10-K 1 r10k100.txt DECEMBER 31, 2000 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 2000 Commission File Number 2-84474 APT HOUSING PARTNERS LIMITED PARTNERSHIP A Massachusetts Limited Partnership I.R.S. Employer Identification No. 04-2791736 500 West Cummings Park, Suite 6050, Woburn, Massachusetts 01801 Registrant's Telephone Number, Including Area Code (781) 935-4200 Securities Registered Pursuant to Section 12(b) or 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]. There were 3,700 units of limited partnership interests held in the Partnership at March 15, 2001. DOCUMENTS INCORPORATED BY REFERENCE NONE TOTAL NUMBER OF PAGES 50 INDEX TO EXHIBITS AT PAGE 15 PART I ITEM 1. BUSINESS: General APT HOUSING PARTNERS LIMITED PARTNERSHIP (the "Partnership") is a limited partnership which was formed under the laws of the Commonwealth of Massachusetts on June 8, 1983. The General Partner of the Partnership is APT Asset Management, Inc., a Massachusetts corporation. APT Asset Management, Inc. is a wholly owned subsidiary of APT Financial Services, Inc. (a Delaware Corporation) whose majority shareholder is John M. Curry. The Partnership's business is to invest, as a limited partner, in Local Limited Partnerships owning government-assisted housing developments and to provide its partners current tax benefits, potential appreciation in real estate investments, distribution of net capital transaction proceeds and distributable cash to the extent available. On September 30, 1983, the Partnership offered for sale 9,000 units of limited partnership interests at $1,000 each pursuant to a prospectus dated September 30, 1983. The offering was subsequently amended on March 30, 1984 to provide for 3,700 units of limited partnership interests at $1,000 each. The public offering was managed by American Investment Team, Inc. ("AIT") ("the dealer manager"), an affiliate of the General Partner of the Partnership. The minimum investment allowed was $5,000. The Partnership received $3,700,000 of subscriptions for limited partnership interests during the period September 30, 1983 through April 30, 1984 from 329 Investors. No further issuance of partnership interests is anticipated. The net proceeds ($3,071,000) of the public offering were primarily used to purchase limited partnership interests in existing multi-family rental housing developments known as Ashland Commons Associates, Rockledge Apartments Associates and Historic Cohoes II. The Partnership's investments in each Local Limited Partnership represents 95.5%, 97% and 97%, respectively. On December 18, 1986 the Partnership withdrew its 97% investment interest in Historic Cohoes II and received its original investment of $1,321,234 from the Local Limited Partnership. A distribution of the same amount was made to the Limited Partners on April 3, 1987. Federal, state or local government agencies have provided significant incentives in order to stimulate private investment in government-assisted housing. The intent of these incentives was to reduce certain market risks and provide investors (i) tax benefits, (ii) limited cash distributions and (iii) long-term capital appreciation. Notwithstanding these factors, there remain significant risks. These risks include, but are not limited to, the financial strength of the local general partners. The long-term nature of investments in government-assisted housing limits the ability of the Partnership to vary its investment portfolio in response to changing economic, financial and investment conditions; such investments are also subject to changes in local economic circumstances and housing patterns which have an impact on real estate values. These housing developments also require greater management expertise and may have higher operating expenses than conventional housing developments. The Partnership became the principal limited partner in these Local Limited Partnerships pursuant to Local Limited Partnership agreements entered into with the local general partners. As a limited partner, the Partnership's liability for obligations of the Local Limited Partnerships is limited to its investment. The local general partners of the Local Limited Partnerships retain responsibility for maintaining, operating and managing the housing developments. Under certain circumstances, the Partnership has the right to replace the local general partner of the Local Limited Partnerships. John M. Curry is a General Partner in one of the Local Limited Partnerships. An affiliated company in which John M. Curry is the President, is the General Partner in the other Local Limited Partnership. Although each of the Local Limited Partnerships in which the Partnership has invested owns a housing development which must compete for tenants in the market place, the rental assistance and below market interest rates on mortgage financing provided by government-assisted housing programs make it possible to offer apartments to eligible tenants at a cost to the tenant significantly below the market rate for comparable conventionally-financed apartments in the area. The Internal Revenue Service (IRS) scrutinizes, in general, "tax shelters" that generate tax losses in any taxable year. The Local Limited Partnerships will deduct certain fees such as General Partners' fees and other expenses on the basis that such expenses constitute ordinary and necessary expenses of carrying on the business. If the federal income tax information return filed annually by the Partnership or by any Local Limited Partnership are audited, no assurance can be given as to what extent the deductions claimed for these fees will be allowed. Any disallowance by the IRS that is not successfully rebutted will have the effect of increasing the taxable income or decreasing the taxable loss of each Limited Partner for the year in question. The Limited Partners do not have a right to participate in the management of the Partnership or its operations. However, a majority in interest of the Limited Partners have the authority to (1) approve or disapprove the sale of all or substantially all of the assets of the Partnership in a single transaction or a related series of transactions, (2) dissolve the Partnership, (3) remove the General Partner, for cause, or (4) elect a substitute General Partner. Limited Partners holding 10% or more of the limited partnership interests have the right to call meetings of the Partnership and propose amendments to the Partnership Agreement. As a Limited Partner of each of the Local Limited Partnerships, the Partnership does not have the right to participate in the management of such Local Limited Partnerships or their operations. The Partnership retains certain rights with respect to voting on or approving certain matters, including the sale of the housing developments. By the existence or exercise of such rights, it could be asserted that the Partnership was taking part in the control of the Local Limited Partnerships' operations and should thereby incur liability for all debts and obligations of the Local Limited Partnerships. If this were found to be the case, the Partnership interest in one Local Limited Partnership could be reached by creditors of another Local Limited Partnership. The Partnership has received opinions of counsel for the Local Limited Partnerships that the existence and exercise of such rights will not subject it to liability as a Local General Partner of the Local Limited Partnership. Holders of the Partnership's limited partnership interests will need to bear the economic risk of their investment for an indefinite period of time. Transferability of the limited partnership interests is restricted so as not to cause a termination of the Partnership for tax purposes. In California, Maine, New Hampshire, Pennsylvania and South Carolina, transferability of the limited partnership interests is restricted to transferees meeting the investor suitability standards. In addition, a transfer of limited partnership interests is subject to the consent of the General Partner, which may be withheld in its sole discretion. Losses recognized for tax purposes from the ownership and operations of the housing developments decline over time. This occurs because the tax advantages of accelerated depreciation are greatest in earlier years and decline over the life of the housing developments, and because those portions of the level mortgage payment attributable to deductible interest likewise decrease with the passage of time. In addition, the benefits to be received in the form of tax savings in future years may decline as a result of the enactment of the Tax Reform Act of 1986, depending on the individual circumstances of each Limited Partner. For these reasons, among others, it is not anticipated that any public market will develop for the purchase and sale of limited partnership interests. Consequently, holders of limited partnership interests in the Partnership may not be able to liquidate their investments in the event of an emergency and limited partnership interests probably will not be readily acceptable as collateral for loans. Moreover, should a limited partner dispose of his limited partnership interest, he will realize taxable income to the extent that his allocable share of the mortgage debt obligations plus the other consideration he receives upon such disposition exceeds his tax basis, while at the same time he may not receive sufficient cash to pay such taxes. Competition The real estate rental business in which the Local Limited Partnerships are engaged is highly competitive and the properties owned by the Local Limited Partnerships are expected to be subject to active competition from similar properties in their respective vicinities. The Local Limited Partnerships compete with many other entities providing residential rental housing through government-assisted and conventionally-financed housing developments. Some of these entities are owned by large real estate operators with significantly greater resources than the Partnership as well as local organizations which own and operate a relatively small number of properties. The Local Limited Partnerships believe that they have a reputation for providing safe, clean, quality residential housing which enables them to compete effectively for tenants. While the Local Limited Partnerships believe that they will continue to compete effectively for tenants, there can be no assurance that they will do so or that they will not encounter further increased competition in the future due to changes in the various government-assisted housing programs and from rehabilitated or new housing developments in their respective vicinities. Employees The Partnership does not have any direct employees. All services are performed for the Partnership by its General Partner and its affiliates. The General Partner receives compensation in connection with such activities as set forth in Item 11. In addition, the Partnership reimburses the General Partner and certain of its affiliates for expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership's Amended and Restated Agreement and Certificate of Limited Partnership (the "Partnership Agreement"). ITEM 2. PROPERTIES: The Partnership holds limited partnership interests in two (2) Local Limited Partnerships as of December 31, 2000. Set forth is a schedule of the Local Limited Partnerships including certain information concerning the Apartment Complexes. Name and Location % of Units Occupied (Number of Units) Date Acquired at December 31, 2000 1999 1998 1997 1996 Ashland Commons Associates March 30, 1984 97% 100% 100% 99% 100% Ashland, MA (96) Rockledge Apartments Associates June 22, 1984 98% 97% 97% 98% 97% Wakefield, MA (60) The Local Limited Partnerships in which the Partnership has invested own existing Apartment Complexes which receive either Federal or State subsidies. The U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), administers a variety of subsidy programs for low- and moderate-income housing developments. The Federal programs generally provide one of a combination of the following forms of assistance: (i) mortgage loan insurance (ii) rental subsidies, (iii) reduction of mortgage interest payments. i) HUD provides mortgage insurance for rental housing projects pursuant to a number of sections of Title II of the National Housing Act ("NHA") including, among others, Section 236 and Section 221(d)(4). Under these programs, HUD will generally provide insurance equal to 90% of the total replacement cost to limited-distribution owners. Mortgages are provided by institutions approved by HUD, including banks, savings and loan companies and local housing authorities. Section 221(d)(4) of the NHA provides for federal insurance of private construction and permanent mortgage loans to finance new construction of rental apartment complexes containing five or more units. ii) Many of the tenants in HUD insured projects receive some form of rental assistance payments, primarily through the Section 8 Housing Assistance Payments Program ("Section 8 Program"). Apartment Complexes receiving assistance through the Section 8 Program will generally have limitations on the amount of rent which may be charged. One requirement imposed by HUD regulations effective for apartment complexes initially approved for Section 8 payments on or after November 5, 1979 is to limit the amount of the owner's annual cash distributions from operations to 10% of the owner's equity investment in an apartment complex if the apartment complex is intended for occupancy by families and to 6% of the owner's equity investment in an apartment complex intended for occupancy by elderly persons. The owner's equity investment in the apartment complex is 10% of the project's replacement cost as determined by HUD. iii) The Section 236 Program, as well as providing mortgage insurance, also provides a subsidy which reduces the debt service on a project mortgage, thereby enabling the owner to charge the tenants lower rents for their apartments. Interest credit subsidy payments are made monthly by HUD directly to the mortgagee of the project. Each payment is in an amount equal to the difference between (i) the monthly payment required by the terms of the mortgage to pay principal and interest and (ii) the monthly payment which would have been required for principal and interest if the mortgage loan provided for interest at the rate of 1%. These payments are credited against the amounts otherwise due from the owner of the project, who makes monthly payments of the balance. Pursuant to HUD?s efforts to provide for the nation?s housing needs, the Multifamily Assisted Housing Reform and Affordability Act (MAHRAA) of 1997, as amended, was enacted. In this Act, Congress set forth the legislation for a permanent ?mark-to-market? program and provided for permanent authority for the renewal of Section 8 Contracts. Owners with Section 8 contracts expiring after September 30 ,1998 are subject to the provisions of MAHRAA. On September 11, 1998, HUD issued an interim rule to provide clarification of the implementation of the mark-to-market program. Since then, revised guidance has been provided through various HUD housing notices, most recently HUD housing notice 99-36, which addresses project-based Section 8 contracts expiring in fiscal year 2000. Under this notice, project owners have several options for Section 8 contract renewals, depending on the type of project and rent level. Options include marking rents up to market, renewing other contracts with rents at or below market, referring projects to the Office of Multifamily Housing Assistance Restructuring (OMHAR) for mark-to market or ?OMHAR lite? renewals, renewing contracts that are exempted from referral to OMHAR, renewing contracts for portfolio re-engineering demonstration and preservation projects, and opting out of the Section 8 program. Owners must submit their option to HUD at least 120 days before expiration of their contract. Each option contains specific rules and procedures that must be followed to comply with the requirements of housing notice 99-36. As such, each Local Limited Partnership may choose to either opt out of the Section 8 program, request mortgage restructuring and renewal of the Section 8 contract, or request renewal of the Section 8 contract without mortgage restructuring. Each option contains a specific set of rules and procedures that must be followed in order to comply with the requirements of MAHRAA. The Partnership cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income and debt structure of certain Local Limited Partnerships currently receiving such subsidy or similar subsidies. All tenant leases are generally for periods not greater than one to two years and no tenant occupies more than 10% of the rentable square footage. Management continuously reviews the physical state of the properties and budgets improvements when required which are generally funded from cash flow from operations or release of replacement reserve escrows. No improvements are expected to require additional financing. See Item 1, Business, above for the general competitive conditions to which the properties described herein are subject. Real estate taxes are calculated using rates and assessed valuations determined by the town or city in which the property is located. ITEM 3. LEGAL PROCEEDINGS: None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS: Limited partnership interests are not traded in a public market but were sold through a public offering managed by American Investment Team, Inc. It is not anticipated that any public market will develop for the purchase and sale of any limited partnership interest. Limited partnership interests may be transferred only if certain requirements are satisfied. As of March 15, 2001, there were 328 registered holders of an aggregate of 3,700 units of limited partnership interests in the Partnership. The Partnership has invested in Local Limited Partnerships owning housing developments which receive governmental assistance under programs which restrict the cash return available to housing development owners. The Partnership does not anticipate providing significant cash distributions to its limited partners in circumstances other than a refinancing or sale. On February 24, 1995, the Partnership distributed $200,000 to the partners, of which $196,000 or $52.97 per unit of limited partnership interest, was distributed to the Limited Partners. The Partnership does not anticipate that it will make any further cash distributions. ITEM 6. SELECTED FINANCIAL DATA: The information set forth below presents selected financial data of the Partnership. Additional financial information is set forth in the audited financial statements in Part IV, Item 14, beginning on page 15. Year Ended December 31, OPERATIONS 2000 1999 1998 1997 1996 Revenue $ 11,202 $ 7,297 $ 4,868 $ 2,610 $1,389 Expenses 54,033 46,212 45,472 46,464 45,891 Loss before share of losses of and distributions from the Local Limited Partnerships( 42,831)( 38,915)( 40,604)( 43,854)( 44,502) Distribution from Local Limited Partnership 87,903 87,903 87,903 87,903 87,903 Share of losses of Local Limited Partnerships - - - - - Net income $ 45,072 $ 48,988 $ 47,299 $ 44,049 $ 43,401 Net income per weighted average limited partnership unit $ 11.94 $ 12.98 $ 12.53 $ 11.67 $ 11.50 FINANCIAL POSITION December 31, 2000 1999 1998 1997 1996 Total assets $ 252,224 $ 203,385 $ 155,218 $ 108,175 $64,360 Investment in Local Limited Partnerships $ -0- $ -0- $ -0- $ -0- $-0- Total liabilities $ 20,047 $ 16,280 $ 17,101 $ 17,357 $ 17,591 Total partners' capital $ 232,177 $ 187,105 $ 138,117 $ 90,818 $ 46,769 Cash distributions per limited partnership unit $ -0- $ -0- $ -0- $ -0- $ -0- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: Liquidity and Capital Resources The Partnership's primary source of funds were the proceeds of its public offering. Other sources of liquidity include interest earned on funds and cash distributions from operations of the Local Limited Partnerships in which the Partnership has invested. These sources of liquidity are available to meet obligations of the Partnership. The Partnership received $3,700,000 in gross proceeds from the sale of partnership interests pursuant to the public offering, resulting in net proceeds available for investment, after volume discounts, establishment of working capital reserves, payment of sales commissions, acquisition fees and offering expenses, of $3,071,000. As of December 31, 2000, the Partnership has invested all of the net proceeds available for investment. The Partnership's commitment to investments requiring initial capital contributions has been paid. The Partnership has no other significant capital commitments. Pursuant to HUD?s efforts to provide for the nation?s housing needs, the Multifamily Assisted Housing Reform and Affordability Act (MAHRAA) of 1997, as amended, was enacted. In this Act, Congress set forth the legislation for a permanent ?mark-to-market? program and provided for permanent authority for the renewal of Section 8 Contracts. Owners with Section 8 contracts expiring after September 30 ,1998 are subject to the provisions of MAHRAA. On September 11, 1998, HUD issued an interim rule to provide clarification of the implementation of the mark-to-market program. Since then, revised guidance has been provided through various HUD housing notices, most recently HUD housing notice 99-36, which addresses project-based Section 8 contracts expiring in fiscal year 2000. Under this notice, project owners have several options for Section 8 contract renewals, depending on the type of project and rent level. Options include marking rents up to market, renewing other contracts with rents at or below market, referring projects to the Office of Multifamily Housing Assistance Restructuring (OMHAR) for mark-to market or ?OMHAR lite? renewals, renewing contracts that are exempted from referral to OMHAR, renewing contracts for portfolio re-engineering demonstration and preservation projects, and opting out of the Section 8 program. Owners must submit their option to HUD at least 120 days before expiration of their contract. Each option contains specific rules and procedures that must be followed to comply with the requirements of housing notice 99-36. As such, each Local Limited Partnership may choose to either opt out of the Section 8 program, request mortgage restructuring and renewal of the Section 8 contract, or request renewal of the Section 8 contract without mortgage restructuring. Each option contains a specific set of rules and procedures that must be followed in order to comply with the requirements of MAHRAA. The Partnership cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income and debt structure of certain Local Limited Partnerships currently receiving such subsidy or similar subsidies. Cash distributions received from a Local Limited Partnership amounted to $87,903, $87,903, and $87,903 during the years ended December 31, 2000, 1999 and 1998, respectively. These distributions were used to meet the Partnership's obligations. The Partnership has invested in Local Limited Partnerships owning housing developments which receive governmental assistance under programs which restrict the cash return available to the housing development owners. The Partnership believes that it will continue to receive cash distributions from a Local Limited Partnership in an amount sufficient to meet its operating expenses. However, there can be no assurance that cash distributions received will be adequate to allow the Partnership to make any further cash distributions to its partners. Management is not aware of any trends or events, commitments or uncertainties that will impact liquidity in a material way. Management believes the only impact would be for laws that have not yet been adopted. Results of Operations The Partnership was formed to provide various benefits to its limited partners as discussed in Part I, Item 1 of this Report. It is anticipated that the Local Limited Partnerships in which the Partnership has invested will primarily produce tax losses of approximately $17,000 per $5,000 investment in approximately 14 to 17 full years of Partnership operations, with approximately $11,000 of such tax losses occurring during the first 5 full years of Partnership operations (assuming the applicability of current laws, regulations and court decisions). The benefits received in the form of tax savings may be reduced due to the enactment of the Tax Reform Act of 1986, depending on the individual circumstances of each Limited Partner. There can be no assurance that the Partnership will be able to attain its investment objectives. The Partnership will not seek to sell its interest in any housing development or Local Limited Partnership until proceeds of such sale would supply sufficient cash to enable its Limited Partners to pay applicable taxes. Proceeds of such sales will not be reinvested. It is not expected that any of the Local Limited Partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to Limited Partners in any material amount. Except for the operating balance of cash, the Partnership's assets consist primarily of limited partnership interests in Local Limited Partnerships owning government-assisted housing developments. The Partnership accounts for its investments in the Local Limited Partnerships using the equity method of accounting. Under the equity method of accounting, the investment cost is subsequently adjusted for the Partnership's share of each Local Limited Partnership's results of operations and cash distributions. The Partnership's share in the loss of each Local Limited Partnership is not recognized to the extent that the investment balance would become negative. For the years ended December 31, 2000, 1999 and 1998, the aggregate share of losses of the Local Limited Partnerships attributable to the Partnership and not included in the statements of income for those years amounted to $158,415, $239,501 and $120,275, respectively. At December 31, 2000 and 1999, the Partnership's cumulative share of losses of the Local Limited Partnerships exceeded its investments by $1,003,015 and $844,600, respectively, and, accordingly, have not been reflected in the Partnership's financial statements in accordance with the equity method of accounting because the investment balances have been reduced to zero. The Partnership's net income in 2000, 1999 and 1998 was due primarily to cash distributions received of $87,903, $87,903 and $87,903, respectively, from one Local Limited Partnership which offset the Partnership's net operating expenses in these years resulting in net income of $45,072, $48,988, and $47,299, respectively. The Partnership incurs an annual program management fee payable to American Securities Team, Inc. (?AST?) commencing in January, 1998 and to American Investment Team, Inc. ("AIT"), for the years prior thereto, both affiliates of the General Partner, for managing the affairs of the Partnership and for providing investor services to the limited partners. The fee to the affiliate is equal to .5% of invested assets plus the Local Limited Partnerships' annualized outstanding nonrecourse debt. The fee amounted to $36,597, $35,830 and $36,651, for 2000, 1999 and 1998, respectively. Administrative expenses consist of professional fees. Other The Partnership's investment as a Limited Partner in the Local Limited Partnerships is subject to the risks incident to the potential losses arising from management and ownership of improved real estate. The Partnership's investments also could be adversely affected by poor economic conditions, generally, which could increase vacancy levels, increase rental payment defaults, or increase operating expenses. Any or all of these circumstances could threaten the financial viability of one or both of the Local Limited Partnerships. There are also substantial risks associated with the operations of Apartment Complexes receiving government assistance. These include: governmental regulations concerning tenant eligibility which may make it more difficult to rent apartments in the complexes; difficulties in obtaining government approval for rent increases; limitations on the percentage of income which low and moderate income tenants may pay as rent; the possibility that Congress may not appropriate funds to enable the U.S. Department of Housing and Urban Development to make the rental assistance payments it has contracted to make; and that, when the rental assistance contracts expire, there may not be market demand for apartments at full market rents in a Local Limited Partnership's Apartment Complex. The Local Limited Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Inflation also affects the Local Limited Partnerships adversely by increasing operating costs, such as fuel, utilities and labor. ITEM 7(A) MARKET RISK: The Partnership maintains cash and cash equivalents in a financial institution which is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Partnership does not believe these financial instruments are subject to significant market risk. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA: The financial statements and supplementary data required by this item are set forth under Item 14 of Part IV beginning on page 15 and are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: Not applicable PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT: The Partnership has no directors or executive officers. The Partnership's affairs are managed and controlled by the General Partner. Certain information concerning the director and executive officers of the General Partner is set forth below: JOHN M. CURRY, BS, MBA, CPM, GSP, RR, 58, is the founder, Chairman, Director, and Shareholder of APT Financial Services, Inc., and its subsidiaries. Mr. Curry has been responsible for the construction of over 4,000 units of multi- family housing at a cost of over $120,000,000 and 240,000 square feet of commercial space. Mr. Curry is a graduate of the University of San Francisco (BS, 1968) and the Harvard Graduate School of Business Administration (MBA, 1970). He is a licensed Real Estate Broker in Massachusetts and New York and a licensed Builder in Massachusetts. His professional memberships include the Institute of Real Estate Management with the classification of Certified Property Manager, the Greater Boston Real Estate Board, Builders Association of Greater Boston, and is listed in Who's Who in America. JEFF E. EWING, BS, CPA, 35, is the President, Chief Financial Officer, Director and Shareholder of APT Financial Services, Inc. Mr. Ewing joined the company in December 1992, becoming its controller, and in December 1994, he became the Company's President and Chief Financial Officer. He is responsible for new business development, corporate operations and the development, implementation and review of all financial reporting systems as well as compliance with applicable tax and regulatory requirements. Prior to joining APT, Mr. Ewing was employed by Congress Realty Group of Companies as assistant controller and the accounting firm of Robert Ercolini and Company as a senior auditor. Mr. Ewing is a Certified Public Accountant in the Commonwealth of Massachusetts and a NASD registered Financial and Operations Principal. Mr. Ewing received his B.S. in Accountancy from Bentley College and is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of Certified Public Accountants. J. STEWART HARVEY, JR., BSBA, MBA, 68, is a Director and Shareholder of APT Financial Services, Inc., and its subsidiaries. Mr. Harvey is Managing Director of Aberdeen American Inc., an investment firm. He has held the position since 1985. Prior to this, Mr. Harvey was Vice President and Director of Gardner and Preston Moss, Inc. He was Vice President and Director of Research for Fidelity Management and Research Company, the largest mutual funds firm in the country. Mr. Harvey is a graduate of Boston University (BSBA, 1960) and Northeastern University (MBA-Finance, 1966). AFFILIATES: APT FINANCIAL SERVICES INC., ("APT" OR "Company") is a Delaware corporation organized on April 19, 1983. The Company's principal office is located at 500 West Cummings Park, Woburn, MA. APT Financial Services, Inc. and its wholly-owned subsidiaries, American Properties Team, Inc., APT Asset Management, Inc., American Securities Team, Inc. and American Investment Team, Inc. form a real estate service company providing property management, asset management, syndication, development and investor services to third-party owners, affiliates and partners. AMERICAN PROPERTIES TEAM, INC. ("APT") is a Massachusetts corporation organized on March 4, 1977. APT provides property management services to third party entities, primarily condominium associations. Currently, the Company manages approximately 4,000 condominium units in Massachusetts. APT ASSET MANAGEMENT, INC. is a Massachusetts corporation organized on August 17, 1982. The company has developed over $100 million in residential and commercial properties. In addition, APT Asset Management, Inc. serves as the General Partner for ten real estate limited partnerships one of which is publicly registered. The company conducts strategic planning for the limited partnerships including development, recapitalization, refinancing and sales. AMERICAN INVESTMENT TEAM, INC. ("AIT") is a Massachusetts corporation organized on August 13, 1982. AIT is an approved U.S. Department of Housing and Urban Development (?HUD?) Title II nonsupervised mortgagee, Government National Mortgage Association (GNMA) approved lender, and was, until January 1, 1997, a NASD registered broker-dealer for both public and private placements. Until January 1, 1997, the company also served as investor services agent for over 570 clients who have invested $30 million of equity in the Company's developments. AMERICAN SECURITIES TEAM, INC. ("AST") is a Massachusetts corporation organized on December 19, 1996. AST commenced operations on January 1, 1997, at which date it acquired AIT?s NASD registered broker-dealer and investor services operations. The company serves as investor services agent for over 570 clients who have invested $30 million of equity in the Company's developments. APT MANAGEMENT, INC. (formerly known as Curry Management, Inc.) is a Massachusetts corporation organized on June 19, 1987. The company provides property management services to both multi-family and commercial properties. Currently, the company manages over 1,300 units of multi-family housing and 75,000 square feet of commercial space in Massachusetts, New York and Indiana. Of the 1,300 units under management, 1,200 are subsidized units through Federal and State programs including Section 8, Section 13A, and Section 236. ITEM 11. EXECUTIVE COMPENSATION: The Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to directors or officers of the General Partner for their services. Under the terms of the Partnership Agreement, the General Partner and affiliates are entitled to receive compensation from the Partnership in consideration of certain services rendered to the Partnership by such parties. In addition, an affiliate of the General Partner, American Securities Team, Inc., receives from the Partnership an annual program management fee equal to .5% of invested assets plus the Local Limited Partnerships' annualized outstanding nonrecourse mortgage debt. The Local Limited Partnerships pay fees ranging from 4.5% to 6% of gross revenue collected to APT Management, Inc., an affiliate of the General Partner, for management of properties owned by the Local Limited Partnerships. Further, the Local Limited Partnerships have incurred $1,373,195 of fees from inception with their local general partners or affiliates for development, construction, administration and various operating and construction deficit guarantees. Included in these fees of the Local Limited Partnerships are fees totaling $618,929 paid or to be paid to John M. Curry or affiliated companies. Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in the annual report. As noted above, the Partnership has no executive officers. The levels of compensation payable to the General Partner and/or its affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT: (a) Security Ownership of Certain Beneficial Owners The General Partner owns all of the outstanding general partnership interests of APT Housing Partners Limited Partnership. One person is known to own beneficially in excess of 5% of the outstanding limited partnership interests. As of March 15, 2001, the ownership interests by the General Partner and its affiliates and holders of 5% or greater of outstanding limited partnership interests is as listed: Title Name and Address of Amount and Nature of Percentage of of Class Beneficial Ownership Beneficial Ownership Class General Partnership Interest APT Asset Management, Inc. $2,000 Capital 2.000% 500 West Cummings Park contribution Suite 6050 directly Woburn, MA 01801 owned Limited Partnership Interest John M. Curry $5,000 Capital .1351% 211 Commodore Dr. contribution Jupiter, FL 33477 (5 units)directly owned Chistopher Burden $275,000 Capital 7.4324% 731 Hospital Trust Bldg. contribution Providence, RI 02903 (275 units)directly owned APT Asset Management, Inc. $7,000 Capital 1.7568% 500 West Cummings Park contribution Suite 6050 (65 units)directly Woburn, MA 01801 owned (b) Changes in Control None ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: The Partnership has and will continue to have certain relationships with affiliates of the General Partner, as discussed in Item 11 and also Note 5 to the financial statements in Item 14, which is incorporated herein by reference. However, there have been no direct financial transactions between the Partnership and the directors and officers of the General Partner. PART IV ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8K: Page (a) 1. Financial Statements Independent Auditor's Report of Robert Ercolini & Company LLP 16 - 17 Balance Sheets as of December 31, 2000 and 1999 18 Statements of Income for the years ended December 31, 2000, 1999 and 1998 19 Statements of Partners' Capital (Deficiency) for the years ended December 31, 2000, 1999 and 1998 20 Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 21 Notes to Financial Statements 22 - 25 (a) 2. Financial Statement Schedules Schedules Applicable to Local Limited Partnerships Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2000 26 Schedule IV - Mortgage Loans on Real Estate as of December 31, 2000 27 All other financial statement schedules have been omitted because the required information is shown in the financial statements or notes thereto or they are not applicable. Individual financial statements of the Local Limited Partnerships for the years ended December 31, 2000, 1999 and 1998 -Ashland Commons Associates 28 - 37 -Rockledge Apartments Associates 38 - 47 (a) 3. Exhibits The exhibits listed on the accompanying Index to Exhibits on page 48 are filed as part of this report or incorporated herein by reference. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Partnership during the fiscal quarter ended December 31, 2000. INDEPENDENT AUDITOR'S REPORT To the Partners of APT Housing Partners Limited Partnership Woburn, Massachusetts We have audited the accompanying balance sheets of APT Housing Partners Limited Partnership (a Massachusetts Limited Partnership) as of December 31, 2000 and 1999, and the related statements of income, partners' capital (deficiency), and cash flows for each of the three years in the period ended December 31, 2000. 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 did not audit the financial statements of Ashland Commons Associates and Rockledge Apartments Associates ("Local Limited Partnerships"), the investments in which, as discussed in Note 3 to the financial statements, are accounted for by the equity method of accounting. The Partnership's cumulative share of losses of and distributions from the Local Limited Partnerships have exceeded its investments therein. Accordingly, the Partnership has reduced the investments to zero and has suspended application of the equity method. The financial statements of the Local Limited Partnerships were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Local Limited Partnerships, is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of APT Housing Partners Limited Partnership as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the accompanying index on page 15 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a required part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements. In our opinion, which insofar as it relates to amounts included for the Local Limited Partnerships is based on the reports of other auditors, these schedules fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Robert Ercolini & Company LLP Boston, Massachusetts February 18, 2001 APT HOUSING PARTNERS LIMITED PARTNERSHIP BALANCE SHEETS ASSETS December 31, 2000 1999 Investment in Local Limited Partnerships $ - $ - Cash and cash equivalents 252,224 203,385 Total assets $ 252,224 $ 203,385 LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) Liabilities: Accrued expenses - Affiliate $ 8,547 $ 7,780 Professional fees 11,500 8,500 Total liabilities 20,047 16,280 Commitments and contingencies Partners' capital (deficiency): General partner ( 34,681) ( 35,583) Limited partner, 3,700 partnership units authorized, issued and outstanding 266,858 222,688 Total partners' capital (deficiency) 232,177 187,105 Total liabilities and partners' capital (deficiency) $ 252,224 $ 203,385 See notes to financial statements APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENTS OF INCOME For the years ended December 31, 2000 1999 1998 Interest income $ 11,202 $ 7,297 $ 4,868 Operating expenses: Management fees - affiliate 36,597 35,830 36,651 Administrative 17,436 10,382 8,821 Total operating expenses 54,033 46,212 45,472 Loss before share of losses of and distributions from Local Limited Partnerships ( 42,831)( 38,915) ( 40,604) Distribution from Local Limited Partnership 87,903 87,903 87,903 Share of losses of Local Limited Partnerships - - - Net income $ 45,072 $ 48,988 $ 47,299 Limited partners' interest in net income $ 44,170 $ 48,008 $ 46,353 Weighted average number of outstanding limited partnership units 3,700 3,700 3,700 Net income per limited partnership unit $ 11.94 $ 12.98 $ 12.53 See notes to financial statements. APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998 General Limited Partner Partners Total Balance, December 31, 1997 ($ 37,509) $ 128,327 $ 90,818 Net income 946 46,353 47,299 Balance, December 31, 1998 ( 36,563) 174,680 138,117 Net income 980 48,008 48,988 Balance, December 31, 1999 ( 35,583) 222,688 187,105 Net income 902 44,170 45,072 Balance, December 31, 2000 ($ 34,681) $ 266,858 $ 232,177 See notes to financial statements APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the years ended December 31, 2000 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 45,072 $ 48,988 $ 47,299 Adjustments to reconcile net income to net cash provided by operating activities: Change in operating assets and liabilities: Increase (decrease) in accrued expenses 3,767 ( 821) ( 256) Net cash provided by operating activities 48,839 48,167 47,043 Net increase in cash and cash equivalents 48,839 48,167 47,043 Cash and cash equivalents, beginning of year 203,385 155,218 108,175 Cash and cash equivalents, end of year $ 252,224 $ 203,385 $ 155,218 See notes to financial statements APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. Organization and summary of significant accounting policies: Organization: APT Housing Partners Limited Partnership ("the Partnership"), organized as a Massachusetts Limited Partnership on June 8, 1983, was formed to invest in other Local Limited Partnerships ("the Local Limited Partnerships") which own and operate existing residential rental housing developments that are financed or operated with assistance from Federal, state and/or local governmental agencies. The Partnership has limited partnership interests in two Local Limited Partnerships, with a total of 156 residential apartment units, located within the Commonwealth of Massachusetts. The general partner of the Partnership is APT Asset Management, Inc. APT Asset Management, Inc. also owns 65 limited partnership units which it acquired at an aggregate cost of $7,000 during 1997. The Partnership Agreement, as amended, authorized the issuance of 3,700 limited partnership units, all of which were issued and are outstanding. Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Investment in Local Limited Partnerships: The Partnership accounts for its investments in the Local Limited Partnerships by the equity method. Accordingly, the investments are carried at cost, adjusted for the Partnership's proportionate share of earnings or losses. The Partnership's share of losses on an investment is recognized only to the extent of the investment. Distributions received are reflected as reductions of the investments. Once an investment balance has been reduced to zero, subsequent distributions received by the Partnership are recognized as income. Income taxes: Federal and state income taxes are not included in the accompanying financial statements because these taxes, if any, are the responsibility of the individual Partners. Investment securities: Investment securities are classified as available for sale and as a result are stated at fair value. Management determines the appropriate classification of securities at the time of purchase and reevaluates such determination on each balance sheet date. Amortization of premiums and accretion of discounts are reflected in interest income. Realized gains and losses on the sale of securities are included in operations. The cost of securities sold is determined using the specific identification method. APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - CONTINUED 1. Organization and summary of significant accounting policies - continued: Statement of cash flows: For purposes of the statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents consist of money market funds and at December 31, 2000, a short-term U.S. Treasury Bill with a carrying value of $198,162. Cash equivalents are carried at fair value which approximates their cost. Net income per limited partnership unit: Net income per limited partnership unit is computed by dividing net income available to limited partnership units by the weighted average number of outstanding limited partnership units during the year. 2. Allocation of benefits: In accordance with the Partnership Agreement, income, losses, credits and distributions are allocated 2% to the General Partner and 98% to the Limited Partners. 3. Investment in Local Limited Partnerships: The Partnership has investments in two Local Limited Partnerships, Ashland Commons Associates ("Ashland") and Rockledge Apartments Associates ("Rockledge"). The Partnership's investments consist of $1,143,695 for a 95.5% limited partnership interest in Ashland which owns an apartment complex of 96 units located in Ashland, Massachusetts and $543,900 for a 97% limited partnership interest in Rockledge which owns an apartment complex of 60 units located in Wakefield, Massachusetts. The Local Limited Partnerships receive governmental assistance under programs which restrict the payment of annual cash distributions to the owners to specified maximum distributable amounts and to available surplus cash, as defined in the applicable Regulatory Agreement between the governmental agency and the Local Limited Partnership. Undistributed amounts are cumulative and may be distributed in subsequent years if there is available surplus cash. Based upon the Partnership's ownership interest in each of the Local Limited Partnerships, the maximum annual distributable amounts that can be made to the Partnership from Ashland and Rockledge are $87,903 and $9,552, respectively. For the years ended December 31, 2000, 1999 and 1998, the aggregate share of losses of the Local Limited Partnerships attributable to the Partnership amounted to $158,415, $239,501 and $120,275, respectively. The Partnership's cumulative share of losses of the Local Limited Partnerships exceeded its investments by $1,003,015 at December 31, 2000 and $844,600 at December 31, 1999. Accordingly, the investments have been reduced to zero and have not been reflected in the accompanying financial statements, and the Partnership has discontinued the application of the equity method. The Partnership will resume applying the equity method only after its allocable share of the net income of the Local Limited Partnerships equals the share of net losses not previously recognized during the period the equity method was suspended. The Partnership's tax bases of the investments in the Local Limited Partnerships aggregate ($3,895,151) and ($3,893,472) at December 31, 2000 and 1999, respectively. During 2000, 1999 and 1998, the Partnership received distributions of $87,903, $87,903, and $87,903, respectively, from Ashland which were received subsequent to the reduction of the Partnership's investment balance to zero. Accordingly, these distributions have been included as income in the accompanying statements of income. APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - CONTINUED 3. Investment in Local Limited Partnerships - continued: Summarized audited balance sheet information on a combined basis for the Local Limited Partnerships as of December 31, 2000 and 1999 was as follows: December 31, 2000 1999 Rental property $ 7,597,934 $ 7,597,934 Accumulated depreciation ( 4,838,312) ( 4,572,123) Cash and cash equivalents 297,070 348,807 Restricted assets and deposits 618,298 626,810 Other assets 103,888 107,788 Total assets 3,778,878 4,109,216 Mortgage loans payable 5,766,301 5,830,851 Other liabilities 176,014 173,623 Total liabilities 5,942,315 6,004,474 Partners' capital (deficiency) ($ 2,163,437) ($ 1,895,258) Composition of partners' capital (deficiency): General partners ($ 154,227) ($ 129,366) Limited Partners ( 2,009,210) ( 1,765,892) Partners' capital (deficiency)($ 2,163,437) ($ 1,895,258) Summarized audited income statement information on a combined basis for the Local Limited Partnerships for the years ended December 31, 2000, 1999 and 1998 was as follows: For the years ended December 31, 2000 1999 1998 Revenues $ 1,684,354 $ 1,647,968 $ 1,662,118 Net income(loss) ($ 175,852) ($ 250,431) ($ 125,537) 4. Cash and cash equivalents: The Partnership maintains cash and cash equivalent balances in a financial institution located in the Commonwealth of Massachusetts. Accounts in the institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At December 31, 2000, cash equivalents included a three month U.S. Treasury Bill which is backed by the full faith and credit of the U.S. Government and the remainder of the Partnership?s cash and cash equivalent balances were fully insured. At December 31, 1999, the Partnership?s uninsured cash and cash equivalent balances totaled $97,970. APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - CONTINUED 4. Cash and cash equivalents - continued: The Partnership's investment in the U.S. Treasury Bill at December 31, 2000 earned interest at the rate of 5.37% and it matures on March 1, 2001. The estimated fair value of the investment approximated its amortized cost and therefore, there were no significant unrealized gains or losses as of December 31, 2000. There were no realized gains or losses on the disposition of investment securities. 5. Transactions with related parties: American Securities Team, Inc., an affiliate of the General Partner of the Partnership, receives an annual program management fee. This fee is for managing the affairs of the Partnership and for providing investor services to the Limited Partners. The fee is equal to .5% of invested assets plus the Local Limited Partnerships' annualized outstanding nonrecourse mortgage debt. Program management fees charged to operations for the years ended December 31, 2000, 1999 and 1998 amounted to $36,597, $35,830, and $36,651,respectively. Of these amounts, $8,547 and $7,780 remained unpaid at December 31, 2000 and 1999, respectively. 6. Fair value of financial instruments: The fair values of the Partnership's financial instruments have been determined at a specific point in time, based on relevant market information and information about the financial instrument. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could affect the estimates. The carrying amounts of cash and cash equivalents and accrued expenses at December 31, 2000 and 1999 approximate their fair values because of the short-term maturity of these instruments. APT HOUSING PARTNERS LIMITED PARTNERSHIP SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED PARTNERSHIPS Property Pledged as Collateral DECEMBER 31, 2000 Cost Year Capitalized of Initial Cost Subsequent Con Life to Partnership to Gross Amount at which str on which Build Acq Carried At close of Period uc Depreciation ings uisi Building Accumu tio in and tion: and lated n/ Latest Des Enc Impr Impr Impr Depr Re Date Income crip umbr ovem ovem ovem Tot ecia nova Acqu Statementis tion ances Land ents ents Land ents al(c) tion tion ired Computed Apartment Complexes Rockledge Apartments Associates Wakefield,MA a)$90,000$1,426,190$426,170$90,000$1,888,360$1,978,360$1,337,925 1973 June,1984 25years Ashland Commons Associates Ashland,MA (a)215,210 5,560,343(155,979)(b)215,210 5,404,364 5,619,574 3,500,387 1982 Mar,1984 25yrs $305,210 $6,986,533 $306,191 $305,210 $7,292,724 $7,597,934 $4,838,312 (a) Properties are subject to mortgage notes as shown in Schedule IV. (b) Net of retirements (c) The aggregate cost for Federal income tax purposes at December 31 ,2000 it is as follows: Rockledge Apartments Associates - $ 1,978,360 Ashland Commons Associates - 4,970,347 Total $ 6,948,707 Cost of Property and Equipment Accumulated Depreciation Year Ended December 31, 2000 1999 1998 2000 1999 1998 Balance at beginning of period $7,597,934 $7,597,934 $7,597,934 $4,572,123 $4,305,934 $4,039,745 Additions during period: Improvements Depreciation expense 266,189 266,189 266,189 Reductions during period: Dispositions Balance at end of period $7,597,934 $7,597,934 $7,597,934 $4,838,312 $4,572,123 $4,305,934 APT HOUSING PARTNERS LIMITED PARTNERSHIP SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE OF LOCAL LIMITED PARTNERSHIPS DECEMBER 31, 2000 Principal Periodic Amount of Loans Mort- Inte Final Pay Face Carrying Subject to Delinquent gage rest Maturity ment Prior Amount of Amount of Principal or Loan rate(s) Date Terms Liens Mortgages Mortgages(a) Interest Rockledge Apartments Associates 7.5485% 7/1/19 monthly None $1,477,000 $1,147,305 None Ashland Commons Associates11.728% 5/1/24 monthly None 5,108,100 4,618,996 None $ 6,585,100 $ 5,766,301 (a) The aggregate carrying amounts for Federal income tax purposes at December 31, 2000 are the same as those amounts listed above. Carrying Amount of Mortgages Year Ended December 31, 2000 1999 1998 Balance at beginning of period $ 5,830,851 $ 5,889,508 $ 5,942,838 Additions during period: New mortgage loans Other (describe) Deductions during period: Payments of principal ( 64,550) ( 58,657) ( 53,330) Other (describe) Balance at end of period $ 5,766,301 $ 5,830,851 $ 5,889,508 ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 REPORT ON FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 CONTENTS Page Independent Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Operations 5 Statement of Partners' Deficit 6 Statement of Cash Flows 7 Summary of Accounting Policies 8 Notes to Financial Statements 9 INDEPENDENT AUDITORS' REPORT January 25, 2001 To the Partners of Ashland Commons Associates Woburn, Massachusetts We have audited the accompanying balance sheet of Ashland Commons Associates, HUD Project No. 023-35279, (a limited partnership) as of December 31, 2000, 1999 and 1998 and the related statements of operations, partners' deficit and cash flows for the years then ended. 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 audit. We conducted our 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 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 statements presentation. We believe that our audit provides 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 Ashland Commons Associates as of December 31, 2000, 1999 and 1998 and the results of its operations and its cash flow for the years then ended in conformity with generally accepted accounting principles. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 BALANCE SHEET DECEMBER 31, 2000 1999 1998 ASSETS Property and Equipment (Mortgaged) - Note 2 Land $ 215,210 $ 215,210 $ 215,210 Building 5,030,902 5,030,902 5,030,902 Equipment and furnishings 373,462 373,462 373,462 5,619,574 5,519,574 5,619,574 Less: Accumulated Depreciation 3,500,387 3,299,191 3,097,995 Net Property and Equipment 2,119,187 2,320,383 2,521,579 Cash and Cash Equivalents 85,372 82,179 182,927 Rents and Other Receivables 7,355 9,012 8,153 Prepaid Expenses 10,370 10,272 10,337 Escrow Deposits 81,127 71,230 57,234 Restricted Cash - Tenants' Security Deposits 17,303 15,880 14,262 Reserve for replacements 149,583 212,165 286,321 Residual Receipts Reserve 195,284 184,355 174,885 Deferred Charges 78,709 83,617 88,525 2,744,290 2,989,093 3,344,223 LIABILITIES AND PARTNERS' DEFICIT LIABILITIES: Mortgage Loan Payable - Note 2 $ 4,618,996 $ 4,654,385 $ 4,685,875 Accrued Interest Payeble 45,143 45,489 45,797 Accounts Payable and Accrued Expenses 50,407 41,891 42,917 Tenants' Security Deposits Payable 15,058 15,039 14,224 Prepaid Rents 3,617 3,207 6,467 TOTAL LIABILITIES 4,733,221 4,760,011 4,795,280 COMMITMENTS AND CONTINGENCIES Notes 2,3 and 4 PARTNERS' DEFICIT - Note 4 General Partners ( 140,470) ( 130,659) ( 116,265) Limited Partners (1,848,461) (1,640,259) (1,334,792) TOTAL PARTNERS' DEFICIT (1,988,931) (1,770,918) (1,451,057) $2,744,290 $2,989,093 $3,344,223 See accompanying summary of accounting policies and notes to financial statements ASHLAND COMMONS (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 1999 1998 RENT AND RELATED INCOME $1,228,758 $1,233,498 $1,227,708 OPERATING EXPENSES: Administrative & Marketing 144,819 143,116 142,342 Utilities 27,116 70,427 72,346 Maintenance and Repair 327,176 384,411 256,393 Real Estate Tax 64,807 74,246 73,596 Interest 566,833 570,938 574,518 Insurance 45,313 39,796 34,886 Depreciation and Amortization 206,104 206,104 206,104 Total Operating Expenses 1,382,168 1,489,038 1,360,185 OPERATING LOSS (153,410) (255,540) (132,477) OTHER INCOME - Interest 27,724 27,724 32,760 NET LOSS $ (125,686) $ (227,816) $ (99,717) NET LOSS TO GENERAL PARTNERS $ (5,669) $ (10,252) $ (4,487) NET LOSS TO LIMITED PARTNERS $ (123,299) $ (217,564) $ (95,230) See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PARTNERS' DEFICIT FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, 1998 General Limited Total Partner Partners Balance, at December 31, 1997 $(1,259,295) $(107,636) $(1,151,659) Net loss (99,717) (4,487) (95,230) Distributions (92,045) (4,142) (87,903) BALANCE, at December 31, 1998 (1,451,057) (116,265) (1,334,792) Net loss (227,816) (10,252) (217,564) Distributions (92,045) (4,142) (87,903) BALANCE, at December 31, 1999 (1,770,918) (130,659) (1,640,259) Net loss (125,968) (5,669) (120,299) Distributions (92,045) (4,142) (87,903) BALANCE, at December 31, 2000 $(1,988,931) $(140,470) $(1,848,461) Percentage of interest in profit and losses 100% 4.5% 95.5% See accompanying summary of accounting policies and notes to financial statements ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 YEAR ENDED DECEMBER 31, 2000 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(125,968) $(227,816) $ (99,717) Adjustments to reconcile Net Loss to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization 206,104 206,104 206,104 (Increase) Decrease in Receivables 1,657 ( 859) (2,901) (Increase) Decrease in Prepaid Expenses (98) 65 ( 15) (Increase) Decrease in Escrow Deposits (9,897) (13,996) 18,302 (Increase) Decrease in Restricted Cash (1,423) ( 1,618) 350 Increase (Decrease)in Accounts Payable and Accrued Expenses 8,170 ( 1,334) (16,007) Increase (Decrease) in Tenants Security Deposits 19 815 ( 388) Increase (Decrease) in Prepaid Rents 410 (3,260) 6,300 Net Cash Provided (Used) by Operating Activities 78,974 (41,899) 112,028 CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) Decrease in Reserve for Replacements 62,582 74,156 (19,783) (Increase) Decrease in Residual Receipts Reserve (10,929) (9,470) ( 9,185) Net Cash Provided (Used) by Investing Activities 51,653 64,686 (28,968) CASH FLOWS FROM FINANCING ACTIVITES: Decrease in Mortgage Loan Payable (35,389) (31,490) (28,020) Distributions to Partners (92,045) (92,045) (92,045) Net Cash Used by Financing Activities (127,434) (123,535) (120,065) Net Increase (Decrease)in Cash and Cash Equivalents 3,193 (100,748) (37,005) Cash and Cash Equivalents, Beginning of Year 82,179 182,927 219,932 Cash and Cash Equivalents, End of Year $ 85,372 $ 82,179 $ 182,927 See accompanying summary of accounting policies and notes of financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial statements are prepared on the accrual basis and all development and construction costs were capitalized. The partnership, for tax purposes, charged to expense certain costs, such as interest and real estate taxes during construction. Accordingly, the cost of property and equipment shown in these statements includes $649,227 which has been deducted for tax purposes. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings is based on a 25 year life using the straight-line method for financial reporting purposes. For income tax purposes, accelerated depreciation methods are used. AMORTIZATION Amortization of financing costs is based on a forty year life using the straight-line method for both financial reporting and income tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Ashland Commons Associates is a Massachusetts limited partnership which was formed on September 29, 1982 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 96 residential units under the provisions of Section 221 (d)(4) of the National Housing Act. The partnership has a Section 8 contract with HUD to receive rent subsidy equal to approximately 83% of the total rental income. The contract expires September, 2002. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is insured by the Federal Housing Administration (FHA) and is payable in monthly installments of approximately $48,283, including interest at 11.728% per annum, through 2024. Annual principal payments for the next five years will be as follows: Year Amount 2001 $39,768 2002 44,691 2003 50,223 2004 56,441 2005 63,428 The partnership is required to make monthly payments of $2,094 into a fund for replacements. Withdrawals from this fund can only be made upon the approval for the Federal Housing Commissioner. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - RELATED PARTY TRANSACTIONS The partnership pays a 4.5% management fee based on gross revenues collected, which, at present, is capped at $43 PUPM, to an affiliate of a general partner, and $506 per month for bookkeeping. In addition, the affiliate receives fees for other services rendered. Further, the management company is reimbursed at cost for salaries and wages and related employee expenses such as payroll taxes, health insurance, disability insurance, worker compensation and other insurance. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 4 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with HUD. Total distributions are limited to $92,045, per annum as allowed by HUD. NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the Partnership's financial instruments have been determined at a specific point in time, based on relevant market information and information about the financial instrument. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could affect the estimates. The carrying amounts of cash and cash equivalents, tenant's security deposits cash, tenant's accounts receivable, restricted deposits and funded reserves, and accounts payable and other liabilities approximate their fair market values because of the short-term maturity of these instruments. The Partnership obtained its mortgage financing under Section 221 (d)(4) of the National Housing Act, as amended, and is supported by a Section 8 rent subsidy contract. Currently, no new mortgages are being insured under these combined programs. Accordingly, management does not believe that it is practicable to estimate the fair value of its mortgage loan. Additional information pertinent to the value of this loan is provided in Note 2. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N REPORT ON FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 CONTENTS Page Independent Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Operations 5 Statement of Partners' Equity (Deficit) 6 Statement of Cash Flows 7 Summary of Accounting Policies 8 Notes to Financial Statements 9 INDEPENDENT AUDITORS' REPORT January 26, 2001 To the Partners of Rockledge Apartments Associates Woburn, Massachusetts We have audited the accompanying balance sheet of MHFA Project No. 71-187-N Rockledge Apartments Associates, (a limited partnership) as of December 31, 2000, 1998 and 1998 and the related statements of operations, partners'equity (deficit) and cash flows for the years then ended. 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 audit. We conducted our 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 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 statements presentation. We believe that our audit provides 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 Rockledge Apartments Associates as of December 31, 2000, 1999, and 1998 and the results of its operations and its cash flow for the years then ended in conformity with generally accepted accounting principles. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N BALANCE SHEET DECEMBER 31, 2000 1999 1998 ASSETS Property and Equipment (Mortgaged)- Note 2 Land $90,000 $90,000 $90,000 Building 1,624,825 1,624,825 1,624,825 Equipment and furnishings 263,535 263,535 263,535 1,978,360 1,978,360 1,978,360 Less: Accumulated Depreciation 1,337,925 1,272,932 1,207,939 Net Property and Equipment 640,435 705,428 770,421 Cash and Cash Equivalents 211,698 266,628 257,365 Rents and Other Receivables 7,454 4,887 7,386 Escrow Deposits 18,669 17,641 18,387 Restricted Cash - Tenants' Security Deposits 28,987 26,281 26,611 Reserve for Replacements 103,512 99,258 98,212 Excess rent income escrow 23,832 - - $1,034,587 $1,120,123 $1,178,382 LIABILITIES AND PARTNERS' DEFICIT LIABILITIES: Mortgage Loan Payable - Note 2 $1,147,304 $1,176,466 $1,203,633 Note Payable Affiliate (Note 3) 13,114 20,046 20,046 Accrued Interest Payable 1,367 1,537 1,695 Accounts Payable and Accrued Expenses 23,242 20,590 29,749 Tenants' Security Deposits Payable 24,030 25,409 24,869 Prepaid Rents 36 415 115 TOTAL LIABILITIES 1,209,093 1,244,463 1,280,107 COMMITMENTS AND CONTINGENCIES Notes 2,3 and 4 PARTNERS' DEFICIT - Note 4 General Partner (13,757) 1,293 1,971 Limited Partner (160,749) (125,633) (103,696) TOTAL PARTNERS' DEFICIT (174,506) (124,340) (101,725) $1,034,587 $1,120,123 $1,178,382 See accompanying summary of accounting policies and notes to financial statements ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 1999 1998 RENT AND RELATED INCOME $410,257 $373,637 $386,277 OPERATING EXPENSES: Administrative & Marketing 103,029 86,128 93,960 Utilities 59,837 44,696 42,070 Maintenance and Repair 188,264 151,824 157,588 Real Estate Tax 38,851 37,432 39,577 Interest 16,763 18,788 23,326 Insurance 6,301 5,500 5,956 Depreciation and Amortization 64,993 64,993 64,993 Total Operating Expenses 478,038 409,361 427,470 OPERATING INCOME (LOSS) (67,781) (35,724) (41,193) OTHER INCOME - Interest 17,615 13,109 15,373 NET INCOME (LOSS) $(50,166) $(22,615) $(25,820) NET INCOME (LOSS) TO GENERAL PARTNERS $(15,050) $ (678) $(775) NET INCOME (LOSS) TO LIMITED $(35,116) $(21,937) $(25,045) PARTNERS See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, 1998 General Limited Total Partner Partners BALANCE, at December 31, 1997 $(75,905) $2,746 $(78,651) Net loss (25,820) (775) (25,045) BALANCE, at December 31, 1998 (101,725) 1,971 (103,696) Net loss (22,615) (678) (21,937) BALANCE, at December 31, 1999 (124,340) 1,293 (125,633) Net loss (50,166) (15,050) (35,116) BALANCE, December 31, 2000 $(174,506) $(13,757) $(160,749) Percent of interest in profit and losses 100% 3% 97% See accompanying summary of accoutning policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2000 1999 1998 CASH FLOWS FROM ACTIVITIES: Net Loss $(50,166) $(22,615) $(25,820) Adjustments to reconcile Net Loss to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization 64,993 64,993 64,993 (Increase) Decrease in Receivables (2,567) 2,499 (2,120) (Increase) Decrease in Escrow Deposits (1,028) 746 8,217 (Increase) Decrease in Restricted Deposits (2,706) 330 (1,324) Increase (Decrease) in Accounts Payable and Accrued Expenses 2,482 (9,317) 872 Increase (Decrease) in Tenants Security Deposits (1,379) 540 (418) Increase (Decrease) in Prepaid Rents (379) 300 (3,449) Net Cash Provided (Used) by Operating Activities 9,250 37,476 40,951 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in excess rent income escrow (23,832) - - (Increase) Decrease in Reserve for Replacements (4,254) (1,046) 6,301 (28,086) (1,046) 6,301 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in Mortgage Loan Payable (29,162) (27,167) (25,310) Note Payable - Affiliate (6,932) - ( 8,006) Net Cash Used by Financing Activities (36,094) (27,167) (33,316) Net Increase (Decrease) in Cash and Cash Equivalents (54,930) 9,263 13,936 Cash and Cash Equivalents, Beginning of Year 266,628 257,365 243,429 Cash and Cash Equivalents, End of Year $211,698 $266,628 $257,365 Supplemental Disclosure: Cash Paid During Year For Interest $20,847 $28,793 $ 22,626 See accompanying summary of accounting policies and notes to financial statements ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial statements are prepared on the accrual basis and all development and construction costs were capitalized. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings and equipment is based on a 25 year life and a 5 year life respectively. The ACRS method is used for tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Rockledge Apartments Associates is a Massachusetts limited partnership which was formed on February 23, 1973 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 60 residential units. The partnership has a contract with HUD to receive rent subsidy equal to approximately 84% of the total rental income. The contract expires in May, 2018. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is payable to the Massachusetts Housing Finance Agency (MHFA) over a 40 year period, in monthly installments of approximately $3,841 (after interest subsidy payments of $6,597 monthly), including interest at 7.5485% per annum thru 2018. Principal payments for the next five years are as follows: 2001 $31,311 2002 33,623 2003 36,113 2004 38,794 2005 42,334 The partnership is required to make monthly payments of $7,582 to MHFA for real estate taxes, insurance and a reserve for replacements. Withdrawals must have the approval of MHFA. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - NOTE PAYABLE The note payable to affiliate bears interest at the rate of 12% per annum for a period of 15 years at which time the note is payable in full. Interest is payable only from Distributable Cash and residual amounts of Net Capital Transactions proceeds. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 4 - RELATED PARTY TRANSACTIONS The partnership pays to an affiliate of a general partner a monthly management fee of 6% of rents collected and a monthly bookkeeping fee of $385, and an annual fee of $1,862 to another affiliate of a general partner. NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the MHFA. Annual distributions are limited to $9,847, as allowed by MHFA. NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the Partnership's financial instruments have been determined at a specific point in time, based on relevant market information and information about the financial instrument. Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could affect the estimates. The carrying amounts of cash and cash equivalents, tenant's security deposits cash, tenant's accounts receivable, restricted deposits and funded reserves, and accounts payable and other liabilities approximate their fair market values because of the short-term maturity of these instruments. The Partnership obtained its mortgage financing under Section 236 of the National Housing Act, as amended, and is supported by a Section 8 rent subsidy contract. Currently, no new mortgages are being insured under these combined programs. Accordingly, management does not believe that it is practicable to estimate the fair value of its mortgage loan. Additional information pertinent to the value of this loan is provided in Note 2. INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO NONMAJOR HUD PROGRAM TRANSACTIONS To the Partners of Rockledge Apartments Associates Woburn, Massachusetts We have audited the financial statements of Rockledge Apartments Associates as of and for the year ended December 31, 1999, and have issued our report thereon dated January 2, 2000. In connection with our audit of the 1999 financial statements of Rockledge Apartments Associates and with our consideration of Rockledge Apartments Associates' internal controls used to administer HUD programs, as required by the Consolidated Audit Guide for Audits of HUD Programs (the Guide) issued by the U.S. Department of Housing and Urban Development, we selected certain transactions applicable to certain nonmajor HUD-assisted programs for the year ended December 31, 1999. As required by the Guide, we performed auditing procedures to test compliance with the requirements governing (types of services allowed or not allowed, tenant application, eligibility, reporting, special tests and provisions of HUD contracts) that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the object of which is the expression of an opinion on Rockledge Apartments Associates' compliance with these requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance that are required to be reported herein under the Guide. This report is intended solely for the information and use of the general partner, management, and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 27, 2000 INDEX TO EXHIBITS Sequentially Exhibit Numbered No. Description Page (3) Articles of Incorporation and By-laws: The registrant is not incorporated. The partnership Agreement was filed with the registrant's Registration Statement on Form S-11 (#2-84474) and is incorporated herein by reference. (10.1)Purchase and Sale Agreement, dated as of March 30, 1984, relating to Ashland Commons Associates (filed with Registrant's Form 8-K dated March 30, 1984 and incorporated herein by reference). (10.2)Purchase and Sale Agreement, dated as of April 30, 1984, relating to Historic Cohoes, II (filed with Registrant's Form 8-K dated April 30, 1984 and incorporated herein by reference). (10.3)Purchase and Sale Agreement, dated as of June 22, 1984, relating to Rockledge Apartment Associates (filed with Registrant's Form 8-K dated June 22, 1984 and incorporated herein by reference). (10.4)Withdrawal of APT Housing Partners Limited Partners as a Limited Partner in a Local Limited Partnership, dated as of December 18, 1986, relating to Historic Cohoes, II, (filed with Registrant's Form 8-K dated March 30, 1987 and incorporated herein by reference). (27) Financial data schedule. 49 APT HOUSING PARTNERS LIMITED PARTNERSHIP FINANCIAL DATA SCHEDULE This schedule contains summary financial information extracted from the balance sheet and statement of income on pages 18 through 19 of the Partnership's 2000 Annual Report on Form 10-K and is qualified in its entirety by reference to such financial statements. Year End Item Number Item Description 2000 5-02(1) Cash and cash items $ 252,224 5-02(2) Marketable securities -0- 5-02(3)(a)(1) Notes and accounts receivable-trade -0- 5-02(4) Allowance for doubtful accounts -0- 5-02(6) Inventory -0- 5-02(9) Total current assets 252,224 5-02(13) Property, plant and equipment -0- 5-02(14) Accumulated depreciation -0- 5-02(18) Total assets 252,224 5-02(21) Total current liabilities 20,047 5-02(22) Bonds, mortgages and similar debt -0- 5-02(28) Preferred stock-mandatory redemption -0- 5-02(29) Preferred stock-no mandatory redemption -0- 5-02(30) Common stock -0- 5-02(31) Other stockholders' equity 232,177 5-02(32) Total liabilities and stockholders' equity 252,224 Year Ended Item Number Item Description 2000 5-03(b)1(a) Net sales of tangible products $ -0- 5-03(b)1 Total revenues 99,105 5-03(b)2(a) Cost of tangible goods sold -0- 5-03(b)2 Total costs and expenses applicable to sales and revenues -0- 5-03(b)3 Other costs and expenses 54,033 5-03(b)5 Provision for doubtful accounts and notes -0- 5-03(b)(8) Interest and amortization of debt discount -0- 5-03(b)(10) Income before taxes and other items 45,072 5-03(b)(11) Income tax expense -0- 5-03(b)(14) Income/loss continuing operations 45,072 5-03(b)(15) Discontinued operations -0- 5-03(b)(17) Extraordinary items -0- 5-03(b)(18) Cumulative effect- changes in accounting principles -0- 5-03(b)(19) Net income or loss 45,072 5-03(b)(20) Earnings per share-primary 11.94 5-03(b)(20) Earnings per share-fully diluted 11.94 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. APT HOUSING PARTNERS LIMITED PARTNERSHIP By: APT Asset Management, Inc. General Partner By: Date March 30, 2001 John M. Curry - CEO APT ASSET MANAGEMENT, INC.