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 August 31, 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 Identificatoin No.
Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson Zip Code
Address of Principal Executive Offices
(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 August 31, November 30,
1996 1995
Assets
Investments in real estate:
Properties $5,809,785 $10,450,002
Less accumulated depreciation (1,525,124) (1,906,839)
Mortgage loan investments 9,675,900 9,675,900
13,960,561 18,219,063
Property held for disposition 4,010,003 _
Cash and cash equivalents 1,806,921 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 49,827 45,360
Total Assets $21,401,412 $21,818,486
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 507,842 $507,842
Accounts payable and accrued expenses 189,967 251,316
Due to general partners and affiliates 31,854 28,664
Deferred income- loan modification fees 24,925 40,318
Security deposits 68,000 66,052
Total Liabilities 822,588 894,192
Partners' Capital:
General Partners 271,518 277,831
Limited Partners 20,307,306 20,646,463
Total Partners' Capital 20,578,824 20,924,294
Total Liabilities and Partners' Capital $21,401,412 $21,818,486
Statement of Partners' Capital
For the nine months ended August 31, 1996
Limited General
Partners Partners Total
Balance at December 1, 1995 $20,646,463 $277,831 $20,924,294
Net income 1,108,193 69,863 1,178,056
Cash distributions (1,447,350) (76,176) (1,523,526)
Balance at August 31, 1996 $20,307,306 $271,518 $20,578,824
Statements of Operations
Three months ended Nine months ended
August 31, August 31,
1996 1995 1996 1995
Income
Rental $658,486 $618,336 $1,909,420 $1,805,996
Mortgage interest 205,613 205,613 616,839 616,839
Interest 20,634 25,026 64,787 76,615
Loan modification fees 5,131 5,131 15,393 15,393
Total Income 889,864 854,106 2,606,439 2,514,843
Expenses
Property operating 388,963 308,443 1,031,201 990,102
Depreciation 88,671 92,668 274,006 278,003
General and administrative 47,959 52,052 123,176 113,273
Total Expenses 525,593 453,163 1,428,383 1,381,378
Net Income $364,271 $400,943 $1,178,056 $1,133,465
Net Income Allocated:
To the General Partners $21,760 $23,753 $69,863 $67,793
To the Limited Partners 342,511 377,190 1,108,193 1,065,672
$364,271 $400,943 $1,178,056 $1,133,465
Per limited partnership unit
(96,490 outstanding) $3.55 $3.91 $11.49 $11.04
Statements of Cash Flows
For the nine months ended August 31, 1996 1995
Cash Flows From Operating Activities:
Net income $1,178,056 $1,133,465
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 274,006 278,003
Deferred income- loan modification fees (15,393) (15,393)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Other assets (4,467) 9,017
Accounts payable and accrued expenses (61,349) (38,406)
Due to general partners and affiliates 3,190 12,590
Security deposits 1,948 6,899
Net cash provided by operating activities 1,375,991 1,386,175
Cash Flows From Investing Activities:
Additions to real estate (25,507) _
Net cash used for investing activities (25,507) _
Cash Flows From Financing Activities:
Distributions (1,523,526) (1,523,526)
Net cash used for financing activities (1,523,526) (1,523,526)
Net decrease in cash and cash equivalents (173,042) (137,351)
Cash and cash equivalents, beginning of period 1,979,963 2,131,720
Cash and cash equivalents, end of period $1,806,921 $1,994,369
Notes to the Financial Statements
The unaudited interim financial statements should be read in
conjunction with the Partnership's annual 1995 audited financial
statements within Form 10-K.
The unaudited interim financial statements include all
adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of August 31, 1996
and the results of operations and cash flows for the nine
months ended August 31, 1996 and 1995 and the statement of
partners' capital for the nine months ended August 31, 1996.
Results of operations for the periods 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.
Sale of Property:
On September 26, 1996, the Partnership executed an agreement
for the purchase and sale of Chaparosa Apartments (the "Property")
with an institutional investor (the "Buyer"). The estimated sales
price of the Property is $5,989,100 and was determined by arms length
negotiations between the Partnership and the Buyer. The General
Partners expect to close on the sale of the Property in November 1996
following the completion of the Buyer's due diligence period. The
Buyer has several opportunities to cancel the transaction during this
due diligence period, as is customary, and there is no guarantee that
the sale will close.
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 August 31, 1996, the Partnership had cash and cash equivalents
of $1,806,921 that were invested in unaffiliated money market
funds, compared with $1,979,963 at November 30, 1995. The
decrease reflects cash distributions to Partners and additions to
real estate exceeding cash provided by operating activities
during the first nine months of fiscal 1996.
On September 26, 1996, the General Partners signed a purchase and sale
agreement with an institutional investor for the sale of Chaparosa
Apartments in Irving, Texas. The estimated sales price of the
property is $5,989,100. The General Partners expect to close the
transaction in November of this year following the completion of the
buyer's due diligence period. While the General Partners believe that
the sale will be completed, the buyer has several opportunities to
cancel the transaction during this due diligence period, as is
customary. Accordingly, there is no guarantee that the sale will
close. Should the sale close as expected, the General Partners intend
to make a return of capital distribution to the limited partners with
the proceeds.
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, 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 required 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. The replumbing of the property began in late October
and was completed during the second quarter of 1996. Total costs
have been $396,781 of which $386,927 has been reimbursed by the
Plumbing Claims Group thus far.
Throughout 1996, the General Partners initiated improvement work and
routine repairs at Chaparosa Apartments and Bryn Athyn Apartments to
upgrade the properties. During the third quarter of 1996, painting
work at Bryn Athyn was completed. Hurricane Fran also necessitated
additional repair work at Bryn Athyn when it passed through the
Raleigh area in early September. The storm caused damage to the areas
around the units creating debris and minor retaining wall damage. It
is not expected that the cleanup and repair costs stemming from the
storm will be significant.
During the second quarter of 1996, the borrower requested
modifications to the terms of its loans secured by Oaktree
Village and Park View Village. The Partnership reviewed and
subsequently denied this request, although discussions with the
borrower continue. Due to their age, Oaktree Village and Park
View Village are likely to need significant funds for maintenance
and capital improvements. The borrower is current on its debt
obligations, however, there can be no assurance that they will
maintain timely debt service payments to the Partnership in the
future.
The General Partners declared a cash distribution of $5.00 per Unit
for the quarter ended August 31, 1996 which will be paid to investors
on or about October 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. Given the anticipated sale
of Chaparosa Apartments and the corresponding reduction in the
Partnership's cash flow, the General Partners expect that the level of
cash distributions will be reduced in the future.
Results of Operations
Partnership operations for the three and nine months ended August
31, 1996 generated net income of $364,271 and $1,178,056,
respectively, compared with net income of $400,943 and
$1,133,465, respectively, for the corresponding periods in fiscal
1995. The decrease in net income for the three month period is
attributable to increased property operating expenses resulting
from the repair work at the properties as discussed above. Net
income increased for the nine month period as a result of an
increase in rental income, partially offset by an increase in
property operating expenses and general and administrative
expenses.
Rental income for the three and nine months ended August 31, 1996
totaled $658,486 and $1,909,420 respectively, compared with
$618,336 and $1,805,996, respectively, for the corresponding
periods in fiscal 1995. The increases are primarily
attributable to higher rental rates at the Partnership's two
wholly-owned properties.
Property operating expenses for the three and nine months ended
August 31, 1996 totaled $388,963 and $1,031,201, respectively,
compared with $308,443 and $990,102, respectively, for the
corresponding periods in fiscal 1995. The increases are
primarily attributable to an increase in repairs and maintenance
and property administrative expenses at Bryn Athyn. These
increases were partially offset by decreases in repairs and
maintenance and property administrative expenses at Chaparosa.
During the first nine 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:
1996 1995
Real Estate Investments:
Bryn Athyn Apartments 96% 96%
Chaparosa Apartments 97% 97%
Mortgage Loan Investments:
Oaktree Village 96% 94%
Park View Village 97% 95%
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 - No reports on Form 8-K
were filed during the quarter ended August 31, 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: October 15, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Aug-31-1996
<CASH> 1,806,921
<SECURITIES> 000
<RECEIVABLES> 13,495,176
<ALLOWANCES> 2,245,176
<INVENTORY> 000
<CURRENT-ASSETS> 49,827
<PP&E> 9,819,788
<DEPRECIATION> 1,525,124
<TOTAL-ASSETS> 21,401,412
<CURRENT-LIABILITIES> 822,588
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 20,578,824
<TOTAL-LIABILITY-AND-EQUITY> 21,401,412
<SALES> 1,909,420
<TOTAL-REVENUES> 2,606,439
<CGS> 000
<TOTAL-COSTS> 1,031,201
<OTHER-EXPENSES> 397,182
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 1,178,056
<INCOME-TAX> 000
<INCOME-CONTINUING> 1,178,056
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,178,056
<EPS-PRIMARY> 11.49
<EPS-DILUTED> 11.49
</TABLE>
