-----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, MAAzgA8Jeu+y2NFvlXfDTE2GM27PnT8VLjL3X8cIb7pOJhGExr0XNB0GGZ34K9iB 5bE/3W+t7ljaVBNhRUDBgQ== 0000726995-96-000005.txt : 19960807 0000726995-96-000005.hdr.sgml : 19960807 ACCESSION NUMBER: 0000726995-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960806 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: 96604506 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 JUNE 30, 1996 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 June 30, 1996 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) 527-0544 - ------------------------------------------------------------------------------- (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 June 30, 1996 December 31, (Unaudited) 1995 Property, at cost (Notes 2, 4, and 5): Land ............................. $3,677,028 $3,677,028 Buildings and improvements ................... 14,067,756 14,067,756 Equipment, furnishings and ................... 1,352,242 1,295,545 fixtures ------------ ------------ 19,097,026 19,040,329 Less accumulated depreciation ................ (4,607,352) (4,418,093) ------------ ------------ 14,489,674 14,622,236 Cash and cash equivalents (Notes 2 and 3) ...... 501,476 480,389 Short-term investments (Note 2) ................ 885,595 1,067,446 Real estate tax escrows ........................ 110,362 44,055 Deposits and prepaid expenses .................. 3,818 1,693 Accounts receivable ............................ 2,900 631 Deferred expenses, net of accumulated amortization of $155,588 and $136,140 (Note2). 38,903 58,351 ------------ ------------ Total assets .......................... $ 16,032,728 $ 16,274,801 ============ ============ LIABILITIES AND PARTNERS' EQUITY Mortgage notes payable (Note 5) ................ 8,629,142 8,695,278 Accounts payable ............................... 34,703 42,245 Accrued expenses ............................... 213,776 164,298 Due to affiliates .............................. (4,250) 23,173 (Note 7) Rents received in advance ...................... (772) 10,495 Tenant security ................................ 57,557 57,306 deposits ------------ ------------ Total ................................. 8,930,156 8,992,795 liabilities Commitments and contingencies (Note 9) Minority interest (Note 4) ..................... (8,895) (8,895) Partners' equity (Note 6)....................... 7,111,467 7,290,901 ------------ ------------ Total liabilities and partners' equity . $ 16,032,728 $ 16,274,801 ============ ============ CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ------------- Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Rental income ................. $ 675,625 $ 686,618 $ 1,368,048 $ 1,343,908 Rental operating expenses ..... 303,735 301,475 573,582 557,407 ----------- ----------- ----------- Net rental operating income (exclusive of items shown separately below) .... 371,890 385,143 794,466 786,501 Interest expense .............. 197,363 200,152 395,476 400,993 Depreciation and amortization . 108,078 100,630 208,707 201,259 Other (income) and expenses: Interest income ............. (16,131) (22,145) (32,934) (43,837) General and administrative .. 135,263 50,028 208,125 95,625 (Note 7) ----------- ----------- ----------- ----------- 424,573 328,665 779,374 654,040 ----------- ----------- ----------- ----------- Net income (loss) ............. ($ 52,683) $ 56,478 $ 15,092 $ 132,461 =========== =========== =========== =========== Net income (loss) allocated to: General Partners ............ ($ 527) $ 2,824 $ 755 $ 6,623 Per unit of Investor Limited Partner interest: 32,421 units ........... (1.61) 1.65 0.44 3.88 issued CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) (Unaudited) ------------- Investor Total General Limited Partners' Partners Partners Equity Balance at December 31, 1994 (159,147) 7,669,907 7,510,760 Cash distributions ......... (26,449) (502,525) (528,974) Net income ................. 15,456 293,659 309,115 ----------- ----------- ----------- Balance at December 31, 1995 (170,140) 7,461,041 7,290,901 Cash distributions ......... (194,526) (194,526) ----------- ----------- Net income ................. 2,824 12,268 15,092 ----------- ----------- ----------- Balance at June 30,1996..... ($ 167,316) $ 7,278,783 $ 7,111,467 =========== =========== =========== CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Increase (decrease) in cash and cash equivalents Six Months Ended June 30, 1996 1995 ----------- ----------- Cash flows from operating activities: Interest received .................................. $ 53,657 $ 25,314 Cash received from rental income ................... 1,357,008 1,327,607 Administrative expenses ............................ (246,610) (120,909) Rental operations expenses ......................... (589,136) (547,209) Interest paid ...................................... (395,476) (401,223) ----------- ----------- Net cash provided by operating activities ............ 179,443 283,580 Cash flows from investing activities: Purchase of fixed assets ........................... (56,697) (6,140) Cash (paid for) received from short-term investments 161,128 168,085 ----------- ----------- Net cash provided (used) by investing ................ 104,431 161,945 activities Cash flows from financing activities: Distributions to partners .......................... (194,526) (273,019) Deposits ........................................... (2,125) 2,033 Principal payments on mortgage notes payable ....... (66,136) (60,416) ----------- ----------- Net cash used by financing ........................... (262,787) (331,402) activities ----------- ----------- Net increase (decrease) in cash and cash ............. 21,087 114,123 equivalents Cash and cash equivalents at beginning of the period 480,389 195,407 ----------- ----------- Cash and cash equivalents at end of the period ....... $ 501,476 $ 309,530 =========== =========== CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Increase (decrease) in cash and cash equivalents ------------- Reconciliation of net income to net cash provided by operating activities: Six Months Ended June 30, 1996 1995 ---- ---- Net income .................................... $ 15,092 $ 132,461 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............... 208,707 201,259 Change in assets and liabilities net of effects from investing and financing activities: Decrease in real estate tax ............... (66,307) 21,506 escrows Increase in accounts and interest ......... 18,454 (18,523) receivable Increase (decrease) in accounts payable and accrued expenses ............ 42,401 (27,990) Increase (decrease) in due to affiliates .. (27,864) (8,832) Increase (decrease) in rent received in ... (11,267) (13,916) advance Increase (decrease) in tenant security .... 227 (2,385) deposits --------- --------- Net cash provided by operating activities ..... $ 179,443 $ 283,580 ========= =========
CLUSTER HOUSING PROPERTIES (A California Limited Partnership) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 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 December 31, 1995, the total number of Limited Partners was 2,013. 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 six months ended June 30, 1996 and 1995. 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 subsidiaries: Sin Vacas Joint Venture (Sin Vacas), Autumn Ridge Joint Venture (Autumn Ridge) and Villa Antigua Joint Venture (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. Short-term Investments At June 30, 1996, short term investments consist solely of various forms of U. S. Government backed securities, with an aggregate par value of $885,595 which mature in September 1996. In 1994, the Partnership adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Partnership has the intent and ability to hold its short term investments to maturity. Accordingly, these securities have been recorded at amortized cost, which approximates market value. There was no cumulative effect recorded as a result of this accounting change. D. 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. E. 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 F. 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. G. 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. H. Rental Income Leases require the payment of rent in advance, however, rental income is recorded as earned. I. 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 June 30, 1996 and December 31, 1995 consisted of the following: 1996 1995 ---- ---- Cash on hand $ 95,466 $ 30,848 Certificate of deposit 202,763 100,000 Money market accounts 203,247 349,541 ------- -------- $501,476 $480,389 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 those of the Partnership. 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 $153,757. At June 30, 1996, the total capital contributions and acquisition costs incurred were $2,592,527 and $418,686, respectively. For the six months ended June 30, 1996 and 1995 the Sin Vacas Joint Venture had net loss of $17,584, and net income of $10,038, respectively. June 30, 1996 Net cash from operations (as defined in the joint venture agreement) is 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 are 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. 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 those of the Partnership. 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.. At June 30, 1996 the total capital contributions and acquisition costs incurred were $4,187,310 and $497,475, respectively. For the six months ended June 30, 1996 and 1995 the Autumn Ridge Joint Venture had net income of $88,700 and $19,916, respectively. Net cash from operations (as defined in the joint venture agreement) is 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 are 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. 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 those of the Partnership. 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 $60,963. At June 30, 1996, the total capital contributions and acquisition costs were $2,555,640 and $381,729, respectively. The Villa Antigua Joint Venture had net income of $122,461 and $49,678 for the six months ended June 30,1996 and 1995. June 30, 1996 Net cash from operations (as defined in the joint venture agreement) is 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 are 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. 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". 5. Mortgage Notes Payable: All of the property owned by the Partnership is pledged as collateral for the nonrecourse mortgage notes payable outstanding at June 30, 1996 and December 31, 1995 which consisted of the following: 1996 1995 ---- ---- Villas at Sin Vacas $2,448,489 $2,467,255 Pinecliff 3,137,870 3,161,919 Villa Antigua 3,042,783 3,066,104 --------- --------- $8,629,142 $8,695,278 ========= ========= 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. Interest accrued at June 30, 1996 and December 31, 1995 consisted of the following: 1996 1995 ---- ---- Villas at Sin Vacas $ 9,381 $ 9,381 Pinecliff 12,022 12,022 Villa Antigua 11,658 11,658 ---------- --------- $ 33,061 $ 33,061 ======== ======== The aggregate principal amounts of long term borrowings due during the calendar years 1996 and 1997, respectively, are $135,348, and $8,559,930. 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 June 30, 1996 and December 31, 1995 consisted of reimbursable costs payable to L'Auberge Communities, Inc., an affiliate of the General Partners, in the amounts of $4,250, and $14,278, respectively and distributions payable to the Villa Antigua co-venturer of $0 and $8,895, respectively. For the six months June 30, 1996 and 1995, general and administrative expenses included $46,683 and $36,006, respectively, of salary reimbursements paid to the General Partners for certain administrative and accounting personnel who performed services for the Partnership. A termination fee of $71,680 was paid to Evans Withycombe, Inc. The officers and principal shareholders of Evans Withycombe, Inc., the developer and property manager 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. During the six months ended June 30, 1996 and 1995, $39,440 and $42,660, respectively, of property management fees were paid or accrued to Evans Withycombe, Inc until the termination of the Management Agreement on May 15, 1996 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 six months ended June 30, 1996 and 1995 $24,880 and $24,507, respectively, of property management fees were paid or accrued to Residential Services - L'Auberge. 8. Significant Event: 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), resulted in the dissolution of the Sin Vacas Joint Venture and the Villa Antigua Joint Venture. -16- 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 June 30, 1996, $218,258 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 1996, the aggregate net increase in working capital reserves was $21,087. This increase resulted primarily from cash provided by operations of $179,443 offset by distributions to partners of $194,526, purchase of fixed assets of $56,697 and $66,136 of principal payments on mortgage notes payable. Property Status Villas at Sin Vacas As of June 30, 1996, the property was 80% occupied, compared to 86% approximately one year ago. At June 30, 1996 and 1995, the market rents for the various unit types were as follows: Unit Type 1996 1995 --------- ---- ---- One bedroom one bath $ 835 $ 835 Two bedroom two bath 1,050 1,050 Three bedroom two bath 1,200 1,200 Autumn Ridge As of June 30, 1996, the property was 90% occupied, compared to 86% approximately one year ago. At June 30, 1996 and 1995, the market rents for the various unit types were as follows: Unit Type 1996 1995 -------- ---- ---- One bedroom one bath $ 910 $ 885 Two bedroom two bath 1,120 1,088 Villa Antigua As of June 30, 1996, the property was 87% occupied, compared to 94% approximately one year ago. At June 30, 1996 and 1995, the market rents for the various unit types were as follows: Unit Type 1996 1995 --------- ---- ---- One bedroom one bath $ 775 $720 Two bedroom two bath 925 935 Three bedroom two bat 1,080 1,050 Results of Operations For the three months ended June 30, 1996, the Partnership recognized interest income earned on short term investments of $15,004 and administrative expenses of $133,318, as well as its share of the income or losses allocated from the Joint Ventures as follows: Sin Autumn Villa Vacas Ridge Antigua Revenue ....................... $ 169,042 $ 279,976 $ 227,734 Expenses: General and administrative .. 1,686 -- 259 Operations .................. 114,214 106,934 81,837 Depreciation and amortization 33,229 44,057 30,792 Interest .................... 56,001 71,768 69,594 --------- --------- --------- 205,130 222,759 182,482 --------- --------- --------- Net income (loss) ............. $ (36,088) $ 57,217 $ 45,252 ========= ========= =========
For the three months ended June 30, 1995 the Partnership recognized interest income earned on short term investments of $21,546 and administrative expenses of $44,700, as well as its share of the income or losses allocated from the Joint Ventures as follows: Sin Autumn Villa Vacas Ridge Antigua Revenue ....................... $200,503 $250,031 $236,683 Expenses: General and administrative .. 1,800 1,728 1,800 Operations .................. 102,915 113,074 85,486 Depreciation and amortization 28,958 42,530 29,142 Interest .................... 56,792 72,783 70,577 -------- -------- -------- 190,465 230,115 187,005 -------- -------- -------- Net income (loss) ............. $ 10,038 $ 19,916 $ 49,678 ======== ======== ========
For the six months ended June 30, 1996, the Partnership recognized interest income earned on short term investments of $30,695 and administrative expenses of $206,180, as well as its share of the income or losses allocated from the Joint Ventures as follows: Sin Autumn Villa Vacas Ridge Antigua Total revenue ................. $ 357,910 $ 528,120 $ 484,257 Expenses: General and administrative .. 1,686 -- 259 Operations .................. 199,406 209,024 162,152 Depreciation and amortization 62,187 86,587 59,933 Interest .................... 112,215 143,809 139,452 --------- --------- --------- 375,494 439,420 361,796 --------- --------- --------- Net income (loss) ............. ($ 17,584) $ 88,700 $ 122,461 ========= ========= =========
For the six months ended June 30, 1995, the Partnership recognized interest income earned on short term investments of $42,703 and administrative expenses of $84,929, as well as its share of the income or losses allocated from the Joint Ventures as follows: Sin Autumn Villa Vacas Ridge Antigua Total revenue ................. $394,077 $483,495 $467,470 Expenses: General and administrative .. 3,600 3,496 3,600 Operations .................. 182,416 210,119 164,872 Depreciation and amortization 57,916 85,060 58,283 Interest .................... 113,780 145,816 141,397 -------- -------- -------- 357,712 444,491 368,152 -------- -------- -------- Net income (loss) ............. $ 36,365 $ 39,004 $ 99,318 ======== ======== ========
Comparison of Operating Results for the Six months ended June 30, 1996 and 1995: Interest income decreased 14% over the prior period as a result of lower amount of working capital invested in the on the Partnership's short term investments. Transition costs associated with the outsourcing of much of the Partnership's administration work to an administration agent and the relocation of the remaining administration, financial and investor services functions to a more cost efficient location in Colorado Springs, Colorado has temporarily increased first half 1996 operating expenses. In addition, the one-time cost of the Evans Withycombe termination ($71,680) and its related legal cost were incurred in May and June of 1996. In aggregate, total operating expenses of the Partnership increased 25% in the first six months of 1996 as compared with the same period in 1995, and are expected to decline in the second half of 1996 as compared with the first half of 1996. Thus far in 1996, the Partnership has made the following cash distributions to its Partners: Total Limited Partners $194,526 General Partners - $194,526 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: August 05, 1996 EX-27 2 FDS --
5 6-MOS Dec-31-1996 Jun-30-1996 501,476 885,595 0 0 0 0 19,097,026 (4,607,352) 16,032,728 301,014 0 0 0 0 8,629,142 16,032,728 0 1,400,982 0 0 990,414 0 395,476 0 0 0 0 0 0 15,092 0 0
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