<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
November 30, 1995
----------------------------------------------------------------
Date of Report (Date of Earliest Event Reported)
CONTINENTAL MORTGAGE AND EQUITY TRUST
----------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
California 0-10503 94-2738844
- --------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
----------------------
Not Applicable
--------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Form 8-K/A amends a Form 8-K Current Report dated November 30, 1995 and
filed December 27, 1995 by Continental Mortgage and Equity Trust (the "Trust")
and provides required financial statements that were not available at the date
of the original filing.
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1994 and the nine months ended September 30, 1995. A pro forma balance
sheet as of September 30, 1995 is also presented.
A summary of the pro forma transactions follows:
In November 1995, the Trust purchased Willow Wick Apartments, a 104 unit
apartment complex in North Augusta, South Carolina for $1.5 million, exclusive
of commissions and closing costs. The Trust paid $595,000 in cash and assumed
the existing first mortgage in the amount of $930,000. The mortgage bears
interest at a rate of 7% per annum, requires monthly payments of principal and
interest of $8,000 and matures in January 2013.
In December 1995, the Trust purchased Heritage on the River Apartments, a 301
unit apartment complex in Jacksonville, Florida for $7.9 million, exclusive of
commissions and closing costs. The Trust paid $1.4 million in cash, assumed
the existing first mortgage in the amount of $6.3 million and the seller
provided additional financing in the amount of $193,000. The mortgages bear
interest at a variable rate, currently 9.18% per annum, require monthly
payments of interest only and mature in December 1998.
The combined $9.4 million purchase price of Willow Wick and Heritage on the
River Apartments is approximately 5.1% of the Trust's consolidated assets at
December 31, 1994. Although not a significant acquisition in themselves, when
aggregated with the other acquisitions completed by the Trust in 1995 as
described below, such acquisitions constitute a significant acquisition.
In addition to the Willow Wick and Heritage on the River Apartments
acquisitions discussed above, the Trust purchased two other apartment complexes
and two commercial properties in 1995. The properties, located in Virginia,
Texas and Florida, were purchased for a total of $26.0 million in separate
transactions from unaffiliated sellers, and represent approximately 14.2% of
the Trust's consolidated assets at December 31, 1994. The Trust paid a total
of $5.1 million in cash and financed the remainder of the purchase prices. The
mortgages bear interest at rates ranging from 6.0% to 9.9% and mature from 1997
to 2002.
The pro forma statements of operations present the Trust's operations as if the
transactions described above had occurred at the beginning of each of the
periods presented.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial statements of property acquired:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ---------------------------------------------------------------------------------------------------------
<S> <C>
99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct Operating Expenses for the year
ended December 31, 1994.
99.1 Willow Wick Apartments Audited Financial Statements for the year ended December 31, 1994.
</TABLE>
3
<PAGE> 4
CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Heritage on
Willow Wick the River
Actual Apartments(1) Apartments(1) Pro forma
---------- ---------- ---------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Assets
------
Notes and interest receivable
Performing..................... $ 4,344 $ - $ - $ 4,344
Nonperforming, nonaccruing..... 4,456 - - 4,456
----------- ---------- -------- ----------
8,800 - - 8,800
Real estate held for sale, net of
accumulated depreciation....... 25,333 - - 25,333
Less - allowance for estimated
losses......................... (9,207) - - (9,207)
----------- ---------- -------- ----------
24,926 - - 24,926
Real estate held for investment,
net of accumulated depreciation 150,024 1,525 7,940 159,489
Investments in marketable equity
securities of affiliates, at
market......................... 4,824 - - 4,824
Investments in partnerships..... 12,248 - - 12,248
Cash and cash equivalents....... 6,954 (595) (1,439) 4,920
Other assets.................... 5,665 - - 5,665
----------- ---------- -------- ----------
$ 204,641 $ 930 $ 6,501 $ 212,072
=========== ========== ======== ==========
</TABLE>
4
<PAGE> 5
CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
CONSOLIDATED BALANCE SHEET - Continued
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Heritage on
Willow Wick the River
Actual Apartments(1) Apartments(1) Pro forma
---------- ---------- ---------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities
Notes and interest payable....... $ 121,920 $ 930 $ 6,501 $ 129,351
Other liabilities................ 5,848 - - 5,848
----------- ------------ ---------- ----------
127,768 930 6,501 135,199
Commitments and contingencies
Shareholders' equity
Shares of Beneficial Interest,
no par value; authorized shares,
unlimited; issued and out-
standing, 2,918,100 shares...... 8,766 - - 8,766
Paid-in capital.................. 260,060 - - 260,060
Accumulated distributions in
excess of accumulated earnings. (195,053) - - (195,053)
Net unrealizable gains on market-
able equity securities.......... 3,100 - - 3,100
----------- ------------ ---------- ----------
76,873 - - 76,873
----------- ------------ ---------- ----------
$ 204,641 $ 930 $ 6,501 $ 212,072
=========== ============ ========== ==========
</TABLE>
- ---------------------------------
(1) Assumes acquisition of Willow Wick and Heritage on the River
Apartments by the Trust on January 1, 1995. The effects of all other
1995 property purchases are included in the September 30, 1995 actual
balances.
5
<PAGE> 6
CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Heritage on
Willow Wick the River Other Property
Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma
---------- ----------- ---------- ------------ -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Income
Rentals...................... $ 27,318 $ 339 $ 1,202 $ 1,306 $ 30,165
Interest..................... 600 - - - 600
Equity in income of
partnerships............... 213 - - - 213
----------- -------- ----------- --------- -----------
28,131 339 1,202 1,306 30,978
Expenses
Property operations.......... 16,456 222 728 712 18,118
Interest..................... 6,998 49 448 555 8,050
Depreciation................. 3,133 23 119 148 3,423
Advisory fee to affiliate.... 1,139 - - - 1,139
General and administrative... 928 - - - 928
Provision for losses......... 541 - - - 541
----------- -------- ----------- --------- -----------
29,195 294 1,295 1,415 32,199
----------- -------- ----------- --------- -----------
Net income (loss)............. $ (1,064) $ 45 $ (93) $ (109) $ (1,221)
=========== ======== =========== ========= ===========
Earnings per share
Net (loss)................... $ (.36) $ (.42)
=========== ===========
Shares of beneficial interest
outstanding.................. 2,918,114 2,918,114
=========== ===========
</TABLE>
- -------------------------
(1) Assumes acquisition by the Trust on January 1, 1995.
6
<PAGE> 7
CONTINENTAL MORTGAGE AND EQUITY TRUST
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Heritage on
Willow Wick the River Other Property
Actual Apartments(1) Apartments(1) Acquisitions(1) Pro forma
---------- ----------- ---------- ------------ -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Income
Rentals...................... $ 27,042 $ 452 $ 1,603 $ 4,017 $ 33,114
Interest..................... 2,699 - - - 2,699
Other........................ (479) - - - (479)
----------- -------- ----------- --------- -----------
29,262 452 1,603 4,017 35,334
Expenses
Property operations.......... 16,888 296 971 1,708 19,863
Interest..................... 7,711 65 597 1,622 9,995
Depreciation................. 3,214 30 159 570 3,973
Advisory fee to affiliate.... 1,326 - - - 1,326
General and administrative... 1,235 - - - 1,235
Provision for losses......... 1,429 - - - 1,429
----------- -------- ----------- --------- -----------
31,803 391 1,727 3,900 37,821
----------- -------- ----------- --------- -----------
Income (loss) before gain on
sale of real estate.......... (2,541) 61 (124) 117 (2,487)
Gain on sale of real estate... 1,708 - - - 1,708
----------- -------- ----------- --------- -----------
Net income (loss)............. $ (833) $ 61 $ (124) $ 117 $ (779)
=========== ======== =========== ========= ===========
Earnings per share
(Loss) before gain on sale of
real estate.................. $ (.87) $ (.85)
Gain on sale of real estate.. .58 .58
----------- -----------
Net (loss)................... $ (.29) $ (.27)
=========== ===========
Shares of beneficial interest
outstanding.................. 2,919,815 2,919,815
=========== ===========
</TABLE>
- ----------------------------
(1) Assumes acquisition by the Trust on January 1, 1994.
7
<PAGE> 8
SIGNATURE
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 hereto duly authorized.
CONTINENTAL MORTGAGE AND
EQUITY TRUST
Date: January 12, 1996 By: /s/ Thomas A. Holland
------------------------ ---------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
8
<PAGE> 9
CONTINENTAL MORTGAGE AND EQUITY TRUST
EXHIBIT TO ITS
CURRENT REPORT ON FORM 8-K/A
Dated November 30, 1995
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- -------------------------------------------------------------------------------- ------
<S> <C> <C>
99.0 Heritage on the River Apartments Audited Statement of Revenues and Direct 10
Operating Expenses for the year ended December 31, 1994.
99.1 Willow Wick Apartments Audited Financial Statements for the year ended 15
December 31, 1994.
</TABLE>
9
<PAGE> 1
EXHIBIT 99.0
Heritage on the River Apartments
================================================================================
Statement of Revenues and
Direct Operating Expenses
Year Ended December 31, 1994
10
<PAGE> 2
Heritage on the River Apartments
Contents
================================================================================
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants 2
Financial Statement
Statement of revenue and direct operating expenses 3
Notes to statement of revenue and direct operating expenses 4
</TABLE>
11
<PAGE> 3
Independent Auditors' Report
To the Board of Trustees
Continental Mortgage and Equity Trust
We have audited the accompanying statement of revenue and direct operating
expenses of Heritage on the River Apartments (a real estate project) for the
year ended December 31, 1994. This financial statement is the responsibility
of the management of Heritage on the River Apartments. Our responsibility is
to express an opinion on this financial statement 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 historical summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the historical summary. 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 out audit provides a reasonable basis
for our opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the form 8-K of Continental Mortgage and Equity Trust) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations of Heritage on the River Apartments.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and direct operating expenses of Heritage on
the River Apartments, for the year ended December 31, 1994, in conformity with
generally accepted accounting principles.
BDO Seidman, LLP
December 20, 1995
12
2
<PAGE> 4
Heritage on the River Apartments
Statement of Revenues and Direct Operating Expenses
Year Ended December 31, 1994
================================================================================
<TABLE>
<S> <C>
Revenues
Rental revenues $1,524,095
Other (Note 2) 78,552
------------------------------------------------------------------------------------------------------------------
Total revenues 1,602,647
------------------------------------------------------------------------------------------------------------------
Operating expenses
Payroll and related expenses 294,864
Repairs and maintenance 155,207
Utilities 149,668
Property taxes 130,200
Management fees (Note 3) 80,132
Property management 52,705
Administrative 43,546
Contract services 34,830
Insurance 29,952
------------------------------------------------------------------------------------------------------------------
Total direct operating expenses 971,104
------------------------------------------------------------------------------------------------------------------
Revenues in excess of direct operating expenses $ 631,543
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
13
3
<PAGE> 5
Heritage on the River Apartments
Notes to Statement of Revenues and Direct Operating Expenses
================================================================================
1. Basis of Presentation Heritage on the River Apartments is a
residential apartment complex located in
Jacksonville, Florida. There is a total of 310
rentable units. For the year ended December
31, 1994, and through the period ended
December 20, 1995, the property was owned by
Lifton-MAQ Associates. On December 20, 1995,
the property was acquired by Continental
Mortgage and Equity Trust.
The accompanying financial statement has been
prepared to substantially comply with the rules
and regulations of the Securities and Exchange
Commission for business combination accounted
for as a purchase. The statement of revenues
and direct operating expenses does not include
certain historical expenses, such as
depreciation and amortization, interest expense
or income taxes. Accordingly, this summary is
not intended to be a complete presentation of
the results of operations.
2. Other Income Other income consists of revenue for laundry,
late fees and vending.
3. Management Fees The property has a management agreement with
an affiliate Lifton-MAQ Associates. This
agreement requires Lifton-MAQ Associates to
pay 5% of gross revenues as a management fee.
14
4
<PAGE> 1
EXHIBIT 99.1
LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
FINANCIAL REPORT
DECEMBER 31, 1994
15
<PAGE> 2
WILLOW WICK ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
DECEMBER 31, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GENERAL PARTNERS' CERTIFICATION 1
MANAGEMENT AGENT'S CERTIFICATION 2
INDEPENDENT AUDITOR'S QUALIFICATIONS 3
INDEPENDENT AUDITOR'S REPORT 4
FINANCIAL STATEMENTS
Classified Balance Sheet 5/6
Statement of Profit and Loss (Form HUD-92410) 7/9
Statement of Changes in Partners' Capital 10
Statement of Cash Flows 11/12
NOTES TO FINANCIAL STATEMENTS 13/15
SUPPLEMENTARY INFORMATION
Analysis of Accounts Receivable 16
Mortgage Escrow Deposits 17
Analysis of Restricted Deposits 18
Schedule of Funds in Financial Institutions 19
Computation of Surplus Cash, Distributions
and Residual Receipts (Form HUD-93486) 20
Analysis of Accounts Payable and Accrued Expenses 21
Changes in Fixed Asset Accounts 22
Compensation of Partners 23
Schedule of Unauthorized Distributions
of Project Income 24
Schedule of Findings 25
INDEPENDENT AUDITOR'S REPORT ON INTERNAL
CONTROL STRUCTURE 26/28
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO
MAJOR HUD PROGRAMS 29
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO
AFFIRMATIVE FAIR HOUSING 30
</TABLE>
16
<PAGE> 3
WILLOW WICK ASSOCIATES LIMITED
PARTNERSHIP HUD PROJECT NO. 054-35130
GENERAL PARTNERS' CERTIFICATION
DECEMBER 31, 1994
We hereby certify that we have examined the accompanying financial
statements and supplementary information of WILLOW WICK ASSOCIATES LIMITED
PARTNERSHIP, EIN 59-2445708 and, to the best of our knowledge and belief, the
same is complete and accurate.
GENERAL PARTNER:
/s/ MARK A. WERNER 2/23/95
- -------------------------------- ------------------
REALTY MANAGEMENT GROUP, INC., DATE
SOLE GENERAL PARTNER
17
<PAGE> 4
[LOGO]
REALTY
MANAGEMENT
GROUP, INC.
We hereby certify that we have examined the accompanying financial
statements and supplemental data of WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP,
EIN 59-2445708 and, to the best of our knowledge and belief, the same is
complete and accurate.
/s/ MARK A. WERNER
- ---------------------------------
Mark A. Werner, President February 20, 1995
Realty Management Group, Inc.
and
Responsible Project Manager for
Willow Wick Apartments
9250 Cypress Green Drive, Suite 104 - Jacksonville, Florida 32256
FAX: (904) 731-4369 OFFICE: (904) 731-4366
18
<PAGE> 5
WILLOW WICK ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
INDEPENDENT AUDITOR'S QUALIFICATIONS
DECEMBER 31, 1994
Independent Auditor's Qualifications
The Independent Auditor, James E. Bullard, CPA, 9471-308 Baymeadows Road,
Jacksonville, Florida 32256, whose Federal Employer Identification Number is
59-1321288, is a duly licensed Certified Public Accountant in the State of
Florida, Florida Certification Number 2572 dated October 8, 1969, such
licensure being consistent with HUD's requirement that the Independent Auditor
be a licensed Certified Public Accountant in his state of domicile. Since all of
the auditing services rendered in connection with examination of the
accompanying financial statements were rendered in Florida, the permanent
office of the Partnership, there is no requirement for the Independent Auditor
to be licensed by the State of South Carolina.
19
<PAGE> 6
James E. Bullard
Certified Public Accountant
9471 Baymeadows Road
Suite 308
Jacksonville, Florida 32256
--------------
(904) 636-9997
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Willow Wick Associates Limited Partnership
Jacksonville, Florida
I have audited the accompanying balance sheet of Willow Wick Associates Limited
Partnership, HUD Project No. 054-35130 as of December 31, 1994, and the related
statement of operations and partners' capital, and of cash flows for the year
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willow Wick Associates Limited
Partnership, HUD Project No. 054-35130, as of December 31, 1994, and the
results of its operations and changes in partners' capital and cash flows for
the year then ended in conformity with generally accepted accounting
principles.
My audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information included in the report
(shown on pages 16 to 25) are presented for the purposes of additional analysis
and are not a required part of the basic financial statements of Willow Wick
Associates Limited Partnership, HUD Project NO. 054-35130. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in my opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/ JAMES E. BULLARD, CPA
February 20, 1995
20
<PAGE> 7
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
CLASSIFIED BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
CURRENT ASSETS:
1110 Petty cash $ 300
1120 Cash in bank 26,298
1130 Accounts receivable - tenants 3,235
----------
29,833
1191 TENANT SECURITY DEPOSITS
HELD IN TRUST 12,940
PREPAID EXPENSES:
1240 Prepaid property insurance 18,460
1250 Prepaid mortgage insurance 401
----------
18,861
RESTRICTED DEPOSITS AND FUNDED RESERVES:
1310 Mortgage escrow deposits 24,191
1320 Reserve for replacements 22,206
----------
46,397
PROPERTY AND EQUIPMENT:
1410 Land 200,000
1420 Buildings 1,530,424
1430 Building equipment - fixed 208,000
----------
1,938,424
Less: Accumulated depreciation (673,286)
----------
1,265,138
OTHER ASSETS:
1900 Syndication costs 15,903
----------
15,903
----------
TOTAL ASSETS $1,389,072
==========
</TABLE>
21
<PAGE> 8
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
CLASSIFIED BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
2110 Accounts payable - trade $ 63,583
2120 Accrued wages payable 2,152
2130 Accrued interest- first
mortgage 5,559
2131 Accrued interest - other 18,036
2210 Prepaid rents 440
2320 Mortgage payable - current
portion 27,195
---------
116,965
DEPOSIT LIABILITY:
2191 Tenant security deposits 12,940
LONG-TERM LIABILITIES:
2310 Note payable 300,608
2320 Mortgage payable - net of
current portion 925,697
----------
Total Liabilities 1,356,210
----------
3130 PARTNERS' CAPITAL 32,862
----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $1,389,072
==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
22
<PAGE> 9
<TABLE>
<S> <C> <C>
STATEMENT OF U.S. DEPARTMENT OF HOUSING
PROFIT AND LOSS AND URBAN DEVELOPMENT
Office of Housing
Federal Housing Commissioner OMB Approval No. 2502-0052 (EXP. 1/31/95)
- ------------------------------------------------------------------------------------------------------------------------------------
Public Reporting Burden for this collection of information is estimated to average 1.0 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management Officer, Office of Information Policies and Systems, U.S.
Department of Housing and Urban Development, Washington, D.C. 20410-3600 and to the Office of Management and Budget, Paperwaste
Reduction Project (2502-0052), Washington, D.C. 20503. Do not send this completed form to either of these addressees.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Monthly/Period Ending: Project Number: Project Name:
Beginning:
<S> <C> <C> <C>
1/1/94 12/31/94 054-35130 WILLOW WICK APARTMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PART I Description of Account Acct. No. Amount*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Apartments or Member Carrying Charges (Coops) 5120 $ 538,765
Tenant Assistance Payments 5121 $
Furniture and Equipment 5130 $
RENTAL Stores and Commercial 5140 $
INCOME Garage and Parking Spaces 5170 $
5100 Flexibility Subsidy Income 5180 $
Miscellaneous (specify) 5190 $
TOTAL RENT REVENUE Potential at 100% Occupancy $ 538,765
- ------------------------------------------------------------------------------------------------------------------------------------
Apartments 5220 ( 72,078)
Furniture and Equipment 5230 ( 254)
VACANCIES Stores and Commercial 5240 ( )
5200 Garage and Parking Spaces 5270 ( )
Miscellaneous (specify) CONCESSIONS 5290 ( 31,539)
TOTAL VACANCIES ( 103,871)
- ------------------------------------------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies $ 434,894
ELDERLY AND CONGREGATE SERVICES INCOME -- 5300
TOTAL SERVICE INCOME (Schedule Attached) 5300 $
Interest Income - Project Operations 5410 $ 395
FINANCIAL Income from Investments - Residual Receipted 5430 $
REVENUE Income from Investments - Reserve for Replacement 5440 $ 1,118
5400 Income from Investments - Miscellaneous 5490 $
TOTAL FINANCIAL REVENUE $ 1,513
- ------------------------------------------------------------------------------------------------------------------------------------
Laundry and Vending 5910 $ 4,765
NSF and Late Charges 5920 $ 2,180
OTHER Damages and Cleaning Fees 5930 $
REVENUE Forfeited Tenant Security Deposits 5940 $ 5,992
5900 Other Revenue (specify) PET FEES, OTHER 5990 $ 3,013
TOTAL OTHER REVENUE $ 15,950
TOTAL REVENUE $ 452,357
- ------------------------------------------------------------------------------------------------------------------------------------
Advertising 6210 $ 11,519
Other Administrative Expense 6250 $
ADMINISTRATIVE Office Salaries 6310 $ 22,595
EXPENSES Office Supplies 6311 $ 6,071
6200/6300 Office or Model Apartment Rent 6312 $
Management 6320 $ 27,353
Manager or Superintendent Salaries 6330 $
Manager or Superintendent Rent Free Unit 6331 $ 2,872
Legal Expenses (Project) 6340 $ 123
Auditing Expenses (Project) 6350 $ 3,750
Bookkeeping Fees/Accounting Services 6351 $
Telephone and Answering Service 6360 $ 7,551
Bad Debts 6370 $
Miscellaneous Administrative Expenses (specify) PAGE 9 6390 $ 7,171
TOTAL ADMINISTRATIVE EXPENSES $ 89,005
- ------------------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
UTILITIES Electricity (Light and Misc. Power) 6450 $ 15,439
EXPENSE Water / SEWER 6451 $ 22,499
6400 Gas 6452 $ 1,869
Sewer 6453 $
TOTAL UTILITIES EXPENSE $ 39,807
- ------------------------------------------------------------------------------------------------------------------------------------
* All Amounts must be rounded to the nearest dollar; Page 1 of 2 -7- form HUD-92410 (7/91)
$.50 and over, round up - $.49 and below, round down. ref Handbook 4370.2
</TABLE>
23
<PAGE> 10
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janitor and Cleaning Payroll 6510 $ 1,338
Janitor and Cleaning Supplies 6515 $ 664
Janitor and Cleaning Contract 6517 $ 2,560
Exterminating Payroll/Contract 6519 $
Exterminating Supplies 6520 $ 1,424
OPERATING Garbage and Trash Removal 6525 $ 13,919
AND Security Payroll/Contract 6530 $
MAINTENANCE Grounds Payroll 6535 $
6500 Grounds Supplies 6536 $ 892
Grounds Contract 6537 $ 13,477
Repairs Payroll 6540 $ 37,704
Repairs Material 6541 $
Repairs Contract 6542 $
Elevator Maintenance/Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 2,656
Swimming Pool Maintenance/Contract 6547 $ 1,107
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $
Decorating Supplies 6561 $
Other 6570 $
Miscellaneous Operating and Maintenance Expenses PAGE 9 6590 $ 21,456
TOTAL OPERATING AND MAINTENANCE EXPENSES $ 97,197
- ------------------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 46,000
Payroll Taxes (FICA) 6711 $ 6,633
TAXES Miscellaneous Taxes, Licenses and Permits 6719 $ 1,037
AND Property and Liability Insurance (Hazard) 6720 $ 7,835
INSURANCE Fidelity Bond Insurance 6721 $
6700 Workmen's Compensation 6722 $ 3,983
Health Insurance and Other Employee Benefits 6723 $ 4,446
Other Insurance (specify) 6729 $
TOTAL TAXES AND INSURANCE $ 69,934
- ------------------------------------------------------------------------------------------------------------------------------------
Interest on Bonds Payable 6810 $
Interest on Mortgage Payable 6820 $ 66,488
FINANCIAL Interest on Notes Payable (Long-Term) 6830 $
EXPENSES Interest on Notes Payable (Short-Term) 6840 $
6800 Mortgage Insurance Premium/Service Charge 6850 $ 4,823
Miscellaneous Financial Expenses 6890 $
TOTAL FINANCIAL EXPENSES $ 71,311
- ------------------------------------------------------------------------------------------------------------------------------------
ELDERLY & TOTAL SERVICE EXPENSES - Schedule Attached 6900 $
CONGREGATE TOTAL COST OF OPERATIONS BEFORE DEPRECIATION $ 367,254
SERVICE PROFIT (LOSS) BEFORE DEPRECIATION $ 85,103
EXPENSES Depreciation (Total) - 6600 (specify) 6600 66,829 $ 66,829
6900 Operating Profit or (Loss) $ 18,274
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OR Officer Salaries 7110 $
MORTGAGOR Legal Expenses (Entity) 7120 $ 10,813
ENTITY Taxes (Federal-State-Entity) 7130-32 $
EXPENSES Other Expenses (Entity) PAGE 9 7190 $ 43,718
7100 TOTAL CORPORATE EXPENSES $ 54,531
NET PROFIT OR (LOSS) $ (36,257)
- ------------------------------------------------------------------------------------------------------------------------------------
WARNING: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C. 3729, 3802)
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190,
5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule
describing or explaining the miscellaneous income or expenses.
- ------------------------------------------------------------------------------------------------------------------------------------
PART II
- ------------------------------------------------------------------------------------------------------------------------------------
1. Total principal payments required under the mortgage, even if payments under a Workout
Agreement are less or more than those required under the mortgage. $ 27,195
- ------------------------------------------------------------------------------------------------------------------------------------
2. Replacement Reserve deposits required by the Regulatory Agreement or Amendments thereto,
even if payments may be temporarily suspended or waived. $ 10,320
- ------------------------------------------------------------------------------------------------------------------------------------
3. Replacement of Painting Reserve releases which are included as expense items on this
Profit and Loss statement $ NONE
- ------------------------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are
included as expense items on this Profit and Loss Statement. $ NONE
- ------------------------------------------------------------------------------------------------------------------------------------
Page 2 of 2 -8- form HUD-92410 (7/91)
ref Handbook 4370.2
</TABLE>
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
24
<PAGE> 11
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
FORM HUD-92410 - ACCOUNT DETAIL
DECEMBER 31, 1994
<TABLE>
<S> <C>
MISCELLANEOUS ADMINISTRATIVE EXPENSE (A/C 6390):
Seminars and meetings $ 1,156
Travel and related expenses 2,264
Miscellaneous 451
Credit checks 1,214
Leasing 690
Employee relations 1,396
---------
$ 7,171
=========
MISCELLANEOUS MAINTENANCE EXPENSES (A/C 6590):
Appliance repairs, maintenance
and replacements $1,145
Carpet cleaning, repairs and
replacements 5,459
Casual labor - maintenance 1,033
Electric repairs 1,131
Fire protection supplies 376
Painting supplies and contract 4,339
Plumbing repairs 3,655
Roof repairs 1,407
Small tools 1,133
Uniforms 762
Glass/locks 1,016
---------
$ 21,456
=========
OTHER ENTITY EXPENSE (A/C 7190):
General Partner fees $ 6,610
Interest - 2nd mortgage 36,072
Tax preparation fees 600
Travel 436
---------
$ 43,718
=========
</TABLE>
25
<PAGE> 12
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
Partners' Capital - January 1, 1994
(restated) $ 69,119
Net loss (36,257)
--------
Partners' Capital - December 31, 1994 $ 32,862
========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
26
<PAGE> 13
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Rental receipts $ 424,688
Interest receipts 1,513
Other receipts 15,950
-----------
442,151
-----------
Management fees (14,814)
Administrative expenses (32,017)
Utilities (38,401)
Salaries and wages (64,474)
Operating and maintenance (48,507)
Real estate taxes (46,000)
Property insurance (4,279)
Miscellaneous taxes and insurance (20,812)
Interest on mortgage note (67,674)
Entity expenses (49,729)
-----------
(386,707)
-----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 55,444
-----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of fixed assets (79,314)
Deposits in reserve
for replacements (11,438)
Withdrawals from reserve
for replacements 11,739
-----------
NET CASH USED IN INVESTING
ACTIVITIES (79,013)
-----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on mortgage note (25,362)
-----------
NET CASH USED IN FINANCING ACTIVITIES (25,362)
-----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (48,931)
CASH AND CASH EQUIVALENTS:
Beginning of Period - January 1, 1994 75,529
-----------
End of Period - December 31, 1994 $ 26,598
===========
</TABLE>
27
<PAGE> 14
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
STATEMENT OF CASH FLOWS (CONTINUED)
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET LOSS $ (36,257)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation 66,829
Adjustment to restate beginning
partners capital (1,039)
Decrease (Increase) in:
Tenant security deposits held
in trust 2,440
Accounts receivable (2,975)
Prepaid insurance (11,573)
Tax and insurance escrow 2,955
Increase (Decrease) in:
Accounts payable (Note 3) 44,847
Accrued wages payable 35
Accrued interest payable (147)
Tenant security deposits payable (2,440)
Prepaid rents (7,231)
---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 55,444
=========
</TABLE>
The Notes To Financial Statements are an integral part of these statements.
28
<PAGE> 15
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
NOTES TO FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Willow Wick Associates Limited Partnership was formed in October 1984
to acquire and operate a 104-unit rental complex (The Project) located
in North Augusta, South Carolina. This project is security for a
mortgage insured by HUD under Section 221(d)(4) of the National
Housing Act, and operating methods and partners' annual distributions
are regulated by HUD pursuant to a regulatory agreement. The agreement
limits annual distributions to "surplus cash" available at the end of
each year.
Basis of Accounting
Assets, liabilities, revenues and expenses are recognized on the
accrual basis of accounting.
Fixed Assets
Property and equipment are recorded at cost. Depreciation provided in
the financial statements is computed by both accelerated and
straight-line methods applied to individual property items based on
estimated useful lives ranging from five to forty years. For Federal
income tax purposes, depreciation for buildings is calculated over an
eighteen-year recovery period.
Deferred Charges
Certain costs and fees associated with the organization and promotion
of the Partnership are non-deductible expenditures and have been
capitalized as syndication costs.
Income Taxes
No income tax provision has been included in the financial statements
since income or loss of the Partnership is required to be reported by
the respective partners on their individual income tax returns.
Reserve For Replacements
Pursuant to a regulatory agreement, The Project is required to deposit
monies monthly with the mortgagor to be used for replacements of
property and equipment approved by HUD.
29
<PAGE> 16
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
NOTES TO FINANCIAL STATEMENTS
NOTE 2: LONG-TERM DEBT
<TABLE>
<CAPTION>
Current Long-term
Portion Portion
------- ---------
<S> <C> <C>
Mortgage note payable (a) $ 27,195 $ 925,697
Note payable (b) -- 300,608
-------- ----------
$ 27,195 $1,226,305
======== ==========
</TABLE>
a) The Partnership assumed an existing mortgage note payable on December
14, 1984, in the amount of $1,141,892 bearing an interest rate of 7%
per annum on the unpaid balance. The note calls for equal monthly
payments in the amount of $7,753 including interest, through January
1, 2013. The note is insured by FHA under the FHA 221(d)(4) program.
The partnership was required to enter into a regulatory agreement with
the U.S. Department of Housing and Urban Development. The Regulatory
Agreement does not require HUD approval of rent levels.
b) The Partnership executed a promissory note on December 14, 1984 in the
amount of $300,608 bearing an interest rate of 12% per annum. Interest
is payable annually until December 14, 1994 when the principal amount
and the remaining accrued interest became due; the maturity date of
the note was extended to April 15, 1995 by agreement of the parties.
The promissory note is subordinate to the first mortgage insured by
the U.S. Department of Housing and Urban Development and payments of
interest and principal from project income can only be paid from
surplus cash as defined by the Regulatory Agreement.
Maturities of long-term debt by year are as follows:
<TABLE>
<S> <C>
1995 $ 327,803
1996 29,161
1997 31,269
1998 33,529
1999 35,953
Thereafter 795,785
-----------
$ 1,253,500
===========
</TABLE>
30
<PAGE> 17
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
NOTES TO FINANCIAL STATEMENTS
NOTE 3: IDENTITIES OF INTEREST
During 1994, the Partnership had certain transactions with third
parties who constituted Identities of Interest, including those
parties reflected in Compensation of Partners (Page 23), and the
following additional transactions:
1) The Partnership reimbursed its General Partner, Realty
Management Group, Inc. for the Apartment Project's payroll and
payroll-related items during 1994.
2) The Partnership reimbursed Realty Management Group, Inc. for
certain repair and replacement items paid on behalf of the Apartment
Project by Realty Management Group, Inc.
31
<PAGE> 18
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
ANALYSIS OF ACCOUNTS RECEIVABLE
DECEMBER 31, 1994
Accounts and Notes Receivable (other than from regular tenants):
There are no known receivables from other than regular tenants at
December 31, 1994.
Delinquent Tenant Accounts Receivable:
<TABLE>
<CAPTION>
Number of Amount
Tenants Past Due
--------- --------
<S> <C> <C>
Delinquent under 30 days 7 $ 2,395
Delinquent 31 - 60 days 3 840
Delinquent 61 - 90 days - -
Delinquent over 90 days - -
---- -------
Totals 10 $ 3,235
==== =======
</TABLE>
32
<PAGE> 19
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
MORTGAGE ESCROW DEPOSITS
DECEMBER 31, 1994
As of December 31, 1994, the estimated amounts needed for future payment of
insurance and taxes are as follows:
<TABLE>
<S> <C>
Property taxes due October 1995
(46,000 X 3/12) $ 11,500
Property insurance due December 1995
(19,418 X 1/12) 1,618
Mortgage insurance due February 1995
(4,823 X 11/12) 4,421
---------
ESTIMATED ACCRUED LIABILITY 17,539
TOTAL CONFIRMED BY MORTGAGEE 24,191
---------
SURPLUS IN DEPOSIT REQUIREMENTS $ 6,652
=========
</TABLE>
33
<PAGE> 20
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
ANALYSIS OF RESTRICTED DEPOSITS
DECEMBER 31, 1994
Tenant Security Deposits:
Tenant security deposits are held in a separate bank account in the name of the
project.
<TABLE>
<S> <C>
RESERVE FOR REPLACEMENTS
Balance - January 1, 1994 $ 22,507
Add: Deposits during year 10,320
Interest earned 1,118
Less: Withdrawals for replacement
of property (11,739)
---------
Balance - December 31, 1994 $ 22,206
=========
</TABLE>
34
<PAGE> 21
WILLOW WICK ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS
AS OF DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
A. Funds Held by Mortgagor, Regular Operating Accounts:
1. First Union National Bank of Florida,
Jacksonville, Florida
(Checking) [1] 1,111
(Checking) [1] 4,979
(Checking) [1] 18,125 $ 24,215
------
2. Nation's Bank
(Checking) [2] 2,083
B. Funds Held by Mortgagor in Trust,
Tenant Security Deposits:
1. Nation's Bank
(Checking) [2] 12,940
---------
FUNDS HELD BY MORTGAGOR, TOTAL 39,238
---------
C. Funds Held by Mortgagee, (in Trust),
by Greystone Servicing corporation, Inc.: [3]
1. Tax & Insurance escrow - various funds 24,191
2. Reserve Fund for Replacements- various funds 22,206
---------
FUNDS HELD BY MORTGAGEE, TOTAL 46,397
---------
TOTAL FUNDS IN FINANCIAL INSTITUTIONS $ 85,635
=========
</TABLE>
[1] Balances confirmed by First Union National Bank of Florida, 1/10/95
[2] Balances confirmed by Nation's Bank of Florida, 1/04/95
[3] Balances confirmed by Greystone Servicing Corporation, Inc., 1/23/95
35
<PAGE> 22
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER:
WILLOW WICK APARTMENTS 12/31/94 054-35130
- ------------------------------------------------------------------------------------------------------------------------------------
PART A-COMPUTE SURPLUS CASH
- ------------------------------------------------------------------------------------------------------------------------------------
1. Cash (Accounts 1110, 1120, 1191, 1192) $ 39,538
CASH 2. Tenant subsidy vouchers due for period covered by
financial statement $
3. Other (describe) $
(a) TOTAL CASH (Add Lines 1, 2, and 3) $ 39,538
- ------------------------------------------------------------------------------------------------------------------------------------
4. Accrued mortgage interest payable $ 5,559
5. Delinquent mortgage principal payments $
6. Delinquent deposits to reserve for replacement $
7. Accounts payable (due within 30 days) $ 63,583
CURRENT 8. Loans and notes payable - (due within 30 days) $
OBLIGATIONS 9. Deficient Tax Insurance of MIP Escrow Deposits $
10. Accrued expenses (not escrowed) $ 2,152
11. Prepaid Rents (Account 2210) $ 440
12. Tenant security deposits liability (Account 2191) $ 12,940
13. Other (Describe) $
(b) LESS TOTAL CURRENT OBLIGATIONS (Add Lines 4 through 13) $ 84,674
(c) SURPLUS CASH (DEFICIENCY)(Line (a) minus Line (b)) $ (45,136)
- ------------------------------------------------------------------------------------------------------------------------------------
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
- ------------------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $
- ------------------------------------------------------------------------------------------------------------------------------------
2a. Annual Distribution Earned During Fiscal Period
Covered by the Statement $
LIMITED 2b. Distribution Accrued and Unpaid as of the End of the
DIVIDED Prior Fiscal Period $
PROJECTS 2c. Distributions Paid During Fiscal Period Covered by
Statement $
3. Amount to be Carried on Balance Sheet as Distribution
Earned but Unpaid (Line 2a plus 2b minus 2c) $
- ------------------------------------------------------------------------------------------------------------------------------------
4. Amount Available for Distribution During Next Fiscal Period $
5. Deposit Due Residual Receipts
(Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $
- ------------------------------------------------------------------------------------------------------------------------------------
PREPARED BY REVIEWED BY
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN TECHNICIAN LOAN SERVICER
- ------------------------------------------------------------------------------------------------------------------------------------
DATE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
See Reverse for Instructions HUD-93486 (12-80)
</TABLE>
36
<PAGE> 23
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
ANALYSIS OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
DECEMBER 31, 1994
Accounts Payable (other than trade creditors):
There are no known accounts payable to other than trade creditors as of
December 31, 1994.
Accrued Taxes (Account 2150):
There are no known taxes to be accrued as of December 31, 1994.
37
<PAGE> 24
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
CHANGES IN FIXED ASSET ACCOUNTS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Description FIXED ASSETS ACCUMULATED DEPRECIATION
------------------- ---------------------------------------------- -------------------------------------------
Note
Carrying
Balance Additions Deductions Balance Balance Additions Deductions Balance Amount
---------- --------- ---------- --------- -------- --------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
410 Land $ 200,000 $ -- $ -- $ 200,00 $ -- $ -- $ -- $ -- $ 200,00
420 Buildings 1,530,424 50,166 50,166 1,530,424 519,749 50,749 50,166 520,059 1,010,365
430 Building
equipment, fixed 208,000 29,148 29,148 208,000 166,295 16,080 29,148 153,227 54,773
---------- ------- ------- ---------- -------- ------- ------- -------- ----------
Total Fixes Assets $1,938,424 $79,314 $79,314 $1,938,424 $685,771 $66,829 $79,314 $673,286 $1,265,138
========== ======= ======= ========== ======== ======= ======= ======== ==========
</TABLE>
38
<PAGE> 25
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
COMPENSATION OF PARTNERS
DECEMBER 31, 1994
Compensation of partners
The General Partner, Realty Management Group, Inc., earned management fees of
$27,353, representing six (6) per cent of project income (as defined), and
General Partner fees of $6,610 for the year ended December 31, 1994.
39
<PAGE> 26
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
SCHEDULE OF UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME
DECEMBER 31, 1994
Schedule of Unauthorized Distributions of Project Income
During 1994, the Partnership made periodic payments (without prior approval of
HUD), of the following items [all classified as entity expenses on Form 92410
(Page 8)]:
<TABLE>
<S> <C> <C>
1] Legal and professional fees (Pages 8 and 9) $ 6,611
2] General partner fees (Page 9) 6,610
3] Interest on Second Mortgage Note Payable (Page 14) 36,072
4] Travel expenses (Page 9) 436
---------
Total (Page 11) $ 49,729
=========
</TABLE>
All of the payments listed above are considered "entity" expenses, and are
payable only out of Surplus Cash as defined in the Regulatory Agreement.
Semi-annual and annual disbursements of Surplus Cash are allowable with prior
approval of HUD.
It is noted that Surplus Cash was $41,299 at December 31, 1993, all of which
could have been distributed (or used to pay entity expenses) during 1994 with
the approval of HUD.
Other than the amounts reflected above, no other unauthorized distributions of
project income were noted during the audit of the accompanying financial
statements.
40
<PAGE> 27
WILLOW WICK ASSOCIATES LIMITED PARTNERSHIP
HUD PROJECT NO. 054-35130
SCHEDULE OF FINDINGS
DECEMBER 31, 1994
Schedule of Findings
1] During 1994, the Partnership made periodic payments (without the prior
approval) of certain entity expenses (See Page 24 for details).
2] The Apartment Project continued to experience substantial vacancies
during 1994, resulting in a deteriorating financial position of the
Project at December 31, 1994.
3] Accounts payable - trade of $63,583 at December 31, 1994 represented
an increase from $18,736 at December 31, 1993.
4] The second mortgage note of $300,608 (Note 2: Long-term debt) and
interest accrued thereon matured on December 14, 1994; the maturity
date of the note was extended to April 15, 1995, by agreement of the
parties. Payment of, or a satisfactory restructuring of this obligation
is imperative for the successful continuation of the Partnership.
41
<PAGE> 28
James E. Bullard
Certified Public Accountant
9471 Baymeadows Road
Suite 308
Jacksonville, Florida 32256
--------------
(904) 636-9997
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL STRUCTURE
To The Partners
Willow Wick Associates Limited Partnership
Jacksonville, Florida
I have audited the financial statements of Willow Wick Associates Limited
Partnership, as of and for the year ended December 31, 1994, and have issued my
report thereon dated February 20, 1995. I have also audited the partnership's
compliance with requirements applicable to HUD-assisted programs and have
issued my report thereon dated February 20, 1995.
I conducted my audit in accordance with generally accepted auditing standards,
Government Auditing Standards issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General in July 1993. Those standards and the Guide require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement and about whether
the Partnership complied with laws and regulations, noncompliance with which
would be material to a HUD-assisted program.
In planning and performing my audit for the year ended December 31, 1994, I
considered the Partnership's internal control structure in order to determine
my auditing procedures for the purpose of expressing my opinion on the
Partnership's basic financial statements and on its compliance with specific
requirements applicable to its HUD-assisted program and not to provide
assurance on the internal control structure.
The management of the Partnership is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management authorization and
recorded properly to permit the preparation of financial statements in
accordance with generally accepted accounting principles and that HUD assisted
programs are managed in compliance with applicable laws and regulations.
Because of inherent limitations in any internal control structure, errors,
irregularities, or instances of noncompliance may nevertheless occur and not be
detected. Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate because of changes
in conditions or that the effectiveness of the design and operation of policies
and procedures may deteriorate.
42
<PAGE> 29
Willow Wick Associates Limited Partnership
February 20, 1995
Page 2
For the purpose of this report, I have classified the significant internal
control structure policies and procedures in the following categories:
Accounting applications
Cash receipts/Revenue
Purchases/Cash disbursements
General ledger
External financial reporting
Specific compliance requirements
The Partnership's Regulatory Agreement (with HUD)
Mortgage status
Replacement reserve
Security deposits
Cash receipts
Cash disbursements
Management functions
For all of the internal control structure categories listed above, I obtained
an understanding of the design of relevant policies and procedures and
determined whether they have been placed in operation, and I assessed control
risk.
I performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal control structure
policies and procedures that I considered relevant to preventing or detecting
material noncompliance with specific requirements applicable to the
Partnership's HUD-assisted program. My procedures were less in scope than would
be necessary to render an opinion on internal control structure policy and
procedures. Accordingly, I do not express such an opinion.
I noted no matters involving the internal control structure and its operation
that I consider to be reportable conditions under standards established by the
American Institute of Certified Public Accountants. Reportable conditions
involve matters coming to my attention relating to significant deficiencies in
the design or operation of the internal control structure that, in my judgment,
could adversely affect the organization's ability to record, process,
summarize, and report financial data consistent with management's assertions in
the financial statements or to administer HUD assisted programs in accordance
with applicable laws and regulations.
43
<PAGE> 30
Willow Wick Associates Limited Partnership
February 20, 1995
Page 3
A material weakness is a reportable condition in which the design or operation
of one or more of the internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited or that
noncompliance with laws and regulations that would be material to a
HUD-assisted program may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. My
consideration of the internal control structure would not necessarily disclose
all matters in the internal control structure that might be reportable
conditions and, accordingly, would not necessarily disclose all reportable
conditions that are also considered to be material weaknesses as defined above.
This report is intended for the information of the Partnership's management,
and the Department of Housing and Urban Development. However, this report is a
matter of public record and its distribution is not limited.
/s/ JAMES E. BULLARD, CPA
- -----------------------------
February 20, 1995
44
<PAGE> 31
James E. Bullard
Certified Public Accountant
9471 Baymeadows Road
Suite 308
Jacksonville, Florida 32256
----------
(904) 636-9997
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO MAJOR HUD PROGRAMS
To the Partners
Willow Wick Associates Limited Partnership
Jacksonville, Florida
I have audited the financial statements of Willow Wick Associates Limited
Partnership, as of and for the year ended December 31, 1994 and have issued my
report thereon dated February 20, 1995. In addition, I have audited the
Partnership's compliance with the specific program requirements governing:
* the Partnership's Regulatory Agreement (with HUD)
* its Mortgage status
* replacement reserve
* its accounting for security deposits, and
* its cash receipts and disbursements, that are applicable to
its only Major HUD-assisted program (Operation of an
Apartment Project which receives no rental assistance)
* Management functions
for the year ended December 31, 1994. The management of the Partnership is
responsible for compliance with those requirements. My responsibility is to
express an opinion on compliance with those requirements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General in July 1993. Those standards and the Guide require that I
plan and perform the audit to obtain reasonable assurance about whether
material noncompliance with the requirements referred to above occurred. An
audit includes examining, on a test basis, evidence about the Partnership's
compliance with those requirements I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the Partnership complied, in all material respects, with the
requirements described above that are applicable to its sole major HUD assisted
program for the year ended December 31, 1994.
This report is intended for the information of the Partnership's management,
and the Department of Housing and Urban Development. However, this report is a
matter of public record and its distribution is not limited.
/s/ JAMES E. BULLARD, CPA
- -----------------------------
February 20, 1995
45
<PAGE> 32
James E. Bullard
Certified Public Accountant
9471 Baymeadows Road
Suite 308
Jacksonville, Florida 32256
(904) 636-9997
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO AFFIRMATIVE FAIR HOUSING
Willow Wick Associates Limited Partnership
Jacksonville, Florida
I have audited the financial statements of Willow Wick Associates Limited
Partnership, as of and for the year ended December 31, 1994, and have issued my
report thereon dated February 20, 1995.
I have applied procedures to test the Partnership's compliance with the
Affirmative Fair Housing requirements applicable to its HUD-assisted programs,
for the year ended December 31, 1994.
My procedures were limited to the applicable compliance requirement described
in the Consolidated Audit Guide for Audits of HUD Programs issued by the
U.S. Department of Housing and Urban Development, Office of Inspector General
in July 1993. My procedures were substantially less in scope than an audit, the
objective of which would be the expression of an opinion on the Partnership's
compliance with the Affirmative Fair Housing requirements. Accordingly, I do not
express such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of noncompliance with the Affirmative Fair Housing
requirements. With respect to items not tested, nothing came to my attention
that caused me to believe that the Partnership had not complied, in all
material respects, with those requirements.
This report is intended for the information of Partnership's management and
the Department of Housing and Urban Development However, this report is a
matter of public record and its distribution is not limited.
James E. Bullard, CPA
/s/ JAMES E. BULLARD
- -------------------------
February 20, 1995
46
