<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 June 30, 1998
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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
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Commission file number 0-10272
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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
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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
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FORM 10-QSB JUNE 30, 1998
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PART 1 - FINANCIAL INFORMATION
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Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
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<S> <C> <C>
Assets
Cash and cash equivalents $ 268 $ 251
Investment in Local Limited Partnership 700 700
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Total Assets $ 968 $ 951
==================== =====================
Liabilities and Partners' Capital
Liabilities:
Accrued interest and expenses $ 33 $ 22
Loan payable 289 289
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Total Liabilities 322 311
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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 1,734 1,728
General Partners deficit (1,088) (1,088)
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Total Partners' Capital 646 640
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Total Liabilities and Partners' Capital $ 968 $ 951
==================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For The Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Income:
Income from Local Limited Partnership
cash distributions $ 51 $ - $ 74 $ 80
Equity in income of Local Limited
Partnership (2) (2) - -
Interest 2 4 4 7
---------------- ----------------- ----------------- ---------------
Total income 51 2 78 87
---------------- ----------------- ----------------- ---------------
Expenses:
Amortization - 2 - 4
Interest 6 16 13 31
General and administrative 35 36 54 40
Management fees 5 - 5 8
---------------- ----------------- ----------------- ---------------
Total expenses 46 54 72 83
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Net income (loss) $ 5 $ (52) $ 6 $ 4
================ ================= ================= ===============
Net income (loss) allocated to General Partners $ - $ (3) $ - $ -
================ ================= ================= ===============
Net income (loss) allocated to Limited Partners $ 5 $ (49) $ 6 $ 4
================ ================= ================= ===============
Net income (loss) per Unit of Limited
Partnership Interest $ .19 $ (1.91) $ .23 $ .16
================ ================= ================= ===============
</TABLE>
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Statements of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance - January 1, 1998 25,595 $ (1,088) $ 1,728 $ 640
Net income - 6 6
----------------- ----------------- ---------------- ----------------
Balance - June 30, 1998 25,595 $ (1,088) $ 1,734 $ 646
================= ================= ================ ================
</TABLE>
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Statements of Cash Flows (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
June 30, June 30,
1998 1997
-------------------- ---------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 6 $ 4
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Amortization - 4
Changes in assets and liabilities:
Decrease in accounts payable and
accrued expenses (3) (9)
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Net cash provided by (used in) operating activities 3 (1)
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Cash Flows From Financing Activities:
Increase (decrease) in accrued interest payable 14 (42)
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Cash used in financing activities 14 (42)
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Net increase (decrease) in cash 17 (43)
Cash and cash equivalents, beginning of period 251 280
-------------------- ---------------------
Cash and cash equivalents, end of period $ 268 $ 237
==================== =====================
Supplemental Disclosure of Cash Flow Information:
- --------------------------------------------------
Cash paid for interest $ - $ 73
==================== =====================
</TABLE>
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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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, 1997.
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. The balance sheet at December 31, 1997, was derived
from audited financial statements at such date.
The results of operations for the six months ended June 30, 1998 and 1997
are not necessarily indicative of the results to be expected for the full
year.
2. Related Party Transactions
Management fees earned by an affiliate of the Managing General Partner
totaled $8,000 for the six months ended June 30, 1997. Commencing
December 16, 1997, an unaffiliated third party began providing management
services to the Partnership.
3. Intent to Sell Investment in Local Limited Partnership
The Partnership has entered into a letter of intent pursuant to which it
will sell a portion of its interest in a Local Limited Partnership, First
Investment Limited Partnership 1 ("FILP"), to the general partner of the
Local Limited Partnership. If this sale, which is subject to many
conditions, is consummated, the Partnership will effectively own a 50%
interest in FILP. The general partner of FILP has renegotiated the
purchase price to approximately $175,000, payable with a ten year
promissory note at 8% interest per annum. As specified in the promissory
note, one half of the general partners future distributions from FILP
will be required to repay the note. In addition, the general partner of
FILP is currently negotiating to refinance the current mortgage, and
expects to distribute any excess proceeds.
6 of 12
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Item 2. Management's Discussion and Analysis or Plan of Operation
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The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form
10-QSB and the other filings with the Securities and Exchange
Commission made by the Partnership from time to time. The
discussion of the Partnership's liquidity, capital resources and
results of operations, including forward-looking statements
pertaining to such matters, does not take into account the
effects of any changes to the Partnership's operations.
Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
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 June 30, 1998, the Partnership retained an equity interest
in six Local Limited Partnerships. During July 1997, Washington
Square Limited Partnership sold the Heritage Hills Townhouses
property. This Local Limited Partnership was terminated in the
fourth quarter of 1997.
The level of liquidity based on cash and cash equivalents
experienced an $17,000 increase for the six months ended June 30,
1998, as compared to December 31, 1997. At June 30, 1998, the
Partnership had $268,000 in cash and cash equivalents, which has
been invested primarily in short-term-certificates of deposit and
money market accounts.
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 or by loans.
On December 16, 1997, the Managing General Partner and certain of
its affiliates entered into a Service Agreement with Coordinated
Services of Valdosta, LLC ("Coordinated Services"), pursuant to
which Coordinated Services was retained to provide asset
management and investor services to the Partnership and certain
affiliated partnerships. As a result of this agreement,
Coordinated Services has the right to direct the day to day
affairs of the Partnership, including without limitation,
reviewing and analyzing potential sale, refinancing or
restructuring proposals by Local Limited Partnerships,
preparation of all Partnership reports, maintaining Partnership
records and maintaining
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Item 2. Management's Discussion and Analysis or Plan of Operation
(Continued)
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Liquidity and Capital Resources (Continued)
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bank accounts of the Partnership. Coordinated Services is not
permitted, however, without the consent of the Managing General
Partner, or as otherwise required under the terms of the
Partnership's Agreement of Limited Partnership (the "Partnership
Agreement") to, among other things, cause the Partnership to
consent to a sale of an asset or cause the Partnership to file
for bankruptcy. As compensation for providing these services, the
Managing General Partner and its affiliates assigned to
Coordinated Services all of their rights to receive fees from the
Partnership, as provided in the Partnership Agreement.
The loan payable to an affiliate of the Managing General Partner
was assigned to an unaffiliated third party on October 27, 1997.
The loan, which bears interest at prime plus 1%, is repayable
from cash flows generated by the Local Limited Partnerships and
the proceeds of any sales of real estate owned by the Local
Limited Partnerships. The outstanding principal balance and
accrued interest on the loan was approximately $314,000 at June
30, 1998. The Partnership will be unable to fully repay this
indebtedness and will continue to 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 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
have an obligation to fund any loan amounts required. The
Partnership did not make cash distributions to its partners
during 1998 or 1997.
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 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.
On September 1, 1996, the Local Limited Partnership which owns
The Villas Apartments signed a provisional workout agreement,
expiring August 31, 1997, with the U.S. Department of Housing and
Urban Development ("HUD"). The provisional workout agreement has
been extended until December 30, 1998. The general partner of the
Local Limited Partnership is currently negotiating with HUD to
reach a resolution. There can be no assurance that a resolution
of this default will be reached with HUD. If the general partner
of the Local Limited Partnership and HUD are unable to agree on a
resolution, the Property could be lost through foreclosure. The
Partnership's investment in this Local Limited Partnership had
previously been written-down to zero.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation
(Continued)
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Liquidity and Capital Resources (Continued)
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The Cedar Lake Ltd. Local Limited Partnership, which owns Albany
Landings Apartments, has incurred significant operating losses
and cash flow deficits. If operations at the property do not
improve, this property may be lost through foreclosure. The
Partnership's investment in this Local Limited Partnership had
previously been written-down to zero.
The Partnership has entered into a letter of intent pursuant to
which it will sell a portion of its interest in a Local Limited
Partnership, First Investment Limited Partnership 1 ("FILP"), to
the general partner of the Local Limited Partnership. If this
sale, which is subject to many conditions, is consummated, the
Partnership will effectively own a 50% interest in FILP. The
general partner of FILP has renegotiated the purchase price to
approximately $175,000, payable with a ten year promissory note
at 8% interest per annum. As specified in the promissory note,
one half of the general partners future distributions from FILP
will be required to repay the note. In addition, the general
partner of FILP is currently negotiating to refinance the current
mortgage, and expects to distribute any excess proceeds.
Results of Operations
---------------------
Net income increased by $2,000 for the six months ended June 30,
1998, as compared to 1997, due to a decrease in income of $9,000,
which was more than offset by a decrease in expenses of $11,000.
Income declined due to a $6,000 decrease in income from Local
Limited Partnership cash distributions and a decrease in interest
income of $3,000. During the six months ended June 30, 1998, the
Partnership received $51,000 from the Local Limited Partnership
which owns the Lynwood property and $23,000 from the Shadowbrook
property. The Shadowbrook property was lost through foreclosure
during 1996, and accordingly no additional distributions are
expected to be received. At June 30, 1997, $80,000 was received
from the Local Limited Partnership which owns the Lynwood
property.
Expenses declined primarily due to a decrease in interest expense
of $18,000, which was only partially offset by an increase in
general and administrative expenses of $14,000. Interest expense
declined due to a significant portion of the loan being repaid
during the third quarter of 1997. General and administrative
expenses increased due to the timing of certain expenses.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27
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 June 30, 1998.
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WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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SIGNATURES
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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
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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: August 11, 1998
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Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 1998
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Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
<TABLE>
<CAPTION>
1. Statement of Cash Available for Distribution for the three months
ended June 30, 1998:
<S> <C>
Net income $ 5,000
Less: Equity in income of Local Limited Partnership -
Cash to reserves (5,000)
------------------
Cash Available for Distribution $ -
=================
2. Fees and other compensation paid or accrued by the Partnership to
the General Partners, or their affiliates, during the three
months ended June 30, 1998:
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------ --------
None
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 268,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 968,000
<CURRENT-LIABILITIES> 0
<BONDS> 289,000
<COMMON> 0
0
0
<OTHER-SE> 646,000
<TOTAL-LIABILITY-AND-EQUITY> 968,000
<SALES> 0
<TOTAL-REVENUES> 74,000
<CGS> 0
<TOTAL-COSTS> 5,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,000
<INCOME-PRETAX> 6,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,000
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
