-----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, EGiM8TIKxzESbIH05vpU1IZG+z/vYEsCLyHXGSx5CI7OmHitnp6zOCT6awiv1Qi0 vR/0i9QnXS/1/P4G40++zg== 0000737829-97-000005.txt : 19970401 0000737829-97-000005.hdr.sgml : 19970401 ACCESSION NUMBER: 0000737829-97-000005 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLORIDA INCOME FUND LP CENTRAL INDEX KEY: 0000737829 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 592337910 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 002-88845-A FILM NUMBER: 97568565 BUSINESS ADDRESS: STREET 1: 12800 UNIVERSITY DR STREET 2: STE 675 CITY: FORT MYERS STATE: FL ZIP: 33907 BUSINESS PHONE: (941) 481-2011 MAIL ADDRESS: STREET 1: 13391 MCGREGOR BLVD STREET 2: SUITE 4 CITY: FORT MYERS STATE: FL ZIP: 33919 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR FISCAL YEAR ENDED DECEMBER 31, 1996 Commission File Number: 2-88845-A Exact name of Registrant as specified in its charter: Florida Income Fund, L.P. State or other Jurisdiction of incorporation or organization: Iowa I.R.S. Employer Identification Number: 59-2337910 Address of Principal Executive Offices: 12800 University Drive, Ste 675 Fort Myers, FL 33907 Registrant's Telephone Number, including Area Code: (941) 481-2011 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None The registrant 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 has been subject to such filing requirements for the past 90 days. FLORIDA INCOME FUND, L.P. FORM 10-K - 1996 CONTENTS AND CROSS REFERENCE INDEX PART ITEM FORM 10-K NO. NO. DESCRIPTION PAGE NO. - ---- ---- ----------- --------- I 1 Business 3 2 Properties 3 - 7 3 Legal Proceedings 7 4 Submission of Matters to a Vote of Security Holders 7 II 5 Market for Registrant's Partnership Equity and Related Partner Matters 8 6 Selected Financial Data 8 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 11 8 Financial Statements and Supplementary Data 12 - 28 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 III 10 Directors and Executive Officers of the Registrant 29 - 31 11 Executive Compensation 32 - 33 12 Security Ownership of Certain Beneficial Owners and Management 33 13 Certain Relationships and Related Party Transactions 33 IV 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 34 Signatures 35 2 PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS - Florida Income Fund, L.P., (the Partnership) is an Iowa Limited Partnership formed as of March 1984, for the purpose of investing in a diversified portfolio of income-producing commercial and residential real estate properties primarily located in Southwest Florida. The Partnership's primary objectives are to preserve and protect the Partnership's original capital, provide distributable cash, a portion of which may constitute nontaxable income, obtain capital appreciation through increases in value of Partnership properties, and realize capital gains from the sale of Partnership properties. There can be no assurance that these objectives will be achieved. The achievement of these objectives depends on many factors, including principally the ability of the Managing General Partner to select suitable properties (completed) at favorable prices and the successful management of those properties. The General Partners of the Partnership are Mariner Capital Management, Inc., a Florida corporation (Managing General Partner or Mariner) and MCD Real Estate, Inc., an Ohio corporation. The primary market is Southwest Florida. The partnership invested in several properties in order to achieve a measure of diversification. The Partnership's original intent was to hold these properties as long-term investments. The Managing General Partner has chosen to invest primarily in Southwest Florida because of its experience in dealing in real estate in this area. Southwest Florida offers, in management's opinion, a competitive but growing market in which to meet its performance objectives. On March 28, 1984, a registration statement on Form S-18 for an offering of 5,000 units of limited partnership interest at $1,000 per unit became effective with the United States Securities and Exchange Commission (File No. 2-88845-A). McDonald and Company Securities, Inc., an affiliate of MCD Real Estate, Inc., one of the General Partner's, acted as the Managing Dealer for the offering, which ended July 8, 1984, when all units were sold. The Partnership itself has no executive officers as employees. The Managing General Partner, which has responsibility for the management of the Partnership, has assigned certain individuals to devote as much time to the operations of the Partnership as deemed necessary. All these individuals serve the Partnership on a part-time basis. The Managing General Partner is also a General Partner in several other public and private limited partnerships engaged in similar activities. ITEM 2. PROPERTIES The Partnership has acquired four properties which it continues to hold and operate. These four properties are: (1) Edison Square Shopping Center, acquired on October 19, 1984; (2) Corporate Office Park, acquired April 15, 1985; (3) Gallery Motel, acquired June 27, 1985; (4) Villas Plaza Shopping Center acquired December 6, 1985. A brief description of these properties and the terms of purchase by the Partnership is as follows: 3 EDISON SQUARE Edison Square is a strip shopping center located in Lee County, Florida, consisting of approximately 40,000 square feet of net leasable area situated on 3.45 acres of land. The building was completed in early 1984, and is of contemporary design with masonry construction and glass store fronts. Edison Square Shopping Center is located on Fowler Street, just east of Edison Mall - the area's largest regional shopping mall. The property also has access from Colonial Boulevard, which is a major artery from I-75 to Fort Myers. Fowler street is a major north/south artery. The Partnership acquired the Edison Square property on October 19, 1984. The Partnership has capitalized the following costs associated with the purchase of Edison Square. Original Purchase Price $3,295,000 Acquisition Fee 131,800 Less: Seller Adjustment for not meeting certain leasing requirements (100,000) ---------- Total Capitalized costs of Acquisition $3,326,800 ---------- The terms of the purchase were $997,000 cash. A first mortgage of $1,645,000 was also placed on the property subsequent to closing. The remaining purchase price was financed by a second mortgage from the seller in the amount of $553,000 at 11% which has subsequently been paid off. The Partnership refinanced this loan as of September 8, 1994. The terms of this mortgage are as follows: The principal amount borrowed was $1,725,000. The interest rate is fixed at 10.6% and the loan balloons on October 1, 2001. This loan is being amortized over 22 years and has a principal and interest payment amount of $16,894.90. The loan is non recourse and Edison Square Shopping Center is the collateral. The Partnership's debt increased from $1,426,000 to $1,725,000. These excess proceeds were used to pay for capital improvements and for loan refinance costs. The loan can not be prepaid in the first year but may be prepaid after the second year with a prepayment amount either the greater of (a) 1% of the principal balance of the note being prepaid or (b) the ratio of the principal balance of the note being prepaid over the outstanding principal balance of the note on the prepayment date multiplied by the present value as of the prepayment date of the remaining scheduled payments determined by discounting such payments at the discount rate less the amount of the outstanding principal balance of the note on the prepayment date. Borrower is also obligated to escrow funds for insurance, taxes and a replacement reserve. When purchased, the property was 62.5% occupied. At December 31, 1996 and 1995 the property was 93% and 97% occupied. 4 CORPORATE PARK The Partnership acquired Corporate Park on April 15, 1985. The property is an office complex consisting of approximately 12,800 square feet situated on 1.13 acres of land. Corporate Park is located on Evans Avenue in Fort Myers, Lee County, Florida. The property is a few blocks from the Metro Park Outlet Mall and the Edison Mall. It is also enhanced by its excellent access to Colonial Boulevard - a main thoroughfare to I-75. The Partnership has capitalized the following costs associated with the acquisition of Corporate Park: Original Purchase Price $1,000,000 Acquisition Fee 20,000 Brokerage Commission 30,000 Appraisal 2,000 ---------- Total Capitalized Cost $1,052,000 ---------- The property was purchased for cash and then subsequently financed with a $620,000 mortgage which has since been paid off with borrowings from an affiliated partnership. At December 31, 1996 and 1995, Corporate Park was 100% occupied. Corporate Office Park and Villas Plaza Shopping Center are secured by a first mortgage to an affiliated partnership in the amount of $1,400,000. The interest rate is 12%. This loan matures on December 31, 1997. GALLERY MOTEL (NOW SEASIDE INN) The Partnership's third acquisition was purchased on June 27, 1985. The property is a motel consisting of 7 buildings, which house 32 rental units including 10 motel, 4 efficiency and 8 one-bedroom cottages situated on 1.88 acres of land. The property also includes a pool, 200 feet of direct frontage on the Gulf of Mexico and office facilities. The buildings are approximately 25 years old and were renovated in 1995. They consist of concrete block and wood veneer construction for some buildings and wood construction for others. All units are elevated to prevent flooding. The Gallery Motel is located on East Gulf Drive on Sanibel Island, Florida, directly on the Gulf of Mexico, near the east end of the Island. Sanibel is located in Lee County, just off Florida's West Coast. 5 The Partnership has capitalized the following costs associated with the acquisition of Gallery Motel: Original Purchase Price $2,150,000 Acquisition Fee 100,000 Less: Imputed discount on mortgage loan (134,000) ---------- Total Capitalized Cost $2,116,000 ---------- Terms of the purchase provided for a cash down payment of $1,000,000 and a seller mortgage at 11.7% interest rate in the amount of $1,150,000 (which was discounted to $1,016,000). The purchase terms were negotiated with no interest or principal payments due for the first year. This mortgage was refinanced with a local financial institution in December, 1986 at prime plus one percent. On February 1, 1990, the Partnership consolidated other debts by increasing its loans on the Gallery Motel with a local financial institution. The loan balance at December 31st is $2,545,747. The maturity date has now been extended to November 1, 1996 with an interest rate of Prime plus 1-1/2%; monthly principal payments of $3,400 commencing July 1, 1995 until maturity, at which time balance is due in full. Proceeds from the above mentioned loan were used to pay off $950,000 ($790,000 and $160,000) of notes payable to affiliates, $250,000 of un-collateralized line of credit and $1,433,768 of mortgages payable to banks. The remainder was used for capital improvements. A total renovation of the property was completed in 1995 and it was renamed Seaside Inn. The Partnership has also obtained a $650,000 loan from an unaffiliated lender in order to complete renovations. This loan is interest only at a rate of 12% and is paid quarterly. The loan balloons October 1997. As of December 31, 1995, $650,000 of the loan had been drawn. The total cost of the renovations was approximately $985,000. The excess costs were invested by the management company and are non-refundable unless the management company purchases the property at which time that sum will be credited to the purchase price. The management company, South Seas Resorts Company (SSRC), an affiliate of the general partner has signed an option agreement to acquire the property on or before January 1997, at a price of $6,485,000. This price assumes renovations of $335,000 of which $330,000 has been funded to date. Since the transaction is between affiliated companies, the general partner must seek approval from the limited partners of (1) the option terms and (2) an amendment of the partnership agreement to permit the sale to an affiliate. That approval was solicited in August 1996. Once approved the transaction still represented an option, however SSRC closed on the purchase of this property in January 1997 as reported in an 8-K filed January 15, 1997. 6 VILLAS PLAZA The Partnership's final property acquisition was made on December 6, 1985. The property is a shopping center consisting of approximately 36,000 square feet situated on 3.51 acres of land, located in Lee County, Florida. There are three buildings with ages ranging from 15 to 30 years. The buildings consist of masonry construction with wood trim. Villas Plaza is located directly on U.S. 41 and Crystal Drive in Fort Myers, Florida. The Partnership has capitalized the following costs associated with the acquisition of Villas Plaza: Original Purchase Price $1,750,000 Acquisition Fee 52,000 Commissions and Appraisal Fees 4,000 ---------- Total Capitalized Cost $1,806,000 ---------- Terms of purchase provided for assumption of a first mortgage of $586,000, a second mortgage from the seller for $328,000, with the balance paid in cash. The second mortgage was paid off and refinanced with a 10% interest only mortgage obtained from an affiliated partnership. The second mortgage matured in January 1990. In February 1990, $160,000 of this second mortgage was paid off from proceeds of the Gallery Motel refinancing (See Page 6). On December 31, 1992, the Partnership borrowed $500,000 of additional cash from an affiliated partnership and satisfied the $150,000 second mortgage on Edison square. This resulted in a new loan of $1,350,000 secured by Villas Plaza and Corporate Office Park, with a 12% interest rate and matures December 31, 1994. Proceeds from this refinance were used to pay off the original first mortgage in January 1993, the $150,000 line of credit, the 1% point associated with the refinance and the remainder will be used for capital improvements to the properties. The Partnership has obtained a new loan in the amount of $1,400,000 to be used to pay this loan in full and cover loan costs. See prior discussion under "Corporate Park". At December 31, 1996 and 1995, the property was 73% and 70% occupied. The Partnership sold the Villas Plaza to an unrelated purchaser on March 20, 1997 at a price of $1,900,000. The sale generated approximately $620,000 which is available for distribution to the partners. ITEM 3. LEGAL PROCEEDINGS The Partnership is not a party to nor is any of the Partnership property the subject of any material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None except for item discussed above under "Gallery Motel" which was submitted on August 8, 1996. 4,950 of the 5,005 limited partnership interests voted in favor of selling the facility, representing a 91.7% approval. 87 partnership interests voted against consummating the sale, or abstained, and 338 failed to vote, which represents a 8.3% negative or abstention vote. The consent document required a 66.67% affirmative vote. 7 PART II ITEM 5. MARKET FOR REGISTRANTS'S PARTNERS' EQUITY AND RELATED PARTNER MATTERS The Partnership units are not traded on any public market and it is not contemplated these units will be traded on any public market in the future. As of December 31, 1996, there were 449 Limited Partners. The Partnership paid quarterly cash distributions totaling $263,421, $105,368 and $237,078 during 1996, 1995 and 1994, respectively. The Partnership intends to use operating cash produced by the Partnership for capital improvements in 1997 and to distribute any excess cash to the Partners.
ITEM 6. SELECTED FINANCIAL DATA YEARS ENDED DECEMBER 31, -------------------------------------------------------------- 1996 1995 1994 1993 1992 --------- ---------- ---------- ---------- ---------- Operating revenues (including interest income of $7,162 for 1996, $55 for 1995, $37 for 1994, $1,151 for 1993 and $1,579 for 1992 $2,469,967 $2,210,238 $2,079,030 $2,133,634 $2,149,907 Net income (loss) $ (169,012) $ (77,025) $ 68,009 $ 196,756 $ 296,991 Net income (loss) per weighted average Limited Partnership unit $ (32.08) $ (14.62) $ 12.91 $ 37.35 $ 56.37 Total assets $8,318,811 $8,461,619 $8,335,671 $7,695,432 $8,185,649 Mortgages and notes payable $6,231,301 $6,299,697 $6,155,942 $5,503,249 $5,766,412 Distributions to Limited Partners $ 250,250 $ 100,100 $ 225,225 $ 400,409 $ 558,080 Distributions per Limited Partnership unit $ 50.00 $ 20.00 $ 45.00 $ 80.00 $ 111.50 Partners' equity $1,151,542 $1,583,975 $1,766,368 $1,935,437 $2,160,164 Book value per Limited Partnership unit $ 252.84 $ 334.92 $ 369.54 $ 401.63 $ 444.29
Also, refer to Item #8 and the audited Financial Statements referred to herein. 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY - The principal sources of the Partnership's liquidity are income from commercial real estate purchased for the Partnership's portfolio (as described in Results from Operations), and cash reserves. The Partnership has two loans that it extended in 1995. Corporate Park and Villas Plaza Shopping Center are collateralized by a $1,350,000 first mortgage from an affiliated partnership. The interest rate is 12%. This loan was refinanced in the amount of $1,400,000 at an interest rate of 12% and extended to December 31, 1997, with no prepayment penalty. The loan is interest only with interest paid quarterly. The maturity date of the Gallery Motel loan in the amount of $2,545,747 has been extended until March 31, 1997, by a local financial institution. See discussion to sell property under Item 2. The Managing General Partner has prepared sales packages on all of the properties and has offered all of the properties for sale. The properties are offered for sale above their current carrying value. A sale of all or some of the properties would increase cash to the Partnership. however, cash flow from operations would decrease due to the property sale. The Partnership properties are not considered to be institutional grade due to their smaller size and lack of sufficient credit tenants; therefore those properties do not have a broad range of potential purchasers. The purchasers of these property types tend to be smaller, with less access to the capital markets for funding. There has been some improvement in this area over the past year and management is hopeful that it can take advantage of that fact in finding qualified buyers but can make no predictions at this time. The Partnership has obtained a $650,000 loan from an unaffiliated lender in order to renovate the Gallery Motel. This is an interest only loan with a rate of 12% paid quarterly. Management believes that these renovations will increase the value of the Gallery Motel through an increase in rate and occupancy. Partner distributions in 1996 were higher than in 1995 due to the Gallery Motel being operated for twelve months in 1996. Other factors that could affect liquidity are unexpected vacancies, unanticipated capital improvements and the strength of the Florida tourist industry. Other than as discussed above, Management is not aware of any trends or demands, commitments events or uncertainties that will result, or that are reasonably likely to result, in the Partnership's liquidity increasing or decreasing in any material way. CAPITAL RESOURCES - As of December 31, 1996, the Partnership had $334,144 in cash and other interest-bearing deposits. In connection with debt refinancing in 1995, see Section 7 under Liquidity. 9 Land and buildings (net of accumulated depreciation of $3,543,798 and provision for impairment of $229,500) are carried at $7,544,846 at December 31, 1996. Improvements to rental properties totaled $42,038 in 1996. The improvements were paid for out of cash from operating activities. Management does not anticipate significant capital improvement expenditures in 1997. Factors influencing this would be unexpected vacancies, unanticipated capital improvements and general property conditions. RESULTS OF OPERATIONS COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1996 AND 1995 During the years ended December 31, 1996 & 1995, the Partnership's principal sources of revenue were rental income of $2,305,736 and $2,041,407 and expense reimbursements from tenants of $157,069 and $168,776, respectively. The increase in rental revenues was attributed to the following properties: Corporate Park increased $7,482, Edison Square increased $11,732, Villas Plaza decreased $5,375 and Gallery Motel increased $250,490. Corporate Park was 100% occupied during the entire year of 1996. Revenue increases at Edison Square and Corporate Park were due to higher occupancy and increased rental rates from CPI increases. The room revenue increase at the Gallery Motel was due to higher average daily rate in 1996 as compared to 1995. The average daily room rate increased more than 10.0% from $148.62 to $163.98. Additionally, there were 2,511 more room nights available to be rented as a result of the motel renovations being completed. Property operating expenses have increased from $1,048,958 to $1,078,297 primarily due to increases in operating costs at the Gallery Motel. Depreciation expense increased from $324,214 to $454,860 due to additional assets being put into service in 1995. Interest expense decreased $28,515 due to lower mortgage balances on the Edison Square and Gallery loans. Management recognized a loss on impairment of $229,500 and $0 at December 31, 1996 and 1995, respectively. COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1995 AND 1994 During the years ended December 31, 1995 and 1994, the Partnership's principal sources of revenue were rental income of $2,041,407 and $1,913,524 and expense reimbursements from tenants of $168,776 and $165,469, respectively. The increase in rental revenues was attributed to the following properties: Corporate Park increased $35,823, Edison Square increased $49,826, Villas Plaza decreased $7,287 and Gallery Motel increased $49,521. Corporate Park experienced a vacancy for part of 1994 and was 100% occupied during the entire year of 1995. Revenue increases at Edison Square and Corporate Park were due to higher occupancy and increased rental rates from cost of living increases. The room revenue increase at the Gallery Motel was due to higher occupancy and average daily rate in 1995 as compared to 1994. The average daily room rate increased 10.0% from $134.97 to $148.62. This rate increase was offset by 427 less room nights being rented in 1995 due to the motel being renovated. 10 Property operating expenses have increased from $920,310 to $1,048,958 primarily due to increases in operating costs at the Gallery Motel. Depreciation expense increased from $311,631 to $324,214 due to additional assets being put into service in 1995. Interest expense increased $99,280 due to higher interest rate and a higher mortgage balance on the Edison Square loan and the interest associated with the $650,000 loan for the Gallery renovations. COMPARISON OF THE FISCAL YEARS ENDED DECEMBER 31, 1994 AND 1993 During the years ended December 31, 1994 and 1993, the Partnership's principal sources of revenue were rental income of $1,913,524 and $1,960,705 and expense reimbursements from tenants of $165,469 and $171,778, respectively. The decrease in rental revenues was attributed to the following properties: Corporate Park decreased $29,218, Edison Square increased $26,834, Villas Plaza increased $9,591 and Gallery Motel decreased $54,388. Corporate Park experienced a vacancy for part of 1994 and was 100% occupied during the entire year of 1993. Revenue increases at Edison Square and Villas Plaza were due to higher occupancy and increased rental rates from cost of living increases. The room revenue decrease at the Gallery Motel was due to lower occupancy in 1994 as compared to 1993. Although the average daily room rate increased 5.3% from $128.12 to $135.63, overall gross revenue declined because occupancy declined from 78.6% in 1993 to 71.3% in 1994 or a total of 848 room nights. Property operating expenses have increased from $901,143 to $920,310 primarily due to increases in insurance costs. In the past two years, the Gallery Motel has settled several claims relating to Workman's Compensation and General Liability claims. These claims plus a general increase in insurance premiums in the insurance market have contributed to the rise in insurance costs. Depreciation expense increased from $293,177 to $311,631 due to additional assets being put into service in 1994. Interest expense increased $30,602 due to higher interest rate and a higher mortgage balance on the Edison Square loan and the interest associated with the $650,000 loan for the Gallery renovations. ($500,000 drawn in 1994.) INFLATION - At the present time, inflation and changing prices have not had a significant impact on operations, however the impact on future operations is not currently determinable. CHANGING RETAIL CONDITIONS - The Florida retail market has changed significantly over the past few years with the trend toward super stores among the giant retailers. Management expects this trend to continue into the next decade. Among the retailers opening super stores are the following: Walmart Builders Square K-Mart Circuit City Target Sam's Wholesale Home Depot These super stores offer most of the products that are offered by the small retailers. They are able to do so at highly competitive prices which has driven many of the smaller retailers out of business or forced them to seek rent relief in order to stay in business. This trend has had a negative effect on both occupancies and rental rates at properties such as those held by the Fund. Management has had to compete with other properties for dwindling supply of small retailers. Management expects this trend to continue. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Balance Sheets of the Partnership as of December 31, 1996 and 1995 and the Statements of Income, Partner's Capital and Cash Flows of the Partnership for each of the three years in the period ended December 31, 1996, as well as the Notes to Financial Statements and Schedule III and the Report of Independent Accountants there on, dated March 20, 1997, are set forth herein: 12 REPORT OF INDEPENDENT ACCOUNTANTS To the Partners Florida Income Fund, L.P. We have audited the accompanying balance sheets of Florida Income Fund, L.P. as of December 31, 1996 and 1995, and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 management, 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 financial statements referred to above present fairly, in all material respects, the financial position of Florida Income Fund, L.P. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Fort Myers, Florida March 20, 1997 13 FLORIDA INCOME FUND, L.P. BALANCE SHEETS December 31, 1996 and 1995
ASSETS 1996 1995 ------------------- ------------------- CURRENT ASSETS Cash and cash equivalents $ 334,144 $ 72,979 Accounts receivable, trade 54,295 21,993 Prepaid expenses and other 86,025 60,457 ------------------- ------------------- Total current assets 474,464 155,429 ------------------- ------------------- RENTAL PROPERTIES, net 7,544,846 8,187,168 ------------------- ------------------- INTANGIBLE ASSETS Deferred loan costs, net 70,001 119,022 ------------------- ------------------- Total assets $ 8,089,311 $ 8,461,619 =================== =================== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES Current maturities of notes and mortgages payable $ 3,183,070 $ 2,573,342 Current maturities of notes payable to affiliates 1,400,000 0 Accounts payable 59,273 52,122 Accrued expenses 80,249 67,899 Customer and security deposits 141,063 128,605 Deposit on sale of rental property 425,883 329,323 ------------------- ------------------- Total current liabilities 5,289,538 3,151,291 ------------------- ------------------- NOTES AND MORTGAGES PAYABLE Notes and mortgages payable, less current maturities 1,648,231 2,326,353 Notes and mortgages payable to affiliates, less current maturities 0 1,400,000 ------------------- ------------------- Total notes and mortgages payable 1,648,231 3,726,353 ------------------- ------------------- PARTNERS' CAPITAL General partners deficiency (113,913) (92,291) Limited partners, 5,005 limited partnership units authorized; 5,005 issued and outstanding 1,265,455 1,676,266 ------------------- ------------------- Total partners' capital $ 1,151,542 $ 1,583,975 ------------------- ------------------- Total liabilities and partners' capital $ 8,089,311 $ 8,461,619 =================== ===================
The accompanying notes are an integral part of these financial statements. 14 FLORIDA INCOME FUND, L.P. STATEMENTS OF INCOME years ended December 31, 1996, 1995 and 1994
1996 1995 1994 ---------------- ---------------- ----------------- Revenues Rental income $ 2,305,736 $ 2,041,407 $ 1,913,524 Tenant reimbursements 157,069 168,776 165,469 Interest income 7,162 55 37 ---------------- ---------------- ----------------- 2,469,967 2,210,238 2,079,030 ---------------- ---------------- ----------------- Expenses Property operating expenses 1,078,297 1,018,268 906,438 Interest expense 556,858 589,648 465,248 Interest expense - affiliates 168,000 163,725 172,027 Depreciation 454,860 324,214 311,631 Property taxes 143,090 146,292 150,487 Bad debt expense 8,374 0 5,190 Loss on impairment of asset 229,500 0 0 Loss on disposal of fixed assets 0 45,116 0 ---------------- ---------------- ----------------- 2,638,979 2,287,263 2,011,021 ---------------- ---------------- ----------------- Net income (loss) $ (169,012) $ (77,025) $ 68,009 ================ ================ ================= Net income (loss) allocated to general partner $ (8,451) $ (3,851) $ 3,400 ================ ================ ================ Net income (loss) allocated to limited partners $ (160,561) $ (73,174) $ 64,609 ================ ================ ================= Net income (loss) per limited partner unit $ (32.08) $ (14.62) $ 12.91 ================ ================ ================= Distributions per limited partner unit $ 50.00 $ 20.00 $ 45.00 ================ ================ ================ Weighted average limited partner units outstanding 5,005 5,005 5,005 ================ ================ ================
The accompanying notes are an integral part of these financial statements. 15 FLORIDA INCOME FUND, L.P. STATEMENTS OF PARTNERS' CAPITAL years ended December 31, 1996, 1995, and 1994
GENERAL LIMITED PARTNERS PARTNERS TOTAL --------------- ---------------- ---------------- Balances, January 1, 1994 $ (74,719) $ 2,010,156 $ 1,935,437 Net income 3,400 64,609 68,009 Distributions (11,853) (225,225) (237,078) ---------------- ---------------- ---------------- Balances, December 31, 1994 (83,172) 1,849,540 1,766,368 Net loss (3,851) (73,174) (77,025) Distributions (5,268) (100,100) (105,368) ---------------- ---------------- ---------------- Balances, December 31, 1995 (92,291) 1,676,266 1,583,975 Net loss (8,451) (160,561) (169,012) Distributions (13,171) (250,250) (263,421) ---------------- ---------------- ---------------- Balances, December 31, 1996 $ (113,913) $ 1,265,455 $ 1,151,542 ================ ================ ================
The accompanying notes are an integral part of these financial statements. 16 FLORIDA INCOME FUND, L.P. STATEMENTS OF CASH FLOWS years ended December 31, 1996, 1995 and 1994
1996 1995 1994 ---------------- ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (169,012) $ (77,025) $ 68,009 Adjustments to reconcile net income (loss) to net cash provided by operating activities Amortization of loan cost 49,020 30,690 13,872 Depreciation 454,860 324,211 311,631 Bad debt 8,374 0 5,190 Loss on disposal of rental property improvements 0 45,116 0 Loss on impairment of rental property 229,500 0 0 (Increase) decrease in: Accounts receivable (32,302) 17,121 (3,609) Prepaid expenses and other (33,942) (10,217) (19,323) Increase (decrease) in: Accounts payable and accrued expenses 19,502 (196,273) 90,213 Customer and security deposits 12,458 31,538 13,850 ---------------- ---------------- ---------------- Net cash provided by operating activities 538,458 165,161 479,833 ---------------- ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Improvements to rental properties (42,038) (924,987) (346,224) Rental property sale deposit 96,560 329 323 0 ---------------- ---------------- ---------------- Net cash used in investing activities 54,522 (595,664) (346,224) ---------------- ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments under line-of-credit agreement 0 0 (111,000) Proceeds of borrowings from unaffiliated companies 0 150,000 2,225,000 Proceeds of borrowings from affiliates 0 1,400,000 0 Repayments of borrowings to unaffiliated companies (68,394) (56,247) (1,461,307) Repayment of borrowings to affiliate 0 (1,350,000) 0 Loan origination fees paid 0 (57,318) (96,749) Partner distributions paid (263,421) (105,368) (237,078) ---------------- ---------------- ---------------- Net cash provided by (used in) financing activities (331,815) (18,933) 318,866 ---------------- ---------------- ---------------- Net increase (decrease) in cash and cash equivalents 261,165 (449,436) 452,475 Cash and cash equivalents at beginning of year 72,979 522,415 69,940 ---------------- ---------------- ---------------- Cash and cash equivalents at end of year $ 334,144 $ 72,979 $ 522,415 ================ ================ ================ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest on borrowings--affiliates $ 126,000 $ 206,863 $ 131,194 Interest on borrowings--other 507,838 556,653 451,376 ---------------- ---------------- ---------------- $ 633,838 $ 763,516 $ 582,570 ================ ================ ================
The accompanying notes are an integral part of these financial statements. 17 FLORIDA INCOME FUND, L.P. NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ORGANIZATION Florida Income Fund, L.P. (the Partnership) was formed on November 7, 1983, by the filing of a Certificate and Agreement of Limited Partnership (Partnership Agreement) under the laws of the State of Iowa. The General Partners, MCD Real Estate, Inc. (MCD) and Mariner Capital Management, Inc. (MCM), also the Managing General Partner, contributed $10,000 and the Initial Limited Partner contributed $5,000 in the initial capitalization of the Partnership. The Partnership was formed for the purpose of investing in a diversified portfolio of income-producing commercial and residential real estate properties located in Florida. The Partnership owns Edison Square and Villas Plaza (two retail shopping centers), Corporate Park (an office complex) and the Gallery Motel. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies of the Partnership follows: RENTAL INCOME: The Partnership leases space in its retail centers. These leases range from one to fifteen years and include provisions for minimum rent increases at stated amounts or the Consumer Price Index. ALLOCATION OF NET INCOME (LOSS): In accordance with the Partnership Agreement, net income (loss), prior to recoupment of the Partners' original capital investment, is allocated five percent (5%) to the General Partners and ninety-five percent (95%) to the Limited Partners as a class. Subsequent to recoupment, income (loss) is allocated twenty percent (20%) to the General Partners and eighty percent (80%) to the Limited Partners as a class. RENTAL PROPERTIES In March 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of" (SFAS 121). The Statement requires that long-lived assets and certain identifiable intangibles to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In assessing recoverability, estimates of future cash flows expected to result from the use of the asset and its eventual disposition should be used. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss should be recognized based on the value of the asset. Management has reviewed the partnership's property holdings and believes that an impairment of the Corporate Park property exists. A loss of $229,500 on impairment of the Corporate Park property has been recognized in the year ended December 31, 1996. 18 NOTES TO FINANCIAL STATEMENTS, CONTINUED 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Depreciation is computed principally under the straight-line method over the estimated useful lives of the assets. Repairs and maintenance are included in operating expenses and major improvements are capitalized. Upon the sale or retirement of depreciable assets, the cost and related accumulated depreciation are removed from the accounts and the difference between the carrying value and any proceeds realized on sale is included in the determination of net income. TENANT REIMBURSEMENTS: Common area maintenance, property tax and utilities expenses for the rental properties are reimbursed to the fund through tenant assessments. These costs are included in property operating expenses and property tax expense. DEFERRED LOAN COSTS: Loan costs incurred from financing and refinancing the various property acquisitions have been capitalized at cost and are being amortized over the lives of the related loans. Amortization of loan costs is included with interest expense in the income statement. INCOME TAXES: The accompanying financial statements do not show a provision or liability for Federal or State income taxes because the Partners are taxed individually on their share of Partnership earnings. PER UNIT INCOME: Per unit income is based on the weighted average number of units outstanding for the years ended December 31, 1996, 1995 and 1994. CASH EQUIVALENTS: For purposes of the statement of cash flows, the Partnership considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS: The recorded value for cash and cash equivalents approximates fair value because of the short maturity of these instruments. The fair value of the Partnership's short and long-term notes and mortgages payable at December 31, 1996, based upon market rates, approximates the amounts disclosed in Footnote 4. RECLASSIFICATIONS: Certain amounts in the 1995 and 1994 financial statements have been reclassified to conform to the current year presentation. These reclassifications have no effect on the net income or partners' capital previously reported. 19 NOTES TO FINANCIAL STATEMENTS, CONTINUED 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED MANAGEMENT'S USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. RENTAL PROPERTIES: Rental properties consisted of the following at December 31:
1996 1995 ---------------- ---------------- Land $ 2,429,433 $ 2,429,433 Buildings and improvements 8,888,711 8,846,673 Loss on impairment of asset (229,500) 0 ---------------- ---------------- 11,088,644 11,276,106 Accumulated depreciation (3,543,798) (3,088,938) ---------------- ---------------- Rental properties, net 7,544,846 8,187,168 ================ ================
Two properties, Gallery Motel and the Villas Plaza, were sold subsequent to year end (See Note 6). The carrying value of these properties at December 31, 1996 was $4,251,355. Depreciation expense was $454,860, $324,214 and $311,631 for 1996, 1995 and 1994, respectively. 20 NOTES TO FINANCIAL STATEMENTS, CONTINUED 2. RENTAL PROPERTIES, CONTINUED The leases at Edison Square, Villas Plaza and Corporate Park are noncancelable leases. Based on the terms of the leases in existence at December 31, 1996, future minimum annual rentals from these leases over the next four years, and in the aggregate, will be approximately as follows: 1997 $ 718,285 1998 514,640 1999 248,425 2000 32,136 ---------------- $ 1,513,486 ================ 3. DEFERRED LOAN COSTS: Deferred loan costs at December 31 are as follows:
1996 1995 ---------------- ---------------- Loan costs $ 122,182 $ 147,597 Accumulated amortization (52,181) (28,575) ---------------- ---------------- $ 70,001 $ 119,022 ================ ================
Additions to deferred loan costs relate to modifications of note terms and other refinancing transactions during the years ended December 31, 1996 and 1995. Certain loan costs became fully amortized during the years ended December 31, 1996 and 1995 and, therefore, were written off. Amortization expense was $49,020, $30,690 and $13,872 for 1996, 1995 and 1994, respectively. 21 NOTES TO FINANCIAL STATEMENTS, CONTINUED 4. NOTES AND MORTGAGES PAYABLE: Notes and mortgages payable consisted of the following at December 31:
1996 1995 ---------------- ---------------- Unaffiliated debt: Note and mortgage payable to banks: Mortgage payable with monthly payments of $3,400 plus interest at prime plus 1.5%, balloon payment of approximately $2,494,400 due March 1997, prime rate at December 31, 1996 was 8.25% $2,504,947 $ 2,545,747 Installment loan payable with monthly payments of $334 including interest at 6.5%, final payment due May 1997 1,642 5,408 ---------- ---------------- Total note and mortgage payable to banks 2,506,589 2,551,155 ---------- ------------- Other mortgages payable: Mortgage payable with monthly payments of $16,895 including interest at 10.6%, final payment due October 2001 1,674,712 1,698,540 Mortgage payable with interest payable quarterly at 12% balloon payment of entire principal plus accrued interest due October 1997 650,000 650,000 ---------- ------------- Total other mortgages payable 2,324,712 2,348,540 ---------- ------------- ffiliated debt: Notes and mortgages payable to affiliates: Mortgage payable with interest payable quarterly at 12%, balloon payment of entire principal plus accrued interest due December 1997, collateralized by first mortgage 1,400,000 1,400,000 ---------- ------------- Total affiliated debt 1,400,000 1,400,000 ---------- ------------- Total notes and mortgages payable 6,231,301 6,299,695 Less current maturities (4,583,070) (2,573,342) ---------- ------------- Total long-term debt less current maturities $1,648,231 $ 3,726,353 ========== =============
22 4. NOTES AND MORTGAGES PAYABLE, CONTINUED Long-term portions of notes and mortgages payable are scheduled to mature approximately as follows: 1997 $ 4,583,070 1998 29,428 1999 32,704 2000 36,344 Thereafter 1,549,755 ---------------- $ 6,231,301 ================ All rental properties are pledged as collateral for mortgages payable, as are rents and receivables related to Corporate Park, Edison Square, and Villas Plaza. 5. RELATED PARTY TRANSACTIONS: The Partnership participated in the following related party transactions: The General Partners and their affiliates are entitled to receive compensation for leasing and management fees in an amount not to exceed 6% of gross revenues produced by commercial Partnership properties. For the years ending December 31, 1996, 1995 and 1994, the General Partners and their affiliates received fees of $106,235, $133,256 and $124,535 respectively. The General Partners and their affiliates are also entitled to reimbursement of costs (including amounts of any salaries paid to employees and officers of a General Partner or its affiliates) directly attributable to the operation of the Partnership which could have been obtained from independent parties. Expenses amounting to 403,615, $343,530, and $304,072 were incurred during the years ended December 31, 1996, 1995 and 1994, respectively, of which the following amounts were included in accounts payable and accrued expenses:
1996 1995 1994 ------- ------- -------- Amounts included in accounts payable $25,829 $10,562 $106,114 ======= ======= ======== Amounts included in accrued expenses $18,279 $ 0 $ 40,833 ======= ======= ========
6. SUBSEQUENT EVENT: The Partnership sold the Seaside Inn (formerly the Gallery Motel) on January 6, 1997 at a price of $6,485,000. The carrying value of the property was $2,529,871 at December 31, 1996. Selling expenses totaled approximately $75,000, resulting in a gain of approximately $3,880,000. The first mortgage of approximately $2,500,000 was assumed by the buyer. Proceeds of approximately $650,000 and $514,000 were used to pay the remaining principal on the second mortgage and related property outstanding liabilities, respectively. Approximately $2,724,000 was available for distribution to partners. Revenues and net income for the Seaside Inn for the year ended December 31, 1996 were approximately $1,400,000 and $43,000, respectively. In addition, the Partnership sold the Villas Plaza property on March 20, 1997 at a price of $1,900,000. The carrying value was approximately $1,700,000 at date of sale. Selling and related expenses totaled approximately $195,000 resulting in no gain or loss. The first mortgage of approximately $1,075,000 was paid off with closing proceeds. Approximately $620,000 was available for distribution to partners. Revenues and net loss for the Villas Plaza property for the year ended December 31, 1996 were approximately $377,000 and $(9,000), respectively. 23 REPORT OF INDEPENDENT ACCOUNTANTS Our report on the financial statements of Florida Income Fund, L.P. is included on page 13 of this Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 34 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Fort Myers, Florida March 20, 1997 24
FLORIDA INCOME FUND, L.P. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER, 31, 1996 COL. A COL. B COL. C COL. D COL. E COST CAPITALIZED GROSS AMT AT INITIAL COST SUBSEQUENT TO WHICH CARRIED AT TO PARTNERSHIP ACQUISITION CLOSE OF PERIOD ----------------------- ------------------------- ---------------- BLDGS. & CARRYING BLDGS & DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS LAND IMPROVEMENTS TOTAL - ----------- ------------ ---- ------------ ------------ -------- ---- ---------------- ----- Edison Square Shopping Center Ft. Myers, FL $1,674,712 $ 665,360 $2,661,440 $ 517,915 $-0- $ 665,360 $3,179,355 $ 3,844,715 Corporate Park Office Complex (b) Ft. Myers, FL(a) 335,000 263,000 789,000 180,794 -0- 263,000 740,294 1,003,294 Gallery Motel (Now Seaside Inn) Sanibel, FL (32 Unit Motel) 3,156,589 814,918 1,301,082 1,457,945 -0- 814,918 2,759,027 3,573,945 Villas Plaza Shopping Center Ft. Myers, FL(a) 1,065,000 686,155 1,119,845 860,690 -0- 686,155 1,980,535 2,666,690 ---------- ---------- ---------- ---------- ---- ---------- ---------- ----------- TOTALS $6,231,301 $2,429,433 $5,871,367 $3,017,344 $-0- $2,429,433 $8,659,211 $11,088,644 ========== ========== ========== ========== ==== ========== ========== ===========
COL. A COL. F COL. G COL. H COL. I LIFE IN WHICH DEPRECIATION IN LATEST INCOME ACCUMULATED DATE OF DATE STATEMENT IS DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED - ----------- ------------ ------------ -------- --------------- Edison Square Shopping Center Ft. Myers, FL $1,171,609 1984 10/19/84 40 years Corporate Park Office Complex Ft. Myers, FL(a) 382,909 1984 04/15/85 40 years Gallery Motel (Now Seaside Inn) Sanibel, FL (32 Unit Motel) 1,044,080 1965 06/27/85 30 years Villas Plaza Shopping Center 1963- Ft. Myers, FL(a) 945,200 1978 12/06/85 30 years ---------- TOTALS $3,543,798 ========== SEE ACCOMPANYING NOTES TO SCHEDULE III (a) = $1,400,000 (b) = This includes a loss on impairment in the amount of $229,500 to reflect the net realizable value.
25 FLORIDA INCOME FUND, L. P. NOTES TO SCHEDULE III DECEMBER 31, 1996 REAL ESTATE AND ACCUMULATED DEPRECIATION Balance as of 12/31/93 $10,148,098 Additions During Period: Acquisitions through foreclosures $ 0 Other Acquisitions 0 Improvements, etc 398,777 398,777 --------- ----------- Balance as of 12/31/94 10,546,875 Additions During Period: Acquisitions through foreclosures 0 Other Acquisitions 0 Improvements, etc 924,991 924,991 --------- Deletions during period: Improvements, etc (195,760) (195,760) --------- ----------- Balance as of 12/31/95 11,276,106 Additions During Period: Acquisitions through foreclosures 0 Other Acquisitions 0 Improvements, etc. 42,038 Impairment of value (229,500) (187,462) --------- ----------- Balance as of 12/31/96 $11,088,644 =========== 26 FLORIDA INCOME FUND, L.P. NOTES TO SCHEDULE III DECEMBER 31, 1996 REAL ESTATE AND ACCUMULATED DEPRECIATION Balance as of 12/31/93 $2,603,736 Depreciation expense for 1994 $ 311,631 311,631 --------- ---------- Balance as of 12/31/94 2,915,367 Depreciation expense for 1995 324,214 (150,643) 173,571 --------- ---------- Balance as of 12/31/95 3,088,938 Depreciation expense for 1996 454,860 454,860 --------- ---------- Balance as of 12/31/96 $3,543,798 ========== 27 FLORIDA INCOME FUND, L.P. NOTES TO SCHEDULE III DECEMBER 31, 1996 REAL ESTATE AND ACCUMULATED DEPRECIATION (A) The aggregate cost of land and buildings is the same for Federal Income Tax purposes. (B) See Note 1 to the Financial Statements for depreciation method. (C) See Note 4 to the Financial Statements for further information on debt obligations. 28 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (A) AND (B) IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS The Partnership, as an entity, does not have any directors or officers. The Managing General Partner is Mariner Capital Management, Inc. (located at 12800 University Dr., Ste. 675, Fort Myers, Florida 33907), a Florida corporation formed for the purpose of becoming the general partner in limited partnerships formed principally to invest in real estate. The Managing General Partner is a wholly owned subsidiary of The Mariner Group, Inc., an Ohio corporation (referred to herein as "Mariner Group"). The executive officers/directors of the Managing General Partner as of December 31, 1996, were as follows: Robert M. Taylor, Timothy R. Bogott, Lawrence A. Raimondi and Joe K. Blacketer. Each of the officers named above, except Joe K. Blacketer, has served as an officer of the Mariner Capital Management, Inc., since its incorporation on July 11, 1983. Joe K. Blacketer replaced Michael J. Scullion as a Secretary/Treasurer as of May 1, 1996. MCD Real Estate, Inc. (located at 800 Superior Avenue, Suite 2100, Cleveland, Ohio 44114) (referred to herein as "MCD") is a Co-General Partner. MCD is an Ohio corporation and a wholly owned subsidiary of McDonald & Company Securities, Inc., the Managing Dealer of the offering. McDonald & Company Securities, an Ohio corporation, is a wholly owned subsidiary of McDonald & Company Investments, Inc., a publicly-traded Delaware corporation listed on the New York Stock Exchange. MCD was formed in February of 1981 for the principal purpose of becoming the general partner of limited partnerships formed to provide equity financing for various real estate projects. The directors and officers of MCD as of December 31, 1996, were as follows: James C. Redinger, Thomas M. O'Donnell and Richard R. Cundiff. (C) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES Not applicable (D) FAMILY RELATIONSHIP Not applicable (E) BUSINESS EXPERIENCE 29 ROBERT M. TAYLOR: Age 55, is Chairman of the Board and a Director of the Managing General Partner. He founded Mariner Group in 1971 and served as its President until his election as Chairman and Chief Executive Officer of Mariner Group in 1979. He also serves as an officer or director of various other Affiliates of Mariner Group. Mr. Taylor is a Director of Acme-Cleveland Corporation, Cleveland, Ohio, a manufacturer of machine tools; Barnett Bank of Fort Myers, Fort Myers, Florida; MIL- COM Electronics Corporation, San Antonio, Texas; Florida Council of 100; the Fort Myers Chamber of Commerce, and Chairman of the Business Development Corporation of Southwest Florida, Fort Myers, Florida. Since 1971, Mr. Taylor has directed the completion of over 30 real estate developments in Lee County, Florida. Prior to 1971, Mr. Taylor was a management consultant employed by McKinsey & Company, Inc., Cleveland, Ohio. TIMOTHY R. BOGOTT: Age 50, is a Director and the former President of the Managing General Partner. He was involved in all aspects of the organization and management of Florida Income Fund, L.P., Florida Income Fund II and Florida Income Fund III until January 1994 when he became President of South Seas Resorts Company. He joined Mariner Group in 1976 and has held the positions of Project Manager and Director of Administration and Secretary/Treasurer. Prior to 1976, Mr. Bogott was employed as an Assistant Vice President of Palmetto Federal Savings and Loan Association, Fort Myers, Florida (1974-1976) and held various management positions with the First National Bank of Fort Myers (1970-1974). Mr. Bogott was elected Secretary/Treasurer of Mariner Group in 1979 and Vice President -Finance in 1983. Mr. Bogott is also President of Mariner Capital Investment Corporation and is an officer or director of various other Affiliates of Mariner Group. LAWRENCE RAIMONDI: Age 49, is President and Director of the Managing General Partner. He became President in January 1994 after serving as Executive Vice President in charge of property acquisitions and financing of partnership debt. He was involved in all property acquisitions for Florida Income Fund, L.P., Florida Income Fund II and Florida Income Fund III. He joined Mariner Group in 1981 and served as Director of Project Finance until joining the general partner. He was employed in the Real Estate Department of Mellon Bank from 1969 to 1981 in various capacities with his most recent position being a Commercial Mortgage Officer. JOE K. BLACKETER: Age 44, is the Secretary/Treasurer of the Managing General Partner. Mr. Blacketer has been a Certified Public Accountant since 1983. He is a member of the American Institute of Certified Public Accounts (AICPA), and a member of the Florida Institute of Certified Public Accountants (FICPA). Mr. Blacketer joined Mariner Group in 1983. Mr. Blacketer was employed by Coopers & Lybrand, CPA's (1979-1983) prior to that time. 30 JAMES C. REDINGER: Age 60. Mr. Redinger joined McDonald & Company (a partnership that transferred all of its assets to McDonald & Company Securities, Inc.) in March 1974, becoming a partner in 1977, working in the area of corporate underwriting and syndication of real estate and oil and gas ventures. He has had extensive experience in site selection, cost projections of both commercial and residential real estate projects and the syndication of such projects through limited partnerships. Mr. Redinger has served as Chairman of the District Nine Committee of the National Association of Securities Dealers, Inc., is a Vice President and a Director of MCD Oil and Gas Company, Inc., a Director of McDonald & Company Venture Capital, Inc., a Director of McDonald & Company Securities, Inc., and a Managing Director of McDonald & Company Securities, Inc. THOMAS M. O'DONNELL: Age 61. Mr. O'Donnell joined McDonald & Company in 1965 in the Corporate Finance Department. Mr. O'Donnell became a partner of McDonald & Company in 1968 and has been a member of its Policy Committee since 1971. Mr. O'Donnell is a Chartered Financial Analyst and a member of the Cleveland Society of Security Analysts. Mr. O'Donnell is a director of Seaway Food Town, Inc., Maumee, Ohio, a grocery retailer. Mr. O'Donnell is Chief Executive Officer and Chairman of the Board of McDonald & Company Investments, Inc., Chief Executive Officer and Chairman of the Board of McDonald, which operates an insurance agency; a Director of MCD Oil & Gas Company, Inc., a Director of McDonald & Company Venture Capital, Inc.; and a Director of McDonald Financial Services. RICHARD R. CUNDIFF, III: Age 37. Mr. Cundiff joined McDonald & Company in December 1982 and has assisted in the development of the Real Estate and Specialty Finance Department. Specializing in real estate and oil and gas investment banking, his responsibilities include structuring, marketing and monitoring investments in these particular areas. Mr. Cundiff is a First Vice President of McDonald & Company. (F) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS No director or officer of the Managing General Partner was involved in any event during the past five years which would be responsive to this question. 31 ITEM 11. EXECUTIVE COMPENSATION (A) CURRENT REMUNERATION OF GENERAL PARTNERS, THEIR DIRECTORS AND OFFICERS No direct remuneration was paid or payable by the Partnership for the period ended December 31, 1996, to directors or officers of the General Partners. During the period ended December 31, 1996, 1995 and 1994, the remuneration paid to the affiliates of the General Partners was as follows: /bullet/ During 1994 and 1993, entered into financing agreements in the aggregate amount of $1,850,000 and $1,350,000, respectively, with an affiliated partnership of which MCM is general partner. These loans were obtained to repay the unsecured note payable to the Mariner Group, Inc., the Parent of the Managing General Partner, in the aggregate amount of $612,212, to finance improvements to Villas Plaza and the Gallery Motel and to refinance the debt on Corporate Park in the amount of $607,511. Interest expense incurred during 1994 and 1993, on these notes was $172,027 and $162,000, respectively. /bullet/ Management fees totalling $106,235, $133,256 and $124,535 were paid to the Managing General Partner or its affiliates for 1996, 1995 and 1994. /bullet/ The General Partners and their affiliates are also entitled to reimbursement for expenses (including amounts of any salaries paid to employees and officers of a General Partner or its affiliates) directly attributable to the operation of the Partnership which could have been obtained from independent parties. Expenses amounting to $403,615, $343,536 and $304,072 were incurred during the years ended December 31, 1996, 1995 and 1994, respectively. Amounts due to related parties, and included in accounts payable and accrued expenses at December 31, 1996 and 1995 are $44,108 and $10,562. A portion of this amount is for the payment of insurance premiums which are collected by Mariner Group, Inc. (for all Mariner affiliates) and paid to the carrier on behalf of Florida Income Fund, L.P. The balance is for reimbursement for on-site property management personnel and for reimbursement of other costs for services performed by the general partner or affiliates which the Partnership would be required to pay to third parties for comparable services in the same geographical location. In accordance with the Partnership Agreement, net income or loss, prior to recoupment of the partner's original capital investment, is allocated five percent (5%) to the General Partners and ninety-five percent (95%) to the Limited Partners as a class. Subsequent to recoupment, income or loss is allocated twenty percent (20%) to the General Partners and eighty per cent (80%) to the Limited Partners as a class. 32 (B) PROPOSED REMUNERATION Except for the payment of acquisition fees and the allocation of net income or loss as described above, the Partnership has no ongoing plan r arrangement to compensate the persons and entities named above. However, the Managing General Partner or its affiliates may receive leasing and management fees in connection with the management of the Partnership's properties, subject to the limitations described herein below. The Managing General Partner or its affiliates are entitled to receive property management fees not to exceed 6% of the gross revenues from commercial properties and 5% from residential properties. Other expenses attributable to the operation of the Partnership may be reimbursed to the General Partners or affiliates of the Managing General Partner. The Managing General Partner or its affiliates are entitled to one half of the commissions paid as a result of the sale of Partnership properties, in an amount not to exceed 3% of such prices and subordinated to the right of the Limited Partners to receive aggregate cash distributions from the Partnership equal to their capital contribution plus the applicable preference amount. (C) REMUNERATION OF DIRECTORS None. (D) OPTIONS, WARRANTS AND RIGHTS The Registrant has granted no options, warrants or rights. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT No person is known to the Partnership to be the beneficial owner of over 5% of the outstanding Partnership units. For information on net income or loss allocation see Item 11. (A). ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS See Note 5, Related Party Transactions in Notes to the Financial Statements, on page 23 under Item 8. 33 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENT SCHEDULES The following Financial Statement Schedules of the Partnership are included in Part II, Item 8: PAGE ---- Report of Independent Accountants 13 Balance Sheets as of December 31, 1996 and 1995 14 Statements of Income for each of the three years ended December 31, 1996, 1995 and 1994 15 Statements of Partners' Capital for each of the three years ended December 31, 1996, 1995 and 1994 16 Statements of Cash Flows for each of the three years ended December 31, 1996, 1995 and 1994 17 Notes to Financial Statements 18 - 23 Report of Independent Accountants on Schedule III 24 Schedule III Real Estate and Accumulated Depreciation 25 - 28 Schedules Omitted: Other schedules have been omitted because of the absence of conditions under which they are required or because the required information is included in the Financial Statements and Notes thereto. (A) 2. EXHIBITS EXHIBIT 27 - Financial Data Schedule (for SEC use only) (A) 3. REPORTS ON FORM 8-K None. 34 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. FLORIDA INCOME FUND, L.P. (Registrant) March 29, 1996 By: /s/ LAWRENCE A. RAIMONDI ------------------------------------------ LAWRENCE A. RAIMONDI President, Director and CEO Mariner Capital Management, Inc. (Principal Executive Officer) By: /s/ JOE K. BLACKETER ------------------------------------------ JOE K. BLACKETER Mariner Capital Management, Inc. (Principal Financial and Accting Officer) 35 EX-27 2
5 12-MOS DEC-31-1996 DEC-31-1996 334,144 0 54,295 0 0 474,464 11,088,644 3,543,798 8,089,311 5,289,538 0 0 0 0 1,151,542 8,089,311 0 2,469,967 0 0 1,914,121 0 724,858 (169,012) 0 (169,012) 0 0 0 (169,012) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----