Partnership owns the following rental real estate property.

A significant portion of the Partnership's rental revenue was earned from tenants whose individual rents represent more than 10% of total rental revenue. Specifically: Three tenants accounted for 50%, 13% and 11%, respectively, for the three months ended March 31, 2001; Two tenants accounted for 62% and 24%, respectively, for the three months ended March 31, 2000. 9 10 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2000 (CONTINUED) NOTE 3 -- NOTE RECEIVABLE On February 4, 2000, the Partnership sold its property located in the Simi Valley of California to an unaffiliated buyer for $2,350,000 and received cash and a note receivable for $1,750,000. The note, which is secured by the property sold, provides for interest at 6% and monthly payments of principal and interest of $10,492. The note matures on February 4, 2004 and all remaining amounts of principal and interest are due on that date. The receivable balance was $1,672,955 as of March 31, 2001. NOTE 4 - NOTES PAYABLE In October 1996, the Partnership obtained permanent financing secured by a first deed of trust from a major insurance company to replace the construction loan on Shaw Villa Shopping Center, which is located in Clovis, California. The terms of the loan are as follows: Principal - $1,500,000; Interest Rate of 9.1% fixed for five years then may be adjusted to the weekly average of the five year Treasury Note yield for the seventh week prior to the adjustment date (5th anniversary date) plus 250 basis points, but in no event less than the existing rate, nor to exceed the maximum rate allowed by law; Amortized over twenty years; balance due November 1, 2006; and current monthly payments of principal and interest of $13,593. The note payable balance was $1,359,260 and $1,368,968 as of March 31, 2001 and December 31, 2000. The aggregate annual future principal maturities at March 31, 2001 are as follows:

10 11 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2000 (CONTINUED) NOTE 5 -- RELATED PARTY TRANSACTIONS (a) For management services rendered to the Partnership, the General Partner is entitled to receive 10% of all distributions of cash from operations. These amounts totaled $0 for the three months ended March 31, 2001 and March 31, 2000. (b) For administrative services provided to the Partnership, the General Partner is entitled to reimbursement for the cost of certain personnel and relevant expenses. These amounts totaled $3,000 for the three months ended March 31, 2001 and March 31, 2000. (c) Property management fees incurred, in accordance with the Partnership Agreement, to West Coast Realty Management, Inc., an affiliate of the corporate General Partner, totaled $4,310 for the three months ended March 31, 2001 and $3,567 for the three months ended March 31, 2000. NOTE 6 - NET INCOME AND CASH DISTRIBUTIONS PER LIMITED PARTNERSHIP LIST The Net Income per Limited Partnership Unit was computed in accordance with the partnership agreement using the weighted average number of outstanding limited partnership units of 7,499 for 2001 and 2000. The Limited Partner cash distributions, computed in accordance with the Partnership Agreement, were as follows:

NOTE 7 - LIQUIDATION OF PARTNERSHIP At March 31, 2001, the Partnership's remaining property is held for sale. The General Partner plans to liquidate the Partnership after the final property is sold. There is no assurance that the remaining property will be sold and the Partnership will be liquidated during 2001. The financial statements do not contain any adjustments that might result from the liquidation of the Partnership. 11 12 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements in the Management Discussion and Analysis constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements. INTRODUCTION Associated Planners Realty Fund (the "Partnership") was organized in November 1985, under the California Revised Limited Partnership Act. The Partnership began offering units for sale on March 28, 1986. As of December 27, 1987, the Partnership had raised $7,499,000 in gross capital contributions. The Partnership netted approximately $6,720,000 after sales commissions and syndication costs. The Partnership was organized for the purpose of investing in, holding, and managing improved, leveraged income-producing property, such as residential property, office buildings, commercial buildings, industrial properties, and shopping centers. The Partnership intended to own and operate such properties for investment over an anticipated holding period of approximately five to ten years. The Partnership's principal investment objectives are to invest in rental real estate 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 during the early years of property operations, 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. The ownership and operation of any income-producing real estate is subject to those risks inherent in all real estate investments, including national and local economic conditions, the supply and demand for similar types of properties, competitive marketing conditions, zoning changes, possible casualty losses, increases in real estate taxes, assessments, and operating expenses, as well as others. 12 13 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) INTRODUCTION (CONTINUED) 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., the General Partner. RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 2001 VS. THREE MONTHS ENDED MARCH 31, 2000 Operations for the quarter ended March 31, 2001, reflect the operations of the Partnership's remaining property Shaw Villa Shopping Center. In contrast the quarter ending March 31, 2000 also includes the operations of the Simi Valley property prior to its sale on February 4, 2000. Net income for the quarter ended March 31, 2001 of $25,536 was lower than the net income for the quarter ended March 31, 2000 of $284,865 primarily as a result of the $291,151 gain on sale of the Simi Valley property in February 2000. Rental revenue of $90,553 for the quarter ended March 31, 2001 increased $15,565 (20.76%) from the quarter ended March 31, 2000 due to higher base rents on the leases contracts for the Shaw Villa Shopping Center. Due to the vacancy of the Simi Valley property and its subsequent sale in February 2000, the Shaw Villa Shopping Center was the only income producing property for both these quarters. Interest income increased $13,531 for the three months ended March 31, 2001 as compared to the three months ended March 31, 2000 primarily due to interest income on the note receivable received in connection with the sale of the Simi Valley property. Operating expenses, property taxes, and property management fees decreased $7,295 (25.70%) for the quarter ending March 31, 2001, compared to the quarter ending March 31, 2000, primarily due to the sale of the Simi Valley property in February 2000. Depreciation and amortization expense decreased $4,612 (20.95%) because fewer properties were owned during the quarter ended March 31, 2001. Interest expense increased $9,722 (45.70%) for the quarter ending March 31, 2001, compared to the quarter ending March 31, 2000, primarily due the timing of the accrual for interest payable in the quarter ending March 31, 2000. The Partnership generated $42,942 in income from operations before depreciation expense of $17,406 for the quarter ended March 31, 2001. In contrast cash basis income for the quarter ended March 31, 2000 was $15,732 before depreciation expense of $22,018 and $291,151 gain from the sale of the Simi Valley property. Net income per limited partnership unit for the quarter decreased from $31.98 in 2000 to $2.86 in 2000. The number of limited partnership units outstanding in each quarter was 7,499. 13 14 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 2001, the Partnership made distributions to the limited partners totaling $37,495 of which $16,079 constituted a return of capital. During the three months ended March 31, 2000, the Partnership made no distributions to the general and limited partners. Proceeds from the sale of the Simi Valley property were distributed in a special cash dividend to holders of units as of March 15, 2000 in April 2000. Management uses cash as its primary measure of the Partnership's liquidity. The amount of cash that represents adequate liquidity for a real estate limited partnership, in the short-term and long-term, 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 believes that it has the ability to generate sufficient cash to meet both short-term and long-term liquidity needs, based upon the above four factors. The first factor refers to the risk of Partnership's investments. The Partnership's investments in properties were paid for in cash or on a moderately leveraged basis. The second factor relates to the condition of the Partnership's property. The Partnership's property is in good condition. There is no foreseeable need to increase reserves to fund deferred or unusual maintenance and repair expenditures. The third factor relates to life cycle. The Partnership completed its funding, acquisition and operating stages of properties in previous years. The Partnership is in the disposition stage. As part of the disposition stage, the Partnership has listed its remaining property for sale. The fourth factor relates to Partnership distributions. The Partnership is currently making semi-annual distributions from operations. Such distributions are subject to payments of Partnership expenses and reasonable reserves for expenses, maintenance, and replacements. In addition, at least six months of cash profits are left in the Partnership's balance sheet at each quarter end, since the Partnership makes distributions to the limited partners one month after each record date of June 30, and December 31. The General Partner believes that the Partnership will have the ability to meet its cash requirements in both the short-term and long-term. 14 15 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Slowdowns in the economy, inflation and changing prices have had a nominal effect on the Partnership's revenues and income from continuing operations. During the fourteen 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 General Partner is attempting to sell the remaining property owned by the Partnership. Once the Shaw Villa Shopping Center is sold and the note receivable taken in connection with the sale of the Simi Valley property is liquidated, the net proceeds will be distributed to the limited and general partners in accordance with the partnership agreement, and the partnership will then be terminated and dissolved. There is no assurance that the remaining property will be sold and the partnership will be liquidated during 2001. The financial statements do not contain any adjustments that might result from the liquidation of the partnership. CASH FLOWS -- THREE MONTHS ENDED MARCH 31, 2001 VS. THREE MONTHS ENDED MARCH 31, 2000 Cash resources increased $23,576 during the three months ended March 31, 2001 compared to a $498,628 increase in cash resources for the three months ended March 31, 2000. The three months ended March 31, 2001 provided $48,100 in cash from operating activities with the largest contributor being $25,536 in net income and $17,406 in depreciation. In contrast, the three months ended March 31, 2000 provided $15,731 in cash from operating activities due primarily to $284,865 in net income and $22,018 in depreciation, offset by $291,151 resulting from the gain on the sale of the Simi Valley property. Investing activities resulted in a $22,679 increase in cash resources during the three months ending March 31, 2001, due to principal repayments on the note receivable. Investing activities resulted in a $491,742 increase in cash resources during the three months ended March 31, 2000, primarily due to cash proceeds from the sale of the Simi Valley property. For the three months ended March 31, 2001 financing activities used $47,203 because of distributions to limited partners totaling $37,495 and repayments on notes payable of $9,708. Cash from financing activities used $8,845 during the three months ended March 31, 2000 due to principal repayments on notes payable. 15 16 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) PART II O T H E R I N F O R M A T I O N ITEM 1. EXHIBITS AND REPORTS ON FORM 8-K (a) Information required under this section has been included in the financial statements. (b) Reports on Form 8-K None 16 17 ASSOCIATED PLANNERS REALTY FUND (A CALIFORNIA LIMITED PARTNERSHIP) S I G N A T U R E S 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. ASSOCIATED PLANNERS REALTY FUND A California Limited Partnership (Registrant) By: WEST COAST REALTY ADVISORS, INC. A California Corporation, General Partner May 14, 2001 /s/ JOHN R. LINDSEY ------------------------------------ John R. Lindsey (Vice President/Treasurer, Principal Financial Officer, Principal Accounting Officer, and Duly Authorized Officer) 17

ASSOCIATED PLANNERS REALTY FUND 10-Q