10-Q 1 realmarkvib_10q.txt QUARTERLY REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2001 Commission File Number: 33-17579 REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP -VI B ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 16-1309988 ----------------------- --------------------------------- (State of organization) (IRS Employer Identification No.) 2350 North Forest Road, Suite 12A,Getzville, New York 14068 ------------------------------------------------------------ (Address of principal executive offices) (716) 636-0280 -------------- (Registrant's telephone number) Indicate by a 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 [ ] Part I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets -------------------------------------

Condensed Consolidated Statements of Operations -----------------------------------------------

2 Condensed Consolidated Statements of Cash Flows -----------------------------------------------

Notes to Financial Statements September 30, 2001 and 2000 Organization ------------ Realmark Property Investors Limited Partnership - VI B (the Partnership), a Delaware limited partnership, was formed on September 21, 1987, to invest in a diversified portfolio of income producing real estate investments. The general partners are Realmark Properties, Inc. (the corporate general partner) and Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole stockholder of J.M. Jayson & Company Inc. Realmark Properties, Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership agreement, the general partners and their affiliates can receive compensation for services rendered and reimbursement for expenses incurred on behalf of the Partnership. Basis of Presentation --------------------- The accompanying interim financial statements have been prepared in accordance with generally accepted accounting principles and, in the opinion of management, contain all necessary adjustments for a fair presentation. The Partnership's significant accounting policies are set forth in its December 31, 2000 Form 10-K. The interim financial statements should be read in conjunction with the financial statements included in that Form 10-K. The interim results should not be considered indicative of the annual results. Certain reclassifications of prior period numbers may have been made to conform to the current period presentation. 3 Property and Equipment ---------------------- Since the first quarter of 2001, the Partnership's two apartment complex properties, Fairway Club and Players Club, have been actively marketed for sale. Depreciation not recorded on these properties in the three and nine month periods ended September 30, 2001 was approximately $50,000 and $165,000, respectively. In its March 31, 2001 and June 30, 2001 Form 10-Qs, the Partnership reported the existence of a contingent $4.7 million sales agreement with an unaffiliated entity, covering Fairway Club. On August 16, 2001, the sale was consummated for cash of $4,373,000 and a $327,000 sixty-day note from the purchaser, resulting in a net gain of $1,851,531. On a pro forma basis, if the sale of the Fairway Club property had occurred on December 31, 2000, that balance sheet would have shown: an increase in cash and equivalents from $.7 to $2.3 million; a note receivable of $327,000; decreases in property of $2.7 million and in mortgage loans of $2.6 million; and an increase in partnership capital of $1.9 million. If the property had been sold on January 1, 2000, the pro forma results of operations for the year ended December 31, 2000 would have been a net loss of $177,000 ($2.25 per limited partnership unit) $57,000 less than the historical net loss, resulting from decreases in revenue and expense of $1,019,000 and $1,076,000, respectively. For the nine months ended September 30, 2001, the pro forma operating results would have been an operating profit of $72,000, resulting from decreases in revenue and expense of $626,000 and $750,000, respectively. For the three months ended September 30, 2001, the pro forma operating results would have been a profit of $20,000, resulting from decreases in revenue and expense of $108,000 and $279,000, respectively. Fairway Club's expense for the quarter and nine months ended September 30, 2001 includes a charge of approximately $127,000 to write-off unamortized deferred mortgage costs. All of the foregoing pro forma operating data excludes the gain on the disposition of the property and simply reflects the elimination of Fairway Club's operating accounts from the consolidated historical results. Investment in Joint Venture --------------------------- At December 31, 2000, the Partnership had an 11.5% interest in a joint venture with Realmark Property Investors Limited Partnership-II (RPILP-II), an entity affiliated through common general partners, owning 88.5%. The Joint Venture was formed to own and operate the Foxhunt Apartments, located in Dayton, Ohio. The Foxhunt property had been the subject of a plan of disposal since July 1999 and was sold for $7,600,000 on March 1, 2001, to an unaffiliated entity. After satisfaction of the $5,942,000 mortgage loan on the property and payment of closing costs, the net proceeds were approximately $1.1 million. The Partnership's equity in the net income of the venture includes its share of the net gain of approximately $4,700,000. Contingency ----------- The Partnership, as a nominal defendant, the General Partners of all of the Realmark Partnerships and the officers and directors of the Corporate General Partner, as defendants, were served with a Summons and Complaint on April 7, 2000 in a class and derivative lawsuit instituted by Ira Gaines and on August 8, 2000 in a class and derivative lawsuit instituted by Sean O'Reilly and Louise Homburger, each in Supreme Court, County of Erie, State of New York (the"Court"). In September 2000, the Court signed an order consolidating these lawsuits. The consolidated lawsuit alleges claims of mismanagement and improper use of partnership funds relating to the Realmark Partnerships. The consolidated lawsuit seeks declaratory relief, unspecified damages, a receiver, an order liquidating the partnership, punitive damages, attorneys' fees and related relief. 4 While the defendants deny any liability and have vigorously defended this lawsuit, on August 29, 2001, the parties entered into a Stipulation of Settlement (the "Agreement"). On October 4, 2001, the Court issued an "Order Preliminarily Approving Settlement" that, among other things, calls for a hearing on November 21, 2001 to determine whether the Agreement should be approved by the Court. The Agreement provides, among other things, that: * $1 million of the amount owed to the General Partners and/or their affiliates by Realmark Property Investors Limited Partnership IV be forgiven. * The payable to the General Partners and/or their affiliates by Realmark Property Investors Limited Partnership VI-A at March 31, 2001, in the amount of $481,598, cease to accrue interest. * All of the Realmark Partnerships' properties be disposed of within 360 days of the hearing order. The consolidated financial statements do not include any adjustments that might result from the outcome of this matter, pending the action of the Court. Current Accounting Pronouncements --------------------------------- Statements of Financial Accounting Standards Nos. 138 and 133, which concern accounting for derivative instruments and hedging activities, became effective for the Partnership on January 1, 2001 and did not have any effect on the Partnership's financial statements. PART I - Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations ------------------------- Liquidity and Capital Resources ------------------------------- The Partnership's cash position is adequate to fund its anticipated recurring cash needs. As the result of the sale of Fairway Club and the distribution from the Foxhunt joint venture, the Partnership had sufficient cash to make a distribution of $2.7 million to partners in the quarter ended September 30, 2001. Results of Operations --------------------- As indicated in the notes to financial statements, the Partnership's operations, excluding the operating accounts of Fairway Club, produced operating income of $20,000 and $72,000 for the three and nine months ended September 30, 2001, respectively. Comparable pro forma results for the same 2000 periods, excluding depreciation, would be operating losses of $5,000 and $27,000. In 2001, the occupancy rate at Players Club continues to be well over the 90% level. Rental income remained constant in the third quarter of 2001 as compared to the 2000 third quarter, while increasing approximately $32,000 in the 2001 nine month period. Property operating costs at Players Club decreased $6,000 in the third quarter and approximately $12,000 in the nine months ended September 30, 2001, principally because of lower maintenance payroll and utility expense. Administrative costs decreased in both 2001 periods because of lower advertising costs and professional fees. Interest expense in both 2001 periods increased because of a charge of $127,000 for the unamortized deferred mortgage costs on Fairway's loan. The increase in the partnership's equity in the earnings of Foxhunt is attributable to the gain on the sale of Foxhunt in the first quarter of 2001. 5 PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Partnership's cash equivalents are short-term, interest-bearing bank accounts and its mortgage loans are fixed-rate. It has not entered into any derivative contracts. Therefore, it has no market risk exposure. PART II - Item 6 Exhibits and Reports on Form 8-K -------------------------------- On August 31, 2001, the Partnership filed a Form 8-K, reporting the sale of Fairway Club under item 2 thereof. 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. REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP VI-B November 14, 2001 /s/ Joseph M. Jayson ----------------- -------------------- Date Joseph M. Jayson, Individual General Partner and Principal Financial Officer 6

REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP VI-B 10-Q