-----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, GtD/f35SuJAGJRoBUJnZ/hKm43PulhZYPfDI3nGHPIwSYCpjBtcpC97rsYx5yOw2 1xon0/8vMPoNjLCG4jul+A== 0000950134-96-000104.txt : 19960116 0000950134-96-000104.hdr.sgml : 19960116 ACCESSION NUMBER: 0000950134-96-000104 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951130 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL MORTGAGE & EQUITY TRUST CENTRAL INDEX KEY: 0000319416 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942738844 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-10503 FILM NUMBER: 96503218 BUSINESS ADDRESS: STREET 1: 10670 N CENTRAL EXPWY STE 300 CITY: DALLAS STATE: TX ZIP: 75231 BUSINESS PHONE: 2146924700 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED CAPITAL SPECIAL TRUST DATE OF NAME CHANGE: 19901122 8-K/A 1 FORM 8-K/A DATED NOVEMBER 30, 1995 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 November 30, 1995 ---------------------------------------------------------------- Date of Report (Date of Earliest Event Reported) CONTINENTAL MORTGAGE AND EQUITY TRUST ---------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) California 0-10503 94-2738844 - -------------------------------------------------------------------------------- (State of Incorporation) (Commission (IRS Employer File No.) Identification No.) 10670 North Central Expressway, Suite 300, Dallas, TX 75231 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (214) 692-4700 ---------------------- Not Applicable -------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 1 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS This Form 8-K/A amends a Form 8-K Current Report dated November 30, 1995 and filed December 27, 1995 by Continental Mortgage and Equity Trust (the "Trust") and provides required financial statements that were not available at the date of the original filing. (a) Pro forma financial information: Pro forma statements of operations are presented for the year ended December 31, 1994 and the nine months ended September 30, 1995. A pro forma balance sheet as of September 30, 1995 is also presented. A summary of the pro forma transactions follows: In November 1995, the Trust purchased Willow Wick Apartments, a 104 unit apartment complex in North Augusta, South Carolina for $1.5 million, exclusive of commissions and closing costs. The Trust paid $595,000 in cash and assumed the existing first mortgage in the amount of $930,000. The mortgage bears interest at a rate of 7% per annum, requires monthly payments of principal and interest of $8,000 and matures in January 2013. In December 1995, the Trust purchased Heritage on the River Apartments, a 301 unit apartment complex in Jacksonville, Florida for $7.9 million, exclusive of commissions and closing costs. The Trust paid $1.4 million in cash, assumed the existing first mortgage in the amount of $6.3 million and the seller provided additional financing in the amount of $193,000. The mortgages bear interest at a variable rate, currently 9.18% per annum, require monthly payments of interest only and mature in December 1998. The combined $9.4 million purchase price of Willow Wick and Heritage on the River Apartments is approximately 5.1% of the Trust's consolidated assets at December 31, 1994. Although not a significant acquisition in themselves, when aggregated with the other acquisitions completed by the Trust in 1995 as described below, such acquisitions constitute a significant acquisition. In addition to the Willow Wick and Heritage on the River Apartments acquisitions discussed above, the Trust purchased two other apartment complexes and two commercial properties in 1995. The properties, located in Virginia, Texas and Florida, were purchased for a total of $26.0 million in separate transactions from unaffiliated sellers, and represent approximately 14.2% of the Trust's consolidated assets at December 31, 1994. The Trust paid a total of $5.1 million in cash and financed the remainder of the purchase prices. The mortgages bear interest at rates ranging from 6.0% to 9.9% and mature from 1997 to 2002. The pro forma statements of operations present the Trust's operations as if the transactions described above had occurred at the beginning of each of the periods presented. 2 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Financial statements of property acquired:
Exhibit Number Description - ------- --------------------------------------------------------------------------------------------------------- 99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct Operating Expenses for the year ended December 31, 1994. 99.1 Willow Wick Apartments Audited Financial Statements for the year ended December 31, 1994.
3 4 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1995
Heritage on Willow Wick the River Actual Apartments(1) Apartments(1) Pro forma ---------- ---------- ---------- ----------- (dollars in thousands) Assets ------ Notes and interest receivable Performing..................... $ 4,344 $ - $ - $ 4,344 Nonperforming, nonaccruing..... 4,456 - - 4,456 ----------- ---------- -------- ---------- 8,800 - - 8,800 Real estate held for sale, net of accumulated depreciation....... 25,333 - - 25,333 Less - allowance for estimated losses......................... (9,207) - - (9,207) ----------- ---------- -------- ---------- 24,926 - - 24,926 Real estate held for investment, net of accumulated depreciation 150,024 1,525 7,940 159,489 Investments in marketable equity securities of affiliates, at market......................... 4,824 - - 4,824 Investments in partnerships..... 12,248 - - 12,248 Cash and cash equivalents....... 6,954 (595) (1,439) 4,920 Other assets.................... 5,665 - - 5,665 ----------- ---------- -------- ---------- $ 204,641 $ 930 $ 6,501 $ 212,072 =========== ========== ======== ==========
4 5 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA CONSOLIDATED BALANCE SHEET - Continued SEPTEMBER 30, 1995
Heritage on Willow Wick the River Actual Apartments(1) Apartments(1) Pro forma ---------- ---------- ---------- ----------- (dollars in thousands) Liabilities and Shareholders' Equity - ------------------------------------ Liabilities Notes and interest payable....... $ 121,920 $ 930 $ 6,501 $ 129,351 Other liabilities................ 5,848 - - 5,848 ----------- ------------ ---------- ---------- 127,768 930 6,501 135,199 Commitments and contingencies Shareholders' equity Shares of Beneficial Interest, no par value; authorized shares, unlimited; issued and out- standing, 2,918,100 shares...... 8,766 - - 8,766 Paid-in capital.................. 260,060 - - 260,060 Accumulated distributions in excess of accumulated earnings. (195,053) - - (195,053) Net unrealizable gains on market- able equity securities.......... 3,100 - - 3,100 ----------- ------------ ---------- ---------- 76,873 - - 76,873 ----------- ------------ ---------- ---------- $ 204,641 $ 930 $ 6,501 $ 212,072 =========== ============ ========== ==========
- --------------------------------- (1) Assumes acquisition of Willow Wick and Heritage on the River Apartments by the Trust on January 1, 1995. The effects of all other 1995 property purchases are included in the September 30, 1995 actual balances. 5 6 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1995
Heritage on Willow Wick the River Other Property Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma ---------- ----------- ---------- ------------ ------------- (dollars in thousands) Income Rentals...................... $ 27,318 $ 339 $ 1,202 $ 1,306 $ 30,165 Interest..................... 600 - - - 600 Equity in income of partnerships............... 213 - - - 213 ----------- -------- ----------- --------- ----------- 28,131 339 1,202 1,306 30,978 Expenses Property operations.......... 16,456 222 728 712 18,118 Interest..................... 6,998 49 448 555 8,050 Depreciation................. 3,133 23 119 148 3,423 Advisory fee to affiliate.... 1,139 - - - 1,139 General and administrative... 928 - - - 928 Provision for losses......... 541 - - - 541 ----------- -------- ----------- --------- ----------- 29,195 294 1,295 1,415 32,199 ----------- -------- ----------- --------- ----------- Net income (loss)............. $ (1,064) $ 45 $ (93) $ (109) $ (1,221) =========== ======== =========== ========= =========== Earnings per share Net (loss)................... $ (.36) $ (.42) =========== =========== Shares of beneficial interest outstanding.................. 2,918,114 2,918,114 =========== ===========
- ------------------------- (1) Assumes acquisition by the Trust on January 1, 1995. 6 7 CONTINENTAL MORTGAGE AND EQUITY TRUST PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
Heritage on Willow Wick the River Other Property Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma ---------- ----------- ---------- ------------ ------------- (dollars in thousands) Income Rentals...................... $ 27,042 $ 452 $ 1,603 $ 4,017 $ 33,114 Interest..................... 2,699 - - - 2,699 Other........................ (479) - - - (479) ----------- -------- ----------- --------- ----------- 29,262 452 1,603 4,017 35,334 Expenses Property operations.......... 16,888 296 971 1,708 19,863 Interest..................... 7,711 65 597 1,622 9,995 Depreciation................. 3,214 30 159 570 3,973 Advisory fee to affiliate.... 1,326 - - - 1,326 General and administrative... 1,235 - - - 1,235 Provision for losses......... 1,429 - - - 1,429 ----------- -------- ----------- --------- ----------- 31,803 391 1,727 3,900 37,821 ----------- -------- ----------- --------- ----------- Income (loss) before gain on sale of real estate.......... (2,541) 61 (124) 117 (2,487) Gain on sale of real estate... 1,708 - - - 1,708 ----------- -------- ----------- --------- ----------- Net income (loss)............. $ (833) $ 61 $ (124) $ 117 $ (779) =========== ======== =========== ========= =========== Earnings per share (Loss) before gain on sale of real estate.................. $ (.87) $ (.85) Gain on sale of real estate.. .58 .58 ----------- ----------- Net (loss)................... $ (.29) $ (.27) =========== =========== Shares of beneficial interest outstanding.................. 2,919,815 2,919,815 =========== ===========
- ---------------------------- (1) Assumes acquisition by the Trust on January 1, 1994. 7 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. CONTINENTAL MORTGAGE AND EQUITY TRUST Date: January 12, 1996 By: /s/ Thomas A. Holland ------------------------ --------------------------------- Thomas A. Holland Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 8 9 CONTINENTAL MORTGAGE AND EQUITY TRUST EXHIBIT TO ITS CURRENT REPORT ON FORM 8-K/A Dated November 30, 1995
Exhibit Page Number Description Number - ------- -------------------------------------------------------------------------------- ------ 99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct 10 Operating Expenses for the year ended December 31, 1994. 99.1 Willow Wick Apartments Audited Financial Statements for the year ended 15 December 31, 1994.
9 EX-99.0 2 HERITAGE ON THE RIVER APARTMENTS 1 EXHIBIT 99.0 Heritage on the River Apartments ================================================================================ Statement of Revenues and Direct Operating Expenses Year Ended December 31, 1994 10 2 Heritage on the River Apartments Contents ================================================================================ Report of Independent Certified Public Accountants 2 Financial Statement Statement of revenue and direct operating expenses 3 Notes to statement of revenue and direct operating expenses 4
11 3 Independent Auditors' Report To the Board of Trustees Continental Mortgage and Equity Trust We have audited the accompanying statement of revenue and direct operating expenses of Heritage on the River Apartments (a real estate project) for the year ended December 31, 1994. This financial statement is the responsibility of the management of Heritage on the River Apartments. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the historical summary. 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 out audit provides a reasonable basis for our opinion. The accompanying financial statement is prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the form 8-K of Continental Mortgage and Equity Trust) and, as described in Note 1, is not intended to be a complete presentation of the results of operations of Heritage on the River Apartments. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and direct operating expenses of Heritage on the River Apartments, for the year ended December 31, 1994, in conformity with generally accepted accounting principles. BDO Seidman, LLP December 20, 1995 12 2 4 Heritage on the River Apartments Statement of Revenues and Direct Operating Expenses Year Ended December 31, 1994 ================================================================================ Revenues Rental revenues $1,524,095 Other (Note 2) 78,552 ------------------------------------------------------------------------------------------------------------------ Total revenues 1,602,647 ------------------------------------------------------------------------------------------------------------------ Operating expenses Payroll and related expenses 294,864 Repairs and maintenance 155,207 Utilities 149,668 Property taxes 130,200 Management fees (Note 3) 80,132 Property management 52,705 Administrative 43,546 Contract services 34,830 Insurance 29,952 ------------------------------------------------------------------------------------------------------------------ Total direct operating expenses 971,104 ------------------------------------------------------------------------------------------------------------------ Revenues in excess of direct operating expenses $ 631,543 ==================================================================================================================
See accompanying notes to financial statements. 13 3 5 Heritage on the River Apartments Notes to Statement of Revenues and Direct Operating Expenses ================================================================================ 1. Basis of Presentation Heritage on the River Apartments is a residential apartment complex located in Jacksonville, Florida. There is a total of 310 rentable units. For the year ended December 31, 1994, and through the period ended December 20, 1995, the property was owned by Lifton-MAQ Associates. On December 20, 1995, the property was acquired by Continental Mortgage and Equity Trust. The accompanying financial statement has been prepared to substantially comply with the rules and regulations of the Securities and Exchange Commission for business combination accounted for as a purchase. The statement of revenues and direct operating expenses does not include certain historical expenses, such as depreciation and amortization, interest expense or income taxes. Accordingly, this summary is not intended to be a complete presentation of the results of operations. 2. Other Income Other income consists of revenue for laundry, late fees and vending. 3. Management Fees The property has a management agreement with an affiliate Lifton-MAQ Associates. This agreement requires Lifton-MAQ Associates to pay 5% of gross revenues as a management fee. 14 4 EX-99.1 3 WILLOW WICK APARTMENTS 1 EXHIBIT 99.1 LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 FINANCIAL REPORT DECEMBER 31, 1994 15 2 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 DECEMBER 31, 1994 TABLE OF CONTENTS
PAGE GENERAL PARTNERS' CERTIFICATION 1 MANAGEMENT AGENT'S CERTIFICATION 2 INDEPENDENT AUDITOR'S QUALIFICATIONS 3 INDEPENDENT AUDITOR'S REPORT 4 FINANCIAL STATEMENTS Classified Balance Sheet 5/6 Statement of Profit and Loss (Form HUD-92410) 7/9 Statement of Changes in Partners' Capital 10 Statement of Cash Flows 11/12 NOTES TO FINANCIAL STATEMENTS 13/15 SUPPLEMENTARY INFORMATION Analysis of Accounts Receivable 16 Mortgage Escrow Deposits 17 Analysis of Restricted Deposits 18 Schedule of Funds in Financial Institutions 19 Computation of Surplus Cash, Distributions and Residual Receipts (Form HUD-93486) 20 Analysis of Accounts Payable and Accrued Expenses 21 Changes in Fixed Asset Accounts 22 Compensation of Partners 23 Schedule of Unauthorized Distributions of Project Income 24 Schedule of Findings 25 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE 26/28 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS 29 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING 30
16 3 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 GENERAL PARTNERS' CERTIFICATION DECEMBER 31, 1994 We hereby certify that we have examined the accompanying financial statements and supplementary information of WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP, EIN 59-2445708 and, to the best of our knowledge and belief, the same is complete and accurate. GENERAL PARTNER: /s/ MARK A. WERNER 2/23/95 - -------------------------------- ------------------ REALTY MANAGEMENT GROUP, INC., DATE SOLE GENERAL PARTNER 17 4 [LOGO] REALTY MANAGEMENT GROUP, INC. We hereby certify that we have examined the accompanying financial statements and supplemental data of WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP, EIN 59-2445708 and, to the best of our knowledge and belief, the same is complete and accurate. /s/ MARK A. WERNER - --------------------------------- Mark A. Werner, President February 20, 1995 Realty Management Group, Inc. and Responsible Project Manager for Willow Wick Apartments 9250 Cypress Green Drive, Suite 104 - Jacksonville, Florida 32256 FAX: (904) 731-4369 OFFICE: (904) 731-4366 18 5 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 INDEPENDENT AUDITOR'S QUALIFICATIONS DECEMBER 31, 1994 Independent Auditor's Qualifications The Independent Auditor, James E. Bullard, CPA, 9471-308 Baymeadows Road, Jacksonville, Florida 32256, whose Federal Employer Identification Number is 59-1321288, is a duly licensed Certified Public Accountant in the State of Florida, Florida Certification Number 2572 dated October 8, 1969, such licensure being consistent with HUD's requirement that the Independent Auditor be a licensed Certified Public Accountant in his state of domicile. Since all of the auditing services rendered in connection with examination of the accompanying financial statements were rendered in Florida, the permanent office of the Partnership, there is no requirement for the Independent Auditor to be licensed by the State of South Carolina. 19 6 James E. Bullard Certified Public Accountant 9471 Baymeadows Road Suite 308 Jacksonville, Florida 32256 -------------- (904) 636-9997 INDEPENDENT AUDITOR'S REPORT To the Partners of Willow Wick Associates Limited Partnership Jacksonville, Florida I have audited the accompanying balance sheet of Willow Wick Associates Limited Partnership, HUD Project No. 054-35130 as of December 31, 1994, and the related statement of operations and partners' capital, and of cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Willow Wick Associates Limited Partnership, HUD Project No. 054-35130, as of December 31, 1994, and the results of its operations and changes in partners' capital and cash flows for the year then ended in conformity with generally accepted accounting principles. My audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supporting information included in the report (shown on pages 16 to 25) are presented for the purposes of additional analysis and are not a required part of the basic financial statements of Willow Wick Associates Limited Partnership, HUD Project NO. 054-35130. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ JAMES E. BULLARD, CPA February 20, 1995 20 7 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 CLASSIFIED BALANCE SHEET DECEMBER 31, 1994 ASSETS CURRENT ASSETS: 1110 Petty cash $ 300 1120 Cash in bank 26,298 1130 Accounts receivable - tenants 3,235 ---------- 29,833 1191 TENANT SECURITY DEPOSITS HELD IN TRUST 12,940 PREPAID EXPENSES: 1240 Prepaid property insurance 18,460 1250 Prepaid mortgage insurance 401 ---------- 18,861 RESTRICTED DEPOSITS AND FUNDED RESERVES: 1310 Mortgage escrow deposits 24,191 1320 Reserve for replacements 22,206 ---------- 46,397 PROPERTY AND EQUIPMENT: 1410 Land 200,000 1420 Buildings 1,530,424 1430 Building equipment - fixed 208,000 ---------- 1,938,424 Less: Accumulated depreciation (673,286) ---------- 1,265,138 OTHER ASSETS: 1900 Syndication costs 15,903 ---------- 15,903 ---------- TOTAL ASSETS $1,389,072 ==========
21 8 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 CLASSIFIED BALANCE SHEET DECEMBER 31, 1994 LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: 2110 Accounts payable - trade $ 63,583 2120 Accrued wages payable 2,152 2130 Accrued interest- first mortgage 5,559 2131 Accrued interest - other 18,036 2210 Prepaid rents 440 2320 Mortgage payable - current portion 27,195 --------- 116,965 DEPOSIT LIABILITY: 2191 Tenant security deposits 12,940 LONG-TERM LIABILITIES: 2310 Note payable 300,608 2320 Mortgage payable - net of current portion 925,697 ---------- Total Liabilities 1,356,210 ---------- 3130 PARTNERS' CAPITAL 32,862 ---------- TOTAL LIABILITIES AND PARTNERS' CAPITAL $1,389,072 ==========
The Notes to Financial Statements are an integral part of these statements. 22 9 STATEMENT OF U.S. DEPARTMENT OF HOUSING PROFIT AND LOSS AND URBAN DEVELOPMENT Office of Housing Federal Housing Commissioner OMB Approval No. 2502-0052 (EXP. 1/31/95) - ------------------------------------------------------------------------------------------------------------------------------------ Public Reporting Burden for this collection of information is estimated to average 1.0 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Reports Management Officer, Office of Information Policies and Systems, U.S. Department of Housing and Urban Development, Washington, D.C. 20410-3600 and to the Office of Management and Budget, Paperwaste Reduction Project (2502-0052), Washington, D.C. 20503. Do not send this completed form to either of these addressees. - ------------------------------------------------------------------------------------------------------------------------------------
For the Monthly/Period Ending: Project Number: Project Name: Beginning: 1/1/94 12/31/94 054-35130 WILLOW WICK APARTMENTS - ------------------------------------------------------------------------------------------------------------------------------------ PART I Description of Account Acct. No. Amount* - ------------------------------------------------------------------------------------------------------------------------------------ Apartments or Member Carrying Charges (Coops) 5120 $ 538,765 Tenant Assistance Payments 5121 $ Furniture and Equipment 5130 $ RENTAL Stores and Commercial 5140 $ INCOME Garage and Parking Spaces 5170 $ 5100 Flexibility Subsidy Income 5180 $ Miscellaneous (specify) 5190 $ TOTAL RENT REVENUE Potential at 100% Occupancy $ 538,765 - ------------------------------------------------------------------------------------------------------------------------------------ Apartments 5220 ( 72,078) Furniture and Equipment 5230 ( 254) VACANCIES Stores and Commercial 5240 ( ) 5200 Garage and Parking Spaces 5270 ( ) Miscellaneous (specify) CONCESSIONS 5290 ( 31,539) TOTAL VACANCIES ( 103,871) - ------------------------------------------------------------------------------------------------------------------------------------ NET RENTAL REVENUE Rent Revenue Less Vacancies $ 434,894 ELDERLY AND CONGREGATE SERVICES INCOME -- 5300 TOTAL SERVICE INCOME (Schedule Attached) 5300 $ Interest Income - Project Operations 5410 $ 395 FINANCIAL Income from Investments - Residual Receipted 5430 $ REVENUE Income from Investments - Reserve for Replacement 5440 $ 1,118 5400 Income from Investments - Miscellaneous 5490 $ TOTAL FINANCIAL REVENUE $ 1,513 - ------------------------------------------------------------------------------------------------------------------------------------ Laundry and Vending 5910 $ 4,765 NSF and Late Charges 5920 $ 2,180 OTHER Damages and Cleaning Fees 5930 $ REVENUE Forfeited Tenant Security Deposits 5940 $ 5,992 5900 Other Revenue (specify) PET FEES, OTHER 5990 $ 3,013 TOTAL OTHER REVENUE $ 15,950 TOTAL REVENUE $ 452,357 - ------------------------------------------------------------------------------------------------------------------------------------ Advertising 6210 $ 11,519 Other Administrative Expense 6250 $ ADMINISTRATIVE Office Salaries 6310 $ 22,595 EXPENSES Office Supplies 6311 $ 6,071 6200/6300 Office or Model Apartment Rent 6312 $ Management 6320 $ 27,353 Manager or Superintendent Salaries 6330 $ Manager or Superintendent Rent Free Unit 6331 $ 2,872 Legal Expenses (Project) 6340 $ 123 Auditing Expenses (Project) 6350 $ 3,750 Bookkeeping Fees/Accounting Services 6351 $ Telephone and Answering Service 6360 $ 7,551 Bad Debts 6370 $ Miscellaneous Administrative Expenses (specify) PAGE 9 6390 $ 7,171 TOTAL ADMINISTRATIVE EXPENSES $ 89,005 - ------------------------------------------------------------------------------------------------------------------------------------ Fuel Oil/Coal 6420 $ UTILITIES Electricity (Light and Misc. Power) 6450 $ 15,439 EXPENSE Water / SEWER 6451 $ 22,499 6400 Gas 6452 $ 1,869 Sewer 6453 $ TOTAL UTILITIES EXPENSE $ 39,807 - ------------------------------------------------------------------------------------------------------------------------------------ * All Amounts must be rounded to the nearest dollar; Page 1 of 2 -7- form HUD-92410 (7/91) $.50 and over, round up - $.49 and below, round down. ref Handbook 4370.2
23 10 - ------------------------------------------------------------------------------------------------------------------------------------ Janitor and Cleaning Payroll 6510 $ 1,338 Janitor and Cleaning Supplies 6515 $ 664 Janitor and Cleaning Contract 6517 $ 2,560 Exterminating Payroll/Contract 6519 $ Exterminating Supplies 6520 $ 1,424 OPERATING Garbage and Trash Removal 6525 $ 13,919 AND Security Payroll/Contract 6530 $ MAINTENANCE Grounds Payroll 6535 $ 6500 Grounds Supplies 6536 $ 892 Grounds Contract 6537 $ 13,477 Repairs Payroll 6540 $ 37,704 Repairs Material 6541 $ Repairs Contract 6542 $ Elevator Maintenance/Contract 6545 $ Heating/Cooling Repairs and Maintenance 6546 $ 2,656 Swimming Pool Maintenance/Contract 6547 $ 1,107 Snow Removal 6548 $ Decorating Payroll/Contract 6560 $ Decorating Supplies 6561 $ Other 6570 $ Miscellaneous Operating and Maintenance Expenses PAGE 9 6590 $ 21,456 TOTAL OPERATING AND MAINTENANCE EXPENSES $ 97,197 - ------------------------------------------------------------------------------------------------------------------------------------ Real Estate Taxes 6710 $ 46,000 Payroll Taxes (FICA) 6711 $ 6,633 TAXES Miscellaneous Taxes, Licenses and Permits 6719 $ 1,037 AND Property and Liability Insurance (Hazard) 6720 $ 7,835 INSURANCE Fidelity Bond Insurance 6721 $ 6700 Workmen's Compensation 6722 $ 3,983 Health Insurance and Other Employee Benefits 6723 $ 4,446 Other Insurance (specify) 6729 $ TOTAL TAXES AND INSURANCE $ 69,934 - ------------------------------------------------------------------------------------------------------------------------------------ Interest on Bonds Payable 6810 $ Interest on Mortgage Payable 6820 $ 66,488 FINANCIAL Interest on Notes Payable (Long-Term) 6830 $ EXPENSES Interest on Notes Payable (Short-Term) 6840 $ 6800 Mortgage Insurance Premium/Service Charge 6850 $ 4,823 Miscellaneous Financial Expenses 6890 $ TOTAL FINANCIAL EXPENSES $ 71,311 - ------------------------------------------------------------------------------------------------------------------------------------ ELDERLY & TOTAL SERVICE EXPENSES - Schedule Attached 6900 $ CONGREGATE TOTAL COST OF OPERATIONS BEFORE DEPRECIATION $ 367,254 SERVICE PROFIT (LOSS) BEFORE DEPRECIATION $ 85,103 EXPENSES Depreciation (Total) - 6600 (specify) 6600 66,829 $ 66,829 6900 Operating Profit or (Loss) $ 18,274 - ------------------------------------------------------------------------------------------------------------------------------------ CORPORATE OR Officer Salaries 7110 $ MORTGAGOR Legal Expenses (Entity) 7120 $ 10,813 ENTITY Taxes (Federal-State-Entity) 7130-32 $ EXPENSES Other Expenses (Entity) PAGE 9 7190 $ 43,718 7100 TOTAL CORPORATE EXPENSES $ 54,531 NET PROFIT OR (LOSS) $ (36,257) - ------------------------------------------------------------------------------------------------------------------------------------ WARNING: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001, 1010, 1012; 31 U.S.C. 3729, 3802) MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule describing or explaining the miscellaneous income or expenses. - ------------------------------------------------------------------------------------------------------------------------------------ PART II - ------------------------------------------------------------------------------------------------------------------------------------ 1. Total principal payments required under the mortgage, even if payments under a Workout Agreement are less or more than those required under the mortgage. $ 27,195 - ------------------------------------------------------------------------------------------------------------------------------------ 2. Replacement Reserve deposits required by the Regulatory Agreement or Amendments thereto, even if payments may be temporarily suspended or waived. $ 10,320 - ------------------------------------------------------------------------------------------------------------------------------------ 3. Replacement of Painting Reserve releases which are included as expense items on this Profit and Loss statement $ NONE - ------------------------------------------------------------------------------------------------------------------------------------ 4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are included as expense items on this Profit and Loss Statement. $ NONE - ------------------------------------------------------------------------------------------------------------------------------------ Page 2 of 2 -8- form HUD-92410 (7/91) ref Handbook 4370.2
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS. 24 11 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 FORM HUD-92410 - ACCOUNT DETAIL DECEMBER 31, 1994 MISCELLANEOUS ADMINISTRATIVE EXPENSE (A/C 6390): Seminars and meetings $ 1,156 Travel and related expenses 2,264 Miscellaneous 451 Credit checks 1,214 Leasing 690 Employee relations 1,396 --------- $ 7,171 ========= MISCELLANEOUS MAINTENANCE EXPENSES (A/C 6590): Appliance repairs, maintenance and replacements $1,145 Carpet cleaning, repairs and replacements 5,459 Casual labor - maintenance 1,033 Electric repairs 1,131 Fire protection supplies 376 Painting supplies and contract 4,339 Plumbing repairs 3,655 Roof repairs 1,407 Small tools 1,133 Uniforms 762 Glass/locks 1,016 --------- $ 21,456 ========= OTHER ENTITY EXPENSE (A/C 7190): General Partner fees $ 6,610 Interest - 2nd mortgage 36,072 Tax preparation fees 600 Travel 436 --------- $ 43,718 =========
25 12 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 STATEMENT OF CHANGES IN PARTNERS' CAPITAL YEAR ENDED DECEMBER 31, 1994 Partners' Capital - January 1, 1994 (restated) $ 69,119 Net loss (36,257) -------- Partners' Capital - December 31, 1994 $ 32,862 ========
The Notes to Financial Statements are an integral part of these statements. 26 13 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Rental receipts $ 424,688 Interest receipts 1,513 Other receipts 15,950 ----------- 442,151 ----------- Management fees (14,814) Administrative expenses (32,017) Utilities (38,401) Salaries and wages (64,474) Operating and maintenance (48,507) Real estate taxes (46,000) Property insurance (4,279) Miscellaneous taxes and insurance (20,812) Interest on mortgage note (67,674) Entity expenses (49,729) ----------- (386,707) ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 55,444 ----------- CASH FLOWS USED IN INVESTING ACTIVITIES: Acquisition of fixed assets (79,314) Deposits in reserve for replacements (11,438) Withdrawals from reserve for replacements 11,739 ----------- NET CASH USED IN INVESTING ACTIVITIES (79,013) ----------- CASH FLOWS USED IN FINANCING ACTIVITIES: Principal payments on mortgage note (25,362) ----------- NET CASH USED IN FINANCING ACTIVITIES (25,362) ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (48,931) CASH AND CASH EQUIVALENTS: Beginning of Period - January 1, 1994 75,529 ----------- End of Period - December 31, 1994 $ 26,598 ===========
27 14 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 STATEMENT OF CASH FLOWS (CONTINUED) YEAR ENDED DECEMBER 31, 1994 RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: NET LOSS $ (36,257) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 66,829 Adjustment to restate beginning partners capital (1,039) Decrease (Increase) in: Tenant security deposits held in trust 2,440 Accounts receivable (2,975) Prepaid insurance (11,573) Tax and insurance escrow 2,955 Increase (Decrease) in: Accounts payable (Note 3) 44,847 Accrued wages payable 35 Accrued interest payable (147) Tenant security deposits payable (2,440) Prepaid rents (7,231) --------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 55,444 =========
The Notes To Financial Statements are an integral part of these statements. 28 15 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 NOTES TO FINANCIAL STATEMENTS NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Willow Wick Associates Limited Partnership was formed in October 1984 to acquire and operate a 104-unit rental complex (The Project) located in North Augusta, South Carolina. This project is security for a mortgage insured by HUD under Section 221(d)(4) of the National Housing Act, and operating methods and partners' annual distributions are regulated by HUD pursuant to a regulatory agreement. The agreement limits annual distributions to "surplus cash" available at the end of each year. Basis of Accounting Assets, liabilities, revenues and expenses are recognized on the accrual basis of accounting. Fixed Assets Property and equipment are recorded at cost. Depreciation provided in the financial statements is computed by both accelerated and straight-line methods applied to individual property items based on estimated useful lives ranging from five to forty years. For Federal income tax purposes, depreciation for buildings is calculated over an eighteen-year recovery period. Deferred Charges Certain costs and fees associated with the organization and promotion of the Partnership are non-deductible expenditures and have been capitalized as syndication costs. Income Taxes No income tax provision has been included in the financial statements since income or loss of the Partnership is required to be reported by the respective partners on their individual income tax returns. Reserve For Replacements Pursuant to a regulatory agreement, The Project is required to deposit monies monthly with the mortgagor to be used for replacements of property and equipment approved by HUD. 29 16 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 NOTES TO FINANCIAL STATEMENTS NOTE 2: LONG-TERM DEBT
Current Long-term Portion Portion ------- --------- Mortgage note payable (a) $ 27,195 $ 925,697 Note payable (b) -- 300,608 -------- ---------- $ 27,195 $1,226,305 ======== ==========
a) The Partnership assumed an existing mortgage note payable on December 14, 1984, in the amount of $1,141,892 bearing an interest rate of 7% per annum on the unpaid balance. The note calls for equal monthly payments in the amount of $7,753 including interest, through January 1, 2013. The note is insured by FHA under the FHA 221(d)(4) program. The partnership was required to enter into a regulatory agreement with the U.S. Department of Housing and Urban Development. The Regulatory Agreement does not require HUD approval of rent levels. b) The Partnership executed a promissory note on December 14, 1984 in the amount of $300,608 bearing an interest rate of 12% per annum. Interest is payable annually until December 14, 1994 when the principal amount and the remaining accrued interest became due; the maturity date of the note was extended to April 15, 1995 by agreement of the parties. The promissory note is subordinate to the first mortgage insured by the U.S. Department of Housing and Urban Development and payments of interest and principal from project income can only be paid from surplus cash as defined by the Regulatory Agreement. Maturities of long-term debt by year are as follows: 1995 $ 327,803 1996 29,161 1997 31,269 1998 33,529 1999 35,953 Thereafter 795,785 ----------- $ 1,253,500 ===========
30 17 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 NOTES TO FINANCIAL STATEMENTS NOTE 3: IDENTITIES OF INTEREST During 1994, the Partnership had certain transactions with third parties who constituted Identities of Interest, including those parties reflected in Compensation of Partners (Page 23), and the following additional transactions: 1) The Partnership reimbursed its General Partner, Realty Management Group, Inc. for the Apartment Project's payroll and payroll-related items during 1994. 2) The Partnership reimbursed Realty Management Group, Inc. for certain repair and replacement items paid on behalf of the Apartment Project by Realty Management Group, Inc. 31 18 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 ANALYSIS OF ACCOUNTS RECEIVABLE DECEMBER 31, 1994 Accounts and Notes Receivable (other than from regular tenants): There are no known receivables from other than regular tenants at December 31, 1994. Delinquent Tenant Accounts Receivable:
Number of Amount Tenants Past Due --------- -------- Delinquent under 30 days 7 $ 2,395 Delinquent 31 - 60 days 3 840 Delinquent 61 - 90 days - - Delinquent over 90 days - - ---- ------- Totals 10 $ 3,235 ==== =======
32 19 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 MORTGAGE ESCROW DEPOSITS DECEMBER 31, 1994 As of December 31, 1994, the estimated amounts needed for future payment of insurance and taxes are as follows: Property taxes due October 1995 (46,000 X 3/12) $ 11,500 Property insurance due December 1995 (19,418 X 1/12) 1,618 Mortgage insurance due February 1995 (4,823 X 11/12) 4,421 --------- ESTIMATED ACCRUED LIABILITY 17,539 TOTAL CONFIRMED BY MORTGAGEE 24,191 --------- SURPLUS IN DEPOSIT REQUIREMENTS $ 6,652 =========
33 20 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 ANALYSIS OF RESTRICTED DEPOSITS DECEMBER 31, 1994 Tenant Security Deposits: Tenant security deposits are held in a separate bank account in the name of the project. RESERVE FOR REPLACEMENTS Balance - January 1, 1994 $ 22,507 Add: Deposits during year 10,320 Interest earned 1,118 Less: Withdrawals for replacement of property (11,739) --------- Balance - December 31, 1994 $ 22,206 =========
34 21 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS AS OF DECEMBER 31, 1994 A. Funds Held by Mortgagor, Regular Operating Accounts: 1. First Union National Bank of Florida, Jacksonville, Florida (Checking) [1] 1,111 (Checking) [1] 4,979 (Checking) [1] 18,125 $ 24,215 ------ 2. Nation's Bank (Checking) [2] 2,083 B. Funds Held by Mortgagor in Trust, Tenant Security Deposits: 1. Nation's Bank (Checking) [2] 12,940 --------- FUNDS HELD BY MORTGAGOR, TOTAL 39,238 --------- C. Funds Held by Mortgagee, (in Trust), by Greystone Servicing corporation, Inc.: [3] 1. Tax & Insurance escrow - various funds 24,191 2. Reserve Fund for Replacements- various funds 22,206 --------- FUNDS HELD BY MORTGAGEE, TOTAL 46,397 --------- TOTAL FUNDS IN FINANCIAL INSTITUTIONS $ 85,635 =========
[1] Balances confirmed by First Union National Bank of Florida, 1/10/95 [2] Balances confirmed by Nation's Bank of Florida, 1/04/95 [3] Balances confirmed by Greystone Servicing Corporation, Inc., 1/23/95 35 22 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT HOUSING - FEDERAL HOUSING COMMISSIONER OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS - ------------------------------------------------------------------------------------------------------------------------------------ PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER: WILLOW WICK APARTMENTS 12/31/94 054-35130 - ------------------------------------------------------------------------------------------------------------------------------------ PART A-COMPUTE SURPLUS CASH - ------------------------------------------------------------------------------------------------------------------------------------ 1. Cash (Accounts 1110, 1120, 1191, 1192) $ 39,538 CASH 2. Tenant subsidy vouchers due for period covered by financial statement $ 3. Other (describe) $ (a) TOTAL CASH (Add Lines 1, 2, and 3) $ 39,538 - ------------------------------------------------------------------------------------------------------------------------------------ 4. Accrued mortgage interest payable $ 5,559 5. Delinquent mortgage principal payments $ 6. Delinquent deposits to reserve for replacement $ 7. Accounts payable (due within 30 days) $ 63,583 CURRENT 8. Loans and notes payable - (due within 30 days) $ OBLIGATIONS 9. Deficient Tax Insurance of MIP Escrow Deposits $ 10. Accrued expenses (not escrowed) $ 2,152 11. Prepaid Rents (Account 2210) $ 440 12. Tenant security deposits liability (Account 2191) $ 12,940 13. Other (Describe) $ (b) LESS TOTAL CURRENT OBLIGATIONS (Add Lines 4 through 13) $ 84,674 (c) SURPLUS CASH (DEFICIENCY)(Line (a) minus Line (b)) $ (45,136) - ------------------------------------------------------------------------------------------------------------------------------------ PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. Surplus Cash $ - ------------------------------------------------------------------------------------------------------------------------------------ 2a. Annual Distribution Earned During Fiscal Period Covered by the Statement $ LIMITED 2b. Distribution Accrued and Unpaid as of the End of the DIVIDED Prior Fiscal Period $ PROJECTS 2c. Distributions Paid During Fiscal Period Covered by Statement $ 3. Amount to be Carried on Balance Sheet as Distribution Earned but Unpaid (Line 2a plus 2b minus 2c) $ - ------------------------------------------------------------------------------------------------------------------------------------ 4. Amount Available for Distribution During Next Fiscal Period $ 5. Deposit Due Residual Receipts (Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $ - ------------------------------------------------------------------------------------------------------------------------------------ PREPARED BY REVIEWED BY - ------------------------------------------------------------------------------------------------------------------------------------ LOAN TECHNICIAN LOAN SERVICER - ------------------------------------------------------------------------------------------------------------------------------------ DATE DATE - ------------------------------------------------------------------------------------------------------------------------------------ See Reverse for Instructions HUD-93486 (12-80)
36 23 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 ANALYSIS OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES DECEMBER 31, 1994 Accounts Payable (other than trade creditors): There are no known accounts payable to other than trade creditors as of December 31, 1994. Accrued Taxes (Account 2150): There are no known taxes to be accrued as of December 31, 1994. 37 24 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 CHANGES IN FIXED ASSET ACCOUNTS YEAR ENDED DECEMBER 31, 1994
Description FIXED ASSETS ACCUMULATED DEPRECIATION ------------------- ---------------------------------------------- ------------------------------------------- Note Carrying Balance Additions Deductions Balance Balance Additions Deductions Balance Amount ---------- --------- ---------- --------- -------- --------- ---------- ------- ---------- 410 Land $ 200,000 $ -- $ -- $ 200,00 $ -- $ -- $ -- $ -- $ 200,00 420 Buildings 1,530,424 50,166 50,166 1,530,424 519,749 50,749 50,166 520,059 1,010,365 430 Building equipment, fixed 208,000 29,148 29,148 208,000 166,295 16,080 29,148 153,227 54,773 ---------- ------- ------- ---------- -------- ------- ------- -------- ---------- Total Fixes Assets $1,938,424 $79,314 $79,314 $1,938,424 $685,771 $66,829 $79,314 $673,286 $1,265,138 ========== ======= ======= ========== ======== ======= ======= ======== ==========
38 25 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 COMPENSATION OF PARTNERS DECEMBER 31, 1994 Compensation of partners The General Partner, Realty Management Group, Inc., earned management fees of $27,353, representing six (6) per cent of project income (as defined), and General Partner fees of $6,610 for the year ended December 31, 1994. 39 26 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 SCHEDULE OF UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME DECEMBER 31, 1994 Schedule of Unauthorized Distributions of Project Income During 1994, the Partnership made periodic payments (without prior approval of HUD), of the following items [all classified as entity expenses on Form 92410 (Page 8)]: 1] Legal and professional fees (Pages 8 and 9) $ 6,611 2] General partner fees (Page 9) 6,610 3] Interest on Second Mortgage Note Payable (Page 14) 36,072 4] Travel expenses (Page 9) 436 --------- Total (Page 11) $ 49,729 =========
All of the payments listed above are considered "entity" expenses, and are payable only out of Surplus Cash as defined in the Regulatory Agreement. Semi-annual and annual disbursements of Surplus Cash are allowable with prior approval of HUD. It is noted that Surplus Cash was $41,299 at December 31, 1993, all of which could have been distributed (or used to pay entity expenses) during 1994 with the approval of HUD. Other than the amounts reflected above, no other unauthorized distributions of project income were noted during the audit of the accompanying financial statements. 40 27 WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 054-35130 SCHEDULE OF FINDINGS DECEMBER 31, 1994 Schedule of Findings 1] During 1994, the Partnership made periodic payments (without the prior approval) of certain entity expenses (See Page 24 for details). 2] The Apartment Project continued to experience substantial vacancies during 1994, resulting in a deteriorating financial position of the Project at December 31, 1994. 3] Accounts payable - trade of $63,583 at December 31, 1994 represented an increase from $18,736 at December 31, 1993. 4] The second mortgage note of $300,608 (Note 2: Long-term debt) and interest accrued thereon matured on December 14, 1994; the maturity date of the note was extended to April 15, 1995, by agreement of the parties. Payment of, or a satisfactory restructuring of this obligation is imperative for the successful continuation of the Partnership. 41 28 James E. Bullard Certified Public Accountant 9471 Baymeadows Road Suite 308 Jacksonville, Florida 32256 -------------- (904) 636-9997 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE To The Partners Willow Wick Associates Limited Partnership Jacksonville, Florida I have audited the financial statements of Willow Wick Associates Limited Partnership, as of and for the year ended December 31, 1994, and have issued my report thereon dated February 20, 1995. I have also audited the partnership's compliance with requirements applicable to HUD-assisted programs and have issued my report thereon dated February 20, 1995. I conducted my audit in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of the United States, and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General in July 1993. Those standards and the Guide require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether the Partnership complied with laws and regulations, noncompliance with which would be material to a HUD-assisted program. In planning and performing my audit for the year ended December 31, 1994, I considered the Partnership's internal control structure in order to determine my auditing procedures for the purpose of expressing my opinion on the Partnership's basic financial statements and on its compliance with specific requirements applicable to its HUD-assisted program and not to provide assurance on the internal control structure. The management of the Partnership is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles and that HUD assisted programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. 42 29 Willow Wick Associates Limited Partnership February 20, 1995 Page 2 For the purpose of this report, I have classified the significant internal control structure policies and procedures in the following categories: Accounting applications Cash receipts/Revenue Purchases/Cash disbursements General ledger External financial reporting Specific compliance requirements The Partnership's Regulatory Agreement (with HUD) Mortgage status Replacement reserve Security deposits Cash receipts Cash disbursements Management functions For all of the internal control structure categories listed above, I obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and I assessed control risk. I performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that I considered relevant to preventing or detecting material noncompliance with specific requirements applicable to the Partnership's HUD-assisted program. My procedures were less in scope than would be necessary to render an opinion on internal control structure policy and procedures. Accordingly, I do not express such an opinion. I noted no matters involving the internal control structure and its operation that I consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to my attention relating to significant deficiencies in the design or operation of the internal control structure that, in my judgment, could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with management's assertions in the financial statements or to administer HUD assisted programs in accordance with applicable laws and regulations. 43 30 Willow Wick Associates Limited Partnership February 20, 1995 Page 3 A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited or that noncompliance with laws and regulations that would be material to a HUD-assisted program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. My consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. This report is intended for the information of the Partnership's management, and the Department of Housing and Urban Development. However, this report is a matter of public record and its distribution is not limited. /s/ JAMES E. BULLARD, CPA - ----------------------------- February 20, 1995 44 31 James E. Bullard Certified Public Accountant 9471 Baymeadows Road Suite 308 Jacksonville, Florida 32256 ---------- (904) 636-9997 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS To the Partners Willow Wick Associates Limited Partnership Jacksonville, Florida I have audited the financial statements of Willow Wick Associates Limited Partnership, as of and for the year ended December 31, 1994 and have issued my report thereon dated February 20, 1995. In addition, I have audited the Partnership's compliance with the specific program requirements governing: * the Partnership's Regulatory Agreement (with HUD) * its Mortgage status * replacement reserve * its accounting for security deposits, and * its cash receipts and disbursements, that are applicable to its only Major HUD-assisted program (Operation of an Apartment Project which receives no rental assistance) * Management functions for the year ended December 31, 1994. The management of the Partnership is responsible for compliance with those requirements. My responsibility is to express an opinion on compliance with those requirements based on my audit. I conducted my audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of Inspector General in July 1993. Those standards and the Guide require that I plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the Partnership's compliance with those requirements I believe that my audit provides a reasonable basis for my opinion. In my opinion, the Partnership complied, in all material respects, with the requirements described above that are applicable to its sole major HUD assisted program for the year ended December 31, 1994. This report is intended for the information of the Partnership's management, and the Department of Housing and Urban Development. However, this report is a matter of public record and its distribution is not limited. /s/ JAMES E. BULLARD, CPA - ----------------------------- February 20, 1995 45 32 James E. Bullard Certified Public Accountant 9471 Baymeadows Road Suite 308 Jacksonville, Florida 32256 (904) 636-9997 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING Willow Wick Associates Limited Partnership Jacksonville, Florida I have audited the financial statements of Willow Wick Associates Limited Partnership, as of and for the year ended December 31, 1994, and have issued my report thereon dated February 20, 1995. I have applied procedures to test the Partnership's compliance with the Affirmative Fair Housing requirements applicable to its HUD-assisted programs, for the year ended December 31, 1994. My procedures were limited to the applicable compliance requirement described in the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, Office of Inspector General in July 1993. My procedures were substantially less in scope than an audit, the objective of which would be the expression of an opinion on the Partnership's compliance with the Affirmative Fair Housing requirements. Accordingly, I do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the Affirmative Fair Housing requirements. With respect to items not tested, nothing came to my attention that caused me to believe that the Partnership had not complied, in all material respects, with those requirements. This report is intended for the information of Partnership's management and the Department of Housing and Urban Development However, this report is a matter of public record and its distribution is not limited. James E. Bullard, CPA /s/ JAMES E. BULLARD - ------------------------- February 20, 1995 46 -----END PRIVACY-ENHANCED MESSAGE-----