MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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(AN ILLINOIS LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
--------------------
DECEMBER 31, 1999
-----------------
(TOGETHER WITH INDEPENDENT AUDITOR'S REPORT)
--------------------------------------------
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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(AN ILLINOIS LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
--------------------
DECEMBER 31, 1999
-----------------
TABLE OF CONTENTS
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INDEPENDENT AUDITOR'S REPORT
----------------------------
FINANCIAL STATEMENTS
--------------------
BALANCE SHEET EXHIBIT A
STATEMENT OF OPERATIONS EXHIBIT B
STATEMENT OF PARTNERS' EQUITY EXHIBIT C
STATEMENT OF CASH FLOWS EXHIBIT D
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Partners
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
(An Illinois Limited Partnership)
We have audited the accompanying balance sheet of MANSUR WOOD ELDERLY LIVING
CENTER, L. P. (An Illinois Limited Partnership) as of December 31, 1999, and the
related statements of operations, partners' equity and cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MANSUR WOOD ELDERLY LIVING
CENTER, L. P. as of December 31, 1999, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ FRIDUSS, LUKEE, SCHIFF & CO., P.C.
FRIDUSS, LUKEE, SCHIFF & CO., P.C.
Certified Public Accountants
Chicago, Illinois
January 20, 2000
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MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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BALANCE SHEET
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DECEMBER 31, 1999 EXHIBIT A
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A S S E T S
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INVESTMENT IN REAL ESTATE HELD FOR LEASE
----------------------------------------
(Notes 2 and 5)
Land $ 50,000
Construction in Progress 7,823,119
------------
NET INVESTMENT IN REAL ESTATE
-----------------------------
HELD FOR LEASE $ 7,873,119
-------------- ------------
OTHER ASSETS
------------
Cash (Note 3) $ 8,985
Construction Escrow (Note 10) 1,026
Capitalized Costs (Note 8) 153,344
------------
TOTAL OTHER ASSETS $ 163,355
------------------ -----------
TOTAL ASSETS $ 8,036,474
------------ ============
See notes to the financial statements.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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BALANCE SHEET
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DECEMBER 31, 1999 EXHIBIT A
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LIABILITIES AND PARTNERS' EQUITY
--------------------------------
LIABILITIES APPLICABLE TO INVESTMENT
IN REAL ESTATE HELD FOR LEASE
Long-term debt (note 5) $ 1,000,326
Accrued partnership reporting fee
(Note 6) 5,000
Due to related parties (note 6) 27,513
Construction costs payable 397,749
------------
TOTAL LIABILITIES APPLICABLE
----------------------------
TO INVESTMENT IN REAL ESTATE
----------------------------
HELD FOR LEASE $ 1,430,588
-------------- ------------
PARTNERS' EQUITY (Exhibit C) $ 6,605,886
---------------- ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 8,036,474
-------------------------------------- ============
See notes to the financial statements.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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STATEMENT OF OPERATIONS
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YEAR ENDED DECEMBER 31, 1999 EXHIBIT B
---------------------------- ---------
INCOME
------
Interest income $ 117,357
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NET INCOME BEFORE PARTNERSHIP EXPENSE $ 117,357
-------------------------------------
PARTNERSHIP EXPENSE
-------------------
Partnership Reporting Fee (5,000)
-------------
NET INCOME $ 112,357
---------- =============
See notes to the financial statements.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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STATEMENT OF PARTNERS' EQUITY
-----------------------------
YEAR ENDED DECEMBER 31, 1999 EXHIBIT C
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<TABLE>
General Limited
Partner Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
PARTNERS' EQUITY, JANUARY 1, 1999 $ 83,031 $ 6,446,998 $ 6,530,029
---------------------------------
DISTRIBUTIONS (36,500) - (36,500)
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NET INCOME FROM OPERATIONS
--------------------------
(Exhibit B) 117,308 (4,951) 112,357
------------ ------------ ------------
PARTNERS' EQUITY, DECEMBER 31, 1999
-----------------------------------
(Exhibit A) $ 163,839 $ 6,442,047 $ 6,605,886
============ ============ ============
</TABLE>
See notes to the financial statements.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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STATEMENT OF CASH FLOWS
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YEAR ENDED DECEMBER 31, 1999 EXHIBIT D
---------------------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Net Income $ 112,357
------------
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Increase in Accrued Partnership Reporting Fee $ 5,000
------------
TOTAL ADJUSTMENTS $ 5,000
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 117,357
----------------------------------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Payments for Construction in Progress $(5,813,701)
Payments for Capitalized Costs (153,344)
------------
NET CASH (USED IN) INVESTING ACTIVITIES $(5,967,045)
--------------------------------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Increase in Due to Related Parties $ 27,513
Proceeds From Long-term Debt 1,000,326
Decrease in Construction Costs Payable (1,022,202)
Capital Distributions (36,500)
Decrease in Construction Escrow 5,541,788
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 5,510,925
----------------------------------------- ------------
NET INCREASE IN CASH $ (338,763)
--------------------
CASH - BEGINNING OF YEAR 347,748
------------------------ ------------
CASH - END OF YEAR $ 8,985
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
-------------------------------------------------
Cash Paid During the Year For:
Interest (Net of Amount Capitalized) $ -
============
See notes to the financial statements.
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MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1999
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NOTE 1 - ORGANIZATION
------------
The partnership was formed as a limited partnership under the
laws of the State of Illinois on April 21, 1998, for the
purpose of constructing and operating a rental housing
project. The project consists of 115 units located in Carbon
Cliff, Illinois, and will operate under the name of Mansur
Wood Living Center.
The project is expected to qualify for the Low-Income Housing
Tax Credit established by the Tax Reform Act of 1986.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A summary of the Partnership's significant accounting policies
consistently applied in the preparation of the accompanying
financial statements follows:
CAPITALIZATION AND DEPRECIATION
-------------------------------
Land, building and improvements are recorded at cost.
Improvements are capitalized, while expenditures for
maintenance and repairs will be charged to expense as
incurred. Upon disposal of depreciable property, the
appropriate property accounts will be reduced by the related
costs and accumulated depreciation. Interest expense
capitalized in 1999 amounts to $13,125.
Depreciation is provided for in amounts sufficient to relate
the cost of depreciable assets to operations over their
estimated service lives. The estimated service life of the
assets for depreciation purposes may be different than their
actual economic useful lives.
Estimated Life Method
-------------- ------
Land - None
Building and Improvements 27.5 Years Straight-line
Furniture and Fixtures Various Macrs
RENTAL INCOME AND PREPAID RENTS
-------------------------------
Rental income will be recognized for apartment rentals as it
accrues. Advance receipts of rental income will be deferred or
classified as liabilities until earned.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1999
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
------------------------------------------
AMORTIZATION
------------
Mortgage costs are amortized over the term of the mortgage loan using
the straight-line method.
INCOME TAXES
------------
No provision or benefit for income taxes has been included in these
financial statements since taxable income passes through to, and is
reportable by, the partners individually.
ESTIMATES
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 3 - CASH
----
The Partnership maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Partnership has not
experienced any losses in such accounts. The Partnership believes it is
not exposed to any significant credit risk on cash.
NOTE 4 - PARTNERS' CAPITAL CONTRIBUTIONS
-------------------------------
The Partnership has one General Partner, Elderly Living Development,
Inc. which has a 1% interest and one Limited Partner, WNC Housing Tax
Credit Fund VI, L.P. Series 5, which has a 98.99% interest and one
Special Limited Partner, WNC Housing, L.P., which has a .01% interest.
Contributions under the terms of the Partnership Agreement are subject
to adjustment depending on certain conditions being met, primarily
related to the amount and timing of low-income housing tax credits the
Partnership is able to obtain.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1999
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NOTE 5 - LONG-TERM DEBT
--------------
MORTGAGE PAYABLE
----------------
The construction loan dated
December 9, 1998 is for the
maximum amount of $4,300,000 and
bears interest at 210 basis points
over the Federal Home Loan Bank
CIP year note. The interest rate
at December 31, 1999 was 8.41%.
The construction loan matures on
December 9, 2000. Collateralized
by real estate and personal property. $ 1,000,326
=============
Aggregate maturities of long-term debt for the next five years are as
follows:
December 31, 2000 $ 1,000,326
=============
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
------------------------------------------------
The General Partner will be entitled to a development fee in the amount
of $1,350,000, of which $700,000 has been earned and paid in 1999.
The apartment project is managed by, Heartland MGT., Inc., an affiliate
of the General Partner. No management fee was earned or paid to
Heartland MGT., Inc. as of December 31, 1999. During 1999, Heartland
MGT., Inc. had advanced salaries and benefits pertaining to the
start-up of the Project in the amount of $27,513. The amount due
Heartland MGT., Inc. at December 31, 1999 amounts to $27,513.
The Partnership is to pay the Managing General Partner, Elderly Living
Development, Inc. an incentive management fee equal to 70% of the net
operating income remaining after reduction for the payments made for
the partnership reporting fee, developer fee, and operating loans. This
fee is payable 75 days after year-end. If the fee is not paid in any
given year it cannot be accrued in the subsequent year. Incentive
management fee for 1999 amounts to $ -0-.
The Partnership is to pay a fee to the Limited Partner in the amount of
$5,000 a year for monitoring the operations of the partnership and for
services in connection with the Partnership's accounting matters. The
fee is payable within 75 days after the year end from net operating
income. The balance due WNC Housing Tax Credit Fund VI, Series 5 at
December 31, 1999 amounts to $5,000.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1999
-----------------
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES - (Continued)
------------------------------------------------
The Partnership Agreement provides for various obligations of the
General Partner, including its obligation to provide funds for any
development and operating deficits.
Amounts due Heartland MGT., Inc., an affiliate of the General Partner
at December 31, 1999 is as follows:
Salaries and Benefits $ 27,513
=========
Amounts due Limited Partner at December 31, 1999 is as follows:
Partnership Reporting Fee $ 5,000
=========
NOTE 7 - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
------------------------------------------------
All profits and losses are allocated 1% to each of the General Partner,
98.99% to the Limited Partner and .01% to the Special Limited Partner.
However, the General Partner and Limited Partners have agreed, in
writing, to allocate 100% of the interest income earned on the
construction escrow (Note 10) to the General Partner. In conjunction
with this allocation, the General Partner is permitted to receive, as a
distribution, an amount sufficient to cover any tax liability incurred
as a result of this allocation.
Distributable cash flow, as defined by the Partnership Agreement, is
distributable 50% to the General Partner and 50% to the Limited
Partners.
Gain, if any, from a sale or exchange or other disposition of the
property owned by the Partnership is allocable as follows:
1. To all partners having negative balances in their capital
accounts prior to the distribution of any sale or refinancing
proceeds, an amount of such gain to increase their negative
balance to zero.
2. 98.99% to the Limited Partner and .01% to the Special Limited
Partner until the Limited Partners have received amounts equal
to their gross capital contributions.
3. To the General Partner until the General Partner has received
amounts equal to its gross capital contribution.
4. The remainder of such gain, if any, 50% to the Limited
Partners and 50% to the General Partner.
<PAGE>
MANSUR WOOD ELDERLY LIVING CENTER, L. P.
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NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 1999
-----------------
NOTE 8 - CAPITALIZED COSTS
-----------------
The costs incurred to obtain financing and fees relating to
organization, as well as certain start-up costs, of the project
partnership have been capitalized and will be amortized as described
below beginning in the first year of operations:
Amortization
Period
------------
Organization and
Start-up Costs 1 Year $ 50,554
Financing Costs
and Tax Credit
Fees 6.5-20 Years 102,790
------------
TOTAL $ 153,344
----- ============
NOTE 9 - RESTRICTED ESCROW DEPOSITS AND RESERVES
---------------------------------------
According to the partnership, loan and other regulatory agreements, the
Partnership is required to maintain the following escrow deposits and
reserves; real estate tax and insurance escrow, working capital escrow
and operating maintenance reserve. The escrow deposits and reserves
will be funded when construction is complete and apartment lease-up
begins.
NOTE 10 - CONSTRUCTION ESCROW
-------------------
Releases from the construction escrow are restricted based on the
performance of certain events as described in the Partnership
Agreement.
