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 June 30, 2003
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Commission File Number: 0-17466
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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 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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(Unaudited)
June 30, December 31,
2003 2002
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Assets
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Property and equipment, all held for sale $ 9,413,964 12,991,816
Less accumulated depreciation 3,926,642 4,918,520
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5,487,322 8,073,296
Cash and equivalents 1,070,448 260,089
Note receivable 345,500 348,234
Other assets 598,355 514,781
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Total assets $ 7,501,625 9,196,400
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Liabilities and Partners' Equity
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Mortgage loans payable 4,535,783 6,337,228
Accounts payable and accrued expenses 368,968 421,439
Payable to affiliates 799,072 1,341,811
Other liabilities 59,807 158,500
Equity in losses of unconsolidated joint venture
in excess of investment 136,505 145,955
Partners' equity 1,601,490 791,467
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Total liabilities and partners' equity $ 7,501,625 9,196,400
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Condensed Consolidated Statements of Operations
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(Unaudited)
Three months ended June 30, Six months ended June 30,
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2003 2002 2003 2002
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Rental income $ 598,266 873,395 1,145,972 1,786,448
Other income 119,376 101,637 192,785 185,367
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Total income 717,642 975,032 1,338,757 1,971,815
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Property operating costs 450,248 798,028 874,480 1,504,213
Administrative expense - affiliates 70,262 110,648 145,300 220,004
Other administrative expense 60,253 132,324 129,480 193,008
Interest 174,522 272,755 365,015 556,900
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Total expenses 755,285 1,313,755 1,514,275 2,474,125
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Loss before equity in joint venture and gain
on sale of property (37,643) (338,723) (175,518) (502,310)
Equity in earnings of joint venture 22,912 31,720 61,450 55,857
Gain on sale of property 924,091 - 924,091 -
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Net income (loss) $ 909,360 (307,003) 810,023 (446,453)
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Net income (loss) per limited partnership unit $ 5.02 (1.89) 4.41 (2.75)
================= ================ ================= ================
Weighted average limited partnership units
outstanding 157,378 157,378 157,378 157,378
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
Six months ended June 30,
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2003 2002
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Cash provided (used) by:
Operating activities:
Net income (loss) $ 810,023 (446,453)
Adjustments:
Gain on sale of property (924,091) -
Other, principally changes in other assets and liabilities (36,336) 526,644
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Net cash provided by (used in) operating activities (150,404) 80,191
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Investing activities:
Net proceeds from sale of property 2,715,340 -
Distributions from joint venture 53,000 43,000
Additions to property and equipment (6,132) (9,370)
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Net cash provided by investing activities 2,762,208 33,630
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Financing activities - principal payments on mortgage loans (1,801,445) (67,351)
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Net increase in cash and equivalents 810,359 46,470
Cash and equivalents at beginning of period 260,089 62,362
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Cash and equivalents at end of period $ 1,070,448 108,832
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Notes to Consolidated Financial Statements
Six months ended June 30, 2003 and 2002
(Unaudited)
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 unaudited interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the instructions to Form 10-Q. Accordingly, they do
not include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial
statements. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation, have been included. The Partnership's significant
accounting policies are set forth in its December 31, 2002 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.
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Property and Equipment
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At June 30, 2003, the Partnership owned and operated one apartment complex and
one commercial property. It also has interests in a joint venture, as described
below. All of the Partnership and venture properties are being marketed for
sale, and, therefore, are not depreciated. Depreciation expense not recorded for
the three and six month periods ended June 30, 2003 was approximately $105,000
and $210,000, respectively. Depreciation expense not recorded for the three and
six month periods ended June 30, 2002 was approximately $168,000 and $336,000,
respectively.
Investment in Research Triangle Industrial Park Joint Venture
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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 Research Triangle Industrial Park West, an
office/warehouse facility located in Durham County, North Carolina. Summary
financial information of the Venture follows.
Balance Sheet Information
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June 30,
2003 December 31, 2002
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Net property, held for sale $ 1,473,368 1,473,368
Cash and equivalents 6,308 34,606
Escrow deposits 882,514 861,615
Other assets 262,930 272,481
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Total assets $ 2,625,120 2,642,070
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Liabilities:
Mortgage loan payable 5,111,810 5,161,824
Accounts payable and accrued expenses 145,597 140,633
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5,257,407 5,302,457
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Partners' deficit:
The Partnership (1,415,559) (1,429,609)
RPILP - II (1,216,728) (1,230,778)
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(2,632,287) (2,660,387)
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Total liabilities and partners' deficit $ 2,625,120 2,642,070
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Operating Information
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Three months ended June 30, Six months ended June 30,
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2003 2002 2003 2002
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Rental income $ 199,500 199,907 399,000 361,646
Other 50,773 47,283 98,717 94,988
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Total income 250,273 247,190 497,717 456,634
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Property operating costs 73,900 42,033 115,996 80,293
Interest 106,856 108,276 213,149 216,405
Administrative 19,093 28,841 36,472 39,022
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Total expenses 199,849 179,150 365,617 335,720
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Net income $ 50,424 68,040 132,100 120,914
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Allocation of net income:
The Partnership 25,212 34,020 66,050 60,457
RPILP - II 25,212 34,020 66,050 60,457
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$ 50,424 68,040 132,100 120,914
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Current Accounting Pronouncements
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Statements of Financial Accounting Standards (SFAS) Nos. 145, 146, 147, and 148
which concern accounting for gains and losses from the extinguishments of debt,
exit or disposal activities, acquisitions of certain financial institutions, and
accounting for stock-based compensation, respectively, became effective for the
Partnership on January 1, 2003 and did not have any effect on the Partnership's
consolidated financial statements.
In April 2003, the Financial Accounting Standards Board issued SFAS No. 149
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
This statement is effective for contract and hedging relationships entered into
or modified after June 30, 2003. In May 2003, the Financial Accounting Standards
Board issued SFAS No. 150 "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equities." This statement is effective
for financial instruments entered into or modified after May 31, 2003 and is
effective for all other financial instruments as of the first interim period
beginning after June 15, 2003. The Partnership does not believe that either
statement will have a material impact on its consolidated financial statements.
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities." The Partnership does not
believe that the Interpretation will have a material impact on its consolidated
financial statements.
Subsequent Event
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In its December 31, 2002 Form 10-K and its March 31, 2003 Form 10-Q, the
Partnership reported the existence of a contingent $3,150,000 sales agreement
covering one of its Properties, Inducon Columbia. On July 31, 2003, the sale was
consummated with an unaffiliated entity, International Trade Zone, LLC, for cash
of $3,150,000, resulting in a net loss of approximately $80,000. After
satisfaction of the $2,012,000 mortgage loan on the property and payment of
closing costs, net cash proceeds available amounted to approximately $1,075,000
before satisfaction of any remaining obligations related to the property. All
relevant comparisons and disclosures are made in the July 31, 2003 Form 8-K
filed on August 13, 2003.
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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Effective January 1, 2001, management began formally marketing all remaining
properties in the Partnership for sale. The Partnership sold two of its
properties (Beaver Creek and Countrybrook) during 2002, and on June 30, 2003
sold another property (Pomeroy Park). For the first six months of 2003, the
partnership experienced difficulties generating sufficient operating funds,
however, with the sale of Pomeroy Park, the Partnership generated enough cash to
begin to repay affiliate borrowings and cover its other obligations. The total
amount payable to affiliates decreased approximately $543,000 during the six
months ended June 30, 2003. There have been no distributions to the partners for
at least the past six years. In accordance with the settlement of the lawsuit
(Part II, Item 1), 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.
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Results of Operations
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Excluding Pomeroy Park, the Partnership's operations produced an operating gain
of approximately $10,000 for the six months ended June 30, 2003. Comparable pro
forma results for the same 2002 period (excluding Beaver Creek, Countrybrook and
Pomeroy Park) would be an operating loss of $209,000.
Income at the properties (excluding Pomeroy Park) increased approximately
$94,000 for the first six months of 2003 as compared to 2002. This was due
mainly to decreased vacancies at Inducon Columbia of approximately $100,000 and
Stonegate of approximately $8,000. Property operating costs (excluding Pomeroy
Park) decreased $5,000 mainly due to decreased contracted services and Inducon
Columbia's land lease expense. The $57,000 decrease in other administrative
expense (excluding Pomeroy Park) was primarily attributable to a decrease in
legal fees. The $35,000 decrease 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 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 general movement of interest
rates. The mortgage loans on the Partnership's properties are fixed-rate and
therefore, are not subject to market risk.
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. 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.
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, 2002.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32. 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.
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(b) Reports on Form 8-K
The Partnership reported the sale of Pomeroy Park Apartments
under item 2 of Form 8-K, filed on July 14, 2003 and the sale of
Inducon Columbia under item 2 of Form 8-K, filed August 13, 2003.
SIGNATURES
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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 - VI A
August 14, 2003 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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