-----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, G4fe6A91KJIKuwJmbncxQIs1tUmOhBC8lY5kBI2eAbAPVCO2R/0nJ2Nsnkq3sihc K3hRvV1a/krddtyYM9TXpA== 0000721465-96-000022.txt : 19961108 0000721465-96-000022.hdr.sgml : 19961108 ACCESSION NUMBER: 0000721465-96-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961107 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APT HOUSING PARTNERS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000721465 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042791736 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-84474 FILM NUMBER: 96655909 BUSINESS ADDRESS: STREET 1: 500 W CUMMINGS PARK STE 6050 CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179354200 MAIL ADDRESS: STREET 1: 500 W CUMMINGS PARK STE 6050 CITY: WOBURN STATE: MA ZIP: 01801 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _______________________________________________ Form 10-Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934. _______________________________________________ For the Nine Months Ended September 30, 1996 commission file number 2-84474 APT Housing Partners Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 04-2791736 (State or other jurisdiction of (IRS EmployerIdentification No.) incorporation or organization) 500 West Cummings Park, Suite 6050, Woburn, Massachusetts 01801 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 935-4200 N/A Former name, former address and former fiscal year, if change since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for 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______________ PART I ITEM 1. FINANCIAL STATEMENTS APT HOUSING PARTNERS LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) ASSETS September 30, December 31, 1996 1995 Investment in Local Limited Partnership $ -0- $ -0- Cash and Cash Equivalents 73,225 20,946 Total Assets $ 73,225 $ 20,946 LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) Liabilities: Accrued Expenses - Affiliate $ 9,350 $ 9,078 Professional Fees 0 8,500 Total Liabilities 9,350 17,578 Commitments and Contingencies Partner's Capital (Deficit): General Partners (38,048) (39,258) Limited partners,3,700 partnership units authorized, issued and outstanding 101,923 42,626 Total Partners' Capital (Deficit) 63,875 3,368 Total Liabilities and Partners' Capital Deficiency $ 73,225 $ 20,946 See accompanying notes to financial statements PART I ITEM 1. FINANCIAL STATEMENTS (Continued) APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENT OF INCOME (Unaudited) Nine Months Ended Three Months Ended September 30, September 30, 1996 1995 1996 1995 Interest Income $ 904 $ 1,742 $ 563 $ 256 Operating Expenses: Management fees - affiliate 28,050 28,274 9,350 9,424 Administrative 250 408 - - Total Operating Expenses 28,300 28,682 9,350 9,424 Loss Before Share of Losses of and Distributions from Local Limited Partnerships ( 27,396) ( 26,940) ( 8,787) (9,168) Distribution from Local Limited Partnership 87,903 87,065 - - Share of Losses of Local Limited Partnerships - - - - Net Income (Loss) $60,507 $60,125 $(8,787) $(9,168) Limited Partners' Interest in Net Income (Loss) $59,297 $58,923 $(8,611) $(8,985) Weighted Average Number of Outstanding Limited Partnership Units 3,700 3,700 3,700 3,700 Net Income (Loss) Per Limited Partnership Unit $ 16.03 $ 15.93 $( 2.33) $(2.43) See accompanying notes to financial statements PART I ITEM 1. FINANCIAL STATEMENTS (Continued) APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY) General Limited Partner Partner Total Balance, January 1, 1996 ($ 39,258) $ 42,626 $ 3,368 Net Income: 1/1/96- 9/30/96 1,210 59,297 60,507 Balance, September 30, 1996 ($ 38,048) $101,923 $ 63,875 See accompanying notes to financial statements PART I ITEM 1. FINANCIAL STATEMENTS (Continued) APT HOUSING PARTNERS LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 1996 1995 Cash Flows From Operating Activities: Net Income (Loss) $ 60,507 $ 60,125 Adjustments to reconcile net income to net cash provided by operating activities: Change in operating assets and liabilities: Increase (decrease) in accrued expenses ( 8,228) ( 8,347) Net Cash provided by (used by) operating activities: 52,279 51,778 Cash Flows From Financing Activities: Distributions to limited partners - 196,000 Distributions to general partner - 4,000 Net cash used in financing activities - 200,000 Net Increase (Decrease) in cash and cash equivalents 52,279 (148,222) Cash and Cash Equivalents, Beginning of Period 20,946 179,140 Cash and Cash Equivalents, End of Period $ 73,225 $ 30,918 See accompanying notes to financial statements APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) 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. The Partnership Agreement, as amended, authorized the issuance of 3,700 limited partnership units, all of which were issued and are outstanding. Interim Statements: The interim financial statements furnished are unaudited and reflect all adjustments which are in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All adjustments are of a normal recurring nature. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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. APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER ENDING SEPTEMBER 30, 1996 AND COMPARABLE PERIODS 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. 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 at September 30, 1996 and September 30, 1995. 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 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. APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER ENDING SEPTEMBER 30, 1996 AND COMPARABLE PERIODS For the quarter ended September 30, 1996, the aggregate share of losses of the Local Limited Partnerships attributable to the Partnership amounted to $25,360. The Partnership's cumulative share of losses of the Local Limited Partnerships exceeded its investments by $409,124 at September 30, 1996. 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. Summarized unaudited balance sheet information on a combined basis for the Local Limited Partnerships as of September 30, 1996 and December 31, 1995 as follows: September 30, 1996 December 31, 1995 Rental property $7,597,934 $7,597,934 Accumulated depreciation ( 3,707,008) ( 3,507,367) Cash and cash equivalents 454,308 525,355 Restricted assets and deposits 556,652 487,541 Other assets 142,456 131,550 Total assets 5,044,342 5,235,013 Mortgage loans payable 6,002,740 6,035,522 Other liabilities 206,369 245,547 Total liabilities 6,209,109 6,281,069 Partners' capital (deficiency) ($1,164,767) ($1,046,056) Composition of partners' capital (deficiency) General partners ($ 93,294) ($ 87,855) Limited partners ( 1,071,473) ( 958,201) Partners' capital (deficiency) ($1,164,767) ($1,046,056) APT HOUSING PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS FOR THE QUARTER ENDING SEPTEMBER 30, 1996 AND COMPARABLE PERIODS Summarized unaudited income statement information on a combined basis for the Local Limited Partnerships for the quarter ended September 30, 1996 and comparable periods was as follows: September 30, 1996 September 30,1995 Revenues $1,328,328 $ 869,741 Net income (loss) ($ 26,668) ($ 41,371) 4. CASH AND CASH EQUIVALENTS The partnership maintains cash and cash equivalent balances in an 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 September 30, 1996, and December 31, 1995 the Partnership's cash and cash equivalent balances in this financial institution were fully insured. 5. TRANSACTIONS WITH RELATED PARTIES American Investment 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 quarters ending September 30, 1996 and 1995 amounted to $9,350 and $9,424, respectively. Of this amount $9,350 and $9,078 remained unpaid at September 30, 1996 and December 31, 1995 respectively. 6. FAIR VALUE OF FINANCIAL INSTRUMENTS Commencing with the year ended December 31, 1995, the Partnership is required to disclose the fair value of its financial instruments in accordance with Statements of Financial Accounting Standards No. 107. 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 September 30, 1996 approximate their fair values because of the short-term maturity of these instruments. PART II ITEM 2. 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 September 30, 1996 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. HUD recently released the American Community Partnerships Act (the "ACPA"). The ACPA is HUD's blueprint for providing for the nation's housing needs in an era of static or decreasing budget authority. Two key proposals in the ACPA that could affect the Local Limited Partnerships are: A discontinuation of project based Section 8 Subsidy payments and an attendant reduction in debt on properties that were supported by the Section 8 payments. The ACPA calls for a transition during which the project based Section 8 would be converted to a tenant based voucher system. Any FHA insured debt would then be "marked-to-market", that is revalued in light of the reduced income stream, if any. The impact of ACPA, if enacted in its present form, is not presently determinable. Several industry sources have already commented to HUD and Congress that in the event the ACPA were fully enacted in its present form, the reduction in mortgage indebtedness would be considered taxable income to limited partners in the Partnership. Legislative relief has been proposed to exempt "mark-to-market" debt from cancellation of indebtedness income treatment. Cash distributions received from a Local Limited Partnership amounted to $87,903, $87,064 and $82,255 during quarter ended September 30, 1996 and the years ended December 31, 1995 and 1994, respectively. These distributions were used to meet the Partnership's obligations and, in 1995, to make distributions to its partners. 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. PART II ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued): 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 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 interest 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 quarter ended September 30, 1996, the aggregate share of losses of the Local Limited Partnerships attributable to the Partnership and not included in the statements of income amounted to $25,736. At September 30, 1996, the Partnership's cumulative share of losses of the Local Limited Partnerships exceeded its investments by $409,500, 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 for the period January 1, 1996 - September 30, 1996 was due primarily to a distribution from a local limited partnership recognized as income in the second quarter 1996. PART II ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued): The partnership incurs an annual program management fee payable to American Investment Team, Inc. ("AIT"), an affiliate of the General Partner, for managing the affairs of the Partnership and for providing investor services to the limited partners. The fee to AIT is equal to .5% of invested asset plus the Local Limited Partnerships' annualized outstanding nonrecourse debt. The fee amounted to $9,350 for the quarter ended September 30, 1996. 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 payments 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 governmental 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. PART II OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K a. Purchase and Sale Agreement, dated as of March 30, 1984, relating to Ashland Commons to Registrant's Form 8-K dated March 30, 1984. Purchase and Sale Agreement, dated as of April 30, 1984, relating to Historic Cohoes, II to Registrant's Form 8-K dated April 30, 1984. Purchase and Sale Agreement, dated as of June 22, 1984,relating to Rockledge Apartments Associated to Registrant's Form 8-K dated June 22, 1984. Withdrawal of APT Housing Partners Limited Partnership as a Limited Partner in a Local Limited Partnership, dated as of December 18, 1986, relating to Historic Cohoes II, to Registrant's Form 8-K dated March 30, 1987. Change in registrant's certifying accountants under Item 4 to Registrant's Form 8-K dated December 1, 1995 b. No reports on Form 8-K have been filed for the quarter ended September 30, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, 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 Date:_____________________ [SIGNATURE] Jeff Ewing, President EX-27 2
5 9-MOS DEC-31-1996 SEP-30-1996 73,225 0 0 0 0 73,225 0 0 73,225 9,350 0 0 0 0 63,875 73,225 0 87,903 0 0 28,300 0 0 60,507 0 0 0 0 0 60,507 16.03 0
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