SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Year Ended December 31, 2001 Commission File Number 0-17717
FOUNDATION REALTY FUND, LTD.
----------------------------
(Exact name of Registrant as specified in its charter)
Florida 59-2802896
------- ----------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
1100 Abernathy Road NE,
Building 500, Suite 700 Atlanta, GA 30328
----------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code - (770) 551-0007
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference by Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or 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
Number of share outstanding of each of Registrant's classes of securities.
Title of Each Class Number of Units December 31, 2001
Units of Limited Partnership 9,407
Interest: $1,000 per unit
DOCUMENT INCORPORATION BY REFERENCE
Part IV - Registration Statement S-11, File No. 33-13849
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
PART I
Item 1. Business
General Development of Business -
The Registrant is a Florida Limited Partnership ("Partnership") whose General
Partners are RJ Properties, Inc. ("RJP"), a wholly-owned subsidiary of Raymond
James Financial, Inc., and J. Robert Love, an individual (collectively, the
"General Partners"). The Partnership was formed under the laws of Florida and
commenced operations on January 12, 1988.
Financial Information about Industry Segments -
The Registrant is engaged in only one industry segment, the acquisition,
management and disposition of apartment properties.
Narrative Description of Business -
The Partnership's business is to acquire, manage, and eventually sell apartment
properties which offer the potential for providing periodic, cash distributions
to Limited Partners, capital appreciation, and preservation and protection of
the Limited Partners' Capital Contributions.
The Registrant has no direct employees. The General Partners have full and
exclusive discretion in management and control of the Partnership.
Item 2. Properties
As of December 31, 2001, the Partnership owned the properties listed below:
Purchase Current
Property Name and Location Date Cost
-------------------------- -------- -------
Oakwood Village Apartments 1/22/88 $ 9,466,117
Atlanta, Georgia
Springfield Apartments 9/22/88 $13,164,984
Durham, North Carolina
December 31, 2001 December 31, 2000
----------------- -----------------
Land $ 3,141,510 $ 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 2,191,473 2,114,164
Apartment Properties, at Cost 22,631,101 22,553,792
Less: Accumulated Depreciation -8,559,129 -7,986,885
$14,071,972 $14,566,907
Item 3. Legal Proceedings
The Registrant is not a party to material pending legal proceedings.
Item 4. Submission of Matters to Vote of Security Holders
A solicitation of proxy was made to the security holders during 2001. The
subject matter the proxy dealt with was the corporate general partner seeking
approval from the limited partners to sell the assets owned by the partnership
and approval to windup partnership operations. A majority of the limited
partners voted to approve the sale of the partnership assets and windup the
partnership operations.
PART II
Item 5. Market for the Registrant's Securities and Related Security
Holder Matters
(A) The Registrant's Limited Partnership interests are not publicly traded.
There is no market for the Registrant's Limited Partnership interests and
it is unlikely that any will develop.
(B) Approximate Number of Equity Security Holders:
Number of Record Holders
Title of Class as of December 31, 2001
- -------------- ------------------------
Units of Limited Partnership Interest 731
General Partner Interest 2
Item 6. Selected Financial Data
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Total Revenues $ 3,951,773 $ 3,876,716 $ 3,753,624 $ 3,681,292 $3,653,810
Net Income
(Loss) (38,218) 89,573 153,404 194,764 (296,253)
Total Assets 15,255,678 15,933,059 16,442,093 16,826,009 17,257,323
Notes Payable 17,169,423 17,373,014 17,561,620 17,736,343 17,898,206
Distributions $ 45.00 $ 45.00 $ 37.50 $ 51.25 $ 67.50
to Limited
Partners Per
Partnership
Unit**
Income (Loss) $(3.86) $ 9.05 $ 15.49 $ 19.67 $ (29.92)
Per $1,000
Limited
Partners
Unit
Outstanding
Occupancy % 93.5% 94.6% 93.8% 93.1% 94.7%
Revenue per $ 9.50 $ 9.32 $ 9.03 $ 8.85 $ 8.78
Sq. Ft.
** For an investor admitted in January, 1988. None of the distribution to
Limited Partners represents a return of capital.
The above selected financial data should be read in conjunction with the
financial statement's related notes appearing elsewhere in this report. This
statement is not covered by the auditor's opinion included elsewhere in this
report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Rental income for the twelve months ended December 31, 2001 was $3,771,408 as
compared to $3,686,506 and $3,621,098 for the comparable periods ended December
31, 2000 and December 31, 1999, respectively. Income from property operations
for the twelve months ended December 31, 2001 was $1,257,891 as compared to
$1,382,498 and $1,472,740 for the comparable periods ended December 31, 2000 and
December 31, 1999.
The $90,242 decrease in income from property operations in 2000 was a result of
several factors; including a $35,043 increase in payroll expense at the
Springfield Apartments due to the hiring of an additional office worker, a
$24,237 increase in property taxes at the Oakwood Village Apartments due to an
increased property tax assessment by the county the property is located within,
repair and maintenance cost increases at both property locations for such items
as landscaping improvement--$26,599; plumbing replacements and interior repairs
due to pipe breaks at the Springfield Apartments totaling $39,913; and exterior
wood replacement and roof repairs totaling $32,563.
The $124,607 decrease in income from property operations in 2001 was also a
result of several factors. During 2001 the partnership incurred approximately
$110,000 in expenses in connection with the Proxy Solicitation discussed in Part
I. Item 4. above. The expenses included professional services for legal,
property appraisals and accounting, printing and mailing fee expenses and filing
fees paid to the Securities and Exchange Commission. The remaining factors
attributed to the decrease in income from property operations is an increase of
$115,138 in operating expenses offset by an increase in rental and related
income of $92,835.
The $115,138 increase in operating expenses was caused by the wood replacement
and repainting of the Springfield Apartments for $100,225 in 2001 and an
increase of $10,659 in advertising related costs offset by a $7,465 reduction in
utility expense at both properties and $3,020 reduction in landscaping expenses
at both properties.
Net income for the twelve months ended December 31, 2000 was $85,094 or $9.05
per Limited Partnership Unit outstanding as compared to a net loss of
$36,307 or $3.86 per Limited Partnership Unit for the comparable period ended
December 31, 2001. The primary source of funds in 2002 will accumulate from
rental operations and investment earnings.
Cash distributions of $423,316, $423,316 and $352,763 were paid to limited
partners in 2001, 2000, and 1999 respectively. The distribution of cash to
limited partners was $129,346 lower in 1999 compared to 1998. The lower 1999
distribution is a result of the partnership setting aside $107,875 of operating
funds for planned capital expenditures in 2000. The higher distribution in 2000
of $70,553 reflects the prior year set aside of $107,875 offset primarily by a
$35,537 decrease in property cash flow.
Year 2000 Disclosure
The partnership's operations were not affected negatively by the advent of
the year 2000. The partnership spent between five and seven thousand dollars
towards Y2K preparations and these amounts were expensed.
Other Disclosure
At the inception of the partnership, Foundation Realty Fund, Ltd. entered into a
property management agreement with RJ Properties, Inc., a general partner, for
management of the apartment properties. On March 31, 1998, a subsidiary and
certain assets of RJ Properties, Inc. were sold to SHLP Realty Corp. and the
existing employees of RJ Properties, Inc. and its affiliate transferred to the
buyer. To avoid loss of continuity, RJ Properties, Inc. entered into a
submanagement agreement with SHLP Realty Corp. for management of the
partnership's properties. This new agreement in no way changes the management
fee expense nor the personnel assigned to the day-to-day coperations of the
properties. This submanagement agreement installs SHLP Realty Corp. as the named
management entity for the Partnership's properties and J. Robert Love remains
President of RJ Properties, Inc. as well as individual General Partner.
Liquidity and Capital Resources
In management's opinion, working capital reserves and liquidity from property
operations are sufficient to meet the short-term operating needs of the
Partnership. The sole long-term commitment of the Partnership is the mortgages
payable which have balloon payments due November 2004. Management plans to meet
the long-term commitment through a property sale or through approaching lenders
to refinance the Partnership mortgages. We are currently in the process of
marketing both properties for sale. If offers at acceptable prices are received,
it is probable that we may sell one or both of the properties. Capital
expenditures for any material commitments, should they occur, will be funded
from two sources-working capital reserves and proceeds earned from property
operations.
Cash provided by operating activities decreased by $108,966 from 2000 to 2001.
The primary reason for the change is the result of the partnership experiencing
a net loss in 2001 verse net income in 2000. Factors contributing to the
operational net loss in 2001 are presented in the Management Discussion and
Analysis section above. Cash provided by operating activities increased by
$30,829 from 1999 to 2000. The decrease was caused by an increase in unearned
rents of $32,075 and a smaller increase in restricted cash offset by a lower net
income of $63,831.
Cash used by investing activities totaled $68,870 in 2000. The $34,112 decrease
from 1999 is attributable to the purchase and capitalization of exercise
equipment and masonry work at the Oakwood Village Apartments and concrete and
landscaping improvements at the Springfield Apartments. The cash used by
investing activities in 2001 was $77,309 and is comparable to the prior year
amount.
The monthly debt service commitments total $52,777 for Oakwood Village and
$74,644 for Springfield. The debt service is adequately funded from Partnership
operations. Cash used by financing activities totaled $611,922 for 2000 as
compared to $626,907 for 2001. This increase was caused by the increased pay
down of partnership debt principal as required in the new loan agreements
entered into during 1997. The change in cash used by financing activities was
more dramatic in 2000 verse 1999. The $84,436 increase was a result of an
increase in partnership distributions of $70,533 coupled with a $13,883 increase
in principal payments on the partnership debt.
Item 8. Financial Statements and Supplementary Data
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
Page No.
Part I - Financial Information
Independent Auditor's Report 7
Balance Sheets as of December 31, 2001 8
And December 31, 2000
Statements of Operations - For the 9
Years Ended December 31, 2001, 2000 and
1999
Statements of Partners' Equity - For the 10
Years Ended December 31, 2001, 2000 and
1999
Statements of Cash Flows - For the Years 11
Ended December 31, 2001, 2000 and
1999
Notes to Financial Statements 12-15
Supplementary Financial Data 16
All other schedules have been omitted as not required, not applicable, or the
information required to be shown therein is included in the financial statements
and related notes.
To the Partners of Foundation Realty Fund, Ltd.
We have audited the accompanying balance sheets of Foundation Realty Fund Ltd.
(a Florida Limited Partnership) as of December 31, 2001 and 2000, and the
related statements of operations, partners' deficit and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion of these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. 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 Foundation Realty Fund, Ltd. as
of December 31, 2001 and 2000 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were made for the purpose of forming an opinion on the basic
financial Statements taken as a whole. The schedules listed under items 14(2) in
the index are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, based on our
audits, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
As discussed in note 7, the partnership is winding down its operations.
SPENCE,MARSTON,BUNCH,MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
February 10,2002
(A Florida Limited Partnership)
BALANCE SHEETS
December 31, 2001 December 31, 2000
----------------- -----------------
ASSETS
------
Apartment Properties, at
Cost $ 22,631,101 $ 22,553,792
Less - Accumulated
Depreciation (8,559,129) (7,986,885)
14,071,972 14,566,907
Cash and cash equivalents 584,564 698,333
503,714
Restricted Cash 477,695
Prepaid Expenses 7,174 8,278
Deferred Loan Cost (Net of 114,273 155,827
AccumulatedAmortization of
$176,605 and $135,051)
TOTAL ASSETS $ 15,255,678 $ 15,933,059
LIABILITIES AND PARTNERS' (DEFICIT)
Liabilities:
Notes Payable $ 17,169,423 $ 17,373,014
Accounts Payable 42,203 31,848
Security Deposits 99,399 102,515
Unearned Rent 32,369 51,864
TOTAL LIABILITIES $ 17,343,394 $ 17,559,241
Partners' (Deficit):
Limited Partners' (Deficit)
(9,407 units)outstanding at
December 31, 2001 and
December 31, 2000 (1,835,443) (1,375,820)
General Partners' (Deficit) (252,273) (250,362)
TOTAL PARTNERS'(DEFICIT) (2,087,716) (1,626,182)
TOTAL LIABILITIES AND
PARTNERS'(DEFICIT) $ 15,255,678 $ 15,933,059
The accompanying notes are an integral part of these financial statements.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
2001 2000 1999
---- ---- ----
Property Operations:
Rental Income $ 3,771,408 $ 3,686,506 $ 3,621,098
Miscellaneous 150,630 142,697 97,542
3,922,038 3,829,203 3,718,640
Expenses: Depreciation &
Amortization 613,798 611,521 603,456
Payroll 443,534 423,765 377,519
Real Estate Taxes 305,560 306,577 281,345
Utilities 185,718 193,183 199,563
Repairs & Maintenance 542,238 481,906 362,768
Property Management -
General Partner 197,363 190,347 184,729
Landscaping 79,883 79,793 80,610
Other 181,780 146,676 143,268
General and Administrative -
Affiliate 1,030 1,998 1,090
Other General and
Administrative 113,243 10,939 11,552
2,664,147 2,446,705 2,245,900
Income from Property
Operations 1,257,891 1,382,498 1,472,740
Interest Income 29,735 47,513 34,984
1,287,626 1,430,011 1,507,724
Other Expenses:
Interest 1,325,844 1,340,438 1,354,320
Net Income (Loss) $ (38,218) $ 89,573 $ 153,404
Allocation of Net Income
(Loss) -
Limited Partners $ (36,307) $ 85,094 $ 145,734
General Partners (1,911) 4,479 7,670
$ (38,218) $ 89,573 $ 153,404
Net Income (Loss) Per
Limited Partnership Unit $ (3.86) $ 9.05 $ 15.50
Number of Limited
Partnership 9,407 9,407 9,407
The accompanying notes are an integral part of these financial statements.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
General
Partners'
Limited Partners' Total Partners'
Equity (Deficit) Equity (Deficit) Equity (Deficit)
---------------- ---------------- ----------------
Balance, December 31, 1998 $ (830,569) $ (262,511) $(1,093,080)
Distribution to Partners (352,763) -0- (352,763)
Net Income (Loss) 145,734 7,670 153,404
Balance, December 31, 1999 (1,037,598) (254,841) (1,292,439)
Distribution to Partners (423,316) -0- (423,316)
Net Income (Loss) 85,094 4,479 89,573
Balance, December 31, 2000 (1,375,820) (250,362) (1,626,182)
Distribution to Partners (423,316) -0- (423,316)
Net Income (Loss) (36,307) (1,911) (38,218)
Balance, December 31, 2001 $(1,835,443) $ (252,273) $(2,087,716)
The accompanying notes are an integral part of these financial statements.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
2001 2000 1999
---- ---- ----
Net Cash Provided by Operating
Activities:
Net Income (Loss) $ (38,218) $ 89,573 $ 153,404
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by Operating Activities
Depreciation & Amortization 613,798 611,521 603,456
Changes in Operating
Assets and liabilities:
(Increase) Decrease
in Restricted Cash 26,019 (14,815) (73,120)
(Increase) Decrease in Prepaid
Expense 1,104 (181) (5,322)
Increase (Decrease) in Accounts
Payable 10,355 (7,923) (1,673)
Increase (Decrease)in Unearned
Rents (19,495) 15,142 (16,933)
Increase (Decrease) in
Security Deposits (3,116) 6,096 8,772
Net Cash Provided by
Operating Activities 590,447 699,413 668,584
Net Cash Flows from Investing
Activities:
Improvements to Apartment
Properties (77,309) (68,870) (102,982)
Net Cash Used in Investing
Activities (77,309) (68,870) (102,982)
Net Cash Flows from Financing
Activities:
Distributions to Partners (423,316) (423,316) (352,763)
Payments of Notes Payable (203,591) (188,606) (174,723)
Net Cash Used by Financing
Activities (626,907) (611,922) (527,486)
Increase (Decrease) in Cash (113,769) 18,621 38,116
Cash at Beginning of Year 698,333 679,712 641,596
Cash at End of Year $ 584,564 $ 698,333 $ 679,712
Supplemental Cash Flow
Information: Interest Paid $ 1,325,844 $ 1,340,438 $ 1,354,320
The accompanying notes are an integral part of these financial statements.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
NOTE 1 - ORGANIZATION:
Foundation Realty Fund, Ltd. (the "Partnership"), a Florida Limited Partnership,
was formed April 14, 1987 under the laws of Florida. Operations commenced on
January 12, 1988. The Partnership operates two apartment properties. The
Partnership will terminate on December 31, 2020, or sooner, in accordance with
the terms of the Limited Partnership Agreement. The Partnership has received
Limited and General Partner capital contributions of $9,407,000 and $1,000
respectively. J. Robert Love, an individual, and RJ Properties, Inc., a wholly
owned subsidiary of Raymond James Financial, Inc. are the General Partners and
manage and control the business of the Partnership.
Operating profits and losses are allocated 95% to the Limited Partners and 5% to
the General Partners. Cash from operations will be shared 95% by the Limited
Partners and 5% by the General Partners; however, distributions to the General
Partners are subordinated to certain preferred returns to the Limited Partners.
The Limited Partnership Agreement states that no cash from operations shall be
distributed to the General Partners in any year until Limited Partners have
received distributions in such year in an amount equal to 7% of their adjusted
capital contribution. Profit and loss and cash distributions from sales of
properties will be allocated as formulated in the Limited Partnership Agreement.
The Limited Partnership Agreement states that cash distributions from sales will
be distributed first to the General Partners until they receive 5% of aggregate
distributions of cash from operations. Cash distributions from sales will be
distributed second to each Limited Partner an amount equal to their adjusted
capital contribution plus an amount equal to an 8% per annum, cumulative but
non-compounded return. Cash distributions from sales will be distributed third
to the General Partners until they have received cumulative distributions in an
amount equal to 3% of the aggregate disposition price of properties sold by the
Partnership. Cash distributions from sales will be distributed fourth, the
balance, if any, 85% to the Limited Partners and 15% to the General Partners.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting/Revenue Recognition
The Partnership utilizes the accrual basis of accounting whereby rental revenues
and other fees are recognized when earned and expenses are recognized as
obligations when incurred. The Partnership does not recognize revenue upon the
collection of security deposits but sets up a liability for the amount received.
Cash and Cash Equivalents
It is the Partnership's policy to include short-term investments with an
original maturity of three months or less in cash and cash equivalents. These
short-term investments are comprised of money market funds and repurchase
agreements. Restricted cash is not included in cash and cash equivalents.
Restricted Cash
Restricted cash includes $378,296 at December 31, 2001 and $401,199 at December
31, 2000 of cash held in escrow for the payment of real estate taxes and capital
replacement items. Restricted cash also includes $99,399 at December 31, 2001
and $102,515 at December 31, 2000 of tenant security deposits held in escrow
account.
Income Taxes
No provision for income taxes has been made in these financial statements, as
income taxes are a liability of the partners rather than of the Partnership.
Concentrations of Credit Risk
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist principally of cash investments in high
credit quality financial institutions.
Depreciation
The apartment buildings are being depreciated over 35 years using the
straight-line method. Furniture and fixtures are being depreciated over eight
years using the straight-line method.
Reclassifications
Certain accounts in the prior year financial statements have been reclassified
for comparison purposes to conform with the presentation in the current year
financial statements.
Risks and Uncertainties
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates that affect certain reported
amounts and disclosures. These estimates are based on management's knowledge and
experience. Accordingly, actual results could differ from these estimates.
NOTE 3 - COMPENSATION, REIMBURSEMENTS, AND ACCRUALS TO THE GENERAL PARTNERS AND
AFFILIATES:
The General Partners and affiliates are entitled to the following types of
compensation and reimbursement for costs and expenses incurred for the
Partnership for the years ended December 31:
2001 2000 1999
---- ---- ----
Property Management Fees $197,363 $190,347 $184,729
General and Administrative Costs 1,030 1,998 1,090
The terms of the property management agreement call for the Corporate General
Partner to receive a monthly fee of up to 5% of the monthly gross receipts from
residential property operations.
Property management fees in the amount of $15,801 are due to the Corporate
General Partner at December 31, 2001. Property management fees in the amount of
$11,100 were due to the Corporate General Partner at December 31, 2000. There
were no amounts due from related parties at December 31, 2001 or December 31,
2000.
NOTE 4 - LEASES AND APARTMENT PROPERTIES:
The Partnership owns apartment complexes leased to residents under short-term
operating leases. A summary of the apartment properties is as follows:
December 31, 2001 December 31, 2000
----------------- -----------------
Land $ 3,141,510 $ 3,141,510
Buildings 17,298,118 17,298,118
Furniture & Fixtures 2,191,473 2,114,164
Apartment Properties at 22,631,101 22,553,792
Cost
Less: Accumulated (8,559,129) (7,986,885)
Depreciation
$ 14,071,972 $ 14,566,907
NOTE 5 - TAXABLE INCOME:
The Partnership's taxable income differs from financial income primarily due to
depreciation which is recorded under the Modified Accelerated Cost Recovery
System (MACRS) and the presentation of prepaid rents. The following is a
reconciliation between net income (loss) as reported and partnership income
(loss) for tax purposes:
2001 2000 1999
---- ---- ----
Net income(loss) per financial
statements $ (38,218) $ 89,573 $ 153,404
Tax depreciation in excess of or
(less than) financial depreciation (131,635) (140,113) (140,947)
Prepaid rents added to taxable
income (17,826) 11,680 (8,725)
Partnership income(loss) for tax
purposes $ (187,679) $ (38,860) $ 3,732
NOTE 6 - NOTES PAYABLE:
The notes payable at December 31, 2001 and 2000 consist of the following:
2001 2000
---- ----
Oakwood Village
The first mortgage note, which has
an interest rate of 7.67%, is
payable in monthly installments
including principal and interest of
$52,777 through October 2004. There
is a balloon payment of $6,834,354
due on this loan of the remaining
principal and any unpaid interest
in November 2004. $ 7,111,459 $ 7,195,785
Springfield
The first mortgage note, which has
an interest rate of 7.67%, is
payable in monthly installments
including principal and interest of
$74,644 through October 2004. There is
a balloon payment of $9,666,045
due on this loan of the remaining
principal and any unpaid interest
in November 2004. 10,057,964 10,177,229
$ 17,169,423 $ 17,373,014
The aggregate amount of principal payments due in the years after December 31,
2001 are:
2002 218,372
2003 235,722
2004 16,715,329
$17,169,423
NOTE 7 - OTHER MATTERS:
A solicitation of proxy was made to the limited partners during 2001. The
subject matter of the proxy involved the Corporate General Partner seeking
approval from the limited partners to sell the assets owned by the partnership
and approval to windup partnership operations. A majority of limited partners
voted to approve the sale of the partnership assets and windup the partnership
operations.
NOTE 8 - SUBSEQUENT EVENT:
On February 15, 2002, the Partnership paid distributions of $105,829 to the
Limited Partners.
NOTE 9 - Selected Quarterly Financial Data (Unaudited)
2000 Q-1-00 Q-2-00 Q-3-00 Q-4-00
- ---- ------ ------ ------ ------
Rental Income $ 880,875 $ 897,338 $ 934,732 $ 973,561
Income from Property 358,410 308,167 332,013 383,908
Operations
Net Income (Loss) 31,289 (18,214) 7,054 69,444
Net Income (Loss) Per
Limited Partnership
unit 3.16 (1.83) .71 7.01
2001 Q-1-01 Q-2-01 Q-3-01 Q-4-01
- ---- ------ ------ ------ ------
Rental Income $ 963,995 $ 934,034 $ 940,223 $ 933,156
Income from Property 389,169 149,457 332,591 386,674
Operations
Net Income (Loss) 66,096 (177,592) 7,494 65,784
Net Income (Loss)Per
Limited
Partnership
Unit 6.68 (17.93) .75 6.64
The significant drop in income from property operations during the second
quarter of 2001 was a result of $87,588 of expenses incurred in connection with
the Proxy Solicitation and an increase in property expenditures of roof
replacements totaling $27,135 and painting and wood replacement of $90,578.
For comparability, the 2000 figures have been reclassified, where appropriate to
conform with the financial statement presentation used in 2001.
Item 9. Disagreements on Accounting and Financial Disclosures
Not applicable.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or officers.
Item 11. Executive Compensation
The Partnership has no directors or officers.
Item 12. Security Ownership of Certain Beneficial Owners & Management
The Registrant is a Limited Partnership and therefore does not have
voting shares of stock. To the knowledge of the Partnership, no person
owns a record or beneficially, more than 5% of the Partnership's
outstanding units.
Item 13. Certain Relationships and Related Transactions
The General Partners and affiliates are entitled to the following types
of compensation and reimbursements for costs and expenses: Total
Incurred by the Partnership for the period ended December 31,
2001 2000 1999
---- ---- ----
Property management fees are paid to
the General Partners for services
performed in connection with, among
other things, the day to day
management to the Limited
Partnership's properties. As
compensation for management services
they perform, the General Partners
are paid a monthly fee equal to 5% of
the monthly gross receipts from
residential property. These fees are
included in the Statement of
Operations. $ 197,363 $ 190,347 $ 184,729
Affiliates of the General Partners
are reimbursed for general and
administrative expenses of the
partnership on an accountable basis.
This expense is included in the
Statement of Operations. Direct costs
are paid by the Partnership. 1,030 1,998 1,090
The General Partners receive 5% of
cash from operations subject to
certain subordination agreements. In
addition, the General Partners are
allocated 5% of all tax items. -0- -0- -0-
PART 4
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
1. Financial Statements - see accompanying index to financial statements,
Item 8.
2. Financial Statements Schedules - Schedule III Real Estate and
Accumulated Depreciation
3. Exhibit Index -
Table Number Page
- ------------ ----
1.1 Form of Soliciting Dealer Agreement *
1.2 Form of Escrow Agreement between Foundation Realty Fund, Ltd.
and Southeast Bank, NA *
2 Plan of acquisition, organization, arrangement, liquidation
or succession **
3.1 The form of Partnership Agreement of the Partnership *
3.2 Articles of Incorporation of RJ Properties, Inc. *
3.2.1 By-laws of RJ Properties, Inc. *
3.3 Certificate of Limited Partnership of Foundation Realty Fund, Ltd. *
4 Instruments defining the rights of security holders
including debentures **
5.1 Summary of appraisal of Oakwood Village Apartments **
8.1 Tax opinion and consent of Schifino, Fleischer & Neal, P.A. *
9 Voting Trust Agreement **
10.1 Oakwood Village Apartments Real Estate Acquisition Contract
and Exhibits thereto *
11 Computation of per share earnings **
12 Computation of ratios **
13 Annual report to security holders **
18 Letter re: change in accounting principles **
19 Previously unfiled documents **
22 Subsidiaries of the Registrant **
23 Published report regarding matters submitted to vote of
security holders **
24 Consents of experts and counsel *
24.1 The consent of Spence, Marston & Bunch *
24.2 The consent of Charles Smallwood, CPA *
24.3 The consent of Schifino, Fleischer & Neal, PA to all references
made to them in the Prospectus included as part of the
Registration Statement of Foundation Realty Fund, Ltd., and
all amendments thereto, is included in their opinions
filed as Exhibit 8.1 to the Registration Statement *
25 Power of Attorney **
28.1 Table 6 (Acquisition of Properties by Program) of Appendix
2 to Industry Guide 5, Preparation of Registration
Statements Relating to Interests in Real Estate Limited
Partnerships *
29 Information from reports furnished to state insurance
regulatory authorities **
* Included with Form S-11, Registration No. 33-13849, previously
filed with the Securities and Exchange Commission.
** Exhibits were omitted as not required, not applicable or the
information required to be shown therein is included elsewhere
in this report.
B. Reports filed on Form 8-K - None
C. Exhibits filed with this Report - None
Foundation Realty Fund, Ltd.
(A Florida Limited Partnership)
Schedule III - Real Estate and Accumulated Depreciation for the
Years Ended December 31, 2001, 2000 and 1999
Description Encumbrance Initial Cost to Cost Carrying Amount
Partnership Capitalized at Close of
Subsequent to Period
Acquisition
- ----------- ----------- ---------------- ----------- ---------------
Oakwood Village First Mortgage note
Apartments Atlanta, with 7.67% interest
GA rate. Balance
$7,111,459 at
December 31, 2001 $ 9,038,120 $427,997 $ 9,466,117
Springfield Apartments First mortgage note
Durham, NC with 7.67% interest
rate. Balance
$10,057,964 at
December 31, 2001 $12,767,861 $397,123 $13,164,984
TOTAL $21,805,981 $825,120 $22,631,101
Foundation Realty Fund, Ltd.
(A Florida Limited Partnership)
Schedule III - Real Estate and Accumulated Depreciation for the
Years Ended December 31, 2001, 2000 and 1999
Description Accumulated Date of Purchase Date of Depreciation Life
Depreciation Construction
- ----------- ------------ ---------------- ------------ -----------------
Oakwood Building-35 years
Village Appliances &
Apartments Equipment-8 years
Atlanta, GA $3,699,824 1/22/88 1982
Springfield Building-35 years
Apartments Appliances &
Durham, NC 4,859,305 9/22/88 1986 Equipment-8 years
TOTAL $8,559,129
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
SCHEDULE III - Real Estate and
Accumulated Depreciation FOR THE YEARS
ENDED DECEMBER 31, 2001, 2000 AND 1999
Balance at (Deletions) Balance at
Beginning Additions Close of
of Year Year
----------- ---------- ---------
1999
Land $3,141,510 $-0- $3,141,510
Buildings 17,298,118 -0- 17,298,118
Equipment 1,942,312 102,982 2,045,294
Total $22,381,940 $102,982 $22,484,922
2000
Land $3,141,510 $-0- $3,141,510
Buildings 17,298,118 -0- 17,298,118
Equipment 2,045,294 68,870 2,114,164
Total $22,484,922 $68,870 $22,553,792
2001
Land $3,141,510 $-0- $3,141,510
Buildings 17,298,118 -0- 17,298,118
Equipment 2,114,164 77,309 2,191,473
Total $22,553,792 $77,309 $22,631,101
SCHEDULE III -
Real Estate and Accumulated
Depreciation FOR THE YEARS ENDED
DECEMBER 31, 2001, 2000 AND 1999
Balance at Depreciation Balance at Close
Beginning Expense of Year
of Year
---------- ------------ ----------------
1999
Buildings $5,229,191 $494,232 $5,723,423
Equipment 1,625,825 67,670 1,693,495
Total $6,855,016 $561,902 $7,416,918
2000
Buildings $5,723,423 $494,232 $6,217,655
Equipment 1,693,495 75,735 1,769,230
Total $7,416,918 $569,967 $7,986,885
2001
Buildings $6,217,655 $494,232 $6,711,887
Equipment 1,769,230 78,012 1,847,242
Total $7,986,885 $572,244 $8,559,129
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
(Registrant)
By: RJ PROPERTIES, INC.
a General Partner
Date: March 21, 2002 By: J. Robert Love President
(Signature)
Date: March 21, 2002 By: Alan G. Lee Secretary
(Signature)
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned duly authorized.
FOUNDATION REALTY FUND, LTD.
(A Florida Limited Partnership)
(Registrant)
By: RJ PROPERTIES, INC.
a General Partner
Date: March 21, 2002 By: J. Robert Love President
(Signature)
Date: March 21, 2002 By: Alan G. Lee Secretary
(Signature)