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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934. (NO FEE
REQUIRED)
Commission File Number 0-17466
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
(Exact Name of Registrant as specified in its Charter)
Delaware 16-1309987
-------------------- --------------------------------
(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership
Interest
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
--- ---
Indicate by a 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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.(X)
DOCUMENTS INCORPORATED BY REFERENCE
See page 13 for a list of all documents incorporated by reference
1
PART I
ITEM 1: BUSINESS
- - -----------------
The Registrant, Realmark Property Investors Limited Partnership-VI A (the
"Partnership"), is a Delaware Limited Partnership organized in September 1987
pursuant to an Agreement and Certificate of Limited Partnership (the
"Partnership Agreement"), under the Revised Delaware Uniform Limited Partnership
Act. The Partnership's General Partners are Realmark Properties, Inc. (the
"Corporate General Partner"), a Delaware corporation, and Joseph M.
Jayson (the "Individual General Partner").
The Registrant commenced the public offering of its limited partnership
units, registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended on November 10, 1987, and concluded the
offering on November 10, 1988, having raised a total of $15,737,790 before
deducting sales commissions and expenses of the offering.
The Partnership's primary business and its only industry segment is to own
and operate income-producing real property for the benefit of its limited
partners. As of December 31, 1996 the Partnership owned four (4) apartment
complexes totaling 680 units. The Partnership also owns an office complex
consisting of three buildings with a combined 92,000 square feet of rentable
space. Additionally, the Partnership is a partner in the Carriage House of
Englewood (formerly Gold Key) and Research Triangle Joint Ventures. The Joint
Venture agreements provide the Partnership with a 40% ownership in a 144 unit
apartment complex located in Dayton, Ohio (Carriage House of Englewood) and a
50% ownership in an office/distribution facility in Raleigh, North Carolina. See
also Item 7.
The business of the Partnership is not seasonal. As of December 31, 1996,
the Partnership did not directly employ any persons in a full-time position. All
persons who regularly rendered services on behalf of the Partnership through
December 31, 1996 were employees of the Corporate General Partner or its
affiliates.
The Partnership investment objectives are to (1) provide a return of
capital plus capital gains from the sale of appreciated properties; (2) provide
partners with cash distributions until properties are sold; (3) preserve and
protect partners capital and; (4) increase Partnership equity through the
reduction of mortgage loans.
Occupancy for each complex as of December 31, 1996, 1995 and 1994 was as
follows:
1996 1995 1994
---- ---- ----
Beaver Creek 89% 98 % 98 %
Countrybrook Estates (formerly West 83% 88 % 85 %
Creeke)
Stonegate Townhouses 92% 97 % 97 %
The Commons on Lewis Ave. 83% 91 % 94 %
Inducon - Columbia 99% 91 % 82 %
Carriage House of Englewood J.V. 83% 92 % 95 %
Research Triangle J.V. 100% 100 % 100 %
2
ITEM 1: BUSINESS (Con't.)
- - --------------------------
The percentage of total Partnership revenue on a consolidated basis
generated from each complex as of December 31, 1996, 1995 and 1994 was as
follows:
1996 1995 1994
---- ---- ----
Beaver Creek 11% 11 % 12 %
Countrybrooke Estates (formerly West 29% 28 % 28 %
Creeke)
Stonegate Townhouses 20% 20 % 22 %
The Commons on Lewis Ave. 22% 26 % 28 %
Inducon - Columbia 18% 15 % 10 %
ITEM 2: PROPERTIES
- - ------- ----------
Following is a list of properties and joint ventures owned by the
Partnership as of December 31, 1996:
Name and Location General Character of Property Purchase Date
- - ----------------- ----------------------------- -------------
Beaver Creek 80 unit apartment complex on 10 February 1989
Monaca, PA acres of land. There is currently
no mortgage in place.
Countrybrook Estates 240 unit apartment complex. The June 1989
(formerly West Creeke) outstanding mortgage payable at
Louisville, KY December 31, 1996 was $3,950,483
originally due July 1996 with monthly
payments of $34,464 including interest
at 9.75%. The mortgage has been
extended to June 1, 1997.
Stonegate Townhouses 130 unit apartment complex. The March 1990
Mobile, AL outstanding mortgage at December
31, 1996 was $1,963,361 maturing April
1997 with monthly principal payments
of $1,726 and interest payments
determined by the Corporate Base
Rate (CBR) plus 1%, adjusted on
the same day the CBR is posted.
The CBR was 9.25% on
December 31, 1996.
3
ITEM 2: PROPERTIES (Con't.)
- - -----------------------------
Name and Location General Character of Property Purchase Date
- - ----------------- ----------------------------- -------------
The Commons on 230 units apartment complex. March 1991
Lewis Avenue The mortgage balance at December
Tulsa, OK 31, 1996 was $1,883,236 maturing
April 2001 with monthly principal
and interest payments determined
by an interest rate ranging from
8% - 12% annually (10.0% at
December 31, 1996).
Carriage House A 144 unit apartment complex. May 1992
of Englewood The mortgage payable at
(formerly Gold Key) December 31, 1996 was $2,930,266
Joint Venture maturing June 2027, and providing
Dayton, OH for monthly principal and interest
payments of $23,503 bearing
interest at 9.0%.
Research Triangle A 150,000 square foot office August 1992
Joint Venture warehouse financed with a 8.625%
Research mortgage, which provides for annual
Triangle, NC principal and interest payments of
$510,936 in equal monthly installments.
The balance as of December 31, 1996
was $4,996,884. The mortgage was
originally due July 15, 1996. A second
extension to March 15, 1997 was granted
by the lender, which required additional
cash payments out of excess cash flow.
As of the report date, the mortgage is in
default and is currently payable on demand.
4
ITEM 2: PROPERTIES (Con't.)
- - ------- -------------------
The above apartment complexes are managed for the Partnership by Realmark
Corporation, an affiliate of the General Partner.
Inducon-Columbia An office complex consisting of May 1989
Columbia, SC three buildings with a combined
92,000 square feet of rentable
space. The property is managed
by a third party, with Realmark
Corporation, an affiliate of the
General Partners, supervising the
operations. The outstanding note
payable balance at December 31,
1996 was $1,776,081, with monthly
interest only payments at prime plus
1.25% (9.5% at December 31, 1996).
The mortgage was originally due
July 1996, but has been extended to
April 1997.
ITEM 3: LEGAL PROCEEDINGS
- - ------- -----------------
The Partnership is not a party to, nor is any of the Partnership's property
the subject of, any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
- - ------- -------------------------------------------
HOLDERS.
--------
None.
PART II
ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED
- - ------- ----------------------------------------
PARTNERSHIP INTEREST.
---------------------
There is currently no established trading market for the units of Limited
Partnership Interest of the Partnership and it is not anticipated that any will
develop in the future.
There were no distributions made during the years ended December 31, 1996,
1995 and 1994. See also Item 7.
As of December 31, 1996, there were 1,916 record holders of units of
Limited Partnership Interest.
5
ITEM 6: SELECTED FINANCIAL DATA
Realmark Properties Investors Limited Partnership-VI A
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
------------- ------------- ------------- ------------- -------------
Total assets $ 15,139,125 $ 16,251,096 $ 17,198,518 $ 18,214,708 $ 19,724,782
============ ============ ============ ============ ============
Mortgages and
notes payable $ 9,573,161 $ 9,672,590 $ 9,641,293 $ 9,259,957 $ 9,560,542
_________________________________________________________________________________________________________
Revenue $ 4,039,286 $ 4,190,474 $ 3,647,476 $ 3,468,533 $ 3,569,837
Expenses 4,860,288 5,312,606 5,021,157 4,391,337 4,207,475
------------ ------------ ------------ ------------ ------------
Loss before allocated loss
from Joint Ventures (821,002) (1,122,132) (1,373,681) (922,804) (637,638)
Allocated loss from
Joint Ventures (165,190) (184,772) (186,922) (150,839) (85,711)
Loss on disposal
of asset -- -- -- -- (74,671)
------------ ------------ ------------ ------------ ------------
Net Loss ($ 986,192) ($ 1,306,904) ($ 1,560,603) ($ 1,073,643) ($ 798,020)
============ ============ ============ ============ ============
_________________________________________________________________________________________________________
Net cash (used in)
provided by operating
activities ($ 45,922) $ 307,437 ($ 394,141) $ 266,326 ($ 295,130)
Principal payments on
long-term debt (99,429) (44,715) (42,653) (300,585) (26,244)
------------ ------------ ------------ ------------ ------------
Net cash (used in)
provided by operating
activities less
principal payments ($ 145,351) $ 262,722 ($ 436,794) ($ 34,259) ($ 321,374)
============ ============ ============ ============ ============
_________________________________________________________________________________________________________
Loss per limited
partnership unit ($ 6.08) ($ 8.06) ($ 9.62) ($ 6.62) ($ 4.92)
============ ============ ============ ============ ============
Distributions per
limited partnership
unit $ -- $ -- $ -- $ 1.25 $ 2.25
============ ============ ============ ============ ============
Weighted average
number of limited
partnership units
outstanding 157,378 157,378 157,378 157,378 157,378
============ ============ ============ ============ ============
6
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources:
- - --------------------------------
The Partnership operated through much of 1996 with occupancy problems and
high delinquencies at its residential properties, thus resulting in poor cash
flow. Management is putting considerable efforts into a marketing program to
both attract new tenants and to maintain existing tenants. A great deal of
energy is being spent on not only advertising campaigns, but also the monitoring
of such ads. Managers at the complexes are trying to determine the effectiveness
of the ads being placed and the medium in which they are being placed.
Additionally, managers at all properties have been instructed to concentrate
heavily on collection efforts. The commercial properties in this Partnership
(including the Joint Venture property) continue to operate at almost 100%
occupancy. The market in the areas where these buildings are located is deemed
by management to be very strong and continually growing; expansion of existing
buildings is strongly being considered to help improve cash flow for the entire
Partnership.
The Partnership made no distributions during the years ended December 31,
1996, 1995 and 1994. The General Partners hope to once again declare a
distribution in the coming year, but at this date, all cash is being utilized to
fund necessary improvements to the properties.
In July of 1996, Carriage House of Englewood (formerly Gold Key Apartments)
came under contract for sale during July 1996. The Partnership is a 40% joint
venture owner of this property. The sale is subject to a number of contingencies
and is cancelable at any time by the buyer. Until such time as all of the buyers
due diligence procedures are performed, no closing date can be established. At
December 31, 1996 it is unclear as to whether this sale will close, so the
General Partners continue to look for a buyer for this property as it is felt
that this is in the best interests of the venturers.
Management has once again implemented corrective action plans in response
to the going concern considerations discussed in Notes 8 and 11 to the financial
statements. These plans include tighter cash management through the closer
monitoring of expenses such as payroll, advertising and maintenance, which have
typically been the expenses that have increased from year to year. Additionally,
tighter credit policies have been put into place as a means of avoiding the
collection problems which the property incurred during the past several years. A
concerted effort at correcting the cash flow shortages and continual losses will
hopefully lead to the ultimate cure of such problems. Management feels that
there is a need to refinance some properties in this Partnership in order to
improve cash flow; the future viability of the Partnership is dependent upon
management's continuing efforts to reduce expenses, increase revenues and on the
ability of management to sell and/or refinance properties.
Results of Operations:
- - ----------------------
For the year ended December 31, 1996, the Partnership incurred a net loss
of $986,192 or $6.08 per limited partnership unit. This is a large decrease from
the years ended December 31, 1995 and 1994 when losses incurred totaled
$1,306,904 or $8.06 per limited partnership unit and $1,560,603 or $9.62 per
limited partnership unit, respectively.
7
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations (Con't.):
- - -------------------------------
Partnership revenues for the year ended December 31, 1996 totaled
$4,039,286, consisting of rental income of $3,699,350 and other income, which
includes interest, laundry income, and other miscellaneous sources of income of
$339,936. The decrease in rental revenue from that of the previous year-end is
the result of decreasing occupancies at Countrybrook Estates, Stonegate
Townhouses, Beaver Creek and The Commons, all of which averaged in the mid-80's
through 1996. Inducon - Columbia and the Partnership's joint venture interest in
Research Triangle were once again the "bright spots" for the Partnership. Both
of these properties experienced high occupancy, good cash collections and
positive cash flow from operations. In order to limit vacancies and improve cash
collections, management continues to offer incentive programs, such as free
months rent or discounted rents for signed leases. Even when such a program is
successful, however, it does result in a short-term decrease in revenues until
full rent is paid. Rental revenues in the year ended December 31, 1995 amounted
to $3,985,317 and in the year ended December 31, 1994 totaled $3,485,626.
Continued vacancies and delinquencies at Carriage House of Englewood (formerly
Gold Key Joint Venture) have also plagued this Partnership as a joint venturer.
Increasing occupancy, as well as decreasing delinquencies, remains the major
focus of management. Tighter credit policies and extended and attractive
incentive programs continue to be management's means of reaching the income
levels needed to improve the cash flow in the Partnership.
Partnership expenses for the year ended December 31, 1996 totaled
$4,860,288, a considerable decrease over the expenses of the years ended
December 31, 1995 and 1994 which were $5,312,606 and $5,021,157, respectively.
Almost the entire decrease may be attributed to lower property operations costs
incurred during 1996. Throughout the year, decreases were seen in payroll and
associated costs, repairs and maintenance expenses and contracted services.
Management has focused on closely monitoring expenses and identifying ways of
controlling and cutting them through utility savings devices, increasing
in-house maintenance work, etc. Other expenses remained fairly constant as
compared to the previous year.
The Partnership expects to incur slightly higher property operations
expenses in the coming year due to the costs associated with preparing the
residential units for new tenants (i.e. cleaning, painting, appliance and
carpeting costs). Although this work is necessary in order to increase rental
revenue(s) generated, management continues to keep in mind that expenditures
must be closely monitored so as not to worsen the cash flow from operations of
the Partnership which was slightly negative in 1996. One means of controlling
such expenses has been management's success at obtaining large price discounts
on paint, carpeting and appliances through negotiations with large national
companies, such as Whirlpool.
The Carriage House of Englewood Joint Venture had a net loss of $299,092
for the year ended December 31, 1996. This loss is indicative of the problems
the property in this venture has had with high vacancy losses and extreme
delinquencies. The loss for the year ended December 31, 1995 was $229,583 or
$1.42 per limited partnership unit and $175,458 or $1.08 per limited partnership
unit for the year ended December 31, 1994. In accordance with the joint venture
agreement, 40% of income and losses is to be passed through to the Partnership
and the balance to the other joint venturer.
The Research Triangle Industrial Park West Joint Venture had a net loss of
$91,104 for the year ended December 31, 1996. This loss is a fairly significant
decrease as compared to that of 1995 which amounted to $185,878 and that of 1994
which was $233,478, primarily due to the increase in rental income which the
property has generated. Regular increases in rental income can be expected due
to rental escalation clauses in several of the tenants' leases. In accordance
with the joint venture agreement, one-half of the loss is allocated to each
joint venturer.
8
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations (Con't.):
- - -------------------------------
For the year ended December 31, 1996, the tax basis loss was $600,196 or
$3.70 per limited partnership unit compared to a tax loss of $882,192 or $5.44
per unit for the year ended December 31, 1995 and a tax loss of $1,249,237 or
$7.70 per limited partnership unit for the year ended December 31, 1994. The
Partnership agreement provides for the taxable income or losses to be allocated
97% to the Limited Partners and 3% to the General Partners, and in accordance
with this and the Internal Revenue Code, the loss for the year ended December
31, 1996 was allocated in this fashion.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- - ------- --------------------------------------------
Listed under Item 14 of the report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- - ------- ---------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------
None.
9
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE
- - -------- ---------------------------------------
REGISTRANT.
-----------
The Partnership, as an entity, does not have any directors or officers. The
Individual General Partner of the Partnership is Joseph M. Jayson. The directors
and executive officers of Realmark Properties, Inc., the Partnership's Corporate
General Partner, as of March 1, 1996, are listed below. Each director is subject
to election on an annual basis.
Title of All Positions Year First
Name Held With the Company Elected Director
- - ---- --------------------- ----------------
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice President and Director 1979
Michael J. Colmerauer Secretary
Joseph M. Jayson, President and Director of Realmark Properties, Inc. and
Judith P. Jayson, Vice President and Director of Realmark Properties, Inc., are
married to each other.
The Director and Executive Officers of the Corporate General Partner and
their principal occupations and affiliations during the last five years or more
are as follows:
Joseph M. Jayson, age 58, is Chairman, Director and sole stockholder of
J.M. Jayson & Company, Inc. and certain of its affiliated companies:
Westmoreland Capital Corporation, Oilmark Corporation and U.S. Energy
Development Corporation. In addition, Mr. Jayson is Chairman and Director of
Realmark Corporation and President and Director of Realmark Properties, Inc.,
wholly owned subsidiaries of J.M. Jayson & Company, Inc. and co-general partner
of Realmark Properties Investors Limited Partnership, Realmark Properties
Investors Limited Partnership-II, Realmark Properties Investors Limited
Partnership-III, Realmark Properties Investors Limited Partnership-IV, Realmark
Properties Investors Limited Partnership-V, Realmark Properties Investors
Limited Partnership-VI A and Realmark Properties Investors Limited
Partnership-VI B. Mr. Jayson is a member of the Investment Advisory Board of the
Corporate General Partner. Mr. Jayson has been engaged in real estate business
for the last 34 years and is a Certified Property Manager as designated by the
Institute of Real Estate Management ("I.R.E.M."). Mr. Jayson received a B.S.
Degree in Education in 1961 from Indiana University, a Masters Degree from the
University of Buffalo in 1963, and has served on the Educational Faculty of the
Institute of Real Estate Management. Mr. Jayson has for the last 34 years been
engaged in various aspects of real estate brokerage and investment. He brokered
residential properties from 1962 to 1964, commercial and investment properties
from 1964 to 1967, and in 1967, left commercial real estate to form his own
investment firm. Since that time, Mr. Jayson and J.M. Jayson & Company, Inc.
have formed or participated in various ways in forming over 30 real estate
related limited partnerships. For the past sixteen years, Mr. Jayson and J.M.
Jayson & Company, Inc. and an affiliate have also engaged in developmental
drilling for gas and oil.
10
Judith P. Jayson, age 57, is currently Vice-President and Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 34 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York high school
system. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration. Mrs. Jayson is the wife of
Joseph M. Jayson, the Individual General Partner.
Michael J. Colmerauer, 39, is Secretary and in-house legal counsel for J.M.
Jayson & Company, Inc., Realmark Corporation, Realmark Properties, Inc. and
other companies affiliated with the General Partners. He received a Bachelor's
Degree (BA) from Canisius College in 1980 and a Juris Doctors (J.D.) from the
University of Tulsa in 1983. Mr. Colmerauer is a member of the American and Erie
County Bar Association and has been employed by the Jayson group of companies
for the last 13 years.
ITEM 11: EXECUTIVE COMPENSATION.
- - -------- -----------------------
No direct remuneration was paid or payable by the Partnership to directors
and officers of the Corporate General Partner for the years ended December 31,
1996, 1995 or 1994 nor was any direct remuneration paid or payable by the
Partnership to directors or officers of Realmark Properties, Inc., the Corporate
General Partner and sponsor, for the years ended December 31, 1996, 1995 or
1994.
The following table sets forth for the years ended December 31, 1996, 1995
and 1994 the compensation paid by the Partnership, directly or indirectly, to
affiliates of the General Partners:
Entity Receiving Type of
Compensation Compensation 1996 1995 1994
------------ ------------ ---- ---- ----
Realmark Properties, Inc. Reimbursement for
(the Corporate General allocated Partnership
Partner) administration expenses:
Investor Services Fees $8,408 $7,705 $9,191
Brokerage 10,872 9,973 12,253
Portfolio Management
& Accounting Fees 149,231 147,839 134,866
Construction Management - - 24,177
Partnership Management Fee 18,000 - 17,910
Realmark Corporation Property Management Fees 175,892 210,903 179,193
Computer Service Fees 11,460 11,460 10,585
----------- ----------- -----------
Total $373,863 $387,880 $388,175
=========== =========== ===========
See notes 1 and 6 to the financial statements for descriptions of the items
detailed above.
11
The Corporate General Partner is entitled to a continuing Partnership
Management Fee equal to 7% of net cash flow (as defined in the Partnership
Agreement), of which 2% is subordinated to the receipt by the Limited Partners
of a non-cumulative annual cash return equal to 7% of the average of their
adjusted Capital Contributions (as defined in the Partnership Agreement). The
Corporate General Partner is paid its 5% Partnership Management Fee annually as
cash flow allows. The 2% subordinated fee will not be paid or accrued until such
time as the Limited Partners have received their 7% return and payment of the
fee becomes probable. The General Partners are also entitled to 3% of
Distributable Cash (as defined in the Partnership Agreement) and to certain
expense reimbursements with respect to Partnership operations.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- - -------- -----------------------------------------------
AND MANAGEMENT.
---------------
To the Registrant's knowledge, no person owns of record or beneficially
more than five percent (5%) of the units of Limited Partnership Interest of the
Partnership. The General Partners, as of December 31, 1996, owned no units of
Limited Partnership Interest; however 30 units are held by an affiliate of the
General Partners.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - -------- ----------------------------------------------
No transactions have occurred between the Partnership and those in the
management of Realmark Properties, Inc. All transactions between the Partnership
and Realmark Properties, Inc. (the Corporate General Partner) and any other
affiliated organization are described in Item 11 of this report.
12
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
- - -------- ---------------------------------------------
REPORTS ON FORM 8-K.
--------------------
(a) Financial Statements and Schedules.
-----------------------------------
FINANCIAL STATEMENTS PAGE
-------------------- ----
(i) Independent Auditors' Report 14
(ii) Balance Sheets at December 31, 1996 and 1995 15
(iii) Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 16
(iv) Statements of Partners' Capital (Deficit) for the
years ended December 31, 1996, 1995 and 1994 17
(v) Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 18
(vi) Notes to Financial Statements 19 - 33
FINANCIAL STATEMENT SCHEDULE
(i) Schedule III - Real Estate and Accumulated Depreciation 34 - 35
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
(b) Reports on Form 8-K.
--------------------
(i) None
(c) Exhibits
--------
4. Instruments defining the rights of security holders, including
indentures.
(a) Certificate of Limited Partners filed with the Registration
Statement of the Registrant Form S-11, filed November 10, 1987,
and subsequently amended incorporated herein by reference.
(b) Partnership Agreement included with the Registration Statement of
the Registrant as filed and amended to date incorporated herein
by reference.
10. Material contracts.
-------------------
(a) Property Management Agreement with Realmark Corporation included
with the Registration Statement of the Registrant as filed and
amended to date incorporated herein by reference.
13
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership - VI A
We have audited the accompanying balance sheets of Realmark Property Investors
Limited Partnership- VI A as of December 31, 1996 and 1995, and the related
statements of operations, partners' capital (deficit), and cash flows for each
of the three years in the period ended December 31, 1996. Our audits also
included the financial statement schedule listed in the index at Item 14. These
financial statements and financial statement schedule are the responsibility of
the General Partners. Our responsibility is to express an opinion on the
financial statements and the financial statement 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit 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 the
General Partners, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership-VI A at December 31, 1996 and 1995 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
The accompanying financial statements and financial statement schedule have been
prepared assuming that the Partnership will continue as a going concern. As
discussed in Note 11, the Partnership's recurring losses and three mortgages
maturing in 1997 raise substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 11. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Buffalo, New York
March 25, 1997
14
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
Assets 1996 1995
------------ ------------
Property, at cost:
Land and land improvements $ 2,116,448 $ 2,114,098
Buildings 16,614,849 16,407,368
Furniture and fixtures 1,101,500 1,101,500
------------ ------------
19,832,797 19,622,966
Less accumulated depreciation 5,289,574 4,506,015
------------ ------------
Property, net 14,543,223 15,116,951
Investment in joint ventures, including
unamortized excess purchase price of
$280,617 and $294,317 at December 31,
1996 and 1995, respectively 368,287 547,177
Accounts receivable 50,337 57,923
Accounts receivable - affiliates -- 349,027
Other assets 177,278 180,018
------------ ------------
Total Assets $ 15,139,125 $ 16,251,096
============ ============
Liabilities and Partners' Capital
Liabilities:
Cash overdraft $ 181,074 $ 174,919
Mortgages payable 9,573,161 9,672,590
Accounts payable and accrued expenses 617,877 681,920
Security deposits and prepaid rents 204,352 172,814
------------ ------------
Total Liabilities 10,576,464 10,702,243
------------ ------------
Partners' Capital (Deficit):
General Partners (264,898) (235,312)
Limited Partners 4,827,559 5,784,165
------------ ------------
Total Partners' Capital 4,562,661 5,548,853
------------ ------------
Total Liabilities and Partners' Capital $ 15,139,125 $ 16,251,096
============ ============
See notes to financial statements
15
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
----------- ----------- -----------
Income:
Rental $ 3,699,350 $ 3,985,317 $ 3,485,626
Interest and other income 339,936 205,157 161,850
----------- ----------- -----------
Total Income 4,039,286 4,190,474 3,647,476
----------- ----------- -----------
Expenses:
Property operations 2,295,937 2,760,376 2,541,380
Interest 933,693 918,510 871,046
Depreciation and amortization 863,577 901,367 822,530
Administrative:
Paid to affiliates 373,863 387,880 388,175
Other 393,218 344,473 398,026
----------- ----------- -----------
Total Expenses 4,860,288 5,312,606 5,021,157
----------- ----------- -----------
Loss before allocated loss from joint ventures (821,002) (1,122,132) (1,373,681)
Allocated loss from joint ventures (165,190) (184,772) (186,922)
----------- ----------- -----------
Net loss ($ 986,192) ($1,306,904) ($1,560,603)
=========== =========== ===========
Net loss per limited partnership unit ($ 6.08) ($ 8.06) ($ 9.62)
=========== =========== ===========
Distributions per limited partnership unit $ -- $ -- $ --
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 157,378 157,378 157,378
=========== =========== ===========
See notes to financial statements
16
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
General Limited Partners
Partners ----------------
Amount Units Amount
Balance, January 1, 1994 ($ 149,287) 157,378 $ 8,565,647
Net loss (46,818) -- (1,513,785)
----------- ----------- -----------
Balance, December 31, 1994 (196,105) 157,378 7,051,862
Net loss (39,207) -- (1,267,697)
----------- ----------- -----------
Balance, December 31, 1995 (235,312) 157,378 5,784,165
Net loss (29,586) -- (956,606)
----------- ----------- -----------
Balance, December 31, 1996 ($ 264,898) 157,378 $ 4,827,559
=========== =========== ===========
See notes to financial statements
17
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
----------- ----------- -----------
Cash flows from operating activities:
Net loss ($ 986,192) ($1,306,904) ($1,560,603)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization 863,577 901,367 822,530
Property acquisition costs -- 406,078 --
Allocated loss from joint ventures 165,190 184,772 186,922
Changes in operating assets and liabilities:
Accounts receivable 7,586 (6,876) (19,477)
Other assets (63,578) (24,266) 13,410
Accounts payable and accrued expenses (64,043) 158,530 133,565
Security deposits and prepaid rents 31,538 (5,264) 29,512
----------- ----------- -----------
Net cash (used in) provided by operating activities (45,922) 307,437 (394,141)
----------- ----------- -----------
Cash flows from investing activities:
Accounts receivable-affiliates 349,027 (185,883) 12,508
Distribution from joint venture -- 100,000 100,000
Property acquisition and construction (209,831) (545,809) (402,949)
----------- ----------- -----------
Net cash provided by (used in) investing activities 139,196 (631,692) (290,441)
----------- ----------- -----------
Cash flows from financing activities:
Cash overdraft 6,155 174,919 --
Proceeds from mortgage -- 76,012 423,989
Principal payments on debt (99,429) (44,715) (42,653)
----------- ----------- -----------
Net cash (used in) provided by financing activities (93,274) 206,216 381,336
----------- ----------- -----------
Decrease in cash 0 (118,039) (303,246)
Cash - beginning of year 0 118,039 421,285
----------- ----------- -----------
Cash - end of year $ 0 $ 0 $ 118,039
=========== =========== ===========
See notes to financial statements
18
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. FORMATION AND OPERATION OF PARTNERSHIP:
---------------------------------------
Realmark Property Investors Limited Partnership-VI A (the "Partnership"), a
Delaware Limited Partnership, was formed on September 21, 1987, to invest in a
diversified portfolio of income-producing real estate investments.
In November 1987, the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to the organization,
it had no business activities and, accordingly, had not incurred any expenses or
earned any income until the first interim closing (minimum closing) of the
offering, which occurred on February 12, 1988. All items of income and expense
arose subsequent to this date. As of December 31, 1996, 157,378 units of limited
partnership interest were sold and outstanding, including 30 units held by an
affiliate of the General Partners. The offering terminated on November 10, 1988
with gross offering proceeds of $15,737,790. 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 (see Note 6).
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities, exclusive of
any sale or refinancing activities, are to be allocated 97% to the Limited
Partners and 3% to the General Partners.
Net income or loss and proceeds arising from a sale or refinancing of
property shall be distributed: first, to the Limited Partners an amount
equivalent to a 7% return on the average of their adjusted capital
contributions; second, to the Limited Partners an amount equal to the return of
their capital investment; third, to the corporate General Partner a 3% property
disposition fee provided, however, that such fees shall be reduced, but not
below zero, by the amounts necessary to pay to Limited Partners whose
subscriptions were accepted by January 31, 1988, an additional cumulative annual
return (not compounded) equal to 2% of their Average Adjusted Capital
Contributions, and to Limited Partners whose subscriptions were accepted between
February 1, 1988 and March 31, 1988, an additional cumulative annual return (not
compounded) equal to 1% of their Average Adjusted Capital Contributions
commencing with the first fiscal quarter following the termination of the
offering of units; fourth, to the Limited Partners, an amount equal to their
capital contributions, then an amount equal to an additional 5% of the average
of their adjusted capital contributions; fifth, to all Partners, an amount equal
to their respective positive capital balances; and finally, in the ratio of 87%
to the Limited Partners and 13% to the General Partners.
19
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
(a) 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.
(b) Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
(c) Property and Depreciation:
-------------------------
Expenditures for maintenance and repairs are expensed as incurred; major
renewals and betterments are capitalized. Generally, buildings and improvements
are depreciated over 25 years, and furniture and fixtures are depreciated over 5
years. Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets and totaled $783,559, $829,055
and $760,840 for the years ended December 31, 1996, 1995 and 1994, respectively.
The Modified Accelerated Cost Recovery System is used to calculate depreciation
expense for tax purposes. For further discussion, see Note 3.
(d) Property Acquisition Costs:
--------------------------
Acquisition fees are paid to the General Partner as properties are
acquired, which generally occurs when a contract to purchase the property is
entered into. Acquisition fees are allocated to specific properties when actual
closing takes place. There were no capitalized acquisition fees at December 31,
1996.
(e) Unconsolidated Joint Ventures:
-----------------------------
The Partnership's interest in affiliated joint ventures is accounted for on
the equity method.
(f) Rental Income
-------------
Leases for residential rental properties have terms of one year or less.
Commercial leases have terms ranging from one to five years. Rental income is
recognized on the straight line method over the term of the lease.
20
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Con't.):
---------------------------------------------------
(g) Rents Receivable
----------------
Due to the nature of these accounts, residential rents receivable are fully
reserved as of December 31, 1996 and 1995.
3. ACQUISITION OF RENTAL PROPERTY:
------------------------------
In February 1989, the Partnership acquired an 80 unit apartment complex
(Beaver Creek) located in Beaver County, Pennsylvania for a purchase price of
$1,879,943, which includes $347,404 in acquisition fees.
In June 1989, the Partnership acquired a 240 unit apartment complex
(Countrybrook Estates, formerly West Creeke) located in Louisville, Kentucky for
a purchase price of $5,670,984, which includes $334,285 in acquisition fees. In
September 1992, the Partnership abandoned the sewage treatment station located
on the grounds of the apartment complex which generated a net loss on disposal
for financial statement purposes of $74,671.
Inducon Joint Venture-Columbia (the "Venture") was formed pursuant to an
agreement dated March 16, 1988 between the Partnership and Trion Development
Group, Inc., a New York corporation (the "Corporation"). The primary purpose of
the Venture was to acquire or lease land and construct office/warehouse
buildings as income-producing property. The Partnership contributed initial
capital to the Venture of $1,064,950 which was used to fund the initial
development costs. On May 19, 1989 the Partnership purchased the Corporation's
interest in the Inducon Joint Venture-Columbia for $130,000. The office complex,
located in Columbia, South Carolina, consists of three buildings. The first
building was put into service in July 1989 and has a total cost of $1,793,276
which includes $311,358 in acquisition fees. The second and third buildings were
put into service in December 1991 and have a total cost of $2,346,548 which
includes $48,796 of capitalized interest.
In March 1990, the Partnership acquired a 130 unit apartment complex
(Stonegate) located in Mobile, Alabama for a purchase price of $4,145,367, which
includes $225,620 in acquisition fees.
In March 1991, the Partnership acquired a 230 unit apartment complex (The
Commons on Lewis Avenue, formerly Williamsburg Commons) located in Tulsa,
Oklahoma for a purchase price of $2,965,803, which includes $269,721 in
acquisition fees.
21
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. ACQUISITION OF RENTAL PROPERTY (Con't.):
---------------------------------------
In September 1991, the Partnership entered into an agreement and formed a
joint venture with Realmark Property Investors Limited Partnerships II and VI B
(RPILP-II and RPILP-VI B), for the purpose of operating the 250 unit Foxhunt
Apartment complex located in Kettering, Ohio and owned by RPILP II. In April
1992, the Partnership's capital contribution of $389,935 plus interest was
returned by RPILP II and the Partnership's interest in the joint venture ended.
In May 1992, the Partnership entered into an agreement to form a joint
venture with Realmark Property Investors Limited Partnership (RPILP) for the
purpose of operating the 144 unit Gold Key Apartments, an apartment complex
located in Dayton, Ohio and owned by RPILP.
In August 1992, the Partnership entered into a joint venture agreement for
the purpose of operating Research Triangle Industrial Park West, a 150,000
square foot office/warehouse facility located in Research Triangle Park, North
Carolina. The original joint venture agreement to develop and operate the
property, created between RPILP-II and Adaron Group (Adaron), was dissolved, and
the Partnership acquired all rights previously held by Adaron. The agreement
provides for 50% of any income or loss to be allocated to both the Partnership
and RPILP II.
4. MORTGAGES AND NOTES PAYABLE
---------------------------
In connection with the acquisition of rental property, the Partnership
obtained mortgages as follows:
Countrybrook Estates (formerly West Creeke)
-------------------------------------------
A mortgage with a balance of $3,950,483 and $3,977,436 at December 31, 1996
and 1995, respectively, bearing interest at 9.75%. The mortgage provides for
annual principal and interest payments of $413,568 payable in equal monthly
installments. The final payment was originally due on July 1, 1996, but has been
extended to June 1, 1997. Secured by the Countrybrook Estates Complex.
Inducon-Columbia
----------------
On July 27, 1989 a construction loan was approved. Interest on the amount
advanced is at the prime rate (8.25% at December 31, 1996), announced by the
Nations Bank, plus 1.25%. Interest was payable monthly commencing the first
month following the first advance, and continuing until July 10, 1994. On that
date the Partnership had the option of purchasing two one-year extensions by
paying, at the time of each extension, a fee equal to one-half of one percent of
the then outstanding principal balance. The Partnership exercised both of its
options, and extended the due date to July 10, 1996 at which time another
extension was granted to April 1997. On July 26, 1993, the construction loan was
restructured to allow up to $500,000 to be advanced solely for tenant upfit
expenses. All terms under the original agreement are still in effect.
As of December 31, 1996 and 1995, construction loan advances amounted to
$1,776,081 and $1,816,081, respectively. The loan is secured by the
Inducon-Columbia Office/Warehouse buildings.
22
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. MORTGAGES AND NOTES PAYABLE (Con't.)
------------------------------------
Stonegate
---------
A mortgage with a balance of $1,963,361 and $1,984,073 at December 31, 1996
and 1995, respectively. The mortgage provided for monthly principal and interest
payments of $18,800 through March 31, 1994. On April 1, 1994 the interest rate
changed to 1% over the corporate base rate charged by the Boatman's National
Bank. The corporate base rate was 9.25% on December 31, 1996. Monthly payments,
from April 1, 1994 through maturity on March 1, 1997 will equal $1,726 in
principal plus accrued interest. A final payment of $1,960,592 plus accrued
interest is due April 1, 1997. Secured by Stonegate Townhouses.
The Commons on Lewis Avenue
---------------------------
A mortgage with a balance of $1,883,236 and $1,895,000 at December 31, 1996
and 1995, respectively, provides for monthly principal and interest payments
calculated based upon an interest rate ranging from 8-12% annually (10% at
December 31, 1996). The mortgage is due April 1, 2001. Secured by The Commons on
Lewis Avenue apartment complex.
The aggregate maturities of the mortgages payable for each of the next five
years and thereafter are as follows:
Year Amount
1997 $7,717,423
1998 20,930
1999 21,081
2000 22,920
2001 1,790,807
-----------
TOTAL $9,573,161
===========
5. FAIR VALUE OF FINANCIAL INSTRUMENTS:
-----------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair value of cash,
accounts receivable, accounts receivable - affiliates, accounts payable,
accounts payable, accrued expenses and deposit liabilities approximate the
carrying value due to the short-term nature of these instruments.
Management has estimated that the fair value of the mortgage payable on
Countrybrook Estates, Stonegate Townhouses and Inducon - Columbia approximate
their carrying values of $3,950,483, $1,963,361 and $1,776,081, respectively, as
the mortgages payable are due and callable in 1997.
Management has estimated that the fair value of the mortgage payable on The
Commons on Lewis Avenue, based on currently available rates, is approximately
$2,062,000. The carrying value of the mortgage is $1,883,236.
23
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. RELATED PARTY TRANSACTIONS
--------------------------
Management fees for the management of certain of the Partnership's
properties are paid to an affiliate of the General Partner. The management
agreement provides for 5% of gross monthly rental receipts of the complexes to
be paid as fees for administering the operations of the properties. These fees
totaled $175,892, $210,903 and $179,193 for the years ended December 31, 1996,
1995 and 1994 respectively.
According to the terms of the partnership agreement, the General Partner is
also entitled to receive a partnership management fee equal to 7% of net cash
flow (as defined in the partnership agreement), 2% of which is subordinated to
the limited partners having received an annual cash return equal to 7% of their
adjusted capital contributions. The Corporate General Partner is paid its 5%
partnership management fee annually as cash flow allows. As such, no fees were
charged for the year ended December 31, 1995. This fee totaled $18,000 and
$17,910 for the years ended December 31, 1996 and 1994, respectively.
The General Partners are also allowed to collect a property disposition fee
upon the sale of acquired properties. This fee is not to exceed the lesser of
50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties or 3% of the sales price.
The property disposition fee is subordinate to the Limited Partners receipt of a
cumulative annual return (not compounded) equal to 7% of their average adjusted
capital contributions and to repayment to the Limited Partners of an amount
equal to their original capital contributions. No properties have been sold as
of December 31, 1996 and accordingly, there have been no property disposition
fees paid or earned by the General Partners.
Pursuant to the terms of the partnership agreement, the Corporate General
Partner charges the Partnership for reimbursement of certain costs and expenses
incurred by the corporate general partner and its affiliates in connection with
the administration of the Partnership and acquisition of properties. These
charges were for the Partnership's allocated share of costs and expenses such as
payroll, travel and communication costs related to partnership accounting,
partner communication and relations, and acquisitions of properties and are
included in property operations. Additionally, Partnership accounting and
portfolio management fees, investor services fees and brokerage fees are
allocated based on total assets, number of partners and number of units,
respectively. These costs amounted to $168,511, $165,517 and $156,310 for the
years ended December 31, 1996, 1995 and 1994, respectively.
Accounts receivable - affiliates, which are payable on demand, amounted to
$0 and $802,099 as of December 31, 1996 and 1995, respectively.
Construction management fees, computed as a percentage of amounts expended
for capital repairs and maintenance outside the scope of normal property
operations totaled $24,177 for the year ended December 31, 1994. No such fee was
charged for the years ended December 31, 1996 or 1995.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partners. The fee is based upon the number of apartment
units and totaled $11,460, $11,460 and $10,585 for the years ended December 31,
1996, 1995 and 1994 respectively.
24
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. INCOME TAXES
------------
No provision has been made for income taxes since the income or loss of the
partnership is to be included in the tax returns of the individual partners.
The tax returns of the Partnership are subject to examination by the
Federal and state taxing authorities. Under Federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded varying
interpretations and, accordingly, reported Partnership amounts could be changed
as a result of any such examination.
The reconciliation of net loss for the years ended December 31, 1996, 1995
and 1994 as reported in the statement of operations, and as would be reported
for tax purposes, is as follows:
1996 1995 1994
---------- ------------ -------------
Net loss -
Statement of operations $(986,192) $ (1,306,904) $ (1,560,603)
Add to (deduct from):
Difference in depreciation 109,457 144,342 80,124
Other nondeductible expenses 120,405 57,796 58,694
Tax basis adjustment - joint 156,134 222,574 172,548
ventures
---------- ------------ -------------
Net loss - tax return purposes $(600,196) $ (882,192) $ (1,249,237)
========== ============ =============
The reconciliation of Partners' Capital as of December 31, 1996, 1995 and
1994, as reported in the balance sheet and as reported for tax return purposes,
is as follows:
1996 1995 1994
------------ ------------ -------------
Partners' Capital - Balance Sheet $ 4,562,661 $ 5,548,853 $ 6,855,757
Add to (deduct from):
Accumulated difference in 255,563 146,106 1,764
depreciation
Syndication fees 2,312,863 2,312,863 2,312,863
Other nondeductible expenses 391,207 270,802 213,006
Tax basis adjustment-Joint 870,533 714,399 491,825
Ventures
------------ ------------ -------------
Partners' Capital - tax return
purposes $ 8,392,827 $ 8,993,023 $ 9,875,215
============ ============ =============
25
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES:
----------------------------
On September 27, 1991, the Partnership entered into an agreement and formed
a Joint Venture with Realmark Property Investors Limited Partnership-II
(RPILP-II), and Realmark Property Investors Limited Partnership-VI B (RPILP-VI
B). The Joint Venture was formed for the purpose of operating an apartment
complex (Foxhunt Apartments located in Dayton, Ohio) owned by RPILP-II. Under
the terms of the original joint venture agreement, the partnership contributed
$390,000 and RPILP-VI B contributed $1,041,568 to buy out the wraparound
promissory note on the property. RPILP-II contributed the property net of the
first mortgage.
On April 1, 1992, the Partnership's interest in the joint venture was
bought out by RPILP-II for $389,935 plus interest at 15%. The joint venture
agreement had provided that any income, loss, gain, cash flow and sale proceeds
be allocated 63.14% to RPILP-II, 10.04% to the partnership and 26.82% to RPILP-
VI B.
On May 5, 1992, the Partnership entered into an agreement to form a joint
venture with Realmark Property Investors Limited Partnership (RPILP) for the
purpose of operating Carriage House of Englewood (formerly the Gold Key
Apartments), an apartment complex located in Englewood, Ohio and owned by RPILP.
Under the terms of the original agreement, the Partnership contributed $497,912
and RPILP contributed the property net of the outstanding mortgage. On March 1,
1993, the Partnership contributed an additional $125,239 to the joint venture.
The original joint venture agreement provided that any income, loss, gain,
cash flow, or sale proceeds be allocated 68% to RPILP and 32% to the
Partnership. An amended joint venture agreement provides that any income, loss,
gain, cash flow, or sale proceeds be allocated 40% to the Partnership and 60% to
RPILP. Due to the recurring losses which has reduced its cash, there is
substantial doubt about the Carriage House of Englewood Joint Venture's ability
to continue as a going concern.
Due to the General Partners active relationship with each venturer, the
Partnership accounts for its interest on the equity method. The equity ownership
was determined based upon the cash paid into the joint venture by the
Partnership as a percentage of the General Partner's estimate of the fair market
value of the apartment complex and other assets at the date of inception.
In July 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of the joint venture with a carrying amount of
$1,191,451 at December 31, 1996 and a net loss of $299,092 for the year ended
December 31, 1996. Management has determined that a sale of the property is in
the best interests of the investors. As of December 31, 1996, an agreement,
cancelable by the buyer, has been signed with an anticipated sales price of
$3,700,000.
In connection with the pending sale, the joint venture has received
$220,000 in non-refundable deposits, of which $47,200 is represented by a note
receivable from the buyer.
26
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Con't.):
-------------------------------------
Financial Accounting Standards Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF (the
"Statement") requires that assets to be disposed of be recorded at the lower of
carrying value or fair value, less costs to sell. The Statement also requires
that such assets not be depreciated during the disposal period, as the assets
will be recovered through sale rather than through operations. In accordance
with this Statement, the long-lived assets of the Partnership, classified as
held for sale on the balance sheet, are recorded at the carrying amount which is
the lower of carrying value or fair value less costs to sell, and have not been
depreciated during the disposal period. Depreciation expense, not recorded
during the disposal period, for the year ended December 31, 1996 totaled
approximately $44,000.
27
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Con't.):
A summary of the assets, liabilities and partners' capital (deficiency) of
the Joint Venture as of December 31, 1996 and 1995 and the results of its
operations for the years ended December 31, 1996, 1995 and 1994 is as follows:
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
BALANCE SHEET
December 31, 1996 and 1995
Assets 1996 1995
----------- -----------
Land and land improvements $ 367,500 $ 367,500
Building 2,413,805 2,404,785
Building equipment 12,141 12,141
----------- -----------
2,793,446 2,784,426
Less accumulated depreciation (1,601,995) (1,531,705)
----------- -----------
Property, net 1,191,451 1,252,721
Cash -- 28,101
Escrow 187,815 277,523
Other assets 573,634 797,919
----------- -----------
Total Assets $ 1,952,900 $ 2,356,264
=========== ===========
Liabilities and Partners' Deficit
Liabilities:
Cash overdraft $ 201,367 $ --
Mortgage payable 2,930,266 2,947,711
Accounts payable and accrued expenses 205,524 702,735
Deposits on sale 220,000 --
Accrued interest 21,977 22,108
Security deposits and prepaid rent 31,858 42,710
----------- -----------
Total Liabilities 3,610,992 3,715,264
----------- -----------
Partners' Capital (Deficit):
The Partnership 274,180 393,817
RPILP (1,932,272) (1,752,817)
----------- -----------
Total Partners' Deficit (1,658,092) (1,359,000)
----------- -----------
Total Liabilities and Partners' Deficit $ 1,952,900 $ 2,356,264
=========== ============
28
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Con't):
------------------------------------
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
----------- ----------- -----------
Income:
Rental $ 737,539 $ 756,009 $ 751,071
Other income 36,012 46,120 36,092
----------- ----------- -----------
Total Income 773,551 802,129 787,163
----------- ----------- -----------
Expenses:
Property operations 403,783 403,394 342,505
Interest 264,455 265,963 267,340
Depreciation and amortization 70,290 118,072 117,490
Administrative:
Paid to affiliates 278,226 191,569 177,395
Other 55,889 52,714 57,891
----------- ----------- -----------
Total Expenses 1,072,643 1,031,712 962,621
----------- ----------- -----------
Net loss ($ 299,092) ($ 229,583) ($ 175,458)
=========== =========== ===========
Allocation of net loss:
The Partnership ($ 119,638) ($ 91,833) ($ 70,183)
RPILP (179,454) (137,750) (105,275)
----------- ----------- -----------
Total ($ 299,092) ($ 229,583) ($ 175,458)
=========== =========== ===========
A reconciliation of the Partnership's investments in the Joint Venture is as
follows:
1996 1995 1994
---------- ---------- ----------
Investment in joint venture at $486,272 $582,605 $657,288
beginning of year
Amortization of excess purchase price (4,500) (4,500) (4,500)
Allocation of net loss (119,638) (91,833) (70,183)
-------- -------- -------
Investment in joint venture at end $362,134 $486,272 $582,605
of year ======== ======== ========
29
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Con't):
------------------------------------
On August 20, 1992, the Partnership entered into a joint venture agreement
for the purpose of operating Research Triangle Industrial Park West, an
office/warehouse facility located in Research Triangle Park, North Carolina. The
original joint venture agreement to develop and operate the property, created
between Realmark Property Investors Limited Partnership-II (RPILP-II) and Adaron
Group (Adaron), was dissolved, and the Partnership acquired Adaron's investment
in the joint venture. In the transaction, the Partnership paid $575,459 to
Adaron and acquired all rights previously held by Adaron. The agreement provides
for 50% of any income or loss to be allocated to both the Partnership and
RPILP-II.
A summary of the assets, liabilities and equity of the Joint Venture as of
December 31, 1996 and 1995 and the results of its operations for the years ended
December 31, 1996, 1995 and 1994 is as follows:
30
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
RESEARCH TRIANGLE JOINT VENTURE
BALANCE SHEET
December 31, 1996 and 1995
Assets 1996 1995
----------- -----------
Land $ 338,112 $ 338,112
Land improvements 799,430 790,101
Buildings 4,130,637 4,130,637
----------- -----------
5,268,179 5,258,850
Less accumulated depreciation (3,667,054) (3,231,895)
----------- -----------
Property, net 1,601,125 2,026,955
Cash 745,127 92,150
Accounts receivable - affiliates -- 321,488
Accounts receivable - other 268,317 333,552
Other assets 49,597 93,285
----------- -----------
Total Assets $ 2,664,166 $ 2,867,430
=========== ===========
Liabilities and Partners' Deficit
Liabilities:
Mortgage payable $ 4,996,884 $ 5,073,225
Accounts payable and accrued expenses 96,440 169,665
Accounts payable - affiliates 37,406 --
----------- -----------
Total Liabilities 5,130,730 5,242,890
----------- -----------
Partners' Deficit:
The Partnership (1,332,697) (1,287,145)
RPILP-II (1,133,867) (1,088,315)
----------- -----------
Total Partners' Deficit (2,466,564) (2,375,460)
----------- -----------
Total Liabilities and Partners' Deficit $ 2,664,166 $ 2,867,430
=========== ===========
8. INVESTMENT IN JOINT VENTURES (Con't):
------------------------------------
RESEARCH TRIANGLE JOINT VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
----------- ----------- -----------
Income:
Rental $ 1,029,367 $ 946,046 $ 914,129
Other 763 431 710
----------- ----------- -----------
Total Income 1,030,130 946,477 914,839
----------- ----------- -----------
Expenses:
Property operations 112,982 117,319 116,828
Interest 436,685 440,630 448,795
Depreciation and amortization 500,228 510,653 507,664
Administrative:
Paid to affiliates 58,987 63,527 72,416
Other 12,352 226 2,614
----------- ----------- -----------
Total Expenses 1,121,234 1,132,355 1,148,317
----------- ----------- -----------
Net loss ($ 91,104) ($ 185,878) ($ 233,478)
=========== =========== ===========
Allocation of net loss:
The Partnership ($ 45,552) ($ 92,939) ($ 116,739)
RPILP-II (45,552) (92,939) (116,739)
----------- ----------- -----------
Total ($ 91,104) ($ 185,878) ($ 233,478)
=========== =========== ===========
31
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
9. LEASES (LESSEE):
---------------
In connection with the development of property in Columbia, South Carolina,
the Partnership entered into a land lease agreement with the Richland-Lexington
Airport District for a period of sixty years. The lease covers two parcels of
land approximately 4.5 acres each, located within the boundaries of the Columbia
Metropolitan Airport in an area designated as a Foreign Trade Zone. The lease
requires minimum monthly rental payments of $9,084 and includes a rental
escalation clause based on the consumer price index for the remainder of the
term. The lease is being accounted for as an operating lease. The agreement also
includes an option to lease a third parcel of land measuring approximately 5.5
acres.
Minimum future rental payments for each of the next five years are as
follows:
Year Amount
---- ------
1997 $ 109,008
1998 109,008
1999 109,008
2000 109,008
2001 109,008
10. LEASES (LESSOR):
---------------
In connection with the Inducon - Columbia property, the Partnership has
entered into commercial lease agreements with terms from one to five years.
Minimum future rentals to be received for each of the next five years under
noncancelable operating leases are as follows:
Year Amount
---- ------
1997 $ 544,126
1998 396,906
1999 307,968
2000 67,303
2001 39,260
11. GOING CONCERN CONSIDERATIONS:
----------------------------
The Partnership has sustained recurring losses and, as discussed in Note 4,
final payments are due in 1997 for the Countrybrook Estates, Inducon - Columbia
and Stonegate Townhouses mortgages. Management is currently seeking refinancing
for these mortgages. These factors combined have raised substantial doubt about
the Partnership's ability to continue as a going concern.
Management is continuing its efforts to reduce expenses and increase rents
and also to sell or refinance existing properties.
31
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
12. SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
-----------------------------------------------
1996 1995 1994
------------ ----------- -------------
Cash paid for interest $ 922,210 $ 905,157 $ 866,626
============ =========== =============
13. RECLASSIFICATIONS
-----------------
Certain reclassifications have been made to the 1994 and 1995 balances to
conform to the classifications used in 1996.
32
SCHEDULE III
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Cost Gross Amounts at which
Initial Cost to Capitalized Carried at Close of Period
-------------------------------------
Partnership Subsequent (3)(4)
-----------------------
Property to (1)(2) Accumulated Date of Date
Description Encumbrances Land Buildings Acquisition Land Buildings Total Depreciation Construction Acquired
Beaver Creek
Pittsburgh, PA $ - 282,000 1,437,944 $ - 282,000 1,437,944 1,719,944 458,685 1975 2/89
Countrybrook Estates
Louisville, KY 3,950,483 882,272 4,277,115 44,845 882,272 4,321,960 5,204,232 1,274,071 1972 6/89
Stonegate
Mobile, AL 1,963,361 419,544 3,487,160 7,085 419,544 3,494,245 3,913,789 939,800 1985 3/90
The Commons
Tulsa, OK 1,883,236 525,000 2,304,303 405,107 525,000 2,709,410 3,234,410 535,926 1970 3/91
Inducon - Columbia
Columbia, SC 1,776,081 - 1,503,710 3,152,862 5,282 4,651,290 4,656,572 1,004,279 1989 5/89
---------- --------- ----------- ------- --------- ----------- ----------- -----------
9,573,161 2,108,816 13,010,232 3,609,899 2,114,098 16,614,849 18,728,947 4,212,761
========== ========= =========== ======= ========= =========== =========== ===========
Carriage House of
Englewood J.V.
Dayton, OH 2,930,266 182,500 2,526,254 72,551 182,500 2,598,805 2,781,305 1,596,577 1972 5/92
========== ========= =========== ======= ========= =========== =========== ===========
Research Triangle J.V.
Raleigh, NC $4,996,884 $338,112 $4,920,738 $9,329 $338,112 $4,930,067 $5,268,179 $3,667,054 1983 8/92
========== ========= =========== ======= ========= =========== =========== ===========
33
SCHEDULE III
(Continued)
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(1) Cost for Federal income tax purposes is $18,728,947.
(2) A reconciliation of the carrying amount of buildings and improvements as of
December 31, 1996, 1995 and 1994 is as follows:
Partnership Properties
----------------------
1996 1995 1994
----------- ----------- -----------
Balance at beginning of period $16,407,368 $15,861,559 $15,458,610
Additions 207,481 545,809 402,949
----------- ----------- -----------
Balance at end of period $16,614,849 $16,407,368 $15,861,559
=========== =========== ===========
Joint Venture Properties
------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of period $7,510,523 $7,504,523 $7,504,523
Additions 18,349 6,000 --
---------- ---------- ----------
Balance at end of period $7,528,872 $7,510,523 $7,504,523
========== ========== ==========
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1996, 1995 and 1994 is as follows:
Partnership Properties
----------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of period $3,473,170 $2,779,144 $2,193,278
Additions charged to cost and expenses
during the period 739,591 694,026 585,866
---------- ---------- ----------
Balance at end of period $4,212,761 $3,473,170 $2,779,144
========== ========== ==========
Joint Venture Properties
------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of period $4,759,130 $4,206,675 $3,654,336
Additions charged to cost and expenses 504,501 552,455 552,339
during the period
---------- ---------- ----------
Balance at end of period $5,263,631 $4,759,130 $4,206,675
========== ========== ==========
(4) Balance applies entirely to buildings.
34
SIGNATURES
Pursuant to the requirements of Section 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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP - VI A
By: /s/ Joseph M. Jayson 3/28/97
------------------------------------------- ---------------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By: /s/ Joseph M. Jayson 3/28/97
-------------------------------------------- ---------------
JOSEPH M. JAYSON, President Date
Principal Executive Officer and Director
/s/ Michael J. Colmerauer 3/28/97
-------------------------------------------- ---------------
MICHAEL J. COLMERAUER, Date
Secretary
35
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
The Form 10-K is sent to security holders. No other annual report is
distributed. No proxy statement, form of proxy or other proxy soliciting
material was sent to any of the registrant's security holders with respect to
any annual or other meeting of security holders.
36