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 November 30, 1999
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-12634
CAMBRIDGE + RELATED HOUSING
PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 13-3161322
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securi-
ties 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 ____
<PAGE>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements
CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
November 30, February 28,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment, net of
accumulated depreciation of
$27,239,402 and $55,795,706,
respectively $ 22,068,908 $ 48,351,071
Property and equipment-held for
sale, net of accumulated
depreciation of $20,168,911
and $12,148,758 19,465,369 11,272,289
Cash and cash equivalents 3,543,262 6,906,857
Cash - restricted for tenants'
security deposits 444,131 752,732
Mortgage escrow deposits 5,492,748 5,874,507
Rents receivable 237,709 336,017
Prepaid expenses and other assets 652,484 1,297,086
Total assets $ 51,904,611 $ 74,790,559
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $ 31,318,145 $ 44,713,166
Purchase money notes payable
(Note 2) 26,316,521 39,902,759
Due to selling partners (Note 2) 36,073,810 49,776,218
Accounts payable, accrued expenses
and other liabilities 2,904,323 2,435,855
Tenants' security deposits payable 444,131 752,732
Due to general partners of
subsidiaries and their affiliates 2,210,916 81,652
Due to general partners and affiliates 2,059,381 1,331,349
Distribution payable 0 2,020,374
Total liabilities 101,327,227 141,014,105
Minority interest 29,576 30,399
Commitments and contingencies
(Note 5)
Partners' deficit:
Limited partners (48,509,140) (65,142,875)
General partners (943,052) (1,111,070)
Total partners' deficit (49,452,192) (66,253,945)
Total liabilities and partners' deficit $ 51,904,611 $ 74,790,559
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Revenues:
Rentals, net $3,640,999 $5,335,491 $14,134,256 $16,612,977
Other 148,298 192,514 488,716 581,460
(Loss) gain on sale
of properties
(Note 4) 0 (49,911) (6,050,854) 12,785,260
Total revenues 3,789,297 5,478,094 8,572,118 29,979,697
Expenses
Administrative and
management 843,687 910,730 3,370,927 2,975,261
Administrative and
management-
related parties
(Note 3) 427,128 579,141 1,522,457 1,744,109
Operating 626,032 787,650 2,281,449 2,558,430
Repairs and
maintenance 855,463 1,441,738 3,661,563 4,302,948
Taxes and
insurance 414,818 648,289 1,783,317 2,113,404
Interest 942,516 1,284,250 3,318,888 4,062,678
Depreciation 429,057 1,024,657 2,162,166 3,204,928
Loss on impairment
of assets 0 0 0 3,191,072
Total expenses 4,538,701 6,676,455 18,100,767 24,152,830
(Loss) income before
minority interest
and extraordinary
item (749,404) (1,198,361) (9,528,649) 5,826,867
Minority interest in
loss (income)
of subsidiaries 74 134 89 (621,160)
(Loss) income before
extraordinary
item (749,330) (1,198,227) (9,528,560) 5,205,707
Extraordinary item-
forgiveness of
indebtedness
income (Note 4) 0 0 26,330,313 7,601,487
Net (loss) income $ (749,330) $(1,198,227) $16,801,753 $12,807,194
(Loss) income before
extraordinary
item - limited
partners $ (741,837) $(1,186,245) $(9,433,275) $ 5,153,650
Extraordinary item -
limited partners 0 0 26,067,010 7,525,472
Net (loss) income -
limited partners $ (741,837) $(1,186,245) $16,633,735 $12,679,122
Number of limited
partnership
units outstanding 10,038 10,038 10,038 10,038
(Loss) income before
extraordinary
item per limited
partnership unit $ (73.90) $ (118.18) $ (939.76) $ 513.41
Extraordinary item
per limited
partnership unit 0.00 0.00 2,596.83 749.70
Net (loss) income
per limited
partnership unit $ (73.90) $ (118.18) $ 1,657.07 $ 1,263.11
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statement of Partners' Deficit
(Unaudited)
<CAPTION>
Limited General
Total Partners Partners
<S> <C> <C> <C>
Balance-
March 1, 1999 $(66,253,945) $(65,142,875) $(1,111,070)
Net income-
nine months ended
November 30, 1999 16,801,753 16,633,735 168,018
Balance-
November 30, 1999 $(49,452,192) $(48,509,140) $ (943,052)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (decrease) in Cash and Cash Equivalents
(Unaudited)
<CAPTION>
Nine Months Ended
November 30,
1999 1998*
<S> <C> <C>
Cash flows from operating activities:
Net income $16,801,753 $12,807,194
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Loss (gain) on sale of properties
(Note 4) 6,050,854 (12,785,260)
Extraordinary item - forgiveness
of indebtedness income (Note 4) (26,330,313) (7,601,487)
Depreciation 2,162,166 3,204,928
Loss on impairment of assets 0 3,191,072
Minority interest in (loss) income
of subsidiaries (89) 621,160
Decrease in cash-restricted
for tenants' security deposits 173,021 1,269
Decrease in mortgage escrow deposits 59,025 478,414
Increase in rents receivable (25,434) (18,324)
Decrease (increase) in prepaid
expenses and other assets 268,530 (415,861)
Increase in due to selling partners 2,184,247 2,680,055
Payments to selling partners 0 (85,784)
Decrease in accounts payable,
accrued expenses and other liabilities (2,852,170) (368,142)
Increase (decrease) in tenants'
security deposits payable 5,826 (3,533)
Increase in due to general
partners of subsidiaries and their
affiliates 3,163 173,859
Decrease in due to general partners of
subsidiaries and their affiliates (1,082,330) (211,760)
Increase (decrease) in due to general
partners and affiliates 728,032 (8,617)
Total adjustments (18,655,472) (11,148,011)
Net cash (used in) provided by
operating activities (1,853,719) 1,659,183
Cash flows from investing activities:
Decrease in certificates of deposit 0 205,509
Proceeds from sale of properties 2,828,103 7,035,898
Acquisitions of property and
equipment (497,745) (388,507)
Increase in mortgage escrow deposits (436,449) (435,464)
Net cash provided by
investing activities 1,893,909 6,417,436
Cash flows from financing activities:
Principal payments of mortgage
notes payable (1,093,116) (4,241,819)
Decrease in minority interest (734) (500,174)
Distributions paid to partners (2,020,374) (2,030,972)
Principal payments of purchase
notes payable (180,111) (100,416)
Payments to selling partners (109,450) 0
Net cash used in financing activities (3,403,785) (6,873,381)
Net (decrease) increase in cash and
cash equivalents (3,363,595) 1,203,238
Cash and cash equivalents at
beginning of period 6,906,857 6,069,843
Cash and cash equivalents at
end of period $ 3,543,262 $ 7,273,081
Supplemental disclosures of
noncash activities:
Forgiveness of indebtedness
Decrease in purchase money
notes payable $(12,242,127) $(3,099,781)
Decrease in due to selling partners (15,061,636) (4,485,944)
Increase in accounts payable,
accrued expenses and
other liabilities 973,450 0
Decrease in due to general partners
of subsidiaries and their affiliates 0 (15,762)
Summarized below are the components
of the gain on sale of properties:
Decrease in property and
equipment, net of accumulated
depreciation 16,424,662 8,472,345
Decrease in cash-restricted for
tenants' security deposits 135,580 22,464
Decrease in mortgage escrow deposits 759,183 894,467
Decrease in rents receivable 123,742 4,629
Decrease in prepaid expenses and
other assets 412,072 8,482
Decrease in mortgage notes payable (12,301,905) (6,024,054)
Decrease in purchase money note
payable 0 (3,250,000)
Increase in due general partners of
subsidiaries and their affiliates 0 11,250
Decrease in due to selling partners 0 (4,164,950)
Increase (decrease) in accounts
payable, accrued expenses and
other liabilities 2,347,188 (1,675,330)
Decrease in tenants' security
deposits payable (314,427) (20,200)
Increase (decrease) in due to general
partners of subsidiaries and
their affiliates 1,292,862 (28,500)
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAMBRIDGE + RELATED HOUSING PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
November 30, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements for the nine months ended
November 30, 1999, include the accounts of Cambridge + Related
Housing Properties Limited Partnership, a Massachusetts limited
Partnership (the "Partnership") and thirty Subsidiary Partnerships
("Subsidiaries", "Subsidiary Partnerships" or "Local Partnerships"),
five of which only have activity through the effective date of sale
of the Partnership's interest and one of which only had activity
through the effective date of sale of their property and the related
assets and liabilities. The consolidated financial statements for the
nine months ended November 30, 1998, include the accounts of
the Partnership and thirty five Subsidiary Partnerships, one of
which only has activity through the effective date of sale of the
Partnership's interest and four of which only have activity through
the effective date of sale of their properties and the related assets
and liabilities (see Note 4). The Partnership is a limited partner,
with an ownership interest of 98.99% in each of the Subsidiary
Partnerships. Through the rights of the Partnership and/or one of
its general partners (a "General Partner"), which General Partner
has a contractual obligation to act on behalf of the Partnership, the
right to remove the local general partner of the Subsidiary Part-
nerships and to approve certain major operating and financial
decisions, the Partnership has a controlling financial interest in the
Subsidiary Partnerships.
For financial reporting purposes, the Partnership's fiscal quarter
ends on November 30. All Subsidiaries have fiscal quarters end-
ing September 30. Accounts of Subsidiaries have been adjusted
for intercompany transactions from October 1 through November
30. The Partnership's fiscal quarter ends on November 30 in order
to allow adequate time for the Subsidiaries' financial statements to
be prepared and consolidated. The books and records of the Part-
nership are maintained on the accrual basis of accounting, in ac-
cordance with generally accepted accounting principles ("GAAP").
All intercompany accounts and transactions have been eliminated
in consolidation.
Increases (decreases) in the capitalization of consolidated Subsidi-
aries attributable to minority interest arise from cash contributions
from and cash distributions to the minority interest partners.
Losses attributable to minority interests which exceed the minority
interests' investment in a Subsidiary have been charged to the
Partnership. Such losses aggregated approximately $0 and $0 and
$86,000 and $0 for the three and nine months ended November 30,
1999 and 1998, respectively. The Partnership's investment in each
Subsidiary is equal to the respective Subsidiary's partners' equity
less minority interest capital, if any.
These unaudited financial statements have been prepared on the
same basis as the audited financial statements included in the
Partnership's Form 10-K for the year ended February 28, 1999. In
the opinion of the General Partners, the accompanying unaudited
financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the fi-
nancial position of the Partnership as of November 30, 1999, the
results of operations for the three and nine months ended Novem-
ber 30, 1999 and 1998 and cash flows for the nine months ended
November 30, 1999 and 1998. However, the operating results for
the nine months ended November 30, 1999 may not be indicative
of the results for the year.
Certain information and note disclosures normally included in
financial statements prepared in accordance with GAAP have
been omitted. It is suggested that these consolidated financial
statements should be read in conjunction with the financial state-
ments and notes thereto included in the Partnership's February 28,
1999 Annual Report on Form 10-K.
Note 2 - Purchase Money Notes Payable
Nonrecourse promissory notes (the "Purchase Money Notes")
were issued to the selling partners of the Subsidiary Partnerships
as part of the purchase price, and are secured only by the Partner-
ship's interest in the Subsidiary Partnership to which the Purchase
Money Note relates.
The Purchase Money Notes, which provide for simple interest,
will not be in default, if not less than 60% of the cash flow actually
distributed to the Partnership by the corresponding Subsidiary
Partnership (generated by the operations, as defined) is applied
first to accrued interest and then to current interest thereon. (As of
November 30, 1999, the maturity dates of the Purchase Money
Notes associated with the remaining properties owned by the
Subsidiary Partnerships were extended for three to five years (see
below). Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase
Money Note. Continued accrual of such interest without payment
would impact the effective rate of the Purchase Money Notes,
specifically by reducing the current effective interest rate of 9%.
The exact effect is not determinable inasmuch as it is dependent
on the actual future interest payments and ultimate repayment
dates of the Purchase Money Notes. Unpaid interest of
$35,948,762 and $49,651,170 at November 30, 1999 and February
28, 1999, respectively, has been accrued and is included in the
caption due to selling partners. In general, the interest on and the
principal of each Purchase Money Note is also payable to the ex-
tent of the Partnership's actual receipt of proceeds from the sale or
refinancing of the apartment complex, or in some cases the interest
in the Local Partnership in which the Partnership invested ("Local
Partnership Interest") to which the Purchase Money Note relates.
The Partnership was permitted to extend the term of the Purchase
Money Notes for up to five additional years. In connection with
such extensions, the Partnership incurred an extension fee of
1 1/2% per annum of the outstanding principal balance of the
Purchase Money Notes. The Partnership sent an extension notice
to each Purchase Money Note holder that pursuant to the note it
was extending the maturity. However in certain cases, the Part-
nership did not pay the extension fee at that time, deferring such
payment to the future. Extension fees in the amount of $729,349
were incurred by the Partnership through November 30, 1999.
Such Purchase Money Notes are now extended with maturity
dates ranging from July 2001 to December 2004. Extension fees of
$303,137 were accrued and added to the Purchase Money Notes
balance.
The Partnership expects that upon final maturity it will be re-
quired to refinance or sell its investments in the Local Partnerships
in order to pay the Purchase Money Notes and accrued interest
thereon. Based on the historical operating results of the Local
Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales
will be sufficient to meet the outstanding balances. Management
is working with the Purchase Money Note holders to restructure
and/or refinance the Purchase Money Notes. No assurance can be
given that management's efforts will be successful. The Purchase
Money Notes are without personal recourse to either the Partner-
ship or any of its partners and the sellers' recourse, in the event of
non-payment, would be to foreclose on the Partnership's interests
in the respective Local Partnerships.
During the nine months ended November 30, 1999 and 1998, the
Partnership received cash flow distributions aggregating $182,415
and $142,973, respectively, of which $109,449 and $85,784 was
used to pay interest on the Purchase Money Notes. In addition,
the Partnership received a distribution of proceeds from the sale of
one and four Local Partnerships aggregating $1,915,569 and
$1,847,379 and proceeds from the sale of its Local Partnership
Interest in five and one Local Partnership aggregating $2,828,103
and $100,000, respectively, of which $1,915,569 and $488,712 was
used to pay principal on the Purchase Money Notes during the
nine months ended November 30, 1999 and 1998, respectively.
Note 3 - Related Party Transactions
<TABLE>
The costs incurred to related parties for the three and nine months
ended November 30, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $ 241,710 $ 241,500 $ 725,129 $ 724,500
Expense reimburse-
ment (b) 31,877 36,972 88,498 89,532
Property manage-
ment fees
incurred to
affiliates of
the General
Partners (c) 32,188 32,014 70,386 133,093
Local administra-
tive fee (d) 5,000 7,000 16,000 20,000
Total general and
administrative-
General Partners 310,775 317,486 900,013 967,125
Property manage-
ment fees
incurred to
affiliates of the
Subsidiary
Partnerships'
general partners (c) 123,958 261,655 619,279 776,984
Subsidiary
Partnerships'
general partners
incentive fee (e) (7,605) 0 3,165 0
Total general and
administrative-
related parties $ 427,128 $ 579,141 $1,522,457 $1,744,109
</TABLE>
(a) After all other expenses of the Partnership are paid, an annual
Partnership management fee of up to .5% of invested assets is
payable to the Partnership's General Partners and affiliates. Part-
nership management fees owed to the General Partners amount-
ing to approximately $1,719,000 and $1,143,000 were accrued and
unpaid as of November 30, 1999 and February 28, 1999, respec-
tively.
(b) The Partnership reimburses the General Partners and their
affiliates for actual Partnership operating expenses incurred by the
General Partners and their affiliates on the Partnership's behalf.
The amount of reimbursement from the Partnership is limited by
the provisions of the partnership agreement. Another affiliate of
the General Partners performs asset monitoring for the Partner-
ship. These services include site visits and evaluations of the Sub-
sidiary Partnerships' performance.
(c) Property management fees incurred by Local Partnerships to
affiliates of the Local Partnerships amounted to $156,146 and
$293,669 and $689,665 and $910,077 for the three and nine months
ended November 30, 1999 and 1998, respectively. Of such fees
$32,188 and $32,014 and $70,386 and $133,093, respectively, were
incurred to a company which is also an affiliate of the General
Partners.
(d) Cambridge/Related Housing Associates Limited Partnership,
the special limited partner of each of the Subsidiary Partnerships,
owning .01%, is entitled to receive a local administrative fee of up
to $2,500 per year from each Subsidiary Partnership.
(e) The Partnership entered into an agreement with the local gen-
eral partner of Parktowne Ltd. and Westwood Apartment Com-
pany Ltd., which provides for an annual incentive fee based on
cash flow distributed from the respective properties. Such fee
amounted to $(7,605) and $0 and $3,165 and $0 for the three and
nine months ended November 30, 1999 and 1998, respectively.
Note 4 - Sale of Properties
General
The Partnership is currently in the process of winding up its op-
erations and disposing of its investments. It is anticipated that this
process will take a number of years. As of November 30, 1999, the
Partnership has disposed of twenty of its forty-four original in-
vestments. Nine additional investments are listed for sale and the
Partnership anticipates that the fifteen remaining investments will
be listed for sale by December 31, 2000. There may be no assur-
ance as to when the Partnership will dispose of its last remaining
investments or the amount of proceeds which may be received.
However, based on the historical operating results of the Local
Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales
received by the Partnership will be sufficient to return to the lim-
ited partners their original investment.
Information Regarding Disposition
On January 16, 1998, the property and related assets and liabilities
of Country Ltd. ("Country") and Northbrook III, Ltd. ("North-
brook") were sold to a third party for approximately $3,247,000
and $1,998,000, respectively, resulting in gains of approximately
$937,000 and $570,000, respectively. The Partnership used ap-
proximately $860,000 and $90,000, respectively, of the net pro-
ceeds to settle the associated Purchase Money Note and accrued
interest thereon which had total outstanding balances of
$2,517,000 and $77,000, respectively, resulting in forgiveness of
indebtedness income of $1,656,000 and $3,000, respectively.
On April 21, 1998, the Partnership's limited partnership interest
and related Purchase Money Note and interest thereon in Okla-
homa City - Town and Country Village Apartments, Ltd. ("Town
and Country") was assigned to the local general partner effective
January 15, 1998, resulting in a gain of approximately $11,984,000.
On April 27, 1998, the property and the related assets and liabili-
ties of Riverside Gardens Limited Partnership ("Riverside") and
Cudahy Gardens Limited Partnership ("Cudahy") were sold to a
third party for approximately $1,834,000 and $232,000, respec-
tively, resulting in losses of approximately $(473,000) and
$(240,000) plus the assumption of the related mortgage notes. The
Partnership used approximately $442,000 and $47,000, respec-
tively, of the net proceeds to settle the associated Purchase Money
Note and accrued interest thereon which had total outstanding
balances of approximately $5,402,000 and $2,672,000, respectively,
resulting in forgiveness of indebtedness income of approximately
$4,961,000 and $2,625,000, respectively.
On April 28, 1999, the Pacific Palms ("Pacific"), a limited partner-
ship entered into a letter of intent to sell the Pacific Palms apart-
ments to an unaffiliated third party purchaser for a price of
$4,800,000. The contract was cancelled and is being modified to
comply with a recently enacted State of California regulation re-
garding prepayment of FHA mortgages such as the one secured
by the Pacific Palms property. On November 9, 1999, Pacific en-
tered into an amendment to the purchase agreement. The
amendment contemplates a closing no later than April 30, 2000. In
exchange for this, the third party purchaser has agreed to increase
the purchase price to $4,900,000. The third party purchaser re-
leased a deposit of $50,000 to Pacific as consideration for addi-
tional time. No assurances can be given that the transaction will
close.
On May 3, 1999, Rolling Meadows Apartments, Ltd. ("Rolling
Meadows") entered into an agreement for the purchase and sale of
real estate with an unaffiliated third party for a price of $3,150,000.
This agreement was conditioned upon several factors. The con-
tract was cancelled. On November 24, 1999, Rolling Meadows
entered into an agreement for the purchase and sale of real estate
with an unaffiliated third party for a price of $2,450,000. The sale
is expected to take place in early 2000. No assurances can be given
that the sale will actually occur.
On May 5, 1999, the Westgate Associates Limited ("Westgate")
entered into an agreement for the purchase and sale of real estate
with an unaffiliated third party for a price of $2,055,000. The con-
tract was terminated on August 24, 1999 by the unaffiliated third
party pursuant to the terms of the agreement. On October 6, 1999,
Westgate entered into an agreement for the purchase and sale of
real estate with an unaffiliated third party for a purchase price of
$2,055,000. The sale is expected to take place in early 2000. No
assurances can be given that the sale will actually occur.
On May 5, 1999, The Wingate Associates Limited entered into an
agreement for the purchase and sale of real estate with an unaffili-
ated third party for a price of $2,560,000. Since entering into the
contract the purchaser and seller have negotiated three separate
amendments to such agreement. The most recent amendment
entered into during December 1999 calls for a reduction in the
purchase price to $2,360,000, an additional down payment of
$25,000 and a closing no later than March 15, 2000. The closing is
expected to occur in early 2000. No assurances can be given that
the sale will actually occur.
On June 18, 1999, the Partnership's limited partnership interest in
Warren Manor Apartments Limited Partnership was sold to the
local general partners for $934,840, resulting in a loss in the
amount of approximately $3,548,000. No proceeds were used to
settle the associated Purchase Money Notes and accrued interest
which had a total outstanding balance of approximately
$9,187,000, resulting in forgiveness of indebtedness income. For
tax purposes, the entire gain to be realized by the Partnership is
anticipated to be approximately $9,349,000.
On June 18, 1999, the Partnership's limited partnership interest in
Golf Manor Apartments Limited Partnership was sold to the local
general partners for $255,473, resulting in a loss in the amount of
approximately $544,000. No proceeds were used to settle the as-
sociated purchase Money Notes and accrued interest which had a
total outstanding balance of approximately $2,227,000, resulting in
forgiveness of indebtedness income. For tax purposes, the entire
gain to be realized by the Partnership is anticipated to be ap-
proximately $2,762,000.
On June 18, 1999, the Partnership's limited partnership interest in
Warren Woods Apartments, L.P. was sold to the local general
partners for $376,585, resulting in a loss in the amount of ap-
proximately $1,914,000. No proceeds were used to settle the asso-
ciated Purchase Money Notes and accrued interest which had a
total outstanding balance of approximately $3,532,000, resulting in
forgiveness of indebtedness income. For tax purposes, the entire
gain to be realized by the Partnership is anticipated to be ap-
proximately $3,287,000.
On June 18, 1999, the Partnership's limited partnership interest in
Rosewood Manor Apartments Limited Partnership was sold to the
local general partners for $405,845, resulting in a loss in the
amount of approximately $1,031,000. No proceeds were used to
settle the associated Purchase Money Notes and accrued interest
which had a total outstanding balance of approximately
$3,568,000, resulting in forgiveness of indebtedness income. For
tax purposes, the entire gain to be realized by the Partnership is
anticipated to be approximately $5,003,000.
On June 18, 1999, the Partnership's limited partnership interest in
Canton Commons Apartments Limited Partnership was sold to
the local general partners for $855,360, resulting in a gain in the
amount of approximately $986,000. No proceeds were used to
settle the associated Purchase Money Notes and accrued interest
which had a total outstanding balance of approximately
$7,816,000, resulting in forgiveness of indebtedness income. For
tax purposes, the entire gain to be realized by the Partnership is
anticipated to be approximately $12,985,000.
On November 8, 1999, the property and the related assets and
liabilities of Bethany Glen Associates ("Bethany") were sold to an
unaffiliated third party for $3,450,000 resulting in a gain in the
amount of approximately $1,875,000. The Partnership used
$1,916,000 of the net proceed to settle the associated Purchase
Money Note and accrued interest thereon which had a total out-
standing balance of approximately $2,889,000, resulting in for-
giveness of indebtedness income of $973,000. For tax purposes,
the entire gain to be realized by the Partnership is anticipated to be
approximately $3,540,000.
Note 5 - Commitments and Contingencies
The following disclosure includes changes and/or additions to
disclosures regarding the Subsidiary Partnership which was in-
cluded in the Partnership's Annual Report on Form 10-K for the
period ended February 28, 1999.
Westwood Apartments Company, Ltd.
Westwood Apartments Company, Ltd. ("Westwood") has experi-
enced a significant decrease in occupancy levels in 1998 and 1999.
As a result, the partnership has incurred operating losses and cash
deficits. In addition, the partnership continues to be in default on
their mortgage payments. Westwood's continuation as a going
concern is dependent upon its ability to generate sufficient cash
flow to meet its obligations on a timely basis, to comply with the
terms of its mortgage and ultimately, to attain successful opera-
tions. The partnership's investment in Westwood was approxi-
mately $0 and $99,000 at November 30, 1999 and February 28,
1999 and the minority interest balance was zero at each date. The
mortgage was assigned to the Department of Housing and Urban
Development ("HUD") on February 18, 1999. In August 1999,
HUD sent correspondence to the general partner indicating that
the mortgage is in foreclosure. The Partnership intends to pursue
all workout options available including a sale of the property.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds are (i) cash distribu-
tions from operations and sales of the Local Partnerships in which
the Partnership has invested, (ii) interest earned on funds and (iii)
cash in working capital reserves. All of these sources of funds are
available to meet the obligations of the Partnership.
During the nine months ended November 30, 1999 and 1998, the
Partnership received cash flow distributions aggregating $182,415
and $142,973, respectively, of which $109,449 and $85,784 was
used to pay interest on the Purchase Money Notes. In addition,
the Partnership received a distribution of proceeds from the sale of
one and four Local Partnerships aggregating $1,915,569 and
$1,847,379 and proceeds from the sale of its Local Partnership
Interest in five and one Local Partnership aggregating $2,828,103
and $100,000, respectively, of which $1,915,569 and $488,712 was
used to pay principal on the Purchase Money Notes during the
nine months ended November 30, 1999 and 1998, respectively.
During the nine months ended November 30, 1999, cash and cash
equivalents of the Partnership and its thirty consolidated Local
Partnerships decreased approximately ($3,364,000). This decrease
was due to principal payments of mortgage notes payable
($1,093,000), principal payments of Purchase Money Notes pay-
able ($180,000), an increase in mortgage escrow deposits
($436,000), distributions paid to partners ($2,020,000), payments to
selling partners ($109,000), acquisitions of property and equip-
ment ($498,000) and cash used in operating activities ($1,854,000)
which exceeded the proceeds from the sale of properties
($2,828,000). Included in the adjustments to reconcile the net in-
come to cash used in operating activities is loss on sale of proper-
ties ($6,051,000), forgiveness of indebtedness income ($26,330,000)
and depreciation ($2,162,000).
The Partnership had a working capital reserve of approximately
$2,404,000 at November 30, 1999. The working capital reserve is
temporarily invested in money market accounts which can be
easily liquidated to meet obligations as they arise. The General
Partners believe that the Partnership's reserves, net proceeds from
future sales and future cash flow distributions will be adequate for
its operating needs and plan to continue investing available re-
serves in short term investments. In March 1999 and 1998, a dis-
tribution of approximately $2,000,000 and $2,011,000 and $20,000
and $20,000 was paid to the limited partners and General Partners,
respectively, from net proceeds from the sale of properties. None
of the total distributions of approximately $2,020,000 and
$2,031,0000 for the nine months ended November 30, 1999 and
1998, was deemed to be a return of capital in accordance with
GAAP.
Partnership management fees owed to the General Partners
amounting to approximately $1,719,000 and $1,143,000 were ac-
crued and unpaid as of November 30, 1999 and February 28, 1999.
The Local Partnerships which receive government assistance are
subject to low-income use restrictions which limited the owners'
ability to sell or refinance the properties. In order to maintain the
existing inventory of affordable housing, Congress passed a series
of related acts including the Emergency Low Income Preservation
Act of 1987, the Low-Income Housing Preservation and Resident
Homeownership Act of 1990 (together the "Preservation Acts")
and the Housing Opportunity Program Extension Act of 1996 (the
"1996 Act"). In exchange for maintaining the aforementioned use
restrictions, the Preservation Acts provide financial incentives for
owners of government assisted properties. The 1996 Act provides
financial assistance by funding the sale of such properties to not-
for-profit owners and also restores the owners ability to prepay
their U.S. Department of Housing and Urban Development
("HUD") mortgage and convert the property to condominiums or
market-rate rental housing. Local general partners have filed for
incentives under the Preservation Acts or the 1996 Act for the
following local partnerships: San Diego - Logan Square Gardens
Company, Albuquerque - Lafayette Square Apts. Ltd., Westgate
Associates Limited, Riverside Gardens Limited Partnership, Pa-
cific Palms, Canton Commons Associates, Rosewood Manor Asso-
ciates, Bethany Glen Associates and South Munjoy Associates,
Limited. The South Munjoy Associates, Limited property and the
Riverside Gardens Limited Partnership were sold on September 9,
1997 and April 27, 1998, respectively. On June 18, 1999, the Rose-
wood Manor Apartments, Limited Partnership and Canton Com-
mons Apartments, Limited Partnership were sold. On November
8, 1999, Bethany was sold. The local general partners of the other
properties are either negotiating purchase and sale contracts or
exploring their alternatives under the 1996 Act.
For a discussion of Purchase Money Notes payable see Note 2 to
the financial statements.
For a discussion of the Partnership's sale of properties see Note 4
to the financial statements.
For a discussion of contingencies affecting certain Local Partner-
ships, see Note 5 to the financial statements and Part II, Item 1 of
this report. Since the maximum loss the Partnership would be
liable for is its net investment in the respective Local Partnerships,
the resolution of the existing contingencies is not anticipated to
impact future results of operations, liquidity or financial condition
in a material way although the Partnership would lose its entire
investment in the property and any ability for future appreciation.
Management is not aware of any trends or events, commitments
or uncertainties which have not otherwise been disclosed that will
or are likely to impact liquidity in a material way. Management
believes the only impact would be from laws that have not yet
been adopted. The portfolio is diversified by the location of the
properties around the United States so that if one area of the is
experiencing downturns in the economy, the remaining properties
in the portfolio May be experiencing upswings. However, the
geographic diversifications of the portfolio May not protect
against a general downturn in the national economy.
Results of Operations
The results of operations of the Partnership, as well as the Local
Partnerships, remained fairly consistent during the three and nine
months ended November 30, 1999 and 1998 excluding Country,
Northbrook, Riverside, Cudahy and Bethany which sold their
properties and Town and Country, Warren Manor Apartments
Limited Partnership, Golf Manor Limited Partnership, Warren
Woods Apartments L.P., Canton Commons Apartments Limited
Partnership and Rosewood Manor Apartments Limited Partner-
ship in which the Partnership's interest was sold (collectively the
"Sold Assets") and loss on impairment of assets. Contributing to
the relatively stable operations at the Local Partnerships is the fact
that a large portion of the Local Partnerships are operating under
government assistance programs which provide for rental subsi-
dies and/or reductions of mortgage interest payments under HUD
Section 8 and Section 236 programs.
The Partnership's primary source of income continues to be its
portion of the Local Partnerships' operating results. The majority
of Local Partnership income continues to be in the form of rental
income with the corresponding expenses being divided among
operations, depreciation, and mortgage interest. In addition, the
Partnership incurred interest expense relating to the Purchase
Money Notes issued when the Local Partnership Interests were
acquired.
Rental income decreased approximately 32% and 15% for the
three and nine months ended November 30, 1999 as compared to
1998. Excluding the Sold Assets, rental income increased by ap-
proximately 1% and decreased less than 1% for the three and nine
months ended November 30, 1999 as compared to 1998.
Other income decreased approximately $44,000 and $93,000 for
the nine months ended November 30, 1999 as compared to 1998.
Excluding the Sold Assets such income increased approximately
$12,000 and decreased approximately $11,000.
Total expenses, excluding the Sold Assets, administrative and
management and loss on impairment of assets, remained fairly
consistent with increases of approximately 3% and 2% for the
three and nine months ended November 30, 1999 as compared to
1998.
Administrative and management (decreased) increased approxi-
mately ($67,000) and $396,000 for the three and nine months
ended November 30, 1999 as compared to 1998. Excluding the
Sold Assets, such expense increased approximately $92,000 and
$654,000 primarily due to an increase in legal fees incurred by the
Partnership and the amortization of the Purchase Money Note
extension fees.
Administrative and management-related parties, operating, re-
pairs and maintenance, taxes and insurance, interest and deprecia-
tion expense (decreased) approximately ($152,000) and ($222,000),
($162,000) and ($277,000), ($586,000) and ($641,000), ($233,000)
and ($330,000), ($342,000) and ($744,000), ($596,000) and
($1,043,000) for the three and nine months ended November 30,
1999 as compared to 1998, primarily due to decreases relating to
the Sold Assets. Excluding the Sold Assets, administrative and
management-related parties, operating, repairs and maintenance,
taxes and insurance and interest increased (decreased) approxi-
mately ($12,000) and ($32,000), $41,000 and $23,000, $12,000 and
$169,000, $26,000 and $23,000, $28,000 and ($9,000), respectively.
Excluding the Sold Assets, Pacific Palms, Ziegler Boulevard, Ltd.,
New Jersey, Ltd., Eastwyck II Ltd., Westwood Apartments Com-
pany, Ltd., Parktowne, Ltd., Rolling Meadows Apartments, Ltd.,
Westgate Associates, Limited, Wingate Associates, Limited and
Bethany Glen Associates for depreciation only, depreciation ex-
pense remained fairly consistent with an increase of approxi-
mately $18,000 and $16,000 for the three and nine months ended
November 30, 1999 as compared to 1998. Pacific Palms, Ziegler
Boulevard, Ltd., New Jersey, Ltd., Eastwyck II Ltd., Westwood
Apartments Company, Ltd., Parktowne, Ltd., Rolling Meadows
Apartments, Ltd., Westgate Associates, Limited, Wingate Associ-
ates, Limited and Bethany Glen Associates are not depreciated
during the period because they are classified as assets held for
sale.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
None
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Rolling Meadows of Chickasha, Ltd.
The Partnership was a plaintiff in the Oklahoma County District
Court in Oklahoma against Jerry L. Womack and Womack Prop-
erty Management, Inc., an Oklahoma corporation. In this action
entitled Shearson + Related Housing Properties Limited Partner-
ship and Shearson/Related Housing Associates Limited Partner-
ship v. Jerry L. Womack and Womack Property Management, Inc.
(the "Litigation"), the Partnership sought judgment for damages
caused by the individual defendant's resignation as general part-
ner of Rolling Meadows of Chickasha, Ltd. ("Rolling Meadows"),
of which the Partnership is a limited partner, and by the corporate
defendant's mismanagement of the apartment project owned by
Rolling Meadows. The individual defendant counterclaimed
against the plaintiffs, alleging that they breached an agreement to
advance funds to Rolling Meadows sufficient to pay operating
losses on the property, thereby damaging such defendant in an
amount exceeding $10,000. The corporate defendant counter-
claimed against the plaintiffs for unpaid management fees and
expenses approximating $6,000. Both counterclaims sought costs
and attorneys' fees. The parties have agreed to a settlement of the
case pursuant to a mediation proceeding. The parties have en-
tered into a settlement agreement and mutual release terminating
the action and, pursuant to which, plaintiffs have been paid
$30,000 to date and will receive an additional $30,000 when Roll-
ing Meadows Apartments, Ltd. is sold. The Litigation was dis-
missed on July 16, 1999.
Westwood Apartments Company Ltd.
On October 16, 1998, the Westwood Apartments Company Ltd.
("Westwood") commenced this action in the Supreme Court of the
State of New York, County of New York, against Edward Osborn,
Charles V. Welden, Jr. and Westwood, Ltd. In the complaint,
Westwood asserted that defendants improperly took the position
that the maturity dates of promissory notes signed by Westwood
in the amounts of $850,000 and $1,225,000, respectively, were not
extended by Westwood as the result of which, according to defen-
dants, the notes were past due and defendants were entitled to sell
Westwood's 99% partnership interests in Parktowne, Ltd. and
Westwood which collateralized the notes.
In May, 1999, Westwood entered into a settlement agreement
discontinuing the litigation with the defendants pursuant to
which, among other things, the defendants have acknowledged
that the notes were properly extended and spelling out the per-
centage of the proceeds to which Westwood will be entitled upon
the sale of the underlying properties, depending on when they are
sold.
Bethany Glen Associates
The Partnership was a defendant in a lawsuit, Civil Action No. 99-
00489; "William P. Monahan, et al. v. Cambridge + Related Hous-
ing Properties Limited Partnership, et al.", in the Superior Court of
the State of Arizona, in and for the county of Maricopa (the
"Court"). Mr. Monahan ("Plaintiff") was the general partner of
Bethany and sought a judgment based on a Purchase Money Note
executed by the Partnership in the original principal amount of
$1,200,000 (the "Note"), plus alleged accrued interest and costs.
Plaintiff also sought to foreclose on the limited partnership interest
in Bethany Glen held by the Partnership. The Partnership had
assigned its interest in Bethany Glen to Cambridge Liquidating
Trust, L.L.C. Plaintiff noticed a private sale of its alleged security
interest in the limited partnership interest in Bethany Glen. A
temporary restraining order was signed prohibiting any such fore-
closure sale. Thereafter, a stipulation was filed in the case which
provided that no foreclosure sale would take place, and Plaintiff
would not be removed as general partner, until a preliminary
injunction hearing took place. On April 13, 1999, counsel an-
nounced to the Court that the parties had reached an agreement in
principle to settle. In June of 1999, the parties executed formal
settlement documents which settled the pending litigation and
provided for, inter alia, the payment of consideration by the Part-
nership, the modification of the existing terms of the Bethany Glen
partnership agreement, an acknowledgement by Plaintiff that the
Purchase Money Note was extended and reinstated, as well as the
dismissal of all claims asserted in the lawsuit. Cambridge Liqui-
dating Trust L.L.C.'s interest in Bethany Glen was assigned back to
the Partnership. No foreclosure sale of any interest in Bethany
Glen took place and Mr. Monahan was not removed as general
partner. An Order of Dismissal with Prejudice was signed by the
Court on or about June 16, 1999, formally concluding the lawsuit.
Grandview-Blue Ridge Manor Limited, Breckenridge-Chaparral
Apartments II, Ltd., El Paso-Gateway East, ltd., Albuquerque-
Lafayette Square Apartments, Ltd., Corpus Christi-Oso Bay
Apartments, Ltd., San Diego-Logan Square Gardens Co.,
Ardmore-Rolling Meadows of Ardmore, Ltd., Fort Worth-
Northwoods Apartments, Ltd., Stephenville-Tarleton Arms
Apartments, Ltd., and Caddo Parrish-Villas South, a Louisiana
Limited Partnership f/k/a Villas South, Ltd. (the "Roar Proper-
ties").
In 1998, the Purchase Money Note holder, Roar Company (the
"Noteholders") disputed the exact calculation of the extension fee.
At the same time, negotiations began with the Noteholders to
refinance or sell the Partnership's investments in the Roar Proper-
ties in order to pay the Purchase Money Notes. The Partnership
cannot sell or otherwise liquidate its investments in those Local
Partnerships that have subsidy agreements with HUD during the
period that such agreements are in existence without HUD's ap-
proval. It is uncertain as to whether the proceeds from such sales
will be sufficient to meet the outstanding balances of principal,
accrued interest and extension fees. No agreement has been
reached with the Noteholders regarding the sale of the Roar Prop-
erties or the calculation of the extension fee.
In order to facilitate an orderly disposition of the Partnership's
assets, the Partnership formed Cambridge Liquidating Trust II
("Trust II"), a Massachusetts general partnership, on December 31,
1998, which is owned 99% by Cambridge Liquidating GP II, L.L.C.
("GP II") and 1% by Cambridge Liquidating GP I, L.L.C. ("GP I").
Both GP I and GP II are owned by the Partnership.
The Partnership then assigned its limited partnership interests in
the Roar Properties to Trust II. In each case, the interests were
assigned subject to each respective Purchase Money Note. The
assignment did not involve any consideration being paid to the
Partnership; therefore, there should not be any tax effect to the
limited partners of the Partnership.
Prior to September 1, 1999, the Noteholders were tendered the
sums calculated to be due as the extension fees under the Purchase
Money Notes as of August 31, 1999. The Noteholders did not
formally respond to this tender or dispute the calculation of the
extension fee amount and did not return the fees. However, a
representative stated that the tender of the fees will be rejected
and the fees will be returned.
On August 27, 1999, Trust II filed a Declaratory Judgment Action
styled Cambridge Liquidating Trust II v. Roar Company, et al,
Cause No. 99-6802 in the 191st District Court of Dallas County
Texas seeking a court ruling as to the proper calculation of the
extension fee [the "Action"]. On September 20, 1999, the Note-
holders filed an Answer in the Action and denied all allegations.
The Noteholders have previously asserted that they have a valid
security interest in the Local Partnership Interests. It is possible
that the Noteholders will attempt to declare the Purchase Money
Notes to be due and commence foreclosure on the Local Partner-
ship Interests based upon a contention that the extension fees were
not paid in the proper amount. The Action has now been set for
trial in August of 2000 and discovery is not complete. Manage-
ment of the Partnership will vigorously prosecute the Action and
may asserts claims against the Noteholders. The General Partner
can express no opinion on the outcome of the case.
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
None
Item 5. Other information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter.
<PAGE>
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.
CAMBRIDGE + RELATED HOUSING
PROPERTIES LIMITED PARTNERSHIP
(Registrant)
By: GOVERNMENT ASSISTED PROPERTIES,
INC., a General Partner
Date: January 3, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President and
Principal Financial Officer
Date: January 3, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer and
Principal Accounting Officer
By: RELATED HOUSING PROGRAMS
CORPORATION, a General Partner
Date: January 3, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President and
Principal Financial Officer
Date: January 3, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted
from the financial statements for Cambridge + Related Housing
Properties L.P. and is qualified in its entirety by reference to such
financial statements
</LEGEND>
<CIK> 0000718915
<NAME> Cambridge + Related Housing Properties L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 9,480,141
<SECURITIES> 0
<RECEIVABLES> 237,709
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 652,484
<PP&E> 88,942,590
<DEPRECIATION> 47,408,313
<TOTAL-ASSETS> 51,904,611
<CURRENT-LIABILITIES> 7,618,751
<BONDS> 93,708,476
0
0
<COMMON> 0
<OTHER-SE> (49,422,616)
<TOTAL-LIABILITY-AND-EQUITY> 51,904,611
<SALES> 0
<TOTAL-REVENUES> 8,572,118
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,781,879
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,318,888
<INCOME-PRETAX> 16,801,753
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 26,330,313
<CHANGES> 0
<NET-INCOME> 16,801,753
<EPS-BASIC> 1,657.07
<EPS-DILUTED> 0
</TABLE>
