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 Quarterly Period Ended June 30, 2000.
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 (781) 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______________
This document contains 14 pages.
PART I
ITEM 1. FINANCIAL STATEMENTS
APT HOUSING PARTNERS LIMITED PARTNERSHIP
BALANCE SHEET
ASSETS
June 30, December 31,
2000 1999
(Unaudited) (audited)
Investment in Local Limited
Partnerships $ -0- $ -0-
Cash and Cash Equivalents 268,803 203,385
Total Assets $ 268,803 $ 203,385
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 7,780
Professional Fees 9,000 8,500
Total Liabilities 18,350 16,280
Commitments and Contingencies
Partners' Capital (Deficit):
General Partners ( 34,316) ( 35,583)
Limited Partners, 3,700 partnership units
authorized, issued and outstanding
284,769 222,688
Total Partners'Capital(Deficit) 250,453 187,105
Total Liabilities and Partners'
Capital (Deficiency) $ 268,803 $ 203,385
See accompanying notes to financial statements
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
2000 1999 2000 1999
Interest Income $ 4,824 $ 2,932 $ 2,522 $ 1,532
Operating Expenses:
Management fees - affiliate
18,700 18,700 9,350 9,350
Administrative 10,679 1,797 5,679 1,797
Total Operating Expenses
29,379 20,497 15,029 11,147
Loss Before Share of Losses of
and Distributions from Local
Limited Partnerships( 24,555) ( 17,565)( 12,507) ( 9,615)
Distribution from Local Limited
Partnerships 87,903 87,903 87,903 87,903
Share of Losses of Local Limited
Partnerships - - - -
Net Income (Loss) $ 63,348 $ 70,338 $ 75,396 $ 78,288
Limited Partners' Interest in
Net Income (Loss) $ 62,081 $ 68,931 $ 73,888 $ 76,722
Weighted Average Number of Outstanding
Limited Partnership Units
3,700 3,700 3,700 3,700
Net Income (Loss) Per
Limited Partnership Unit
$ 16.78 $ 18.63 $ 19.97 $ 20.74
See accompanying notes to financial statements.
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
2000 1999
Cash Flows From Operating Activities:
Net Income (Loss) $ 63,348 $ 70,338
Adjustments to reconcile net income (loss)
to net cash provided by (used by) operating activities:
Change in operating assets and liabilities:
Increase (decrease) in accrued expenses 2,070 ( 7,751)
Net Cash provided by (used by)
operating activities: 65,418 62,587
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 65,418 62,587
Cash and Cash Equivalents, Beginning of Period 203,385 155,218
Cash and Cash Equivalents, End of Period $ 268,803 $217,805
See accompanying notes to financial statements.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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.
Financial Statements:
The accompanying balance sheet as of June 30, 2000, the statements
of operations for the six-month and three-month periods ended June
30, 2000 and June 30, 1999, and the statements of cash flows for
the six-month periods then ended have been prepared by the
Partnership without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations, and cash flows for the interim periods have been made.
The accompanying balance sheet as of December 31, 1999 has been
taken from the audited financial statements at that date.
The results of operations for the six-month and three-month
periods ended June 30, 2000 and 1999 are not necessarily
indicative of operating results for a full year.
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.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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.
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 the 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 and a U.S. Government
Agency security at June 30, 2000.
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 period.
2. ALLOCATION OF BENEFITS
In accordance with the 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.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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.
For the six-month periods ended June 30, 2000 and 1999, the
aggregate share of losses of the Local Limited Partnerships
attributable to the Partnership amounted to $68,011 and
$95,323, respectively. For the three-months ended June 30,
2000 and 1999, the aggregate share of losses of the Local
Limited Partnerships attributable to the Partnership amounted
to $34,527 and $45,657, respectively. The Partnership's
cumulative share of losses of the Local Limited Partnerships
exceeded its investments by $912,611 at June 30, 2000 and
$844,600 at December 31, 1999. 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, 2000 and
December 31, 1999 was as follows:
June 30, 2000 December 31, 1999
(Unaudited) (audited)
Rental property $ 7,597,934 $ 7,597,934
Accumulated depreciation ( 4,705,217) ( 4,572,123)
Cash and cash equivalents 335,394 348,807
Restricted assets and deposits 565,716 626,810
Other assets 105,745 107,788
Total assets 3,899,572 4,109,216
Mortgage loans payable 5,799,353 5,830,851
Other liabilities 158,031 173,623
Total liabilities 5,957,384 6,004,474
Partners' capital (deficiency) ( $ 2,057,812) ($ 1,895,258)
Composition of partners' capital (deficiency):
General partners ($ 136,008) ($ 129,366)
Limited partners ( 1,921,804) ( 1,765,892)
Partners' capital (deficiency) ($ 2,057,812) ($ 1,895,258)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Summarized unaudited income statement information on a combined
basis for the Local Limited Partnerships for the six-month and
three-month periods ended June 30, 2000 and 1999 were as follows:
Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
Revenues $ 871,163 $ 852,299 $ 439,734 $ 430,396
Net income
(loss) ($ 70,511) ($ 99,602)($ 35,812) ($ 47,861)
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, 2000 and December 31, 1999, the Partnership's
uninsured cash and cash equivalent balances totaled $21,730
and $97,970, respectively. At June 30, 2000, cash and cash
equivalents include a three month Government Agency security
which is backed by the full faith and credit of the U.S.
Government.
5. TRANSACTIONS WITH RELATED PARTIES
American Securities 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 each of the
six-month and three-month periods ended June 30, 2000 and 1999
amounted to $18,700 and $9,350, respectively. The Partnership has
liabilities to the affiliate of $9,350 and $7,780 at June 30, 2000
and December 31, 1999, respectively.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
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, 2000 and December 31, 1999 approximate their
fair values because of the short-term maturity of these
instruments.
PART I
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, 2000, 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.
However, the legislature has issued regulations that allow for
a Local Limited Partnership to elect to be marked to market
with a restructuring of its existing debt. In addition, marked
to market may also be accomplished without restructuring the debt.
The legislature also has provided a Local Limited Partnership the
option to "mark-up to market"; that is, upon expiration of its
Section 8 subsidy contract, and if current market rents exceed
contract rents, then the Local Limited Partnership may elect to
contract with HUD at the higher rents for a period of five years
as an incentive to maintain affordable housing.
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.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued):
Cash distributions received from a Local Limited Partnership
amounted to $87,903 and $87,903 during the quarters ended June 30,
2000 and 1999, respectively. These distributions are used to meet
the Partnership's obligations. 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.
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 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
assets consist primarily of limited partnership interests
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 six-month
periods ended June 30, 2000 and 1999, the aggregate
share of losses of the Local Limited Partnerships
attributable to the Partnership amounted to $68,011 and
$95,323, respectively. For the three-months ended June
30, 2000 and 1999, the aggregate share of losses of the
Local Limited Partnerships attributable to the Partnership
and not included in the statements of income amounted to
$34,527 and $45,657, respectively. The Partnership's cumulative
share of losses of the Local Limited Partnerships exceed its
investments, and, accordingly, its share of losses of the Local
Limited Partnerships have not been reflected in the financial
statements in accordance with the equity method of accounting
because the investment balances have been reduced to zero.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued):
The Partnership's net income for the six-month and three-month
periods ended June 30, 2000 and 1999 was due primarily to the
receipt of a cash distribution from its investment in a Local
Limited Partnership.
The Partnership incurs an annual program management fee
payable to American Securities Team, Inc. ("AST"), 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 AST is equal to .5% of invested assets
plus the Local Limited Partnerships' annualized outstanding
nonrecourse debt. The fee amounted to $9,350 per quarter
for the periods ended June 30, 2000 and 1999.
Administrative expenses consist of professional fees.
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 Partnership has evaluated the potential impact of the
situation commonly referred to as the "Year 2000 Problem".
The Year 2000 Problem, which is common to most companies,
concerns the inability of information systems, primarily
computer software programs, to properly recognize and process
date sensitive information related to the year 2000. Year 2000
problems may not surface until after January 1, 2000.
Management does not expect the Partnership to incur any
significant expenses related to this issue.
PART I
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership maintains cash and cash equivalents in a financial
institution which is insured by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. The Partnership also has a
three month Government Agency security which is backed by the full
faith and credit of the U.S. Government. The Partnership does not
believe these financial instruments are subject to significant
market risk.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. 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.
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 is
incorporated herein by reference.
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 is incorporated herein
by reference.
Purchase and Sale Agreement, dated as of June 22, 1984,
relating to Rockledge Apartments Associates filed with
Registrant's Form 8-K dated June 22, 1984 and is
incorporated herein by reference.
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,
filed with Registrant's Form 8-K dated March 30, 1987
and is incorporated herein by reference.
Financial data schedule (included herewith on page 13).
b. No reports on Form 8-K have been filed for the quarter
ended June 30, 2000.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted
from the balance sheet as of June 30, 2000 and statement of
income for the six months ended June 30, 2000 and is qualified
in its entirety by reference to such financial statements.
Six-Months End
Item Number Item Description June 30, 2000
5-02(1) Cash and cash items $ 268,803
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 268,803
5-02(13) Property, plant and equipment -0-
5-02(14) Accumulated depreciation -0-
5-02(18) Total assets 268,803
5-02(21) Total current liabilities 18,350
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 250,453
5-02(32) Total liabilities and
stockholders' equity 268,803
Six-Months End
Item Number Item Description June 30, 2000
5-03(b)1(a) Net sales of tangible products $ -0-
5-03(b)1 Total revenues 92,727
5-03(b)2(a) Cost 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 29,379
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/(loss) before taxes and
other items 63,348
5-03(b)(11) Income tax expense -0-
5-03(b)(14) Income/(loss) continuing operations 63,348
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) 63,348
5-03(b)(20) Earnings (loss) per share-primary 16.78
5-03(b)(20) Earnings (loss) per share-fully diluted 16.78
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:_________________ ____________________________________
Jeff Ewing, President
