-----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, PFW4RwpWu6qPLC+FxhE3nhyG5cKBWA4ooLcHYzHw9dn/hOIE2hZ32fjGCscvDl9V R86XafEMR0h3pdKhcHJx8w== 0000726995-97-000003.txt : 19970515 0000726995-97-000003.hdr.sgml : 19970515 ACCESSION NUMBER: 0000726995-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY & BOYLE CLUSTER HOUSING PROPERTIES CENTRAL INDEX KEY: 0000726995 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 042817478 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13556 FILM NUMBER: 97603214 BUSINESS ADDRESS: STREET 1: 57 RIVER ST CITY: WELLESLEY HILLS STATE: MA ZIP: 02181 BUSINESS PHONE: 6172370544 MAIL ADDRESS: STREET 1: 57 RIVER STREET CITY: WELLESLEY HILLS STATE: MA ZIP: 02181 10-Q 1 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to ________________ Commission File No. 0-13556 Cluster Housing Properties (A California Limited Partnership) (Exact name of registrant as specified in its charter) California 04-2817478 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5110 Langdale Way, Colorado Springs CO 80906 (Address of principal executive offices) (Zip Code) (719) 576-5122 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 and 15(d) of the Securities 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. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------- ASSETS March 31, 1997 December 31, (Unaudited) 1996 Property, at cost: Land $3,677,028 $3,677,028 Buildings and improvements 14,067,757 14,067,757 Equipment, furnishings and 1,648,890 1,576,836 fixtures ------------- -------------- 19,393,675 19,321,621 Less accumulated depreciation (4,908,370) (4,810,314) ------------- -------------- 14,485,305 14,511,307 Cash and cash equivalents 962,444 1,065,855 Real estate tax escrows 70,089 41,632 Deposits 3,818 3,818 Accounts receivable 4,942 2,605 Deferred expenses, net of accumulated amortization of $184,766 and 9,725 19,450 $175,041 ------------- -------------- Total assets $15,536,323 $15,644,667 ============= ============== LIABILITIES AND PARTNERS' EQUITY Mortgage notes payable $8,524,125 $8,559,930 Accounts payable 98,436 115,410 Accrued expenses 191,247 195,794 Due to affiliates 15,974 8,975 (Note 7) Rents received in advance 4,538 - Tenant security 55,463 55,320 deposits ------------- -------------- Total 8,885,245 8,939,967 liabilities Partners' equity 6,651,078 6,704,700 ------------- -------------- Total liabilities and $15,536,323 $15,644,667 partners' equity ============= ============== CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ------------- Three Months Ended March 31, 1997 1996 ---- ---- Revenue: Rental income $657,818 $692,423 Interest Income 10,897 16,803 -------------- --------------- Total Revenue 668,715 709,226 Expenses: Operations 280,058 269,847 Interest expense 195,002 198,113 Depreciation and amortization 107,780 100,629 General and administrative 42,234 72,862 -------------- --------------- Total Expenses 625,074 641,451 -------------- --------------- Net income (loss) $43,641 $67,775 ============== =============== Net income (loss) allocated to: General Partners $2,182 $3,389 Per unit Net income (loss) allocated to Investor Limited Partner interest: 32,421 units $1.28 $1.99 issued CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) ------------- Investor Total General Limited Partners' Partners Partners Equity Balance at December 31, 1995 ($170,140) $7,461,041 $7,290,901 Minority interest absorbed - (8,895) (8,895) Cash distributions (20,476) (389,052) (409,528) Net Income (1,678) (166,100) (167,778) --------------- ------------- -------------- Balance at December 31, 1996 ($192,294) $6,896,994 $6,704,700 Cash distributions - (97,263) (97,263) Net income 2,182 41,459 43,641 --------------- ------------- -------------- Balance at March 31, 1997 ($190,112) $6,841,190 $6,651,078 =============== ============= ============== CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, Cash flows from operating 1997 1996 ---- ---- activities: Interest received $10,897 $39,887 Cash received from rental income 653,423 682,880 General and administrative (104,433) (65,278) expenses Operations expense (253,449) (293,429) Interest paid (195,002) (198,113) --------------- ------------- Net cash provided by operating 111,436 165,947 activities Cash flows from investing activities: Purchase of fixed assets (72,054) (14,314) Cash received from short-term investments - 90,917 --------------- ------------- Net cash provided by investing (72,054) 76,603 activities Cash flows from financing activities: Distributions to partners (97,263) (97,263) Cash paid for deferred costs (9,725) - Principal payments on mortgage notes payable (35,805) (32,692) --------------- ------------- Net cash used by financing (142,793) (129,955) activities --------------- ------------- Net increase (decrease) in cash and cash (103,411) 112,595 equivalents Cash and cash equivalents at beginning of the 1,065,855 480,389 period --------------- ------------- Cash and cash equivalents at end of the period $962,444 $592,984 =============== ============= CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------- Reconciliation of net income (loss) to net cash provided by operating activities: Three Months Ended March 31, 1997 1996 Net income (loss) $43,641 $67,775 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 107,780 100,629 Change in assets and liabilities net of effects of investing and financing activities: Decrease in real estate tax (28,457) (34,247) escrows (Increase) decrease in accounts and interest receivable (2,337) 23,715 (Increase) decrease in deposits and prepaid (9,725) - expenses Increase (decrease) in accounts payable and accrued expenses (2,070) 18,946 Increase (decrease) in due to 6,999 (1,328) affiliates Decrease in rent received in (4,538) (10,495) advance Increase in tenant security 143 952 deposits --------------- ------------- Net cash provided by operating $111,436 $165,947 activities =============== =============
1. Organization of Partnership: Cluster Housing Properties (a California Limited Partnership) (the "Partnership"), formerly Berry and Boyle Cluster Housing Properties, was formed on August 8, 1983. The Partnership issued all of the General Partnership Interests to three General Partners in exchange for capital contributions aggregating $2,000. Stephen B. Boyle and GP L'Auberge Communities, L.P., (a California Limited Partnership), formerly Berry and Boyle Management, are the General Partners. In September, 1995, with the consent of Limited Partners holding a majority of the outstanding Units, as well as the consent of the mortgage lenders for the Partnership's three properties, Richard G. Berry resigned as a general partner of the Partnership. A total of 2,000 individual Limited Partners owning 32,421 units have contributed $16,210,500 of capital to the Partnership. At March 31, 1997, the total number of Limited Partners was 1,917. Except under certain limited circumstances, as defined in the Partnership Agreement, the General Partners are not required to make any additional capital contributions. The General Partners or their affiliates will receive various fees for services and reimbursement for various organizational and selling costs incurred on behalf of the Partnership. The accompanying consolidated financial statements present the activity of the Partnership for the three months ended March 31, 1997 and 1996. The Partnership will continue until December 31, 2010, unless terminated earlier by the sale of all, or substantially all, of the assets of the Partnership, or otherwise in accordance with the provisions of Section 16 of the Partnership Agreement. 2. Significant Accounting Policies: A. Basis of Presentation The consolidated financial statements include the accounts of the Partnership and its properties: Sin Vacas, Pinecliff and Villa Antigua. All intercompany accounts and transactions have been eliminated in consolidation. The Partnership follows the accrual basis of accounting. B. Cash and Cash Equivalents The Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value. It is the Partnership's policy to invest cash in income-producing temporary cash investments. The Partnership mitigates any potential risk from such concentration of credit by placing investments with high quality financial institutions. C. Significant Risks and Uncertainties 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. D. Depreciation Depreciation is provided for by the use of the straight-line method over estimated useful lives as follows: Buildings and improvements 39-40 years Equipment, furnishings and fixtures 5-15 years E. Deferred Expenses Costs of obtaining the mortgages on the properties are being amortized over the term of the related mortgage notes payable using the straight-line method. Fees paid to certain of the property developers were amortized over the term of the services provided using the straight-line method. Any unamortized costs remaining at the date of a refinancing are expensed in the year of refinancing. F. Income Taxes The Partnership is not liable for Federal or state income taxes because Partnership income or loss is allocated to the Partners for income tax purposes. If the Partnership's tax returns are examined by the Internal Revenue Service or state taxing authority and such an examination results in a change in Partnership taxable income (loss), such change will be reported to the Partners. G. Rental Income Leases require the payment of rent in advance, however, rental income is recorded as earned. H. Long-Lived Assets The Partnership's long-lived assets include property and equipment and deferred expenses. The Partnership will evaluate the possible impairment of long-lived assets whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. 3. Cash and Cash Equivalents: Cash and cash equivalents at March 31, 1997 and December 31, 1996 consisted of the following: 1997 1996 ---------- ---------- Cash on hand ......... $ 853,854 $ 854,769 Certificate of deposit 108,590 211,086 __________ __________ $ 962,444 $1,065,855 4. Joint Venture and Property Acquisitions: The Partnership has invested in three properties located in Scottsdale and Tucson, Arizona and Colorado Springs, Colorado. The success of the Partnership will depend upon factors which are difficult to predict including general economic and real estate market conditions, both on a national basis and in the areas where the Partnership's investments are located. Sin Vacas On October 25, 1985, the Partnership acquired a majority interest in the Sin Vacas Joint Venture, which owns and operates the Villas at Sin Vacas, a 72-unit residential property located in Tucson, Arizona. Since the Partnership owns a majority interest in the Sin Vacas Joint Venture, the accounts and operations of the Sin Vacas Joint Venture have been consolidated into the Partnership. The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a Phoenix based residential development, construction and management firm. EWI is also the developer of the Villa Sin Vacas property. The Partnership made initial cash payments in the form of capital contributions totaling $2,458,507 and funded $398,949 of property acquisition costs which were treated as a capital contribution to the joint venture. Since completion of construction, the Partnership has made additional contributions totaling $275,167. At March 31, 1997, the total capital contributions and acquisition costs incurred were $2,713,937 and $418,686, respectively. For the three months ended March 31, 1997, and 1996 the Sin Vacas Joint Venture had net income of $11,111 and $18,504, respectively. JANUARY 1, 1996 THROUGH MAY 13, 1996 Net cash from operations (as defined in the joint venture agreement) was to be distributed as available to each joint venture partner quarterly as follows: First, to the Partnership, an amount equal to 8.75% per annum, noncumulative (computed daily on a simple noncompounded basis from the date of completion funding) of the Partnership's capital investment, as defined in the joint venture agreement; Second, the balance 70% to the Partnership and 30% to the co-venturer. All losses from operations and depreciation for the Sin Vacas Joint Venture were allocated 99% to the Partnership and 1% to the co-venturer. All profits from operations, to the extent of cash distributions, shall first be allocated to the Partnership and co-venturer in the same proportion as the cash distribution. Any remaining profits are allocated 70% to the Partnership and 30% to the co-venturer. In the case of certain capital transactions and distributions as defined in the joint venture agreement, the allocation of related profits, losses and cash distributions, if any, would be different than as described above and would be effected by the relative balances in the individual partners' capital accounts. Villa Antigua On June 11, 1987, the Partnership acquired a majority interest in the Villa Antigua Joint Venture, which owns and operates Villa Antigua, an 88-unit residential property located in Scottsdale, Arizona. Since the Partnership owns a majority interest in the Villa Antigua Joint Venture, the accounts and operations of the Villa Antigua Joint Venture have been consolidated into the Partnership. The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a Phoenix based residential development, construction and management firm. EWI is also the developer of the Villa Antigua property. The Partnership made initial cash payments in the form of capital contributions totaling $2,494,677 and funded $381,729 of property acquisition costs which were treated as a capital contribution to the Villa Antigua Joint Venture. Since completion of construction, the Partnership has made additional contributions totaling $85,440. At March 31, 1997, the total capital contributions and acquisition costs were $2,580,117 and $381,729, respectively. The Villa Antigua Joint Venture had net income of $47,494 and $76,436 for the three months ending March 31, 1997 and 1996. JANUARY 1, 1996 THROUGH MAY 13, 1996 Net cash from operations (as defined in the joint venture agreement) was to be distributed as available to each joint venture partner quarterly as follows: First, to the Partnership, an amount equal to 10% per annum, noncumulative (computed daily on a simple noncompounded basis from the date of completion funding) of the Partnership's adjusted capital investment, as defined in the joint venture agreement; Second, the balance 70% to the Partnership and 30% to the co-venturer. All losses from operations and depreciation for the Villa Antigua Joint Venture were allocated 99% to the Partnership and 1% to the co-venturer. All profits from operations, to the extent of cash distributions, shall first be allocated to the Partnership and co-venturer in the same proportion as the cash distributions; however, if for any taxable year there are no cash distributions, profits are allocated 99% to the Partnership and 1% to the co-venturer. In the case of certain capital transactions and distributions as defined in the joint venture agreement, the allocation of related profits, losses and cash distributions, if any, would be different than as described above and would be effected by the relative balances in the individual partners' capital accounts. Sin Vacas and Villa Antigua MAY 14, 1996 THROUGH DECEMBER 31, 1996 On May 14, 1996, the Partnership and certain affiliates consummated an agreement with Evans Withycombe Management, Inc. and certain of its affiliates ("EWI") which separated the interests of EWI and the Partnership, thus affording the Partnership greater flexibility in the operation and disposition of the properties. In consideration of a payment by the Partnership to EWI of $73,775 and delivery of certain mutual releases, EWI (i) relinquished its contract to manage Sin Vacas and Villa Antigua and its option to exercise its rights of first refusal with regard to the sale of those properties and (ii) assigned all of its interest in the Sin Vacas Joint Venture and the Villa Antigua Joint Venture to the Partnership (while preserving the economic interests of the venturer in these Joint Ventures), which resulted in the dissolution of the Sin Vacas Joint Venture and the Villa Antigua Joint Venture. EWI may still share in the cash flow distributions or proceeds from sale of the properties if certain performance levels are met. Pinecliff On July 16, 1986, the Partnership acquired Pinecliff (formerly Autumn Ridge), a 96-unit residential property located in Colorado Springs, Colorado and simultaneously contributed the property to the Autumn Ridge Joint Venture comprised of the Partnership and an affiliate of the property developer. Since the Partnership owns a majority interest in the Autumn Ridge Joint Venture, the accounts and operations of the Autumn Ridge Joint Venture have been consolidated into the Partnership. The co-venture partner was Highland Properties, Inc. ("Highland") a Colorado based residential development, construction and management firm. Highland developed the property known as L'Auberge Pinecliff. The Partnership made initial cash payments in the form of capital contributions totaling $3,819,397 and funded $546,576 of property acquisition costs which were treated as a capital contribution to the Autumn Ridge Joint Venture. Since completion of construction, the Partnership has made additional contributions totaling $323,811. At March 31, 1997 the total capital contributions and acquisition costs incurred were $4,192,309 and $497,475, respectively. For the three months ended March 31, 1997, and 1996 the Pinecliff had net income of $16,845 and $31,484, respectively. JANUARY 1, 1996 THROUGH JULY 2, 1996: Net cash from operations (as defined in the joint venture agreement) was to be distributed as available to each joint venture partner quarterly as follows: First, to the Partnership, an amount equal to 8% per annum, noncumulative (computed daily on a simple noncompounded basis from the date of completion funding) of the Partnership's capital investment, as defined in the joint venture agreement; Second, the balance 82% to the Partnership and 18% to the co-venturer. All losses from operations and depreciation for the Autumn Ridge Joint Venture were allocated 100% to the Partnership. All profits from operations, to the extent of cash distributions, shall first be allocated to the Partnership and co-venturer in the same proportion as the cash distribution. Any remaining profits are allocated 82% to the Partnership and 18% to the co-venturer. In the case of certain capital transactions and distributions as defined in the joint venture agreement, the allocation of related profits, losses and cash distributions, if any, would be different than as described above and would be effected by the relative balances in the individual partners' capital accounts. JULY 3, 1996 THROUGH DECEMBER 31, 1996 On July 3, 1996, the Partnership and certain affiliates consummated an agreement with Highland Properties, Inc. ("Highland") which separated the interests of Highland and the Partnership, thus affording the Partnership greater flexibility in the operation and disposition of the property. In consideration of a payment by the Partnership, to Highland totaling $7,718, and delivery of certain mutual releases, Highland (i) relinquished its option to exercise its rights of first refusal with regard to the sale of the property and (ii) assigned all of its interest in the L'Auberge Pinecliff Joint Venture to the Partnership, (while preserving the economic interests of the venturer in these Joint Ventures), which resulted in the dissolution of the L'Auberge Pinecliff Joint Venture. Highland may still share in the cash flow distributions or proceeds from sale of the properties if certain performance levels are met. The Sin Vacas Joint Venture, the Autumn Ridge Joint Venture and the Villa Antigua Joint Venture are sometimes collectively referred to as the "Joint Ventures". These joint ventures were effectively terminated on December 31, 1996. The Partnership has eliminated various minority interests related to these joint ventures, as such, the Partnership owns 100% of the underlying assets at December 31, 1996. 5. Mortgage Notes Payable: All of the property owned by the Partnership is pledged as collateral for the nonrecourse mortgage notes payable outstanding at March 31, 1997 and December 31, 1996 which consisted of the following: 1997 1996 ---------- ---------- Villas at Sin Vacas $2,418,691 $2,428,851 Pinecliff ......... 3,099,682 3,112,702 Villa Antigua ..... 3,005,752 3,018,377 ---------- ---------- $8,524,125 $8,559,930 ========== ========== Sin Vacas On June 30, 1992, Villas at Sin Vacas refinanced its permanent loan using the proceeds of a new first mortgage loan in the amount of $2,575,000. Under the terms of the note, monthly principal and interest payments of $21,830, based on a fixed interest rate of 9.125%, are required over the term of the loan. The balance of the note will be due on July 15, 1997. Pinecliff On June 30, 1992, Pinecliff refinanced its permanent loan using the proceeds of a new first mortgage loan in the amount of $3,300,000. Under the terms of the note, monthly principal and interest payments of $27,976 are required over the term of the loan, based on a fixed interest rate of 9.125%. The balance of the note will be due on July 15, 1997. Villa Antigua On June 30, 1992, Villa Antigua refinanced its permanent loan using the proceeds of a new first mortgage loan in the amount of $3,200,000. Under the terms of the note, monthly principal and interest payments of $27,128, based on a fixed interest rate of 9.125%, are required over the term of the loan. The balance of the note will be due on July 15, 1997. As these mortgage notes payable are due in fiscal 1997, the Partnership will seek to renegotiate these mortgage notes with its existing lenders or seek new sources of financing for these properties on a long term basis. The General Partners believe that existing cash flows from the properties will be sufficient to support a level of borrowing that is at least equal to amounts outstanding as of March 31, 1997. If the general economic climate for real estate in these respective locations were to deteriorate resulting in an increase in interest rates for mortgage financing or a reduction in the availability of real estate mortgage financing or a decline in the market values of real estate it may affect the Partnership's ability to complete these refinancings. Interest accrued at March 31, 1997 and December 31, 1996 consisted of the following: 1997 1996 ------- ------- Villas at Sin Vacas $ 9,235 $ 9,235 Pinecliff ......... 11,835 11,835 Villa Antigua ..... 11,476 11,476 ------- ------- $32,546 $32,546 ======= ======= The principal balance of the mortgage notes payable appearing on the consolidated balance sheet approximates the fair value of such notes. 6. Partners' Equity: Under the terms of the Partnership Agreement profits are allocated 95% to the Limited Partners and 5% to the General Partners; losses are allocated 99% to the Limited Partners and 1% to the General Partners. Cash distributions to the partners are governed by the Partnership Agreement and are made, to the extent available, 95% to the Limited Partners and 5% to the General Partners. The allocation of the related profits, losses, and distributions, if any, would be different than described above in the case of certain events as defined in the Partnership Agreement, such as the sale of an investment property or an interest in a joint venture partnership. 7. Related-Party Transactions: Due to affiliates at March 31, 1997 and December 31, 1996 consisted of reimbursable costs payable to L'Auberge Communities, Inc., an affiliate of the General Partners, in the amounts of $15,974, and $8,975, respectively. For the three months ended March 31, 1997 and 1996, general and administrative expenses included $14,547 and $27,268, respectively, of salary reimbursements paid to the General Partners for certain administrative and accounting personnel who performed services for the Partnership. The officers and principal shareholders of Evans Withycombe, Inc., the developer of the Villas at Sin Vacas and Villa Antigua properties and an affiliate of the co-venturers of those joint ventures, together hold a two and one half percent cumulative profit or partnership voting interest in LP L'Auberge Communities, a California Limited Partnership, formerly Berry and Boyle, which is the principal limited partner of GP L'Auberge Communities, L.P. Residential Services - L'Auberge, formerly Berry and Boyle Residential Services, the property manager of Pinecliff, is an affiliate of the General Partners of the Partnership. For the three months ended March 31, 1997, $25,639 of property management fees were paid to Residential Services - L'Auberge for the management of Villas Sin Vacas, Villa Antigua and L'Auberge Pinecliff. As of March 31, 1996, Residential Services-L'Auberge received management fees of $12,308 for management of L'Auberge Pinecliff. During the three months ended March 31, 1996, $21,679, of property management fees were paid to Evans Withycombe, Inc. for management of Villa Sin Vacas and Villa Antigua. 8. Subsequent Event: On May 6, 1997, the Partnership entered into a Purchase and Sales Agreement ( the "Agreement") to sell Villas Sin Vacas in Tucson, Arizona, and Villa Antigua, Phase I, in Scottsdale, Arizona, to an unaffiliated purchaser. The purchase price for Villas Sin Vacas is approximately $5,040,000 and the purchase price for Villa Antigua, Phase I, is approximately $6,248,000. The Agreement is subject to completion of customary due diligence to the satisfaction of the purchaser, and the purchaser obtaining a financing commitment for the purchase of the property on commercially reasonable terms and conditions. Under the terms of the Agreement, it is anticipated that the closing would occur within approximately 3 to 5 months after the date of the Agreement. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources In connection with its capitalization, the Partnership admitted investors who purchased a total of 32,421 Units aggregating $16,210,500. These offering proceeds, net of organizational and offering costs of $2,431,575, provided $13,778,925 of net proceeds to be used for the purchase of income-producing residential properties, including related fees and expenses, and working capital reserves. The Partnership expended $10,410,263 to (i) acquire its joint venture interests in the Sin Vacas Joint Venture, the Villa Antigua Joint Venture, and the Autumn Ridge Joint Venture, (ii) to pay acquisition expenses, including acquisition fees to one of the General Partners, and (iii) to pay certain costs associated with the refinancing of the Autumn Ridge permanent loan. The Partnership distributed $1,731,681 to the Limited Partners as a return of capital resulting from construction cost savings with respect to the Sin Vacas, Autumn Ridge and Villa Antigua projects and other excess offering proceeds. The remaining net proceeds of $1,636,981 were used to establish initial working capital reserves. These reserves may be used periodically to enable the Partnership to meet its various financial obligations including contributions to the various joint ventures that may be required. Through March 31, 1997, $373,990 cumulatively was contributed to the joint ventures for this purpose. The working capital reserves of the Partnership consist of cash and cash equivalents and short-term investments. Together these amounts provide the Partnership with the necessary liquidity to carry on its day-to-day operations and to make necessary contributions to the various joint ventures. Thus far in 1997, the aggregate net decrease in working capital reserves was $103,411. This decrease resulted primarily from cash provided by operations of $111,436 offset by distributions to partners of $97,263, purchase of fixed assets of $72,054, cash paid for deferred costs of $9,725 and $35,805 of principal payments on mortgage notes payable. Property Status Villas at Sin Vacas As of March 31, 1997, the property was 89% occupied, compared to 90% approximately one year ago. At March 31, 1997 and 1996, the market rents for the various unit types were as follows: Unit Type ....... 1997 1996 - ---------------------- ------ ------ One bedroom one bath . $ 835 $ 835 Two bedroom two bath . 1,050 1,050 Three bedroom two bath 1,200 1,200 Pinecliff As of March 31, 1997, the property was 81% occupied, compared to 94% approximately one year ago. At March 31, 1997 and 1996, the market rents for the various unit types were as follows: Unit Type ............ 1997 1996 - ---------------------- ------ ------ One bedroom one bath $ 905 $ 898 Two bedroom two bath 1,109 1,100 Villa Antigua As of March 31, 1997, the property was 98% occupied, compared to 100% approximately one year ago. At March 31, 1997 and 1996, the market rents for the various unit types were as follows: Unit Type ....... 1997 1996 - ---------------------- ------ ------ One bedroom one bath . $ 760 $ 735 Two bedroom two bath . 1,080 953 Three bedroom two bath 1,130 1,070 Results of Operations For the three months ended March 31, 1997, the Partnership's operating results were comprised of its share of the income and expenses from the Sin Vacas, Pinecliff and Villa Antigua, as well as partnership level interest income earned on short term investments, reduced by administrative expenses. A summary of these operating results appears below Sin L'Auberge Villa Investment Consolidated Vacas Pinecliff Antigua Partnership Total Total revenue $185,073 $235,026 $238,173 $10,443 $668,715 Expenses: General and administrative 42,252 42,252 Operations 86,962 101,820 91,258 280,040 Depreciation and 31,669 45,451 30,660 107,780 amortization Interest 55,331 70,910 68,761 195,002 -------------- ----------------- ------------- ------------- --------------- 173,962 218,181 190,679 42,252 625,074 -------------- ----------------- ------------- ------------- --------------- Net income $11,111 $16,845 $47,494 ($31,809) $43,641 ============== ================= ============= ============= ===============
For the three months ended March 31, 1996, the Partnership's operating results were comprised of its share of the income and expenses from the Sin Vacas, Pinecliff and Villa Antigua, as well as partnership level interest income earned on short term investments, reduced by administrative expenses. A summary of these operating results appears below: Sin L'Auberge Villa Investment Consolidated Vacas Pinecliff Antigua Partnership Total Revenue $188,868 $248,144 $256,523 $15,691 $709,226 Expenses: General and administrative 75,112 75,112 Operations 85,192 102,089 80,316 267,597 Depreciation and 28,958 42,530 29,141 100,629 amortization Interest 56,214 72,041 69,858 198,113 ------------ ---------------- ---------------- -------------- --------------- 170,364 216,660 179,315 75,112 641,451 ------------ ---------------- ---------------- -------------- --------------- Net loss $18,504 $31,484 $77,208 ($59,421) $67,775 ============ ================ ================ ============== ===============
Comparison of Operating Results for the Three Months ended March 31, 1997 and 1996: Total revenue decreased by $40,511 or 6% primarily due to a decrease in rental income as a result of competitive pressure from new apartment properties in the lease up phase in the local market. Operating expenses increased slightly by $12,443 (4%). General and administrative expenses have decreased $32,860 due to the re-stabilization of costs associated with Partnership administrative, financial and investor services functions following the office relocation to Colorado Springs. Thus far in 1997, the Partnership has made the following cash distributions to its Partners: Total Limited Partners $97,263 General Partners - $97,263 PART II-OTHER INFORMATION ITEM 1. Legal Proceedings Response: None ITEM 2. Changes in Securities Response: None ITEM 3. Defaults Upon Senior Securities Response: None ITEM 4. Submission of Matters to a Vote of Security Holders Response: None ITEM 5. Other Information Response: None ITEM 6. Exhibits and Reports on Form 8-K Response: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CLUSTER HOUSING PROPERTIES By: GP L'Auberge Communities, L.P., a California Limited Partnership, General Partner By: L'Auberge Communities, Inc., its General Partner By: __/s/ Stephen B. Boyle_______________________________ Stephen B. Boyle, President Date: May 13, 1997 EX-27 2 FDS --
5 3-MOS Dec-31-1997 Mar-31-1997 962,444 0 0 0 0 0 19,393,675 (4,908,370) 14,485,305 361,120 0 0 0 0 8,524,125 15,536,323 0 668,715 0 280,058 150,014 0 195,002 0 0 0 0 0 0 43,641 0 0
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