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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the year ended December 31, 1998 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 of Organization) (I.R.S. Employer I.D. No.)
5 Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142
- ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (617) 234-3000
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Securities registered pursuant to Section 12(b) of the Act:
None
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Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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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-B 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-KSB or any amendment to
this Form 10-KSB. [ ]
Registrant's revenues for its most recent fiscal year were $46,000.
No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART I
Item 1. Description of 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 limited partnership. See "Employees" below.
In 1981, the Partnership sold, pursuant to Registration Statement filed
with the Securities and Exchange Commission, 25,666 Units of limited partnership
interest ("Unit") at a purchase price of $1,000 per Unit (an aggregate 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.
The only business of the Partnership is investing as a limited partner
in other limited partnerships that own apartment complexes originally subsidized
by the U.S. Department of Housing and Urban Development ("HUD"). The Partnership
initially acquired equity interests in the form of limited partnership interests
in 16 Local Limited Partnerships owning and operating
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apartment complexes. The Partnership completed its acquisitions in May 1982. The
Partnership has sold its interests in six properties: Greentree Apartments
(November 1986), Marsh Cove Apartments (December 1986), Orchard Hill (October
1988), Racquet Club (May 1989), Columbine (May 1989) and Heritage Hills
Townhouses (1997). See "Item 2. Description of Properties." A seventh 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. In 1998, the
Partnership sold a portion of its interest in Copperfield Apartments (see
"Property Matters" below). 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. The mortgage encumbering Stonewood Apartments was foreclosed in
March 1996 and Shadowbrook Apartments was effectively deeded in lieu of
foreclosure to the lender in August 1996. See "Defaults" below.
Property Matters
Copperfield Apartments. The Partnership sold a portion of its interest
in First Investment Limited Partnership 1 ("First Investment"), the local
limited partnership which owns Copperfield Apartments, to the general partner of
First Investment. The Partnership now owns a 50% interest in First Investment.
The sales price of $175,000 was paid with a promissory note which matures on
December 31, 2008, and is secured by the purchaser's interest in First
Investment. The promissory note accrues interest at 8% per annum. As specified
in the promissory note, one half of the general partner's future distributions
from First Investment will be required to repay the note. During September 1998,
$70,000 of the principal balance and $5,000 of accrued interest was paid
resulting in an outstanding balance on the note at December 31, 1998 of $107,000
of principal and accrued interest. During 1997, the Partnership recorded a
$762,000 write-down of its investment in Copperfield Apartments to its net
realizable value.
On August 31, 1998, Copperfield Apartments refinanced its mortgage. The
new mortgage in the amount of $1,200,000 replaced indebtedness of approximately
$725,000. The mortgage bears interest at 6.40%, requires monthly payments of
$8,000 and matures on September 1, 2008, with a balloon payment of approximately
$1,039,000. A premium is to be calculated under the terms of the mortgage if the
loan is prepaid. During September 1998, Copperfield Apartments distributed
$150,000 of refinancing proceeds to the Partnership.
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Heritage Hills. In July 1997, the Local Limited Partnership owning
Heritage Hills Townhouses sold the property. Net proceeds distributed to the
Partnership as a result of the sale totaled $506,000.
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 Local Limited Partnership owning Shadowbrook defaulted on its
mortgage in November 1987, and the mortgage was subsequently assigned by the
lender to HUD. In August 1996, unable to reach a resolution to cure the default,
this property was effectively deeded in lieu of foreclosure to the 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. On September 1, 1996, a provisional workout agreement was entered
into with HUD. This agreement expired on August 31, 1997. The provisional
workout agreement was extended through December 30, 1998. The Partnership is
currently negotiating with HUD in an effort 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.
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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; and (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 the Local Limited
Partnership which owns the Villas to maintain ownership of its property, while
the Local Limited Partnership and the Lender attempt to negotiate a plan which
will allow the Local Limited Partnership to work toward reducing the unpaid
amounts.
Employees
The Partnership does not have any employees. Services were performed
for the Partnership until December 16, 1997 by the Managing General Partner, and
Winthrop Management LLC, an affiliate of the Managing General Partner.
On December 16, 1997, the Managing General Partner and certain of its
affiliates entered into a Services 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, 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
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affiliates assigned to Coordinated Services all of their right to receive fees
from the Partnership as provided in the Partnership Agreement. See "Item 12.
Certain Relations and Related Transactions."
Item 2. Description of Properties.
The following table sets forth certain information regarding the
properties owned by the six Local Limited Partnerships in which the Partnership
has retained an interest and which continue to own apartment properties as of
March 15, 1999:
Date of Number of
Property Name Location Acquisition(1) Units
- ------------- -------- -------------- ---------
The Villas Apartments Amarillo, TX 6/05/81 136
Lynnwood Park Apartments Raleigh, NC 9/28/81 152
Stonegate Apartments Holland, MI 8/04/81 156
Albany Landing Apartments Decatur, AL 4/02/82 120
College Green Apartments Wilmington, NC 11/30/81 138
Copperfield Apartments Columbia, SC 8/22/91 120
- ----------------------------
(1) Represents the date on which the Partnership made its initial investment in
the Local Limited Partnership
The following table sets forth information relating to the first
mortgage encumbering each of the Local Limited Partnership's properties:
<TABLE>
<CAPTION>
Principal
Principal Balance
Balance at Interest Period Maturity Due at
Property December 31,1998 Rate Amortized Date Maturity
- -------- ---------------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
The Villas $3,574,000 7.5% 40 years 8/1/2022 (1)
Lynndale $4,033,000 7.5% 40 years 3/1/2023 (1)
Stonegate $4,767,000 7.5% 40 years 3/1/2022 (1)
Albany Landing $2,770,000 7.5% 40 years 9/1/2023 (1)
College Green $2,755,000 7.5% 40 years 3/1/2023 (1)
Copperfield $1,198,000 6.4% 10 years 9/1/2008 $1,039,000
</TABLE>
(1) Self-amortizing loan.
6
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The following table sets forth the Partnership's limited partnership
ownership interest in each of the Local Limited Partnerships:
Local Limited Partnership Ownership Interest
- ------------------------- ------------------
The Villas, Ltd. 99%
Lynndale Apartments, Ltd. 50%
Stonegate Apartments
Limited Partnership 93%
Cedar Lake, Ltd. 98.93%
College Green 95%
First Investment
Limited Partnership I 50%
As of March 15, 1999, 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.
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 two years, where that data is
available to the Partnership:
Average Monthly
Average Monthly Rental
Occupancy Rate Rate per Unit
Property 1998 1997 1998 1997
- -------- ---- ---- ---- ----
The Villas 96% 98% $448 $431
Lynnwood Park 96% 98% $524 $536
Stonegate 93% 95% $538 $526
Albany Landing 79% 82% $415 $403
College Green 93% 94% $533 $525
Copperfield 91% 89% $521 $482
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Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of each of the Partnership's
properties as of December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
Property Gross Federal
- -------- Carrying Accumulated Tax
Value Depreciation Rate Method Basis
----- ------------ ---- ------ -----
<S> <C> <C> <C> <C> <C>
The Villas $4,598 $2,913 5-25 yrs. S/L $ 397
Lynnwood Park 4,427 2,954 10-25 yrs. S/L 180
Stonegate 4,784 3,211 5-25 yrs. S/L 14
Albany Landing 3,347 1,969 10-25 yrs. S/L 158
College Green 3,606 2,319 10-25 yrs. S/L 212
Copperfield 3,064 865 5-27.5 yrs. S/L 1,751
</TABLE>
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.
No matter was submitted to a vote of security holders during the period
covered by this report.
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PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
The Partnership 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, 1999, there were 2,857 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 1998 or 1997.
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Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB 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-KSB 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 December 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.
On May 1, 1998, the Partnership sold a portion of its interest in a
Local Limited Partnership, First Investment Limited Partnership I ("Copperfield
Apartments"), to the general partner of the Local Limited Partnership. The
Partnership now owns a 50% interest in Copperfield Apartments. The sales price
was $175,000, payable with a promissory note, maturing on December 31, 2008, and
secured by the interest in the Local Limited Partnership. The promissory note
accrues interest at 8% per annum. On August 31, 1998, Copperfield Apartments
refinanced its mortgage. During September 1998, Copperfield Apartments
distributed $150,000 of refinancing proceeds to the Partnership. As specified in
the promissory note, one half of the general partner's future distributions from
Copperfield Apartments are required to repay the note. During September 1998,
the general partner of Copperfield Apartments repaid $70,000 of the principal
balance and $5,000 of accrued interest due on the note.
The level of liquidity based on cash and cash equivalents experienced a
$204,000 increase for the year ended December 31, 1998, as compared to December
31, 1997. The Partnership's $218,000 of cash provided by investing activities
and an increase in accrued interest payable of $27,000 (financing activities),
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were only partially offset by $41,000 of cash used in operating activities.
Investing activities consisted of $150,000 of refinancing proceeds distributed
by First Investment Limited Partnership I (Copperfield Apartments), one of the
Local Limited Partnerships which the Partnership has an equity interest, and
$70,000 of collections of a note receivable, which were only partially offset by
$2,000 of expenses relating to the partial sale of the Partnership's investment
in Copperfield Apartments. At December 31, 1998, the Partnership had $455,000 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, 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
transferred to another affiliate on October 27, 1997. The loan, which bears
interest at prime plus 1%, (8.75% and 9.5% at December 31, 1998 and 1997,
respectively) is repayable from cash flows generated by the Local Limited
Partnerships and the
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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 $327,000 and $301,000 at December 30, 1998 and 1997, respectively.
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.
The Local Limited Partnership which owns The Villas Apartments
previously entered into a provisional workout agreement with the U.S. Department
of Housing and Urban Development ("HUD"). This agreement expired on December 30,
1998. The general partner of the Local Limited Partnership is continuing its
negotiations with HUD in an effort 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.
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.
Results of Operations
Net loss declined by $236,000 for the year ended December 31, 1998, as
compared to 1997, due to a decrease in expenses of $783,000, which was
substantially offset by a decrease in income of $547,000.
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Income declined primarily due to the $506,000 gain on sale of property
from the Local Partnership owning the Heritage Hills Townhouses in 1997, as
compared to the $23,000 loss on the sale of a portion of the Partnership's
interest in Copperfield Apartments during 1998. During the year ended December
31, 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. During 1997, $81,000
was received from the Local Limited Partnership which owns the Lynwood property
and $24,000 from the Local Limited Partnerships owning the Heritage Hills
Townhouses. The Partnership also received residual cash distributions of $22,000
and $2,000 from the Shadowbrook and Candlewood properties, respectively.
Expenses declined primarily due to the $762,000 writedown in 1997 of
the Partnerships investment in Copperfield Apartments.. Interest expense
declined due to a significant portion of the loan being repaid during the third
quarter of 1997. All other items of income and expense remained relatively
constant.
Year 2000
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The Registrant
is dependent upon the General Partner and its affiliates and Coordinated
Services for management and administrative services. Any computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
During the first half of 1998, Coordinated Services, the General
Partner and its affiliates completed their assessment of the various computer
software and hardware used in connection with the management of the Registrant.
This review indicated that significantly all of the computer programs used by
Coordinated Services, the General Partner and its affiliates are off-the-shelf
"packaged" computer programs which are easily upgraded to be Year 2000
compliant. In addition, to the extent that custom programs are utilized by
Coordinated Services, the General Partner and its affiliates, such custom
programs are Year 2000 compliant.
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Following the completion of its assessment of the computer software and
hardware, Coordinated Services, the General Partner and its affiliates began
upgrading those systems which required upgrading. To date, significantly all of
these systems have been upgraded. The Registrant has to date not borne, nor is
it expected that the Registrant will bear any significant cost, in connection
with the upgrade of those systems to requiring remediation. It is expected that
all systems will be remediated, tested and implemented during the first half of
1999.
To date, neither Coordinated Services no the General Partner are aware
of any external agent, including local general partners, with a Year 2000 issue
that would materially impact the Registrant's results of operations, liquidity
or capital resources. However, Coordinated Services and the General Partner have
no means of ensuring that external agents will be Year 2000 compliant. The
General Partner does not believe that the inability of external agents to
complete their Year 2000 resolution process in a timely manner will have a
material impact on the financial position or results of operations of the
Registrant. However, the effect of non-compliance by external agents is not
readily determinable.
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Item 7. Financial Statements
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
INDEX
Page
Independent Auditors' Report..........................................F - 2
Financial Statements:
Balance Sheets as of December 31, 1998 and 1997.......................F - 3
Statements of Operations for the Years Ended
December 31, 1998 and 1997.......................................F - 4
Statements of Partners' Capital for the Years Ended
December 31, 1998 and 1997.......................................F - 5
Statements of Cash Flows for the Years Ended
December 31, 1998 and 1997.......................................F - 6
Notes to Financial Statements.........................................F - 7
F - 1
<PAGE>
Independent Auditors' Report
To the Partners
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, 1998 and 1997, and the related statements of operations, partners'
capital and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements 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
1). 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 other
auditors.
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, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Certified Public Accountants
New York, New York
March 19, 1999
F - 2
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
BALANCE SHEETS
(In Thousands, Except Unit Data)
DECEMBER 31,
------------------------
1998 1997
---- ----
ASSETS
Cash and cash equivalents $ 455 $ 251
Note Receivable 107 -
Investment in Local Limited Partnership 329 700
------- -------
Total Assets $ 891 $ 951
======= =======
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued interest and expenses $ 48 $ 22
Loan payable 289 289
------- -------
Total Liabilities 337 311
------- -------
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 1,645 1,728
General Partners' deficit (1,091) (1,088)
------- -------
Total Partners' Capital 554 640
------- -------
Total Liabilities and Partners' Capital $ 891 $ 951
======= =======
See notes to financial statements.
F - 3
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1998 1997
--------- ---------
<S> <C> <C>
Income:
Income from Local Limited Partnership
cash distributions $ 74 $ 129
Gain on sale of property from Local Limited Partnership - 506
Equity in loss of Local Limited Partnership (24) (55)
Loss on sale of investment in Local Limited Partnership (23) -
Interest 19 13
------------ -----------
Total Income 46 593
------------ -----------
Expenses:
Amortization - 7
Interest 27 48
General and administrative 100 88
Management fees 5 10
Write-down of investment in a
Local Limited Partnership - 762
------------ -----------
Total Expenses 132 915
------------ -----------
Net Loss $ (86) $ (322)
============ ===========
Net Loss allocated to General Partners $ (3) $ (36)
============ ===========
Net Loss allocated to Limited Partners $ (83) $ (286)
============ ===========
Net Loss per Unit of Limited Partnership Interest $ (3.24) $ (11.17)
============ ===========
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1998 AND 1997
(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> <C>
Balance - January 1, 1997 25,595 $ (1,052) $ 2,014 $ 962
Net Loss - (36) (286) (322)
------------ --------- ---------- -------
Balance - December 31, 1997 25,595 (1,088) 1,728 640
Net Loss - (3) (83) (86)
------------ --------- ---------- -------
Balance - December 31, 1998 25,595 $ (1,091) $ 1,645 $ 554
============ ========= ========== =======
</TABLE>
See notes to financial statements.
F - 5
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (86) $ (322)
Adjustments to reconcile net loss to net cash used in
operating activities:
Gain on sale of property from Local Limited Partnership - (506)
Amortization - 7
Loss on sale of investment in Local Limited Partnership 23 -
Equity in loss of Local Limited Partnerships 24 55
Write-down of investment in a Local Limited Partnership - 762
Changes in assets and liabilities:
Decrease in accrued expenses (2) (7)
--------- ---------
Net cash used in operating activities (41) (11)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenses related to sale of investment in Local Limited Partnership (2) -
Collections of note receivable 70 -
Distribution received from Local Limited Partnership 150 -
Proceeds from Local Limited Partnership sale of property - 506
--------- ---------
Net cash provided by investing activities 218 506
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in accrued interest payable 27 (147)
Repayment of loans payable to affiliate - (377)
--------- ---------
Cash provided by (used in) financing activities 27 (524)
--------- ---------
Net increase (decrease) in cash and cash equivalents 204 (29)
Cash and cash equivalents, Beginning of Year 251 280
--------- ---------
Cash and cash equivalents, End of Year $ 455 $ 251
========= =========
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ - $ 195
========= =========
Supplemental Disclosure of Non-Cash Investing Activities:
Sale of Investment in Local Limited Partnership
payable with a promissory note (see Note 4) $ 175 $ -
========= =========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. At December 31,
1998, the Partnership has investments in six Local Limited Partnerships,
each owning one apartment complex. The properties are located throughout
the United States. One property owned by a Local Limited Partnership, was
sold during 1997.
The Partnership was capitalized with approximately $25,667,000 of
contributions representing 25,666 investor limited partnership units. The
offering closed in September 1981. The general partners and the initial
limited partner (10 units) contributed $12,000. At December 31, 1998 and
1997, there were 25,595 limited partnership units issued and outstanding.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents. The carrying amount of cash and cash equivalents approximates
its fair value due to the short term nature of such instruments.
Uses of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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 is subsequently adjusted by the Partnership's share of
the Local Limited Partnership's results of operations and by distributions
received. 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.
Net Income Per Limited Partnership Unit
Net income per limited partnership unit is computed by dividing net income
allocated to the limited partners by the 25,595 units outstanding.
F - 7
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is made
in the financial statements of the Partnership.
Concentration of Credit Risk
Principally all of the Partnerships cash and cash equivalents consist of
certificates of deposit held by a bank, with original maturity dates of
three months or less.
Segment Reporting
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
which is effective for years beginning after December 15, 1997. SFAS 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas, and
major customers. The Partnership has one reportable segment, residential
real estate. The Partnership evaluates performances based on net operating
income, which is income before depreciation, amortization, interest and
non-operating items.
2. ALLOCATION OF PROFITS, LOSSES AND DISTRIBUTIONS
In accordance with the partnership agreement, profits and losses not
arising from a sale and cash available for distribution from operations
shall be allocated 5% to the general partners and 95% to the limited
partners. Gains and distributions of proceeds arising from a sale or
refinancing are allocated first to the limited partners to the extent of
their Adjusted Capital Contribution (as defined) and then in accordance
with the partnership agreement, however, the general partner is allocated
at least 1% of the gain. Losses from a sale or refinancing are allocated 1%
to the general partners and 99% to the limited partners. If there are no
sale proceeds, gains from a sale are allocated 5% to the general partners
and 95% to the limited partners.
3. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. ("One Winthrop" or the "Managing General
Partner"), and WP Management Co., Inc. ("WP Management"), the manager of
the Partnership's investments in the Local Limited Partnerships are wholly
owned subsidiaries of First Winthrop Corporation ("First Winthrop"), which
in turn is controlled by Winthrop Financial Associates, A Limited
Partnership ("WFA").
F - 8
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
3. TRANSACTIONS WITH RELATED PARTIES (Continued)
WP Management was 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 was noncumulative and commenced at the closing of each Local Limited
Partnership's permanent loan. WP Management earned $10,000 of such fees in
1997.
On December 16, 1997, the Managing General Partner and certain of its
affiliates entered into a Services 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. 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 right to receive fees from the Partnership, as
provided in the Partnership Agreement. Coordinated Services, which is a
related party for financial reporting purposes only, earned management fees
of $5,000 for the year ended December 31, 1998.
The Partnership had borrowed amounts from First Winthrop to pay operating
expenses and fund operating deficits at properties owned by the Local
Limited Partnerships. These borrowings from First Winthrop bore interest at
the prime rate plus 1%. The loan was transferred by First Winthrop to an
affiliate on October 27, 1997. The Partnership paid $195,000 of accrued
interest to First Winthrop in 1997, before the transfer. The loan payable,
in the amount of $289,000, bears interest at the prime rate plus 1% (8.75%
and 9.5% at December 31, 1998 and 1997, respectively), and 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 principal balance and accrued interest on the loan was
$327,000 and $301,000 at December 31, 1998 and 1997, respectively. Due to
the nature of the loan payable it is not practicable to estimate fair value
because it cannot be determined whether financing with similar terms and
conditions would be available to the Partnership.
An affiliate of the Managing General Partner received approximately $35,000
and $32,000 in management fees and expense reimbursements from a Local
Limited Partnership during 1998 and 1997, respectively.
F - 9
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of December 31, 1998, the Partnership has Limited Partnership equity
interests in six Local Limited Partnerships each owning one apartment
complex. Such interests are summarized as follows:
<TABLE>
<CAPTION>
Local Limited Partnership Percentage Ownership
------------------------- --------------------
<S> <C>
The Villas, Ltd. (The Villas Apartments) 99
Lynndale Apartments, Ltd. (Lynwood Park Apartments) 50
Stonegate Apartments Limited Partnership (Stonegate Apartments) 93
Cedar Lake, Ltd. (Albany Landing Apartments) 99
College Green Limited Partnership (College Green Apartments) 95
First Investment Limited Partnership I (Copperfield Apartments) 50
</TABLE>
The Partnership's equity interest in Washington Square Limited Partnership
(89%) was sold in July 1997. (See Note 6).
The above Local Limited Partnerships have outstanding mortgages totaling
$19,097,000, which are secured by the Local Limited Partnerships' real
property, security interests, liens and endorsements common to first
mortgage loans.
On May 1, 1998, the Partnership sold a portion of its interest in First
Investment Limited Partnership I ("Copperfield Apartments"), to the general
partner of the Local Limited Partnership. The Partnership now owns a 50%
interest in Copperfield Apartments. The sales price was $175,000, payable
with a promissory note (the "Note"), maturing on December 31, 2008, and
secured by the interest in the Local Limited Partnership. The promissory
note accrues interest at 8% per annum. As specified in the Note, one half
of the general partner's future distributions from Copperfield Apartments
will be required to repay the note. On August 31, 1998, Copperfield
Apartments refinanced its mortgage. During September 1998, Copperfield
Apartments distributed $150,000 of refinancing proceeds to the Partnership
and the general partner of Copperfield Apartments repaid $70,000 of the
principal balance and $5,000 of accrued interest due on the note. The
balance of the note receivable consists of principal of $105,000 and
accrued interest of $2,000 at December 31, 1998. During 1997, the
Partnership recorded a $762,000 write-down of its investment in Copperfield
Apartments to its net realizable value.
During 1998 and 1997, the Partnership made no additional investments in the
Local Limited Partnerships. As of December 31, 1998, the net cumulative
operating deficit funded by the Partnership to the Local Limited
Partnerships was $3,249,000, which the Partnership has recorded as capital
contributions. However, the Local Limited Partnerships have accounted for
$2,213,000 of these investments as operating deficit advances and $898,000
as capital contributions. The remaining $138,000 represents a purchase of
interests in a Local Limited Partnership, which is not accounted for by the
Local Limited Partnership
F - 10
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The combined balance sheets of the Local Limited Partnerships are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1997
--------- ----------
ASSETS
Real estate, at cost:
<S> <C> <C>
Land $ 929 $ 929
Buildings, net of accumulated depreciation
of $14,231 and $13,391 in 1998
and 1997, respectively 8,665 9,372
Cash and cash equivalents 715 505
Other assets, net of accumulated amortization
of $747 and $722 in 1998 and
1997, respectively 1,183 1,172
---------- -----------
Total Assets $ 11,492 $ 11,978
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Notes payable $ 755 $ 774
Loans payable 578 578
Mortgage notes payable 19,097 18,946
Accounts payable and accrued expenses 1,222 1,115
---------- -----------
Total Liabilities 21,652 21,413
---------- -----------
Partners' Deficit:
Winthrop Residential Associates I (8,357) (7,814)
Other partners (1,803) (1,621)
---------- -----------
(10,160) (9,435)
---------- -----------
Total Liabilities and Partners' Deficit $ 11,492 $ 11,978
========== ===========
</TABLE>
F - 11
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The combined statements of operations of the Local Limited Partnerships
are as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997
------------ ----------
<S> <C> <C>
Income:
Rental income $ 4,278 $ 5,020
Other income 360 387
----------- ----------
Total income 4,638 5,407
----------- ----------
Expenses:
Interest 1,417 1,750
Depreciation and amortization 861 1,263
Taxes and insurance 480 517
Other operating expenses 2,187 2,814
----------- ----------
Total expenses 4,945 6,344
----------- ----------
Loss from operations (307) (937)
Gain on sale of properties - 3,298
----------- ----------
Net income (loss) $ (307) $ 2,361
=========== ==========
Net income (loss) allocated to
Winthrop Residential Associates I $ (334) $ 1,212
=========== ==========
Net income allocated to
other partners $ 27 $ 1,149
=========== ==========
</TABLE>
F - 12
<PAGE>
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(Continued)
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (Continued)
The Local Limited Partnership owning The Villas Apartments previously
entered into a provisional workout agreement with the U.S. Department of
Housing and Urban Development ("HUD"). This agreement expired on December
30, 1998. The general partner of the Local Limited Partnership is
continuing its negotiations with HUD in an effort 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.
The Cedar Lake Ltd. Local Limited Partnership 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.
5. GAIN ON SALE OF PROPERTY FROM LOCAL LIMITED PARTNERSHIP
During July 1997, the Washington Square Local Limited Partnership owning
the Heritage Hills Townhouses sold the property. The Partnership received
$506,000 in distributions from the sale. The Partnership recognized a
$506,000 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
was terminated during the fourth quarter of 1997.
6. TAXABLE INCOME
The Partnership's taxable income differs from the net loss for financial
reporting purposes, as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Net loss for financial reporting purposes $ (86) $ (322)
Amortization of capitalized costs and costs in
excess of the Partnership's initial basis in the net
assets of the Local Limited Partnerships - 7
Tax gains in excess of gains for financial reporting
purposes (due primarily to termination)
- 4,386
Writedown of investment - 762
Differences in equity in Local Limited Partnerships'
income/loss for financial reporting and tax
reporting purposes 257 (350)
Income from Local Limited Partnerships
Cash distributions (51) (129)
---------- ---------
Taxable income $ 120 $ 4,354
========== =========
</TABLE>
F - 13
<PAGE>
Item 8. Changes in and Disagreements on Accounting and Financial Disclosure.
There were no disagreements with Imowitz Koenig & Co., LLP regarding
the 1998 or 1997 audits of the Partnership's financial statements.
28
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
The Partnership has no officers or directors. One Winthrop Properties,
Inc., the managing general partner of the Partnership (the "Managing General
Partner"), manages and controls substantially all of the Partnership's affairs
and has general responsibility and ultimate authority in all matters affecting
its business. As of March 1, 1999, 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 Managing General Partner Officer Since
- ---- ------------------------ -------------
Michael L. Ashner Chief Executive Officer 1-96
and Director
Thomas C. Staples Chief Financial Officer 1-99
Peter Braverman Executive Vice President 1-96
Carolyn Tiffany Chief Operating Officer 10-95
and Clerk
Michael L. Ashner, age 46, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing
General Partner 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.
Thomas C. Staples, age 43, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr. Staples was the Controller of the Residential Division of Winthrop
Management.
Peter Braverman, age 47, has been a Vice President of WFA and the
Managing General Partner since January 1996. From June
29
<PAGE>
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.
Carolyn Tiffany, age 32, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. Ms. Tiffany was a Vice
President in the asset management and investor relations departments of WFA from
October 1995 to December 1997, at which time she became the Chief Operating
Officer of WFA.
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; Nantucket Island Associates Limited Partnership; One Financial
Place Limited Partnership; Presidential Associates I Limited Partnership;
Riverside Park 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; Southeastern Income
Properties Limited Partnership; and Southeastern Income Properties II Limited
Partnership.
Except as indicated above, neither the Partnership nor the Managing
General Partner has any significant employees within the meaning of Item 401(b)
of Regulation S-B. There are no family relationships among the officers and
directors of the Managing General Partner.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any
30
<PAGE>
director, officer or beneficial owner of more than ten percent of the units of
limited partnership interest in the Partnership that failed to file on a timely
basis, as disclosed in the above Forms, reports required by section 16(a) of the
Exchange Act during the most recent fiscal year or prior fiscal years.
Effective December 16, 1997, the Managing General Partner and certain
of its affiliates entered into an agreement with Coordinated Services of
Valdosta, LLC ("Coordinated Services") to provide for the daily asset and
property management services and investor services for the Partnership. See
"Item 11, Security Ownership of Certain Beneficial Owners and Management."
Coordinated Services of Valdosta LLC is a Georgia limited liability corporation
with headquarters in Valdosta, Georgia. Founded in 1997, its managing member is
Investor Service Group, Inc., a Georgia Corporation. The principals of Investor
Service Group are Mary T. Johnson and James L. Dewar, Jr.
Mary T. Johnson is the Manager of Coordinated Services. Ms. Johnson is
also Executive Vice President of Dewar Realty, Inc. and Dewar Properties, Inc.
Ms. Johnson is a graduate of Valdosta State University and is a licensed Georgia
Real Estate Broker. Ms. Johnson has 21 years of experience in property
management, asset management, investor services, and development of apartment
and assisted living properties. Ms. Johnson is currently responsible for the
asset management of over 150 investor partnerships and property management of
over 50 apartment communities.
James L. Dewar, Jr. is the founder of Dewar Realty, Inc. and Dewar
Properties, Inc. Mr. Dewar is a graduate of the University of Georgia and is a
licensed Georgia Real Estate Broker. Mr. Dewar has 32 years experience in real
estate construction, property management and development of apartment and
assisted living properties. Mr. Dewar has produced over $100 million in
conventional and government funded family and elderly apartment communities.
Item 10. Executive Compensation.
The Partnership 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 12, "Certain Relationships and Related Transactions.")
31
<PAGE>
Item 11. 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, 1999. 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.
(b) Security ownership of management.
None of the officers, directors or general partners of the General
Partner or their respective officers, directors or general partners owned any
Units at March 15, 1999 in individual capacities; however, a wholly-owned
subsidiary of First Winthrop owns 100 Units and Winthrop Financial Associates, A
Limited Partnership owns 5 Units (.60% in the aggregate).
(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.
On December 16, 1997, the Managing General Partner and certain of its affiliates
entered into a Services Agreement with 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, however, without the consent of the
Managing General Partner, or as otherwise required under the terms of the
Partnership's Agreement of Limited
32
<PAGE>
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
right to receive fees from the Partnership as provided in the Partnership
Agreement.
Item 12. Certain Relationships and Related Transactions.
The Partnership began borrowing from First Winthrop in 1986, and
through December 31, 1997, had 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, 1997, the Partnership has repaid $875,661 to First Winthrop leaving
an outstanding loan balance of $289,011 on December 31, 1997. This amount was
transferred by First Winthrop to an unaffiliated third party on October 27,
1997.
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. 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, 1998 For the years ended
December 31, 1997 and 1998, respectively, Winthrop Management LLC received
management fees of $31,701 and $0 from the Local Limited Partnership owning the
Villas. In addition, the Partnership paid $10,000 to Winthrop Management for
services rendered in 1997. Effective December 16, 1997, management at the Villas
began being performed by an affiliate of Coordinated Services of Valdosta LLC.
Item 13. Exhibits and Reports on Form 8-K.
(a) 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
33
<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 13th day of
April, 1999.
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
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 April 13, 1999
- --------------------- Officer and Director
Michael L. Ashner
/s/ Thomas Staples Chief Financial Officer April 13, 1999
- ---------------------
Thomas Staples
34
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
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 Partnership'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).
10.1 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)
10.2 Services Agreement, dated December 16, 1997, by and between First
Winthrop Corporation, Winthrop Financial Co., Inc., WFC Realty Co.,
Inc., WFC Realty Saugus, Inc., Winthrop Properties, Inc., Winthrop
Metro Equities Corporation, Winthrop Lisbon Realty, Inc. and Northwood
Realty Co., Inc. and Coordinated Services of Valdosta, LLC.
(incorporated by reference to the Registrant's Annual Report on Form
10KSB for the year ended December 31, 1997).
16. Letter from Arthur Andersen LLP dated September 19, 1996 (incorporated
herein by reference to Registrant's Current Report on Form 8-K dated
September 19, 1996).
27. Financial Data Schedule.
99. Supplementary information required pursuant to Section 9.4 of the
Partnership Agreement.
</TABLE>
<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>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 455,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 891,000
<CURRENT-LIABILITIES> 0
<BONDS> 289,000
0
0
<COMMON> 0
<OTHER-SE> 554,000
<TOTAL-LIABILITY-AND-EQUITY> 891,000
<SALES> 0
<TOTAL-REVENUES> 27,000<F1>
<CGS> 0
<TOTAL-COSTS> 5,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,000
<INCOME-PRETAX> (86,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,000)
<EPS-PRIMARY> (3.24)
<EPS-DILUTED> (3.24)
<FN>
<F1>
Includes a $23,000 loss on sale of investment in a Local Limited Partnership.
</FN>
</TABLE>
<PAGE>
Exhibit 99
----------
WINTHROP RESIDENTIAL ASSOCIATES I, A LIMITED PARTNERSHIP
DECEMBER 31, 1998
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement (Unaudited)
1. Statement of Cash Available for Distribution for the:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, 1998 December 31, 1998
----------------- ------------------
<S> <C> <C>
Net loss $ (86,000) $(21,000)
Add: Equity in loss of Local Limited Partnership 24,000 3,000
Loss on sale of investment in
Local Limited Partnership 23,000 --
Collections from note receivable 70,000 --
Distribution received from
Local Limited Partnership 150,000 --
Cash from reserves -- 18,000
Less: Cash to reserves (181,000) --
---------- ----------
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, 1998:
Entity Receiving Form of
Compensation Compensation Amount
------------ ------------ ------
None
