FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003
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 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)
September 30, December 31,
2003 2002
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Assets
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Cost of property and equipment, all held for sale $ 4,555,560 12,991,816
Less accumulated depreciation 1,906,407 4,918,520
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2,649,153 8,073,296
Cash and equivalents 1,253,363 260,089
Note receivable 344,094 348,234
Other assets 127,935 514,781
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Total assets $ 4,374,545 9,196,400
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Liabilities and Partners' Equity
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Mortgage loans payable 2,514,195 6,337,228
Accounts payable and accrued expenses 201,220 421,439
Payable to affiliates 46,290 1,341,811
Other liabilities 43,604 158,500
Equity in losses of unconsolidated joint venture
in excess of investment 120,396 145,955
Partners' equity 1,448,840 791,467
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Total liabilities and partners' equity $ 4,374,545 9,196,400
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Condensed Consolidated Statements of Operations
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(Unaudited)
Three months ended Sept. 30, Nine months ended Sept. 30,
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2003 2002 2003 2002
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Rental income $ 232,319 833,832 1,378,291 2,620,280
Other income 49,881 84,381 242,666 269,748
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Total income 282,200 918,213 1,620,957 2,890,028
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Property operating costs 268,897 770,746 1,143,377 2,274,959
Administrative expense - affiliates 31,939 113,465 177,239 333,469
Other administrative expense 70,210 74,132 199,690 267,140
Interest 131,210 283,295 496,225 840,195
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Total expenses 502,256 1,241,638 2,016,531 3,715,763
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Loss before equity in joint venture and gain on
sale of property (220,056) (323,425) (395,574) (825,735)
Equity in earnings of joint venture 36,109 23,656 97,559 79,513
Gain on sale of property 31,297 847,434 955,388 847,434
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Net income (loss) $ (152,650) 547,665 657,373 101,212
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Net income (loss) per limited partnership unit $ (.96) 3.38 3.44 .62
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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)
Nine months ended Sept. 30,
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2003 2002
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Cash provided by:
Operating activities:
Net income: $ 657,373 101,212
Adjustments:
Gain on sale of properties (955,388) (847,434)
Other, principally changes in other assets and liabilities (880,481) 788,720
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Net cash provided (used) by operating activities (1,178,496) 42,498
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Investing activities:
Additions to property and equipment (6,132) (9,370)
Net proceeds from sale of property 5,928,935 382,790
Distributions from joint ventures 72,000 58,000
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Net cash provided by investing activities 5,994,803 431,420
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Financing activities - principal payments on mortgage loans (3,823,033) (101,676)
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Net increase in cash and equivalents 993,274 372,242
Cash and equivalents at beginning of period 260,089 62,362
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Cash and equivalents at end of period $ 1,253,363 434,604
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Notes to Consolidated Financial Statements
Nine months ended September 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 September 30, 2003, the Partnership owned and operated one apartment complex.
It also has interest in a joint venture, as described below. The Partnership
property and joint venture property are being actively marketed for sale and,
therefore, are not being depreciated. Depreciation expense not recorded during
the three and nine month periods ended September 30, 2003 was approximately
$41,000 and $246,000, respectively. Depreciation not recorded during the three
and nine month periods ended September 30, 2002 was approximately $165,000 and
$501,000, respectively.
Current Accounting Pronouncements
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In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is
applicable immediately for variable interest entities created after January 31,
2003. For variable interest entities created before February 1, 2003, the
provisions of FIN 46 are applicable no later than December 15, 2003. The
Partnership has not created any variable interest entities after January 31,
2003. The Partnership does not believe that the Interpretation will have a
material impact on its consolidated financial statements.
In May 2003, the Financial Accounting Standards Board issued SFAS No. 150
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities." SFAS No. 150 changes the accounting for certain
financial instruments that, under previous guidance, could be classified as
equity or "mezzanine" equity, by now requiring those instruments to be
classified as liabilities (or assets in some circumstances) in the Consolidated
Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of
those instruments and settlement alternatives. 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 has evaluated SFAS No. 150 and
determined that it does not have an impact on its consolidated financial
statements.
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Investments in Joint Ventures
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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 the 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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September 30, December 31,
2003 2002
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Net property, held for sale $ 1,473,368 1,473,368
Cash and equivalents 7,090 34,606
Escrow deposits 898,328 861,615
Other assets 271,747 272,481
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Total assets $ 2,650,533 2,642,070
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Liabilities:
Mortgage loan payable 5,087,172 5,161,824
Accounts payable and accrued expenses 158,828 140,633
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5,246,000 5,302,457
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Partners' deficit:
The Partnership (1,397,149) (1,429,609)
RPILP - II (1,198,318) (1,230,778)
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(2,595,467) (2,660,387)
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Total liabilities and partners' deficit $ 2,650,533 2,642,070
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Operating Information
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Three months ended Sept 30, Nine months ended Sept 30,
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2003 2002 2003 2002
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Rental income $ 199,500 236,943 598,500 598,589
Other 44,683 5,780 143,400 100,768
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Total income 244,183 242,723 741,900 699,357
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Property operating costs 38,994 59,203 154,990 139,496
Interest 107,481 108,990 320,630 325,395
Administrative 20,888 22,618 57,360 61,640
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Total expenses 167,363 190,811 532,980 526,531
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Net income $ 76,820 51,912 208,920 172,826
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Allocation of net income:
The Partnership 38,410 25,956 104,460 86,413
RPILP - II 38,410 25,956 104,460 86,413
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$ 76,820 51,912 208,920 172,826
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PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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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, on June 30, 2003 sold
another property (Pomeroy Park), and on July 31, 2003 sold another property
(Inducon Columbia). For the first six months of 2003, the partnership
experienced difficulties generating sufficient funds to cover its cash
obligations without relying on affiliate borrowings. With the sale of Inducon
Columbia and Pomeroy Park, the Partnership generated enough cash to repay
affiliate borrowings and cover its other obligations during the third quarter.
The total amounts payable to affiliates decreased approximately $1,300,000
during the first nine months ended September 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.
Results of Operations
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Excluding the four sold properties, the Partnership's operations produced an
operating loss of approximately $198,000 for the nine months ended September 30,
2003. Comparable pro forma results for the same 2002 period (excluding Inducon
Columbia, Beaver Creek, Countrybrook and Pomeroy Park) would be an operating
loss of $324,000.
Income increased approximately $34,000 for the first nine months of 2003 as
compared to 2002. This was due mainly to decreased rental income at Stonegate
Townhouses of $11,000 and an increased in other income of 45,000. Property
operating costs (excluding the sold properties) decreased $18,000 mainly due to
decreased contracted services at Stonegate Townhouses. The $2,000 decrease in
other administrative expense (excluding the sold properties) was primarily
attributable to a decrease in legal fees. The $89,000 decrease in administrative
expense to affiliates was primarily due to a decrease in professional fees.
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PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership invests in only 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 property is fixed-rate and
therefore, is not subject market risk.
PART I - Item 4. Controls and Procedures
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Disclosure Controls and Procedures: The Partnership's management, with the
participation of the Partnership's Individual General Partner and Principal
Financial Officer, has evaluated the effectiveness of the Partnership's
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this report. Based on such evaluation, the Partnership's
Individual General Partner and Principal Financial Officer have concluded that,
as of the end of such period, the Partnership's disclosure controls and
procedures are effective.
Internal Control Over Financial Reporting: There have been no changes in the
Partnership's internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934, as amended) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceeding
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As previously reported, the Partnership, as a nominal defendant, the General
Partners of the Partnership and of affiliated public partnerships (the "Realmark
Partnerships") and the officers and directors of the Corporate General Partner,
as defendants, had been involved in a class action litigation in New York State
court. The Partnership's settlement of this litigation is described in its
Annual Report on Form 10-K for the year ended December 31, 2002.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to Rule 13a-14(a), 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.
(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.
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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
November 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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