2014 Management Discussion

I write with a Quick Update on Clarameda Fund.  By now you should all have received your K1s.  We have filed taxes at the Partnership level.  For non-CA Partners we have paid your CA taxes, those amounts will be deducted from your next regular distribution.  

At a high level we did very well on maintaining a high level of occupancy.  We suffered however from a higher than anticipated repair expenses, including a "mold" abatement issue for a highly sensitive tenant.   We ended the year with another large repair item (replacing a HVAC unit) - which is why I am deferring the Special Distribution decision to June.  In keeping with my conservative approach I don't want to pay out more in distributions than we take in from Operations - as you can see we are about even - which is about where I want us to be.  

Here is a distilled look at Partnership's Finances for FY 2013, ending Dec. 31, 2013:

Note - this is at the Management Level (GAAP would account for things like Accumulated Depreciation, etc).  

Balance Sheet

Assets:  

• 8 Properties

• About $925K in Book Value.  Click here for Zillow Market Values:  

• About $8K in Cash/Receivables

• $933K Total

Liabilities:

• $60K in 3.25% Notes

• About $21K due to Sandalstone (Net)

• About $2K in Security Deposits (Oak properties only)

• $83K Total Liabilities

Shareholder Equity

• $850K in Partner Capital

Net Income

Net Rent:  $113.493

Less Expenses

Taxes:  $12,376

Insurance:  $3,387

Operations:  $45,979 

Operating Expenses:  $61,742

Net Operating Income:  $51,751  

Net Interest Expense:  $7,060

Depreciation:  $26,569

Net Income:  $18,122

Distributions Paid

• $51,716

• More than Net Income Why?

• Addback Depreciation

  • One-Time Costs Expensed vs Capitalized.  This year we had several charges which affected our bottom line and cash flow. These include fees for setting up a Credit Line for Clarameda.

• Going forward, On-going Operations support current Distribution levels plus resumption of Special Distribution

  • The usual caveats of not having excess vacancy, evictions, repairs, etc...

  • We have had no vacancies so far and have gotten through paying for the HVAC unit.  

Partner Taxes

• Very low for 2013 (however up from 2012 as we made no acquisitions) - Net Income of $18,122 vs $51,716 in Distributions 

Thanks for everyone's continued support,  this is an Accounting Update, the Q1 2014 Update will be more market focused - and in that I will provide more commentary on Operations and the Market as usual.    

Cheers,

Biren