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 May 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 Identification 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 At May 31, At November 30,
1996 1995
Assets
Investments in real estate:
Properties $10,450,002 $10,450,002
Less accumulated depreciation (2,092,174) (1,906,839)
Mortgage loan investments 9,675,900 9,675,900
18,033,728 18,219,063
Cash and cash equivalents 1,829,378 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 $21,487,033 $21,818,486
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 507,842 $507,842
Accounts payable and accrued expenses 123,572 251,316
Due to general partners and affiliates 32,553 28,664
Deferred income- loan modification fees 30,056 40,318
Security deposits 70,615 66,052
Total Liabilities 764,638 894,192
Partners' Capital:
General Partners 275,150 277,831
Limited Partners 20,447,245 20,646,463
Total Partners' Capital 20,722,395 20,924,294
Total Liabilities and Partners' Capital $21,487,033 $21,818,486
Statement of Partners' Capital
For the six months ended May 31, 1996
Limited General
Partners Partners Total
Balance at December 1, 1995 $20,646,463 $277,831 $20,924,294
Net income 765,682 48,103 813,785
Cash distributions (964,900) (50,784) (1,015,684)
Balance at May 31, 1996 $20,447,245 $275,150 $20,722,395
Statements of Operations
Three months ended May 31, Six months ended May 31,
1996 1995 1996 1995
Income
Rental $633,691 $587,718 $1,250,934 $1,187,660
Mortgage interest 205,613 205,613 411,226 411,226
Interest 20,870 26,663 44,153 51,589
Loan modification fees 5,131 5,131 10,262 10,262
Total Income 865,305 825,125 1,716,575 1,660,737
Expenses
Property operating 294,414 351,841 642,238 681,659
Depreciation 92,667 92,667 185,335 185,335
General and administrative 38,489 27,489 75,217 61,221
Total Expenses 425,570 471,997 902,790 928,215
Net Income $439,735 $353,128 $813,785 $732,522
Net Income Allocated:
To the General Partners $25,694 $25,070 $48,103 $44,040
To the Limited Partners 414,041 328,058 765,682 688,482
$439,735 $353,128 $813,785 $732,522
Per limited partnership unit
(96,490 outstanding) $4.29 $3.40 $7.94 $7.14
Statements of Cash Flows
For the six months ended May 31, 1996 1995
Cash Flows From Operating Activities:
Net income $813,785 $732,522
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 185,335 185,335
Deferred income- loan modification fees (10,262) (10,263)
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Other assets (4,467) (1,470)
Accounts payable and accrued expenses (127,744) (115,633)
Due to general partners and affiliates 3,889 (157)
Security Deposits 4,563 4,896
Net cash provided by operating activities 865,099 795,230
Cash Flows From Financing Activities:
Distributions (1,015,684) (1,015,684)
Net cash used for financing activities (1,015,684) (1,015,684)
Net decrease in cash and cash equivalents (150,585) (220,454)
Cash and cash equivalents, beginning of period 1,979,963 2,131,720
Cash and cash equivalents, end of period $1,829,378 $1,911,266
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 financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair
statement of financial position as of May 31, 1996 and the
results of operations and cash flows for the six months ended May
31, 1996 and 1995 and the statement of partners' capital for the
six months ended May 31, 1996. Results of operations for the
period are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year
1995 and no material contingencies exist, which require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
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 May 31, 1996, the Partnership had cash and cash equivalents of
$1,829,378 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 half 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, 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 $377,695 of which $367,967 has been reimbursed by the
Plumbing Claims Group thus far.
During 1996, the General Partners initiated an 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. Thus far, the wood replacement work is complete,
with the painting to be finished within the next few months.
The General Partners have engaged a commercial real estate broker
to market Chaparosa Apartments in Dallas, Texas. There can be no
assurance that a sale will be completed or that any particular
price for the property can be obtained. In the event that a sale
is not consummated, the Partnership will continue to hold the
property as an investment.
The borrower recently requested modifications to the terms of its
loans secured by Oaktree Village and Park View Village. The
General Partners are currently reviewing this request.
The General Partners declared a cash distribution of $5.00 per
Unit for the quarter ended May 31, 1996 which will be paid to
investors on or about July 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
property improvements required at Bryn Athyn.
Results of Operations
Partnership operations for the three and six months ended May 31,
1996 generated net income of $439,735 and $813,785, respectively,
compared with net income of $353,128 and $732,522, respectively,
for the corresponding periods in fiscal 1995. Net income
increased as a result of an increase in rental income and a
decrease in property operating expenses, partially offset by an
increase in general and administrative expenses.
Rental income for the three and six months ended May 31, 1996
totaled $633,691 and $1,250,934 respectively, compared with
$587,718 and $1,187,660, respectively, for the corresponding
period 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 six months ended
May 31, 1996 totaled $294,414 and $642,238, respectively,
compared with $351,841 and $681,659, respectively, for the
corresponding periods in fiscal 1995. The decreases are
primarily attributable to a decrease in repairs and maintenance
and property administrative expenses and an overaccrual for real
estate taxes in 1995 at Chaparosa, partially offset by an
increase in repairs and maintenance and property administrative
expenses at Bryn Athyn.
During the first six 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 96% 96%
Mortgage Loan Investments:
Oaktree Village 95% 95%
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 - 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: July 15, 1996 BY: /s/ Paul L. Abbott
Director, President, Chief Executive Officer
and Chief Financial Officer
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<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> May-31-1996
<CASH> 1,829,378
<SECURITIES> 000
<RECEIVABLES> 3,819,276
<ALLOWANCES> 2,245,176
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<CURRENT-ASSETS> 49,827
<PP&E> 10,450,002
<DEPRECIATION> 2,092,174
<TOTAL-ASSETS> 21,487,033
<CURRENT-LIABILITIES> 764,638
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000
<OTHER-SE> 20,722,395
<TOTAL-LIABILITY-AND-EQUITY> 21,487,033
<SALES> 1,250,934
<TOTAL-REVENUES> 1,716,575
<CGS> 000
<TOTAL-COSTS> 642,238
<OTHER-EXPENSES> 260,552
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<INCOME-PRETAX> 813,785
<INCOME-TAX> 000
<INCOME-CONTINUING> 813,785
<DISCONTINUED> 000
<EXTRAORDINARY> 000
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<NET-INCOME> 813,785
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