U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
Commission File Number: 0-17151
PAINE WEBBER/CMJ PROPERTIES, LP
(Exact name of registrant as specified in its charter)
Delaware 04-2780288
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
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 .
PAINE WEBBER/CMJ PROPERTIES, LP
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
(In thousands of dollars)
ASSETS
June 30 December 31
Cash and cash equivalents $ 495 $ 324
Investments in local limited
partnerships, at equity - 201
$ 495 $ 525
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 99 $ -
Accrued expenses 5 14
Partners' capital 391 511
$ 495 $ 525
STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 1995 and 1994
(Unaudited)
(In thousands of dollars, except per Unit information)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUES:
Other income from
local limited partnerships $100 $ 157 $100 $ 157
Interest income 5 3 9 7
105 160 109 164
EXPENSES:
Management fees 49 49 99 99
General and administrative 28 11 42 29
77 60 141 128
Operating income (loss) 28 100 (32) 36
Partnership's share of local
limited partnerships' income
(losses) (103) (75) - 15
NET INCOME (LOSS) $ (75) $ 25 $ (32) $ 51
Net income(loss) per Limited
Partnership Unit $(8.53) $2.79 $ (3.57) $5.77
Cash distributions per Limited
Partnership Unit $ 5.00 $ - $10.00 $ -
The above net income (loss) and cash distributions per Limited Partnership Unit
are based upon the 8,745 Limited Partnership Units outstanding for each period.
See accompanying notes.
PAINE WEBBER/CMJ PROPERTIES, LP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the six months ended June 30, 1995 and 1994
(Unaudited)
(In thousands of dollars)
General Limited
Partner Partners
Balance at December 31, 1993 $ (71) $ 573
Net income 1 50
BALANCE AT JUNE 30, 1994 $ (70) $ 623
Balance at December 31, 1994 $ (71) $ 582
Cash distributions (1) (87)
Net loss - (32)
BALANCE AT JUNE 30, 1995 $ (72) $ 463
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(In thousands of dollars)
1995 1994
Cash flows from operating activities:
Net income(loss) $ (32) $ 51
Adjustments to reconcile net income(loss)
to net cash used for operating activities:
Other income from local limited partnerships (100) (157)
Partnership's share of local limited
partnerships' income - (15)
Changes in assets and liabilities:
Accounts payable - affiliates 99 (105)
Accrued expenses (9) (12)
Total adjustments (10) (289)
Net cash used for operating activities (42) (238)
Cash flows from financing activities:
Distributions from local limited partnerships 301 407
Distributions to partners (88) -
Net cash provided by financing
activities 213 407
Net increase in cash and cash equivalents 171 169
Cash and cash equivalents, beginning of period 324 463
Cash and cash equivalents, end of period $ 495 $ 632
See accompanying notes.
1. General
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in
the Partnership's Annual Report for the year ended December 31, 1994.
In the opinion of management, the accompanying financial statements,
which have not been audited, reflect all adjustments necessary to present
fairly the results for the interim period. All of the accounting
adjustments reflected in the accompanying interim financial statements are
of a normal recurring nature.
2. Local Limited Partnerships
The Partnership has investments in six local limited partnerships which
own operating investment properties, as discussed further in the Annual
Report. These local limited partnerships are accounted for on the equity
method. Under the equity method of accounting for limited partnership
interests, the investments are carried at cost adjusted for the
Partnership's share of the local limited partnership's earnings, losses and
distributions. Losses in excess of the investment in individual local
limited partnerships are not recognized currently, but rather, are offset
against future earnings from such entities. Distributions received from
investments in limited partnerships with carrying values of zero are
recorded as other income in the Partnership's income statement.
Summarized operating results of these local limited partnerships follow:
CONDENSED COMBINED SUMMARY OF OPERATIONS
For the three and six months ended June 30, 1995 and 1994
(In thousands of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Rental revenues, including
government subsidies $ 2,484 $ 2,453 $ 4,947 $ 4,916
Interest income 33 21 51 34
2,517 2,474 4,998 4,950
Property operating expenses 1,396 1,460 2,505 2,615
Interest expense 723 731 1,446 1,463
Depreciation and amortization 306 297 612 595
Real estate taxes 216 163 367 318
2,641 2,651 4,930 4,991
Net income (loss) $ (124) $ (177) $ 68 $ (41)
Net income (loss):
Partnership's share of
combined operations $ (110) $ (152) $ 55 $ (35)
Local partners' share of
combined operations (14) (25) 13 (6)
$ (124) $ (177) $ 68 $ (41)
RECONCILIATION OF PARTNERSHIP'S SHARE OF OPERATIONS:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Partnership's share of
operations,as shown above $ (110) $ (152) $ 55 $ (35)
Losses in excess of
basis not recognized
by Partnership 53 77 61 86
Income offset with
prior year unrecognized
losses (46) - (116) (36)
Partnership's share of
local limited partnerships'
income (losses) $ (103) $ (75) $ - $ 15
3. Related Party Transactions
The Adviser earned basic management fees of $99,000 during each of the six-
month periods ended June 30, 1995 and 1994. Accounts payable - affiliates at
June 30, 1995 consists of $99,000 of management fees payable to the Adviser.
Included in general and administrative expenses for the six months ended June
30, 1995 and 1994 is $16,000 and $21,000, respectively, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.
Also included in general and administrative expenses for both of the six-
month periods ended June 30, 1995 and 1994 is $1,000 representing fees earned
by Mitchell Hutchins Institutional Investors, Inc. for managing the
Partnership's cash assets.
4. Contingencies
The Partnership is involved in certain legal actions. The General Partner
believes these actions will be resolved without material adverse effect on
the Partnership's financial statements, taken as a whole.
PAINE WEBBER/CMJ PROPERTIES, LP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Demand for government subsidized `low-income'' housing continues to exceed
the available supply, which allowed occupancy levels at all six of the
properties in which the Partnership has invested to be in the high 90s for the
quarter ended June 30, 1995. However, the effects on the Partnership's
operating property investments of the improving market conditions for multi-
family residential properties in general, while positive, are limited by the
government restrictions on rental rate increases. With the exception of The
Villages at Montpelier Apartments, which has only 20% of its units restricted
for low-income housing, cash flow from the properties in which the Partnership
has invested is restricted by the Department of Housing and Urban Development
(`HUD'') and other applicable state housing agencies, which set rental rates
for low-income units and require significant cash reserves to be established for
future capital improvements. A portion of these replacement reserve escrows are
scheduled to be used during 1995 at all six of the properties for both routine
and major improvements. Furthermore, a substantial amount of the revenues
generated by these properties comes from rental subsidy payments made by federal
or state housing agencies. In addition to limiting the cash flow potential
under improving market conditions, these features, which are characteristic of
all low-income housing properties, limit the pool of potential buyers for these
real estate assets. As a limited partner of the local limited partnerships, the
Partnership does not control property disposition decisions. At the present
time, management is not aware of any plans or intentions of the general partners
of these partnerships to sell any of the investment properties in the near
future.
At the present time, all six of the properties in which the Partnership has
invested are generating sufficient cash flow from operations to cover their
operating expenses and debt service payments, and all properties are generating
excess cash flow, a portion of which is being distributed to the Partnership on
an annual basis in accordance with the respective regulatory and limited
partnership agreements. During 1994, the Partnership received distributions
totalling approximately $407,000 from its six limited partnership investments.
The distributions received in 1994 represented the available cash flow for
distribution as of December 31, 1993, as determined by the general partners of
the local limited partnerships in accordance with the partnership, financing and
regulatory agreements. Through June 30, 1995, the Partnership has received
distributions from 1994 operations totalling approximately $301,000, with
additional distributions expected to be received from the Colonial Farms, Quaker
Court/Meadows and Marvin Gardens partnerships during the third quarter. As
discussed in the Annual Report, given the improvements in cash flow and the
strong operating performances of the investment properties in recent years,
management began the payment of regular quarterly distributions in 1994 at an
annual rate of 2% on original invested capital. At the present level, annual
distributions to the Limited and General Partners would total approximately
$177,000. Management intends to maintain distributions at the present level for
the balance of 1995, unless actual results of operations, economic conditions or
other factors differ substantially from the assumptions used in setting the
planned distribution rate.
At June 30, 1995, the Partnership had available cash and cash equivalents
of $495,000, which it intends to use for its working capital requirements and
for distributions to partners. The source of future liquidity and distributions
to the partners is expected to be from cash generated from the operations of the
Partnership's real estate investments and from the proceeds received from the
sale or refinancing of the properties owned by the local limited partnerships or
from the sale of the Partnership's interests in the local limited partnerships.
Such sources of liquidity are expected to be sufficient to meet the
Partnership's needs on both a short-term and long-term basis.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1995
For the three-month period ended June 30, 1995 the Partnership reported a net
loss of $75,000 compared to net income of $25,000 in the prior year. The
unfavorable change in net operating results for the second quarter of 1995 was
the result of a decrease in other income from local limited partnerships of
$57,000, an increase in general and administrative expenses of $17,000 and an
increase in the Partnership's recorded share of local limited partnership losses
of $28,000. Distributions received from investments in limited partnerships
with carrying values of zero are recorded as other income in the Partnership's
income statement. The decline in other income for the current three-month
period results from changes in the timing of the receipt of distributions from
the local limited partnerships. General and administrative expenses increased
mainly as a result of the over accrual of certain professional fees as of
December 31, 1993 which was reversed in the prior period. As discussed further
in the Notes to the Financial Statements, losses in excess of the investment in
individual local limited partnerships are not recognized currently, but rather,
are offset against future earnings from such entities. The Partnership's share
of losses from local limited partnerships represents the allocable losses of
only the Ramblewood partnership in both the current and prior three-month
periods. Losses from the Ramblewood partnership increased for the current
three-month period mainly due to an increase in real estate taxes. Overall
combined results for the six local limited Partnerships improved over the same
three-month period in the prior year due to a slight increase in revenues and a
decline in repairs and maintenance expenses.
Six Months Ended June 30, 1995
The Partnership recorded a net loss of $32,000 for the six months ended
June 30, 1995, as compared to net income of $51,000 for the same period in the
prior year. The unfavorable change in net operating results for the six months
ended June 30, 1995 was the result of a decrease in other income from local
limited partnerships of $57,000, an increase in general and administrative
expenses of $13,000 and a decrease in the Partnership's recorded share of local
limited partnership's income of $15,000. The decline in other income for the
current six-month period results from changes in the timing of the receipt of
distributions from the local limited partnerships. General and administrative
expenses increased mainly as a result of the over accrual of certain
professional fees as of December 31, 1993 which was reversed in the prior
period. As discussed further in the Notes to the Financial Statements, losses
in excess of the investment in individual local limited partnerships are not
recognized currently, but rather, are offset against future earnings from such
entities. The Partnership's share of local limited partnerships' income for the
six months ended June 30, 1994 represented the allocable income of the
Ramblewood partnership; the only investment which still had a positive equity
method carrying value as of June 30, 1994. For the six months ended June 30,
1995, the Ramblewood partnership generated a net loss, of which the
Partnership's allocable share amounted to $5,000. However, during the quarter
ended June 30, 1995 the carrying value of the Ramblewood investment was reduced
to zero as a result of the Partnership's receipt of a cash distribution from the
local limited partnership. As a result, the Partnership did not recognize the
loss from the Ramblewood partnership for the current six-month period. The
unfavorable change in the net operating results of the Ramblewood partnership
for the current six-month period resulted mainly from an increase in real estate
taxes. Overall combined results for the six local limited Partnerships
improved over the same six-month period in the prior year due to a slight
increase in revenues and a decline in repairs and maintenance expenses.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
In November 1994, a series of purported class actions (the "New York
Limited Partnership Actions") were filed in the United States District Court for
the Southern District of New York concerning PaineWebber Incorporated's sale and
sponsorship of various limited partnership investments, including those offered
by the Partnership. On May 30, 1995, the court certified class action treatment
of the claims asserted in the litigation. Refer to the description of the
claims in the prior quarterly report for further information. The General
Partners continue to believe that the action will be resolved without material
adverse effect on the Partnership's financial statements, taken as a whole.
Item 2 through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
PAINE WEBBER/CMJ PROPERTIES, LP
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.
PAINE WEBBER/CMJ PROPERTIES, LP
By: PW SHELTER FUND, INC.
Managing General Partner
By: /s/ Walter V. Arnold
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Dated: August 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's interim financial statements for the six months ended June 30,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 495
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 495
<PP&E> 0
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<TOTAL-ASSETS> 495
<CURRENT-LIABILITIES> 104
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 391
<TOTAL-LIABILITY-AND-EQUITY> 495
<SALES> 0
<TOTAL-REVENUES> 109
<CGS> 0
<TOTAL-COSTS> 141
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> (32)
<INCOME-TAX> 0
<INCOME-CONTINUING> (32)
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