SEC Company Response from ARIZONA LAND INCOME CORP (CIK 0000830748) — Aug 31, 2005
ARIZONA LAND INCOME CORP (CIK 0000830748)
Date: Aug. 31, 2005 · CIK: 0000830748 · Accession: 0001193125-05-178292
AI Filing Summary & Sentiment
File numbers found in text: 001-09900
Referenced dates: July 18, 2005
Letter
United States Securities Form 10-KSB for Fiscal Year Ended December 31, 2004 Filed March 31, 2005 File No. 001-09900
Dear Mr. Telewicz:
In response to your letter dated July 18, 2005, we note the Staff’s comment relative to the registrant’s use of the full accrual method for the sale of the property known as Loan 6. We believe that the payments receivable under the terms of the mortgage note receivable exceed the payment requirements outlined in paragraph 12 of SFAS No. 66. The market for real estate, such as that held as Loan 6, in the Phoenix, Arizona area has experienced significant appreciation. That market continues to experience significant gains subsequent to the sale described in Note 4 to the registrant’s financial statements for the year ended December 31, 2004. In many cases, fully collateralized loans such as these in this appreciating market carry interest rates at less than the prime rate. Given the relative short term of the loan of five years, a variable prime rate factor on a mortgage note such as this is at least a fair market interest rate. We believed that if a market rate of 3.5% to 4% were used on a 20-year amortization, the annual payments required under the loan as it exists approximate the amounts that would be required under a 20-year amortization. The loan presently bears interest at 6.25%. At this rate, the payments being received more closely approximate payments required under a 20-year amortization at 3.5% to 4%. Given the trend of increasing interest rates, we believe that the annual payments will continue to increase to a level that exceed the amounts determined under a 20 year amortization. A rate of 6.9% would be required to meet that criterion. The anticipated payments over the five-year term of the note are anticipated to exceed the amounts determined using a 20-year amortization. Additionally, the initial investment of cash was 25% of the sales price. The buyer intends to
ARIZONA LAND INCOME CORPORATION
2999 N. 44th Street, Suite 100
Phoenix, Arizona 85018
602) 952-6800
commence commercial development of the property within two years of the purchase with an attendant prepayment for partial releases thus adding to the payment stream. The initial cash payment exceeds the minimum initial investment of 20% as prescribed by paragraph 54 of SFAS No. 66.
Robert Telewicz
Securities and Exchange Commission
July 22, 2005
Page 2
The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filings. The Company also acknowledges that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings. The Company acknowledges that it may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions, please contact the undersigned at (602) 952-6824.
Sincerely,
/s/ Thomas R. Hislop
Thomas R. Hislop
Chairman of the Board,
CEO
cc: Linda van Doorn, Securities and Exchange Commission
ARIZONA LAND INCOME CORPORATION
2999 N. 44th Street, Suite 100
Phoenix, Arizona 85018
602) 952-6800
August 12, 2005
Mr. Robert Telewicz
Linda van Doorn
Staff Accountant
Senior Assistant Chief Accountant
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Arizona Land Income Corporation
Form 10-KSB for Fiscal Year Ended
December 31, 2004
Filed March 31, 2005
File No. 001-09900
Dear Ms. van Doorn & Mr. Telewicz:
This letter will serve to inform you that Arizona Land Income Corporation (“AZL”) is revising its 2004 Form 10-KSB and its Form 10-QSB for the quarterly period ended March 31, 2005 to reflect a change in the accounting method used to record the note receivable received as a result of our real estate transaction of May 2004.
We have elected to use the installment sale method rather than the full accrual method as is currently present. We feel that the installment sale method is the most appropriate since we did not receive a down payment exceeding the cost of our property, thus the cost recovery method is not appropriate.
Our current intent is to file the restated Form 10-QSB for the quarterly period ended March 31, 2005, the restated 2004 Form 10-KSB and the Form 10-QSB for the quarterly period ended June 30, 2005 on Monday, August 15, 2005.
If you have any questions, please contact the undersigned at (602) 952-6824.
Sincerely,
/s/ Thomas R. Hislop
Show Raw Text
CORRESP 1 filename1.htm Letter of Correspondence ARIZONA LAND INCOME CORPORATION 2999 N. 44th Street, Suite 100 Phoenix, Arizona 85018 602) 952-6800 July 22, 2005 Mr. Robert Telewicz Staff Accountant United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Arizona Land Income Corporation Form 10-KSB for Fiscal Year Ended December 31, 2004 Filed March 31, 2005 File No. 001-09900 Dear Mr. Telewicz: In response to your letter dated July 18, 2005, we note the Staff’s comment relative to the registrant’s use of the full accrual method for the sale of the property known as Loan 6. We believe that the payments receivable under the terms of the mortgage note receivable exceed the payment requirements outlined in paragraph 12 of SFAS No. 66. The market for real estate, such as that held as Loan 6, in the Phoenix, Arizona area has experienced significant appreciation. That market continues to experience significant gains subsequent to the sale described in Note 4 to the registrant’s financial statements for the year ended December 31, 2004. In many cases, fully collateralized loans such as these in this appreciating market carry interest rates at less than the prime rate. Given the relative short term of the loan of five years, a variable prime rate factor on a mortgage note such as this is at least a fair market interest rate. We believed that if a market rate of 3.5% to 4% were used on a 20-year amortization, the annual payments required under the loan as it exists approximate the amounts that would be required under a 20-year amortization. The loan presently bears interest at 6.25%. At this rate, the payments being received more closely approximate payments required under a 20-year amortization at 3.5% to 4%. Given the trend of increasing interest rates, we believe that the annual payments will continue to increase to a level that exceed the amounts determined under a 20 year amortization. A rate of 6.9% would be required to meet that criterion. The anticipated payments over the five-year term of the note are anticipated to exceed the amounts determined using a 20-year amortization. Additionally, the initial investment of cash was 25% of the sales price. The buyer intends to ARIZONA LAND INCOME CORPORATION 2999 N. 44th Street, Suite 100 Phoenix, Arizona 85018 602) 952-6800 commence commercial development of the property within two years of the purchase with an attendant prepayment for partial releases thus adding to the payment stream. The initial cash payment exceeds the minimum initial investment of 20% as prescribed by paragraph 54 of SFAS No. 66. Robert Telewicz Securities and Exchange Commission July 22, 2005 Page 2 The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filings. The Company also acknowledges that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings. The Company acknowledges that it may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. If you have any questions, please contact the undersigned at (602) 952-6824. Sincerely, /s/ Thomas R. Hislop Thomas R. Hislop Chairman of the Board, CEO cc: Linda van Doorn, Securities and Exchange Commission ARIZONA LAND INCOME CORPORATION 2999 N. 44th Street, Suite 100 Phoenix, Arizona 85018 602) 952-6800 August 12, 2005 Mr. Robert Telewicz Linda van Doorn Staff Accountant Senior Assistant Chief Accountant United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Arizona Land Income Corporation Form 10-KSB for Fiscal Year Ended December 31, 2004 Filed March 31, 2005 File No. 001-09900 Dear Ms. van Doorn & Mr. Telewicz: This letter will serve to inform you that Arizona Land Income Corporation (“AZL”) is revising its 2004 Form 10-KSB and its Form 10-QSB for the quarterly period ended March 31, 2005 to reflect a change in the accounting method used to record the note receivable received as a result of our real estate transaction of May 2004. We have elected to use the installment sale method rather than the full accrual method as is currently present. We feel that the installment sale method is the most appropriate since we did not receive a down payment exceeding the cost of our property, thus the cost recovery method is not appropriate. Our current intent is to file the restated Form 10-QSB for the quarterly period ended March 31, 2005, the restated 2004 Form 10-KSB and the Form 10-QSB for the quarterly period ended June 30, 2005 on Monday, August 15, 2005. If you have any questions, please contact the undersigned at (602) 952-6824. Sincerely, /s/ Thomas R. Hislop Thomas R. Hislop Chairman of the Board, CEO