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, 1997 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
(Unaudited)
ASSETS
March 31, December 31,
1997 1996
Investment in Local Limited Partnership $ -0- $ -0-
Cash and Cash Equivalents 55,468 64,360
Total Assets $ 55,468 $ 64,360
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 9,091
Professional Fees 8,500 8,500
Total Liabilities 17,850 17,591
Commitments and Contingencies
Partner's Capital (Deficit):
General Partners ( 38,573) ( 38,390)
Limited partners, 3,700 partnership units
authorized, issued and outstanding 76,191 85,159
Total Partners' Capital (Deficit) 37,618 46,769
Total Liabilities and Partners'
Capital Deficiency $ 55,468 $64,360
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENT OF INCOME
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
Interest Income $ 449 $ 1,172
Operating Expenses:
Management fees - affiliate $ 9,350 $ 9,350
Administrative 250 250
Total Operating Expenses $ 9,600 $ 9,600
Loss Before Share of Losses of
and Distributions from Local
Limited Partnerships ($ 9,151) ($ 9,504)
Distribution from Local Limited Partnership - -
Share of Losses of Local Limited Partnerships - -
Net Income (Loss) ($ 9,151) ($ 9,504)
Limited Partners' Interest in
Net Income (Loss) ($ 8,968) ($ 9,314)
Weighted Average Number of Outstanding
Limited Partnership Units 3,700 3,700
Net Income (Loss) Per
Limited Partnership Unit ($ 2.42) ($ 2.52)
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
General Limited
Partner Partner Total
Balance, January 1, 1997 ($ 38,390) $ 85,159 $ 46,769
Net Loss: 1/1/97- 3/31/97 ($ 183) ($ 8,968) ($ 9,151)
Balance, March 31, 1997 ($ 38,573) $ 76,191 $ 37,618
See accompanying notes to financial statements
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1997 1996
Cash Flows From Operating Activities:
Net Income (Loss) ($ 9,151) ($ 9,504)
Adjustments to reconcile net income
to net cash provided by operating activities
Change in operating assets and liabilities:
Increase (decrease) in accrued expenses 259 ( 5,748)
Net Cash provided by (used by)
operating activities: ( 8,892) ( 15,252)
Cash Flows From Financing Activities:
Distributions to limited partners - -
Distributions to general partner - -
Net cash used in financing activities - -
Net Increase (Decrease) in cash and cash equivalents ( 8,892) ( 15,252)
Cash and Cash Equivalents, Beginning of Period 64,360 20,946
Cash and Cash Equivalents, End of Period $ 55,468 $ 5,694
See accompanying notes to financial statements
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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, 1997 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 March 31, 1997 and March 31, 1996.
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, 1997 AND COMPARABLE PERIODS
For the quarter ended March 31, 1997, the aggregate share of losses of the
Local Limited Partnerships attributable to the Partnership amounted to
$27,218. The Partnership's cumulative share of losses of the Local
Limited Partnerships exceeded its investments by $422,795 at March 31,
1997. 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 unaudited balance sheet information on a combined basis for the
Local Limited Partnerships as of March 31, 1997 and December 31, 1996 as
follows:
Unaudited March 31, 1997 December 31, 1996
Rental property $7,597,934 $7,597,934
Accumulated depreciation ( 3,840,103) ( 3,773,556)
Cash and cash equivalents 459,549 464,868
Restricted assets and deposits 616,656 601,273
Other assets 156,844 119,041
Total assets 4,989,880 5,009,560
Mortgage loans payable 5,979,801 5,991,356
Other liabilities 188,423 168,384
Total liabilities 6,168,224 6,159,740
Partners' capital (deficiency) ($1,178,344) ($1,150,180)
Composition of partners' capital (deficiency)
General partners ($ 98,208) ($ 97,262)
Limited partners ( 1,080,136) ( 1,052,918)
Partners'
capital (deficiency) ($1,178,344) ($1,150,180)
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDING MARCH 31, 1997 AND COMPARABLE PERIODS
Summarized unaudited income statement information on a combined basis for
the Local Limited Partnerships for the quarter ended March 31, 1997 and
comparable periods was as follows:
March 31, 1997 March 31,1996
Revenues $ 420,063 $ 434,712
Net income (loss) ($ 28,164) ($ 35,155)
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, 1997, and December 31, 1996 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, 1997 and 1996 amounted to $9,350 and
$9,350, respectively. Of this amount $9,350 and $9,091 remained unpaid at
March 31, 1997 and December 31, 1996 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, 1997 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, 1997 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 0,
$87,903 and $87,064 during quarter ended March 31, 1997 and the years ended
December 31, 1996 and 1995, 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. 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 Partneships in which the Partnersh9p has invested will
generate cash flow sufficient to provide for distributions to Limitd
Partnership in any material amount.
Except for the operating balance of cash, the Partnership's assets 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 Parntership'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, 1997, the aggregate share of losses of the
Local Limited Partnerships attributable to the Partnership and not included in
the statements of income amounted to $27,218. At March 31, 1997, the
Partnership's cumulative share of losses of the Local Limited Partnerships
exceeded its investments by $422,795, 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, 1997 - March 31, 1997
was due primarily to the accrual of the first quarter 1997 program
management fee. The Massachusetts Housing Finance Agency has not approved
the 1996 distribution and accordingly income has not been recognized for
the period January 1, 1997 through March 31, 1997. 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, 1997.
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 rental assistance payments it has contracted to
make; and that when the rental assistance 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 September
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 55468
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55468
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 55468
<CURRENT-LIABILITIES> 17850
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 37618
<TOTAL-LIABILITY-AND-EQUITY> 55468
<SALES> 0
<TOTAL-REVENUES> 449
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9151)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9151)
<EPS-PRIMARY> (2.42)
<EPS-DILUTED> 0
</TABLE>
