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
For the Fiscal Year Ended December 31, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission File Number 0-17466
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
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(Exact Name of Registrant as specified in its Charter)
Delaware 16-1309987
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(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
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(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 Item 15 for a list of all documents incorporated by reference
PART I
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ITEM 1: BUSINESS
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The Registrant, Realmark Property Investors Limited Partnership-VI A
(the "Partnership"), is a Delaware Limited Partnership organized in September
1987 pursuant to an Amended and Restated Certificate and Agreement 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 partners.
At December 31, 2002 the Partnership, either directly or through a limited
liability, wholly-owned subsidiary company, owned two apartment complexes
totaling 360 units and an office complex consisting of three buildings with a
combined 92,000 square feet of rentable space. The Partnership also has a 50%
joint partner interest in Research Triangle Industrial Park Joint Venture, which
owns an office/distribution facility in Raleigh, North Carolina. Additionally,
the Partnership had a 40% joint partner interest in Realmark/Gold Key
Associates, which owned the Carriage House of Englewood, Ohio apartment complex.
The other interests in the ventures are owned by limited partnerships affiliated
with the Partnership through common general partners. On March 1, 2001, the
Carriage House property was sold. All of the other properties are currently
being actively marketed for sale. On August 28, 2002 and October 31, 2002, the
Partnership sold Beaver Creek and Countrybrook Estates, respectively, to
unaffiliated entities. Refer to Item 7 and the notes to the financial statements
for details of these transactions.
In 2003, the Partnership entered into sales agreements with
unaffiliated parties for the sale of the following:
Agreement Sales Approximate
Property Date Price Taxable Gain
-------- ---- ----- ------------
Pomeroy Park January 29, 2003 $ 3,425,000 665,000
Inducon Columbia February 9, 2003 3,150,000 --
=========== =============
These sales, if closed, will result in the taxable gain identified
above, however, this doesn't necessarily mean that cash proceeds would be
available for distribution in an amount equal to the gain.
It is anticipated that the Partnership will be entering into sales
contracts in the near future (one to six months) which will be subject to sales
conditions which are customary for sales contracts and there is no assurance
that the sales will be consummated.
The business of the Partnership is not seasonal and it competes on the
basis of rental rates and property operations with similar types of properties
in vicinities in which the Partnership's properties are located. The Partnership
has no real property investments located outside the United States. The
Partnership does not segregate revenue or assets by geographic region, since, in
management's view, such a presentation would not be significant to an
understanding of the Partnership's business or financial results taken as a
whole. As of December 31, 2002, the Partnership did not directly employ any
persons in a full-time position. All persons who regularly rendered services on
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behalf of the Partnership through December 31, 2002 were employees of the
Corporate General Partner or its affiliates.
The occupancy for each complex at December 31 was as follows:
Property 2002 2001 2000
-------- ---- ---- ----
Beaver Creek -- 88% 98%
Countrybrook Estates -- 78% 84%
Stonegate Townhouses 94% 93% 95%
Pomeroy Park 70% 74% 90%
Inducon Columbia 91% 75% 78%
Carriage House of Englewood -- -- 85%
Research Triangle 100% 100% 100%
The percent of total Partnership revenue generated by each complex for
the last three years was as follows:
2002 2001 2000
---- ---- ----
Beaver Creek 8% 12% 10%
Countrybrook Estates 25% 25% 28%
Stonegate Townhouses 24% 23% 22%
Pomeroy Park 28% 28% 26%
Inducon Columbia 15% 12% 14%
This annual report contains certain forward-looking statements
concerning the Partnership's current expectations as to future results. Words
such as "believes", "forecasts", "intends", "possible", "expects", "estimates",
"anticipates" or "plans" and similar expressions are intended to identify
forward-looking statements. Such statements may not ultimately turn out to be
accurate due to, among other things, economic or market conditions or the
failure of the Partnership to sell an investment which is under contract.
ITEM 2: PROPERTIES
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The following is a list of properties owned by the Partnership and its
joint venture investees as of December 31, 2002:
Property Name
and Location General Character of Property Purchase Date
- ------------ ----------------------------- -------------
Stonegate Townhouses 130 unit apartment complex, securing an 8.43% 1990
Mobile, AL mortgage loan with a balance at December
31, 2002 of $2,534,046, maturing in 2027.
Pomeroy Park 230 unit apartment complex, securing a 12% 1991
Tulsa, OK mortgage loan with a balance at December 31,
2002 of $1,767,862, maturing in 2003.
Inducon-Columbia An office complex consisting of three buildings with 1989
Columbia, SC a combined 92,000 square feet of rentable space,
securing a 7.86% mortgage loan with a balance at
December 31, 2002 of $2,035,320, maturing in 2022
Research Triangle A 150,000 square foot office/warehouse financed with 1992
Industrial Park a 8.06% having a balance of $5,161,824 at
Raleigh, NC December 31, 2002.
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ITEM 3: 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 at the
state court level regarding the payment of fees and other management issues.
On August 29, 2001, the parties entered into a Stipulation of
Settlement (the "Settlement"). On October 4, 2001, the Court issued an "Order
Preliminary Approving Settlement" (the "Hearing Order") and on November 29,
2001, the court issued an "Order and Final Judgment Approving Settlement and
Awarding Fees and Expenses" and dismissing the complaints with predjudice. The
Settlement provided, among other things, that:
o The payable to the general partners and/or their affiliates by the
Realmark Property Investors Limited Partnership VI-A at March 31,
2001, in the amount of $481,598, cease to accrue interest.
o All of the Realmark Partnerships' properties be disposed of. The
general partners will continue to have primary authority to dispose
of the Partnerships' properties. If either (i) the general partners
have not sold or contracted to sell 50% of the Partnerships'
properties (by value) by April 2, 2002 or (ii) the general partners
have not sold or contracted to sell 100% of the Partnerships'
properties by September 29, 2002, then the primary authority to
dispose of the Partnerships' properties will pass to a sales agent
designated by plaintiffs' counsel and approved by the Court. On
October 4, 2002, the Court appointed a sales agent to work with the
general partners to continue to sell the Partnership's remaining
properties.
The settlement also provided for the payment by the Partnerships of
fees to the plaintiffs' attorneys. These payments, which are not calculable at
this time but may be significant, are payable out of the proceeds from the sale
of all of the properties owned by all of the Realmark Partnerships, following
the sale of the last of these properties in each partnership. Plaintiffs'
counsel will receive 15% of the amount by which the sales proceeds distributable
to limited partners in each partnership exceeds the value of the limited
partnership units in each partnership (based on the weighted average of the
units' trading prices on the secondary market as reported by Partnership
Spectrum for the period May through June 2001). In no event may the increase on
which the fees are calculated exceed 100% of the market value of the units as
calculated above.
ITEM 4: SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
PART II
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ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST
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There is currently no active trading market for the units of limited
partnership interest of the Partnership and it is not anticipated that any will
develop in the future. Accordingly, information as to the market value of a unit
at any given date is not available. As of December 31, 2002, there were 1,630
record holders of units of limited partnership interest.
The Partnership is a limited partnership and, accordingly, does not pay
dividends. It does, however, make distributions of cash to its partners. The
partnership agreement provides for the distribution to the partners of net cash
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flow from operations. In connection with the pending sale of the Partnership's
properties (Item 3), it is anticipated that there will be no future
distributions of net cash flow from operations. All future distributions of net
cash from sales proceeds will be distributed, to the extent available, 100% to
the limited partners until there has been a return of the limited partner's
capital contribution plus an amount sufficient to provide a 7%, not compounded,
return on their adjusted capital contributions for all years following the
termination of the offering of the units. It is anticipated that there will not
be sufficient cash flow from the sale of the Partnership's remaining properties
to provide this return to the limited partners.
The gain on the sale of the properties will be allocated in the same
proportions as distributions of distributable cash from sale proceeds
(anticipated to be 100% to the limited partners). In the event there is no
distributable cash from sale proceeds, taxable income will be allocated 87% to
the limited partners and 13% to the general partners. Any tax loss arising from
a sale will be allocated 97% to the limited partners and 3% to the general
partners. The above is subject to tax laws that were applicable at the time of
the formation of the Partnership and may be adjusted due to subsequent changes
in the Internal Revenue Code.
ITEM 6: SELECTED FINANCIAL DATA
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At or for the years ended December 31,
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2002 2001 2000 1999 1998
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Balance sheet data
Net rental property $ 8,073,296 12,905,193 12,902,052 13,350,614 14,015,558
Total assets 9,196,400 13,826,176 13,885,786 14,444,783 15,106,049
Mortgage loans payable 6,337,228 11,661,131 11,783,657 11,893,713 11,392,501
Partners' equity (deficit) 791,467 (26,884) 642,321 1,535,019 2,225,574
=========================================================================
Operating data
Rental income 3,250,092 3,935,066 4,016,788 4,112,626 3,873,839
Other income 320,936 279,387 235,859 306,725 337,083
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Total revenue 3,571,028 4,214,453 4,252,647 4,419,351 4,210,922
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Property operating costs 2,948,185 2,975,319 2,853,456 2,601,748 2,597,419
Depreciation -- -- 521,290 761,550 723,579
Interest expense 1,039,007 1,129,347 1,151,708 1,141,622 1,214,669
Administrative expenses 696,913 831,885 721,056 648,615 778,943
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Total expenses 4,684,105 4,936,551 5,247,510 5,153,535 5,314,610
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Loss before gain on sale of
properties and equity in joint
venture operations (1,113,077) (722,098) (994,863) (734,184) (1,103,688)
Gain on sale of properties 1,797,168 -- -- -- --
Equity in joint venture operations 134,260 52,893 102,165 43,629 (111,443)
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Net income (loss) $ 818,351 (669,205) (892,698) (690,555) (1,215,131)
=========================================================================
Cash flow data
Net cash provided (used) by:
Operating activities (860,011) (63,983) (71,141) (451,048) 250,131
Investing activities 6,381,641 103,443 62,272 233,394 138,113
Financing activities (5,323,903) (122,526) (110,056) 394,456 (300,693)
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Net increase (decrease) in cash
and equivalents $ 197,727 (83,066) (118,925) 176,802 87,551
=========================================================================
Per limited partnership unit:
Net income (loss) $ 3.90 (4.10) (5.50) (4.26) (7.49)
=========================================================================
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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Effective January 1, 2001, the Partnership's four apartment complexes
and commercial property (Inducon Columbia), have actively been marketed for
sale. On August 28, 2002, the partnership sold Beaver Creek Apartments to an
unaffiliated entity for cash of $2,320,000 and a $350,000 three-year promissory
note from the purchaser, resulting in a net gain of $776,434. Additionally, on
October 31, 2002 the Partnership sold Countrybrook Estates to an unaffiliated
entity for $5,200,000. After satisfaction of the $3,900,000 mortgage loan on the
property and payment of closing costs, the net gain amounted to approximately
$1,020,000. There was no distribution in 2002, 2001 or 2000. In accordance with
the settlement of the lawsuit (Item 3) it is anticipated that with the sale of
the remaining properties, the Partnership may be in a position to make
distributions to the limited partners. These distributions will be reduced by
the amount of fees payable to the plaintiffs' legal counsel in connection with
the settlement agreement (Item 3), any outstanding liabilities and any mortgage
prepayment penalties incurred with regard to the sale of the Partnership's
properties.
Limited partners should be aware that it is possible that they will
receive an allocation of income from gain on sale of properties on which they
will be required to pay income taxes and there is no assurance that
distributions from the sale of the properties will be sufficient to satisfy
these obligations.
Except as described above and in the consolidated financial statements,
the general partner is not aware of any trends or events, commitments or
uncertainties that may impact liquidity in a material way.
Results of Operations:
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The results of operations of the Partnership for the year ended
December 31, 2002, before equity in earnings from joint ventures and a gain on
sale of properties, excluding Beaver Creek and Countrybrook (the "Sold Assets"),
produced a net loss of $740,767. Effective January 1, 2001, management began
formally marketing all properties in the Partnership for sale, therefore, the
properties were not depreciated in 2002 and 2001. Excluding the Sold Assets and
depreciation, the results of operations, before equity in earnings from joint
ventures, were a net loss of $472,037 in 2001 and net loss of $473,573 in 2000.
Inflation has been consistently low during the periods presented in the
consolidated financial statements and, as a result, has not had a significant
effect on the operations of the Partnership or its properties.
2002 as compared to 2001
- ------------------------
Rental income at the properties, excluding Beaver Creek and
Countrybrook (the "Sold Assets"), which were sold during the year 2002,
decreased approximately 10% for the year ended December 31, 2002 as compared to
2001. Excluding the Sold Assets, rental income decreased approximately $251,000
for the same period. This was due mainly to increased vacancies at Pomeroy Park
of $157,000, $19,000 at Stonegate Townhouses and $22,000 at Inducon Columbia,
and increased concessions of $38,000 at Stonegate Townhouses.
Excluding the Sold Assets, total expenses decreased $2,000 as property
operation expenses increased $71,000, other administrative expenses decreased
$67,000 and other expenses decreased $6,000. The increase in property operating
costs was due mainly to an increase in repairs and insurance on all properties
6
partially offset by decreases in utility costs The decrease in other
administrative expenses was primarily attributable to an increase in advertising
offset by a decrease in legal fees. The increase in administrative expense to
affiliates was primarily for professional fees.
2001 as compared to 2000
- ------------------------
Rental income decreased approximately $82,000 for the year ended
December 31, 2001 as compared to 2000. Rental income decreased approximately
$105,000 and $51,000 at Countrybrook and Inducon Columbia, respectively, with
the largest decrease at Countrybrook, resulting from a decrease in occupancy
from 84% at December 31, 2000 to 78% at December 31, 2001. This decrease was
offset by an increase in rental income at Beaver Creek of approximately $56,000
and other minor increases at the other properties. Other income increased by 18%
in 2001 due primarily to an increase in security deposit forfeitures and late
charge fees at Pomeroy Park of approximately $16,000 and $12,000, respectively,
and an increase in termination fees of approximately $16,000 at Stonegate
Townhouses.
Total expenses, excluding depreciation, increased approximately 4% for
the year ended December 31, 2001. Property operations increased approximately
$124,000 due primarily to increases in utility expense of approximately $69,000,
$46,000 and $16,000 at Pomeroy Park, Countrybrook and Inducon Columbia,
respectively, offset by a decrease in cable expense of $27,000 at Stonegate
Townhouses, and an increase in real estate taxes for Countrybrook of
approximately $18,000 due to an increase in its tax assessment. Other
administrative expense increased approximately 11% due to increased legal fees.
Administrative expense to affiliated parties increased 20% because of an
allocation revision. Interest expense to affiliated parties decreased
approximately $16,000 from 2000 to 2001 due to interest no longer being accrued
on $481,598 of the payable to affiliated parties in compliance with the
settlement of the lawsuit (Item 3).
Joint Venture
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The Research Triangle Industrial Park Joint Venture experienced 100%
occupancy in 2002. Its net income increased 5% for the year. Rental income
increased approximately 8% in 2002 due to the sole tenant of Research Triangle
renewing their lease. Total expenses increased 9% mainly due to legal fees and
commissions from the lease renewal. Because the joint venture has had net income
during each of the last three year, the Partnership's 50% equity has enabled the
Partnership to receive cash distributions from the Venture of $108,000 in 2002,
$104,500 in 2001, and $135,000 in 2000.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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The Partnership invests only in short term money market instruments, in
amounts in excess of daily working cash requirements. The rates of earnings on
those investments increase or decrease in line with the general movement of
interest rates. The mortgage loans on the Partnership's properties are fixed
rate and therefore, are not subject to market risk.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Listed under Item 15 of this report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
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PART III
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ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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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 December 31, 2002, are listed below. Each
director is subject to election on an annual basis.
Title of All Positions Held with
Name the Corporate General Partner Year First Elected to Position
- ---- ----------------------------- ------------------------------
Joseph M. Jayson Chairman of the Board, President 1979
and Treasurer
Judith P. Jayson Vice President and Director 1979
Joseph M. Jayson and Judith P. Jayson are married to each other.
The Directors 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 64, is Chairman, Director and sole stockholder of
J. M. Jayson and Company, Inc. and certain of its affiliated companies: U.S.
Apartments LLC, Westmoreland Capital Corporation, Oilmark Corporation and U.S.
Energy Development Corporation. In addition, Mr. Jayson is Chairman of Realmark
Corporation, Chairman, President and Treasurer of Realmark Properties, Inc.,
wholly-owned subsidiaries of J. M. Jayson and Company, Inc. and co-general
partner of Realmark Property Investors Limited Partnership, Realmark Property
Investors Limited Partnership-II, Realmark Property Investors Limited
Partnership-III, Realmark Property Investors Limited Partnership-IV, Realmark
Property Investors Limited Partnership-V, Realmark Property Investors Limited
Partnership-VI A, and Realmark Property Investors Limited Partnership-VI B. Mr.
Jayson has been in the real estate business for the last 40 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 40 years been engaged in various aspects
of real estate brokerage and investment. He brokered residential properties from
1962 to 1964, commercial 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 with forming over 30 real estate related limited partnerships. For
the past 21 years, Mr. Jayson and an affiliate have also engaged in
developmental drilling for gas and oil.
Judith P. Jayson, age 62, is currently Vice President and a 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 31 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.
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ITEM 11: EXECUTIVE COMPENSATION
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No direct remuneration was paid or payable by the Partnership to
directors and officers (since it has no directors or officers), 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
year ended December 31, 2002. The Corporate General Partner and its affiliate,
Realmark Corporation, are entitled to fees and to certain expense reimbursements
with respect to Partnership operations, as set forth in Item 13 hereof and in
the notes to the consolidated financial statements.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
No person is known to the Partnership to own of record or beneficially,
more than 5% of the units of limited partnership interests of the Partnership,
except for affiliates of the general partners that own 9,838.4 units of limited
partnership interest amounting to approximately 6.2% of the Partnership interest
at December 31, 2002. The general partners and the executive officers of the
Corporate General Partners, as of December 31, 2002, owned 90 units of limited
partnership interest. The general partners and affiliates will receive their
proportionate share, as limited partners, of any distributable proceeds from the
sale of the properties.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The properties of the Partnership and its subsidiaries are managed
by Realmark Corporation, an affiliate of the Partnership's corporate general
partner, for a fee of generally 5% of annual net rental income of the
properties. Realmark Corporation and the Corporate General Partner are also
reimbursed for disbursements made on behalf of the Partnership. Those
transactions are further described, and quantified, in the note to the
consolidated financial statements entitled "Related Party Transactions".
ITEM 14: CONTROLS AND PROCEDURES
- -------- -----------------------
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. There have been no 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.
9
PART IV
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ITEM 15: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
- -------- ------------------------------------------------------------------
(a) Consolidated Financial Statements Page
--------------------------------- ----
Independent Auditor's Report F-1
Consolidated Balance Sheets as of December 31, 2002 and 2001 F-2
Consolidated Statements of Operations for the years ended
December 31, 2002, 2001 and 2000 F-3
Consolidated Statements of Partners' Equity for the years
ended December 31, 2002, 2001 and 2000 F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000 F-5
Notes to Consolidated Financial Statements F-6
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated Depreciation F-16
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or the notes thereto.
(b) Reports on Form 8-K
-------------------
On November 13, 2002, the Partnership filed Form 8-K with the
Securities and Exchange Commission which under Item 2 reported the
sale, on October 31, 2002, of Countrybrook Estates. The property was
sold to an unaffiliated entity, for $5,200,000, resulting in a net gain
of approximately $1,020,000.
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(c) Exhibits
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2. Plan of acquisition, reorganization, arrangement, liquidation,
or succession
(a) Stipulation of Settlement Agreement dated August 29,
2001 is incorporated herein by reference.
(b) Order and Final Judgment Approving Settlement and
Awarding Fees and Expenses dated November 29, 2001 is
incorporated herein by reference.
4. Instruments defining the rights of security holders, including
indentures.
(a) Amended and Restated Certificate and Agreement of
Limited Partnership filed with the Registration
Statement of the Registrant Form S-11, filed September
30, 1987, and subsequently amended, incorporated herein
by reference.
10. Material contracts.
(a) Property Management Agreement with Realmark Corporation
included with the Registration Statement, Form S-11, of
the Registrant as filed and amended to date,
incorporated herein by reference.
(b) Property sales agreements with unrelated third-parties
included with the Partnership's reports on Form 8-K on
September 12, 2002 and November 13, 2002 are
incorporated herein by reference.
(c) Property sales agreements with unrelated third-parties
dated January 29, 2003 and February 9, 2003 are filed
herewith.
99. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is
filed herewith.
11
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 March 31, 2003
----------------------------------- --------------
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 March 31, 2003
-------------------- --------------
JOSEPH M. JAYSON, Date
President, Treasurer and Director
/s/ Judith P. Jayson March 31, 2003
-------------------- --------------
JUDITH P. JAYSON, Date
Vice President and Director
12
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph M Jayson, Individual General Partner and Principal Financial Officer
of Realmark Property Investors Limited Partnership - VI A, hereby certify that:
1. I have reviewed this annual report on Form 10-K of Realmark Property
Investors Limited Partnership - VI A;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of circumstances under
which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this annual report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the Partnership and I have:
a. Designed such disclosure controls and procedures to ensure the
material information relating to the Partnership, including its
consolidated subsidiary, is made known to me by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. Evaluated the effectiveness of the Partnership's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c. Presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
Partnership's auditors and the audit committee of the board of
directors (or persons performing the equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the Partnership's ability to
record, process, summarize and report financial data and have
weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal controls; and
6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
March 31, 2003 /s/ Joseph M. Jayson
-------------- --------------------
Date Joseph M. Jayson
Individual General Partner and
Principal Financial Officer
13
INDEPENDENT AUDITOR'S REPORT
----------------------------
The Partners
Realmark Property Investors Limited
Partnership - VI A:
We have audited the accompanying consolidated balance sheets of Realmark
Property Investors Limited Partnership - VI A and Subsidiaries as of December
31, 2002 and 2001, and the related consolidated statements of operations,
partners' equity, and cash flows for each of the three years in the period ended
December 31, 2002. Our audits also included the financial statement schedule
listed in the index at Item 15. These consolidated financial statements and
financial statement schedule are the responsibility of the general partners. Our
responsibility is to express an opinion on the consolidated financial statements
and the financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Realmark Property
Investors Limited Partnership - VI A and Subsidiaries as of December 31, 2002
and 2001, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the 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.
As discussed in note 10 to the consolidated financial statements, the
Partnership settled a class and derivative lawsuit in which it was involved. As
a result of this settlement, the Partnership is currently in the process of
winding up its operations and disposing of its investments. It is anticipated
that this process will take place within the next twelve months.
TOSKI, SCHAEFER & CO., P.C.
Williamsville, New York
March 25, 2003
F-1
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2002 and 2001
Assets 2002 2001
------ ---- ----
Property and equipment, at cost, all held for sale:
Land and improvements $ 957,776 2,159,398
Buildings and improvements 11,569,936 17,472,132
Furniture and equipment 464,104 1,111,674
------------ ------------
12,991,816 20,743,204
Less accumulated depreciation 4,918,520 7,838,011
------------ ------------
Net property and equipment 8,073,296 12,905,193
Cash and equivalents 260,089 62,362
Note receivable 348,234 --
Escrow deposits 321,393 478,414
Deferred mortgage costs, net of accumulated amortization of
$282,008 in 2002 and $348,660 in 2001 116,133 303,339
Other assets 77,255 76,868
------------ ------------
Total assets $ 9,196,400 13,826,176
============ ============
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable 6,337,228 11,661,131
Accounts payable and accrued expenses 371,557 634,972
Accrued interest payable 49,882 104,363
Payable to affiliated parties 1,341,811 1,043,895
Security deposits and prepaid rents 158,500 236,484
------------ ------------
Total liabilities 8,258,978 13,680,845
------------ ------------
Losses of unconsolidated joint ventures in excess of investment,
net of unamortized excess purchase price of $137,463 in 2002
and $146,663 in 2001 145,955 172,215
Partners' equity (deficit):
General partners (202,943) (407,211)
Limited partners 994,410 380,327
------------ ------------
Total partners' equity (deficit) 791,467 (26,884)
------------ ------------
Total liabilities and partners' equity $ 9,196,400 13,826,176
============ ============
See accompanying notes to consolidated financial statements
F-2
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2002, 2001 and 2000
2002 2001 2000
---- ---- ----
Income:
Rental $ 3,250,092 3,935,066 4,016,788
Interest and other income 320,936 279,387 235,859
----------- ----------- -----------
Total income 3,571,028 4,214,453 4,252,647
----------- ----------- -----------
Expenses:
Property operations 2,948,185 2,975,319 2,853,456
Interest:
Affiliated parties 89,661 28,227 44,101
Other 949,346 1,101,120 1,107,607
Depreciation -- -- 521,290
Administrative:
Affiliate parties 415,566 447,357 373,572
Other 281,347 384,528 347,484
----------- ----------- -----------
Total expenses 4,684,105 4,936,551 5,247,510
----------- ----------- -----------
Loss before gain on sale of property and
equity in earnings of joint ventures (1,113,077) (722,098) (994,863)
Gain on sale of property 1,797,168 -- --
Equity in earnings of joint ventures 134,260 52,893 102,165
----------- ----------- -----------
Net income (loss) $ 818,351 (669,205) (892,698)
=========== =========== ===========
Net income (loss) per limited partnership unit $ 3.90 (4.10) (5.50)
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 157,378 157,378 157,378
=========== =========== ===========
See accompanying notes to consolidated financial statements
F-3
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Consolidated Statements of Partners' Equity
Years Ended December 31, 2002, 2001 and 2000
General Limited Partners
Partners Units Amount
-------- ----- ------
Balances at December 31, 1999 (355,728) 157,378 1,890,747
Net loss (26,781) -- (865,917)
---------- ---------- ----------
Balances at December 31, 2000 (382,509) 157,378 1,024,830
Net loss (24,702) -- (644,503)
---------- ---------- ----------
Balances at December 31, 2001 (407,211) 157,378 380,327
Net income 204,268 -- 614,083
---------- ---------- ----------
Balances at December 31, 2002 $ (202,943) 157,378 994,410
========== ========== ==========
See accompanying notes to consolidated financial statements
F-4
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2002, 2001 and 2000
2002 2001 2000
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 818,351 (669,205) (892,698)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 56,491 59,410 589,513
Equity in earnings of joint ventures (134,260) (54,977) (102,165)
Gain on sale of property (1,797,168) -- --
Changes in:
Accounts receivable -- 6,325 (6,402)
Escrow deposits 106,303 (102,211) (74,915)
Other assets (35,706) 16,161 4,604
Accounts payable and accrued expenses (162,471) 134,931 231,620
Accrued interest payable (37,381) 3,872 (926)
Payable to affiliated parties 297,916 532,691 167,761
Security deposits and prepaid rents 27,914 9,020 12,467
----------- ----------- -----------
Net cash used in operating
activities (860,011) (63,983) (71,141)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of property 6,385,891 -- --
Payments on note receivable 1,766 -- --
Distributions received from joint venture 108,000 106,584 135,000
Additions to property and equipment (114,016) (3,141) (72,728)
----------- ----------- -----------
Net cash provided by investing
activities 6,381,641 103,443 62,272
----------- ----------- -----------
Cash flows from financing activities - principal
payments on mortgage loans (5,323,903) (122,526) (110,056)
----------- ----------- -----------
Net increase (decrease) in cash and equivalents 197,727 (83,066) (118,925)
Cash and equivalents at beginning of year 62,362 145,428 264,353
----------- ----------- -----------
Cash and equivalents at end of year $ 260,089 62,362 145,428
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 929,027 1,033,515 1,041,001
=========== =========== ===========
Note receivable issued for sale of property $ 350,000 -- --
=========== =========== ===========
See accompanying notes to consolidated financial statements
F-5
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2002, 2001 and 2000
(1) Formation and Operation of Partnership
- -------------------------------------------
Realmark Property Investors Limited Partnership-VI A (the Partnership) is a
Delaware limited partnership formed on September 21, 1987, to invest in
a diversified portfolio of income-producing real estate investments.
In 1987 and 1988, the Partnership sold, through a public offering, 157,378
units of limited partnership interest, including 30 units held by an
affiliate of the general partners, for $15,737,790. The general
partners are Realmark Properties, Inc. (the Corporate General Partner)
and Joseph M. Jayson (the Individual General Partner) who 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 (note 6).
(2) Summary of Significant Accounting Policies
- -----------------------------------------------
(a) Basis of Accounting and Consolidation
-----------------------------------------
The accompanying consolidated financial statements have been prepared
on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America and
include the accounts of the Partnership and its four subsidiaries,
that are wholly-owned:
(1) Realmark - Columbia, LLC that owns Inducon-Columbia, a three
building office complex in Columbia, South Carolina, acquired
in 1989 and 1991 for $4,670,991.
(2) Realmark - Beaver, LLC that owns Beaver Creek, an 80 unit
apartment complex located in Monaca, Pennsylvania, acquired in
1989 for $1,879,943 and sold in 2002.
(3) Realmark - Countrybrook, LLC that owns Countrybrook Estates, a
240 unit apartment complex located in Louisville, Kentucky,
acquired in 1989 for $5,670,984 and sold in 2002.
(4) Realmark - Stonegate, LLC that owns Stonegate, a 130 unit
apartment complex located in Mobile, Alabama, acquired in 1990
for $4,145,367.
The Partnership also owns a residential property, Pomeroy Park.
In consolidation, all intercompany accounts and transactions have been
eliminated.
(b) Estimates
-------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
F-6
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
- ----------------------------------------------------------
(c) Property and Equipment
--------------------------
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of
the assets, from 5 to 25 years. Significant improvements are
capitalized, while expenditures for maintenance, repairs and
replacements are charged to expense as incurred. Upon disposal of
depreciable property, the appropriate property accounts are
reduced by the related costs and accumulated depreciation and
gains and losses are reflected in the consolidated statements of
operations.
The Partnership reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable. In determining
whether there is an impairment of long-lived assets, the
Partnership compares the sum of the expected future net cash flows
(undiscounted and without interest charges) to the carrying amount
of the assets. At December 31, 2002, no impairment in value has
been recognized.
The Partnership and its ventures' policy is to consider a property to
be held for sale or disposition when the Partnership or venture
has committed to a plan to sell or dispose of such property and
active marketing activity has commenced or is expected to commence
in the near term or the Partnership or venture has concluded that
it may dispose of the property by no longer funding operating
deficits or debt service requirements of the property thus
allowing the lender to realize upon its security. Any properties
identified as "held for sale or disposition" are no longer
depreciated. All the properties were held for sale in 2002 and
2001.
(d) Cash and Equivalents
------------------------
Cash and equivalents include money market accounts and any highly
liquid debt instruments purchased with a maturity of three months
or less.
(e) Deferred Mortgage Costs
---------------------------
Costs incurred in obtaining mortgage financing are deferred and
amortized using the straight-line method over the life of the
respective mortgage.
(f) Unconsolidated Joint Ventures
---------------------------------
The Partnership's investment in Carriage House of Englewood Joint
Venture (which was sold in 2001) and Research Triangle Joint
Venture is in unconsolidated joint ventures which are accounted
for on the equity method. These joint ventures are not
consolidated in the Partnership's financial statements because the
Partnership is not the majority owner.
F-7
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
- ----------------------------------------------------------
(g) Rental Income
-----------------
Rental income is recognized as earned according to the terms of the
leases. Leases for residential properties are generally for
periods of one year or less, payable monthly. Commercial leases
are generally for periods of one to five years. Delinquent
residential property rent is not recorded.
(h) Per Unit Data
-----------------
Per limited partnership unit data is based on the weighted average
number of limited partnership units outstanding for the year.
(i) Fair Value of Financial Instruments
---------------------------------------
The fair value of the Partnership's financial instruments approximated
their carrying values at December 31, 2002.
(j) Income Allocation and Distributable Cash Flow
-------------------------------------------------
The partnership agreement provides that income not arising from sale
and refinancing activities and all partnership losses are to be
allocated 97% to the limited partners and 3% to the general
partners. Partnership income arising from sale or refinancing
activities is allocated in the same proportion as distributions or
distributable cash from sale proceeds. In the event there is no
distributable cash from sale proceeds, taxable income will be
allocated 87% to the limited partners and 13% to the general
partners. The above is subject to tax laws that were applicable at
the time of the formation of the Partnership and may be adjusted
due to subsequent changes in the Internal Revenue Code.
The partnership agreement also provides for the distribution to the
partners of net cash flow from operations. In connection with the
pending sale of the Partnership's properties (note 10), it is
anticipated that there will be no future distributions of net cash
flow from operations. Sale or refinancing proceeds are distributed
to the extent available, 100% to the limited partners until there
has been a return of the limited partner's capital contribution
plus an amount sufficient to provide a 7%, not compounded, return
on their adjusted capital contributions for all years following
the termination of the offering of the units. It is anticipated
that there will not be sufficient cash flow from the sale of the
Partnership's remaining properties to provide this return to the
limited partners. There were no distributions to partners made in
2002, 2001 or 2000.
(k) Income Taxes
----------------
No income taxes are included in the consolidated financial statements
since the taxable income or loss of the Partnership is reportable
by the partners on their income tax returns. At December 31, 2002,
net assets for financial reporting purposes were $1,059,000 less
than the tax bases of the net assets.
F-8
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
- ----------------------------------------------------------
(l) Segment Information
-----------------------
The Partnership's operating segments all involve the ownership and
operation of income-producing real property, and are aggregated
into one reporting segment.
(m) Recent Pronouncements
-------------------------
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143,
"Accounting for Asset Retirement Obligations." Under SFAS No. 143,
the fair value of a liability for an asset retirement obligation
must be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying
amount of the related long-lived asset. SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, 64, Amendment of FASB Statement No. 13, and
Technical Corrections." SFAS No. 145 eliminates extraordinary
accounting treatment for reporting a gain or loss on debt
extinguishments and amends other existing authoritative
pronouncements to make various technical corrections, clarify
meanings, and describe applicability under changed conditions.
Debt extinguishments reported as extraordinary items prior to
scheduled adoption of SFAS No. 145 would be reclassified in most
cases following adoption. SFAS No. 145 is effective for fiscal
years beginning after May 15, 2002.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146
requires the recording of costs associated with exit or disposal
activities at their fair values when a liability has been
incurred. Under previous guidance, certain exit costs were accrued
upon management's commitment to an exit plan, which is generally
before an actual liability has been incurred. SFAS No. 146 is
effective for fiscal years beginning after December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an
Amendment of SFAS No. 123." SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation.
In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method
used on reported results.
The Partnership does not believe that these pronouncements will have a
material impact on its financial position, cash flows, or results
of operations.
F-9
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3) Investments in Real Estate
- -------------------------------
On January 1, 2002, the Partnership adopted SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 144
establishes the accounting and reporting standards for the impairment
or disposal of long-lived assets by requiring those assets to be
measured at the lower of depreciated cost or fair value less selling
costs, whether reported on continuing operations or in discontinued
operations. This standard does not change the fundamental provisions of
SFAS No. 121; however, it resolves various implementation issues of
SFAS No. 121. The adoption of this standard did not have a material
effect on the Partnership's consolidated financial position or results
of operations for the year ended December 31, 2002.
On October 31, 2002, the Partnership sold Countrybrook Estates to an
unaffiliated entity for $5,200,000 and recognized a related gain on the
sale amounting to $1,020,734.
On August 28, 2002 the Partnership sold Beaver Creek Apartments to an
unaffiliated entity for cash of $2,320,000 and a $350,000 note from the
purchaser (note 4), and recognized a related gain on the sale amounting
to $776,434.
All of the properties were classified as property held for sale prior to
the adoption of SFAS No. 144 and continue to be actively marketed for
sale. Accordingly, their results of operations have been recorded in
continuing operations.
The carrying value of the assets as of December 31, 2002, and the
properties net income or loss and depreciation expense not recorded for
the year ended December 31, 2002 are as follows:
Depreciation
Carrying value Net income expense not
Property of assets (loss) recorded
-------- --------- ------ --------
Inducon - Columbia 2,832,038 20,840 143,253
Stonegate Townhouses 2,649,153 (11,843) 163,438
Pomeroy Park 2,592,105 (361,955) 113,767
========= ======= =======
(4) Note Receivable
- -------------------
In connection with the sale of Beaver Creek Apartments on August 28, 2002,
the Partnership received a note from the purchaser amounting to
$350,000. The note is secured by a second mortgage on Beaver Creek
Apartments and a first mortgage on a home in Beaver, Pennsylvania. The
first $250,000 of the note bears interest at the rate of 7.5% annually
and is payable in monthly installments of $2,000 through August 28,
2005, at which time the remaining unpaid principal and any accrued
interest are due and payable. The remaining $100,000 of the note is
non-interest bearing and is due on August 28, 2005. However, the
payment of the $100,000 may be extended for up to 2 years by the
purchaser. If extended, the $100,000 of the note will bear interest at
7.5% annually.
F-10
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) Mortgage Loans Payable
- ---------------------------
Mortgage loans payable are as follows:
Total Balance
Interest monthly December 31,
Property collateral rate Maturity payment 2002 2001
------------------- ---- -------- ------- ---- ----
Countrybrook Estates 7.89% 2029 $ 29,044 $ -- 3,930,585
Inducon - Columbia 7.86% 2022 16,787 2,035,320 2,072,788
Stonegate Townhouses 8.43% 2027 20,207 2,534,046 2,558,790
Beaver Creek 8.23% 2027 10,137 -- 1,304,209
Pomeroy Park 12.00% 2003 19,750 1,767,862 1,794,759
======== ----------- -----------
$ 6,337,228 11,661,131
=========== ===========
The aggregate maturities of the mortgages for each of the five years
following 2002 and thereafter, assuming principal payments will not be
accelerated, are as follows:
2003 $ 1,840,708
2004 78,969
2005 85,608
2006 92,807
2007 100,611
Thereafter 4,138,525
-------------
$ 6,337,228
=============
(6) Related Party Transactions
- -------------------------------
The Corporate General Partner and its affiliates earn fees, principally for
property and partnership management and are reimbursed for services
rendered to the Partnership, as provided for in the partnership
agreement. A summary of those items follows:
2002 2001 2000
---- ---- ----
Property management fees based on a percent-
age (generally 5%) of rental income $ 165,912 190,803 198,353
Reimbursement for cost of services to the Partnership
that include investor relations, marketing of
properties, professional fees, communications,
supplies, accounting, printing, postage and
other items 249,654 256,554 175,219
---------- ------- -------
$ 415,566 447,357 373,572
========== ======= =======
In addition to the above, other properties specific expenses such as
payroll, benefits, etc. are charged to property operations on the
Partnership's consolidated statements of operations. Payables to
affiliated parties are on demand and bear interest at 11%.
F-11
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6) Related Party Transactions, Continued
- ------------------------------------------
Property Disposition Fees
-------------------------
The general partners are also allowed to collect a property disposition fee
upon 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
payments to the limited partners of a cumulative annual return (not
compounded) equal to 7% of their average adjusted capital balances and
to repayment to the limited partners of an amount equal to their
original capital contributions. Since these conditions described above
have not been met, no disposition fees have been paid or accrued on
properties sold in prior years.
(7) Investments in Joint Ventures
- ----------------------------------
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 Eaglewood Apartments,
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 investments in the venture,
$74,813, was charged to equity in joint venture operations during 2001.
The Partnership also has a 50% interest in a joint venture with Realmark
Property Investors Limited Partnership-II (RPILP-II), an entity
affiliated through common general partners. The venture owns and
operates the Research Triangle Industrial Park West, an
office/warehouse facility located in Research Triangle Park, North
Carolina. The joint venture agreement provides that any income, loss,
gain, cash flow, or sale proceeds be allocated 50% to the Partnership
and 50% to RPILP-II.
Summary financial information for the Venture follows:
Balance Sheet Information
-------------------------
December 31,
Assets 2002 2001
------ ---- ----
Property, net of accumulated depreciation $ 1,473,368 1,473,368
Cash and equivalents 34,606 55,158
Escrow deposits 861,615 876,539
Other assets 272,481 252,727
----------- ----------
Total assets $ 2,642,070 2,657,792
=========== ==========
F-12
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Investments in Joint Ventures, Continued
- ---------------------------------------------
December 31,
------------
Liabilities and Partners' Deficit 2002 2001
--------------------------------- ---- ----
Liabilities:
Mortgage loan payable $ 5,161,824 5,254,865
Accounts payable and accrued expenses 140,633 134,234
----------- -----------
Total liabilities 5,302,457 5,389,099
----------- -----------
Partners' deficit:
The Partnership (1,429,609) (1,465,069)
RPILP-II (1,230,778) (1,266,238)
----------- -----------
Total partners' deficit (2,660,387) (2,731,307)
----------- -----------
Total liabilities and partners' deficit $ 2,642,070 2,657,792
=========== ===========
Operating Information
---------------------
Years ended December 31,
------------------------
2002 2001 2000
---- ---- ----
Income:
Rental $ 975,220 899,322 1,026,251
Other 5,335 11,812 13,456
--------- --------- ---------
Total income 980,555 911,134 1,039,707
--------- --------- ---------
Expenses:
Property operations 178,923 127,047 133,400
Interest 433,798 442,817 450,766
Depreciation -- -- 100,518
Administrative:
Affiliated parties 54,867 47,449 67,413
Other 26,047 20,009 10,992
--------- --------- ---------
Total expenses 693,635 637,322 763,089
--------- --------- ---------
Net income $ 286,920 273,812 276,618
========= ========= =========
Allocation of net income:
The Partnership 143,460 136,906 138,309
RPILP-II 143,460 136,906 138,309
--------- --------- ---------
Total $ 286,920 273,812 276,618
========= ========= =========
F-13
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Investments in Joint Ventures, Continued
- ---------------------------------------------
A reconciliation of the Partnership's investment in the Research Triangle Joint
Venture is as follows:
2002 2001 2000
---- ---- ----
Investment in joint venture at beginning of year $(172,215) (195,421) (189,530)
Distributions from joint venture (108,000) (104,500) (135,000)
Amortization of excess purchase price (9,200) (9,200) (9,200)
Allocation of net income 143,460 136,906 138,309
--------- --------- ---------
Losses in excess of investment in joint venture
at end of year $(145,955) (172,215) (195,421)
========= ========= =========
(8) Leases (Lessee)
- --------------------
In connection with the development of property in Columbia, South
Carolina, the Partnership entered into an operating lease with the
Richland-Lexington Airport District for a period of sixty years, at
$89,000 per year. In August of 2002, the lease was renegotiated with
terms to recover amounts owing from 2001. The base amount of monthly
rent was reduced to $58,760 per year. The amended lease provides that
effective January 1, 2007 and each successive five year period
throughout the remainder of the agreement, the rental rate shall
increase by 5%. The lease covers nine acres located within the
boundaries of the Columbia Metropolitan Airport in an area designated
as a Foreign Trade Zone. The lease agreement includes an option to
lease 5.5 acres of land. The terms of the lease agreement allow for the
lessor to cancel the lease if the lessee (the Partnership) fails to
make payment of the agreed upon rental within 30 days after receipt of
written notice from the lessor that the rental payment is past due.
(9) 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
---- ------
2003 $ 531,407
2004 507,900
2005 440,353
2006 358,771
2007 267,354
===========
F-14
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10) Settlement of Lawsuit
- ---------------------------
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 at the state court level
regarding the payment of fees and other management issues.
On August 29, 2001, the parties entered into a Stipulation of Settlement
(the "Settlement"). On October 4, 2001, the Court issued an "Order
Preliminarily Approving Settlement" (the "Hearing Order") and on
November 29, 2001, the court issued an "Order and Final Judgment
Approving Settlement and Awarding Fees and Expenses" and dismissing the
complaints with predjudice. The Settlement provided, among other
things, that:
o The payable to the general partners and/or their affiliates by
Realmark Property Investors Limited Partnership VI - A at March 31,
2001, in the amount of $481,598, cease to accrue interest.
o All of the Realmark Partnerships' properties be disposed of. The
general partners will continue to have primary authority to dispose
of the Partnerships' properties. If either (i) the general partners
have not sold or contracted to sell 50% of the Partnerships'
properties (by value) by April 2, 2002 or (ii) the general partners
have not sold or contracted to sell 100% of the Partnerships'
properties by September 29, 2002, then the primary authority to
dispose of the Partnerships' properties will pass to a sales agent
designated by plaintiffs' counsel and approved by the Court. On
October 4, 2002, the Court appointed a sales agent to work with the
general partners to continue to sell the Partnerships' remaining
properties.
The settlement also provided for the payment by the Partnerships of fees to
the plaintiffs' attorneys. These payments, which are not calculable at
this time but may be significant, are payable out of the proceeds from
the sale of all of the properties owned by all of the Realmark
Partnerships, following the sale of the last of these properties in
each partnership. Plaintiffs' counsel will receive 15% of the amount by
which the sales proceeds distributable to limited partners in each
partnership exceeds the value of the limited partnership units in each
partnership (based on the weighted average of the units' trading prices
on the secondary market as reported by Partnership Spectrum for the
period May through June 2001). In no event may the increase on which
the fees are calculated exceed 100% of the market value of the units as
calculated above.
(11) Subsequent Events
- -----------------------
In 2003, the Partnership entered into sales agreements with unaffiliated
parties for the sale of the following:
Agreement Sales Approximate
Property Date Price Taxable Gain
-------- ---- ----- ------------
Pomeroy Park January 29, 2003 $ 3,425,000 665,000
Inducon - Columbia February 9, 2003 3,150,000 --
=========== ============
F-15
Schedule III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Real Estate and Accumulated Depreciation
December 31, 2002
Gross amounts at which
Carried at Close of period
Initial Cost to Cost --------------------------
Partnership capitalized Buildings
Property -------------------------- subsequent to Land and and Accumulated
Description Encumbrances Land Buildings acquisition improvements improvements Total depreciation
- ----------- ------------ ------------ ------------ ----------- ------------ ------------ ----- ------------
Stonegate
Mobile, AL 2,534,046 419,544 3,487,160 323,856 427,494 3,803,066 4,230,560 1,581,407
Pomeroy Park
Tulsa, OK 1,767,862 525,000 2,304,303 615,575 525,000 2,919,878 3,444,878 855,118
Inducon-Columbia
Columbia, SC 2,035,320 -- 1,503,710 3,348,564 5,282 4,846,990 4,852,274 2,020,234
------------ ------- --------- --------- ------- ---------- ---------- ---------
$ 6,337,228 944,544 7,295,173 4,287,995 957,776 11,569,936 12,527,712 4,456,759
============ ======= ========= ========= ======= ========== ========== =========
Research Triangle
J. V.
Raleigh, NC $ 5,161,824 338,112 4,920,738 9,329 338,112 4,930,067 5,268,179 3,794,811
============ ======= ========= ========= ======= ========== ========== =========
(RESTUBBED TABLE)
Life
on which
depreciation
in latest
Date statement of
of Date operations
construction acquired is computed
------------ -------- -----------
Stonegate
Mobile, AL 1985 3/90 -- *
Pomeroy Park
Tulsa, OK 1970 3/91 -- *
Inducon-Columbia
Columbia, SC 1989 5/89 -- *
==== ==== ====
Research Triangle
J. V.
Raleigh, NC 1983 8/92 -- *
==== ==== ====
* In accordance with Statement of Financial Accounting Standards No. 144, no
depreciation was recorded during the disposal period January 1, 2002 through
December 31, 2002.
F-16
Schedule III, Cont.
-------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Real Estate and Accumulated Depreciation
December 31, 2002, 2001 and 2000
(1) Cost for Federal income tax purposes of Partnership properties is
$12,527,712.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 2002, 2001 and 2000 is as follows:
Partnership Properties
----------------------
2002 2001 2000
---- ---- ----
Balance at beginning of year $ 19,631,530 19,631,530 19,563,640
Additions 114,016 -- 67,890
Dispositions (6) 7,217,834 -- --
------------ ------------ ------------
Balance at end of year $ 12,527,712 19,631,530 19,631,530
============ ============ ============
Joint Venture Properties
------------------------
2002 2001 2000
---- ---- ----
Balance at beginning of year $ 5,268,179 8,131,032 8,123,502
Additions -- -- 7,530
Dispositions (5) -- 2,862,853 --
------------ ------------ -----------
Balance at end of year $ 5,268,179 5,268,179 8,131,032
============ ============ ===========
(3) A reconciliation of accumulated depreciation for the years ended
December 31, 2002, 2001 and 2000 is as follows:
Partnership Properties
----------------------
2002 2001 2000
---- ---- ----
Balance at beginning of year $ 6,735,316 6,735,316 6,214,453
Depreciation expense -- -- 520,563
Dispositions (6) 2,278,557 -- --
------------ ------------ -----------
Balance at end of year (4) $ 4,456,759 6,735,316 6,735,316
============ ============ ===========
Joint Venture Properties
------------------------
2002 2001 2000
---- ---- ----
Balance at beginning of year $ 3,794,811 5,391,388 5,290,870
Depreciation expense -- -- 100,518
Dispositions (5) -- 1,596,577 --
------------ ------------ -----------
Balance at end of year (4) $ 3,794,811 3,794,811 5,391,388
============ ============ ===========
(4) Balance applies entirely to buildings and improvements.
(5) Sale of Carriage House of Englewood Apartments in 2001.
(6) Sale of Countrybrook Estates and Beaver Creek Apartments in 2002.
F-17