ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS - Florida Income Fund II, Limited Partnership, (the Partnership) is an Ohio Limited Partnership formed as of March 26, 1986, 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, build equity through reductions of mortgage indebtedness 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 at favorable prices (completed) 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. For further information see Item 10. The primary market is Southwest Florida. The intent was to invest 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 economic base in which to meet its performance objectives.
The Partnership commenced a $15,000,000 offering of limited partnership interest (the Units) at $1,000 per unit (15,000 total units) on June 13, 1986, pursuant to a registration statement on Form S-11 under the Securities Act of 1933 (Reg. No. 33-04345) (Registration Statement). McDonald and Company Securities, Inc., an affiliate of MCD Real Estate, Inc., Janney Montgomery Scott, Inc. and J. J. B. Hilliard, W. L. Lyons, Inc., acted as the managing dealers of the offering.
The Prospectus filed pursuant to Rule 424(B) and 424(C) under the Securities Act of 1933 (the Prospectus) was supplemented on August 7, 1986, November 20, 1986, January 12, 1987 and March 23, 1987. The Prospectus and supplements are incorporated herein by reference to the extent necessary or appropriate. Pursuant to the terms of the offering, there was a right to offer for sale an additional 5,000 units. The Partnership sold a total of $10,655,000 (10,655 units) to the public.
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 a General Partner in other publicly and privately offered limited partnerships, some having the same or similar investment objectives as the Partnership.
ITEM 2.
ITEM 2. PROPERTIES
The Partnership has purchased six properties. Broadway Medical Center and Laurel Center, which are located in Fort Myers, Florida, were purchased on December 15, 1986. In 1987, the Partnership purchased two additional properties. Town Centre Shopping Center, located in Marco Island, Florida was purchased on April 9, 1987, and Manatee West Shopping Center, located in Bradenton, Florida was purchased on November 4, 1987. Heritage Square Shopping Center, located in Marco Island, Florida was purchased on March 11, 1988, and Pinebrook Commons, located in Bradenton, Florida was purchased on August 3, 1988. A brief description of these properties and the terms of the purchases by the Partnership follows:
BROADWAY MEDICAL CENTER - Broadway Medical Center is a medical office building located in Lee County, Florida consisting of approximately 15,300 square feet of net leasable area situated on 2.23 acres of land. The building was constructed in 1975.
Broadway Medical Center is located at the Southwest corner of Broadway and Carroll Road, just west of U.S. 41 and East of Fowler Avenue. This location is between Lee Memorial Hospital and Southwest Regional Medical Center.
The Partnership acquired the Broadway Medical Center property on December 15, 1986. The Partnership has capitalized the following costs associated with acquisition of Broadway Medical Center:
Contract Purchase Price $1,257,500 Acquisition Fee 62,875 Appraisal Fee 3,000 Survey Fee 1,479 ---------- $1,324,854 ==========
The terms of the purchase were $844,416 cash and a first mortgage of $480,438. When purchased, the property was 100% occupied. At year end 1996 and 1995 the property was 67% and 100% occupied.
The first mortgage was paid off on September 6, 1990, with proceeds obtained from a $6,000,000 consolidation loan, collateralized by Broadway Medical, Town Center Mall and Heritage Square which bears an interest rate of Prime +1%.
The partnership has entered into a contract to sell Broadway Medical Center to an unrelated third party for a price less then the carrying value of the property. Accordingly, a loss on impairment has been recognized at December 1996. The sale is scheduled to occur in the second quarter of 1997, however, there can be no assurance that the transaction will be completed. The decision to sell the property at an amount less than the carrying value was made in response to a declining rental market in the Fort Myers Broadway Avenue area. The subject neighborhood has been declining and losing many of the long term medical office tenants to newer buildings located in more desirable areas of Lee County. This has resulted in a high supply of vacant space versus very low demand which has in turn led to reduced rental rates. The General Partner was of the opinion that the problem is long term and felt it was economically prudent to sell the property at a reduced price.
LAUREL CENTER - The Laurel Center is a 2,300 square foot medical center on 1.95 acres of land that was acquired in 1986. The Partnership capitalized the following costs associated with the acquisition:
Contract Purchase Price $1,657,500 Acquisition Fee 82,875 Closing Costs 4,885 ---------- $1,745,260 ==========
The property was deeded to the lender in lieu of foreclosure in 1994. A non-recourse loan in the amount of $1,337,812 was forgiven by the lender and no further liability exists on the part of the Partnership or its General Partner. The Partnership recorded a loss of $87,150. See 8-K which was filed in December 1994.
The above action was taken in response to a declining rental market in the Fort Myers Central Avenue area. The subject neighborhood has been declining and losing many of the long term medical office tenants to newer buildings located in more desirable areas of Lee County. This has resulted in a high supply of vacant space versus very low demand which has in turn led to reduced rental rates. The General Partner was of the opinion that the problem is long term and felt economically prudent to deed the property to the lender to eliminate the negative cash flow being generated by the property.
TOWN CENTER - Town Center is a retail shopping center consisting of four buildings totalling approximately 101,000 square feet of net leasable area situated on 10.12 acres of land. The age of the buildings range from 9 to 23 years. Town Center is located on Collier Boulevard, the main thoroughfare, on Marco Island.
The Partnership acquired Town Center on April 9, 1987. The Partnership has capitalized the following costs associated with the acquisition of Town Center Shopping Center.
Contract Purchase Price $7,343,400 Acquisition Fee 220,300 Roof Inspection 602 Closing Costs 30,212 Less: Guaranteed Rent (190,000) ---------- $7,404,514 ==========
The terms of the purchase were $3,364,302 cash and an interest only mortgage of $4,200,000 at 9% for seven months, provided by the seller. The purchase agreement contained a $190,000 rent guarantee to cover vacant space. The temporary seller financing was paid off in September 1987, when permanent financing was secured with a financial institution. This loan was paid off on September 6, 1990, (see discussion of consolidation loan under Broadway Medical).
When purchased, the center was 75% occupied. As of December 31, 1995 the property was 82% occupied. The 82% figure for 1995 includes a 20,000 sq. ft. grocery store which has vacated, however, the lessee is obligated under the lease to pay rent through 2005.
The partnership entered into a contract to sell Town Center to an unrelated third party for a price in excess of the carrying value of the property. A $100,000 non refundable deposit was received by the partnership. This sale closed in the second quarter of 1996 as reported in an 8-K filed July 1, 1996.
MANATEE WEST SHOPPING CENTER - Manatee West is a shopping center consisting of two separate buildings consisting of approximately 46,600 square feet located in Bradenton, Florida. The property is located on 6.95 acres at Manatee Avenue West (SR-64) and 75th Street West. Manatee Avenue West is a major east-west artery through Manatee County with connecting access to Interstate-75.
The Partnership acquired Manatee West on November 4, 1987. The Partnership has capitalized the following costs associated with the acquisition of Manatee West Shopping Center.
Purchase Price $3,500,000 Acquisition Fee 175,000 Closing Costs - Escrow Assumed 19,611 Less: Guaranteed Rent (200,000) ---------- $3,494,611 ==========
The terms of the purchase were cash of $1,689,393 and the assumption of the existing mortgage of $1,985,607. The purchase agreement contained a $200,000 rent guarantee to cover the vacant space. The rent guarantee has been received.
At the time of acquisition, the Partnership assumed a first mortgage held by a life insurance company with a fixed rate of 11 3/8%, a 30 year amortization and a maturity date of February 1, 1993, in the amount of $1,916,215. The loan has been renegotiated at a rate of 9% with payments of $19,615, plus escrow of taxes and hazard insurance over a term of 177 months. The loan was extended for three years, until February 1, 1996, and subsequently extended until June 1996. This loan was paid off out of the proceeds of the Town Center sale.
The property was 67% and 71% occupied at December 31, 1996 and 1995.
The partnership has entered into a contract to sell Manatee West to an unrelated third party at a price less than the carrying value of the property. Accordingly, a loss on impairment has been recognized at December, 1996. The sale is scheduled to close in the second quarter of 1997, however, there can be no assurance that the transaction will be completed.
The decision to sell the property at an amount less than the carrying value was made in response to a declining rental market in the Manatee Avenue West area. The General Partner was of the opinion that the problem is long term and felt it was prudent to sell the property at a reduced price.
HERITAGE SQUARE SHOPPING CENTER - Heritage Square is an office/retail plaza consisting of 26,600 square feet located directly across the street from Town Center on Marco Island, Florida.
The Partnership acquired Heritage Square on March 11, 1988. The Partnership has capitalized the following costs associated with the acquisition of Heritage Square.
Purchase Price $1,600,000 Acquisition Fee 80,000 Appraisal 5,000 Title Insurance 2,955 Attorney Fees 2,750 Survey 2,350 Other Capitalized Costs 1,742 Less: Guaranteed Rent (30,000) ---------- $1,664,797 ==========
The terms of the purchase were all cash. When purchased the property was 65% occupied. The purchase agreement contained a $30,000 rent guarantee to cover vacant space. The rent guarantee has been received. As of December 31, 1995, the property was 93% occupied.
The Partnership encumbered this property with a loan from a financial institution of up to $500,000 that was paid off with refinance proceeds (see Broadway Medical).
The Partnership sold Heritage Square to Heritage Square Real Estate, L.L.C. on January 16, 1996. An 8-K was filed with the U.S. Securities and Exchange Commission describing this transaction in detail. The filing date of this 8-K was 1/30/96.
From the closing proceeds, the partnership paid in full a loan from NationsBank with an approximate principal balance of $594,000 plus accrued interest. That loan was secured by a second mortgage on three properties known as Heritage Square, Broadway Medical Center and Town Center.
PINEBROOK COMMONS - Pinebrook Commons is a 33,334 square foot retail shopping center located on approximately 4.95 acres of land. The center is five years old and is located in Bradenton, Florida.
The Partnership acquired Pinebrook Commons on August 3, 1988. The Partnership has capitalized the following costs associated with the acquisition of Pinebrook Commons:
Contract Purchase Price $3,190,000 Acquisition Fee 84,350 Audit 5,000 Survey, Inspection Appraisal 6,630 ---------- $3,285,980 ==========
The terms of the purchase were $735,480 cash and a first mortgage of $2,550,000 obtained from a life insurance company. The current interest rate is 8.75% with monthly payments of $20,060 and a balloon payment at maturity on August 1, 1998.
The loan could not be prepaid before August 1, 1996, and after that the prepayment penalty is 2% in year 4 and 1% in year 5.
Pinebrook Commons is adjoined with Frank's Nursery, a national chain. Frank's Nursery was not included in the purchase, however, it acts as an excellent anchor and it pays 32.4% of certain common area expenses associated with operating the property.
When purchased, the property was 97% occupied. As of December 31, 1996 and 1995, the property was 88% and 97% occupied. During 1996, a loss on impairment has been recognized on Pinebrook Commons of $272,000 to reflect the current net realizable value of the property.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to nor is any of the Partnership's property the subject of any material pending legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANTS'S PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
The units are not traded on any public market and it is not contemplated for these units to be traded on any public market in the future. As of December 31, 1996, there were 623 Limited Partners.
The Partnership commenced paying quarterly cash distributions in January 1987. During 1996, 1995 and 1994, the total cash distributions were $5,599,869, $224,316 and $504,711, respectively. Distributions were not made in 1986, except for escrow interest, because the Partnership was still raising money and had not invested in commercial real estate until December 1986. The Partnership intends to distribute operating cash produced by the Partnership and the net proceeds from the potential property sales on a quarterly basis in 1997.
Also, refer to Item #8 and the audited Financial Statements referred to herein.
ITEM 7.
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 on commercial real estate purchased for the Partnership's portfolio (as described in Results of Operations), and the cash reserves held in interest-bearing accounts.
The Managing General Partner has prepared sales packages on all of the properties and has offered all of the properties for sale. A sale of all or some of the properties would increase cash to the Partnership, however, future cash flow from operations would decline due to any property sales.
On January 16, 1996, the partnership sold Heritage Square Shopping Center for $1,950,000. The sale produced net proceeds of $1,852,000. From that amount, approximately $594,000 was used to pay off a loan which was collateralized by a second mortgage on Town Center, Heritage Square and Broadway Medical. The remaining funds were used to pay down additional debt.
The partnership had a loan from a life insurance company in the approximate amount of $1,700,000 which was due on April 1, 1996. It was collateralized by a first mortgage on Manatee West. The general partner negotiated with the lender an extension of the maturity date until June 1, 1996. The proceeds from the sale of Town Center were available to fully pay off the remaining balance in June, 1996.
The partnership had a loan in the approximate amount of $5,787,000 which was due on September 6, 1996. It was collateralized by a mortgage on Town Center and Broadway Medical. This loan was paid from proceeds from the sale of Town Center.
The sale of the properties would result in reductions in partnership debt and an increase in capital distributions to the limited partners in 1997. It would also result in a reduction in partnership assets and revenues which would have a negative effect on future distributions.
CAPITAL RESOURCES - As of December 31, 1996, the Partnership had $251,866 in cash and interest-bearing deposits.
Land and buildings (net of accumulated depreciation of $1,895,885 and provision for impairment of $1,781,000) are carried at $5,128,779 at December 31, 1996.
The Partnership paid $3,750 for capital improvements in 1996. Factors that could effect the level of capital expenditures are 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 and 1995 the Partnership's principal sources of revenue were rental income of $1,527,335 and $2,269,729, and expense reimbursements from tenants of $330,259 and $520,134. In 1996 the partnership also reported a gain on the sale of two rental properties in the amount of $4,740,695. Total rental revenue decreased by $742,394 due to the following conditions:
Broadway Medical decreased $7,144, Pinebrook Commons decreased $10,907, Town Center decreased $454,050, Heritage Square decreased $210,697 and Manatee West increased $27,941. Broadway Medical's and Pinebrook Commons' rent decreases were due to vacancies occurring in the centers. Town Center's and Heritage Square's revenue decreased due to sales of the properties in 1996. Manatee West increased in 1996 because of higher rates.
Tenant reimbursements have decreased $189,875 from 1996 to 1995 primarily as a result of the sales of Heritage Square and Town Center in 1996.
Interest income increased $27,047 due to proceeds of the Heritage Square sale.
Property operating expenses have decreased $284,525 primarily due to the sale of Heritage Square and Town Center.
Depreciation expense decreased $185,208 primarily due to the sale of two properties in 1996.
Interest expense decreased $490,035 due to principal pay down of the Partnership's debt by $8,116,147. The Partnership's outstanding debt decreased from $10,596,357 at December 31, 1995, to $2,480,210 at December 31, 1996. This reduction was due to the sale of Heritage Square and Town Center.
Property taxes decreased $73,980 primarily due to the sale of two properties and closely monitoring real estate tax assessments on other properties.
Bad Debt expense increased $51,291 from 1995. Management continues to closely monitor all tenants in order to reduce this amount.
Management recognized a loss on impairment of $1,781,000 and $0 at December 31, 1996 and 1995, respectively.
RESULTS OF OPERATIONS
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 $2,269,729 and $2,609,123, and expense reimbursements from tenants of $520,134 and $608,435. Total revenue decreased by $339,392 due to the following conditions:
Broadway Medical decreased $9,734, Laurel Medical Center decreased $76,689, Pinebrook Commons increased $39,538, Town Center decreased $47,827, Heritage Square decreased $1,029 and Manatee West decreased $112,355. Broadway Medical's rent decrease was due to a vacancy occurring in the center. Laurel Medical Center rent decreased because 1994 included four months of operations whereas 1995 had no activity. Pinebrook Commons rent increased due to an increase in occupancy. Town Center's revenue decreased due to vacancies during 1995. Heritage Square's revenue decreased slightly due to a tenant vacating the center for part of 1995. The space has been re-leased. Manatee West decreased in 1995 because of higher vacancy.
Income recognized from deferred rent changed from an increase in income in 1994 of $68,592 to a reduction in income of $62,706. The decrease in income recognized from deferred rent for 1995 was attributed to charges in the deferred rent balance of the following properties: Broadway Medical decreased $17,057, Town Center decreased $2,261, Heritage Square decreased $29,939, Manatee West decreased $14,134 and Pinebrook Commons increased $685.
Broadway Medical decreased due to the long term leases coming to maturity, Town Center decreased due to vacancies occuring in the center, Heritage Square decreased due to a vacancy occurring in the center, Manatee West decreased due to vacancies in the center and Pinebrook increased due to a new lease being signed.
Tenant reimbursements have decreased $88,301 from 1995 to 1994. Town Center was down $58,698 and Manatee West decreased $35,900.
Interest income increased 1,935.
Property operating expenses have increased $62,568 due to Broadway decreased $6,021, Laurel Center decreased $1,557, Heritage Square decreased $1,751 and Pinebrook Commons increased $15,626.
Depreciation expense decreased $56,320 due to Laurel Center and also due to fixed assets being fully depreciated in 1995.
Interest expense decreased $27,373 due to principal pay down of the Partnership's debt by $220,169. The Partnership's outstanding debt decreased from $10,816,526 at December 31, 1994, to $10,596,357 at December 31, 1995. This reduction was due to normal principal amortization during the year.
Property taxes decreased $39,250 due to Laurel Center not being in the portfolio and closely monitoring real estate tax assessments on other properties.
Bad Debt expense declined from 1994. Management continues to closely monitor all tenants in order to reduce this further.
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 $2,609,123 and $2,897,522, interest income of $2,168 and $8,199 and expense reimbursements from tenants of $608,435 and $647,268. Total revenue decreased by $288,399 due to the following conditions:
Broadway Medical increased $8,496, Laurel Medical Center decreased $165,422, Pinebrook Commons decreased $65,332, Town Center decreased $45,823, Heritage Square decreased $33,361 and Manatee West increased $13,043. Broadway Medical's rent increase was due to stated rent increases in the leases. Laurel Medical Center rent decreased because 1994 only included four months of operations whereas 1993 included twelve months. Pinebrook Commons rent decreased due to the remaining rent guarantee being recognized as income at December 31, 1993. That amount was $50,624. The remaining decrease at Pinebrook was due to vacancy which occurred in 1994. Town Center's revenue decreased due to vacancies during 1994. Heritage Square's revenue decreased due to a tenant vacating the center for part of 1994. The space has been re-leased. Manatee West increased in 1994 because of higher occupancy.
Income recognized from deferred rent increased $68,592 in 1994. The increase in income recognized from deferred rent for 1994 was attributed to changes in the deferred rent balance of the following properties: Broadway Medical decreased $12,007, Laurel Medical Center decreased $11,063, Town Center increased $56,881, Heritage Square increased $34,022, Manatee West decreased $2,206, and Pinebrook Commons increased $2,963.
Broadway Medical decreased due to the long term leases coming to maturity, Laurel Medical Center decreased due to the property being deeded back to the lender in 1994, Town Center increased due to new leases being signed and long term leasess being in the early portion of their lease, Heritage Square increased due to a new lease being signed in 1994 on previously vacant space, Manatee West decreased due to leases nearing expiration and Pinebrook Commons increased due to new leases in 1994 and leases being in the early part of their lease life.
Reimbursement has decreased $38,833 from 1994 to 1993. The decrease is primarily at two properties. Town Center was down $30,251 and Heritage Square decreased $7,824. These properties were down due to vacancies that did not occur in 1993.
Interest income decreased due to lower interest rates and lower funds invested.
Property operating expenses have decreased $38,571 due to operating Laurel Center for four months in 1994 as compared to twelve months in 1993.
Depreciation expense decreased $12,894 due to Laurel Center and also due to fixed assets being fully depreciated in 1994.
Interest expense decreased $144,793 due to Laurel Center only having interest charged for 4 months in 1994. The savings as compared to 1993 was $98,992. The remaining difference was due to pay down of the principal on the Partnership's outstanding debt. The Partnership's outstanding debt decreased from $12,375,950 at December 31, 1993, to $10,816,526 at December 31, 1994. This reduction was due to the Laurel Center loan reduction of $1,342,727 and $216,697 of principal reduction during the year.
Property taxes decreased $6,976 due to Laurel Center and closely monitoring real estate tax assessments on other properties.
Bad Debt expense declined from 1993. Management continues to closely monitor all tenants in order to reduce this further.
The abandoned property expense of $87,150 is a one time loss associated with Laurel Medical Center.
ITEM 8.
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, Statements of Partner's Capital and Statements of 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 3, 1997, are set forth herein:
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners Florida Income Fund II, Limited Partnership
We have audited the accompanying balance sheets of Florida Income Fund II, Limited Partnership, 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 II, Limited Partnership, 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 3, 1997
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP BALANCE SHEETS December 31, 1996 and 1995
The accompanying notes are an integral part of these financial statements.
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP STATEMENTS OF INCOME years ended December 31, 1996, 1995 and 1994
The accompanying notes are an integral part of these financial statements.
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL years ended December 31, 1996, 1995, and 1994
The accompanying notes are an integral part of these financial statements.
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS years ended December 31, 1996, 1995 and 1994
RM132
During 1996, $450,000 of selling expenses were deducted from the proceeds of the Heritage Square and Town Center sales.
The accompanying notes are an integral part of these financial statements.
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Florida Income Fund II, Limited Partnership (the Partnership) was formed on March 26, 1986, by the filing of a Certificate and Agreement of Limited Partnership (Partnership Agreement) under the laws of the State of Ohio. The general partners, MCD Real Estate, Inc. (MCD) and Mariner Capital Management, Inc. (MCM), also the managing general partner, contributed $20,000 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 purchased Heritage Square, Manatee West, Pinebrook Commons, Town Center (four retail shopping centers), Laurel Center and Broadway Medical Center (two medical complexes). During 1994, the Partnership deeded the Laurel Medical Center assets and assigned all rents to Ohio National Life Insurance Company in lieu of foreclosure and full satisfaction of the loan outstanding on the property in the amount of $1,342,727. The Partnership sold Heritage Square in January 1996 and Town Center in June 1996. In addition, the Partnership has contracts to sell the Manatee West and Broadway Medical properties (See Note 2).
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 15 years and include provisions for minimum rent increases at stated amounts or the Consumer Price Index. Rental income is recognized by amortizing the total contract minimum rent on a straight-line basis over the life of the lease. The difference between rental income recognized and actual rental receipts is accumulated as deferred rent incentives and included as prepaid expenses and other in the accompanying balance sheets.
ALLOCATION OF NET INCOME: In accordance with the Partnership Agreement, net income (loss), prior to recoupment (as defined in the prospectus) 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.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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 and for 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. SFAS 121 is effective for financial statements for fiscal years beginning after December 15, 1995 with earlier application encouraged. Management has reviewed the Partnership's property holdings and believes no impairment exists at December 31, 1996. A loss on impairment of the Pinebrook Commons, Manatee West and Broadway Medical properties of $272,000, $939,000 and $570,000, respectively, has been recognized in the year ended December 31, 1996.
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 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 statements.
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 to be cash equivalents.
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS: Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires that the Partnership disclose estimated fair values 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.
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:
Management has entered into contracts to sell the Manatee West and Broadway Medical properties at prices less than each of the property's carrying value. Accordingly, an impairment loss was recognized. The carrying value was written down to the contractual sales price less selling expenses. The carrying value of the Manatee West and Broadway Medical properties were $2,150,450 and $498,703, respectively, at December 31, 1996.
Depreciation expense was $349,056, $534,264 and $590,586 for the years ended December 31, 1996, 1995 and 1994, respectively.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. RENTAL PROPERTIES, CONTINUED
Based on the Partnership's noncancelable leases with terms in excess of one year in existence at December 31, 1996, future minimum annual rentals from these leases over the next five years, and in the aggregate, will be approximately as follows:
1997 $ 659,912 1998 375,764 1999 262,535 2000 133,463 2001 62,901 ---------------- $ 1,494,575 ================
3. INTANGIBLE ASSETS:
Intangible assets at December 31 are as follows:
Additions to deferred loan costs relate to modifications of note terms and other refinancing transactions during the year ended December 31, 1995. Certain loan costs became fully amortized during the years ended December 31, 1996, 1995 and, therefore, were written off. Amortization expense was $26,915, $74,372 and $58,949 for the years ending December 31, 1996, 1995 and 1994, respectively.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. NOTES AND MORTGAGES PAYABLE:
Notes and mortgages payable consisted of the following at December 31:
Notes and mortgages payable are scheduled to mature approximately as follows:
1997 $ 24,510 1998 2,455,700 ---------------- $ 2,480,210 ================
Pinebrook Commons is pledged as collateral for notes and mortgages payable, as well as rents and receivables related to Pinebrook Commons. See Note 6 regarding additional collateral pledged for the Pinebrook Commons mortgage.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 managing the properties 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 $34,769, $175,411 and $180,427, 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 performed by independent parties. Expenses amounting to $52,792, $259,916 and $295,941 were incurred during the years ending December 31, 1996, 1995 and 1994, respectively, of which $1,359, $13,375 and $28,752 were included in accounts payable for the years ending December 31, 1996, 1995, and 1994, respectively.
6. RESTRICTED CASH:
Pursuant to an agreement between the Partnership and one of its insurance company lenders, the Partnership deposited approximately $114,500 into escrow resulting from the settlement of a major tenant's early lease termination in 1993.
The escrow account, in compliance with the terms of the agreement, was managed by the lender's servicing agent. The escrow balance is applied to tenant improvements, leasing commissions and debt service related to the vacated space, as governed by the agreement. During 1995 and 1994, the lender released approximately $40,100 and $10,500, respectively, to the Partnership, which is included in Partnership rental income. The restricted balance related to the escrowed lease settlement was $0 and $40,100 at December 31, 1996 and 1995, respectively.
Certain tenants have required security deposits be maintained in a restricted account not available to the Partnership for operating activities. Restricted security deposit balances were $0 and $3,232 for December 31, 1996 and 1995, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the financial statements of Florida Income Fund II, Limited Partnership, is included on page 15 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 36 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 3, 1997
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP NOTES TO SCHEDULE III DECEMBER 31, 1996 REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/93 $21,566,170
Additions During 1994:
Acquisitions through foreclosures $ 0 Other Acquisitions 174,037 Improvements, etc. 0 Other 0 174,037 ---------- ------------ Deductions During 1994:
Cost of real estate sold 0 Other cost of real estate deeded to lender (1,850,373) ( 1,850,373) ---------- ------------ Balance as of 12/31/94 19,889,834
Additions During 1995:
Acquisitions through foreclosures 0 Other Acquisitions 143,398 Improvements, etc. 0 Other 0 143,398 ---------- ------------ Balance as of 12/31/95: 20,033,232
Additions During 1996:
Acquisitions through foreclosures 0 Other acquisitions 3,750 Improvements, etc. 0 Cost of real estate sold (11,231,318) Impairment of value ( 1,781,000) (13,008,568) ------------- ------------- Balance as of 12/31/96 $ 7,024,664 =============
FLORIDA INCOME FUND II, LIMITED PARTNERSHIP NOTES TO SCHEDULE III DECEMBER 31, 1996 REAL ESTATE AND ACCUMULATED DEPRECIATION
Balance as of 12/31/93 $ 3,344,584
Accumulated depreciation on disposal of fixed assets $ (420,496)
Depreciation expense for 1994 590,586 170,090 ----------- ----------- Balance as of 12/31/94 3,514,674
Depreciation expense for 1995 534,264 534,264 ----------- ----------- Balance as of 12/31/95 4,048,938
Accumulated depreciation on disposal of fixed assets (2,502,109)
Depreciation expense for 1996 349,056 (2,153,053) ------------ ------------ Balance as of 12/31/96 $ 1,895,885 ============
FLORIDA INCOME FUND II LIMITED PARTNERSHIP 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, except for Town Centre, Manatee West and Heritage Square. The guaranteed rent received of $190,000, $200,000 and $30,000, respectively, is considered taxable income, whereas these amounts are accounted for as basis reductions for financial statement reporting purposes.
(B) Included in the acquisitions of 1988, 1987 and 1986 are $164,350, $395,300 and $145,750 of acquisition fees and expenses paid to the General Partner in connection with acquiring the properties.
(C) See Note 1 to the Financial Statements for depreciation method.
(D) See Note 4 to the Financial Statements for further information on debt obligations.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
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, 1995, 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
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.
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.
ITEM 11.
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.
In accordance with the Partnership Agreement, net income or loss, prior to recoupment or 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 percent (80%) to the limited partners as a class.
The General Partners and their affiliates are entitled to reimbursement of the actual cost to the General Partners or their affiliates of goods, materials and services used for or by the Partnership and obtained from unaffiliated entities and also the cost of services performed by officers and employees of the General Partners and their affiliates which could be performed directly for the Partnership by independent parties. Expenses amounting to $52,792, $259,916 and $295,941 have been charged for the years ending December 31, 1996, 1995 and 1994, of which $1,359 and $13,375 were included in accounts payable at December, 31, 1996, and 1995, respectively. 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 II. 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
The General Partners and their affiliates are entitled to receive compensation for leasing and management fees in an amount not to exceed 5% of gross revenues from residential partnership properties or 6% of gross revenues produced by commercial partnership properties. Management fees totaling $34,769, $175,411 and $180,427 were paid to the Managing General Partner or its affiliates for the years ending December 31, 1996, 1995 and 1994, respectively.
(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 or 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 based on property sales prices, 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 adjusted 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.
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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
See Note 5, Related Party Transactions in Notes to the Financial Statements, on page 24 in Item 8.
PART IV
ITEM 14.
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 14
Balance Sheets as of December 31, 1996 and 1995 15
Statements of Income for the years ended December 31, 1996, 1995 and 1994 16
Statements of Partners' Capital for the years ended December 31, 1996, 1995 and 1994 17
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 18
Notes to Financial Statements 19 - 24
Report of Independent Accountants on Schedule III 25
Schedule III Real Estate and Accumulated Depreciation 26 - 29
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 Statement and Notes thereto.
(A) 2. EXHIBITS
27 Financial Data Schedule (for SEC use only)
99 Form 8-K
(A) 3. REPORTS ON FORM 8-K
None.
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 II, LIMITED PARTNERSHIP (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 Accounting Officer)