FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002
Commission File Number: 0-17466
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VIA
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(Exact name of registrant as specified in its charter)
Delaware 16-1309987
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(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 12A,Getzville, New York 14068
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(Address of principal executive offices)
(716) 636-0280
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(Registrant's telephone number)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed Consolidated Balance Sheets
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September 30, December 31,
2002 2001
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Assets
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Cost of property and equipment, all held for sale 18,702,759 20,743,204
Less accumulated depreciation (6,963,060) 7,838,011
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11,739,699 12,905,193
Cash and equivalents 434,604 62,362
Other assets 1,139,247 858,621
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Total assets 13,313,550 13,826,176
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Liabilities and Partners' Equity
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Mortgage loans payable 10,264,105 11,661,131
Accounts payable and accrued expenses 1,003,840 739,335
Payable to affiliates 1,616,224 1,043,895
Other liabilities 204,351 236,484
Equity in losses of unconsolidated joint ventures
in excess of investment 161,658 172,215
Partners' equity (deficit) 63,372 (26,884)
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Total liabilities and partners' equity 13,313,550 13,826,176
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Condensed Consolidated Statements of Operations
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Three months ended Sept. 30, Nine months ended Sept. 30,
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2002 2001 2002 2001
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Rental income $ 833,832 968,676 2,620,280 2,992,300
Other income 84,381 69,747 269,748 207,908
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Total income 918,213 1,038,423 2,890,028 3,200,208
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Property operating costs 770,746 790,493 2,274,959 2,281,232
Administrative expense - affiliates 113,465 127,710 333,469 335,921
Other administrative expense 74,132 72,162 267,140 244,237
Interest 283,295 292,971 840,195 870,538
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Total expenses 1,241,638 1,283,336 3,715,763 3,731,928
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Loss before equity in joint venture operations (323,425) (244,913) (825,735) (531,720)
and gain on sale of property
Gain on sale of property 847,434 -- 847,434 --
Equity in earnings of joint ventures 23,656 36,149 79,513 51,156
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Net income (loss) $ 547,665 (208,764) 101,212 (480,564)
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Net income (loss) per limited partnership unit $ 3.38 (1.29) .62 (2.96)
================ ================ ============= ================
Weighted average limited partnership units 157,378 157,378 157,378 157,378
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Condensed Consolidated Statements of Cash Flows
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Nine months ended Sept. 30,
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2002 2001
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Operating activities:
Net income (loss) $ 101,212 (480,564)
Adjustments:
Gain on sale of property (847,434) --
Other, principally changes in other assets and liabilities 788,720 420,993
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Net cash provided (used) by operating activities 42,498 (59,571)
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Investing activities:
Additions to property and equipment (9,370) (3,140)
Net proceeds from sale of property 382,790 --
Distributions from joint ventures 58,000 89,500
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Net cash provided by investing activities 473,918 86,360
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Net cash used by financing activities - principal payments
on mortgage loans (101,676) (90,436)
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Net increase (decrease) in cash and equivalents 372,242 (63,647)
Cash and equivalents at beginning of period 62,362 145,428
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Cash and equivalents at end of period $ 434,604 81,781
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Notes to Consolidated Financial Statements
Nine months ended September 30, 2002 and 2001
Organization
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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. 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
shareholder of J.M. Jayson & Company, Inc. Realmark Properties, Inc. is a
wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates can receive compensation
for services rendered and reimbursement for expenses incurred on behalf of the
Partnership.
Basis of Presentation
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The accompanying interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and, in the opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set forth in
its December 31, 2001 Form 10-K. The interim financial statements should be read
in conjunction with the financial statements included therein. The interim
results should be considered indicative of the annual results.
Property and Equipment
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At September 30, 2002, the Partnership owned and operated four apartment
complexes and commercial property (Inducon Columbia). All of the properties are
being actively marketed for sale and, therefore, are not being depreciated.
Depreciation not recorded on these properties for the three and nine months
ended September 30, 2002 and September 30, 2001 was approximately $165,000 and
$500,000, respectively.
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In its March 31, 2002 and June 30, 2002 Form 10-Qs, the Partnership reported the
existence of a contingent $2,440,000 sales agreement with an unaffiliated
entity, covering Beaver Creek Apartments. On August 28, 2002, the sale was
consummated for cash of $2,320,000 and a $350,000 three-year promissory note
from the purchaser, resulting in a net gain of approximately $850,000.
On a pro forma basis, if the sale of Beaver Creek had occurred in December 31,
2001, that balance sheet would have shown a $62,000 decrease in cash and
equivalents along with an $809,000 increase in accounts payable; a note
receivable of $350,000; a decrease in property of $5,816,000 and in mortgage
loans of $1,304,000; and a decrease in partnership capital of $2,224,000.
If the property had been sold on January 1, 2001, the pro forma results of
operations for the year ended December 31, 2001 would have been a net loss
before equity in joint venture operations of $763,000 ($4.70 per limited
partnership unit), resulting from decreases in revenue and expenses of $510,000
and $409,000, respectively. For the nine months ended September 30, 2002, the
pro forma operating results would have been an operating loss of $753,000 ($4.64
per limited partnership unit), resulting from decreases in revenue and expenses
of $295,000 and $368,000, respectively. For the three months ended September 30,
2002, the pro forma operating results would have been a loss of $302,000, ($1.86
per limited partnership unit) resulting from decreases in revenue and expenses
of $72,000 and $94,000, respectively.
All of the foregoing pro forma operating date excludes the gain on the
disposition of the property and simply reflects the elimination of Beaver
Creek's operating accounts from the consolidated historical results.
Current Accounting Pronouncements
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Statements of Financial Accounting Standards Nos. 145, 146 and 147 which concern
accounting for gains and losses from the extinguishments of debt, exit or
disposal activities, and acquisitions of certain financial institutions will
become effective for the Partnership in the first quarter of 2003. The
Partnership is currently evaluating the impact of these pronouncements to
determine the effect, if any, they may have on the consolidated financial
position and results of operations.
Investments in Joint Ventures
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The Partnership had a 40% interest in a joint venture with Realmark Property
Investors Limited Partnership (RPILP), an entity affiliated through common
general partners. The venture was formed to own and operate an apartment
complex, Carriage House of Englewood, Ohio. Since July 1996, when a plan to
dispose of the venture's property was established, Carriage House had been
carried at the lower of depreciated cost or fair value less costs to sell and
was not depreciated. Carriage House was sold on March 1, 2001. While the venture
recorded a net gain on the sale, the net proceeds were not sufficient to satisfy
the liabilities related to the property. Therefore, the balance of the
Partnership's investment in the venture, $74,813, was charged to equity in joint
venture operations in the quarter ended March 31, 2001.
The Partnership has a 50% interest in Research Triangle Industrial Park Joint
Venture with Realmark Property Investors Limited Partnership-II (RPILP-II), an
entity affiliated through common general partners, owning the other 50%. The
Venture owns and operates the Research Triangle Industrial Park West, an
office/warehouse facility located in Durhan County, North Carolina. Summary
financial information of the Venture follows:
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Balance Sheet Information
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September 30, December 31,
2002 2001
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Net property, held for sale $ 1,473,368 1,473,368
Cash and equivalents 6,633 55,158
Escrow deposits 907,891 876,539
Other assets 209,702 252,727
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Total assets $ 2,597,594 2,657,792
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Liabilities:
Mortgage loan payable 5,186,079 5,254,865
Accounts payable and accrued expenses 85,996 134,234
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5,272,075 5,389,099
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Partners' deficit:
The Partnership (1,436,656) (1,465,069)
RPILP - II (1,237,825) (1,266,238)
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(2,674,481) (2,731,307)
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Total liabilities and partners' deficit $ 2,597,594 2,657,792
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Operating Information
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Three months ended Sept 30, Nine months ended Sept 30,
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2002 2001 2002 2001
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Rental income $ 236,943 218,620 598,589 655,860
Other 5,780 48,457 100,768 144,135
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Total income 242,723 267,077 699,357 799,995
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Property operating costs 59,203 31,570 139,496 90,731
Interest 108,990 111,761 325,395 331,882
Administrative 22,618 46,846 61,640 115,812
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Total expenses 190,811 190,177 526,531 538,425
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Net income $ 51,912 76,900 172,826 261,570
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Allocation of net income:
RPILP II 25,956 38,450 86,413 130,785
RPILP VI-A 25,956 38,450 86,413 130,785
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$ 51,912 76,900 172,826 261,570
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Subsequent Event
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In its December 31, 2001 Form 10-K and its March 31, 2002 and June 30, 2002 Form
10-Q, the Partnership reported the existence of a contingent $5,200,000 sales
agreement covering one of its Properties, Countrybrook Estates. On October 31,
2002, the sale was consummated with an unaffiliated entity, Countrybrook
Apartments, LLC, for cash of $5,140,000, resulting in a gain of approximately
$1,020,000. After satisfaction of the $3,900,000 mortgage loan on the property
and payment of closing costs, net cash proceeds available amounted to
approximately $610,000 before satisfaction of any remaining obligations related
to the property. All relevant comparisons and disclosures are made in the
October 31, 2002 Form 8-K filed on November 13, 2002.
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PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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Although the Partnership sold one of its properties, it continued to have
difficulties in the first nine months of 2002 generating sufficient funds to
cover its cash obligations without relying on affiliates. The total amount
payable to affiliates rose approximately $572,000 in the nine months ended
September 30, 2002. There have been no distributions to the partners for at
least the past six years.
The Partnership has entered into a contingent $5,100,000 sales agreement with an
unaffiliated entity, for the sale of Stonegate Townhouses. This sale, if closed,
will result in a gain of approximately $1,250,000 to the Partnership.
Results of Operations
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The Partnership's operations, excluding the operating accounts of Beaver Creek,
produced an operating loss $302,000 and $753,000 for the three and nine months
ended September 30, 2002, respectively. Comparable pro forma results for the
same 2001 periods would be an operating loss of $251,000 and $564,000,
respectively.
Rental income at the properties decreased approximately $272,000 for the first
nine months. This is due mainly to increased vacancies at Pomeroy Park of
$152,000, increased vacancies of $13,000 and increased concession of $32,000 at
Stonegate, increased vacancies of $55,000 at Countrybrook, and increased
vacancies of $60,000 offset by a $40,000 increase in gross market rent at
Inducon Columbia. Other income increased $57,000 due to cleaning/damages fees
and termination fees. Total expenses decreased $26,000 as a result of a decrease
in property operations of $34,000, a decrease in interest expense of $17,000, an
increase in other administrative expense of $15,000, and an increase in
administrative expense to affiliates of $10,000. The decrease in property
operations expense was due mainly to a decrease in utility costs offset by an
increase in repairs, real estate taxes and insurance at the properties. The
increase in other administrative was primarily attributable to an increase in
advertising. The increase in administrative expense to affiliates was primarily
for professional fees.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership's cash equivalents are short-term, interest-bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered into any
derivative contracts. Therefore, it has no market risk exposure.
PART I - Item 4. Controls and Procedures
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Within the 90 days prior to the filing date of this report, the Partnership
carried out an evaluation, under the supervision and with the participation of
the Partnership's management, including Joseph M. Jayson (the Partnership's
Individual General Partner and Principal Financial Officer), of the
effectiveness of the design and operation of the Partnership's disclosure
controls and procedures. Based upon that evaluation, the Principal Financial
Officer concluded that the Partnership's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Partnership (including its consolidated subsidiaries) required to be included in
the Partnership's period SEC filings. There have not been any significant
changes in the Partnership's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the evaluation.
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PART II - OTHER INFORMATION
Item 1. Legal Proceeding
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As previously reported, the Partnership, as a nominal defendant, the General
Partners of the Partnership and of affiliated public partnerships (the "Realmark
Partnerships") and the officers and directors of the Corporate General Partner,
as defendants, had been involved in a class action litigation in New York State
court. The Partnership's settlement of this litigation is described in its
Annual Report on Form 10-K for the year ended December 31, 2001. Subsequent to
September 30, 2002, the court appointed a sales agent to work with the General
Partners to continue to sell the Partnership's remaining properties.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
99.1 Certification of Principal Financial Officer Pursuant
to Section 302 of the Sarbanes- Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 10-K
The Partnership reported the sale of the Beaver Creek Apartment
property under item 2 of Form 8-K, filed on September 12, 2002 and the
sale of the Countrybrook Apartment property under item 2 of Form 8-K,
filed on November 13, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - VIA
November 14, 2002 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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