SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1998
Commission File Number 2-84474
APT HOUSING PARTNERS LIMITED PARTNERSHIP
A Massachusetts Limited Partnership
I.R.S. Employer Identification No. 04-2791736
500 West Cummings Park, Suite 6050, Woburn, Massachusetts 01801
Registrant's Telephone Number, Including Area Code (781) 935-4200
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].
DOCUMENTS INCORPORATED BY REFERENCE
NONE
TOTAL NUMBER OF PAGES 50
INDEX TO EXHIBITS AT PAGE 15
<PAGE>
PART I
ITEM 1. BUSINESS:
General
APT HOUSING PARTNERS LIMITED PARTNERSHIP (the "Partnership") is a limited
partnership which was formed under the laws of the Commonwealth of
Massachusetts on June 8, 1983. The General Partner of the Partnership is
APT Asset Management, Inc., a Massachusetts corporation. APT Asset
Management, Inc. is a wholly owned subsidiary of APT Financial Services,
Inc. (a Delaware Corporation) whose majority shareholder is
John M. Curry.
The Partnership's business is to invest, as a limited partner, in Local
Limited Partnerships owning government-assisted housing developments and to
provide its partners current tax benefits, potential appreciation in real
estate investments, distribution of net capital transaction proceeds and
distributable cash to the extent available.
On September 30, 1983, the Partnership offered for sale 9,000 units of
limited partnership interests at $1,000 each pursuant to a prospectus dated
September 30, 1983. The offering was subsequently amended on March 30, 1984
to provide for 3,700 units of limited partnership interests at $1,000 each.
The public offering was managed by American Investment Team, Inc. ("AIT")
("the dealer manager"), an affiliate of the General Partner of the
Partnership. The minimum investment allowed was $5,000.
The Partnership received $3,700,000 of subscriptions for limited partnership
interests during the period September 30, 1983 through April 30, 1984 from
329 Investors. No further issuance of partnership interests is anticipated.
The net proceeds ($3,071,000) of the public offering were primarily used to
purchase limited partnership interests in existing multi-family rental
housing developments known as Ashland Commons Associates, Rockledge
Apartments Associates and Historic Cohoes II. The Partnership's investments
in each Local Limited Partnership represents 95.5%, 97% and 97%,
respectively. On December 18, 1986 the Partnership withdrew its 97%
investment interest in Historic Cohoes II and received its original
investment of $1,321,234 from the Local Limited Partnership. A distribution
of the same amount was made to the Limited Partners on April 3, 1987.
Federal, state or local government agencies have provided significant
incentives in order to stimulate private investment in government-assisted
housing. The intent of these incentives was to reduce certain market risks
and provide investors (i) tax benefits, (ii) limited cash distributions and
(iii) long-term capital appreciation. Notwithstanding these factors, there
remain significant risks. These risks include, but are not limited to, the
financial strength of the local general partners. The long-term nature of
investments in government-assisted housing limits the ability of the
Partnership to vary its investment portfolio in response to changing economic,
financial and investment conditions; such investments are also subject to
changes in local economic circumstances and housing patterns which have an
impact on real estate values. These housing developments also require
greater management expertise and may have higher operating expenses than
conventional housing developments.
The Partnership became the principal limited partner in these Local Limited
Partnerships pursuant to Local Limited Partnership agreements entered into
with the local general partners. As a limited partner, the Partnership's
liability for obligations of the Local Limited Partnerships is limited to
its investment. The local general partners of the Local Limited
Partnerships retain responsibility for maintaining, operating and managing
the housing developments. Under certain circumstances, the Partnership has
the right to replace the local general partner of the Local Limited
Partnerships.
<PAGE>
John M. Curry is a General Partner in one of the Local Limited Partnerships.
An affiliated company in which John M. Curry is the President, is the
General Partner in the other Local Limited Partnership.
Although each of the Local Limited Partnerships in which the Partnership has
invested owns a housing development which must compete for tenants in the
market place, the rental assistance and below market interest rates on
mortgage financing provided by government-assisted housing programs make it
possible to offer apartments to eligible tenants at a cost to the tenant
significantly below the market rate for comparable conventionally-financed
apartments in the area.
The Internal Revenue Service (IRS) scrutinizes, in general, "tax shelters"
that generate tax losses in any taxable year. The Local Limited Partnerships
will deduct certain fees such as General Partners' fees and other expenses on
the basis that such expenses constitute ordinary and necessary expenses of
carrying on the business. If the federal income tax information return filed
annually by the Partnership or by any Local Limited Partnership are audited,
no assurance can be given as to what extent the deductions claimed for these
fees will be allowed. Any disallowance by the IRS that is not successfully
rebutted will have the effect of increasing the taxable income or decreasing
the taxable loss of each Limited Partner for the year in question.
The Limited Partners do not have a right to participate in the management of
the Partnership or its operations. However, a majority in interest of the
Limited Partners have the authority to (1) approve or disapprove the sale of
all or substantially all of the assets of the Partnership in a single
transaction or a related series of transactions, (2) dissolve the
Partnership, (3) remove the General Partner, for cause, or (4) elect a
substitute General Partner. Limited Partners holding 10% or more of the
limited partnership interests have the right to call meetings of the
Partnership and propose amendments to the Partnership Agreement.
As a Limited Partner of each of the Local Limited Partnerships, the
Partnership does not have the right to participate in the management of such
Local Limited Partnerships or their operations. The Partnership retains
certain rights with respect to voting on or approving certain matters,
including the sale of the housing developments. By the existence or exercise
of such rights, it could be asserted that the Partnership was taking part
in the control of the Local Limited Partnerships' operations and should
thereby incur liability for all debts and obligations of the Local Limited
Partnerships. If this were found to be the case, the Partnership interest
in one Local Limited Partnership could be reached by creditors of another
Local Limited Partnership. The Partnership has received opinions of counsel
for the Local Limited Partnerships that the existence and exercise of such
rights will not subject it to liability as a Local General Partner of the
Local Limited Partnership.
Holders of the Partnership's limited partnership interests will need to bear
the economic risk of their investment for an indefinite period of time.
Transferability of the limited partnership interests is restricted so as not
to cause a termination of the Partnership for tax purposes. In California,
Maine, New Hampshire, Pennsylvania and South Carolina, transferability of the
limited partnership interests is restricted to transferees meeting the
investor suitability standards. In addition, a transfer of limited
partnership interests is subject to the consent of the General Partner,
which may be withheld in its sole discretion.
<PAGE>
Losses recognized for tax purposes from the ownership and operations of the
housing developments decline over time. This occurs because the tax
advantages of accelerated depreciation are greatest in earlier years and
decline over the life of the housing developments, and because those portions
of the level mortgage payment attributable to deductible interest likewise
decrease with the passage of time. In addition, the benefits to be received
in the form of tax savings in future years may decline as a result of the
enactment of the Tax Reform Act of 1986, depending on the individual
circumstances of each Limited Partner. For these reasons, among others, it
is not anticipated that any public market will develop for the purchase and
sale of limited partnership interests. Consequently, holders of
limited partnership interests in the Partnership may not be able to liquidate
their investments in the event of an emergency and limited partnership
interests probably will not be readily acceptable as collateral for loans.
Moreover, should a limited partner dispose of his limited partnership
interest, he will realize taxable income to the extent that his allocable
share of the mortgage debt obligations plus the other consideration he
receives upon such disposition exceeds his tax basis, while at the same time
he may not receive sufficient cash to pay such taxes.
Competition
The real estate rental business in which the Local Limited Partnerships are
engaged is highly competitive and the properties owned by the Local Limited
Partnerships are expected to be subject to active competition from similar
properties in their respective vicinities. The Local Limited Partnerships
compete with many other entities providing residential rental housing through
government-assisted and conventionally-financed housing developments. Some
of these entities are owned by large real estate operators with significantly
greater resources than the Partnership as well as local organizations which
own and operate a relatively small number of properties. The Local Limited
Partnerships believe that they have a reputation for providing safe, clean,
quality residential housing which enables them to compete effectively for
tenants. While the Local Limited Partnerships believe that they will
continue to compete effectively for tenants, there can be no assurance that
they will do so or that they will not encounter further increased competition
in the future due to changes in the various government-assisted
housing programs and from rehabilitated or new housing developments in their
respective vicinities.
Employees
The Partnership does not have any direct employees. All services are
performed for the Partnership by its General Partner and its affiliates. The
General Partner receives compensation in connection with such activities as
set forth in Item 11. In addition, the Partnership reimburses the General
Partner and certain of its affiliates for expenses incurred in connection
with the performance by their employees of services for the Partnership in
accordance with the Partnership's Amended and Restated Agreement and
Certificate of Limited Partnership (the "Partnership Agreement").
<PAGE>
ITEM 2. PROPERTIES:
The Partnership holds limited partnership interests in two (2) Local Limited
Partnerships as of December 31, 1998. Set forth is a schedule of the Local
Limited Partnerships including certain information concerning the Apartment
Complexes.
Name and Location % of Units Occupied
(Number of Units) Date Acquired at December 31,
1998 1997 1996 1995 1994
Ashland Commons Associates March 30, 1984 100% 99% 100% 99% 100%
Ashland, MA (96)
Rockledge Apartments Associates June 22, 1984 97% 98% 97% 98.2% 100%
Wakefield, MA (60)
The Local Limited Partnerships in which the Partnership has invested own
existing Apartment Complexes which receive either Federal or State subsidies.
The U.S. Department of Housing and Urban Development (HUD), through the
Federal Housing Administration (FHA), administers a variety of subsidy
programs for low- and moderate-income housing developments. The Federal
programs generally provide one of a combination of the following forms of
assistance: (i) mortgage loan insurance (ii) rental subsidies, (iii)
reduction of mortgage interest payments.
i) HUD provides mortgage insurance for rental housing projects pursuant to
a number of sections of Title II of the National Housing Act ("NHA")
including, among others, Section 236 and Section 221(d)(4). Under these
programs, HUD will generally provide insurance equal to 90% of the total
replacement cost to limited-distribution owners. Mortgages are provided by
institutions approved by HUD, including banks, savings and loan companies and
local housing authorities. Section 221(d)(4) of the NHA provides for federal
insurance of private construction and permanent mortgage loans to finance
new construction of rental apartment complexes containing five or more units.
ii) Many of the tenants in HUD insured projects receive some form of
rental assistance payments, primarily through the Section 8 Housing
Assistance Payments Program ("Section 8 Program"). Apartment Complexes
receiving assistance through the Section 8 Program will generally have
limitations on the amount of rent which may be charged. One requirement
imposed by HUD regulations effective for apartment complexes initially
approved for Section 8 payments on or after November 5, 1979 is to limit
the amount of the owner's annual cash distributions from operations to 10% of
the owner's equity investment in an apartment complex if the apartment
complex is intended for occupancy by families and to 6% of the owner's equity
investment in an apartment complex intended for occupancy by elderly persons.
The owner's equity investment in the apartment complex is 10% of the
project's replacement cost as determined by HUD.
HUD 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. Currently, any Section 8 subsidy contract that expires, HUD
is renewing on a year to year basis until such time as a new program is
implemented, if any. The impact of ACPA, if enacted in its present form, is
not presently determinable.
<PAGE>
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.
iii) The Section 236 Program, as well as providing mortgage insurance,
also provides a subsidy which reduces the debt service on a project mortgage,
thereby enabling the owner to charge the tenants lower rents for their
apartments. Interest credit subsidy payments are made monthly by HUD
directly to the mortgagee of the project. Each payment is in an amount equal
to the difference between (i) the monthly payment required by the terms of
the mortgage to pay principal and interest and (ii) the monthly payment
which would have been required for principal and interest if the mortgage
loan provided for interest at the rate of 1%. These payments are credited
against the amounts otherwise due from the owner of the project, who makes
monthly payments of the balance.
All tenant leases are generally for periods not greater than one to two
years and no tenant occupies more than 10% of the rentable square footage.
Management continuously reviews the physical state of the properties and
budgets improvements when required which are generally funded from cash flow
from operations or release of replacement reserve escrows. No improvements
are expected to require additional financing.
See Item 1, Business, above for the general competitive conditions to which
the properties described herein are subject.
Real estate taxes are calculated using rates and assessed valuations
determined by the town or city in which the property is located.
ITEM 3. LEGAL PROCEEDINGS:
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP
INTERESTS AND RELATED SECURITY HOLDER MATTERS:
Limited partnership interests are not traded in a public market but were sold
through a public offering managed by American Investment Team, Inc. It is
not anticipated that any public market will develop for the purchase and sale
of any limited partnership interest. Limited partnership interests may be
transferred only if certain requirements are satisfied. As of March 15,
1999, there were 326 registered holders of an aggregate of 3,700 units of
limited partnership interests in the Partnership.
<PAGE>
The Partnership has invested in Local Limited Partnerships owning housing
developments which receive governmental assistance under programs which
restrict the cash return available to housing development owners. The
Partnership does not anticipate providing significant cash distributions to
its limited partners in circumstances other than a refinancing or sale. On
February 24, 1995, the Partnership distributed $200,000 to the partners, of
which $196,000 or $52.97 per unit of limited partnership interest, was
distributed to the Limited Partners. The Partnership does not anticipate
that it will make any further cash distributions.
ITEM 6. SELECTED FINANCIAL DATA:
The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
financial statements in Part IV, Item 14, beginning on page 15.
Year Ended December 31,
OPERATIONS 1998 1997 1996 1995 1994
Revenue $ 4,868 $ 2,610 $ 1,389 $ 1,884 $ 4,843
Expenses 45,472 46,464 45,891 46,948 46,713
Loss before share of losses of
and distributions from the
Local Limited Partnerships ( 40,604) ( 43,854) ( 44,502) ( 45,064) ( 41,870)
Distribution from Local
Limited Partnership 87,903 87,903 87,903 87,064 82,255
Share of losses of Local
Limited Partnerships - - - - -
Net income $ 47,299 $ 44,049 $ 43,401 $ 42,000 $ 40,385
Net income per weighted
average limited
partnership unit $ 12.53 $ 11.67 $ 11.50 $ 11.12 $ 10.70
FINANCIAL POSITION
December 31,
1998 1997 1996 1995 1994
Total assets $ 155,218 $ 108,175 $ 64,360 $ 20,946 $ 179,140
Investment in Local
Limited Partnerships $ -0- $ -0- $ -0- $ -0- $ -0-
Total liabilities $ 17,101 $ 17,357 $ 17,591 $ 17,578 $ 17,772
Total partners' capital $ 138,117 $ 90,818 $ 46,769 $ 3,368 $ 161,368
Cash distributions per
limited partnership unit $ -0- $ -0- $ -0- $ 52.97 $ -0-
<PAGE>
ITEM 7. 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 December 31, 1998, 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 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.
Currently, any Section 8 subsidy contract that expires, HUD is renewing on a
year to yd Expense (15) 123 9
(Increase) Decrease in Escrow Deposits 18,302 (14,196) 7,173
(Increase) Decrease in Restricted Cash 350 (109) (1,860)
Increase (Decrease) in Accounts Payable
and Accrued Expenses (16,007) 30,311 (61,908)
Increase (Decrease) in Tenants
Security Deposits (388) 700 1,269
Increase (Decrease) in Prepaid Rents 6,300 166 (86)
Net Cash Provided (Used) by
Operating Activities 112,028 158,358 157,532
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) Decrease in Reserve
for Replacements (19,783) (41,229) (39,870)
(Increase) Decrease in Residual
Receipts Reserve ( 9,185) (80,242) (24,092)
Net Cash Provided (Used) by Investing
Activities (28,968) (121,471) (63,962)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Mortgage Loan Payable (28,020) (24,934) (22,187)
Distributions to Partners (92,045) (92,045) (92,045)
Net Cash Used by Financing Activities 120,065 116,979 114,232
Net Increase (Decrease) in Cash and
Cash Equivalents (37,005) (80,092) (20,662)
Cash and Cash Equivalents,
Beginning of Year 219,932 300,024 320,686
Cash and Cash Equivalants,
End of Year 182,927 219,932 300,024
Supplemental Disclosure
Cash Paid During Year For Interest 574,808 576,623 587,042
See accompanying summary of accounting policies
and notes to financial statements
<PAGE>
ASHLAND COMMONS ASSOCIATES
(a limited partnership)
PROJECT NO: 023-35279
SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Financial statements are prepared on the accrual basis and all development
and construction costs were capitalized. The partnership, for tax purposes,
charged to expense certain costs, such as interest and real estate taxes
during construction. Accordingly, the cost of property and equipment shown
in these statements includes $649,227 which has been deducted for tax
purposes.
The balance sheet does not give effect to any assets that the partners may
have outside their interest in the partnership, nor to any personal
obligations, including income taxes, of the individual partners.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Depreciation of buildings is
based on a 25 year life using the straight-line method for financial
reporting purposes. For income tax purposes, accelerated depreciation
methods are used.
AMORTIZATION
Amortization of financing costs is based on a forty year life using the
straight-line method for both financial reporting and income tax purposes.
INCOME TAXES
The partnership, as an entity, is not subject to income tax. The partners'
share of the loss for tax purposes is includable in their income tax returns.
CASH AND CASH EQUIVALENTS
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.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
<PAGE>
ASHLAND COMMONS ASSOCIATES
(a limited partnership)
PROJECT NO: 023-35279
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - GENERAL
Ashland Commons Associates is a Massachusetts limited partnership which was
formed on September 29, 1982 for the purpose of owning, rehabilitating and
operating a multi-unit apartment complex containing 96 residential
units under the provisions of Section 221 (d)(4) of the National Housing Act.
The partnership has a Section 8 contract with HUD to receive rent subsidy
equal to approximately 83% of the total rental income. The contract expires
September, 2002.
NOTE 2 - MORTGAGE LOAN PAYABLE
The mortgage note is insured by the Federal Housing Administration (FHA) and
is payable in monthly installments of approximately $48,283, including
interest at 11.728% per annum, through 2024. Annual principal payments will
average $40,312 each year for the next five years.
The partnership is required to make monthly payments of $2,094 into a fund
for replacements. Withdrawals from this fund can only be made upon the
approval for the Federal Housing Commissioner.
The partnership and its partners have no personal liability on the mortgage
loan; the mortgaged property is the only collateral for the loan.
NOTE 3 - RELATED PARTY TRANSACTIONS
The partnership pays a 4.5% management fee based on gross revenues collected,
which, at present, is capped at $43 PUPM, to an affiliate of a general
partner, and $506 per month for bookkeeping. Further, the management
company is reimbursed at cost for salaries and wages and related employee
expenses such as payroll taxes, health insurance, disability insurance,
worker compensation and other insurance.
<PAGE>
ASHLAND COMMONS ASSOCIATES
(a limited partnership)
PROJECT NO: 023-35279
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 4 - CAPITAL DISTRIBUTION RESTRICTION
No distribution of assets may be made except from "surplus cash" as defined
in the regulatory agreement with HUD. Total distributions are limited to
$92,045, per annum as allowed by HUD.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value 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
judgement and therefore cannot be determined with precision. Changes in
assumptions could affect the estimates.
The carrying amounts of cash and cash equivalents, tenant's security deposits
cash, tenant's accounts receivable, restricted deposits and funded reserves,
and accounts payable and other liabilities approximate their fair market
values because of the short-term maturity of these instruments.
The Partnership obtained its mortgage financing under Section 221 (d)(4) of
the National Housing Act, as amended, and is supported by a Section 8 rent
subsidy contract. Currently, no new mortgages are being insured under these
combined programs. Accordingly, management does not believe that it is
practicable to estimate the fair value of its mortgage loan. Additional
information pertinent to the value of this loan is provided in Note 2.
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
REPORT ON FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<PAGE>
CONTENTS
Page
Independent Auditors' Report 3
Financial Statements:
Balance Sheet 4
Statement of Operations 5
Statement of Partners' Equity (Deficit) 6
Statement of Cash Flows 7
Summary of Accounting Policies 8
Notes to Financial Statements 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
January 26, 1999
To the Partners of
Rockledge Apartments Associates
Woburn, Massachusetts
We have audited the accompanying balance sheet of MHFA Project No. 71-187-N
Rockledge Apartments Associates, (a limited partnership) as of December 31,
1998, 1997 and 1996 and the related statements of operations, partners'equity
(deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statements presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rockledge Apartments
Associates as of December 31, 1998, 1997, and 1996 and the results
of its operations and its cash flow for the years then ended in conformity
with generally accepted accounting principles.
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
BALANCE SHEET
DECEMBER 31, 1998
DECEMBER 31,
1998 1997 1996
ASSETS
Property and Equipment
(Mortgaged) - Note 2
Land $ 90,000 $ 90,000 $ 90,000
Building 1,624,825 1,624,825 1,624,825
Equipment and furnishings 263,535 263,535 263,535
1,978,360 1,978,360 1,978,360
Less:
Accumulated Depreciation 1,207,939 1,142,946 1,077,953
Net Property and Equipment 770,421 835,414 900,407
Cash and Cash Equivalents 257,365 243,429 164,844
Rents and Other Receivables 7,386 5,266 7,196
Escrow Deposits 18,387 26,604 16,219
Restricted Cash -
Tenants' Security Deposits 26,611 25,287 25,103
Reserve for Replacements 98,212 104,513 173,341
1,178,382 1,240,513 1,287,110
LAIBILITIES AND PARTNERS' DEFICIT
LIABILITIES:
Mortgage Loan Payable - Note 2 1,203,633 1,228,943 1,252,527
Note Payable Affiliate (Note 3) 20,046 28,052 35,922
Accrued Interest Payable 1,695 1,841 1,977
Accounts Payable and Accrued Expenses 29,749 28,731 18,802
Tenants' Security Deposits Payable 24,869 25,287 23,358
Prepaid Rents 115 3,564 2
TOTAL LIABILITIES 1,280,107 1,316,418 1,332,588
COMMITMENTS AND CONTINGENCIES
Notes 2,3 and 4
PARTNERS' DEFICIT - Note 4
General Partner 1,971 2,746 3,659
Limited Partner ( 103,696) ( 78,651) ( 49,137)
TOTAL PARTNERS' DEFICIT ( 101,725) ( 75,905) ( 45,478)
1,178,382 1,240,513 1,287,110
See accompanying summary of accounting policies and
notes to financial statements
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31,
1998 1997 1996
RENT AND RELATED INCOME $ 386,277 $ 383,550 $ 375,241
OPERATING EXPENSES:
Administrative & Marketing 93,960 85,095 85,653
Utilities 42,070 47,791 46,256
Maintenance and Repair 157,588 167,323 157,368
Real Estate Tax 39,577 34,785 24,035
Interest 23,326 25,976 28,648
Insurance 5,956 5,530 5,598
Depreciation and Amortization 64,993 64,993 65,048
Total Operating Expenses 427,470 431,493 412,606
OPERATING INCOME (LOSS) (41,193) (47,943) (37,365)
OTHER INCOME - Interest 15,373 17,516 18,848
NET INCOME (LOSS) $(25,820) $(30,427) $(18,517)
NET INCOME (LOSS) TO GENERAL PARTNERS $ (775) $ (913) $ (556)
NET INCOME (LOSS) TO LIMITED PARTNERS $(25,045) $(29,514) $(17,961)
See accompanying summary of accounting policies and notes to financial
statements.
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, 1996
General Limited
Total Partner Partners
BALANCE, at December 31, 1995 $ (26,961) $ 4,215 $ (31,176)
Net loss (18,517) (556) (17,961)
BALANCE, at December 31, 1996 (45,478) 3,659 (49,137)
Net loss (30,427) (913) (29,514)
BALANCE, at December 31, 1997 (75,905) 2,746 (78,651)
Net loss (25,820) (775) (25,045)
BALANCE, at December 31, 1998 $ (101,725) $ 1,971 $(103,696)
Percentage of interest in
profit and losses 100% 3% 97%
See accompanying summary of accounting policies and notes
to financial statements
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
1998 1997 1996
CASH FLOWS FROM ACTIVITIES
Net Loss $( 25,820) $ (30,427) $ (18,517)
Adjustments to reconcile Net Loss
to Net Cash Provided (Used) by Operating
Activities:
Depreciation and Amortization 64,993 64,993 65,048
(Increase) Decrease in Receivables ( 2,120) 1,930 7,144
(Increase) Decrease in Escrow Deposits 8,217 (10,385) 1,201
(Increase) Decrease in
Restricted Deposits (1,324) ( 184) (1,017)
Increase (Decrease) in Accounts Payable
and Accrued Expenses 872 9,793 (8,187)
Increase (Decrease) in Tenants
Security Deposits ( 418) 1,929 ( 510)
Increase (Decrease) in Prepaid Rents (3,449) 3,562 2
Net Cash Provided (Used) by
Operating Activities 40,951 41,211 45,164
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) Decrease in Reserve
for Replacements 6,301 68,828 (55,267)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Mortgage Loan Payable (25,310) (23,584) (21,979)
Note Payable - Affiliate ( 8,006) ( 7,870) ( 7,743)
Net Cash Used by Financing Activities 33,316 31,454 29,722
Net Increase (Decrease) in Cash and
Cash Equivalents 13,936 78,585 (39,825)
Cash and Cash Equivalents,
Beginning of Year 243,429 164,844 204,669
Cash and Cash Equivalents,
End of Year $ 257,365 $ 243,429 $ 164,844
See accompanying summary of accounting policies and
notes to financial statements
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Financial statements are prepared on the accrual basis and all development
and construction costs were capitalized.
The balance sheet does not give effect to any assets that the partners may
have outside their interest in the partnership, nor to any personal
obligations, including income taxes, of the individual partners.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Depreciation of buildings and
equipment is based on a 25 year life and a 5 year life respectively. The
ACRS method is used for tax purposes.
INCOME TAXES
The partnership, as an entity, is not subject to income tax. The partners'
share of the loss for tax purposes is includable in their income tax returns.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
CASH AND CASH EQUIVALENTS
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.
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - GENERAL
Rockledge Apartments Associates is a Massachusetts limited partnership which
was formed on February 23, 1973 for the purpose of owning, rehabilitating and
operating a multi-unit apartment complex containing 60 residential units.
The partnership has a contract with HUD to receive rent subsidy equal to
approximately 84% of the total rental income. The contract expires in
May, 2018.
NOTE 2 - MORTGAGE LOAN PAYABLE
The mortgage note is payable to the Massachusetts Housing Finance Agency
(MHFA) over a 40 year period, in monthly installments of approximately
$3,841 (after interest subsidy payments of $6,597 monthly), including
interest at 7.5485% per annum thru 2018. Principal payments for the next
five years are as follows:
1999 $27,116
2000 29,163
2001 31,311
2002 33,623
2003 36,113
The partnership is required to make monthly payments of $7,582 to MHFA for
real estate taxes, insurance and a reserve for replacements. Withdrawals
must have the approval of MHFA.
The partnership and its partners have no personal liability on the mortgage
loan; the mortgaged property is the only collateral for the loan.
NOTE 3 - NOTE PAYABLE
The note payable to affiliate bears interest at the rate of 12% per annum for
a period of 15 years at which time the note is payable in full. Interest is
payable only from Distributable Cash and residual amounts of Net Capital
Transactions proceeds.
<PAGE>
ROCKLEDGE APARTMENTS ASSOCIATES
(a limited partnership)
PROJECT NO: 71-187-N
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 4 - RELATED PARTY TRANSACTIONS
The partnership pays to an affiliate of a general partner a monthly
management fee of 6% of rents collected and a monthly bookkeeping fee of
$385, and an annual fee of $1,862 to another affiliate of a general partner.
NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION
No distribution of assets may be made except from "surplus cash" as defined
in the regulatory agreement with the MHFA. Annual distributions are limited
to $9,847, as allowed by MHFA.
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value 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
judgement and therefore cannot be determined with precision. Changes in
assumptions could affect the estimates.
The carrying amounts of cash and cash equivalents, tenant's security deposits
cash, tenant's accounts receivable, restricted deposits and funded reserves,
and accounts payable and other liabilities approximate their fair market
values because of the short-term maturity of these instruments.
The Partnership obtained its mortgage financing under Section 236 of the
National Housing Act, as amended, and is supported by a Section 8 rent
subsidy contract. Currently, no new mortgages are being insured under
these combined programs. Accordingly, management does not believe that it is
practicable to estimate the fair value of its mortgage loan. Additional
information pertinent to the value of this loan is provided in Note 2.
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
No. Description Page
(3) Articles of Incorporation and By-laws: The registrant
is not incorporated. The partnership Agreement was
filed with the registrant's Registration Statement
on Form S-11 (#2-84474) and is incorporated herein by
reference.
(10.1) Purchase and Sale Agreement, dated as of March 30, 1984,
relating to Ashland Commons Associates (filed with
Registrant's Form 8-K dated March 30, 1984 and incorporated
herein by reference).
(10.2) Purchase and Sale Agreement, dated as of April 30, 1984,
relating to Historic Cohoes, II (filed with Registrant's
Form 8-K dated April 30, 1984 and incorporated herein
by reference).
(10.3) Purchase and Sale Agreement, dated as of June 22, 1984,
relating to Rockledge Apartment Associates (filed with
Registrant's Form 8-K dated June 22, 1984 and incorporated
herein by reference).
(10.4) Withdrawal of APT Housing Partners Limited Partners as
a Limited Partner in a Local Limited Partnership, dated
as of December 18, 1986, relating to Historic Cohoes, II,
(filed with Registrant's Form 8-K dated March 30, 1987
and incorporated herein by reference).
(27) Financial data schedule. 49
<PAGE>
APT HOUSING PARTNERS LIMITED PARTNERSHIP
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
balance sheet and statement of income on pages 18 through 19 of the
Partnership's 1998 Annual Report on Form 10-K and is qualified in its
entirety by reference to such financial statements.
Item Number Item Description Year End 1998
5-02(1) Cash and cash items $ 155,218
5-02(2) Marketable securities -0-
5-02(3)(a)(1) Notes and accounts receivable-trade -0-
5-02(4) Allowance for doubtful accounts -0-
5-02(6) Inventory -0-
5-02(9) Total current assets 155,218
5-02(13) Property, plant and equipment -0-
5-02(14) Accumulated depreciation -0-
5-02(18) Total assets 155,218
5-02(21) Total current liabilities 17,101
5-02(22) Bonds, mortgages and similar debt -0-
5-02(28) Preferred stock-mandatory redemption -0-
5-02(29) Preferred stock-no mandatory redemption -0-
5-02(30) Common stock -0-
5-02(31) Other stockholders' equity 138,117
5-02(32) Total liabilities and stockholders' equity 155,218
Item Number Item Description Year Ended 1998
5-03(b)1(a) Net sales of tangible products $ -0-
5-03(b)1 Total revenues 92,771
5-03(b)2(a) Cost of tangible goods sold -0-
5-03(b)2 Total costs and expenses applicable to sales
and revenues -0-
5-03(b)3 Other costs and expenses 45,472
5-03(b)5 Provision for doubtful accounts and notes -0-
5-03(b)(8) Interest and amortization of debt discount -0-
5-03(b)(10) Income before taxes and other items 47,299
5-03(b)(11) Income tax expense -0-
5-03(b)(14) Income/loss continuing operations 47,299
5-03(b)(15) Discontinued operations -0-
5-03(b)(17) Extraordinary items -0-
5-03(b)(18) Cumulative effect-changes in accounting principles -0-
5-03(b)(19) Net income or loss 47,299
5-03(b)(20) Earnings per share-primary 12.53
5-03(b)(20) Earnings per share-fully diluted 12.53
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
By: APT Asset Management, Inc.
General Partner
Date:___________ [SIGNATURE]
Jeff Ewing, President
APT ASSET MANAGEMENT, INC.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 155,218
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,218
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 155,218
<CURRENT-LIABILITIES> 17,101
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 138,117
<TOTAL-LIABILITY-AND-EQUITY> 155,218
<SALES> 0
<TOTAL-REVENUES> 92,771
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 45,472
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 47,299
<INCOME-TAX> 0
<INCOME-CONTINUING> 47,299
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,299
<EPS-PRIMARY> 12.53
<EPS-DILUTED> 12.53
</TABLE>
