FORM 10-K
UNITED STATES
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, 2003
( ) 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)
Indicate by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [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, 2003 the Partnership 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. On August 28, 2002 and October 31, 2002, the
Partnership sold Beaver Creek and Countrybrook Estates, respectively, to
unaffiliated entities. On June 30, 2003, July 31, 2003, and December 17, 2003,
the Partnership sold Pomeroy Park Apartments, Inducon Columbia, and Stonegate
Townhouses, respectively, to unaffiliated entities. Refer to Item 7 and the
notes to the financial statements for details of these transactions.
It is anticipated that the Partnership will be entering into a sales
contract 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 sale 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, 2003, the Partnership did not directly employ any
persons in a full-time position. All persons who regularly rendered services on
behalf of the Partnership through December 31, 2003 were employees of the
Corporate General Partner or its affiliates.
The occupancy for each complex at December 31 was as follows:
Property 2003 2002 2001
-------- ---- ---- ----
Beaver Creek - - 88%
Countrybrook Estates - - 78%
Stonegate Townhouses - 94% 93%
Pomeroy Park - 70% 74%
Inducon Columbia - 91% 75%
Research Triangle 100% 100% 100%
2
The percent of total Partnership revenue generated by each complex for
the last three years was as follows:
2003 2002 2001
---- ---- ----
Beaver Creek - 8% 12%
Countrybrook Estates - 25% 25%
Stonegate Townhouses 48% 24% 23%
Pomeroy Park 28% 28% 28%
Inducon Columbia 24% 15% 12%
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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At December 31, 2003, the Partnership and its joint venture investees owned
Research Triangle Industrial Park, a 150,000 square foot office/warehouse
located in Raleigh, North Carolina. The property was purchased in 1992. The
first mortgage loan on the property accrues interest at 8.06% and had a balance
of $5,060,888 at December 31, 2003.
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.
3
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, 2003, there were 1,624
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
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. In 2003, the Partnership
distributed $250,000 to the limited partners. There were no distributions for
1999 through 2002.
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.
4
ITEM 6: SELECTED FINANCIAL DATA
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At or for the years ended December 31,
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2003 2002 2001 2000 1999
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Balance sheet data
Net rental property $ -- 8,073,296 12,905,193 12,902,052 13,350,614
Total assets 1,280,856 9,196,400 13,826,176 13,885,786 14,444,783
Mortgage loans payable -- 6,337,228 11,661,131 11,783,657 11,893,713
Partners' equity (deficit) 1,091,827 791,467 (26,884) 642,321 1,535,019
===============================================================================
Operating data
Rental income 1,529,090 3,250,092 3,935,066 4,016,788 4,112,626
Other income 253,117 320,936 279,387 235,859 306,725
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Total revenue 1,782,207 3,571,028 4,214,453 4,252,647 4,419,351
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Property operating costs 1,309,329 2,948,185 2,975,319 2,853,456 2,601,748
Depreciation -- -- -- 521,290 761,550
Interest expense 470,866 1,039,007 1,129,347 1,151,708 1,141,622
Administrative expenses 442,584 696,913 831,885 721,056 648,615
-------------------------------------------------------------------------------
Total expenses 2,222,779 4,684,105 4,936,551 5,247,510 5,153,535
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Loss before gain on sale of
properties and equity in joint
venture operations (440,572) (1,113,077) (722,098) (994,863) (734,184)
Gain on sale of properties 3,108,929 1,797,168 -- -- --
Equity in joint venture
operations 132,003 134,260 52,893 102,165 43,629
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Net income (loss) $ 2,800,360 818,351 (669,205) (892,698) (690,555)
===============================================================================
Cash flow data
Net cash provided
(used) by:
Operating activities (1,843,939) (860,011) (63,983) (71,141) (451,048)
Investing activities 11,635,414 6,381,641 103,443 62,272 233,394
Financing activities (8,837,228) (5,323,903) (122,526) (110,056) 394,456
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Net increase (decrease) in cash
and equivalents $ 954,247 197,727 (83,066) (118,925) 176,802
===============================================================================
Per limited partnership unit:
Net income (loss) $ 17.85 3.90 (4.10) (5.50) (4.26)
Distributions $ 15.89 -- -- -- --
===============================================================================
5
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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Liquidity and Capital Resources
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Effective January 1, 2001, the Partnership began formally marketing all
of its properties 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
approximately $770,000. 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. On June 30, 2003, the Partnership
sold Pomeroy Park Apartments to an unaffiliated entity for cash of $4,000,000.
After satisfaction of the $1,795,000 mortgage loan on the property, payment of
closing costs, and the payment of a $150,000 termination fee, the net gain
amounted to approximately $1,000,000. On July 31, 2003, the Partnership sold
Inducon Columbia to an unaffiliated entity for cash of $3,150,000, resulting in
a net loss of approximately $150,000. On December 17, 2003, the Partnership sold
Stonegate Townhouses to an unaffiliated entity for cash of $5,150,000. After
satisfaction of the $2,507,000 mortgage loan on the property and payment of
closing costs, the net gain amounted to approximately $2,200,000. The sales
proceeds enabled the Partnership to make a distribution to the limited partners
in the last quarter of 2003 in the amount of $2,500,000. There was no
distribution in 2002 or 2001. In accordance with the settlement of the lawsuit
(Item 3) it is anticipated that with the sale of the remaining joint venture,
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 joint venture.
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:
- ---------------------
As a result of the sale of its remaining wholly-owned properties, the
results of operations of the Partnership for the year ended December 31, 2003,
before equity in earnings of joint ventures and a gain on sale of properties,
excluding Pomeroy Park Apartments, Inducon Columbia, and Stonegate Townhouses
(the "Sold Assets"), which were sold in 2003, and excluding Beaver Creek and
Countrybrook (the "Sold Assets"), which were sold in 2002, produced a net loss
of $341,783. Excluding the Sold Assets, the results of operations, before equity
in earnings of joint ventures and a gain on sale of properties, was a net loss
of $387,808 in 2002 and a net loss , also excluding depreciation, of $363,104 in
2001.
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.
6
2003 as compared to 2002
- ------------------------
As discussed above, the decrease in most components of the consolidated
statement of operations was a result of the remaining wholly-owned properties
being sold in 2003 and rental operations ceasing at the time of the sales.
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
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.
Joint Venture
- -------------
The Research Triangle Industrial Park Joint Venture experienced 100%
occupancy in 2003 and 2002. Its 2003 net income remained consistent with 2002.
Rental income increased approximately 1% in 2003 due to the sole tenant of
Research Triangle renewing their lease late in 2002. Total expenses increased 2%
mainly due to legal fees, commissions from the lease renewal, and increased
insurance expense. Because the joint venture has had net income during each of
the last three years, the Partnership's 50% equity has enabled the Partnership
to receive cash distributions from the Venture of $72,000 in 2003, $108,000 in
2002 and $104,500 in 2001.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
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
- ------ -------------------------------------------
Listed under Item 15 of this report.
7
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
ITEM 9A: CONTROLS AND PROCEDURES
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The Partnership maintains a set of disclosure controls and procedures
designed to ensure that information required to be disclosed by the Partnership
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. Within the 90-day period
prior to the filing of this report, an evaluation was carried out under the
supervision and with the participation of the Partnership's management,
including the Partnership's Individual General Partner and Principal Financial
Officer, of the effectiveness of the Partnership's disclosure controls and
procedures. Based on that evaluation, the Partnership's Individual General
Partner and Principal Financial Officer concluded that the Partnership's
disclosure controls and procedures are effective.
Subsequent to the date of their most recent evaluation, there have been
no significant changes in the Partnership's internal control over financial
reporting or in other factors that could significantly affect the internal
control over financial reporting.
PART III
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ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
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, 2003, are listed below. Each
director is subject to election on an annual basis.
Title of All Positions Held with Year First
Name the Corporate General Partner 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:
8
Joseph M. Jayson, age 65, 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 41 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 41 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 22 years, Mr. Jayson and an affiliate have also engaged in
developmental drilling for gas and oil.
Judith P. Jayson, age 63, 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 32 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.
Audit Committee
- ---------------
The Partnership has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
members of the audit committee are Joseph M. Jayson and Bryant E. Zilke.
Audit Committee Financial Expert
- --------------------------------
The Directors and Executive Officers of the Corporate General Partner
have determined that Bryant E. Zilke is an audit committee financial expert as
defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Mr. Zilke is not independent within the meaning
of Item 7(d)(3)(iv) of Schedule 14A of the Exchange Act due to limited
circumstances, namely that the Partnership is small in size and there is limited
personnel. Mr. Zilke is not independent as a result of being an employee of an
affiliate of the Corporate General Partner.
Code of Ethics
- --------------
The Partnership has adopted a code of ethics for the partners,
principal financial officer, and employees of the Corporate General Partner or
its affiliates who render services on behalf of the Partnership. The Partnership
will provide to any person without charge, upon request, a copy of the code of
ethics which is available from:
9
Realmark Property Investors Limited Partnership - VIA
Attention: Investor Relations
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
ITEM 11: EXECUTIVE COMPENSATION
- -------- ----------------------
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, 2003. 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 9,811.1 units of limited
partnership interest amounting to approximately 6.2% of the Partnership interest
at December 31, 2003. The general partners and the executive officers of the
Corporate General Partners, as of December 31, 2003, 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: PRINCIPAL ACCOUNTING FEES AND SERVICES
- -------- --------------------------------------
Audit Engagement: Toski, Schaefer & Co., P.C. was engaged as the Partnership's
independent auditor for years 2003 and 2002. All fees incurred for the years
ended December 31, 2003 and 2002 were approved by the Audit Committee.
10
Audit Fees: Audit fees for the audit of the Partnership's annual financial
statements included in the Partnership's annual report on Form 10-K and those
financial statements included in the Partnership's quarterly reports on Form
10-Q by Toski, Schaefer & Co., P.C. for the years ended December 31, 2003 and
2002 totaled $40,750 and $37,850, respectively.
Audit-Related Fees: None.
Tax Fees: The Partnership engaged Toski, Schaefer & Co., P.C. to provide tax
filing and compliance services during the year ended December 31, 2003. The fees
for these services amounted to $6,745. No tax services were provided during the
year ended December 31, 2002.
All Other Fees: None.
The Audit Committee has set a policy that all fees incurred by the
Partnership for services performed by its independent auditors must be
pre-approved by the Audit Committee. All fees related to 2003 were pre-approved
by the Audit Committee.
The Audit Committee oversees the Partnership's financial reporting
process. Management has the primary responsibility for the financial statements
and the financial reporting process, including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements with management, including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements.
The Audit Committee has the sole authority to retain and terminate the
Partnership's independent auditors and approves all fees paid to the independent
auditors. During 2003 and 2002, the Audit Committee reviewed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not just the
acceptability, of the Partnership's accounting principles and such other matters
as are required to be discussed with the Audit Committee under generally
accepted auditing standards. In addition, the Audit Committee has discussed with
the independent auditors the auditors' independence from management and the
Partnership, including the matters in the written disclosures required by the
Independence Standards Board, and considered the scope and type of non-audit
services provided by the auditor when reviewing the compatibility of those
non-audit services with the auditors' independence.
The Audit Committee discussed with the Partnership's independent
auditors the overall scope and plans for their audit. The Audit Committee meets
with the independent auditors to discuss the results of their examination, their
evaluations of the Partnership's internal controls, and the overall quality of
the Partnership's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the General Partners (and the General Partners have
approved) that the audited financial statements be included in the annual report
on Form 10-K for the year ended December 31, 2003.
11
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, 2003 and 2002 F-2
Consolidated Statements of Operations for the years ended
December 31, 2003, 2002 and 2001 F-3
Consolidated Statements of Partners' Equity for the years
ended December 31, 2003, 2002 and 2001 F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001 F-5
Notes to Consolidated Financial Statements F-6
FINANCIAL STATEMENT SCHEDULE
----------------------------
(i) Schedule III - Real Estate and Accumulated Depreciation F-17
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 January 5, 2004, the Partnership filed Form 8-K with the
Securities and Exchange Commission which under Item 2 reported the
sale, on December 17, 2003, of Stonegate Townhouses. The property was
sold to an unaffiliated entity for $5,150,000, resulting in a net gain
of approximately $2.2 million.
(c) Exhibits
--------
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.
12
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 agreement with an unrelated third-party
included with the Partnership's report on Form 8-K on January
5, 2004 is incorporated herein by reference.
14. Code of Ethics is filed herewith.
21. Subsidiaries of the Partnership is filed herewith.
31. Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, is filed herewith.
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.
13
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 30, 2004
-------------------- --------------
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 30, 2004
-------------------- --------------
JOSEPH M. JAYSON, Date
President, Treasurer and Director
/s/ Judith P. Jayson March 30, 2004
-------------------- --------------
JUDITH P. JAYSON, Date
Vice President and Director
14
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, 2003 and 2002, and the related consolidated statements of operations,
partners' equity, and cash flows for each of the three years in the period ended
December 31, 2003. 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, 2003
and 2002, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2003, 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 9 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.
/s/ TOSKI, SCHAEFER & CO., P.C.
-------------------------------
TOSKI, SCHAEFER & CO., P.C.
Williamsville, New York
March 26, 2004
F-1
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2003 and 2002
Assets 2003 2002
------ ---- ----
Property and equipment, at cost, all held for sale:
Land and improvements $ -- 957,776
Buildings and improvements -- 11,569,936
Furniture and equipment -- 464,104
------------ ------------
-- 12,991,816
Less accumulated depreciation -- 4,918,520
------------ ------------
Net property and equipment -- 8,073,296
Cash and equivalents 1,214,336 260,089
Note receivable -- 348,234
Escrow deposits -- 321,393
Deferred mortgage costs, net of accumulated amortization of
$282,008 in 2002 -- 116,133
Other assets 66,520 77,255
------------ ------------
Total assets $ 1,280,856 9,196,400
============ ============
Liabilities and Partners' Equity
--------------------------------
Liabilities:
Mortgage loans payable -- 6,337,228
Accounts payable and accrued expenses 78,669 371,557
Accrued interest payable -- 49,882
Payable to affiliated parties 24,408 1,341,811
Security deposits and prepaid rents -- 158,500
------------ ------------
Total liabilities 103,077 8,258,978
------------ ------------
Losses of unconsolidated joint ventures in excess of investment,
net of unamortized excess purchase price of $128,263 in 2003
and $137,463 in 2002 85,952 145,955
Partners' equity (deficit):
General partners (212,200) (202,943)
Limited partners 1,304,027 994,410
------------ ------------
Total partners' equity 1,091,827 791,467
------------ ------------
Total liabilities and partners' equity $ 1,280,856 9,196,400
============ ============
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, 2003, 2002 and 2001
2003 2002 2001
---- ---- ----
Income:
Rental $ 1,529,090 3,250,092 3,935,066
Interest and other income 253,117 320,936 279,387
----------- ----------- -----------
Total income 1,782,207 3,571,028 4,214,453
----------- ----------- -----------
Expenses:
Property operations 1,309,329 2,948,185 2,975,319
Interest:
Affiliated parties 53,242 89,661 28,227
Other 417,624 949,346 1,101,120
Administrative:
Affiliate parties 201,225 415,566 447,357
Other 241,359 281,347 384,528
----------- ----------- -----------
Total expenses 2,222,779 4,684,105 4,936,551
----------- ----------- -----------
Loss before gain on sale of properties and
equity in earnings of joint ventures (440,572) (1,113,077) (722,098)
Gain on sale of properties 3,108,929 1,797,168 --
Equity in earnings of joint ventures 132,003 134,260 52,893
----------- ----------- -----------
Net income (loss) $ 2,800,360 818,351 (669,205)
=========== =========== ===========
Net income (loss) per limited partnership unit $ 17.85 3.90 (4.10)
=========== =========== ===========
Distributions per limited partnership unit $ 15.89 -- --
=========== =========== ===========
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, 2003, 2002 and 2001
Limited Partners
General ----------------
Partners Units Amount
-------- ----- ------
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
Net income (loss) (9,257) -- 2,809,617
Distributions to partners -- -- (2,500,000)
---------- ---------- ----------
Balances at December 31, 2003 $ (212,200) 157,378 1,304,027
========== ========== ==========
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, 2003, 2002 and 2001
2003 2002 2001
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 2,800,360 818,351 (669,205)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Amortization 76,478 56,491 59,410
Equity in earnings of joint ventures (132,003) (134,260) (54,977)
Gain on sale of properties (3,108,929) (1,797,168) --
Changes in:
Accounts receivable -- -- 6,325
Escrow deposits 122,193 106,303 (102,211)
Other assets (42,004) (35,706) 16,161
Accounts payable and accrued expenses (182,744) (162,471) 134,931
Accrued interest payable (41,090) (37,381) 3,872
Payable to affiliated parties (1,317,403) 297,916 532,691
Security deposits and prepaid rents (18,797) 27,914 9,020
------------ ------------ ------------
Net cash used in operating
activities (1,843,939) (860,011) (63,983)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of properties 11,221,312 6,385,891 --
Payments on note receivable 348,234 1,766 --
Distributions received from joint venture 72,000 108,000 106,584
Additions to property and equipment (6,132) (114,016) (3,141)
------------ ------------ ------------
Net cash provided by investing
activities 11,635,414 6,381,641 103,443
------------ ------------ ------------
Cash flows from financing activities:
Principal payments on mortgage loans (6,337,228) (5,323,903) (122,526)
Distributions to partners (2,500,000) -- --
------------ ------------ ------------
Net cash used in financing
activities (8,837,228) (5,323,903) (122,526)
------------ ------------ ------------
Net increase (decrease) in cash and equivalents 954,247 197,727 (83,066)
Cash and equivalents at beginning of year 260,089 62,362 145,428
------------ ------------ ------------
Cash and equivalents at end of year $ 1,214,336 260,089 62,362
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 443,767 929,027 1,033,515
============ ============ ============
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, 2003, 2002 and 2001
(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 owned Inducon-Columbia, a three building
office complex in Columbia, South Carolina, acquired in 1989 and 1991
for $4,670,991 and sold in 2003.
(2) Realmark - Beaver, LLC that owned 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 owned 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 owned Stonegate, a 130 unit apartment
complex located in Mobile, Alabama, acquired in 1990 for $4,145,367
and sold in 2003.
The Partnership also owned a residential property, Pomeroy Park, which was
sold in 2003.
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, 2003, 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 2003, 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, 2003.
(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 9), 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. Distributions amounting to $2,500,000 were made in December 2003.
There were no distributions to partners made in 2002 or 2001.
F-8
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) Summary of Significant Accounting Policies, Continued
-----------------------------------------------------
(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, 2003, net assets for financial
reporting purposes were equal to the tax bases of the net assets.
(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 January 2003, the Financial Accounting Standards Board (FASB) issued
Financial Interpretation (FIN) No. 46, "Consolidation of Variable Interest
Entities." In December 2003, the FASB reissued FIN No. 46R with certain
modifications and clarifications. FIN No. 46R is effective on March 31,
2004 for the Partnership. The Partnership does not believe that this
pronouncement will have a material impact on its financial position, cash
flows, or results of operations.
In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS No. 149 amends and clarifies financial accounting
and reporting for derivative instruments embedded in other contracts and
for hedging activities under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003. The adoption of
this pronouncement did not have a material impact on the Partnership's
financial position, cash flows, or results of operations.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity."
SFAS No. 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of this pronouncement did not have a material impact on the
Partnership's financial position, cash flows, or results or 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 December 17, 2003, the Partnership sold Stonegate Townhouses to an
unaffiliated entity for $5,150,000 and recognized a related gain on the
sale amounting to $2,218,212.
On July 31, 2003, the Partnership sold Inducon Columbia to an unaffiliated
entity for $3,150,000 and recognized a related loss on the sale amounting
to $148,695.
On June 30, 2003, the Partnership sold Pomeroy Park Apartments to an
unaffiliated entity for $4,000,000 and recognized a related gain on the
sale amounting to $1,039,412.
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 continued to be actively marketed for
sale. Accordingly, their results of operations have been recorded in
continuing operations.
(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. In 2003, the Partnership agreed to accept a
F-10
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) Note Receivable, Continued
--------------------------
payment of $329,094 in principal and $369 in interest as payment in full on
this note receivable.
(5) Mortgage Loans Payable
----------------------
Mortgage loans payable at December 31, 2002 are as follows:
Total
Interest monthly
Property collateral rate Maturity payment Balance
------------------- ---- -------- ------- -------
Inducon - Columbia 7.86% 2022 $ 16,787 $ 2,035,320
Stonegate Townhouses 8.43% 2027 20,207 2,534,046
Pomeroy Park 12.00% 2003 19,750 1,767,862
======== -----------
$ 6,337,228
===========
These mortgage loans were all repaid in 2003 in connection with the sale of
the properties.
(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:
2003 2002 2001
---- ---- ----
Property management fees based on a percent-
age (generally 5%) of rental income $ 79,745 165,912 190,803
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 121,480 249,654 256,554
--------- ------- -------
$ 201,225 415,566 447,357
========= ======= =======
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%.
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
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, Continued
------------------------------------
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.
Distributions
-------------
U.S. Apartments, LLC is an affiliated company in which the Individual
General Partner of Realmark Property Investors Limited Partnership-VIA is
the sole member. U.S. Apartments, LLC owns 9,811.1 units of limited
partnership interest and received its proportionate share of distributable
proceeds amounting to $155,853 in 2003 from the sale of properties (note
3).
(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.
F-12
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A AND
SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Investments in Joint Ventures, Continued
----------------------------------------
Summary financial information for the Venture follows:
Balance Sheet Information
-------------------------
December 31,
Assets 2003 2002
------ ---- ----
Property, net of accumulated depreciation $ 1,684,255 1,473,368
Cash and equivalents 26,667 34,606
Escrow deposits 871,080 861,615
Other assets 245,242 272,481
----------- ----------
Total assets $ 2,827,244 2,642,070
=========== ==========
Liabilities and Partners' Deficit
---------------------------------
Liabilities:
Mortgage loan payable $ 5,060,888 5,161,824
Accounts payable and accrued expenses 288,337 140,633
----------- ----------
Total liabilities 5,349,225 5,302,457
----------- ----------
Partners' deficit:
The Partnership (1,360,406) (1,429,609)
RPILP-II (1,161,575) (1,230,778)
----------- ----------
Total partners' deficit (2,521,981) (2,660,387)
----------- ----------
Total liabilities and partners' deficit $ 2,827,244 2,642,070
=========== ==========
F-13
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Investments in Joint Ventures, Continued
----------------------------------------
Operating Information
---------------------
Years ended December 31,
------------------------
2003 2002 2001
---- ---- ----
Income:
Rental $ 984,634 975,220 899,322
Other 2,231 5,335 11,812
---------- --------- -----------
Total income 986,865 980,555 911,134
---------- --------- -----------
Expenses:
Property operations 201,803 178,923 127,047
Interest 427,613 433,798 442,817
Administrative:
Affiliated parties 59,078 54,867 47,449
Other 15,965 26,047 20,009
---------- --------- -----------
Total expenses 704,459 693,635 637,322
---------- --------- -----------
Net income $ 282,406 286,920 273,812
========== ========= ===========
Allocation of net income:
The Partnership 141,203 143,460 136,906
RPILP-II 141,203 143,460 136,906
---------- --------- -----------
Total $ 282,406 286,920 273,812
========== ========= ===========
A reconciliation of the Partnership's investment in the Research Triangle
Joint Venture is as follows:
2003 2002 2001
---- ---- ----
Investment in joint venture at beginning of year $ (145,955) (172,215) (195,421)
Distributions from joint venture (72,000) (108,000) (104,500)
Amortization of excess purchase price (9,200) (9,200) (9,200)
Allocation of net income 141,203 143,460 136,906
---------- --------- -----------
Losses in excess of investment in joint venture
at end of year $ (85,952) (145,955) (172,215)
========== ========= ===========
F-14
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8) Lease (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. The lease was
transferred upon the sale of Inducon Columbia on July 31, 2003 (note 3).
(9) 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.
F-15
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) Settlement of Lawsuit, Continued
--------------------------------
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.
F-16
Schedule III
------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
AND SUBSIDIARIES
Real Estate and Accumulated Depreciation
December 31, 2003
Gross amounts at which
Initial Cost to Cost Carried at Close of period
Partnership capitalized --------------------------
Property ------------------- subsequent to Buildings and Accumulated
Description Encumbrances Land Buildings acquisition Land improvements Total depreciation
- ----------- ------------ ---- --------- ----------- ---- ------------ ----- ------------
Research
Triangle JV
Raleigh, NC $ 5,060,888 338,112 4,920,738 220,216 338,112 5,140,954 5,479,066 3,794,811
=========== ======= ========= ======= ======= ========= ========= =========
(RESTUBBED TABLE)
Life
on which
depreciation
in latest
Date statement of
Property of Date operations
Description construction acquired is computed
- ----------- ------------ -------- -----------
Research
Triangle JV
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, 2001 through
December 31, 2003.
F-17
Schedule III, Cont.
-------------------
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - VI A
Real Estate and Accumulated Depreciation
December 31, 2003, 2002 and 2001
(1) Cost for Federal income tax purposes - none.
(2) A reconciliation of the carrying amount of land and buildings as of
December 31, 2003, 2002 and 2001 is as follows:
Partnership Properties
----------------------
2003 2002 2001
---- ---- ----
Balance at beginning of year $ 12,527,712 19,631,530 19,631,530
Additions 6,132 114,016 --
Dispositions (6) 12,533,844 7,217,834 --
------------ ----------- ------------
Balance at end of year $ -- 12,527,712 19,631,530
============ =========== ============
Joint Venture Properties
------------------------
2003 2002 2001
---- ---- ----
Balance at beginning of year $ 5,268,179 5,268,179 8,131,032
Additions 210,887 -- --
Dispositions (5) -- -- 2,862,853
------------ ----------- ---------
Balance at end of year $ 5,479,066 5,268,179 5,268,179
============ =========== =========
(3) A reconciliation of accumulated depreciation for the years ended December
31, 2003, 2002 and 2001 is as follows:
Partnership Properties
----------------------
2003 2002 2001
---- ---- ----
Balance at beginning of year $ 4,456,759 6,735,316 6,735,316
Dispositions (6) 4,456,759 2,278,557 --
------------ ----------- ---------
Balance at end of year (4) $ -- 4,456,759 6,735,316
============ =========== =========
Joint Venture Properties
------------------------
2003 2002 2001
---- ---- ----
Balance at beginning of year $ 3,794,811 3,794,811 5,391,388
Dispositions (5) -- -- 1,596,577
------------ ------------ ---------
Balance at end of year (4) $ 3,794,811 3,794,811 3,794,811
============ ============ =========
(4) Balance applies entirely to buildings and improvements.
(5) Sale of Carriage House of Englewood Apartments in 2001.
(6) Sale of Stonegate Townhouses, Inducon Columbia, and Pomeroy Park Apartments
in 2003, and Countrybrook Estates and Beaver Creek Apartments in 2002.
F-18