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: 33-17579
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP -VI B
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(Exact name of registrant as specified in its charter)
Delaware 16-1309988
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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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Consolidated Statement of Net Assets in Liquidation
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(Liquidation Basis)
September 30, 2002
Assets:
Cash $ 2,172,459
Note receivable 276,950
Receivable from affiliated party 97,343
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Total assets 2,546,752
Liabilities - accounts payable and accrued expenses 3,852
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Net assets in liquidation $ 2,542,900
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Consolidated Statement of Changes in Net Assets in Liquidation
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(Liquidation Basis)
For the period June 1, 2002 to September 30, 2002
Partners' equity at June 1, 2002 $ 2,883,271
Adjustment to liquidation basis - loss on settlement of lawsuit (257,929)
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Net assets in liquidation at June 1, 2002 2,625,342
Operating loss (82,442)
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Net assets in liquidation at September 30, 2002 $ 2,542,900
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Condensed Consolidated Balance Sheets
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December 31,
2001
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Assets
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Cost of property and equipment, all held for sale $ 3,228,531
Less accumulated depreciation 1,164,899
2,063,632
Cash and equivalents 340,444
Note receivable 326,950
Other assets 282,806
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Total assets $ 3,013,832
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Liabilities and Partners' Equity
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Mortgage loan payable 2,620,735
Accounts payable and accrued expenses 91,660
Other liabilities 56,911
Partners' equity 244,526
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Total liabilities and partners' equity $ 3,013,832
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Condensed Consolidated Statements of Operations
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Nine months
Three months Period from ended
ended September January 1, 2002 September 30,
30, 2001 to May 31, 2002 2001
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Rental income 328,574 405,338 1,272,008
Other income 29,821 49,844 99,793
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Total income 358,395 455,182 1,371,801
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Property operating costs 235,636 302,086 779,317
Administrative expense - affiliates 38,427 40,941 129,844
Other administrative expense 26,703 65,308 80,716
Interest 208,870 91,036 433,802
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Total expenses 509,636 499,371 1,423,679
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Income (loss) before equity in earnings of (151,241) (44,189) (51,878)
joint venture and gain on sale of property
Equity in earnings of joint venture -- -- 546,261
Gain on property sale 1,851,531 2,682,934 1,851,531
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Net income 1,700,290 2,638,745 2,345,914
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Net income per limited partnership unit 20.98 32.55 28.94
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Weighted average limited partnership units 78,625 78,625 78,625
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Condensed Consolidated Statements of Cash Flows
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Period from Nine months
January 1, ended
2002 to May September 30,
31, 2002 2001,
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Cash provided (used) by:
Operating activities:
Net income $ 2,638,745 2,345,914
Adjustments:
Equity in earnings of joint venture -- (546,261)
Gain on sale of property (2,682,934) (1,851,531)
Other, principally changes in other assets and liabilities (429,941) 86,274
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Net cash provided (used) by operating activities (474,130) 34,396
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Investing activities:
Proceeds from sale of property, excluding note receivable 5,273,215 4,209,377
Distributions from joint ventures -- 647,823
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Net cash provided by investing activities 5,273,215 4,857,200
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Financing activities:
Distribution to partners -- (2,680,412)
Principal payments on mortgage loans (2,620,735) (2,600,361)
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Net cash provided (used) by financing activities (2,620,735) (5,280,773)
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Net increase (decrease) in cash and equivalents 2,178,350 (389,177)
Cash and equivalents at beginning of period 340,444 708,683
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Cash and equivalents at end of period $ 2,518,794 319,506
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Notes to Consolidated Financial Statements
Nine months ended September 30, 2001 and 2000
Liquidation of the Partnership
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On May 30, 2002 the Partnership sold its remaining property investment, Player's
Club, at which time the Partnership adopted a plan of termination and
liquidation under which liabilities will be paid and net proceeds will be
distributed to the Partners.
Organization
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Realmark Property Investors Limited Partnership - VI B (the Partnership), a
Delaware limited partnership, was formed on September 21, 1987, to invest in a
diversified portfolio of income producing real estate investments. The general
partners are Realmark Properties, Inc. (the corporate general partner) and
Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole
stockholder of J.M. Jayson & Company Inc. Realmark Properties, Inc. is a
wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates can receive compensation
for services rendered and reimbursement for expenses incurred on behalf of the
Partnership.
Basis of Presentation
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As a result of the plan termination and liquidation, the Partnership changed its
basis of accounting to the liquidation basis effective June 1, 2002. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their estimated settlement
amounts.
The accompanying interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
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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 not be considered indicative of the annual results.
Property and Equipment
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On May 30, 2002, the Partnership closed on the sale of its remaining property,
Player's Club, resulting in a gain of approximately $2,680,000. During 2002 and
2001, the Partnership's properties were being actively marketed for sale and,
therefore, were not being depreciated. Depreciation not recorded for the period
from April 1, 2002 to May 31, 2002 and for the period from January 1, 2002 to
May 31, 2002 was approximately $22,000 and $56,000, respectively. Depreciation
not recorded in the three and nine month periods ended September 30, 2001 was
approximately $50,000 and $166,000, respectively. As of September 30, 2002, the
Partnership does not have an interest in any property or equipment.
Investment in Joint Venture
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The Partnership had an 11.5% interest in a joint venture with Realmark Property
Investors Limited Partnership-II (RPILP-II), an entity affiliated through common
general partners, owning 88.5%. The Joint Venture was formed to own and operate
the Foxhunt Apartments, located in Dayton, Ohio. The Foxhunt property had been
the subject of a plan of disposal since July 1999 and was sold on March 1, 2001,
to an unaffiliated entity, for $7,600,000. After satisfaction of the $5,942,000
mortgage loan on the property and payment of closing costs, the net proceeds
were approximately $1.1 million. The Partnership's equity in the net income of
the venture includes its share of the net gain of approximately $4,700,000.
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
statements.
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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Since January 1, 2001, the Partnership's only remaining property, Player's Club,
had been actively marketed for sale. On May 30, 2002, the Partnership sold
Player's Club to an unaffiliated entity for cash of $5,548,000. After
satisfaction of the $3,031,000 mortgage loan, including a prepayment penalty, on
the property and payment of closing costs, the net proceeds available amounted
to approximately $2,180,000, before satisfaction of any remaining obligations
related to the property.
Prior to the sale of Player's Club, the Partnership maintained a cash position
adequate to fund capital improvements and scheduled debt payments. The
Partnership's cash position and the proceeds from the sale of Fairway Club
Apartments (sold August 16, 2001) enabled the Partnership to make a $2,600,000
distribution to the Limited Partners in the last quarter of 2001.
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The Partnership's cash position and the proceeds from the sale of Player's Club
(sold May 30, 2002) will enable the Partnership to make a distribution to the
Limited Partners in the last quarter of 2002.
Results of Operations
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As a result of the sale of the sole remaining property, Player's Club, and the
establishment of a plan of liquidation, the Partnership began reporting on the
liquidation basis of accounting effective June 1, 2002. Therefore, operations
for the period June 1, 2002 to September 30, 2002 are reported on the
consolidated statement of changes in net assets in liquidation while the
operations for the period January 1, 2002 to May 31, 2002 and for the three and
nine months ended September 30, 2001 are reported on the condensed consolidated
statement of operations.
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. 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 periodic 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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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.
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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
None.
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 - VIB
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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