-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V5c2ISdgEP36qhoU9I2S2+7OV2way3x9Fpqnk0C/Es10za8JFyxAZQWwkziCfLsY ngWd5DUkKVM/cyABEm+48g== 0000319723-97-000001.txt : 19970730 0000319723-97-000001.hdr.sgml : 19970730 ACCESSION NUMBER: 0000319723-97-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970729 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES II LTD PARTNERSHIP CENTRAL INDEX KEY: 0000319723 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 570709233 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10256 FILM NUMBER: 97646723 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-10256 SHELTER PROPERTIES II LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) South Carolina 57-0709233 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) 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 a) SHELTER PROPERTIES II LIMITED PARTNERSHIP BALANCE SHEET (in thousands, except unit data) (Unaudited) June 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 2,367 Restricted--tenant security deposits 142 Accounts receivable 15 Escrow for taxes 254 Restricted escrows 922 Other assets 267 Investment properties: Land $ 1,814 Buildings and related personal property 22,980 24,794 Less accumulated depreciation (15,547) 9,247 $ 13,214 Liabilities and Partners' Capital Liabilities Accounts payable $ 43 Tenant security deposits 142 Accrued taxes 207 Other liabilities 192 Mortgage notes payable 8,645 Partners' Capital (Deficit) General partners $ (108) Limited partners (27,500 units issued and outstanding) 4,093 3,985 $ 13,214 See Accompanying Notes to Financial Statements b) SHELTER PROPERTIES II LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (in thousands, except unit data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 Revenues: Rental income $ 1,341 $ 1,297 $ 2,635 $ 2,586 Other income 78 96 158 186 Total revenues 1,419 1,393 2,793 2,772 Expenses: Operating 493 492 959 944 General and administrative 49 48 93 96 Maintenance 179 173 404 323 Depreciation 254 269 504 535 Interest 200 204 401 409 Property taxes 104 97 210 193 Total expenses 1,279 1,283 2,571 2,500 Net income $ 140 $ 110 $ 222 $ 272 Net income allocated to general partners (1%) $ 1 $ 1 $ 2 $ 3 Net income allocated to limited partners (99%) 139 109 220 269 Net income $ 140 $ 110 $ 222 $ 272 Net income per limited partnership unit $ 5.05 $ 3.96 $ 8.00 $ 9.78 See Accompanying Notes to Financial Statements
c) SHELTER PROPERTIES II LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands, except unit data) (Unaudited)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 27,500 $ 2 $ 27,500 $ 27,502 Partners' (deficit) capital at December 31, 1996 27,500 $ (110) $ 3,878 $ 3,768 Distributions to partners -- (5) (5) Net income for the six months ended June 30, 1997 2 220 222 Partners' (deficit) capital at June 30, 1997 27,500 $ (108) $ 4,093 $ 3,985 See Accompanying Notes to Financial Statements
d) SHELTER PROPERTIES II LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Six Months Ended June 30, 1997 1996 Cash flows from operating activities: Net income $ 222 $ 272 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 504 535 Amortization of discounts and loan costs 54 52 Change in accounts: Restricted cash 7 3 Accounts receivable 4 (6) Escrows for taxes (20) (45) Other assets (43) -- Accounts payable (113) (191) Tenant security deposit liabilities (7) (4) Accrued taxes (16) 32 Other liabilities 1 14 Net cash provided by operating activities 593 662 Cash flows from investing activities: Property improvements and replacements (299) (126) Deposits to restricted escrows (19) (21) Receipts from restricted escrows -- 25 Net cash used in investing activities (318) (122) Cash flows from financing activities: Payments on mortgage notes payable (126) (117) Distributions to partners (5) (500) Net cash used in financing activities (131) (617) Net increase (decrease) in unrestricted cash and cash equivalents 144 (77) Unrestricted cash and cash equivalents at beginning of period 2,223 2,280 Unrestricted cash and cash equivalents at end of period $ 2,367 $ 2,203 Supplemental disclosure of cash flow information: Cash paid for interest $ 347 $ 356 See Accompanying Notes to Financial Statements
e) SHELTER PROPERTIES II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Shelter Properties II Limited Partnership (the "Partnership" or the "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Shelter Realty II Corporation (the "Corporate General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - RECONCILIATION OF CASH FLOWS The following is a reconciliation of the subtotal on the accompanying statements of cash flows captioned "Net cash provided by operating activities" to "net cash used in operations," as defined in the partnership agreement. However, "net cash used in operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity. Six Months Ended June 30, (in thousands) 1997 1996 Net cash provided by operating activities $ 593 $ 662 Payments on mortgage notes payable (126) (117) Property improvements and replacements (299) (126) Change in restricted escrows, net (19) 4 Changes in reserves for net operating liabilities 187 197 Additional reserves (336) (625) Net cash used in operations $ -- $ (5) In 1997 and 1996, the Corporate General Partner believed it to be in the best interest of the Partnership to reserve an additional $336,000 and $625,000, respectively, to fund continuing capital improvement needs in order for the properties to remain competitive. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Corporate General Partner and affiliates in 1997 and 1996: Six Months Ended June 30, (in thousands) 1997 1996 Property management fees $ 136 $ 135 Reimbursement for services of affiliates 70 59 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Corporate General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations is not significant. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1997 and 1996: Average Occupancy Property 1997 1996 Parktown Townhouses Deer Park, Texas 95% 96% Raintree Apartments Anderson, South Carolina 91% 96% Signal Pointe Apartments Winter Park, Florida 96% 95% The decrease in occupancy at Raintree Apartments is due to tenants vacating the property to purchase homes. This property is located in a favorable housing market. The Partnership's net income for the six months ended June 30, 1997, was approximately $222,000 with $140,000 of this income being attributable to the second quarter. The Partnership reported net income of approximately $272,000 and approximately $110,000 for the corresponding periods in 1996. Net income for the six months ended June 30, 1997 decreased primarily due to an increase in maintenance expenses. The increased maintenance expense is a result of an exterior rehabilitation project started at Parktown Townhouses during 1996. This project was necessary to improve the appearance of the property. The repairs and improvements made to this property during 1997 include exterior painting, gutter repairs and landscaping. Included in maintenance expense for the six months ended June 30, 1997, is approximately $128,000 of major repairs and maintenance comprised primarily of gutter repairs, exterior painting and other exterior building improvements. Included in maintenance expense for the six months ended June 30, 1996, is approximately $88,000 of major repairs and maintenance comprised primarily of exterior and interior building improvements and major landscaping. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. At June 30, 1997, the Partnership had unrestricted cash and cash equivalents of approximately $2,367,000 compared to $2,203,000 at June 30, 1996. Net cash provided by operating activities decreased primarily as a result of the decrease in net income as discussed above. Also contributing to the decrease in net cash provided by operating activities was the prepayment of a portion of the annual insurance premiums. Net cash used in investing activities increased due to the increase in property improvements and replacements, primarily at Parktown Townhouse. Net cash used in financing activities decreased due to the Partnership making a lesser distribution in 1997 as compared to 1996. The Partnership has no material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. The Corporate General Partner is currently evaluating the necessity of the replacement or repair of water and sewer lines at Parktown due to possible underground leaks. These capital expenditures and maintenance expenses will be incurred only if cash is available. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $8,645,000, net of discount, is amortized over 257 months. In addition, the mortgage notes require balloon payments of $7,370,000 on November 15, 2002, at which time the properties will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, refinancings, property sales and the availability of cash reserves. The Managing General Partner is evaluating the economic position of the Partnership and the Partnership's ability to make a distribution. A cash distribution of $5,000 was paid to the South Carolina tax department on behalf of the limited partners during the six months ended June 30, 1997. During the six months ended June 30, 1996, distributions totaling $500,000 were declared and paid. As of June 30, 1997, the Reserve Account was fully funded; however, if it becomes necessary to draw upon these reserves, distributions may also be restricted by the requirement to deposit net operating income (as defined in the mortgage note agreement) into the Reserve Account. PART II - OTHER INFORMATION ITEM 1. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 1997. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHELTER PROPERTIES II LIMITED PARTNERSHIP By: Shelter Realty II Corporation Corporate General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Vice President and Treasurer Date: July 29, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties II Limited Partnership 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000319723 SHELTER PROPERTIES II LIMITED PARTNERSHIP 1,000 6-MOS DEC-31-1997 JUN-30-1997 2,367 0 15 0 0 0 24,794 15,547 13,214 0 8,645 0 0 0 3,985 13,214 0 2,793 0 0 2,571 0 401 222 0 222 0 0 0 222 8.00 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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