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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, 1997
( ) 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 14 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, 1997 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
(Research Triangle). See also Item 7.
The business of the Partnership is not seasonal. As of December 31, 1997,
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, 1997 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, 1997, 1996 and 1995 was as
follows:
1997 1996 1995
---- ---- ----
Properties
- ----------
Beaver Creek 95% 89% 98%
Countrybrook Estates (formerly West Creeke) 84% 83% 88%
Stonegate Townhouses 91% 92% 97%
The Commons on Lewis Ave. 76% 83% 91%
Inducon - Columbia 98% 99% 91%
Joint Ventures
- --------------
Carriage House of Englewood 72% 83% 92%
Research Triangle 100% 100% 100%
2
ITEM 1: BUSINESS (Cont.)
The percentage of total Partnership revenue on a consolidated basis
generated from each complex as of December 31, 1997, 1996 and 1995 was as
follows:
1997 1996 1995
---- ---- ----
Beaver Creek 12% 11% 11%
Countrybrook Estates (formerly West Creeke) 28% 29% 28%
Stonegate Townhouses 20% 20% 20%
The Commons on Lewis Ave. 23% 22% 26%
Inducon - Columbia 17% 18% 15%
ITEM 2: PROPERTIES
Following is a list of properties and joint ventures owned by the
Partnership as of December 31, 1997:
Property
Name and Location General Character of Property Purchase Date
- ----------------- ----------------------------- -------------
Beaver Creek 80 unit apartment complex on 10 February 1989
Monaca, PA acres of land. The outstanding
mortgage payable at December 31,
1997 was $1,348,129 due July 2027
with monthly payments of $7,864
including interest of 8.3%.
Countrybrook Estates 240 unit apartment complex. The June 1989
(formerly West Creeke) outstanding mortgage payable at
Louisville, KY December 31, 1997 was $3,415,000
due July 1999 with monthly payments
of interest only at a rate of 9.1875%.
Stonegate Townhouses 130 unit apartment complex. The March 1990
Mobile, AL outstanding mortgage payable at
December 31, 1997 was $2,638,649 due
July 2027 with monthly payments of
$20,207 including interest of 8.43%.
3
ITEM 2: PROPERTIES (Cont.)
Property
Name and Location (Cont.) General Character of Property Purchase Date
- ------------------------- ----------------------------- -------------
The Commons on 230 unit apartment complex. March 1991
Lewis Avenue The mortgage balance at December
Tulsa, OK 31, 1997 was $1,866,372 maturing
April 2001 with monthly principal
and interest payments determined
by an interest rate ranging from
8% - 12% annually (11% at
December 31, 1997).
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 an
unrelated third party, with Realmark
Corporation, an affiliate of the
General Partners, supervising the
operations. The outstanding mortgage
payable balance at December 31, 1997
was $2,195,742 with monthly payments
of $16,787 including interest at
7.867%. The maturity date of the
mortgage is October 2022.
Carriage House A 144 unit apartment complex. May 1992
of Englewood The mortgage payable at
(formerly Gold Key) December 31, 1997 was $2,914,486
Joint Venture maturing June 2027, and providing
Dayton, OH for monthly principal and interest
payments of $23,503 bearing
interest at 9%.
Research Triangle A 150,000 square foot office August 1992
Joint Venture warehouse financed with a 8.06%
Research Triangle, NC mortgage, which provides for monthly
principal and interest payments of
$43,251. The balance as of December
31, 1997 was $5,558,723.
With the exception of Inducon-Columbia, the above apartment complexes are
managed for the Partnership by Realmark Corporation, an affiliate of the General
Partner.
4
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, 1997,
1996 and 1995. See also Item 7.
As of December 31, 1997, 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, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
------------ ------------ ------------ ------------ ------------
Total assets $ 16,284,862 $ 15,139,125 $ 16,251,096 $ 17,198,518 $ 18,214,708
============ ============ ============ ============ ============
Mortgages and
notes payable $ 11,463,892 $ 9,573,161 $ 9,672,590 $ 9,641,293 $ 9,259,957
============ ============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------------------------
Revenue $ 3,992,130 $ 4,039,286 $ 4,190,474 $ 3,647,476 $ 3,468,533
Expenses 5,209,137 4,860,288 5,312,606 5,021,157 4,391,337
------------ ------------ ------------ ------------ ------------
Loss before allocated income
(loss) from Joint Ventures (1,217,007) (821,002) (1,122,132) (1,373,681) (922,804)
Allocated income (loss)
from Joint Ventures 95,051 (165,190) (184,772) (186,922) (150,839)
------------ ------------ ------------ ------------ ------------
Net Loss $ (1,121,956) $ (986,192) $ (1,306,904) $ (1,560,603) $ (1,073,643)
============ ============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------------------------
Net cash (used in)
provided by operating
activities $ (245,265) $ 15,947 $ 307,437 $ (394,141) $ 266,326
Principal payments upon
refinancing (7,641,618) -- -- -- --
Principal payments on
long-term debt (78,350) (99,429) (44,715) (42,653) (300,585)
------------ ------------ ------------ ------------ ------------
Net cash (used in)
provided by operating
activities less
principal payments $ (7,965,233) $ (83,482) $ 262,722 $ (436,794) $ (34,259)
============ ============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------------------------
Loss per limited
partnership unit $ (6.92) $ (6.08) $ (8.06) $ (9.62) $ (6.62)
============ ============ ============ ============ ============
Distributions per
limited partnership
unit $ -- $ -- $ -- $ -- $ 1.25
============ ============ ============ ============ ============
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 had a poor year financially with cash flow shortages from
operations exceeding $245,000. Occupancy levels and poor collections at The
Commons and Carriage House of Englewood continued to be the Partnership's
primary challenges. Management is continuing to focus its efforts on ways of
improving collections at all of the residential complexes in the Partnership.
Both resident managers and leasing specialists at the properties are constantly
being evaluated to make sure the property has the best and most capable staff
that management can find. Advertising also continues to be stressed by
management as one of the most effective means of attracting new tenants.
Managers are continually reminded of the importance of monitoring ads and the
"traffic" of potential renters that they attract. With the capital improvement
work that management plans on completing in the coming year, occupancies are
expected to increase at all sites.
There were no distributions made for the years ended December 31, 1997,
1996 or 1995. Management for the Partnership has been utilizing its cash to fund
capital improvements; management expects to continue making improvements (e.g.
painting, carpet and appliance replacements, etc.) to the properties in an
effort to increase occupancies, so it is unlikely that any distributions will be
made during the early part of 1998 either.
The Partnership successfully refinanced the mortgages on Inducon-Columbia,
Countrybrook and Stonegate during the year ended December 31, 1997. No gains or
losses were realized from the refinancings. Additionally, a mortgage was placed
on Beaver Creek, which formally did not have a mortgage. The result of the
refinancings and the new mortgage was to give the Partnership cash it needed to
physically improve the properties. The refinancings also significantly lowered
interest rates being paid on the properties' mortgages. Management feels that
with the additional financing proceeds, it will be able to continue to complete
the capital improvements necessary at the properties. Escrow accounts were set
up as part of the new mortgages. These accounts are to be used to cover the
costs of the planned improvements but, because releases of escrowed funds are
typically not immediate, for cash flow purposes the cash from operations is
being used to pay for the improvements. Management believes that when all work
is done at the properties, potential tenants will find them more attractive,
thus leading to increased occupancies and positive cash flow from operations.
Carriage House of Englewood (formerly Gold Key Apartments) came under
contract for sale during July 1996; the contract was extended into 1997 and also
renegotiated, but was subsequently canceled. Unless the property shows
significant improvement in occupancy and collections, as well as a decrease in
expenses, the property could be in a position to default on its mortgage, thus
throwing it into a foreclosure. With this in mind, management for the venture
continues to aggressively market the property to potential buyers.
The Partnership has conducted a review of its computer systems to identify
the systems that could be affected by the "year 2000 issue" and has
substantially developed an implementation plan to resolve such issues. The year
2000 issue is the result of computer programs being written using two digits
rather than four digits to define the applicable year. Computer programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. Management has confirmed with its
software providers that all software currently in use is either "2000 compliant"
or will be with little adaptation and at no significant cost.
7
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont.)
Liquidity and Capital Resources (Cont.):
Management is aware of the need to implement corrective action plans in
response to the going concern considerations discussed in Note 11 to the
financial statements. As discussed previously, management believes that
marketing is a vital part of turning around the properties' financial problems.
Additionally, closer monitoring of expenditures, tighter credit policies and
scheduled physical improvements to the properties continue to be priorities. It
is hoped that efforts to correct the continual cash flow shortages and losses
will lead to the ultimate cure of such problems. The future viability of the
Partnership continues to be dependent upon management's efforts to increase
revenues, reduce/control expenses and in some cases, sell properties.
Results of Operations:
For the year ended December 31, 1997, the Partnership incurred a net loss
of $1,121,956 or $6.92 per limited partnership unit. This is a large increase
from the year ended December 31, 1996 when losses totaled $986,192 or $6.08 per
limited partnership unit and somewhat less from the year ended December 31, 1995
when losses totaled $1,306,904 or $8.06 per limited partnership unit.
Partnership revenues for the year ended December 31, 1997 totaled
$3,992,130, consisting of rental income of $3,538,666, other income, which
includes interest, laundry income, and other miscellaneous sources of income, of
$369,462, and income from insurance proceeds received due to a flood. The
decrease in rental revenue from that of the previous year-end is partially the
result of continually decreasing occupancy at The Commons, which averaged only
76% through 1997. Inducon - Columbia and the Partnership's joint venture
interest in Research Triangle once again experienced high occupancy, good cash
collections and positive cash flow from operations. Beaver Creek saw much
improved occupancy with an average for 1997 of 95%, an increase over the
previous year's average of 6%. 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, 1996 amounted
to $3,699,350 and in the year ended December 31, 1995 totaled $3,985,317.
Vacancies and delinquencies at Carriage House of Englewood (formerly Gold Key
Joint Venture) continue to plague this Partnership as a joint venturer.
Increasing occupancy and decreasing delinquencies remain 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, 1997 totaled
$5,209,137, a substantial increase over the expenses of the year ended December
31, 1996 which totaled $4,860,288, and a decrease of almost $103,500 from 1995
which were $5,312,606. Property operations costs increased just under $274,000;
this increase is responsible for the majority of the 7% increase seen in total
expenses between 1997 and 1996. Other than at Countrybrook, payroll and related
expenses remained fairly consistent between 1997 and 1996; for Countrybrook,
however, these expenses grew by over $48,000 with an increase in the number of
maintenance personnel on site. This property required a significant amount of
maintenance-type work during the past year, and in order to control costs,
management felt it was more financially beneficial to use on-site personnel to
perform the work as opposed to paying a higher amount using outside contractors.
Additional amortization expense in 1997 was the result of new financing obtained
during the year on several of the residential complexes and the one commercial
building in the Partnership. The new financing led to the write-off of the
majority of the previously capitalized mortgage acquisition costs. The write-off
of such costs amounted to approximately $15,628.
8
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Cont.)
Results of Operations (Cont.):
The Partnership expects to continue to incur slightly higher property
operations expenses in the first half of 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 negative in 1997. Management
is continually looking for new ways to save on expenses at the properties; as an
example, utility costs are "regularly" measured, and cost-savings ideas are
implemented wherever possible and practical. Insurance costs are also reviewed
regularly, as are real estate taxes with appeals being filed as deemed
practical.
The Carriage House of Englewood Joint Venture had a net loss of $253,956
for the year ended December 31, 1997. This loss, although slightly better than
that recorded in the previous year, 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, 1996 was $299,092 and $229,583 for the year
ended December 31, 1995. 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 property expects continuing high property
operations expenses in the coming months due to the maintenance work that needs
to be done; much work needs to be completed in order to prepare units for new
tenants and to satisfy current tenants (i.e. cleaning, painting, appliance and
carpeting costs), as well as to physically improve the exterior of the complex.
Management for the venture was successful in early 1998 in both negotiating the
release of escrowed reserve funds and in the suspension of future escrows for
replacements. It is hoped that this will provide the property with some of the
additional cash needed to fund the necessary improvements.
The Research Triangle Industrial Park West Joint Venture reported net
income of $65,136 for the year ended December 31, 1997. This is a decrease from
the year ended December 31, 1996 when the property showed net earnings of
$237,025. This is however, an improvement over the losses reported in the year
ended December 31, 1995 which totaled $185,878. Once again, this property
maintained 100% occupancy during 1997 and is expected to do the same in the
coming year. In accordance with the joint venture agreement, one-half of the
income (loss) is allocated to each joint venturer.
For the year ended December 31, 1997, the tax basis loss was $923,925 or
$5.69 per limited partnership unit compared to a tax loss of $600,196 or $3.70
per unit for the year ended December 31, 1996 and a tax loss of $882,192 or
$5.44 per limited partnership unit for the year ended December 31, 1995. 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, 1997 was allocated in this fashion, as were losses from 1996 and 1995.
9
PART III
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.
10
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, 1998, 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 59, 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 35 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 35 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 seventeen years, Mr. Jayson and J.M.
Jayson & Company, Inc. and an affiliate have also engaged in developmental
drilling for gas and oil.
11
Judith P. Jayson, age 58, 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 35 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, 40, 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 14 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,
1997, 1996 or 1995 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, 1997, 1996 or
1995.
The following table sets forth for the years ended December 31, 1997, 1996
and 1995 the compensation paid by the Partnership, directly or indirectly, to
affiliates of the General Partners:
Entity Receiving Type of
Compensation Compensation 1997 1996 1995
---------------- ------------ ---- ---- ----
U.S. Capital, Inc. Loan placement fees $102,878 $ -- $ --
======== ======== ========
Realmark Properties, Inc. Interest charged on accounts
(the Corporate General payable - affiliates $ 11,861 $ -- $ --
Partner) ======== ======== ========
Reimbursement for
allocated Partnership
administration expenses:
Investor Services Fees $ 12,060 $ 8,408 $ 7,705
Brokerage 25,882 10,872 9,973
Portfolio Management
& Accounting Fees 150,436 149,231 147,839
Partnership Management Fee -- 18,000 --
Realmark Corporation Property Management Fees 188,714 175,892 210,903
Computer Service Fees 11,460 11,460 11,460
-------- -------- --------
Total $388,552 $373,863 $387,880
======== ======== ========
See notes 1 and 6 to the financial statements for descriptions of the
items detailed above.
12
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, 1997, 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.
13
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements and Schedules.
FINANCIAL STATEMENTS PAGE
-------------------- ----
(i) Independent Auditors' Report 15
(ii) Balance Sheets at December 31, 1997 and 1996 16
(iii) Statements of Operations for the years ended
December 31, 1997, 1996 and 1995 17
(iv) Statements of Partners' Capital (Deficit) for the
years ended December 31, 1997, 1996 and 1995 18
(v) Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 19
(vi) Notes to Financial Statements 20 - 38
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated
Depreciation 39 - 40
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.
14
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, 1997 and 1996, and the related
statements of operations, partners' capital (deficit), and cash flows for each
of the three years in the period ended December 31, 1997. Our audits also
include 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 schedules 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 Decembr 31, 1997 and 1996 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 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 from operations and
operating cash flow deficiencies 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.
March 10, 1998
15
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
Assets 1997 1996
- ------ ------------ ------------
Property, at cost (including assets held for sale,
Note 15):
Land and land improvements $ 2,159,398 $ 2,116,448
Buildings 17,197,934 16,614,849
Furniture and fixtures 1,101,500 1,101,500
------------ ------------
20,458,832 19,832,797
Less accumulated depreciation 5,831,582 5,289,574
------------ ------------
Property, net 14,627,250 14,543,223
Investment in joint ventures, including
unamortized excess purchase price of
$266,917 and $280,617 at December 31,
1997 and 1996, respectively 449,640 368,287
Accounts receivable 31,085 50,337
Escrow deposits 570,297 51,529
Mortgage costs, net of accumulated amortization
of $141,547 and $268,186 at December 31,
1997 and 1996, respectively 561,252 76,845
Other assets 45,338 48,904
------------ ------------
Total Assets $ 16,284,862 $ 15,139,125
============ ============
Liabilities and Partners' Capital
- ---------------------------------
Liabilities:
Cash overdraft $ 229,302 $ 181,074
Mortgages payable 11,463,892 9,573,161
Accounts payable and accrued expenses 877,316 617,877
Accounts payable - affiliates 35,529 --
Security deposits and prepaid rents 238,118 204,352
------------ ------------
Total Liabilities 12,844,157 10,576,464
------------ ------------
Partners' Capital (Deficit):
General Partners (298,557) (264,898)
Limited Partners 3,739,262 4,827,559
------------ ------------
Total Partners' Capital 3,440,705 4,562,661
------------ ------------
Total Liabilities and Partners' Capital $ 16,284,862 $ 15,139,125
============ ============
See notes to financial statements
16
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
----------- ----------- -----------
Income:
Rental $ 3,538,666 $ 3,699,350 $ 3,985,317
Gain from insurance proceeds on flood loss 84,002 -- --
Interest and other income 369,462 339,936 205,157
----------- ----------- -----------
Total Income 3,992,130 4,039,286 4,190,474
----------- ----------- -----------
Expenses:
Property operations 2,569,545 2,295,937 2,760,376
Interest:
Paid to affiliates 11,861 -- --
Other 1,023,689 933,693 918,510
Depreciation and amortization 739,721 863,577 901,367
Administrative:
Paid to affiliates 388,552 373,863 387,880
Other 475,769 393,218 344,473
----------- ----------- -----------
Total Expenses 5,209,137 4,860,288 5,312,606
----------- ----------- -----------
Loss before allocated income (loss) from joint ventures (1,217,007) (821,002) (1,122,132)
Allocated income (loss) from joint ventures 95,051 (165,190) (184,772)
----------- ----------- -----------
Net loss $(1,121,956) $ (986,192) $(1,306,904)
=========== =========== ===========
Net loss per limited partnership unit $ (6.92) $ (6.08) $ (8.06)
=========== =========== ===========
Distributions per limited partnership unit $ -- $ -- $ --
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 157,378 157,378 157,378
=========== =========== ===========
See notes to financial statements
17
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
General Limited Partners
Partners ------------------------
Amount Units Amount
--------- ------- -----------
Balance, January 1, 1995 $(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
Net loss (33,659) -- (1,088,297)
--------- ------- -----------
Balance, December 31, 1997 $(298,557) 157,378 $ 3,739,262
========= ======= ===========
See notes to financial statements
18
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
----------- --------- -----------
Cash flows from operating activities:
Net loss $(1,121,956) $(986,192) $(1,306,904)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Gain from insurance proceeds (84,002) -- --
Depreciation and amortization 739,721 863,577 901,367
Property acquisition costs -- -- 406,078
Allocated (income) loss from joint ventures (95,051) 165,190 184,772
Changes in operating assets and liabilities:
Accounts receivable 19,252 7,586 (6,876)
Other assets 3,566 (1,709) (24,266)
Accounts payable and accrued expenses 259,439 (64,043) 158,530
Security deposits and prepaid rents 33,766 31,538 (5,264)
----------- --------- ---------
Net cash (used in) provided by operating activities (245,265) 15,947 307,437
----------- --------- ---------
Cash flows from investing activities:
Escrow deposits (518,768) (14,844) --
Accounts receivable-affiliates -- 349,027 (185,883)
Accounts payable - affiliates 35,529 -- --
Distribution from joint venture -- -- 100,000
Property acquisition (913,399) (209,831) (545,809)
Insurance proceeds on flood loss 287,571 -- --
----------- --------- ---------
Net cash provided by (used in) investing activities (1,109,067) 124,352 (631,692)
----------- --------- ---------
Cash flows from financing activities:
Cash overdraft 48,228 6,155 174,919
Mortgage costs (584,627) (47,025) --
Proceeds from mortgage 9,610,699 -- 76,012
Principal payments upon refinancings (7,641,618)
Principal payments on debt (78,350) (99,429) (44,715)
----------- --------- ---------
Net cash (used in) provided by financing activities 1,354,332 (140,299) 206,216
----------- --------- ---------
Decrease in cash -- -- (118,039)
Cash - beginning of year -- -- 118,039
----------- --------- ---------
Cash - end of year $ -- $ -- $ --
=========== ========= =========
See notes to financial statements
19
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
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, 1997, 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.
20
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 $618,347, $783,559
and $829,055 for the years ended December 31, 1997, 1996 and 1995, respectively.
The Modified Accelerated Cost Recovery System is used to calculate depreciation
expense for tax purposes. For further discussion, see Note 3.
(d) Unconsolidated Joint Ventures:
The Partnership's interest in affiliated joint ventures is accounted for on
the equity method.
(e) 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.
(f) Rents Receivable
Due to the nature of these accounts, residential rents receivable are fully
reserved as of December 31, 1997 and 1996.
(g) Mortgage Costs
Mortgage costs consist of fees for obtaining financing and are being
amortized over the life of the mortgage.
21
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
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 $1,891,995
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 $2,778,996 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.
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.
22
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. ACQUISITION OF RENTAL PROPERTY (Cont.):
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:
Countrybrook Estates (formerly West Creek)
A mortgage with a balance of $3,415,000 at December 31, 1997 due July 1999
with monthly payments of interest only at a rate of 9.1875%. The mortgage is
secured by the Countrybrook Estates complex.
The mortgage outstanding balance at December 31, 1996 of $3,950,483 was
refinanced into the new mortgage described above during 1997. No significant
gain or loss on the refinancing occurred.
Inducon-Columbia
The outstanding mortgage payable balance at December 31, 1997 was
$2,195,742, with monthly payments of $16,787 including interest at 7.867%. The
maturity date of the mortgage is October 2022. The mortgage is secured by the
Inducon-Columbia Office/Warehouse buildings.
The construction loan outstanding at December 31, 1996 of $1,776,081 was
refinanced into the mortgage described above during 1997. No significant gain or
loss on the refinancing occurred.
Stonegate
The outstanding mortgage payable at December 31, 1997 was $2,638,649 due
July 2027 with monthly payments of $20,207 including interest at 8.43%.
The mortgage outstanding at December 31, 1996 of $1,963,361 was refinanced
into the mortgage described above during 1997. No significant gain or loss on
the refinancing occurred.
Beaver Creek
The outstanding mortgage payable at December 31, 1997 was $1,348,129 due
July 2027 with monthly payments of $7,864 including interest of 8.3%.
There was no mortgage outstanding at December 31, 1996.
23
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. MORTGAGES AND NOTES PAYABLE (Cont.):
The Commons on Lewis Avenue
A mortgage with a balance of $1,866,372 and $1,883,236 at December 31, 1997
and 1996, respectively, provides for monthly principal and interest payments
calculated based upon an interest rate ranging from 8-12% annually ( 11% at
December 31, 1997). The mortgage is due April 1, 2001 and is 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
---- -----------
1998 $ 231,748
1999 3,634,473
2000 221,719
2001 1,989,071
2002 198,196
Thereafter 5,188,685
-----------
TOTAL $11,463,892
===========
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 -
affiliates, 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 mortgages payable on
Countrybrook Estates, Stonegate Townhouses, Inducon-Columbia, and Beaver Creek
approximate their carrying values of $3,415,000, $2,638,649, $2,195,742 and
$1,347,430, respectively, as the mortgages payable were obtained 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
$2,018,000. The carrying value of the mortgage is $1,866,372.
24
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 $188,714, $175,892 and $210,903 for the years ended December 31, 1997,
1996 and 1995 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 years ended December 31, 1997 and 1995. This fee totaled $18,000
for the year ended December 31, 1996.
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, 1997 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 $188,378 , $168,511 and $165,517 for the
years ended December 31, 1997, 1996 and 1995, respectively.
Accounts payable - affiliates, which are payable on demand, amounted to
$35,529 as of December 31, 1997.
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 for the years ended December 31, 1997, 1996 and 1995
respectively.
Loan placement fees are paid or accrued to an affiliate of the General
Partners. The fee is calculated as 1% of the mortgage loan amounts. These fees
totaled $102,878 for the year ended December 31, 1997. No such fees were paid
during the years ended December 31, 1996 or 1995.
25
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, 1997, 1996
and 1995 as reported in the statement of operations, and as would be reported
for tax purposes, is as follows:
1997 1996 1995
----------- --------- -----------
Net loss -
Statement of operations $(1,121,956) $(986,192) $(1,306,904)
Add to (deduct from):
Difference in depreciation (35,280) 109,457 144,342
Other nondeductible expenses 151,955 120,405 57,796
Tax basis adjustment - joint ventures 81,356 156,134 222,574
----------- --------- -----------
Net loss - tax return purposes $ (923,925) $(600,196) $ (882,192)
=========== ========= ===========
The reconciliation of Partners' Capital as of December 31, 1997, 1996 and
1995, as reported in the balance sheet and as reported for tax return purposes,
is as follows:
1997 1996 1995
---------- ---------- ----------
Partners' Capital - Balance Sheet $3,440,705 $4,562,661 $5,548,853
Add to (deduct from):
Accumulated difference in depreciation 220,283 255,563 146,106
Syndication fees 2,312,863 2,312,863 2,312,863
Other nondeductible expenses 543,162 391,207 270,802
Tax basis adjustment - Joint Ventures 951,889 870,533 714,399
---------- ---------- ----------
Partners' Capital - tax return purposes $7,468,902 $8,392,827 $8,993,023
========== ========== ==========
26
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
$1,252,779 and $1,191,451 at December 31, 1997 and 1996, respectively. The Joint
Venture incurred losses of approximately $254,000 and $299,000 for the years
ended December 31, 1997 and 1996, respectively. Management has determined that a
sale of the property is in the best interests of the investors.
27
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Cont.):
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, 1997 and 1996
totaled approximately $122,000 and $44,000, respectively. Management believes
that the property's fair value has not changed significantly since being
classified as held for sale.
28
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Cont.):
A summary of the assets, liabilities and partners' capital (deficiency) of
the Carriage House of Englewood Joint Venture as of December 31, 1997 and 1996
and the results of its operations for the years ended December 31, 1997, 1996
and 1995 is as follows:
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
BALANCE SHEET
December 31, 1997 and 1996
Assets 1997 1996
- ------ ----------- -----------
Land and land improvements $ 367,500 $ 367,500
Building 2,475,133 2,413,805
Building equipment 164,141 164,141
----------- -----------
3,006,774 2,945,446
Less accumulated depreciation (1,753,995) (1,753,995)
----------- -----------
Property, net 1,252,779 1,191,451
Cash - security deposits 30,154 29,406
Escrow 155,194 187,815
Mortgage costs, net of accumulated amortization
of $32,536 in 1997 and $26,794 in 1996 168,415 174,157
Other assets 15,110 179,477
----------- -----------
Total Assets $ 1,621,652 $ 1,762,306
=========== ===========
Liabilities and Partners' Deficit
- ---------------------------------
Liabilities:
Cash overdraft $ 286,850 $ 230,773
Mortgage payable 2,914,486 2,930,266
Accounts payable and accrued expenses 223,856 205,524
Accrued interest 65,539 21,977
Security deposits and prepaid rent 42,969 31,858
----------- -----------
Total Liabilities 3,533,700 3,420,398
----------- -----------
Partners' Capital (Deficit):
The Partnership 172,598 274,180
RPILP (2,084,646) (1,932,272)
----------- -----------
Total Partners' Deficit (1,912,048) (1,658,092)
----------- -----------
Total Liabilities and Partners' Deficit $ 1,621,652 $ 1,762,306
=========== ===========
29
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
CARRIAGE HOUSE OF ENGLEWOOD JOINT VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
--------- --------- ---------
Income:
Rental $ 583,445 $ 640,124 $ 717,713
Other income 42,620 44,915 47,650
--------- --------- ---------
Total Income 626,065 685,039 765,363
--------- --------- ---------
Expenses:
Property operations 436,621 455,678 451,322
Interest:
Paid to affiliates 31,966 -- --
Other 262,807 264,455 265,963
Depreciation and amortization 5,742 76,031 123,813
Administrative:
Paid to affiliates 55,506 55,889 52,714
Other 87,379 132,078 101,134
--------- --------- ---------
Total Expenses 880,021 984,131 994,946
--------- --------- ---------
Net loss $(253,956) $(299,092) $(229,583)
========= ========= =========
Allocation of net loss:
The Partnership $(101,583) $(119,638) $ (91,833)
RPILP (152,373) (179,454) (137,750)
--------- --------- ---------
Total $(253,956) $(299,092) $(229,583)
========= ========= =========
A reconciliation of the Partnership's investments in the Carriage House of
Englewood Joint Venture is as follows:
1997 1996 1995
--------- --------- ---------
Investment in joint venture at beginning of year $ 362,134 $ 486,272 $ 582,605
Amortization of excess purchase price (4,499) (4,500) (4,500)
Allocation of net loss (101,583) (119,638) (91,833)
--------- --------- ---------
Investment in joint venture at end of year $ 256,052 $ 362,134 $ 486,272
========= ========= =========
30
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. INVESTMENT IN JOINT VENTURES (Cont.):
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, 1997 and 1996 and the results of its operations for the years ended
December 31, 1997, 1996 and 1995 presented as follows have been adjusted to
reflect audited balances for 1996 which became available during the third
quarter of 1997. The Partnership's investment in the joint venture as of
December 31, 1996 was based on the estimated results of operations for the year
then ended. Any differences from those estimates have been reflected in the
Partnership's 1997 financial statements. The investment in this joint venture
amounted to $193,588 as of December 31, 1997.
31
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
RESEARCH TRIANGLE JOINT VENTURE
BALANCE SHEET
December 31, 1997 and 1996
Assets 1997 1996
- ------ ----------- -----------
Land $ 338,112 $ 338,112
Land improvements 799,430 799,430
Buildings 4,130,637 4,130,637
----------- -----------
5,268,179 5,268,179
Less accumulated depreciation (3,469,458) (3,338,925)
----------- -----------
Property, net 1,798,721 1,929,254
Cash 1,127,231 745,127
Accounts receivable - affiliates 20,603 --
Accounts receivable - other 35,731 268,317
Escrow deposits 330,058 --
Other assets 263,149 49,597
----------- -----------
Total Assets $ 3,575,493 $ 2,992,295
=========== ===========
Liabilities and Partners' Deficit
- ---------------------------------
Liabilities:
Mortgage payable $ 5,558,723 $ 4,996,884
Accounts payable and accrued expenses 90,069 96,440
Accounts payable - affiliates -- 37,406
----------- -----------
Total Liabilities 5,648,792 5,130,730
----------- -----------
Partners' Deficit:
The Partnership (1,136,064) (1,168,632)
RPILP-II (937,235) (969,803)
----------- -----------
Total Partners' Deficit (2,073,299) (2,138,435)
----------- -----------
Total Liabilities and Partners' Deficit $ 3,575,493 $ 2,992,295
=========== ===========
32
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
RESEARCH TRIANGLE JOINT VENTURE
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995
-------- ---------- -----------
Income:
Rental $886,634 $1,029,367 $ 946,046
Other 5,496 763 431
-------- ---------- -----------
Total Income 892,130 1,030,130 946,477
-------- ---------- -----------
Expenses:
Property operations 101,896 112,982 117,319
Interest 466,651 436,685 440,630
Depreciation and amortization 170,218 172,099 510,653
Administrative:
Paid to affiliates 60,177 58,987 63,527
Other 28,052 12,352 226
-------- ---------- -----------
Total Expenses 826,994 793,105 1,132,355
-------- ---------- -----------
Net income (loss) $ 65,136 $ 237,025 $ (185,878)
======== ========== ===========
Allocation of net income (loss):
The Partnership $ 32,568 $ 118,513 $ (92,939)
RPILP-II 32,568 118,512 (92,939)
-------- ---------- -----------
Total $ 65,136 $ 237,025 $ (185,878)
======== ========== ===========
A reconciliation of the Partnership's investment in the Research Triangle Joint
Venture is as follows:
1997 1996 1995
--------- --------- ---------
Investment in joint venture at beginning of year $ 170,220 $ 60,907 $ 263,046
Distributions -- -- (100,000)
Amortization of excess purchase price (9,200) (9,200) (9,200)
Allocation of net income (loss) 32,568 118,513 (92,939)
--------- --------- ---------
Investment in joint venture at end of year $ 193,588 $ 170,220 $ 60,907
========= ========= =========
33
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 approximately $7,400. 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
---- -------
1998 $89,000
1999 89,000
2000 89,000
2001 89,000
2002 89,000
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 in the future under noncancelable
operating leases are as follows:
Year Amount
---- --------
1998 $432,807
1999 322,391
2000 95,442
2001 42,661
11. GOING CONCERN CONSIDERATIONS:
The Partnership has sustained recurring losses and is experiencing
operating cash flow difficulties. 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
occupancy at its properties, especially at the Commons on Lewis Avenue and
Countrybrook Estates. There are also plans to market the properties for sale.
34
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
12. SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
1997 1996 1995
---------- -------- --------
Cash paid for interest $1,034,123 $922,210 $905,157
========== ======== ========
13. RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 and 1996 balances to
conform to the classifications used in 1997.
14. GAIN FROM INSURANCE PROCEEDS
On March 1, 1997, Countrybrook Estates experienced a flood that resulted in
property damage estimated at a net book value of $203,569. The Partnership
received insurance proceeds totaling $287,751, resulting in a gain for financial
statement purposes of $84,002.
15. LONG-LIVED ASSETS
In 1997, the Partnership entered into a plan to dispose of the property,
plant and equipment of Countrybrook Estates with a carrying amount of $4,047,737
and $3,932,512 at December 31, 1997 and 1996, respectively. Countrybrook Estates
incurred net losses of approximately $207,000, $237,000, and $424,000 for the
years ended December 31, 1997, 1996, and 1995, respectively. Management has
determined that the sale of the property is in the best interests of the limited
partners. As of December 31, 1997, an agreement cancelable by the buyer has been
signed with an anticipated sales price of approximately $6,060,000. Although
this agreement was canceled in the first quarter of 1998, the Partnership
anticipates that it will sell the property in 1998.
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 years ended December 31, 1997 totaled
approximately $175,000. Management believes that the property's fair value has
not changed significantly since being classified as held for sale.
35
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
NOTES TO FINANCIAL STATEMENTS
(Continued)
16. SUBSEQUENT EVENTS
Subsequent to December 31, 1997, management committed to a plan to sell the
assets of Research Triangle Joint Venture. On January 9, 1998, the Joint Venture
entered into an agreement to sell substantially all of its real property at a
purchase price of $7,600,000. Although the agreement subsequently expired,
management is continuing to market the assets of the Joint Venture and
anticipates its sale in 1998.
36
SCHEDULE III
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-VI A
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Cost Gross Amounts at which
Initial Cost to Capitalized Carried at Close of Period
Partnership Subsequent ----------------------------------------
Property ------------------------- to (1)(2)
Description Encumbrances Land Buildings Acquisition Land Buildings Total
----------- ------------ ---------- ----------- ----------- ---------- ----------- -----------
Beaver Creek
Pittsburgh, PA $ 1,348,129 $ 282,000 $ 1,437,944 $ 169,871 $ 317,000 $ 1,572,815 $ 1,889,815
Countrybrook Estates
Louisville, KY 3,415,000 882,272 4,277,115 365,990 884,622 4,360,847 5,245,469
Stonegate
Mobile, AL 2,638,649 419,544 3,417,160 288,160 427,494 3,767,370 4,194,164
The Commons
Tulsa, OK 1,866,372 525,000 2,304,303 521,609 525,000 2,825,912 3,350,912
Inducon - Columbia
Columbia, SC 2,195,742 - 1,503,710 3,172,562 5,282 4,670,990 4,676,272
----------- ---------- ----------- ---------- ---------- ----------- -----------
$11,463,892 $2,108,816 $13,010,232 $4,518,192 $2,159,398 $17,197,934 $19,357,332
=========== ========== =========== ========== ========== =========== ===========
Carriage House of
Englewood J.V.
Dayton, OH $ 2,914,486 $ 367,500 $ 2,341,254 $ 133,879 $ 367,500 $ 2,475,133 $ 2,842,633
=========== ========== =========== ========== ========== =========== ===========
Research Triangle J.V.
Raleigh, NC $ 5,558,723 $ 338,112 $ 4,920,738 $ 9,329 $ 338,112 $ 4,930,067 $ 5,268,179
=========== ========== =========== ========== ========== =========== ===========
(3)(4)
Property Accumulated Date of Date
Description Depreciation Construction Acquired
----------- ------------ ------------ --------
Beaver Creek
Pittsburgh, PA $ 522,026 1975 2/89
Countrybrook Estates
Louisville, KY 1,197,732 1972 6/89
Stonegate
Mobile, AL 1,091,489 1985 3/90
The Commons
Tulsa, OK 639,024 1970 3/91
Inducon - Columbia
Columbia, SC 1,284,998 1989 5/89
----------
$4,735,269
==========
Carriage House of
Englewood J.V.
Dayton, OH $1,596,577 1972 5/92
==========
Research Triangle J.V.
Raleigh, NC $3,469,458 1983 8/92
==========
37
SCHEDULE III
(Continued)
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(1) Cost for Federal income tax purposes is $ 19,357,332.
(2) A reconciliation of the carrying amount of buildings and improvements as of
December 31, 1997, 1996 and 1995 is as follows:
Partnership Properties
--------------------------------------------
1997 1996 1995
----------- ----------- -----------
Balance at beginning of period $16,614,849 $16,407,368 $15,861,559
Additions 862,993 207,481 545,809
Disposals (279,908) -- --
------------ ----------- -----------
Balance at end of period $17,197,934 $16,614,849 $16,407,368
============ =========== ===========
Joint Venture Properties
--------------------------------------------
1997 1996 1995
----------- ----------- -----------
Balance at beginning of period $ 7,343,872 $ 7,325,523 $ 7,319,523
Additions 61,328 18,349 6,000
----------- ----------- -----------
Balance at end of period $ 7,405,200 $ 7,343,872 $ 7,325,523
=========== =========== ===========
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1997, 1996 and 1995 is as follows:
Partnership Properties
--------------------------------------------
1997 1996 1995
----------- ----------- -----------
Balance at beginning of period $ 4,212,761 $ 3,473,170 $ 2,779,144
Additions charged to cost and
expenses during the period 598,847 739,591 694,026
Accumulated cost and expenses
written-off during the period (76,339) -- --
----------- ----------- -----------
Balance at end of period $4,735,269 $ 4,212,761 $ 3,473,170
=========== =========== ===========
Joint Venture Properties
--------------------------------------------
1997 1996 1995
----------- ----------- -----------
Balance at beginning of period $ 4,935,502 $ 4,431,001 $ 3,878,546
Additions charged to cost and
expenses during the period 130,533 504,501 552,455
----------- ----------- -----------
Balance at end of period $ 5,066,035 $ 4,935,502 $ 4,431,001
=========== =========== ============
(4) Balance applies entirely to buildings.
38
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 4/15/98
------------------------------ -----------------------------------
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: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/ JOSEPH M. JAYSON 4/15/98
------------------------------ -----------------------------------
JOSEPH M. JAYSON, Date
President and Director
/s/ MICHAEL J. COLMERAUER 4/15/98
------------------------------- -----------------------------------
MICHAEL J. COLMERAUER Date
Secretary
39
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.
40