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 SEPTEMBER 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
September 30, 1995 and December 31, 1994
(Unaudited)
(In thousands of dollars)
ASSETS
September 30 December 31
Cash and cash equivalents $ 535 $ 324
Investments in local limited
partnerships, at equity 68 201
$ 603 $ 525
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 149 $ -
Accrued expenses 10 14
Partners' capital 444 511
$ 603 $ 525
STATEMENTS OF INCOME
For the three and nine months ended September 30, 1995 and 1994
(Unaudited)
(In thousands of dollars, except per Unit information)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
REVENUES:
Other income from
local limited
partnerships $ 80 $ - $ 180 $ 157
Interest income 7 7 16 15
87 7 196 172
EXPENSES:
Management fees 50 50 149 149
General and
administrative 21 23 63 53
71 73 212 202
Operating income (loss) 16 (66) (16) (30)
Partnership's share of
local limited
partnerships' income 81 92 81 107
NET INCOME $ 97 $ 26 $ 65 $ 77
Net income per Limited
Partnership Unit $11.09 $2.90 $ 7.49 $8.67
Cash distributions per
Limited Partnership Unit $ 5.00 $5.00 $15.00 $5.00
The above net income 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 nine months ended September 30, 1995 and 1994
(Unaudited)
(In thousands of dollars)
General Limited
Partner Partners
Balance at December 31, 1993 $ (71) $ 573
Cash distributions (1) (44)
Net income 1 76
BALANCE AT SEPTEMBER 30, 1994 $ (71) $ 605
Balance at December 31, 1994 $ (71) $ 582
Cash distributions (1) (131)
Net income 1 64
BALANCE AT SEPTEMBER 30, 1995 $ (71) $ 515
STATEMENTS OF CASH FLOWS
For the nine months ended September 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 $ 65 $ 77
Adjustments to reconcile net income
to net cash used for operating activities:
Other income from local limited partnerships (180) (157)
Partnership's share of local limited
partnerships' income (81) (107)
Changes in assets and liabilities:
Accounts payable - affiliates 149 (56)
Accrued expenses (4) (8)
Total adjustments (116) (328)
Net cash used for operating activities (51) (251)
Cash flows from investing activities:
Distributions from local limited partnerships 395 407
Cash flows from financing activities:
Distributions to partners (133) (44)
Net increase in cash and cash equivalents 211 112
Cash and cash equivalents, beginning of period 324 463
Cash and cash equivalents, end of period $ 535 $ 575
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 nine months ended September 30, 1995 and 1994
(In thousands of dollars)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Rental revenues, including
government subsidies $ 2,447 $ 2,465 $ 7,394 $ 7,381
Interest income 26 19 77 53
2,473 2,484 7,471 7,434
Property operating expenses 1,292 1,161 3,797 3,776
Interest expense 721 731 2,167 2,194
Depreciation and amortization 306 298 918 893
Real estate taxes 131 125 498 443
2,450 2,315 7,380 7,306
Net income $ 23 $ 169 $ 91 $ 128
Net income:
Partnership's share of
combined operations $ 17 $ 149 $ 72 $ 114
Local partners' share of
combined operations 6 20 19 14
$ 23 $ 169 $ 91 $ 128
RECONCILIATION OF PARTNERSHIP'S SHARE OF OPERATIONS:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Partnership's share
of operations,
as shown above $ 17 $ 149 $ 72 $ 114
Losses in excess of basis not
recognized by Partnership 64 - 88 79
Income offset with prior year
unrecognized losses - (57) (79) (86)
Partnership's share of
local limited
partnerships' income $ 81 $ 92 $ 81 $ 107
3. Related Party Transactions
The Adviser earned basic management fees of $149,000 during each of the nine-
month periods ended September 30, 1995 and 1994. Accounts payable -
affiliates at September 30, 1995 consists of $149,000 of management fees
payable to the Adviser.
Included in general and administrative expenses for the nine months ended
September 30, 1995 and 1994 is $24,000 and $28,000, 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 the nine months
ended September 30, 1995 and 1994 is $2,000 and $1,000, respectively,
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 Managing 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
Occupancy levels at all six of the properties in which the Partnership has
invested remained in the mid - to - high 90% range for the quarter ended
September 30, 1995. However, the effects on the Partnership's operating
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 which apply to all six of the
Partnership's operating properties. 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 September 30, 1995, the Partnership has received
distributions from 1994 operations totalling approximately $395,000, which
includes distributions from five of the six local limited partnerships.
Management of the Colonial Farms limited partnership has yet to make a
distribution of 1994 excess cash flow because it has been evaluating the future
maintenance and capital improvement requirements of the operating property. A
small additional distribution may be received from the Colonial Farms
partnership during the fourth quarter pending the outcome of the analysis. 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 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 projecting
the planned distribution rate.
At September 30, 1995, the Partnership had available cash and cash
equivalents of $535,000, 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 September 30, 1995
For the three-month period ended September 30, 1995, the Partnership reported
net income of $97,000 compared to net income of $26,000 in the prior year. The
favorable change in net operating results for the third quarter of 1995 was the
result of an increase in other income from local limited partnerships of
$80,000, which was partially offset by a decrease in the Partnership's recorded
share of local limited partnership's income of $11,000. Distributions received
from investments in limited partnerships with carrying values of zero are
recorded as other income in the Partnership's income statement. The increase in
other income for the current three-month period resulted from a change in the
timing of the receipt of distributions from certain of the local limited
partnerships. 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 income from local limited
partnerships represents the allocable income of only the Ramblewood partnership
in both the current and prior three-month periods. Income from the Ramblewood
partnership decreased for the current three-month period mainly due to an
increase in real estate taxes. Overall combined results for the six local
limited partnerships declined over the same three-month period in the prior year
due to an increase in property operating expenses, principally maintenance and
housing agency reimbursements, along with slight increases in real estate taxes
and depreciation and amortization expense.
Nine Months Ended September 30, 1995
The Partnership recorded net income of $65,000 for the nine months ended
September 30, 1995, as compared to net income of $77,000 for the same period in
the prior year. The unfavorable change in net operating results for the nine
months ended September 30, 1995 was the result of an increase in general and
administrative expenses of $10,000 and a decrease in the Partnership's recorded
share of local limited partnerships' income of $26,000. 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 nine months ended September 30, 1994, of $107,000, represented the
allocable income of the Ramblewood partnership; the only one of the
Partnership's investments which still has a positive equity method carrying
value. For the nine months ended September 30, 1995, the Ramblewood partnership
generated net income of which the Partnership's allocable share amounted to
$81,000. The unfavorable change in the net operating results of the Ramblewood
partnership for the current nine-month period resulted mainly from an increase
in real estate taxes. Overall combined results for the six local limited
partnerships declined over the same nine-month period in the prior year due to
slight increases in real estate taxes and depreciation and amortization expense,
which were partially offset by a small decline in interest expense and a slight
increase in revenues.
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: November 13, 1995
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<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's interim financial statements for the nine months ended September 30,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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<PERIOD-TYPE> 9-MOS
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<PERIOD-END> SEP-30-1995
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