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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 March 31, 1998
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
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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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<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 262 $ 251
Investment in Local Limited Partnership 702 700
-------- --------
Total Assets $ 964 $ 951
======== ========
Liabilities and Partners' Capital
Liabilities:
Accrued interest and expenses $ 34 $ 22
Loan payable 289 289
-------- --------
Total Liabilities 323 311
-------- --------
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 1,729 1,728
General Partners deficit (1,088) (1,088)
-------- --------
Total Partners' Capital 641 640
-------- --------
Total Liabilities and Partners' Capital $ 964 $ 951
======== ========
</TABLE>
See notes to financial statements.
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<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Statements of Income (Unaudited)
(In Thousands, Except Unit Data)
For The Three Months Ended
--------------------------
March 31, March 31,
1998 1997
--------- ---------
Income:
Income from Local Limited Partnership
cash distributions $ 23 $ 80
Equity in income of Local Limited
Partnership 2 2
Interest 2 3
----- -------
Total income 27 85
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Expenses:
Amortization - 2
Interest 7 15
General and administrative 19 4
Management fees - 8
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Total expenses 26 29
----- -------
Net income $ 1 $ 56
===== =======
Net income allocated to General Partners $ - $ 3
===== =======
Net income allocated to Limited Partners $ 1 $ 53
===== =======
Net income per Unit of Limited Partnership Interest $.04 $2.07
===== =======
See notes to financial statements.
3 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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 - 1 1
------- -------- ------- -----
Balance - March 31, 1998 25,595 $(1,088) $1,729 $641
======= ======== ======= =====
</TABLE>
See notes to financial statements.
4 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Statements of Cash Flows (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For The Three Months Ended
--------------------------
March 31, March 31,
1998 1997
---------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 1 $ 56
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization - 2
Equity in income of Local Limited Partnership (2) (2)
Changes in assets and liabilities:
Increase in accounts payable and
accrued expenses 12 8
--------- -------
Net cash provided by operating activities 11 64
--------- -------
Net increase in cash 11 64
Cash and cash equivalents, beginning of period 251 280
--------- -------
Cash and cash equivalents, end of period $ 262 $ 344
========= =======
</TABLE>
See notes to financial statements.
5 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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 three months ended March 31, 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 three months ended March 31, 1997.
3. Intent to Sell Investment in Local Limited Partnership
The Partnership has entered into a letter of intent pursuant to which it
will sell 37.5% of its 80% 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, it is expected that the Partnership will
receive approximately $260,000 in net proceeds.
6 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation
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 March 31, 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 $11,000 increase for the three months ended March 31, 1998, as
compared to December 31, 1997. At March 31, 1998, the Partnership had
$262,000 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 bank accounts of the Partnership. Coordinated
Services is not permitted,
7 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (Continued)
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 $307,000 at March 31, 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 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
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.
8 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (Continued)
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 37.5% of its interest in the Local Limited Partnership,
which owns Copperfield Apartments, to the general partner of such
Local Limited Partnership. If this sale, which is subject to many
conditions, is consummated, it is expected that the Partnership will
receive approximately $260,000 in net proceeds. As a result of this
negotiated sales price, the Partnership has recorded a $762,000
write-down of its investment in the Local Limited Partnership.
Results of Operations
Net income declined for the three months ended March 31, 1998 by
$55,000, as compared to 1997, primarily due to a decrease in income
from Local Limited Partnership cash distributions of $57,000. During
the three months ended March 31, 1998, the Partnership received
residual cash distributions of $23,000 from the Shadowbrook property,
which was lost through foreclosure during 1996, and accordingly no
additional distributions are expected to be received. At March 31,
1997, $80,000 was received from the Local Limited Partnership which
owns the Lynwood property. General and administrative expenses
increased by $15,000 for the three months ended March 31, 1998, as
compared to 1997, due to the timing of certain expenses.
9 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
--------------------------------------------------------
FORM 10-QSB MARCH 31, 1998
--------------------------
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 March 31, 1998.
10 of 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
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: May 15, 1998
11 of 12
<PAGE>
Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1998
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three months ended
March 31, 1998:
Net income $ 1,000
Add: Cash from reserves 1,000
Less: Equity in income of Local Limited Partnership (2,000)
-------
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
March 31, 1998:
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------ ------
None
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 262,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 964,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 641,000
<TOTAL-LIABILITY-AND-EQUITY> 964,000
<SALES> 0
<TOTAL-REVENUES> 25,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,000
<INCOME-PRETAX> 1,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,000
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
