SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________________
Form 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934.
_______________________________________________
For the Six Months Ended June 30, 1996 commission file number 2-84474
APT Housing Partners Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2791736
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
500 West Cummings Park, Suite 6050, Woburn, Massachusetts 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)935-4200
N/A
Former name, former address and former fiscal year, if change since
last report
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 and 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>
PART I
ITEM 1. FINANCIAL STATEMENTS
APT HOUSING PARTNERS LIMITED PARTNERSHIP
BALANCE SHEET
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
ASSETS
June 30, December 31,
1996 1995
Investment in Local Limited Partnership $ -0- $ -0-
Cash and Cash Equivalents 84,492 20,946
Total Assets $84,492 $20,946
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 9,078
Professional Fees 2,480 8,500
Total Liabilities 11,830 17,578
Commitments and Contingencies
Partner's Capital (Deficit):
General Partners (37,872) (39,258)
Limited partners,3,700 partnership units
authorized, issued and outstanding 110,534 42,626
Total Partners' Capital (Deficit) 72,662 3,368
Total Liabilities and Partners' Capital Deficiency $ 84,492 $ 20,946
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1995
Interest Income $ 341 $ 1,486
Operating Expenses:
Management fees - affiliate 18,700 18,850
Administrative 250 408
Total Operating Expenses 18,950 19,258
Loss Before Share of Losses of
and Distributions from Local
Limited Partnerships ( 18,609 ) ( 17,772 )
Distribution from Local Limited Partnership 87,903 87,065
Share of Losses of Local Limited Partnerships - -
Net Income (Loss) $69,294 $69,293
Limited Partners' Interest in Net Income (Loss) $67,908 $67,907
Weighted Average Number of Outstanding
Limited Partnership Units 3,700 3,700
Net Income (Loss) Per Limited Partnership Unit $ 18.35 $ 18.35
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
FOR THE QUARTER ENDING JUNE 30, 1996
General Limited
Partner Partner Total
Balance, January 1, 1996 ($ 39,258) $ 42,626 $ 3,368
Net Income: 1/1/96- 6/30/96 1,386 67,908 69,294
Balance, June 30, 1996 ($ 37,872) $110,534 $ 72,662
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
Three Three
Months Ended Months Ended
June 30, 1996 June 30, 1995
Cash Flows From Operating Activities:
Net Income (Loss) $ 69,294 $ 69,293
Adjustments to reconcile net income
to net cash provided by operating activities:
Change in operating assets and liabilities:
Increase (decrease) in accrued expenses ( 5,748) ( 8,347)
Net Cash provided by (used by)
operating activities: 63,546 60,946
Cash Flows From Financing Activities:
Distributions to limited partners - 196,000
Distributions to general partner - 4,000
Net cash used in financing activities - 200,000
Net Increase (Decrease) in cash and
cash equivalents 63,546 (139,054)
Cash and Cash Equivalents, Beginning of Year 20,946 179,140
Cash and Cash Equivalents, End of Quarter $ 84,492 $ 40,086
See accompanying notes to financial statements
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For The Quarter Ending June 30, 1996 and Comparable Periods
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
APT Housing Partners Limited Partnership (the Partnership),organized as
a Massachusetts Limited Partnership on June 8,1983 was formed to invest
in other Local Limited Partnerships ("the Local Limited Partnerships")
which own and operate existing residential rental housing developments
that are financed or operated with assistance from Federal, State
and/or local governmental agencies. The Partnership has limited partnership
interests in two Local Limited Partnerships, with a total of 156 residential
apartment units, located within the Commonwealth of Massachusetts.
The general partner of the Partnership is APT Asset Management,Inc. The
Partnership Agreement, as amended, authorized the issuance of 3,700 limited
partnership units, all of which were issued and are outstanding.
Interim Statements:
The interim financial statements furnished are unaudited and reflect all
adjustments which are in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All adjustments
are of a normal recurring nature.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment in Local Limited Partnerships:
The Partnership accounts for its investments in the Local Limited
Partnerships by the equity method. Accordingly, the investments are carried
at cost, adjusted for the Partnership's proportionate share of earnings or
losses. The Partnership's share of losses on an investment is recognized
only to the extent of the investment. Distributions received are reflected
as reductions of the investments. Once an investment balance has been
reduced to zero, subsequent distributions received by the Partnership are
recognized as income.
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
Income taxes:
Federal and state income taxes are not included in the accompanying
financial statements because these taxes, if any, are the responsibility of
the individual Partners.
Statement of cash flows:
For purposes of the statement of cash flows, the Partnership considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents. Cash equivalents consist of money market funds
at June 30,1996 and June 30, 1995.
Net income per limited partnership unit:
Net income per limited partnership unit is computed by dividing net income
available to limited partnership units by the weighted average number of
outstanding limited partnership units during the year.
2. ALLOCATION OF BENEFITS
In accordance with Partnership Agreement, income, losses,credits and
distributions are allocated 2% to the General Partner and 98% to the Limited
Partners.
3. INVESTMENT IN LOCAL LIMITED PARTNERSHIPS
The Partnership has investments in two Local Limited Partnerships, Ashland
Commons Associates ("Ashland") and Rockledge Apartments Associates
("Rockledge"). The Partnership's investments consist of $1,143,695 for a
95.5% limited partnership interest in Ashland which owns an apartment
complex of 96 units located in Ashland, Massachusetts and $543,900 for a 97%
limited partnership interest in Rockledge which owns an apartment complex of
60 units located in Wakefield, Massachusetts.
The Local Limited Partnerships receive governmental assistance under programs
which restrict the payment of annual cash distributions to the owners to
specified maximum distributable amounts and to available surplus cash, as
defined in the applicable Regulatory Agreement between the governmental
agency and the Local Limited Partnership. Undistributed amounts are
cumulative and may be distributed in subsequent years if there is available
surplus cash. Based upon the Partnership's ownership interest in each of the
Local Limited Partnerships, the maximum annual distributable amounts that can
be made to the Partnership from Ashland and Rockledge are $87,903 and $9,552,
respectively.
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
For the quarter ended June 30, 1996, the aggregate share of losses of the
Local Limited Partnerships attributable to the Partnership amounted to
$33,643. The Partnership's cumulative share of losses of the Local Limited
Partnerships exceeded its investments by $417,407 at June 30, 1996.
Accordingly, the investments have been reduced to zero and have not been
reflected in the accompanying financial statements, and the Partnership has
discontinued the application of the equity method. The Partnership will
resume applying the equity method only after its allocable share of the net
income of the Local Limited Partnerships equals the share of net losses not
previously recognized during the period the equity method was suspended.
Summarized balance sheet information on a combined basis for the Local
Limited Partnerships as of June 30, 1996 and December 31, 1995 as follows:
Unaudited June 30, 1996 December 31,1995
Rental property $7,597,934 $7,597,934
Accumulated depreciation ( 3,640,461) ( 3,507,367)
Cash and cash equivalents 415,653 525,355
Restricted assets and deposits 528,472 487,541
Other assets 160,145 131,550
Total assets 5,061,743 5,235,013
Mortgage loans payable 6,013,957 6,035,522
Other liabilities 211,621 245,547
Total liabilities 6,225,578 6,281,069
Partners' capital (deficiency) ($1,163,835) ($1,046,056)
Composition of partners' capital (deficiency)
General partners ($ 93,325) ($ 87,855)
Limited partners (1,070,510) ( 958,201)
Partners' capital (deficiency) ( $1,163,835) ($1,046,056)
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING JUNE 30, 1996 AND COMPARABLE PERIODS
Summarized unaudited income statement information on a combined basis for
the Local Limited Partnerships for the quarter ended June 30, 1996 and
comparable periods was as follows:
June 30, 1996 June 30, 1995
Revenues $ 880,576 $ 869,741
Net income (loss) ($ 25,736 ($ 41,371)
4. CASH AND CASH EQUIVALENTS
The partnership maintains cash and cash equivalent balances in a financial
institution located in the Commonwealth of Massachusetts. Accounts in the
institution are insured by the Federal Deposit Insurance Corporation (FDIC)
up to $100,000. At June 30, 1996, and December 31, 1995 the Partnership's
cash and cash equivalent balances in this financial institution were fully
insured.
5. TRANSACTIONS WITH RELATED PARTIES
American Investment Team, Inc., an affiliate of the General Partner of the
Partnership, receives an annual program management fee. This fee is for
managing the affairs of the Partnership and for providing investor services
to the Limited Partners. The fee is equal to .5% of invested assets plus the
Local Limited Partnerships' annualized outstanding nonrecourse mortgage debt.
Program management fees charged to operations for the quarters ending
June 30, 1996 and 1995 amounted to $9,350 and $9,300, respectively. Of this
amount $9,350 and $9,078 remained unpaid at June 30, 1996 and December
31, 1995 respectively.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Commencing with the year ended December 31, 1995, the Partnership is required
to disclose the fair value of its financial instruments in accordance with
Statements of Financial Accounting Standards No. 107.
The fair values of the Partnership's financial instruments have been
determined at a specific point in time, based on relevant market information
and information about the financial instrument. Estimates of fair value are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could affect the estimates.
The carrying amounts of cash and cash equivalents and accrued expenses at
June 30, 1996 approximate their fair values because of the short-term
maturity of these instruments.
<PAGE>
PART II
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
Liquidity and Capital Resources
The partnership's primary source of funds were the proceeds of its public
offering. Other sources of liquidity include interest earned on funds and
cash distributions from operations of the Local Limited Partnerships in which
the Partnership has invested. These sources of liquidity are available to
meet obligations of the partnership.
The Partnership received $3,700,000 in gross proceeds from the sale of
partnership interests pursuant to the public offering, resulting in net
proceeds available for investment, after volume discounts, establishment of
working capital reserves, payment of sales commissions, acquisition fees and
offering expenses, of $3,071,000.
As of June 30, 1996 the Partnership has invested all of the net
proceeds available for investment.
The Partnership's commitment to investments requiring initial capital
contributions has been paid. The Partnership has no other significant
capital commitments.
HUD recently released the American Community Partnerships Act (the "ACPA").
The ACPA is HUD's blueprint for providing for the nation's housing needs in
an era of static or decreasing budget authority. Two key proposals in the
ACPA that could affect the Local Limited Partnerships are: A discontinuation
of project based Section 8 Subsidy payments and an attendant reduction in
debt on properties that were supported by the Section 8 payments.
The ACPA calls for a transition during which the project based Section 8
would be converted to a tenant based voucher system. Any FHA insured debt
would then be "marked-to-market", that is revalued in light of the reduced
income stream, if any. The impact of ACPA, if enacted in its present form,
is not presently determinable.
Several industry sources have already commented to HUD and Congress that in
the event the ACPA were fully enacted in its present form, the reduction in
mortgage indebtedness would be considered taxable income to limited partners
in the Partnership. Legislative relief has been proposed to exempt
"mark-to-market" debt from cancellation of indebtedness income treatment.
Cash distributions received from a Local Limited Partnership amounted to
$87,903, $87,064 and $82,255 during quarter ended June 30, 1996 and the years
ended December 31, 1995 and 1994, respectively. These distributions were
used to meet the Partnership's obligations and, in 1995, to make
distributions to its partners. The Partnership has invested in Local Limited
Partnerships owning housing developments which receive governmental
assistance under programs which restrict the cash return available to the
housing development owners. The Partnership believes that it will continue
to receive cash distributions from a Local Limited Partnership in an amount
sufficient to meet its operating expenses. However, there can be no
assurance that cash distributions received will be adequate to allow the
Partnership to make any further cash distributions to its partners.
<PAGE>
PART II
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued):
Management is not aware of any trends or events, commitments or uncertainties
that will impact liquidity in a material way. Management believes the only
impact would be for laws that have not yet been adopted.
Results of Operations
The partnership was formed to provide various benefits to its limited
partners as discussed in Part I, Item 1 of this Report. It is anticipated
that the Local Limited Partnerships in which the Partnership has invested
will primarily produce tax losses of approximately $17,000 per $5,000
investment in approximately 14 to 17 full years of Partnership operations,
with approximately $11,000 of such tax losses occurring during the first
5 years of Partnership operations (assuming the applicability of current
laws, regulations and court decisions). The benefits received in the form
of tax savings may be reduced due to the enactment of the Tax Reform Act of
1986, depending on the individual circumstances of each Limited Partner.
There can be no assurance that the Partnership will be able to attain its
investment objectives. The Partnership will not seek to sell its interest in
any housing development or Local Limited Partnership until proceeds of such
sale would supply sufficient cash to enable its Limited Partners to pay
applicable taxes. Proceeds of such sales will not be reinvested. It is not
expected that any of the Local Limited Partnerships in which the Partnership
has invested will generate cash flow sufficient to provide for distributions
to Limited Partners in any material amount.
Except for the operating balance of cash, the Partnership's asset consist
primarily of limited partnership interest in Local Limited Partnerships
owning government-assisted housing developments. The Partnership accounts
for its investments in the Local Limited Partnerships using the equity method
of accounting. Under the equity method of accounting, the investment cost
is subsequently adjusted for the Partnership's share of each Local Limited
Partnership's results of operations and cash distributions. The
Partnership's share in the loss of each Local Limited Partnership is not
recognized to the extent that the investment balance would become negative.
For the quarter ended June 30, 1996, the aggregate share of losses of
the Local Limited Partnerships attributable to the Partnership and not
included in the statements of income amounted to $25,736. At June 30, 1996,
the Partnership's cumulative share of losses of the Local Limited
Partnerships exceeded its investments by $409,500, and, accordingly, have not
been reflected in the Partnership's financial statements in accordance with
the equity method of accounting because the investment balances have been
reduced to zero.
The partnership's net income for the period January 1, 1996 -
June 30, 1996 was due primarily to a distribution from a local
limited partnership recognized as income in the second quarter
1996.
<PAGE>
PART II
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued):
The partnership incurs an annual program management fee payable to American
Investment Team, Inc. ("AIT"), an affiliate of the General Partner, for
managing the affairs of the Partnership and for providing investor services
to the limited partners. The fee to AIT is equal to .5% of invested asset
plus the Local Limited Partnerships' annualized outstanding nonrecourse debt.
The fee amounted to $9,350 for the quarter ended June 30, 1996.
Other
The Partnership's investment as a Limited Partner in the Local Limited
Partnerships is subject to the risks incident to the potential losses
arising from management and ownership of improved real estate. The
Partnership's investments also could be adversely affected by poor economic
conditions, generally, which could increase vacancy levels, increase rental
payments defaults, or increase operating expenses. Any or all of these
circumstances could threaten the financial viability of one or both of the
local Limited Partnerships.
There are also substantial risks associated with the operations of Apartment
Complexes receiving governmental assistance. These include: governmental
regulations concerning tenant eligibility which may make it more difficult
to rent apartments in the complexes; difficulties in obtaining government
approval for rent increases; limitations on the percentage of income which
low and moderate income tenants may pay as rent; the possibility that
Congress may not appropriate funds to enable the U.S.Department of Housing
and Urban Development to make the rental assistance payments it has
contracted to make; and that when the rental assistance contracts expire,
there may not be market demand for apartments at full market rents in a Local
Limited Partnership's Apartment Complex.
The Local Limited Partnerships are impacted by inflation in several ways.
Inflation allows for increases in rental rates generally to reflect the
impact of higher operating and replacement costs. Inflation also affects the
Local Limited Partnerships adversely by increasing operating costs, such as
fuel, utilities and labor.
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Purchase and Sale Agreement, dated as of March 30, 1984,
relating to Ashland Commons to Registrant's Form 8-K dated
March 30, 1984.
Purchase and Sale Agreement, dated as of April 30, 1984,
relating to Historic Cohoes, II to Registrant's Form 8-K dated
April 30, 1984.
Purchase and Sale Agreement, dated as of June 22, 1984,
relating to Rockledge Apartments Associated to Registrant's
Form 8-K dated June 22, 1984.
Withdrawal of APT Housing Partners Limited Partnership as a
Limited Partner in a Local Limited Partnership, dated as of
December 18, 1986, relating to Historic Cohoes II, to
Registrant's Form 8-K dated March 30, 1987.
Change in registrant's certifying accountants under Item 4 to
Registrant's Form 8-K dated December 1, 1995
b. No reports on Form 8-K have been filed for the quarter ended June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
By: APT Asset Management, Inc.
General Partner
Date:_____________________ [SIGNATURE]
Jeff Ewing, President
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0
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<OTHER-SE> 72,662
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