-----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, VJPzrWbMLI/jyvYEPxMo+XOMY7QZAVuwlXxrhweJ36gOsrhhV9b6TbC8E3YZRzP2 b8zfgASiu3A9SNrSaTUXbQ== 0000726995-97-000021.txt : 19971113 0000726995-97-000021.hdr.sgml : 19971113 ACCESSION NUMBER: 0000726995-97-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-13556 FILM NUMBER: 97715109 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 SEPTEMBER 30, 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 September 30, 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 September 30 1997 December 31, (Unaudited) 1996 Property, at cost: Land $3,677,028 $3,677,028 Buildings and improvements 14,067,756 14,067,757 Equipment, furnishings and fixtures 1,811,930 1,576,836 ---------------- ----------------- 19,556,714 19,321,621 Less accumulated depreciation (5,123,653) (4,810,314) ---------------- ----------------- 14,433,061 14,511,307 Cash and cash equivalents 691,777 1,065,855 Real estate tax escrows 55,667 41,632 Deposits 4,993 3,818 Accounts receivable 1,643 2,605 Deferred expenses, net of accumulated amortization of $194,491 and $175,041 - 19,450 ---------------- ----------------- Total assets $15,187,141 $15,644,667 ================ ================= LIABILITIES AND PARTNERS' EQUITY Mortgage notes payable $8,450,031 $8,559,930 Accounts payable 212,892 115,410 Accrued expenses 166,122 195,794 Due to affiliates (Note 7) 5,429 8,975 Rents received in advance - 4,538 Tenant security deposits 63,706 55,320 ---------------- ----------------- Total liabilities 8,898,180 8,939,967 General Partners equity (193,533) (192,294) Limited Partners equity 6,482,495 6,896,994 ---------------- ----------------- Total liabilities and partners' equity $15,187,141 $15,644,667 ================ ================= CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ------------- Three Months Ended Nine Months Ended September 30 September 30 1997 1996 1997 1996 ---- ---- ---- ---- Revenue: Rental income $612,106 $620,167 $1,895,970 $1,988,215 Interest Income 8,462 10,071 29,064 43,005 ------------- --------------- ---------------- ----------------- Total Revenue 620,568 630,238 1,925,034 2,031,220 Expenses: Operations 372,008 312,323 955,597 885,905 Interest expense 200,837 196,534 590,019 592,010 Depreciation and amortization 117,228 104,521 332,789 313,228 General and administrative 54,437 87,866 170,579 295,991 ------------- --------------- ---------------- ----------------- Total Expenses 744,510 701,244 2,048,984 2,087,134 ------------- --------------- ---------------- ----------------- Net income (loss) ($123,942) ($71,006) ($123,950) ($55,914) ============= =============== ================ ================= Net income (loss) allocated to: General Partners ($1,239) ($710) ($1,240) ($559) Per unit Net income (loss) allocated to Investor Limited Partner interest: 32,421 units ($3.78) ($2.17) ($3.78) ($1.71) 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 - (291,789) (291,789) Net income (1,240) (122,711) (123,950) --------------- ---------------- ----------------- Balance at September 30, 1997 ($193,533) $6,482,495 $6,288,961 =============== ================ ================= CLUSTER HOUSING PROPERTIES (a California Limited Partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30 Cash flows from operating activities: 1997 1996 ---- ---- Interest received $29,064 $64,613 Cash received from rental income 1,900,718 1,980,606 General and administrative expenses (203,874) (326,839) Operations expense (872,010) (830,475) Interest paid (591,194) (593,482) ---------------- ----------------- Net cash provided by operating activities 262,704 294,423 Cash flows from investing activities: Purchase of fixed assets (235,094) (164,643) Cash received from short-term investments - 237,802 ---------------- ----------------- Net cash provided by investing activities (235,094) 73,159 Cash flows from financing activities: Distributions to partners (291,789) (291,789) Deposits - (3,025) Principal payments on mortgage notes payable (109,899) (100,349) ---------------- ----------------- Net cash used by financing activities (401,688) (395,163) ---------------- ----------------- Net increase (decrease) in cash and cash equivalents (374,078) (27,581) Cash and cash equivalents at beginning of the period 1,065,855 480,389 ---------------- ----------------- Cash and cash equivalents at end of the period $691,777 $452,808 ================ ================= 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: Nine Months Ended September 30 1997 1996 ---- ---- Net income (loss) ($123,950) ($55,914) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 332,789 313,228 Change in assets and liabilities net of effects of investing and financing activities: Decrease in real estate tax escrows (14,035) (35,540) (Increase) decrease in accounts and interest receivable 962 19,639 (Increase) decrease in deposits and prepaid expenses (1,175) (900) Increase (decrease) in accounts payable and accrued expenses 66,910 83,604 Increase (decrease) in due to (3,545) (22,085) affiliates Decrease in rent received in advance (3,638) (10,495) Increase in tenant security deposits 8,386 2,886 ---------------- ----------------- Net cash provided by operating activities $262,704 $294,423 ================ =================
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 September 30, 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 nine months ended September 30, 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 evaluates rental properties for impairment when conditions exist which may indicate that it is probable that the sum of expected future cash flows (undiscounted) from rental properties is less than its carrying value. Upon determination that a permanent impairment has occurred, rental properties are reduced to fair value. For the year ended December 31, 1996 and the quarter ended June 30, 1997, permanent impairment conditions did not exist at any of the Partnership's properties. 3. Cash and Cash Equivalents: Cash and cash equivalents at September 30, 1997, and December 31, 1996, consisted of the following: 1997 1996 ---------- ---------- Cash on hand ............................. $ 158,161 $ 854,769 Certificate of deposit ................... 211,086 Money market account ..................... 533,616 ---------- ---------- $ 691,777 $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 controls and 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 September 30, 1997, the total capital contributions and acquisition costs incurred were $2,713,937 and $418,686, respectively. For the nine months ended September 30, 1997 and 1996, Sin Vacas had net loss of $15,690 and $58,266, 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 controls and 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 September 30, 1997, the total capital contributions and acquisition costs were $2,580,117 and $381,729, respectively. Villa Antigua had net income of $16,603 and $145,859 for the nine months ended September 30, 1997 and 1996, 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 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 SEPTEMBER 30, 1997 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 controls and 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 September 30, 1997, the total capital contributions and acquisition costs incurred were $4,192,309 and $497,475, respectively. For the nine months ended September 30, 1997 and 1996, L'Auberge Pinecliff had a net income of $18,812 and $120,035, 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 affected by the relative balances in the individual partners' capital accounts. JULY 3, 1996 THROUGH SEPTEMBER 30, 1997 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 September 30, 1997 and December 31, 1996 which consisted of the following: 1997 1996 ---------- ---------- Villas at Sin Vacas .................... $2,397,667 $2,428,851 Pinecliff .............................. 3,072,739 3,112,702 Villa Antigua .......................... 2,979,625 3,018,377 ---------- ---------- $8,450,031 $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 maturity date of the note is July 15, 1998. 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 maturity date of the note is July 15, 1998. 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, based on a fixed interest rate of 9.125%. The maturity date of the note is July 15, 1998. Interest accrued at September 30, 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 September 30, 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 $5,429 and $8,975, respectively. For the nine months ended September 30, 1997 and 1996, general and administrative expenses included $45,064 and $66,026, 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, Villas Sin Vacas and Villa Antigua, is an affiliate of the General Partners of the Partnership. For the nine months ended September 30, 1997, property management fees of $73,654 were paid to Residential Services - L'Auberge. For the nine months ended September 30, 1996, Residential Services-L'Auberge was paid $43,972 for the management of L'Auberge Pinecliff. For the management of Villa Sin Vacas and Villa Antigua, $39,440 of property management fees were paid to Evans Withycombe, Inc., until the termination of the Management Agreement on May 15, 1996. 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, to an unaffiliated purchaser. The purchase price for Villas Sin Vacas is approximately $5,040,000. 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 6 months after the date of the Agreement. On October 10, 1997, Villa Antigua, Phase I was sold pursuant to the terms of a Purchase and Sale Agreement and Escrow Instructions, dated as of May 6, 1997 as amended. Villa Antigua was sold to Villa Antigua Condominium Ventures Limited Partnership, an Arizona limited partnership unaffiliated with the Partnership. The purchase price for Villa Antigua Phase I was $6,248,000 subject to certain customary adjustments and the repayment of mortgage financing in the amount of $3,010,362, paid at closing utilizing a portion of proceeds from the sale. 17 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 have been used to establish initial working capital reserves sufficient to meet future needs of the Partnership, including contributions to the various properties that may be required. Through September 30, 1997, $373,990 cumulatively was contributed to the properties 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 properties. Thus far in 1997, the aggregate net decrease in working capital reserves was $374,078. This decrease resulted primarily from cash provided by operations of $262,704 offset by distributions to partners of $291,789, purchase of fixed assets of $235,094, and $109,899 of principal payments on mortgage notes payable. On October 10, 1997, Villa Antigua Phase I was sold for $6,248,000. See Item 8. Subsequent Event. Property Status Villas at Sin Vacas As of September 30, 1997, the property was 94% occupied, compared to 84% approximately one year ago. At September 30, 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 September 30, 1997, the property was 82% occupied, compared to 91% approximately one year ago. At September 30, 1997 and 1996, the market rents for the various unit types were as follows: Unit Type .................................... 1997 1996 - ---------------------------------------------- ------ ------ One bedroom one bath ....................... $ 925 $ 890 Two bedroom two bath ....................... 1,150 1,099 Villa Antigua As of September 30, 1997, the property was 86% occupied, compared to 85% approximately one year ago. At September 30, 1997 and 1996, the market rents for the various unit types were as follows: Unit Type ............................... 1997 1996 - ---------------------------------------------- ------ ------ One bedroom one bath ......................... $ 760 $ 760 Two bedroom two bath ......................... 925 925 Three bedroom two bath ....................... 1,105 1,080 Results of Operations For the three months ended September 30, 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 $180,182 $232,856 $200,053 $7,477 $620,568 Expenses: General and administrative 54,436 54,437 Operations 110,364 123,269 138,375 372,008 Depreciation and amortization 33,983 50,575 32,670 117,228 Interest 57,359 72,804 70,674 200,837 ------------- --------------- ---------------- ------------ --------------- 201,706 246,648 241,719 54,436 744,510 ------------- --------------- ---------------- ------------ --------------- Net income ($21,524) ($13,792) ($41,666) ($46,959) ($123,942) ============= =============== ================ ============ =============== For the three months ended September 30, 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 Partnership Consolidated Vacas Pinecliff Antigua Level Totals Revenue: $160,684 $258,420 $201,159 9,975 $630,238 Expenses: General and administrative - - - 87,866 87,866 Operations 115,086 111,538 78,533 7,166 312,323 Depreciation and amortization 30,497 44,058 29,966 104,521 Interest 55,783 71,489 69,262 - 196,534 ---------------- --------------- --------------- --------------- --------------- 201,366 227,085 177,761 95,032 701,244 ---------------- --------------- --------------- --------------- --------------- Net income (loss) ($40,682) $31,335 $23,398 ($85,057) ($71,006) ================ ================================ =============== =============== For the nine months ended September 30, 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 $538,653 $715,030 $644,429 $26,922 $1,925,034 Expenses: General and administrative 170,578 170,579 Operations 289,233 340,417 325,929 18 955,597 Depreciation and amortization 97,322 141,476 93,991 332,789 Interest 167,788 214,325 207,906 590,019 ------------- --------------- ---------------- ------------- --------------- 554,343 696,218 627,826 170,596 2,048,984 ------------- --------------- ---------------- ------------- --------------- Net income ($15,690) $18,812 $16,603 ($143,674) ($123,950) ============= =============== ================ ============= =============== For the nine months ended September 30, 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 Partnership Consolidated Vacas Pinecliff Antigua Level Totals Revenue: $518,594 $786,540 $685,416 40,670 $2,031,220 Expenses: General and administrative 1,686 259 294,046 295,991 Operations 314,492 320,562 240,685 10,166 885,905 Depreciation and amortization 92,684 130,645 89,899 313,228 Interest 167,998 215,298 208,714 592,010 -------------- --------------- --------------- -------------- ------------- 576,860 666,505 539,557 304,212 2,087,134 -------------- --------------- --------------- -------------- --------------- Net income (loss) ($58,266) $120,035 $145,859 ($263,542) ($55,914) ============== =============================== ============== ===============
Comparison of Operating Results for the Nine Months Ended September 30, 1997 and 1996: Total revenue decreased by $106,186 or 5%, 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 by $69,692 (8%) primarily due to one-time costs of preparing the properties for disposition, including an increase in advertising, promotions, repairs and maintenance. General and administrative expenses have decreased by 42% or $125,412, of which $73,775 was the Evans Withycombe termination fee in 1996. A contributing factor to the additional reduction of $51,637 was 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 $291,789 of cash distributions to its Limited Partners and $-0- to the General Partners. 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 (A.) Exhibit - None (B.) Report on Form 8-K, Item 2, dated October 10, 1997 filed October 23, 1997 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: November 15, 1997 EX-27 2 FDS --
5 9-MOS Dec-31-1997 Sep-30-1997 691,777 0 1,643 0 0 0 19,556,714 (5,123,653) 15,187,141 448,149 0 0 0 0 8,450,031 15,187,141 0 1,925,034 0 0 1,458,965 0 590,019 0 0 0 0 0 0 (123,950) 0 0
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