United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended February 29, 1996
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: 0-13330
HUTTON/CONAM REALTY PENSION INVESTORS
Exact Name of Registrant as Specified in its Charter
New York 11-2673854
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
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
Balance Sheets At February 29, At November 30,
1996 1995
Assets
Investments in real estate:
Properties $10,450,002 $10,450,002
Less accumulated depreciation (1,999,507) (1,906,839)
Mortgage loan investments 9,675,900 9,675,900
18,126,395 18,219,063
Cash and cash equivalents 1,749,589 1,979,963
Interest receivable - deferred, net of
accumulated provision for losses of
$2,245,176 in 1996 and 1995 1,574,100 1,574,100
Other assets 52,629 45,360
Total Assets $21,502,713 $21,818,486
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 507,842 $ 507,842
Accounts payable and accrued expenses 80,842 251,316
Due to general partners and affiliates 20,426 28,664
Deferred income - loan modification fees 35,187 40,318
Security deposits 67,914 66,052
Total Liabilities 712,211 894,192
Partners' Capital:
General Partners 274,848 277,831
Limited Partners 20,515,654 20,646,463
Total Partners' Capital 20,790,502 20,924,294
Total Liabilities and
Partners' Capital $21,502,713 $21,818,486
Statement of Partners' Capital
For the three months ended February 29, 1996
Limited General
Partners Partners Total
Balance at December 1, 1995 $20,646,463 $277,831 $20,924,294
Net income 351,641 22,409 374,050
Cash distributions (482,450) (25,392) (507,842)
Balance at February 29, 1996 $20,515,654 $274,848 $20,790,502
Statements of Operations
For the three months ended
February 29 and February 28, 1996 1995
Income
Rental $617,243 $599,942
Mortgage interest 205,613 205,613
Interest 23,283 24,926
Loan modification fees 5,131 5,131
Total Income 851,270 835,612
Expenses
Property operating 347,824 329,818
Depreciation 92,668 92,668
General and administrative 36,728 33,732
Total Expenses 477,220 456,218
Net Income $374,050 $379,394
Net Income Allocated:
To the General Partners $ 22,409 $ 18,970
To the Limited Partners 351,641 360,424
$374,050 $379,394
Per limited partnership unit
(96,490 outstanding) $3.64 $3.74
Statements of Cash Flows
For the three months ended February 29 and February 28,
1996 1995
Cash Flows From Operating Activities:
Net income $374,050 $379,394
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 92,668 92,668
Deferred income - loan modification fees (5,131) (5,131)
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Other assets (7,269) --
Accounts payable and accrued
expenses (170,474) (147,008)
Due to general partners and
affiliates (8,238) (254)
Security deposits 1,862 (527)
Net cash provided by operating activities 277,468 319,142
Cash Flows From Financing Activities:
Distributions (507,842) (507,842)
Net cash used for financing activities (507,842) (507,842)
Net decrease in cash and cash equivalents (230,374) (188,700)
Cash and cash equivalents,
beginning of period 1,979,963 2,131,720
Cash and cash equivalents, end of period $1,749,589 $1,943,020
Notes to the Financial Statements
The unaudited financial statements should be read in conjunction with the
Partnership's annual 1995 audited financial statements within Form 10-K .
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of February 29, 1996 and the results of operations and cash flows
for the three months ended February 29, 1996 and February 28, 1995 and the
statement of changes in partner's capital for the three months ended February
29, 1996. Results of operations for the period are not necessarily indicative
of the results to be expected for the full year.
The following significant event has occurred subsequent to fiscal year 1995
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5).
Effective December 1, 1995, the Partnership adopted Statement of Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan"("FAS
114"), as amended by Statement of Accounting Standards No. 118, " Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures", which
states that a loan is considered impaired and a provision for credit losses is
required if it is probable that all amounts of principal and interest due will
not be collected. The measurement of impaired loans is generally based on the
present value of expected future cash flows discounted at the loan's effective
interest rate, except that collateral dependent loans are measured for
impairment based on the observable market value or fair value of the collateral
less estimated selling costs. The Partnership considers its mortgage loan
investments collateral dependent. The adoption of FAS 114 had no impact on the
financial statements. Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Partnership's investment portfolio consists of: (1) two mortgage loans
funded to Southridge Partners I which are secured by two apartment properties,
Park View Village and Oaktree Village; and (2) two apartment properties, Bryn
Athyn Apartments and Chaparosa Apartments, which were acquired by the
Partnership on July 14, 1989 and January 31, 1992, respectively.
Liquidity and Capital Resources
At February 29, 1996, the Partnership had cash and cash equivalents of
$1,749,589 which were invested in unaffiliated money market funds, compared
with $1,979,963 at November 30, 1995. The decrease reflects cash distributions
to Partners exceeding cash provided by operating activities during the first
quarter of fiscal 1996.
The General Partners pursued a settlement agreement with the Plumbing Claims
Group regarding the polybutelene water pipes used in the construction of the
Bryn Athyn property. The pipes, which were determined to be defective, have
resulted in significant leaks and required a replumbing of the entire property.
The General Partners signed a settlement agreement during the third quarter of
1995 which will require the Plumbing Claims Group to cover the cost of
replumbing the property's interior units, up to a limit of $379,000, as well as
40% of the expense in replumbing the exterior which is estimated to cost a
total of $25,480. The Partnership has sufficient reserves to fund any repairs
which will not be covered by the Plumbing Claims Group. The Partnership
expects to incur expenses totaling approximately $7,500 for plumbing repairs
and associated costs at the property. The replumbing of the property began in
late October and is expected to be completed in 1996. During the first quarter
of fiscal 1996, $333,534 of replumbing costs was incurred by the Partnership
which was fully reimbursed by the Plumbing Claims Group.
During 1996, the General Partners are implementing an extensive property
improvement program, including painting and wood replacement, at Bryn Athyn to
upgrade the property. This program is intended to maintain the property's
position within its market, which is growing increasingly competitive with the
addition of new apartment properties. It is also hoped that these improvements
will allow for greater increases in rental rates, thereby improving the
property's revenue and value, and making it better positioned for eventual
sale. The General Partners are currently evaluating the extent of the work to
be performed at the property and what impact it will have on the Partnership's
cash reserves. Given favorable market conditions, the General Partners will
begin marketing Chaparosa Apartments over the next several months. There can
be no assurance that a sale will be completed or that any particular price for
the property can be obtained.
The General Partners declared a cash distribution of $5.00 per Unit for the
quarter ended February 29, 1996 which will be paid to investors on or about
April 15, 1996. The level of future distributions will be evaluated on a
quarterly basis and will depend on the Partnership's operating results and
future cash needs. It is anticipated that cash from reserves may be required
to fund a portion of the distributions during 1996 as a result of capital
expenditures required at Bryn Athyn.
Results of Operations
Partnership operations for the three months ended February 29, 1996 generated
net income of $374,050 compared with net income of $379,394 for the
corresponding period in fiscal 1995. Net income was stable as an increase in
rental income was offset by an increase in property operating expenses.
Rental income totaled $617,243 for the three months ended February 29, 1996
compared with $599,942 for the corresponding period in fiscal 1995. The
increase is primarily attributable to higher rental rates at the Partnership's
two wholly-owned properties.
Property operating expenses for the three months ended February 29, 1996
totaled $347,824 compared with $329,818 for the corresponding period in fiscal
1995. The increase is attributable to higher repairs and maintenance expenses
at Bryn Athyn and higher salary expenses at the two wholly-owned properties.
During the first three months of fiscal 1996 and 1995, average occupancy levels
at the Partnership's two properties and at the properties securing the
Partnership's equity participating loans were as follows:
Real Estate Investments: 1996 1995
Bryn Athyn Apartments 96% 95%
Chaparosa Apartments 97% 97%
Mortgage Loan Investments:
Oaktree Village 94% 96%
Park View Village 97% 94%
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - On March 15, 1996, based upon, among other
things, the advice of Partnership counsel, Skadden, Arps, Slate,
Meagher & Flom, the General Partners adopted a resolution that
states, among other things, if a Change of Control (as defined below)
occurs, the General Partners may distribute the Partnership's cash
balances not required for its ordinary course day-to-day operations.
"Change of Control" means any purchase or offer to purchase more than
10% of the Units that is not approved in advance by the General
Partners. In determining the amount of the distribution, the General
Partners may take into account all material factors. In addition,
the Partnership will not be obligated to make any distribution to any
partner and no partner will be entitled to receive any distribution
until the General Partners have declared the distribution and
established a record date and distribution date for the distribution.
The Partnership filed a form 8-K disclosing this resolution on
March 21, 1996.
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.
HUTTON/CONAM REALTY PENSION INVESTORS
BY: RPI REAL ESTATE SERVICES, INC.
General Partner
Date: April 15, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief Executive
Officer and Chief Financial Officer
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<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Feb-29-1996
<CASH> 1,749,589
<SECURITIES> 000
<RECEIVABLES> 3,819,276
<ALLOWANCES> 1,574,100
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<CURRENT-ASSETS> 52,629
<PP&E> 10,450,002
<DEPRECIATION> 1,999,507
<TOTAL-ASSETS> 21,502,713
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000
<OTHER-SE> 20,790,502
<TOTAL-LIABILITY-AND-EQUITY> 21,502,713
<SALES> 617,243
<TOTAL-REVENUES> 851,270
<CGS> 000
<TOTAL-COSTS> 347,824
<OTHER-EXPENSES> 129,396
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 374,050
<INCOME-TAX> 000
<INCOME-CONTINUING> 374,050
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 374,050
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