<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-10272
Winthrop Residential Associates I, A Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Maryland 04-2720493
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
- --------------------------------------- -----------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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Indicate by check mark whether 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
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
September 30, December 31,
1997 1996
------------- ------------
Assets
Cash and cash equivalents $ 239 $ 280
Investment in Local Limited Partnerships 1,484 1,524
------------- -------------
Total Assets $ 1,723 $ 1,804
============= =============
Liabilities and Partners' Capital
Liabilities:
Accrued expenses $ 7 $ 17
Accrued interest payable to affiliate 5 159
Loans payable to affiliate 289 666
------------- -------------
Total Liabilities 301 842
------------- -------------
Partners' Capital:
Limited Partners
Units of Limited Partnership Interest,
$1,000 stated value per Unit; 25,676
units authorized; and 25,595
units issued and outstanding 2,471 2,014
General Partners (Deficit) (1,049) (1,052)
------------- -------------
Total Partners' Capital 1,422 962
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Total Liabilities and Partners' Capital $ 1,723 $ 1,804
============= =============
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Income:
Income from Local Limited Partnership
cash distributions $ 24 $ 3 $ 104 $ 640
Gain on sale of property from
Local Limited Partnership 500 - 500 -
Equity in net loss of Local Limited
Partnership (34) (12) (34) (27)
Interest 3 4 10 7
--------- --------- --------- ---------
Total income 493 (5) 580 620
--------- --------- --------- ---------
Expenses:
Amortization 1 1 5 5
Interest 10 15 41 46
General and administrative 24 33 64 111
Management fees 2 - 10 10
--------- --------- --------- ---------
Total expenses 37 49 120 172
--------- --------- --------- ---------
Net income (loss) $ 456 $ (54) $ 460 $ 448
========= ========= ========= =========
Net income (loss) allocated to general
partners $ 3 $ (3) $ 3 $ 22
========= ========= ========= =========
Net income (loss) allocated to limited
partners $ 453 $ (51) $ 457 $ 426
========= ========= ========= =========
Net income (loss) per Unit of Limited
Partnership Interest $ 17.70 $ (1.99) $ 17.86 $ 16.64
========= ========= ========= =========
</TABLE>
See notes to financial statements.
3 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Statement of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited General Limited Total
Partnership Partners' Partners' Partners'
Interest (Deficit) Capital Capital
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Balance - January 1, 1997 25,595 $ (1,052) $ 2,014 $ 962
Net Income 3 457 460
------------- ------------ ----------- ------------
Balance - September 30, 1997 25,595 $ (1,049) $ 2,471 $ 1,422
============= ============ =========== ============
</TABLE>
See notes to financial statements.
4 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Statements of Cash Flows (Unaudited)
(In Thousands)
For the Nine Months Ended
September 30, September 30,
1997 1996
-------------- ------------
Cash Flows from Operating Activities:
Net income $ 460 $ 448
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Amortization 5 5
Equity in net loss of Local Limited
Partnership 34 27
Gain on sale of property from Local Limited
Partnership (500) --
Changes in assets and liabilities:
Decrease in accrued interest payable to
affiliate (154) (304)
(Decrease) increase in accrued expenses (9) 38
--------------- --------------
Net cash (used in) provided by operating
activities (164) 214
--------------- --------------
Cash Flows from Investing Activities:
Proceeds from Local Limited Partnership sale of
property 500 --
--------------- --------------
Cash provided by investing activities 500 --
--------------- --------------
Cash Flows from Financing Activities:
Repayment of loans payable to affiliate (377) --
--------------- --------------
Cash used in financing activities (377) --
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Net (decrease) increase in cash and cash equivalents (41) 214
Cash and cash equivalents, beginning of period 280 111
--------------- --------------
Cash and cash equivalents, end of period $ 239 $ 325
=============== ==============
Supplemental Disclosure of Cash Flow Information:
- -------------------------------------------------
Cash paid for interest $ 195 $ 350
=============== ==============
See notes to financial statements.
5 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
NOTES TO FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's annual report on Form 10-KSB for
the year ended December 31, 1996.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature, except as described in Note 3. The balance sheet at
December 31, 1996 was derived from audited financial statements at such
date.
The results of operations for the nine months ended September 30, 1997
and 1996 are not necessarily indicative of the results to be expected for
the full year.
2. Related Party Transactions
At September 30, 1997, the outstanding principal and accrued interest to
First Winthrop was $294,000. The loan bears interest at prime (8.50% at
September 30, 1997) plus 1%. During 1997, the Partnership repaid $377,000
of the principal balance and $195,000 of interest (of which $154,000 was
accrued in prior years). Interest expense related to such borrowings was
$41,000 and $46,000 for the nine months ended September 30, 1997 and 1996,
respectively.
Management fees earned by an affiliate of the Managing General Partner
totaled $10,000 for each of the nine months ended September 30, 1997 and
1996.
3. Gain on Sale of Property from Local Limited Partnership
During July 1997, the Local Limited Partnership owning the Heritage Hills
Townhouses sold the property. The Partnership received $500,000 in
distributions from the sale. The Partnership recognized a $500,000 gain on
sale, as a result of the Partnership's investment account having a zero
balance at the date of sale. The Local Limited Partnership is expected to
terminate during the fourth quarter of 1997.
4. Subsequent Event
On October 28, 1997, affiliates of the general partner and Insignia
Financial Group, Inc. ("Insignia") entered into an agreement pursuant to
which, among other things, upon approval from the U.S. Department of
Housing and Urban Development, an affiliate of Insignia will be retained as
the property manager at the Local Limited Partnership property that is
currently managed by an affiliate of the Managing General Partner and will
gain control of the local general partner of the Local Limited Partnership
through the purchase of Class B Stock in the entity which controls the
stock of the local general partner. The new management agreement has the
same terms as the existing agreement. In addition, an affiliate of
Insignia purchased the loans payable and accrued interest therein to an
affiliate of the Managing General Partner.
6 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Item 6. Management's Discussion and Analysis or Plan of Operation
This Item should be read in conjunction with the financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
As of September 30, 1997, the Partnership retained an equity
interest in seven Local Limited Partnerships. The Local Limited
Partnership owning the Heritage Hill Townhouses is expected to
terminate during the fourth quarter of 1997, as a result of the
sale of the property during July 1997.
The level of liquidity based on cash and cash equivalents
experienced a $41,000 decrease for the nine months ended September
30, 1997, as compared to December 31, 1996. The Partnership's
$164,000 used in operating activities and $377,000 of repayment of
loans payable to an affiliate (financing activities) were only
partially offset by $500,000 of sale proceeds received from the
Local Limited Partnership owning the Heritage Hills Townhouses
(investing activities). During July 1997, the Local Limited
Partnership owning the Heritage Hills Townhouses sold the property
and distributed $500,000 of sale proceeds to the Partnership. The
Partnership repaid a portion of the principal balance of the loans
payable to an affiliate and accrued interest with the sales
proceeds. The Partnership recognized a $500,000 gain on sale as a
result of the Partnership's investment account having a zero
balance at the date of sale. It is expected that a gain of
approximately $175 per unit will be allocated to the Limited
Partners due to the recapture of benefits taken in prior years with
respect to this Local Limited Partnership.
The Partnership's primary source of income is distributions from
the Local Limited Partnerships. The Partnership requires cash to
pay management fees, general and administrative expenses and 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,
loans from an affiliate of the Managing General Partner and cash
reserves.
At September 30, 1997, the outstanding principal and accrued
interest on the loans payable to an affiliate of the Managing
General Partner was $294,000. The Partnership repaid $377,000
of the loans payable to an affiliate and $195,000 of interest
(of which $154,000 was accrued in prior years), primarily from
sales proceeds received from the Local Limited Partnership owning
the Heritage Hills Townhouses. The Partnership will be unable to
fully repay this indebtedness 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 to provide sufficient 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 affiliate loans. Neither the
Managing General Partner or its affiliates has an obligation to
fund any loan amounts required. The Partnership does not expect to
make cash distributions to its partners in 1997.
7 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Item 6. Management's Discussion and Analysis or Plan of Operation
(Continued)
Liquidity and Capital Resources (Continued)
At present, the Partnership has no intention of making advances to
fund future operating deficits incurred by any Local Limited
Partnership, but retains its right to exercise business judgement
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.
On September 1, 1996, the Local Limited Partnership owning The
Villas Apartments signed a provisional workout agreement, which
expired August 31, 1997, with the U.S. Department of Housing and
Urban Development ("HUD"). The Local Limited Partnership submitted
a proposal to HUD to extend the term through December 31, 1998 and
is awaiting approval from HUD. If HUD does not extend such workout
agreement, the property could be lost through foreclosure. If HUD
sells the mortgage, the provisional workout agreement may be
terminated by the new mortgage holder.
Results of Operations
Net income increased for the nine months ended September 30, 1997
by $12,000, as compared to 1996, primarily due to the $500,000 gain
on sale of property from the Local Partnership owning the Heritage
Hills Townhouses and a decrease in general and administrative
expenses of $47,000, which was partially offset by a decrease in
income from Local Limited Partnership cash distributions of
$536,000. General and administrative expenses declined due to costs
associated with the Shadowbrook foreclosure during 1996. In 1996,
$640,000 was received from three Local Limited Partnerships
(Shadowbrook $494,000, Lynwood $101,000, and Stonewood $45,000).
The Shadowbrook and Stonewood Apartment properties were lost
through foreclosure during 1996 and accordingly, no additional
distributions will be received from these Local Limited
Partnerships. For the nine months ended September 30, 1997, $80,000
was received from the Local Limited Partnership owning the Lynwood
property and $24,000 from the Local Limited Partnership owning the
Heritage Hills Townhouses.
8 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule.
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months
ended September 30, 1997.
9 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP RESIDENTIAL ASSOCIATES I,
A LIMITED PARTNERSHIP
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY:/s/ Michael L. Ashner
--------------------------------
Michael L. Ashner
Chief Executive Officer
BY:/s/ Edward V. Williams
--------------------------------
Edward V. Williams
Chief Financial Officer
Dated: November 13, 1997
10 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
SEPTEMBER 30, 1997
Exhibit Index
Exhibit Page No.
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27. Financial Data Schedule --
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
<PAGE>
Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three
months ended September 30, 1997:
Net income $ 456,000
Add: Amortization 1,000
Cash from reserves 66,000
Less: Equity in net loss of Local Limited Partnership (34,000)
Repayment of loan payable affiliate (377,000)
Repayment of interest payable to affiliate (112,000)
--------
Cash Available for Distribution $ 0
========
2. Fees and other compensation paid or accrued by the
Partnership to the General Partners, or their affiliates,
during the three months ended September 30, 1997:
Entity Receiving Form of
Compensation Compensation Amount
---------------------------- -------------------- ------------
First Winthrop Corporation Interest on Loans $ 10,000
WP Management Co., Inc. Management Fees $ 2,000
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Residential Associates I, A Limited Partnership and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 239,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,723,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,422,000
<TOTAL-LIABILITY-AND-EQUITY> 1,723,000
<SALES> 0
<TOTAL-REVENUES> 570,000 <F1>
<CGS> 0
<TOTAL-COSTS> 15,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,000
<INCOME-PRETAX> 460,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 460,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 460,000
<EPS-PRIMARY> 17.86
<EPS-DILUTED> 17.86
<FN>
<F1>
Includes gain on sale of property from Local Limited Partnership of $500,000.
</FN>
</TABLE>
