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 Three Months Ended March 31, 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 MARCH 31, 1996 AND COMPARABLE PERIODS
ASSETS
March 31, December 31,
1996 1995
Investment in Local Limited Partnership $ -0- $ -0-
Cash and Cash Equivalents 5,694 20,946
Total Assets $ 5,694 $ 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 (39,448) (39,258)
Limited partners,3,700 partnership units
authorized, issued and outstanding 33,312 42,626
Total Partners' Capital (Deficit) ( 6,136) 3,368
Total Liabilities and
Partners' Capital Deficiency $ 5,694 $ 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 MARCH 31, 1996 AND COMPARABLE PERIODS
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
Interest Income $ 96 $ 1,172
Operating Expenses:
Management fees - affiliate 9,350 9,300
Administrative 250 -
Total Operating Expenses 9,600 9,300
Loss Before Share of Losses of
and Distributions from Local
Limited Partnerships ( 9,504 ) ( 8,128)
Distribution from Local Limited Partnership - 87,065
Share of Losses of Local Limited Partnerships - -
Net Income (Loss) ($ 9,504 ) $78,937
Limited Partners' Interest in Net Income (Loss) ($ 9,314 ) $77,358
Weighted Average Number of Outstanding
Limited Partnership Units 3,700 3,700
Net Income (Loss) Per Limited Partnership Unit ( $ 2.52 ) $ 20.91
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 MARCH 31, 1996
General Limited
Partner Pa2tner Total
Balance, January 1, 1996 ($ 39,258) $ 42,626 $ 3,368
Net Loss: 1/1/96- 3/31/96 ( 190) ( 9,314) (9,504)
Balance, March 31, 1996 ($ 39,448) $ 33,312 ($ 6,136)
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 MARCH 31, 1996 AND COMPARABLE PERIODS
Three Three
Months Ended Months Ended
March 31, 1996 March 31, 1995
Cash Flows From Operating Activities:
Net Income (Loss) ($ 9,504) $ 78,937
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) 28
Net Cash provided by (used by) operating activities: (15,252) 78,965
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 (15,252) (121,035)
Cash and Cash Equivalents, Beginning of Year 20,946 179,140
Cash and Cash Equivalents, End of Quarter $ 5,694 $ 58,105
See accompanying notes to financial statements
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
For The Quarter Ending March 31, 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 MARCH 31, 1996 AND COMPARABLE PERIODS
Income taxes:
Federal and state income taxes are not included in t he
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 March 31,
1996 and March 31, 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 MARCH 31, 1996 AND COMPARABLE PERIODS
For the quarter ended March 31, 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 March 31, 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 March 31, 1996 and
December 31, 1995 as follows:
Unaudited March 31, 1996 December 31, 1995
Rental property $7,597,934 $7,597,934
Accumulated depreciation ( 3,573,914) (3,507,367)
Cash and cash equivalents 455,128 525,355
Restricted assets and deposits 514,976 487,541
Other assets 148,371 131,550
Total assets 5,142,495 5,235,013
Mortgage loans payable 6,025,004 6,035,522
Other liabilities 198,702 245,547
Total liabilities 6,223,706 6,281,069
Partners' capital (deficiency) ($1,081,211) ($1,046,056)
Composition of partners' capital (deficiency)
General partners ($ 89,367) ($ 87,855)
Limited partners ( 991,844) ( 958,201)
Partners' capital (deficiency) ($1,081,211) ($1,046,056)
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING MARCH 31, 1996 AND COMPARABLE PERIODS
Summarized unaudited income statement information on a combined
basis for the Local Limited Partnerships for the quarter ended
March 31, 1996 and comparable periods was as follows:
March 31, 1996 March 31, 1995
Revenues $ 434,712 $ 429,354
Net income (loss) ($ 35,155) ($ 7,737)
4. CASH AND CASH EQUIVALENTS
The partnership maintains cash and cash equivalent balances in
an 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
March 31, 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 March 31, 1996 and 1995
amounted to $9,350 and $9,300, respectively. Of this amount
$9,350 and $9,078 remained unpaid at March 31, 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 March 31, 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 March 31, 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 $87,064, $82,255, and $96,546 during the years ended
December 31, 1995, 1994 and 1993, 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 March 31, 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
$33,643. At March 31, 1996, the Partnership's cumulative share
of losses of the Local Limited Partnerships exceeded its
investments by $417,407, 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 loss for the period January 1, 1996 -
March 31, 1996 was due primarily to the accrual of the first
quarter 1996 program management fee. The first quarter loss as
compared to the net income for the same period of 1995 was due
primarily to a distribution from a local limited partnership
recognized as income in the first quarter 1995. The
Massachusetts Housing Finance Agency has not approved the 1996
distribution and accordingly income has not been recognized for
the period January 1, 1996 through March 31, 1996. Management
is confident that the distribution will be approved.
<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 March 31, 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 of 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
March 31, 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
[SIGNATURE]
Jeff Ewing, President
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<ARTICLE> 5
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,694
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,694
<CURRENT-LIABILITIES> 11,830
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (6,136)
<TOTAL-LIABILITY-AND-EQUITY> 5,694
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<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
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