SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the year ended December 31, 1995 Commission File
Number 0-10272
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Maryland 04-2720493
(State of Organization) (I.R.S. Employer I.D. No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (617)330-8600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
Title of Class
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
No market for the Limited Partnership Units exists and therefore, a
market value for such Units cannot be determined.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Part of the Document Incorporated
Form 10-K By Reference
I, III Prospectus of the registrant dated May 13, 1981
as supplemented in August, June 17, 1981, August 25,
1981, March 16, 1982, March 31, 1982 and March 31,
1983 (the "Prospectus")
<PAGE>
PART I
Item 1. Business.
Development
Winthrop Residential Associates I ("WRA I") was originally organized
under the Uniform Limited Partnership Act of the State of Maryland on January
30, 1981, for the purpose of investing, as a limited partner, in other limited
partnerships which would develop, manage, own, operate and otherwise deal with
apartment complexes assisted by Federal, state or local government agencies
("Local Limited Partnerships") pursuant to programs which do not significantly
restrict distributions to owners or the rates of return on investments in such
complexes. On June 23, 1983, WRA I elected to comply with and be governed by the
Maryland Revised Uniform Limited Partnership Act (the "Act") and filed its
Agreement and Certificate of Limited Partnership (the "Partnership Agreement")
with the Maryland State Department of Assessments and Taxation. In accordance
with and upon filing its certificate of limited partnership pursuant to the Act,
WRA I changed its name to Winthrop Residential Associates I, A Limited
Partnership (the "Partnership").
The General Partners of the Partnership are One Winthrop Properties,
Inc., a Massachusetts corporation ("One Winthrop" or the "Managing General
Partner"), and Linnaeus- Hampshire Realty Limited Partnership (formerly known as
Linnaeus-Hampshire Realty Company), a Massachusetts limited partnership
("Linnaeus-Hampshire"). One Winthrop is a wholly-owned subsidiary of First
Winthrop Corporation ("First Winthrop"), a Delaware corporation, which in turn
is wholly-owned by Winthrop Financial Associates, A Limited Partnership ("WFA"),
a Maryland public limited partnership. See "Change in Control".
The Partnership was initially capitalized with contributions totaling
$2,000 from its two General Partners and with contributions of $5,000 from each
of the two Initial Limited Partners.
In early 1981, the Partnership filed a Registration Statement on Form
S-11 with the Securities and Exchange Commission (Registration No. 2-70828) with
respect to a public offering of 25,000 Units of limited partnership interest
("Units") at a purchase price of $1,000 per Unit (an aggregate of $25,000,000)
with an additional 2,500 Units registered over and above the maximum of 25,000
Units for sale in the event that subscriptions in excess of the 25,000 Units
were received. The Registration Statement was declared effective on May 13,
1981. The offering terminated in September 1981, at which time subscriptions had
been received for 25,666 Units, representing capital contributions from Limited
Partners of $25,666,000. Capital contributions net of selling commissions and
sales registration costs were utilized to purchase interests in 16 Local Limited
Partnerships and the remainder in temporary short-term investments.
<PAGE>
Description of Business
The only business of the Partnership is investing as a limited partner
in other limited partnerships that own apartment complexes subsidized by the
U.S. Department of Housing and Urban Development ("HUD"). The Partnership's
investment objectives and policies are described at pages 22-27 of its
Prospectus dated May 13, 1981 (the "Prospectus") under the caption "Investment
Objectives and Policies," which description is attached hereto as an exhibit and
incorporated herein by this reference. The Prospectus was previously filed with
the Commission pursuant to Rule 424(b).
Local Limited Partnerships
The Partnership initially acquired equity interests in the form of
limited partnership interests in 16 Local Limited Partnerships owning and
operating apartment complexes. The Partnership completed its acquisitions in May
1982. The Partnership has sold its interests in five properties: Greentree
Apartments (November 1986), Marsh Cove Apartments (December 1986), Orchard Hill
(October 1988), Racquet Club (May 1989), and Columbine (May 1989). A sixth
property, Copperfield Apartments, was sold in 1985 by its Local Limited
Partnership which provided seller financing with a second mortgage. The buyer
subsequently defaulted on the second mortgage in 1988, and the Local Limited
Partnership completed the reacquisition of the property in August 1991. The
Partnership lost its ownership interests in The Park Apartments and Candlewood
Apartments when HUD foreclosed on the Local Limited Partnerships owning those
properties in August 1993 and January 1995, respectively. In addition, the
Villas, Shadowbrook and Stonewood were in default. See "Defaults" below.
The following table sets forth certain information regarding the
properties owned by the nine Local Limited Partnerships in which the Partnership
has retained an interest and which continue to own apartment complexes:
<TABLE>
Number Principal Mortgage
Date of of Equity Amount of Interest Amortization
Property Acquisition Units Payments(1) Mortgage(2) Rate Period(3)
<S> <C> <C> <C> <C> <C> <C> <C>
1. Shadowbrook Apartments 5/07/81 336 $ 2,224,800 $ 8,254,800 7-1/2% 40 years
New Orleans, LA(5)(7)
2. The Villas Apartments 6/05/81 136 957,500 3,782,000 7-1/2% 40 years
Amarillo, TX(4)(5)(6)
3. Heritage Hills 4/27/82 181 1,750,000 7,287,000 7-1/2% 40 years
Townhouses Section II
Glen Burnie, MD
4. Lynnwood Park Apartments 9/28/81 152 550,000 4,773,300 7-1/2% 40 years
Raleigh, NC
5. Stonegate Apartments 8/04/81 156 1,083,000 4,648,600 7-1/2% 40 years
Holland, MI
6. Albany Landing Apartments 4/02/82 120 800,000 3,131,900 7-1/2% 40 years
Decatur, AL
7. College Green Apartments 11/30/81 138 727,500 3,126,700 7-1/2% 40 years
Wilmington, NC
8. Stonewood Apartments 3/25/82 100 824,000 2,817,600 9-3/4% 40 years
Durham, NC (5)(7)
9. Copperfield Apartments 8/22/91 120 1,475,000 1,029,000 7-1/2% 30 years
----- ------------ -----------
Columbia, SC
T O T A L S: 1,439 $ 10,391,800 $ 38,850,900
</TABLE>
(1) Equity Payments do not include fees paid to Winthrop Financial Co., Inc.
("Winthrop Financial"), an affiliate of the General Partners, for services
rendered to local general partners. Equity Payments plus the fees paid to
Winthrop Financial by the local general partners constitute the
Partnership's capital contributions to the Local Limited Partnerships.
(2) Represents the mortgage amount or mortgage commitment as of the time the
Partnership acquired its interest in the Local Limited Partnership.
(3) Represents the full term or the remaining term of the mortgage, as the case
may be, at the time the Partnership acquired its interest in the Local
Limited Partnership.
(4) The mortgage is held by HUD.
(5) This property is managed by Winthrop Management, an affiliate of WFA.
(6) The temporary work-out agreement which this Local Limited Partnership had
with HUD has expired, and the Local Limited Partnership is now in default
under the terms of its original mortgage. See Defaults, below.
(7) This Local Limited Partnership's mortgage was sold by HUD. See Defaults,
below.
As of March 15, 1996, none of the Local Limited Partnerships had plans for
substantial renovation, improvement or development of the properties owned by
the Local Limited Partnerships. All of the properties owned by the Local Limited
Partnerships are adequately covered by insurance.
<PAGE>
The following chart provides comparative data for each property owned by
the Local Limited Partnerships regarding occupancy rates and average market
rental rates per apartment unit, for the last five years, where that data is
available to the Partnership.
<TABLE>
Average Occupancy Rate/Average Rental Rate Per Apartment Unit
Property 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
1. Shadowbrook Apartments 89%/$432 90%/$419 92%/$395 97%/$367 97%/$351
2. The Villas Apartments 97%/$431 94%/$431 95%/$402 94%/$404 85%/$418
3. Heritage Hill Townhouses 92%/$663 96%/$646 93%/$628 91%/$628 (1)
4. Lynnwood Park Apartments 99%/$505 96%/$478 96%/$463 96%/$449 94%/$421
5. Stonegate Apartments 95%/$509 95%/$497 92%/$496 78%/$483 73%/$479
6. Albany Landing Apartments 93%/$387 98%/$367 94%/$374 91%/$371 88%/$369
7. College Green Apartments 99%/$440 99%/$414 98%/$403 96%/$379 93%/$368
8. Stonewood Apartments 92%/$542 96%/$516 96%/$499 96%/$481 96%/$472
9. Copperfield Apartments 95%/$456 93%/$440 93%/$431 91%/$423 (1)
- -------------------------------
</TABLE>
(1) Figures are not available to the Partnership.
Descriptions of the interests in Local Limited Partnerships and the terms
upon which the Partnership acquired them are set forth at pages 33-36 of the
Prospectus under the caption "Initial Investment," pages 1-9 and 15-27 of the
Supplement to the Prospectus dated June 17, 1981 (the "June 17, 1981
Supplement"), pages 1-11 of the Supplement to the Prospectus dated August 25,
1981 (the "August 25, 1981 Supplement"), pages 2-3 of the Partnership's Current
Report on Form 8-K filed March 16, 1982 under the caption "Acquisition or
Disposition of Assets," pages 8-13 of the Partnership's Annual Report on Form
10-K filed March 31, 1982 under the caption "Item 1. Business," and pages 8-11
of the Partnership's Annual Report on Form 10-K filed March 31, 1983 under the
caption "Item 1. Business," all of which descriptions are attached hereto as
exhibits and incorporated herein by this reference. The June 17, 1981 Supplement
was filed with the Commission as Post-Effective Amendment No. 1 to the
Partnership's Registration Statement
<PAGE>
on Form S-11. (Registration No. 2-70828) and the August 25, 1981 Supplement was
filed with the Commission pursuant to Rule 424(c). See also "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 4 of Notes to Financial Statements included as a part of
this Annual Report for additional information concerning the properties, all of
which information is incorporated herein by this reference.
Defaults
As noted above, the Partnership holds limited partnership interests in
Local Limited Partnerships which own apartment properties, all of which were
originally financed with HUD- insured first mortgages. If a Local Limited
Partnership defaults on a HUD-insured mortgage, the mortgagee can assign the
defaulted mortgage to HUD and recover the principal owed on its first mortgage
from HUD. HUD, in its discretion, may then either (i) negotiate a workout
agreement with the Local Limited Partnership, (ii) sell the mortgage to another
lender, or (iii) pursue its right to transfer the ownership of the property from
the Local Limited Partnership to HUD through a foreclosure action. The objective
of a workout agreement between an owner and HUD is to secure HUD's sanction of a
plan which, over time, will cure any mortgage delinquencies. While a workout
agreement is effective and its terms are being met, HUD agrees not to pursue any
remedies available to it as a result of the default. If the owner does default
under the terms of the workout agreement or if HUD concludes that a property in
default lacks the ability to generate sufficient revenue to cure its default, it
may pursue its right to assume ownership of the property through foreclosure.
HUD may also sell the mortgage to another lender. Some workout agreements
terminate upon the sale of the mortgage to another lender.
The Partnership holds ownership interests in two Local Limited
Partnerships (Shadowbrook and the Villas) which are currently in default on
their mortgage obligations. One other Local Limited Partnership (Stonegate),
which had been in default, entered into an agreement with HUD pursuant to which
the existing loan was modified. One Local Limited Partnership (Candlewood) lost
its property in January 1995 in a foreclosure sale and the Local Limited
Partnership (Stonewood) lost its property in a March 1996 foreclosure.
The Local Limited Partnership owning Shadowbrook defaulted on its
mortgage in November 1987, and the mortgage was subsequently assigned by the
lender to HUD. HUD agreed to a two-year workout agreement which expired in
December 1990. Since then, the Local Limited Partnership has submitted various
proposals to HUD, all of which had been rejected by HUD. In December 1995, HUD
sold the mortgage to DL Mortgage. The Local Limited Partnership has signed a
pre-negotiation letter agreement with the new lender and has submitted various
proposals which are currently under review by the new lender.
The Local Limited Partnership owning The Villas defaulted on its mortgage
obligation in November 1991. The lender assigned the mortgage to HUD in August
1992. In January 1995, the Local Limited Partnership negotiated a one-year
Provisional Workout Arrangement which is effective from February 1, 1995 to
January 31, 1996. The Local Limited Partnership submitted an extension of the
agreement to HUD, which extension is currently under review by HUD. The terms of
the Provisional Workout Arrangement require minimum debt service payments equal
to 85% of accruing interest as well as payments for real estate taxes and a
service charge.
<PAGE>
The Local Limited Partnership owning Stonegate defaulted on its mortgage
obligation in July 1991. The lender assigned the mortgage to HUD in August 1992.
In late 1994, the Local Limited Partnership negotiated its third one-year
Provisional Workout Arrangement (the "Current Agreement"), effective from
February 1, 1995 to January 31, 1996. On December 1, 1995, the Local Limited
Partnership signed a corrected Modification of Mortgage Note and Mortgage. This
modification increased the principal amount by the $442,579.41 of accrued
interest, has an interest rate of 7.5% and reamortized the debt over the
remaining term through December 1, 2022.
In June 1991, Candlewood defaulted on a workout agreement that previously
had been negotiated with HUD. Subsequently, a workout proposal submitted to HUD
to further reduce the debt service obligations was not approved. In January
1995, HUD sold the property pursuant to a foreclosure sale. The Partnership will
recognize a taxable gain in 1995 of approximately $120 per investment unit as a
result of the foreclosure sale.
The Local Limited Partnership owning Stonewood defaulted on its mortgage
in February 1988, and the mortgage was assigned to HUD in September 1988. The
Local Limited Partnership was unable to negotiate a workout proposal which HUD
will approve. In May 1995, HUD sold the mortgage to Condor One, Inc. The Local
Limited Partnership signed a pre- negotiation agreement with the new lender and
submitted various proposals to the new lender all of which were rejected. The
new owner of the mortgage foreclosed on its mortgage on March 14, 1996.
All of the Local Limited Partnerships face the possibility that HUD or a
new lender if HUD sells its mortgage, (collectively the "Lender") could
foreclose on the properties as long as (i) the Lender and the Local Limited
Partnerships have not entered into a workout agreement; (ii) there is unpaid
interest and principal owed the Lender, and the Lender determines that it is
unlikely that the property can generate sufficient revenue to cure the mortgage
delinquency. To date, however, the Lender has allowed, with the exception of The
Park, Candlewood and Stonewood, all of the Local Limited Partnerships to
maintain ownership of the properties, while the Local Limited Partnerships and
the Lender attempt to negotiate a plan which will allow those Local Limited
Partnerships to work toward reducing the unpaid amounts.
Employees
The Partnership does not have any employees. Services are performed for
the Partnership by the Managing General Partner, and agents retained by it,
including an affiliate of the General Partners, Winthrop Management.
Change in Control
Until December 22, 1994, the sole general partner of Linnaeus Associates
Limited Partnership ("Linnaeus"), which is the sole general partner of WFA, and
the general partner of Linnaeus-Hampshire, was Arthur T. Halleran, Jr. On
December 22, 1994, pursuant to an Investment Agreement entered into among Nomura
Asset Capital Corporation ("NACC"), Mr. Halleran and certain other individuals
who comprised the senior management of WFA, the general partnership interest in
Linnaeus was transferred to W.L. Realty, L.P. ("W.L. Realty"). W.L. Realty is a
Delaware limited partnership, the general partner of which was, until July 18,
1995, A.I. Realty Company, LLC ("Realtyco"). The equity securities of Realtyco
are currently held by certain employees of NACC. On July 18, 1995 Londonderry
Acquisition II Limited Partnership (Londonderry II"), a Delaware limited
partnership, and affiliate of Apollo Real Estate Advisors, L.P. ("Apollo"),
acquired, among other things, Realtyco's general partner interest in W.L. Realty
and a sixty four percent (64%) limited partnership interest in W.L. Realty. WFA
also acquired the sole general partner interest of Linnaeus-Hampshire.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
and which in turn is the sole general partner of WFA. As a result of the
foregoing, effective July 18, 1995, Londonderry II, an affiliate of Apollo,
became the controlling entity of the General Partners. In connection with the
transfer of control, the officers and directors of One Winthrop resigned and
Londonderry II appointed new officers and directors. See Item 10, "Directors and
Executive Officers of Registrant.
Item 2. Properties.
Other than the interests in the Local Limited Partnerships which own
properties described under Item 1 above, the Partnership does not own any
property.
Item 3. Legal Proceedings.
The Partnership is not a party, nor are any of the Local Limited
Partnerships subject, to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders. None.
No matter was submitted to a vote of security holders during the period
covered by this report.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
The Registrant is a partnership and thus has no common stock. There is no
active market for the Units. Trading in the Units is sporadic and occurs solely
through private transactions.
As of March 1, 1995, there were 2,884 holders of Units holding 25,585
units.
The Partnership Agreement requires that any Cash Available for
Distribution (as defined in said agreement) be distributed monthly or quarterly
to the Partners in specified proportions and priorities. There are no outside
restrictions on the Partnership's present or future ability to make
distributions of Cash Available for Distribution. There was no Cash Available
for Distribution in 1995 or 1994.
Item 6. Selected Financial Data.
The following represents selected financial data for Registrant for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
<TABLE>
For the Year Ended or as of December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income from Local Limited
Partnership Cash Distributions $ 119,622 $ -- $ -- $ -- $ --
Other Income 20,425
Income from Short-term Investments -- $ -- $ -- $ 15 $ 29
Operating Expenses (116,825) (93,815) (94,749) (97,942) (104,057)
Equity in (Loss) Income of
Local Limited Partnerships $ (3,927) $ 25,810 $ 29,454 $ (64,140) $ (269,777)
Net (Loss) Income $ 19,295 $ (68,005) $ (65,294) $ 162,067 $ (373,805)
Net Loss per weighted average
Unit of Limited Partnership
Interest Outstanding $ 0.72 $ (2.52) $ (2.42) $ (6.00) $ (13.83)
Total Assets $1,715,728 $1,615,118 $1,596,124 $1,573,486 $1,644,442
Investments in Local Limited
Partnerships $1,604,375 $1,615,118 $1,596,124 $1,573,486 $1,644,442
Equity payments due to Local
Limited Partnerships 0 $ 0 $ 0 $ 0 $ 0
Total Cash Distributions per Unit of Limited Partnership Interest, including
amounts distributed or to be distributed after year end
with respect to 1991 through 1995: 0 $ 0 $ 0 $ 0 $ 0
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Reserves
As of March 15, 1996, the Partnership retained an equity interest in 8
Local Limited Partnerships. The Partnership follows the equity method of
accounting for these interests and recognizes its proportionate share of income
and losses incurred by the Local Limited Partnerships. Through 1990, the
recognition of losses decreased due to two factors. First, certain properties
have reached break even operations. Second, losses which would cause the
investment account of a property to become negative are not recognized since the
Partnership has no obligation to fund them. To date, the recognition of
$19,429,468 of the Partnership's equity in losses has been deferred. In 1995,
$729,425 of such losses were deferred. As of 1989, the Partnership ceased
recognizing losses in certain properties because the Partnership's investment
account in certain of the Local Limited Partnerships had been reduced to zero.
In the event the Partnership's investment account in a Local Limited Partnership
is increased, then the Partnership will be able to recognize losses in that
Local Limited Partnership until the investment therein is again reduced to zero.
In 1990 and 1991, the Partnership recognized losses from two of the Local
Limited Partnerships as a result of a revaluation of the collateral under the
Wrap Mortgage for Copperfield and an operating deficit advance made to
Candlewood in 1990 and 1991. The equity method of accounting is used solely for
financial reporting purposes; all losses continue to be recognized for tax
purposes. In 1991, the equity in losses was significantly increased because of
the recognition of $308,049 of losses from the Local Limited Partnership that
owns Copperfield due to a determination that the property was worth less than
the reacquisition price. In 1992, the only equity in loss which was recognized
was for the Local Limited Partnership owning Copperfield due to its positive
investment balance. In 1993, equity in income from the Local Limited Partnership
owning Copperfield was recognized.
Between 1994 and 1995, the Partnership sustained a decrease in its
investment in the Local Limited Partnerships in the amount of $10,743. This
change in its investment is attributable to two factors. First, the
Partnership's investment was decreased by $3,927 representing its share of the
equity in income available from a Local Limited Partnership (Copperfield).
Second, the Partnership's investment was reduced by $6,816 representing the
amortization of goodwill and capitalized costs.
The tax losses of the Partnership will decrease over time since the
advantages of accelerated depreciation taken by the Local Limited Partnerships
are greatest in the earlier years. Also, the deductions for mortgage interest
expenses will steadily decrease as the principal amounts of the mortgage loans
are amortized.
The Partnership requires cash to pay its general and administrative
expenses or to make capital contributions to any of the Local Limited
Partnerships which the Managing General Partner deems to be in the Partnership's
best interest to preserve its ownership interest. To date, all cash requirements
have been satisfied by interest income, cash distributed by the Local Limited
Partnerships to the Partnership or by loans from First Winthrop. (See the first
and second paragraphs of Item 13(a) for a discussion of the First Winthrop
loans.) The Partnership will be unable to repay its indebtedness to First
Winthrop, the accrued interest on that indebtedness or to fully fund its general
and administrative expenses until such time as (i) the operating results of any
or all of the Local Limited Partnerships improve sufficiently to provide cash
distributions to the Partnership, or (ii) any or all of the properties owned by
the Local Limited Partnerships can be sold at a price sufficient to provide net
sales proceeds to the Partnership. In addition, any future contributions by the
Partnership to the Local Limited Partnerships would have to be funded by
additional First Winthrop loans. Should First Winthrop fail to provide
additional loans to the Partnership, the Partnership would be unable to meet its
general and administrative expenses. First Winthrop has no obligation to fund
these loans and there can be no assurance that if such loans were needed, First
Wintrhop would provide such amounts.
The Partnership does not intend to make advances to fund future operating
deficits incurred by any Local Limited Partnership, but retains its prerogative
to exercise a business judgment to reverse this position if circumstances
change. Moreover, the Partnership is not obligated to provide any additional
funds to the Local Limited Partnerships to fund operating deficits. If a Local
Limited Partnership sustains continuing operating deficits and has no other
sources of funding, it is likely that it will eventually default on its mortgage
obligations and risk a foreclosure on its property by the lender. If a
foreclosure were to occur, the Local Limited Partnership would lose its
investment in the property and would incur a tax liability due to the recapture
of tax benefits taken in prior years. The Partnership, as an owner of the Local
Limited Partnership, would share these consequences in proportion to its
ownership interest in the Local Limited Partnership.
Results of Operations
A number of the properties owned by the Local Limited Partnership in
which the Partnership has invested have operated at a deficit for many years due
to their location in areas with weak economies or overbuilt rental markets. Five
Local Limited Partnerships have defaulted on their mortgage obligations,
Candlewood, Stonegate, The Villas, Shadowbrook and Stonewood. Candlewood was
foreclosed on by HUD in January 1995, and Stonewood was foreclosed on by its new
lender in March 1996. See Item 1, "Business - Defaults".
The five remaining properties met their financial obligations but did not
generate sufficient revenue to distribute any cash flow to the Partnership.
College Green operated at break even in 1995; therefore no cash
distributions will be made to the Partnership in 1996. Cash flow generated in
1993 and 1994 was held as cash reserves by the Local Limited Partnership owning
College Green.
Revenues and expenses at Heritage Hill during 1995 were even as compared
to positive cash flow in 1994. No cash distributions were made to the
Partnership in 1994 or 1993.
Copperfield generated positive cash flow during 1995 and 1994. The Local
Limited Partnership has not yet determined the amount of distributions, if any,
based on 1995 operations. Cash flow generated in 1994 and 1993 was held as cash
reserves by the Local Limited
<PAGE>
Partnership. No cash distribution was made in 1995 from 1994 operations.
Lynnwood generated positive cash flow during 1995 and 1994. The 1995 cash
flow was distributed to partners with the Partnership receiving its $100,973
share of such cash flow in March 1996. Cash flow generated in 1994 was used to
repay advances to the local general partner.
Revenues and expenses at Albany Landing during 1995 were even. No cash
distribution will be made to the Partnership in 1996 and none were made in 1995,
1994 or 1993 due to prior years deficit operations.
The Local Limited Partnerships' objectives are to improve operating
results for their respective properties and to obtain workout agreements for
those properties that are in default on their respective mortgage obligations.
If the Local Limited Partnerships which own properties in default are unable to
negotiate a workout agreement with the Lender, the Local Limited Partnership may
lose the property through foreclosure. Any workout agreement entered into
between the Lender and the Local Limited Partnerships will have no affect on the
Partnership's ability to deduct mortgage interest expense unless the Lender
agrees to forgive such interest indebtedness. As of March 15, 1996, none of the
Local Limited Partnerships had agreements which would forgive accrued interest.
Based on the Partnership's original investment in the 8 Local Limited
Partnerships in which the Partnership currently owns an interest, the two
properties currently in default without a workout agreement with HUD represent
32% of the total capital contributions made to those Local Limited Partnerships.
The results of operations for future years may differ from those in 1995
as a result of many factors. One will be the ability of the Local Limited
Partnerships which own properties in default on their mortgage obligations
(Shadowbrook and the Villas) to negotiate workout agreements to modify their
debt service requirements. Another will be the ability of each Local Limited
Partnership to deal with the consequences of changing economic conditions that
affect property operations. The Partnership's investment in Local Limited
Partnerships owning rental real estate is subject to the risk involved with
management and ownership of rental real estate. Vacancy levels, rental payment
defaults and operating expenses are all dependent on general and local economic
conditions. Shifts in the economy could result in differing operating results
for each individual Local Limited Partnership.
The Partnership's plan is to work with the Local Limited Partnerships to
maintain ownership of and seek workout agreements for those properties in
default on their mortgage. Although the Partnership has no ability to force a
sale of properties owned by the Local Limited Partnerships, the Partnership will
also work with the Local Limited Partnerships to investigate sale opportunities
and will continue to work with the Local Limited Partnerships to improve the
financial performance of all the properties.
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
<PAGE>
For the Year Ended December 31, 1995
Financial Statements:
Report of Independent Public Accountants
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years Ended December 31, 1995, 1994
and 1993
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1995, 1994 and 1993
Statements of Cash Flow for the Years Ended December 31, 1995, 1994
and 1993
Notes to Financial Statements
Financial Statement Schedules:
III - Real Estate and Accumulated Depreciation of Property Held by
Local Limited Partnerships as of December 31, 1995
All schedules prescribed by Regulation S-X other than the one indicated above
have been omitted as the required information is inapplicable or the
information is presented elsewhere in the financial statements or related
notes.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP:
We have audited the accompanying balance sheets of WINTHROP RESIDENTIAL
ASSOCIATES I, A LIMITED PARTNERSHIP (a Maryland limited partnership) as of
December 31, 1995 and 1994, and the related statements of operations, changes in
partners' capital and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements and the schedule referred to below
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits. We did not audit the financial statements of certain Local Limited
Partnerships, the investments in which are reflected in the accompanying
financial statements using the equity method of accounting and were written down
to zero (see Note 2). Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts included for those Local Limited Partnerships, is based solely on the
reports of the other auditors.
<PAGE>
We conducted our audits 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 audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED
PARTNERSHIP as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III, listed in the index to the
financial statements, is the responsibility of WINTHROP RESIDENTIAL ASSOCIATES
I, A LIMITED PARTNERSHIP management and is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not a required part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, fairly states in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 20, 1996
<TABLE>
BALANCE SHEETS
- -------------------------------------------------------------------------------------------
December 31, 1995 and 1994 1995 1994
- ---------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash .............................................................................. $ 111,353 $ -
Investments in Local Limited Partnerships (Note 4).................................... 1,604,375 1,615,118
--------------------------
$ 1,715,728 $ 1,615,118
==========================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses (Note 3)...................................... $ 446,856 $ 398,543
Loans payable - Affiliate (Note 3).................................................. 666,273 633,271
1,113,129 1,031,814
Commitments and Contingencies (Note 7)
Partners' Capital:
Limited Partners
Units of Limited Partnership Interest, $1,000 stated value per unit; 25,676
units authorized; 25,595 units issued and outstanding at December 31,
1995 and 25,646 units issued and outstanding
at December 31, 1994.......................................................... 1,672,765 1,654,435
General Partners.................................................................... (1,070,166) (1,071,131)
602,599 583,304
$ 1,715,728 $ 1,615,118
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------
For the Years Ended
December 31, 1995, 1994 and 1993 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from local Limited Partnership
cash distribution $ 119,622 $ - $ -
Other Income 20,425 - -
-------------------------------------
140,047 - -
-------------------------------------
Expenses:
Amortization.............................................. 6,816 6,816 6,816
Interest (Note 3)......................................... 64,521 49,795 40,306
General and administrative............................... 45,488 37,204 47,626
116,825 93,815 94,748
--------------------------------------------
Income (loss) from operations................................ 23,222 (93,815) (94,748)
Equity in (loss) income of Local Limited
Partnerships ............................................... (3,927) 25,810 29,454
----------------------------------------------
Net income (loss)............................................ $ 19,295 $ (68,005) $ (65,294)
=======================================================
Net income (loss) allocated to General Partners $ 965 $ (3,400) $ (3,265)
======================================
Net income (loss) allocated to Limited
Partners.................................................... $ 18,330 $ (64,605) $ (62,029)
=======================================
Net income (loss) per unit of Limited
Partnership Interest........................................ $ 0.72 $ (2.52) $ (2.42)
=======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
- ------------------------------------------------------------------------------------------
UNITS OF
LIMITED GENERAL LIMITED
For the Years Ended PARTNERSHIP PARTNERS' PARTNERS' TOTAL
December 31, 1995, 1994 and 1993 INTEREST CAPITAL CAPITAL CAPITAL
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992............................... 25,661 $(1,064,466) $1,781,069 $716,603
Retirement of units...................................... (15)
Net loss................................................. (3,265) (62,029) (65,294)
---------------------------------------------
Balance, December 31, 1993............................... 25,646 (1,067,731) 1,719,040 651,309
Net loss................................................. (3,400) (64,605) (68,005)
----------------------------------------------
Balance, December 31, 1994 .............................. 25,646 (1,071,131) 1,654,435 583,304
Retirement of Units...................................... (51)
Net income............................................... 965 18,330 19,295
----------------------------------------------
Balance, December 31, 1995............................... 25,595 $(1,070,166) $1,672,765 $602,599
==============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------
For the Years Ended
December 31, 1995, 1994 and 1993 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................. $ 19,295 $(68,005) $ (65,294)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Amortization............................................... 6,816 6,816 6,816
Equity in loss (income) of Local Limited
Partnerships............................................... 3,927 (25,810) (29,454)
Change in assets and liabilities:
Increase in accounts payable and accrued
expenses................................................ 48,313 47,857 40,850
----------------------------------------------------
Net cash provided by (used in) operating
activities ............................................ 78,351 (39,142) (47,082)
------------------------------------------------------------
Cash flows from financing activities:
Increase in loan payable...................................... 33,002 39,142 47,082
----------------------------------------------------
Net increase in cash............................................ 111,353 - -
Cash, beginning of year......................................... - - -
--------------------------------------------------
Cash, end of year............................................... $ 111,353 $ - $ -
==================================================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION
Winthrop Residential Associates I, A Limited Partnership (the "Partnership"),
was organized on January 30, 1981 under the Uniform Limited Partnership Act of
the State of Maryland to invest in limited partnerships (the "Local Limited
Partnerships") that develop, manage, operate and otherwise deal in government-
assisted apartment complexes that do not significantly restrict distributions to
owners or the rate of return on investments in such properties. On June 23,
1983, the Partnership elected to comply with and be governed by the Maryland
Revised Uniform Limited Partnership Act. On May 22, 1984, the Limited Partners
approved an amendment to the Partnership Agreement enabling the Partnership to
own investments in Local Limited Partnerships where the distribution of project
funds from operations or the rate of return on investments is limited. The
Partnership will terminate on December 31, 2011, or sooner, in accordance with
the terms of the Partnership Agreement.
2. SIGNIFICANT ACCOUNTING POLICIES
Financial Statements - The financial statements of the Partnership are prepared
on the accrual basis of accounting.
Use of 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.
Income Taxes - No provision has been made for federal, state or local income
taxes in the financial statements of the Partnership. Partners are required to
report on their individual tax returns their allocable share of income, gains,
losses, deductions and credits of the Partnership. The Partnership files its tax
returns on the accrual basis. On May 29, 1981, the Internal Revenue Service
issued a ruling that the Partnership will be classified as a partnership for
federal income tax purposes.
Investments in Local Limited Partnerships - The Partnership accounts for its
investment in each Local Limited Partnership using the equity method. Under the
equity method of accounting, the investment cost (including amounts paid or
accrued) is subsequently adjusted by the Partnership's share of the Local
Limited Partnership's results of operations and by distributions received or
accrued. Costs relating to the acquisition and selection of the investment in
the Local Limited Partnerships are capitalized to the investment account and
amortized over the life of the investment or until the investment balance has
been written down to zero. Costs in excess of the Partnership's initial basis in
the net assets of the Local Limited Partnership are amortized over the estimated
useful lives of the underlying assets. Equity in the loss of Local Limited
Partnerships is not recognized to the extent that the investment balance would
become negative since the Partnership is not obligated to advance funds to the
Local Limited Partnerships.
3. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. ("One Winthrop"), the Managing General Partner; WP
Management Co., Inc. ("WP Management"), the manager of the Partnership's
investments in the Local Limited Partnerships; and Winthrop Financial Co., Inc.
("Winthrop Financial") are wholly owned subsidiaries of First Winthrop
Corporation ("First Winthrop"), which in turn is wholly owned by Winthrop
<PAGE>
NOTES TO FINANCIAL STATEMENT
(Continued)
Financial Associates, a limited partnership ("WFA").
WP Management is entitled to a fee for services rendered in managing the
Partnership's investments in the Local Limited Partnerships equal to 10% of the
Partnership's share of cash distributions from the Local Limited Partnerships,
not to exceed one half of 1% of the sum of (a) the amount of the Partnership's
aggregate total investment in all Local Limited Partnerships, plus (b) the
Partnership's allocable share of all liens and mortgages secured by the projects
of all Local Limited Partnerships. The fee is noncumulative and commences at the
closing of each Local Limited Partnership's permanent loan. No fees were earned
in 1995, 1994 or 1993.
The General Partners are entitled to 5% of Cash Available for Distribution. No
distribution was paid or accrued to the General Partners in 1995, 1994 or 1993.
The Partnership has depleted its available reserves and, as a result, borrows
amounts from First Winthrop to pay operating expenses and fund operating
deficits at properties owned by the Local Limited Partnerships. The borrowings
from First Winthrop bear interest at the prime rate (8.5% at December 31, 1995)
plus 1%. The accrued interest payable to First Winthrop is $446,854 and $382,333
at December 31, 1995 and 1994, respectively. The Partnership will repay First
Winthrop's loans from cash flow generated by the Local Limited Partnerships and
the proceeds of any sales of real estate owned by the Local Limited
Partnerships. Due to the nature of these loans, it is not practicable to
estimate their fair value because it cannot be determined whether financing with
similar terms and conditions would be available to the Partnership.
During the liquidation stage of the Partnership, the General Partners and their
affiliates are entitled to receive certain distributions, subordinated to
specified minimum returns to the Limited Partners as described in the
Partnership Agreement.
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of December 31, 1995, the Partnership has Limited Partnership equity
interests in nine Local Limited Partnerships that own fully operating apartment
complexes. These Local Limited Partnerships have outstanding mortgages totaling
$36,974,317, which are secured by the Local Limited Partnerships' real property,
security interests, liens and endorsements common to first mortgage loans.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
During 1995, the Partnership made no additional investments in the Local Limited
Partnerships. As of December 31, 1995, the net cumulative operating deficit
advanced to the local Limited Partnerships was $3,249,248, which the Partnership
has recorded as capital contributions. However, the Local Limited Partnerships
have accounted for $2,213,085 of these investments as operating deficit advances
and $898,411 as capital contributions. The remaining $137,752 represents a
purchase of interests in a Local Limited Partnership, which is not accounted for
by the Local Limited Partnership.
The investment balance in Local Limited Partnerships as of December 31, 1995 and
1994 is as follows:
<TABLE>
1995
1994 Activity 1995
<S> <C> <C> <C>
Equity payments........................................................$ 21,225,748 $21,225,748
Additional investments made to and recognized
as operating deficit advances by the Local
Limited Partnerships............................................... 2,213,085 2,213,085
Additional investments made to purchase
interests in a Local Limited Partnership........................... 137,752 137,752
Capitalized costs...................................................... 557,365 557,365
Cash distributions from Local Limited
Partnerships.......................................................... (1,859,848) (1,859,848)
Amortization of the capitalized costs and the
costs in excess of the Partnership's initial
basis in the net assets of the Local Limited
Partnerships........................................................ (689,006) (6,816) (695,822)
Equity in loss of Local Limited Partnerships,
net of equity in income and gains from sale
of real estate...................................................... (19,969,978) (3,927) (19,973,905)
----------- -----------
Investments per balance sheet.......................................... 1,615,118 1,604,375
Difference in basis (including equity
payments paid or accrued to a partner of
a Local Limited Partnership
totaling $1,737,752)............................................... (1,748,945) (1,748,945)
Additional investments made to and recognized
as operating deficit advances by the Local
Limited Partnerships................................................ (2,213,085) (2,213,085)
Additional investments made to purchase
interests in a Local Limited Partnership............................ (137,752) (137,752)
Sale of interest in Local Limited
Partnerships........................................................ 561,987 561,987
Foreclosure of Local Limited Partnership............................... 2,775,142 2,748,216 5,523,418
Capitalized costs...................................................... (557,365) (557,365)
Amortization of the capitalized costs and the
costs in excess of the Partnership's initial
basis in the net assets of the Local Limited
Partnerships........................................................ 689,006 6,816 695,822
Equity in loss of Local Limited
Partnerships not recognizable under the
equity method of accounting (Note 2)................................ (18,700,043) (729,425) (19,429,468)
----------- -----------
Equity per Local Limited Partnerships'
combined financial statements.......................................$(17,715,937) $(15,701,013)
============ ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
<TABLE>
The combined balance sheets of the Local Limited Partnerships at December 31,
1995 and 1994 are as follows:
1995 1994
<S> <C> <C>
ASSETS
Real estate, at cost:
Land................................................. $ 2,639,839 $ 2,916,310
Buildings, net of accumulated depreciation
of $21,425,937 and $21,485,262 in 1995 and
1994, respectively.................................. 19,152,057 22,278,821
Cash and cash equivalents................................. 1,503,469 1,091,324
Other assets, net of accumulated amortization
of $815,248 and $1,216,564 in
1995 and 1994, respectively............................... 2,222,900 2,438,950
----------- -----------
Total Assets.............................................. $25,518,265 $28,725,405
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Notes payable............................................ $ 980,960 $ 1,092,235
Operating deficit loans payable to
Winthrop Residential Associates I....................... 1,019,723 1,499,613
Mortgage notes payable................................... 36,974,317 40,088,894
Accounts payable and accrued expenses.................... 5,195,057 6,789,448
----------- -----------
44,170,057 49,470,190
----------- -----------
Partners' Capital:
Winthrop Residential Associates I....................... (15,701,013) (17,715,937)
Other partners.......................................... (2,950,779) (3,028,848)
------------ ------------
(18,651,792) (20,744,785)
------------ ------------
Total liabilities and Partners' capital $ 25,518,265 $ 28,725,405
============ ============
</TABLE>
<TABLE>
The combined statements of operations of the Local Limited Partners for the
years ended December 31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Rental income........................................ $ 7,909,125 $ 8,075,975 $ 7,772,511
Other income......................................... 584,312 358,064 320,870
--------------------------------------------------
8,493,437 8,434,039 8,093,381
--------------------------------------------------
Expenses:
Interest............................................. 2,950,593 3,140,874 3,287,940
Depreciation and amortization........................ 1,645,981 1,740,601 1,765,922
Taxes and insurance.................................. 871,380 1,009,241 878,277
Management and administration fees................... 442,260 476,466 432,616
Repairs and maintenance.............................. 1,682,064 1,532,277 1,348,938
General and administrative............................. 1,615,181 2,054,185 2,092,710
--------------------------------------------------
9,207,459 9,953,644 9,806,403
--------------------------------------------------
Gain on sale of property................................... 2,825,692 - -
---------------------------------------------------------
Net income (loss)......................................... $ 2,111,670 $(1,519,605) $(1,713,022)
==================================================
Net income (loss) allocated to
Winthrop Residential Associates I......................... $ 2,030,703 $(1,456,701) $(1,613,055)
==================================================
Net income (loss) allocated to
other partners............................................ $ 80,967 $ (62,904) $ (99,967)
==================================================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. TAXABLE INCOME
The Partnership's taxable income for 1995 differs from the net income for
financial reporting purposes primarily due to accounting differences in the
recognition of amortization, equity losses and gain on foreclosure incurred by
the Local Limited Partnerships. The taxable income for 1995 is as follows:
<TABLE>
<S> <C>
Net income for financial reporting purposes............................... $ 19,295
Plus: Amortization of the capitalized costs and
the costs in excess of the Partnership's
initial basis in the net assets of the
Local Limited Partnerships.................................... 6,816
Tax gains in excess of gains for financial
reporting purposes (due primarily to
gain on foreclosure)......................................... 3,123,069
Less: Equity in Local Limited Partnerships'
losses for financial reporting purposes
not recognizable under the equity
method of accounting (Note 2)................................. (729,425)
----------
Taxable income.............................................................. $ 2,419,755
===========
</TABLE>
6. FORECLOSURE OF REAL ESTATE
During 1993, the general partner of The Park, in which the Partnership owns a
limited partnership interest, was notified that the United States Department of
Housing and Urban Development (HUD) foreclosed on its mortgage in August 1993.
The Partnership's investment in The Park was zero at the time of foreclosure,
and it had no obligation to fund any liabilities related to The Park.
One of the Local Limited Partnership, Candlewood, was unable to negotiate a
workout agreement with HUD, resulting in a foreclosure sale of the property in
January 1995. The Partnership's investment in Candlewood for financial reporting
purposes was zero at the time of foreclosure. The net proceeds of $104,000
received by the Partnership has been recorded as equity income in the 1995
statement of operations. For tax purposes, the Partnership recognized a gain of
approximately $3,400,000 in 1995 as a result of the foreclosure.
7. COMMITMENTS AND CONTINGENCIES
As of December 31, 1995, three Local Limited Partnerships (The Villas,
Shadowbrook and Stonewood) were in default on their mortgage obligation. The
Villas is presently seeking to extend the workout agreement with HUD, as the
previous agreement has expired on January 31, 1996. The other two mortgage notes
in default were sold by HUD to third parties during 1995, and the regulatory
agreements with HUD were canceled. Shadowbrook has signed a pre-negotiation
letter agreement with the new lender and has submitted various proposals which
are currently under review by the new lender. Stonewood was unable to negotiate
a restructuring of the loan agreement with the new lender and the mortgage was
foreclosed upon on March 14, 1996 (Note 8). The Partnership is not obligated to
fund operating deficits on mortgage loans at the Local Limited Partnerships.
8. SUBSEQUENT EVENT
The mortgage for Stonewood Associates LTD. was foreclosed upon in March 1996.
The Partnership's investment in Stonewood for financial reporting purposes was
zero at the time of foreclosure. The Partnership will recognize a taxable gain
of approximately $100 per unit of limited partnership interest in 1996 as a
result of the foreclosure.
<PAGE>
<TABLE>
SUPPLEMENTARY INFORMATION
REQUIRED PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT
- ----------------------------------------------------------------------------------------
December 31, 1995 Three Months Ended Year Ended
(Unaudited) December 31, 1995 December 31, 1995
1. Statement of Cash Available for Distribution:
<S> <C> <C>
Net income (loss)............................................ $ (16,390) $ 19,295
Less: Charges to income not affecting cash
available for distribution........................ (16,470) (11,358)
Add: Equity in Loss of Local
Limited Partnerships.................................... 13,983 3,927
Added to reserves....................................... - (11,864)
-------------------------------
Cash Available for Distribution............................... $ - $ -
----------------------------
</TABLE>
2. Fees and other compensation paid or accrued by the Partnership to the General
Partners or their affiliates, during the three months ended December 31, 1995:
<TABLE>
Entity Receiving Form of
Compensation Compensation Amount
<S> <C> <C>
First Winthrop Corporation Interest on Loans to Partnership $16,324
</TABLE>
WINTHROP RESIDENTIAL ASSOCIATES I,
A LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
DECEMBER 31, 1995
SCHEDULE III
Initial cost to Local Limited Partnership
and gross amount at which it was carried as of
December 31, 1995 (A, B and C)
<TABLE>
Accumulated
Depreciation
Description Number as of
and Ownership of Outstanding Buildings and December 31,
Percentage Apts. Encumbrance Land Improvements Total 1995 (D)
- ---------- ----- ----------- ---- ------------ ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Louisiana Housing Partners
New Orleans, LA - 96% 336 $ 8,072,430 $ 914,000 $ 8,349,631 $ 9,263,631 $ 4,253,962
The Villas Ltd.
Amarillo, TX - 99% 136 3,574,274 140,871 4,207,543 4,348,414 2,351,531
Stonegate Apartments
Limited Partnership
Holland, MI - 93% 156 4,958,539 162,000 4,630,814 4,792,814 2,688,891
Lynndale Apartments, Ltd.
Raleigh, NC - 50% 152 4,297,443 175,529 4,244,800 4,420,329 2,477,654
College Green Limited
Partnership
Wilmington, NC - 95% 138 2,862,951 102,000 3,473,861 3,575,861 2,046,106
First Investment Limited
Partnership I (E)
Columbia, SC - 90% 120 847,974 193,500 2,746,220 2,939,720 480,663
Stonewood Associates, Ltd.
Durham, NC - 96% 100 2,788,098 183,062 3,193,649 3,376,711 1,722,082
Cedar Lake, Ltd.
Decatur, AL - 98.93% 120 2,875,673 155,377 3,191,765 3,347,142 1,744,332
Washington Square Limited
Partnership
Glen Burnie, MD - 89% 181 6,696,935 613,500 6,539,711 7,153,211 3,660,716
----- ---------- --------- ---------- ---------- ----------
1,439 $36,974,317 $2,639,839 $40,577,994 $43,217,833 $21,425,937
===== =========== ========== =========== =========== ===========
</TABLE>
<TABLE>
Depreciation
Description Construc- Date Depre-
and Ownership tion interest ciable
Period Acquired Life
<S> <C> <C> <C>
Louisiana Housing Partners
New Orleans, LA - 96% 10/80-12/82 5/7/81 10-25yrs.
The Villas Ltd.
Amarillo, TX - 99% 4/81-4/82 6/5/81 10-25yrs.
Stonegate Apartments
Limited Partnership
Holland, MI - 93% 3/81-2/82 8/4/81 10-25yrs.
Lynndale Apartments, Ltd.
Raleigh, NC - 50% 3/81-5/82 9/28/81 10-25yrs.
College Green Limited
Partnership
Wilmington, NC - 95% 8/81-10/82 11/30/81 10-25yrs.
First Investment Limited
Partnership I (E)
Columbia, SC - 90% N/A N/A N/A
Stonewood Associates, Ltd.
Durham, NC - 96% 3/82-2/83 3/25/82 10-25yrs.
Cedar Lake, Ltd.
Decatur, AL - 98.93% 3/82-4/83 4/2/82 10-25yrs.
Washington Square Limited
Partnership
Glen Burnie, MD - 89% 4/82-11/82 4/27/82 10-25yrs.
</TABLE>
(A) Substantially all project costs, including costs such as construction
period interest and various fees, are capitalized as part of the cost of
the properties. these costs are amortized over the lives of the related
assets.
(B) The total cost of land and buildings and improvements less accumulated
depreciation at December 31, 1995 for federal income tax purposes is
$10,757,506.
(C) Reconciliation of Cost:
Balance as of December 31, 1994.......... $ 46,680,393
Property Sold............................ ( 3,809,257)
Additions during 1995, net of deletions.. 346,697
------------
Balance as of December 31, 1995............ $ 43,217,833
============
(D) Reconciliation of Accumulated Depreciation:
Balance as of December 31, 1994............ $ 21,485,262
Property Sold.............................. ( 1,663,149)
Depreciation Expense in 1995, net of deletions 1,603,824
------------
Balance as of December 31, 1995............... $ 21,425,937
============
(E) The Local Limited Partnership sold its real estate on December 30, 1985
and received cash and a note receivable. The property was reacquired by
the Local Limited Partnership on October 15, 1991.
All other information required pursuant to Section 9.4 of the Partnership
Agreement is set forth in the attached financial statements and related notes or
Annual Partnership Report.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive Officers. Registrant has
no officers or directors. The Managing General Partner manages and controls
substantially all of Registrant's affairs and has general responsibility and
ultimate authority in all matters effective its business. As of March 1, 1996,
the names of the directors and executive officers of the Managing General
Partner and the position held by each of them, are as follows:
Has Served as
Position Held with the a Director or
Name and Age Managing General Partner Officer Since
Michael L. Ashner Chief Executive Officer 1-96
and Director
Ronald J. Kravit Director 7-95
W. Edward Scheetz Director 7-95
Richard J. McCready President and
Chief Operating Officer 7-95
Jeffrey D. Furber Executive Vice President 1-96
and Clerk
Anthony R. Page Chief Financial Officer 8-95
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
(c) Identification of Certain Significant Employees. None.
(d) Family Relationships. None.
(e) Business Experience. The Managing General Partner was incorporated in
Massachusetts in October 1978. The background and experience of the executive
officers and directors of the Managing General Partner, described above in Items
10(a) and (b), are as follows:
Michael L. Ashner, age 44, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
W. Edward Scheetz, age 31, has been a Director of WFA since July 1995. Mr.
Scheetz was a director of NPI from October 1994 until January 1996. Since May
1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors,
L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment
Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director
of Roland International, Inc., a real estate investment company since January
1994, and as a Director of Capital Apartment Properties, Inc., a multi-family
residential real estate investment trust, since January 1994. From 1989 to May
1993, Mr. Scheetz was a principal of Trammel Crow Ventures, a national real
estate investment firm.
Ronald Kravit, age 39, has been a Director of WFA since July 1995. Mr.
Kravit has been associated with Apollo since August 1995. From October 1993 to
August 1995, Mr. Kravit was a Senior Vice President with G. Soros Realty
Advisors/Reichman International. Mr. Kravit was a Vice President and Chief
Financial Officer of MAXXAM Property Company from July 1991 to October 1993.
Richard J. McCready, age 37, is the President and Chief Operating Officer
of WFA and its subsidiaries. Mr. McCready previously served as a Managing
Director, Vice President and Clerk of WFA and a Director, Vice President and
Clerk of the Managing General Partner and all other subsidiaries of WFA. Mr.
McCready joined the Winthrop organization in 1990.
Jeffrey P. Furber, age 36, has been the Executive Vice President of
WFA and the President of Winthrop Management since January 1996. Mr. Furber
served as a Managing Director of WFA from January 1991 to December 1995 and as a
Vice President from June 1984 until December 1990.
Anthony R. Page, age 32, has been the Chief Financial Officer for WFA since
August 1995. From July 1994, to August 1995, Mr. Page was a Vice President with
Victor Capital Group, L.P. and from 1990 to July 1994, Mr. Page was a Managing
Director with Principal Venture Group. Victor Capital and Principal Venture are
investment banks emphasizing on real estate securities, mergers and
acquisitions.
Peter Braverman, age 44, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates II, A Limited
Partnership; Winthrop Residential Associates III, A Limited Partnership; 1626
New York Associates Limited Partnership; 1999 Broadway Associates Limited
Partnership; Indian River Citrus Investors Limited Partnership; Nantucket Island
Associates Limited Partnership; One Financial Place Limited Partnership;
Presidential Associates I Limited Partnership; Riverside Park Associates Limited
Partnership; Sixty-Six Associates Limited Partnership; Springhill Lake Investors
Limited Partnership; Twelve AMH Associates Limited Partnership; Winthrop
California Investors Limited Partnership; Winthrop Growth Investors I Limited
Partnership; Winthrop Interim Partners I, A Limited Partnership; Winthrop
Financial Associates, A Limited Partnership; Southeastern Income Properties
Limited Partnership; Southeastern Income Properties II Limited Partnership;
Winthrop Miami Associates Limited Partnership; and Winthrop Apartment Investors
Limited Partnership.
(f) Involvement in Certain Legal Proceedings. None
Item 11. Executive Compensation.
Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 13, "Certain Relationships and Related Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners.
The General Partners own the entire general partnership interest. No
person or group is known by the Partnership to be the beneficial owner of more
than 5% of the outstanding Units at March 15, 1996. Under the Partnership
Agreement, the voting rights of the Limited Partners are limited and, in some
circumstances, are subject to the prior receipt of certain opinions of counsel
or judicial decisions.
Under the Partnership Agreement, the right to manage the business of the
Partnership is vested in the General Partners and is generally to be exercised
only by the Managing General Partner, although approval of the other General
Partner, Linnaeus, is required as to all investments in Local Limited
Partnerships and in connection with any votes or consents arising out of the
ownership of a Local Limited Partnership interest.
<PAGE>
(b) Security ownership of management.
None of the partners of WFA and none of the officers, directors or
general partners of the General Partners, owned any Units at March 15, 1996 in
individual capacities; however, a wholly-owned subsidiary of First Winthrop owns
105 Units (.40%).
(c) Changes in control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership
except as follows:
In connection with its acquisition of control of Linnaeus, Londonderry
II issued NACC a $22 million non-recourse purchase money note due 1998 (the
"Purchase Money Note"), as set forth in a loan agreement, dated as of July 14,
1995, by and between NACC and Londonderry II. Initial security for the Purchase
Money Note includes, among other things, the partnership interests in W.L.
Realty acquired by Londonderry II and the W.L. Realty partnership interest in
Linnaeus. Accordingly, if Londonderry II does not satisfy its obligations under
the Purchase Money Note, NACC would have the right to foreclose upon this
security and, as result, would gain control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
(a) Transactions with management and others.
The Partnership began borrowing from First Winthrop in 1986, and through
December 31, 1995, has borrowed a total of $1,164,672 from First Winthrop to
fund operating deficits incurred by some Local Limited Partnerships and to pay
the Partnership's general and administrative expenses. Through December 31,
1995, the Partnership has repaid $498,399 to First Winthrop, leaving an
outstanding loan balance of $666,273 on December 31, 1995. The following is a
summary of yearly additions and payments on both the principal balance of the
loan and interest that has accrued on the loan:
<TABLE>
Loan Loan Loan Interest Interest Interest
Year Addition Payment Balance Expense Paid Accrued
- ---- -------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
1986 551,459 0 551,459 13,659 0 13,659
1987 180,000 0 731,459 64,958 13,659 64,958
1988 66,448 493,399 304,508 66,684 0 131,642
1989 36,298 5,000 335,806 37,693 0 169,335
1990 78,445 0 414,251 42,464 0 211,799
1991 79,663 0 493,914 42,301 0 251,100
1992 53,133 0 547,047 38,131 0 292,231
1993 47,082 0 594,129 40,307 0 332,538
1994 39,142 0 633,271 49,795 0 382,333
1995 3,302 0 666,273 64,521 0 446,854
</TABLE>
<PAGE>
The loans from First Winthrop were made pursuant to and in compliance
with Section 5.3A (iv) of the Partnership Agreement. The loans between the
Partnership and First Winthrop are demand loans which bear interest at Bank of
Boston prime rate plus 1%. No specific repayment terms were negotiated. The
Partnership intends to repay the loans when the Partnership receives cash from
either cash flow or sales proceeds from a Local Limited Partnership.
Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense reimbursements
from the Partnership. The amounts of these items and the times at which they are
payable to the General Partners or their affiliates are described at pages 9-12
and 31-33 of the Prospectus under the captions "Management Compensation" and
"Profits or Losses for Tax Purposes and Cash Distributions," respectively, which
descriptions are attached hereto as an Exhibit and incorporated herein by this
reference.
There were no fees, commissions or cash distributions which the
Partnership paid to or accrued for the account of the General Partners and their
affiliates for the year ended December 31, 1995. Four properties owned by Local
Limited Partnerships, Candlewood, Villas, Stonewood and Shadowbrook, paid, in
the aggregate, property management fees of $141, 591 to Winthrop Management, an
affiliate of WFA.
For the year ended December 31, 1995, the Partnership allocated $45,370
of taxable income to the Managing General Partner and $75,617 to
Linnaeus-Hampshire. See Note 3 of Notes to Financial Statements for additional
information about transactions between the Partnership and the General Partners
and their affiliates. In addition, $64,521 of interest at the Bank of Boston
prime rate plus 1% was accrued to the account of First Winthrop in 1995 on its
loan to the Partnership, however no interest was paid to First Winthrop in 1995.
The principal outstanding on the loan from First Winthrop was $666,273 as of
December 31, 1995.
(b) Certain business relationships.
The Partnership's response to Item 13(a) is incorporated herein by
reference. In addition, the Registrant has no business relationship with
entities of which the directors of the Managing General Partner are officers,
directors or 10% equity owners other than as set forth in the Registrant's
response to Item 13(a).
(c) Indebtedness of management. None.
(d) Transactions with promoters. None.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See Item 8 of this Form 10-K for Financial Statements of the
Partnership, Notes thereto, and Financial Statement Schedules.
(A Table of Contents to Financial Statements and Financial
Statement Schedules is included in Item 8 and incorporated
herein by reference.)
(a) (3) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 as this 27th day of
March 1996.
WINTHROP RESIDENTIAL ASSOCIATES I,
A LIMITED PARTNERSHIP
By: One Winthrop Properties, Inc.
Managing General Partner
By: /s/ Michael L. Ashner
Michael Ashner
Chief Executive Officer
Date: March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature/Name Title Date
/s/ Michael L. Ashner Chief Executive March 27, 1996
Michael L. Ashner Officer and Director
/s/ Ronald J. Kravit Director March 27, 1996
Ronald J. Kravit
/s/ Anthony R. Page Chief Financial Officer March 27, 1996
Anthony R. Page
INDEX TO EXHIBITS
Exhibit No. Title to Document
3. Agreement and Certificate of Limited Partnership of Winthrop
Residential Associates I, A Limited Partnership, dated as of June 23,
1983 (incorporated herein by reference to the Partner- ship's Annual
Report on Form 10-K filed March 30, 1984, File No. 0-10272).
4. Agreement and Certificate of Limited Partnership of Winthrop
Residential Associates I, A Limited Partnership, dated as of June 23,
1983 (incorporated herein by reference to Exhibit 3 hereto).
10. Agreement between Winthrop Residential Associates I, A Limited
Partnership and The Artery Organization, Inc. (incorporated herein by
reference to the Registrant's Registration Statement on Form S-11,
File No. 2-70828)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from audited financial
statements for the one year period ending
December 31, 1995 and is qualified in its
entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000350903
<NAME> Winthrop Residential Assoc
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.0000
<CASH> 111353
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 111353
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1715728
<CURRENT-LIABILITIES> 446856
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 602599
<TOTAL-LIABILITY-AND-EQUITY> 1715728
<SALES> 0
<TOTAL-REVENUES> 140047
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 52304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64521
<INCOME-PRETAX> 23222
<INCOME-TAX> 0
<INCOME-CONTINUING> 23222
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19295
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.00
</TABLE>
