SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________ to ________________
Commission File No. 0-13556
Cluster Housing Properties
(A California Limited Partnership)
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(Exact name of registrant as specified in its charter)
California 04-2817478
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(State or other jurisdiction of (I.R.S.
Employer incorporation or organization)
Identification No.)
5110 Langdale Way, Colorado Springs CO 80906
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(Address of principal executive offices) (Zip Code)
(719) 527-0544
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities 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 ___
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 ]
Aggregate market value of voting securities held by non-affiliates: Not
applicable, since securities are not actively traded on any exchange.
Documents incorporated by reference: Portions of the Prospectus of Registrant
dated March 22, 1984 are incorporated by reference into Part III
The Exhibit Index is located on page ______
<PAGE>
PART I
ITEM 1. BUSINESS
This form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
Cluster Housing Properties (the "Partnership"), formerly Berry and Boyle Cluster
Housing Properties, is a California limited partnership formed on August 8,
1983. The General Partners are Stephen B. Boyle and GP L'Auberge Communities,
L.P., a California limited partnership, formerly Berry and Boyle Management.
The primary business of the Partnership is to operate and ultimately dispose of
a diversified portfolio of income-producing residential real properties through
its joint venture interest in such properties. Descriptions of such properties
are included below in "Item 2. Properties" as well as in note 5 of the Notes to
the Consolidated Financial Statements included in this report and incorporated
herein by reference thereto.
On October 25, 1985, the Partnership acquired a majority joint venture interest
in the Sin Vacas Joint Venture, which owns and operates a 72-unit multifamily
rental property located in Tucson, Arizona. The Partnership contributed
$2,520,954 to the Sin Vacas Joint Venture which was used to repay a portion of
the construction loan on the property. The balance of the construction loan was
repaid through the proceeds of a $2,575,000 permanent loan from a third party
lender. In accordance with the terms of the Partnership Agreement, the
Partnership paid an acquisition fee of $250,000 to GP L'Auberge Communities,
L.P. for its services in structuring and negotiating the acquisition. The
Partnership also incurred acquisition expenses relating to the acquisition which
totaled $168,686.
On July 16, 1986, the Partnership assigned its right to acquire a property known
as L'Auberge Pinecliff ("Pinecliff"), formerly Autumn Ridge, a 96-unit
multifamily rental property located in Colorado Springs, Colorado to a Colorado
joint venture (the Autumn Ridge Joint Venture) which acquired the property for a
purchase price of $7,320,760. The Partnership simultaneously contributed to the
Autumn Ridge Joint Venture an amount equal to the total purchase price less the
proceeds of a $3,300,000 permanent loan. In accordance with the terms of the
Partnership Agreement, the Partnership paid an acquisition fee of $400,000 to GP
L'Auberge Communities, L.P. for its services in structuring and negotiating this
acquisition. The Partnership also incurred acquisition expenses relating to the
acquisition which totaled $97,475.
On June 11, 1987, the Partnership acquired a majority joint venture interest in
the Villa Antigua Joint Venture which owns and operates an 88-unit multifamily
rental property located in Scottsdale, Arizona. The Partnership contributed
$2,494,677 to the Villa Antigua Joint Venture which was used to repay a portion
of the construction loan on the property. The balance of the construction loan
was repaid through the proceeds of a $3,200,000 permanent loan from a third
party lender. In accordance with the terms of the Partnership Agreement, the
Partnership paid an acquisition fee of $350,000 to GP L'Auberge Communities,
L.P. for its services in structuring and negotiating the acquisition. The
Partnership also incurred acquisition expenses relating to the acquisition which
totaled $31,729.
From time to time the Partnership expects to sell the properties taking into
consideration such factors as the amount of appreciation in value, if any, to be
realized, the possible risks of continued ownership and the anticipated
advantages to be gained for the partners. Proceeds from the sale, financing or
refinancing of the properties will not be reinvested by the Partnership or its
joint ventures, but will be distributed to the partners, so that the Partnership
will, in effect, be self-liquidating. Under the terms of the various joint
venture agreements, the Partnership has control over the decision to sell any
property.
The success of the Partnership will depend upon factors which are difficult to
predict and many of which are beyond the control of the Partnership. Such
factors include, among others, general economic and real estate market
conditions, both on a national basis and in those areas where the Partnership's
investments are located, competitive factors, the availability and cost of
borrowed funds, real estate tax rates, federal and state income tax laws,
operating expenses (including maintenance and insurance), energy costs,
government regulations, and potential liability under and changes in
environmental and other laws, as well as the successful management of the
properties.
On-site management of two of the Partnership's properties, Villas at Sin Vacas
and Villa Antigua, is currently conducted by an affiliate of the respective
developer/joint venture partners and supervised by the General Partners. On-site
management of Pinecliff is currently conducted by an affiliate of the General
Partners. The terms of such property management services between the Partnership
and property managers are embodied in a written management agreement with
respect to each property. The property manager in each case receives management
fees which are competitive with those obtainable in arm's-length negotiations
with independent parties providing comparable services in the localities in
which the properties are located. These fees do not exceed 5% of the gross
revenues from each property plus reimbursement for allocable expenses.
It is the responsibility of the General Partners to select or approve property
managers and to supervise their performance. Property managers are responsible
for on-site operations and maintenance, generation and collection of rental
income, and payment of operating expenses.
The difference between rental income and expenses related to operations,
including items such as local taxes and assessments, utilities, insurance
premiums, maintenance, repairs and improvements (and reserves therefor),
bookkeeping and payroll expenses, legal and accounting fees, property management
fees and other expenses incurred, constitute the properties' operating cash
flow. The Partnership's administrative expenses are paid out of the
Partnership's share of such cash flow from the various Joint Ventures and from
interest income which the Partnership earns on its short-term investments.
The Partnership's investments in real estate are also subject to certain
additional risks including, but not limited to, (i) competition from existing
and future projects held by other owners in the areas of the Partnership's
properties, (ii) possible reduction in rental income due to an inability to
maintain high occupancy levels, (iii) adverse changes in mortgage interest
rates, (iv) possible adverse changes in general economic conditions and adverse
local conditions, such as competitive overbuilding, or a decrease in employment
or adverse changes in real estate zoning laws, (v) the possible future adoption
of rent control legislation which would not permit the full amount of increased
costs to be passed on to tenants in the form of rent increases, and (vi) other
circumstances over which the Partnership may have little or no control.
The Partnership's investments are subject to competition in the rental, lease
and sale of similar types of properties in the localities in which the
Partnership's real property investments are located. Furthermore, the General
Partners of the Partnership are affiliated with other partnerships owning
similar properties in the vicinity in which the Partnership's properties are
located. In addition, other limited partnerships may be formed by affiliates of
the General Partners which will compete with the Partnership.
The Partnership considers itself to be engaged in only one industry segment,
real estate investment.
The Partnership has no employees. Accounting and other administrative functions
are performed by employees of an affiliate of the General Partners.
ITEM 2. PROPERTIES
The Partnership owns a majority joint venture interest in three joint ventures
(the "Joint Ventures"): (1) the Sin Vacas Joint Venture, an Arizona joint
venture that owns and operates Villas at Sin Vacas, a 72-unit multifamily rental
property in Tucson, Arizona, subject to first mortgage financing in the original
principal amount of $2,575,000; (2) the Autumn Ridge Joint Venture, a Colorado
joint venture that owns and operates Pinecliff, a 96-unit multifamily rental
property in Colorado Springs, Colorado, subject to first mortgage financing in
the original principal amount of $3,300,000; and, (3) the Villa Antigua Joint
Venture, an Arizona joint venture that owns and operates Villa Antigua, an
88-unit multifamily rental property in Scottsdale, Arizona, subject to first
mortgage financing in the original principal amount of $3,200,000. With regard
to the proposed termination of the Sin Vacas Joint Venture and the Villa Antigua
Joint Venture see Note 10 of Notes to Consolidated Financial Statements.
Villas at Sin Vacas
As of February 29, 1996, the property was 86% occupied, compared to 92%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Market Rents
December 31,
Unit Type ................................... ........... 1995 1994
- ------------------------------------------------------------- ------ ------
One bedroom one bath ......................................... $ 835 $ 835
Two bedroom two bath ......................................... 1,050 1,050
Three bedroom two bath ....................................... 1,200 1,200
Pinecliff
As of February 10, 1996, the property was 95% occupied, compared to 84%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Market Rents
December 31,
Unit Type ............................................... 1995 1994
- -------------------------------------------------------------- ------ ------
One bedroom one bath ......................................... $ 898 $ 885
Two bedroom two bath ......................................... 1,102 1,088
Villa Antigua
As of February 10, 1996, the property was 99% occupied, compared to 97%
approximately one year ago. At December 31, 1995 and 1994, the market rents for
the various unit types were as follows:
Market Rents
December 31,
Unit Type ............................................... 1995 1994
- -------------------------------------------------------------- ------ ------
One bedroom one bath ........................................ $ 760 $ 720
Two bedroom two bath ........................................ 1,028 935
Three bedroom two bath ...................................... 1,090 1,050
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Partnership or any
joint venture in which it owns an interest is a party, or of which any of the
properties is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The transfer of Units is subject to certain limitations contained in the
Partnership Agreement. There is no public market for the Units and it is not
anticipated that any such public market will develop.
The number of holders of Units as of December 31, 1995 was 2,013.
Distributions are made to the Partners on a quarterly basis based upon Net Cash
from Operations, as calculated under Section 10 of the Partnership Agreement.
Total cash distributions to the Limited Partners for 1995 and 1994 were paid as
follows:
Calendar ......... Date of
Quarter Ended .... Payment Amount
- ------------------ ----------------- -------
March 31, 1994 ... May 15, 1994 121,579
June 30, 1994 .... August 15, 1994 121,579
September 30, 1994 November 15, 1994 121,579
December 31, 1994 February 15, 1995 137,789
March 31, 1995 ... May 15, 1995 121,579
June 30, 1995 .... August 15, 1995 121,579
September 30, 1995 November 15, 1995 121,579
December 31, 1995 February 15, 1996 97,263
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Year Ended
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<S> <C> <C> <C> <C> <C>
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
Rental income $2,725,119 $2,572,947 $2,391,911 $2,204,133 $2,000,202
Net income (loss) $309,115 $260,976 $141,982 ($142,622) ($279,177)
Net income (loss) allocated to Partners:
Limited Partners - Per Unit
Aggregate 32,421 Units $9.06 $7.65 $4.16 ($4.36) ($8.52)
General Partners $15,456 $13,049 $7,099 ($1,426) ($2,792)
Net cash provided by operations $758,756 $686,776 $528,872 $343,342 $230,852
Cash distributions to Partners:
Limited Partners:
Weighted average per Unit $15.50 $17.75 $9.50 $3.00 $3.70
General Partners $26,449 $30,288 $16,211 $5,119 $6,314
Total assets $16,274,801 $16,587,271 $17,032,336 $17,327,814 $17,463,961
Long term obligations $8,695,278 $8,818,891 $8,931,713 $9,034,755 $8,921,356
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning
Management's expectations regarding future financial performance and future
events. These forward-looking statements involve significant risk and
uncertainties, including those described herein. Actual results may differ
materially from those anticipated by such forward-looking statements.
Liquidity; Capital Resources
In connection with its capitalization, the Partnership admitted investors who
purchased a total of 32,421 Units aggregating $16,210,500. These offering
proceeds, net of organizational and offering costs of $2,431,575, provided
$13,778,925 of net proceeds to be used for the purchase of income-producing
residential properties, including related fees and expenses, and working capital
reserves. The Partnership expended $10,410,263 to (i) acquire its joint venture
interests in the Sin Vacas Joint Venture, the Villa Antigua Joint Venture, and
the Autumn Ridge Joint Venture, (ii) to pay acquisition expenses, including
acquisition fees to one of the General Partners, and (iii) to pay certain costs
associated with the refinancing of the Pinecliff permanent loan. The Partnership
distributed $1,731,681 to the Limited Partners as a return of capital resulting
from construction cost savings with respect to the Sin Vacas, Pinecliff and
Villa Antigua projects and other excess offering proceeds. The remaining net
proceeds of $1,636,981 were used to establish initial working capital reserves.
These reserves have been used periodically to enable the Partnership to meet its
various financial obligations including contributions to the various Joint
Ventures that may be required. Cumulatively through December 31, 1995, $218,258
was contributed to the Joint Ventures for this purpose.
In addition to the proceeds generated from the public offering, the Partnership
utilized external sources of financing at the joint venture level to purchase
properties. The Partnership Agreement limits the aggregate mortgage indebtedness
which may be incurred in connection with the acquisition of Partnership
properties to 80% of the purchase price of such properties.
The Partnership's future ability to generate cash adequate to meet its needs is
dependent primarily on the successful operations of its real estate investments.
Such ability is also dependent upon the future availability of bank borrowings,
and upon the future refinancing or sale of the Partnership's real estate
investments and the collection of any mortgage receivable which may result from
such sales. These sources of liquidity will be used by the Partnership for
payment of expenses related to real estate operations, debt service and
professional and management fees and expenses. Net Cash From Operations and Net
Proceeds, if any, as defined in the Partnership Agreement, will then be
available for distribution to the Partners in accordance with Section 10 of the
Partnership Agreement. The General Partners believe that the current working
capital reserves together with projected cash flows for 1996 are adequate to
meet the Partnership's cash needs in the coming year. With regard to certain
balloon payments on existing first mortgage debt on the Partnership's
properties, see Note 6 of Notes to Consolidated Financial Statements.
The working capital reserves of the Partnership consist of cash and cash
equivalents and short-term investments. Together these amounts provide the
Partnership with the necessary liquidity to carry on its day-to-day operations
and to make necessary contributions to the various Joint Ventures. In 1995, the
aggregate net decrease in working capital reserves was $41,502. This decrease
resulted primarily from cash provided by operations of $758,756 offset by
$148,127 of fixed asset additions, distributions to partners of $528,974 and
$123,613 of principal payments on mortgage notes payable.
In 1994, the aggregate net decrease in working capital reserves was $35,777.
This decrease resulted primarily from cash provided by operations of $686,776
offset by $6,392 of fixed asset additions, distributions to partners of $605,762
and $112,822 of principal payments on mortgage notes payable.
In 1993, the aggregate net increase in working capital reserves was $65,322.
This increase resulted primarily from cash provided by operations of $528,872
offset by $38,248 of fixed asset additions, distributions to partners of
$324,211 and $103,042 of principal payments on mortgage notes payable.
Results of Operations
For the year ended December 31, 1995, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, Autumn
Ridge and Villa Antigua Joint Ventures, as well as partnership level interest
income earned on short term investments, reduced by administrative expenses. A
summary of these operating results appears below:
<TABLE>
Investment Consolidated
Sin Vacas Pinecliff Villa Antigua Partnership Totals
<S> <C> <C> <C> <C>
Rental income $754,953 $1,041,124 $929,042 $2,725,119
Rental operating expenses 353,533 420,726 310,611 1,084,870
-----------------------------------------------------------------------
Net rental operating income (exclusive
of items shown separately below) 401,420 620,398 618,431 1,640,249
Interest expense 226,761 290,606 281,800 799,167
Depreciation and amortization 118,909 173,174 118,217 410,300
Other (income) and expenses:
Interest income (727) (278) (1,194) ($81,023) (83,222)
General and administrative 7,200 7,244 7,200 183,245 204,889
-----------------------------------------------------------------------
6,473 6,966 6,006 102,222 121,667
-----------------------------------------------------------------------
Net income (loss) $49,277 $149,652 $212,408 ($102,222) $309,115
=======================================================================
</TABLE>
For the year ended December 31, 1994, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, Autumn
Ridge and Villa Antigua Joint Ventures, as well as partnership level interest
income earned on short term investments, reduced by administrative expenses. A
summary of these operating results appears below:
<TABLE>
Investment Consolidated
Sin Vacas Pinecliff Villa Antigua Partnership Totals
<S> <C> <C> <C> <C>
Rental income $756,731 $978,667 $837,549 $2,572,947
Rental operating expenses 339,483 353,665 298,421 991,569
-----------------------------------------------------------------------
Net rental operating income (exclusive
of items shown separately below) 417,248 625,002 539,128 1,581,378
Interest expense 229,820 294,553 285,601 809,974
Depreciation and amortization 115,612 169,787 116,476 401,875
Other (income) and expenses:
Interest income (759) (549) (813) ($56,007) (58,128)
General and administrative 7,494 7,793 7,862 143,532 166,681
-----------------------------------------------------------------------
6,735 7,244 7,049 87,525 108,553
-----------------------------------------------------------------------
Net income (loss) $65,081 $153,418 $130,002 ($87,525) $260,976
=======================================================================
</TABLE>
For the year ended December 31, 1993, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, Autumn
Ridge and Villa Antigua Joint Ventures, as well as partnership level interest
income earned on short term investments, reduced by administrative expenses. A
summary of these operating results appears below:
<TABLE>
Investment Consolidated
Sin Vacas Pinecliff Villa Antigua Partnership Totals
<S> <C> <C> <C> <C>
Rental income $695,598 $914,041 $782,272 $2,391,911
Rental operating expenses 293,353 330,444 303,551 927,348
-----------------------------------------------------------------------
Net rental operating income (exclusive
of items shown separately below) 402,245 583,597 478,721 1,464,563
Interest expense 232,613 298,106 289,072 819,791
Depreciation and amortization 115,392 169,415 115,199 400,006
Other (income) and expenses:
Interest income (807) (704) (802) ($49,145) (51,458)
General and administrative 6,817 6,817 6,852 133,756 154,242
-----------------------------------------------------------------------
6,010 6,113 6,050 84,611 102,784
-----------------------------------------------------------------------
Net income (loss) $48,230 $109,963 $68,400 ($84,611) $141,982
=======================================================================
</TABLE>
Comparison of 1995 and 1994 Operating Results:
Rental income increased $152,172, or 6% over the prior year, primarily as a
result of rental rate increases at the Partnership's properties. Rental
operating expenses increased $93,301 or 9% over the prior year primarily as a
result of increases in maintenance and advertising costs. Interest income
increased $25,094 or 43% in 1995, as a result of higher interest rates earned on
money market accounts and short-term investments. General and administrative
expenses increased $38,208 or 23%, due primarily to increased salary expense
allocations and legal costs and printing and mailing costs associated with the
voluntary withdrawal of a general partner of the Partnership. Fixed asset
purchases increased $141,735 from $6,392 in the prior year to $148,127 and
included such tems as carpet, floor tile and other replacements and exterior
painting of Sin Vacas. As a result of the factors described above, distributions
to partners decreased $76,788, or 13%, from $605,762 in 1994 to $528,974 in
1995.
Comparison of 1994 and 1993 Operating Results:
Rental income increased $181,036 or 7% over the prior year, primarily as a
result of high occupancy and rent increases. Rental operating expenses increased
$64,221 or 7% over the prior year primarily as a result of increases in
maintenance and advertising costs. Interest income increased $6,670 or 13% in
1994, as a result of higher interest rates earned on money market accounts and
short-term investments. General and administrative expenses increased $12,349 or
8%, due primarily to increased legal costs and printing and mailing costs
associated with the voluntary withdrawal of a general partner of the
Partnership. As a result of these factors, distributions to partners increased
$281,511 from $324,211 in 1993 to $605,762 in 1994.
Projected 1996 Operating Results:
Operating results for 1996 are not anticipated to vary significantly from those
of 1995. However, such forward-looking expectations involve significant risks
and uncertainties, including those described herein.
Actual results may differ materially from those anticipated.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Appendix A to this Report.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no directors or executive officers. Information as to the
individual general partners of the Partnership and directors and executive
officers of L'Auberge Communities, Inc. (formerly Berry and Boyle Inc.), the
general partner of GP L'Auberge Communities, L.P., is set forth below.
Individual General Partners
Stephen B. Boyle, age 55, is President, Executive Officer and Director of
L'Auberge Communities, Inc. and a general partner and co-founder of LP L'Auberge
Communities, a California Limited Partnership (formerly Berry and Boyle), a
limited partnership formed in 1983 to provide funds to various affiliated
general partners of real estate limited partnerships, one of which is GP
L'Auberge Communities, L.P.
In September, 1995, with the consent of Limited Partners holding a majority of
the outstanding Units, as well as the consent of the mortgage lenders for the
Partnership's three properties, Richard G. Berry resigned as a general partner
of the Partnership.
GP L'Auberge Communities, L.P.
Information as to the directors and executive officers of L'Auberge Communities,
Inc., a general partner of GP L'Auberge Communities, L.P., which is a general
partner of the Partnership, and its affiliates, is set forth below. There are no
familial relationships between or among any officer and any other officer or
director.
Name Position
Stephen B. Boyle See above
J. Michael McDonald Executive Vice President and
Chief Financial Officer
Earl O. Robertson Executive Vice President
Donna Popke Vice President and Secretary
J. Michael McDonald, age 53, is Executive Vice President and Chief Financial
Officer of L'Auberge Communities, Inc. He is a certified public accountant and a
business school graduate of California State University. He began his real
estate career with the firm of Kenneth Leventhal and Company. Mr. McDonald held
senior finance positions with publicly traded Arlen Realty and Christiana
Companies. He was a senior operations officer with Lehman Brothers real estate
affiliates. Prior to joining L'Auberge Communities, Inc. in August, 1995, he was
a consultant for the FDIC, acting as a real estate asset disposition strategist.
Earl O. Robertson, age 47, has been a senior development officer, partner and
consultant in several prominent real estate development companies for over
twenty years, including Potomac Investment Associates, developers of planned
golf course communities nationwide. Mr. Robertson was also a key member of the
management team that developed the nationally acclaimed Inn at the Market in
Seattle. He joined L'Auberge Communities, Inc. in June 1995 and holds the
position of Executive Vice President.
Donna Popke, age 36, joined L'Auberge Communities, Inc. in July, 1995 and holds
the title of Vice President and Secretary.. Prior to joining L'Auberge
Communities, Inc., Ms. Popke was employed in the field of public accounting for
six years and later with David R. Sellon & Company, a Colorado Springs land
development company.
ITEM 11. EXECUTIVE COMPENSATION
None of the General Partners or any of their officers or directors received any
compensation from the Partnership. See Item 13 below with respect to a
description of certain transactions of the General Partners and their affiliates
with the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of March 28, 1996, no person of record owned or was known by the General
Partners to own beneficially more than 5% of the Partnership's outstanding
Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1995, the Partnership paid or accrued
remuneration to the General Partners or their affiliates as set forth below. In
addition to the information provided herein, certain transactions are described
in notes 7 and 8 in the Notes to Financial Statements appearing in Appendix A,
which are included in this report and are incorporated herein by reference
thereto.
<TABLE>
Net Cash From Operations distributed in 1995
<S> <C>
to the General Partners $26,449
Allocation of Income and (Loss)
to the General Partners $15,181
(For a description of the share of Net Cash From
Operations and the allocation of Income and Loss to which the General Partners
are entitled, reference is made to the discussion under the caption "Profits and
Losses and Cash Distributions" contained on pages 35 through 38 of the
Prospectus of the Partnership dated March 22, 1984 (the "Prospectus"), which
discussion is incorporated herein by reference.)
Property management fees paid to an affiliate of
the General Partners $51,715
Reimbursements to General Partners $84,643
(For a description of the costs reimbursable to the
General Partners, reference is made to the discussion under the caption
"Compensation and Fees" contained on pages 10 through 12 of the Prospectus,
which discussion is incorporated herein by reference.)
</TABLE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1,2 See Page F-2
3 See Exhibit Index contained herein
(b) Reports on Form 8-K
The Partnership has not filed and was not required to file any reports
on Form 8-K during the last quarter of 1995.
(c) See Exhibit Index contained herein
(d) See Page F-2.
<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.
CLUSTER HOUSING PROPERTIES
By: GP L'Auberge Communities, L.P., a California
Limited Partnership, General Partner
By: L'Auberge Communities, Inc., its General Partner
By: __/s/ J. Michael McDonald_________________________________
J. Michael McDonald, Executive Vice President
and Chief Financial Officer
Date: March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
_/s/ Stephen B. Boyle___ Director, President and March 25, 1996
--------------------
STEPHEN B. BOYLE Principal Executive
Officer of L'Auberge
Communities, Inc.
_/s/ J. Michael McDonald_Executive Vice President and March 25, 1996
-----------------------
J. MICHAEL McDONALD Principal Financial and
Accounting Officer of
L'Auberge Communities, Inc.
<PAGE>
F-4
APPENDIX A
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
---------
CONSOLIDATED FINANCIAL STATEMENTS
ITEM 8, ITEM 14(a)(1) and (2), and ITEM 14(d) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1995
<PAGE>
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
---------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants F-3
Consolidated Balance Sheets at December 31, 1995 and 1994 F-4
Consolidated Statements of Operations for the years
ended December 31, 1995, 1994 and 1993 F-5
Consolidated Statements of Partners' Equity (Deficit)
for the years ended December 31, 1995, 1994 and 1993 F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993 F-7 -- F-8
Notes to Consolidated Financial Statements F-9 -- F-16
All Schedules are omitted as they are not applicable, not required, or the
information is provided in the financial statements or the notes thereto.
<PAGE>
Report of Independent Accountants
To the Partners of
Cluster Housing Properties
(a California Limited Partnership):
We have audited the accompanying consolidated balance sheets of Cluster
Housing Properties (a California Limited Partnership) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, partners' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the General Partners of the Partnership. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the
General Partners of the Partnership, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Cluster
Housing Properties (a California Limited Partnership) and subsidiaries as of
December 31, 1995 and 1994 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts February 21, 1996, except as for the information presented
in Note 10 for which the date is March 22, 1996
<PAGE>
<TABLE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
---------------
ASSETS
1995 1994
---- ----
Property, at cost (Notes 2, 3, 5, and 6):
<S> <C> <C>
Land $3,677,028 $3,677,028
Buildings and improvements 14,067,756 14,067,756
Equipment, furnishings and fixtures 1,295,545 1,147,418
--------------- ---------------
19,040,329 18,892,202
Less accumulated depreciation (4,418,093) (4,046,690)
--------------- ---------------
14,622,236 14,845,512
Cash and cash equivalents (Notes 2 and 4) 480,389 195,407
Short-term investments (Note 2) 1,067,446 1,393,930
Real estate tax escrows 44,055 51,805
Deposits and prepaid expenses 1,693 3,368
Accounts receivable 631
-
Deferred expenses, net of accumulated
amortization of $136,140 and $97,242 (Note 2) 58,351 97,249
--------------- ---------------
Total assets $16,274,801 $16,587,271
=============== ===============
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable (Note 6) 8,695,278 8,818,891
Accounts payable 42,245 14,594
Accrued expenses 164,298 156,079
Due to affiliates (Note 8) 23,173 10,190
Rents received in advance 10,495 13,997
Tenant security deposits 57,306 62,760
--------------- ---------------
Total liabilities 8,992,795 9,076,511
Commitments and contingencies (Note 10)
Minority interest (Note 5) (8,895)
Partners' equity (Note 7) 7,290,901 7,510,760
--------------- ---------------
Total liabilities and partners' equity $16,274,801 $16,587,271
=============== ===============
</TABLE>
<PAGE>
<TABLE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1995, 1994 and 1993
-------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Rental income $2,725,119 $2,572,947 $2,391,911
Rental operating expenses 1,084,870 991,569 927,348
--------------- --------------- ---------------
Net rental operating income (exclusive of items
shown separately below) 1,640,249 1,581,378 1,464,563
Interest expense 799,167 809,974 819,791
Depreciation and amortization 410,300 401,875 400,006
Other (income) and expenses:
Interest income (83,222) (58,128) (51,458)
General and administrative (Note 8) 204,889 166,681 154,242
--------------- --------------- ---------------
121,667 108,553 102,784
--------------- --------------- ---------------
Net income (loss) $309,115 $260,976 $141,982
=============== =============== ===============
Net income (loss) allocated to:
General Partners $15,456 $13,049 $7,099
Per unit of Investor Limited
Partner interest:
32,421 units issued 9.06 7.65 4.16
</TABLE>
<PAGE>
<TABLE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
for the years ended December 31, 1995, 1994 and 1993
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1992 (132,796) 8,170,571 8,037,775
Cash distributions (16,211) (308,000) (324,211)
Net income 7,099 134,883 141,982
--------------- --------------- ---------------
Balance at December 31, 1993 (141,908) 7,997,454 7,855,546
Cash distributions (30,288) (575,474) (605,762)
Net income 13,049 247,927 260,976
--------------- --------------- ---------------
Balance at December 31, 1994 (159,147) 7,669,907 7,510,760
Cash distributions (26,449) (502,525) (528,974)
Net income 15,456 293,659 309,115
--------------- --------------- ---------------
Balance at December 31, 1995 ($170,140) $7,461,041 $7,290,901
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995, 1994 and 1993
Increase (decrease) in cash and cash equivalents
-------------
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Interest received $82,408 $55,610 $49,606
Cash received from rental income 2,716,163 2,569,838 2,395,681
Administrative expenses (201,143) (159,895) (150,084)
Rental operations expenses (1,039,036) (968,373) (946,149)
Interest paid (799,636) (810,404) (820,182)
--------------- --------------- ---------------
Net cash provided by operating activities 758,756 686,776 528,872
Cash flows from investing activities:
Purchase of fixed assets (148,127) (6,392) (38,248)
Proceeds from maturities of short-term investments 1,367,863 1,400,408 1,379,242
Cash paid for short-term investments (1,040,565) (1,367,863) (1,400,408)
--------------- --------------- ---------------
Net cash provided (used) by investing activities 179,171 26,153 (59,414)
Cash flows from financing activities:
Distributions to partners (528,974) (605,762) (324,211)
Deposits (358) (95) 1,951
Principal payments on mortgage notes payable (123,613) (112,822) (103,042)
--------------- --------------- ---------------
Net cash used by financing activities (652,945) (718,679) (425,302)
--------------- --------------- ---------------
Net increase (decrease) in cash and cash equivalents 284,982 (5,750) 44,156
Cash and cash equivalents at beginning of year 195,407 201,157 157,001
--------------- --------------- ---------------
Cash and cash equivalents at end of year $480,389 $195,407 $201,157
=============== =============== ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995, 1994 and 1993
Increase (decrease) in cash and cash equivalents
-------------
Reconciliation of net income to net cash provided by operating activities:
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income $309,115 $260,976 $141,982
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 410,300 401,875 400,006
Change in assets and liabilities net of effects
from investing and financing activities:
Decrease in real estate tax escrows 7,750 14,568 308
Increase in accounts and interest receivable (1,445) (1,153) (3,217)
Decrease (increase) in deposits and prepaid expenses 2,033 (2,033) -
Increase (decrease) in accounts
payable and accrued expenses 35,871 8,679 (13,041)
Increase (decrease) in due to affiliates 4,088 6,973 (936)
Increase (decrease) in rent received in advance (3,526) 4,446 1,595
Increase (decrease) in tenant security deposits (5,430) (7,555) 2,175
--------------- --------------- ---------------
Net cash provided by operating activities $758,756 $686,776 $528,872
=============== =============== ===============
</TABLE>
<PAGE>
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
F-9
1. Organization of Partnership:
Cluster Housing Properties (a California Limited Partnership) (the
"Partnership"), formerly Berry and Boyle Cluster Housing Properties, was formed
on August 8, 1983. The Partnership issued all of the General Partnership
Interests to three General Partners in exchange for capital contributions
aggregating $2,000. Stephen B. Boyle and GP L'Auberge Communities, L.P., (a
California Limited Partnership), formerly Berry and Boyle Management, are the
General Partners. In September, 1995, with the consent of Limited Partners
holding a majority of the outstanding Units, as well as the consent of the
mortgage lenders for the Partnership's three properties, Richard G. Berry
resigned as a general partner of the Partnership.
A total of 2,000 individual Limited Partners owning 32,421 units have
contributed $16,210,500 of capital to the Partnership. At December 31, 1995, the
total number of Limited Partners was 2,013. Except under certain limited
circumstances, as defined in the Partnership Agreement, the General Partners are
not required to make any additional capital contributions. The General Partners
or their affiliates will receive various fees for services and reimbursement for
various organizational and selling costs incurred on behalf of the Partnership.
The accompanying consolidated financial statements present the activity of the
Partnership for the years ended December 31, 1995, 1994 and 1993.
The Partnership will continue until December 31, 2010, unless terminated earlier
by the sale of all, or substantially all, of the assets of the Partnership, or
otherwise in accordance with the provisions of Section 16 of the Partnership
Agreement.
2. Significant Accounting Policies:
A. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries: Sin Vacas Joint Venture (Sin Vacas),
Autumn Ridge Joint Venture (Autumn Ridge) and Villa Antigua Joint
Venture (Villa Antigua). All intercompany accounts and transactions
have been eliminated in consolidation. The Partnership follows the
accrual basis of accounting.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying value of cash and cash equivalents approximates fair value. It
is the Partnership's policy to invest cash in income-producing
temporary cash investments. The Partnership mitigates any potential
risk from such concentration of credit by placing investments with high
quality financial institutions.
C. Short-term Investments
At December 31, 1995, short term investments consist solely of various
forms of U. S. Government backed securities, with an aggregate par
value of $1,075,000, which mature in February, 1996. In 1994, the
Partnership adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities". The Partnership has the intent and ability to hold its
short term investments to maturity. Accordingly, these securities have
been recorded at amortized cost, which approximates market value. There
was no cumulative effect recorded as a result of this accounting
change.
D. Significant Risks and Uncertainties
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.
E. Depreciation
Depreciation is provided for by the use of the straight-line method
over estimated useful lives as follows:
Buildings and improvements 39-40 years
Equipment, furnishings and fixtures 5-15 years
F. Deferred Expenses
Costs of obtaining the mortgages on the properties are being amortized
over the term of the related mortgage notes payable using the
straight-line method. Fees paid to certain of the property developers
were amortized over the term of the services provided using the
straight-line method. Any unamortized costs remaining at the date of a
refinancing are expensed in the year of refinancing.
G. Income Taxes
The Partnership is not liable for Federal or state income taxes because
Partnership income or loss is allocated to the Partners for income tax
purposes. If the Partnership's tax returns are examined by the Internal
Revenue Service or state taxing authority and such an examination
results in a change in Partnership taxable income (loss), such change
will be reported to the Partners.
H. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
I. Reclassification
Certain items in the financial statements for the years ended December
31, 1994 and 1993 have been reclassified to conform to the 1995
presentation.
J. Long-Lived Assets
The Partnership's long-lived assets include property and equipment and
deferred expenses. The Partnership will evaluate the possible
impairment of long-lived assets whenever events or circumstances
indicate that the carrying value of the assets may not be recoverable.
<PAGE>
3. Property
<TABLE>
Property, at cost, consisted of the following at December 31, 1995:
Initial Cost Costs Capitalized
to Partnership Subsequent to Acquisition
------------------------------------------------------------------------
Buildings Equipment Buildings
Property and Furniture and
Description Land Improvements & Fixtures Land Improvements
- -------------------------------------------------------------------------------------------------
Villas at Sin Vacas,
a 72-unit residential
rental complex located
<S> <C> <C> <C> <C> <C>
in Tucson, Arizona $799,913 $3,948,060 $344,615 $22,146 $75,678
Pinecliff, a 96-unit
residential rental
complex located in
Colorado Springs,
Colorado 1,242,061 5,981,166 380,288 - 81,889
Villa Antigua, an 88-unit
residential rental
complex located in
Scottsdale, Arizona 1,610,646 3,942,388 376,709 2,262 38,575
------------------------------------------------------------------------
$3,652,620 $13,871,614 $1,101,612 $24,408 $196,142
========================================================================
Depreciation expense for the years ended December 31, 1995, 1994 and 1993 and accumulated depreciation
at December 31, 1995 and 1994 consisted of the following:
Depreciation Expense
1995 1994 1993
<S> <C> <C> <C>
Buildings and improvements $351,694 $351,695 $351,143
Equipment, furnishings and fixtures 19,709 11,283 9,966
------------------------------------------
$371,403 $362,978 $361,109
==========================================
3. Property Continued
Property, at cost, consisted of the following at December 31, 1995:
Gross Amount At Which Carried
at Close of Period
-------------------------------------------------------------------------
Equipment Buildings Equipment
Property Furniture and Furniture Accumulated
Description & Fixtures Land Improvements & Fixtures Total Depreciation
- -----------------------------------------------------------------------------------------------------------------
Villas at Sin Vacas,
a 72-unit residential
rental complex located
<S> <C> <C> <C> <C> <C> <C>
in Tucson, Arizona $97,176 $822,059 $4,023,738 $441,791 $5,287,588 $1,383,336
Pinecliff, a 96-unit
residential rental
complex located in
Colorado Springs,
Colorado 49,292 1,242,061 6,063,055 429,580 7,734,696 1,799,532
Villa Antigua, an 88-unit
residential rental
complex located in
Scottsdale, Arizona 47,465 1,612,908 3,980,963 424,174 6,018,045 1,235,225
----------------------------------------------------------------------------------------
$193,933 $3,677,028 $14,067,756 $1,295,545 $19,040,329 $4,418,093
========================================================================================
Accumulated Depreciation
December 31,
1995 1994
<S> <C> <C>
Buildings and improvements 3,288,113 $2,936,419
Equipment, furnishings 1,129,980 1,110,271
- -----------------------------------------------------
$4,418,093 $4,046,690
============================
Each of the properties is encumbered by a nonrecourse mortgage note payable (see Note 6).
Leave blank for Note 3 Depreciation Schedule
</TABLE>
<PAGE>
4. Cash and Cash Equivalents:
Cash and cash equivalents at December 31, 1995 and 1994 consisted of the
following:
1995 1994
---- ----
Cash on hand ............................. $ 30,848 $ 19,992
Certificate of deposit ................... 100,000 --
Money market accounts .................... 349,541 175,415
-------- --------
$480,389 $195,407
5. Joint Venture and Property Acquisitions:
The Partnership has invested in three properties located in Scottsdale and
Tucson, Arizona and Colorado Springs, Colorado. The success of the Partnership
will depend upon factors which are difficult to predict including general
economic and real estate market conditions, both on a national basis and in the
areas where the Partnership's investments are located.
Sin Vacas
On October 25, 1985, the Partnership acquired a majority interest in the Sin
Vacas Joint Venture, which owns and operates the Villas at Sin Vacas, a 72-unit
residential property located in Tucson, Arizona. Since the Partnership owns a
majority interest in the Sin Vacas Joint Venture, the accounts and operations of
the Sin Vacas Joint Venture have been consolidated into those of the
Partnership.
The Partnership made initial cash payments in the form of capital contributions
totaling $2,458,507 and funded $398,949 of property acquisition costs which were
treated as a capital contribution to the joint venture. Since completion of
construction, the Partnership has made additional contributions totaling
$153,757. At December 31, 1995, the total capital contributions and acquisition
costs incurred were $2,592,527 and $418,686, respectively.
For the years ended December 31, 1995, 1994 and 1993 the Sin Vacas Joint Venture
had net income of $49,277, $65,081 and $48,230, respectively. The minority
interest joint venturer had insufficient basis to absorb its respective share of
the losses, therefore, for financial statement purposes the excess of losses
over basis has been charged against the majority interest. Future minority
interest income, if any, from Sin Vacas will be credited against minority
interest losses previously absorbed by the majority interest. At December 31,
1995 the cumulative minority interest losses absorbed by the majority interest
totaled $9,691.
Net cash from operations (as defined in the joint venture agreement) is to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 8.75% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's capital investment, as
defined in the joint venture agreement;
Second, the balance 70% to the Partnership and 30% to the co-venturer.
All losses from operations and depreciation for the Sin Vacas Joint Venture are
allocated 99% to the Partnership and 1% to the co-venturer.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 70% to the Partnership and 30%
to the co-venturer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
Pinecliff
On July 16, 1986, the Partnership acquired Pinecliff (formerly Autumn Ridge), a
96-unit residential property located in Colorado Springs, Colorado and
simultaneously contributed the property to the Autumn Ridge Joint Venture
comprised of the Partnership and an affiliate of the property developer. Since
the Partnership owns a majority interest in the Autumn Ridge Joint Venture, the
accounts and operations of the Autumn Ridge Joint Venture have been consolidated
into those of the Partnership.
The Partnership made initial cash payments in the form of capital contributions
totaling $3,819,397 and funded $546,576 of property acquisition costs which were
treated as a capital contribution to the Autumn Ridge Joint Venture. Since
completion of construction, the Partnership has made additional contributions
totaling $314,097. At December 31, 1995 the total capital contributions and
acquisition costs incurred were $4,182,595 and $497,475, respectively.
For the years ended December 31, 1995, 1994 and 1993 the Autumn Ridge Joint
Venture had net income of $149,652, $153,418 and $109,963, respectively.
Net cash from operations (as defined in the joint venture agreement) is to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 8% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's capital investment, as
defined in the joint venture agreement;
Second, the balance 82% to the Partnership and 18% to the co-venturer.
All losses from operations and depreciation for the Autumn Ridge Joint Venture
are allocated 100% to the Partnership.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 82% to the Partnership and 18%
to the co-venturer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
Villa Antigua
On June 11, 1987, the Partnership acquired a majority interest in the Villa
Antigua Joint Venture, which owns and operates Villa Antigua, an 88-unit
residential property located in Scottsdale, Arizona. Since the Partnership owns
a majority interest in the Villa Antigua Joint Venture, the accounts and
operations of the Villa Antigua Joint Venture have been consolidated into those
of the Partnership.
The Partnership made initial cash payments in the form of capital contributions
totaling $2,494,677 and funded $381,729 of property acquisition costs which were
treated as a capital contribution to the Villa Antigua Joint Venture. Since
completion of construction, the Partnership has made additional contributions
totaling $60,832. At December 31, 1995, the total capital contributions and
acquisition costs were $2,555,509 and $381,729, respectively.
The Villa Antigua Joint Venture had net income of $206,914, $130,002 and $68,400
for the years ended December 31,1995, 1994 and 1993. The minority interest joint
venturer had insufficient basis to absorb its respective share of losses,
therefore, for financial statement purposes the excess of losses over basis has
been charged against the majority interest. In 1995, minority interest income of
$5,494 was credited against minority interest losses previously absorbed by the
majority interest. At December 31, 1995, the cumulative minority interest losses
absorbed by the majority interest, net of income credited totaled $4,925.
Net cash from operations (as defined in the joint venture agreement) is to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 10% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's adjusted capital
investment, as defined in the joint venture agreement;
Second, the balance 70% to the Partnership and 30% to the co-venturer.
All losses from operations and depreciation for the Villa Antigua Joint Venture
are allocated 99% to the Partnership and 1% to the co-venturer.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distributions; however, if for any taxable year there are no cash distributions,
profits are allocated 99% to the Partnership and 1% to the co-venturer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
The Sin Vacas Joint Venture, the Autumn Ridge Joint Venture and the Villa
Antigua Joint Venture are sometimes collectively referred to as the "Joint
Ventures".
6. Mortgage Notes Payable:
All of the property owned by the Partnership is pledged as collateral for the
nonrecourse mortgage notes payable outstanding at December 31, 1995 and 1994
which consisted of the following:
1995 1994
---- ----
Villas at Sin Vacas .................... $2,467,255 $2,502,323
Pinecliff .............................. 3,161,919 3,206,886
Villa Antigua .......................... 3,066,104 3,109,682
---------- ----------
$8,695,278 $8,818,891
========== ==========
Sin Vacas
On June 30, 1992, Villas at Sin Vacas refinanced its permanent loan using the
proceeds of a new first mortgage loan in the amount of $2,575,000. Under the
terms of the note, monthly principal and interest payments of $21,830, based on
a fixed interest rate of 9.125%, are required over the term of the loan. The
balance of the note will be due on July 15, 1997.
Pinecliff
On June 30, 1992, Pinecliff refinanced its permanent loan using the proceeds of
a new first mortgage loan in the amount of $3,300,000. Under the terms of the
note, monthly principal and interest payments of $27,976 are required over the
term of the loan, based on a fixed interest rate of 9.125%. The balance of the
note will be due on July 15, 1997.
Villa Antigua
On June 30, 1992, Villa Antigua refinanced its permanent loan using the proceeds
of a new first mortgage loan in the amount of $3,200,000. Under the terms of the
note, monthly principal and interest payments of $27,128, based on a fixed
interest rate of 9.125%, are required over the term of the loan. The balance of
the note will be due on July 15, 1997.
Interest accrued at December 31, 1995 and 1994 consisted of the following:
1995 1994
---- ----
Villas at Sin Vacas ........................ $ 9,381 $ 9,514
Pinecliff .................................. 12,022 12,193
Villa Antigua .............................. 11,658 11,823
------- -------
$33,061 $33,530
======= =======
The aggregate principal amounts of long term borrowings due during the calendar
years 1996 and 1997, respectively, are $135,348, and $8,559,930.
The principal balance of the mortgage notes payable appearing on the
consolidated balance sheet approximates the fair value of such notes.
7. Partners' Equity:
Under the terms of the Partnership Agreement profits are allocated 95% to the
Limited Partners and 5% to the General Partners; losses are allocated 99% to the
Limited Partners and 1% to the General Partners.
Cash distributions to the partners are governed by the Partnership Agreement and
are made, to the extent available, 95% to the Limited Partners and 5% to the
General Partners.
The allocation of the related profits, losses, and distributions, if any, would
be different than described above in the case of certain events as defined in
the Partnership Agreement, such as the sale of an investment property or an
interest in a joint venture partnership.
8. Related-Party Transactions:
Due to affiliates at December 31, 1995 and 1994 consisted of reimbursable costs
payable to L'Auberge Communities, Inc., an affiliate of the General Partners, in
the amounts of $14,278, and $10,190, respectively and distributions payable to
the Villa Antigua co-venturer of $8,895 and $0, respectively.
For the years ended December 31, 1995, 1994 and 1993, general and administrative
expenses included $84,643, $68,625, and $67,387, respectively, of salary
reimbursements paid to the General Partners for certain administrative and
accounting personnel who performed services for the Partnership.
The officers and principal shareholders of Evans Withycombe, Inc., the developer
and property manager of the Villas at Sin Vacas and Villa Antigua properties and
an affiliate of the co-venturers of those joint ventures, together hold a two
and one half percent cumulative profit or partnership voting interest in LP
L'Auberge Communities, a California Limited Partnership, formerly Berry and
Boyle, which is the principal limited partner of GP L'Auberge Communities, L.P.
During the years ended December 31, 1995, 1994 and 1993, $84,187, $79,692 and
$73,891, respectively, of property management fees were paid or accrued to Evans
Withycombe, Inc.
Residential Services - L'Auberge, formerly Berry and Boyle Residential Services,
the property manager of Pinecliff, is an affiliate of the General Partners of
the Partnership. For the years ended December 31, 1995, 1994 and 1993, $51,715,
$49,083 and $45,715, respectively, of property management fees were paid or
accrued to Residential Services - L'Auberge.
9. Book-Tax Reconciliation of Net Income (Loss)
The reconciliation of net income reported in the accompanying consolidated
statements of operations to the net loss reported in the Partnership's 1995 U.S.
Partnership Return of Income is as follows:
Net income per consolidated statement of operations ........... $ 309,115
Prepaid rental income ......................................... (3,525)
Additional depreciation ....................................... (206,563)
Basis step-up adjustment ...................................... (18,204)
Other adjustments, net ........................................ (5,459)
---------
Net income per federal tax return ............................. $ 75,364
=========
10. Subsequent Event:
On March 22, 1996, the Partnership and certain affiliates entered into a letter
of intent with Evans Withycombe, Inc. and certain of its affiliates ("EWI"). The
transactions contemplated by the letter of intent, which are subject to the
execution of definitive agreements, the receipt of any necessary lender consents
and satisfaction of certain other conditions, as to which there can be no
assurance, are intended to more definitively separate the interests of EWI and
the Partnership, thus affording the Partnership greater flexibility in the
operation and disposition of the properties. The letter of intent provides,
among other things, in consideration of a payment by the Partnership to EWI of
$73,775, for EWI (i) to relinquish its contract to manage Sin Vacas and Villa
Antigua and its option to exercise its rights of first refusal with regard to
the sale of those properties and (ii) to assign all of its interest in the Sin
Vacas Joint Venture and the Villa Antigua Joint Venture to the Partnership
(while preserving the economic interests of the venturer in these Joint
Ventures), resulting in the dissolution of the Sin Vacas Joint Venture and the
Villa Antigua Joint Venture.
<PAGE>
(4)(a)(1) Amended and Restated Certificate and Agreement of Limited Partnership
(included as Exhibit A to the Prospectus of the Partnership (the
"Prospectus") dated March 22, 1984, contained in Amendment No. 2 to the
Partnership's Registration Statement No. 2-86262, declared effective on
March 22, 1984 and incorporated herein by reference).
(4)(a)(2) Seventeenth Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership dated May 31, 1990 (included as an
exhibit to the Partnership's Form 10-K for the fiscal year ended
December 31, 1990 and incorporated herein by reference).
(4)(b) Subscription Agreement and Signature Page (included as Exhibit B to
Amendment No. 2 declared effective March 22, 1984, and incorporated
herein by reference).
(28) Portions of the Partnership's Prospectus dated March 22, 1984
(included as an exhibit to the Partnership's Form 10-K for the fiscal
year ended December 31, 1987 and incorporated herein by reference).
(10)(a)Development Agreement and exhibits thereto for the acquisition of a joint
venture interest in the Sin Vacas Joint Venture (filed as Exhibit 10.2 to
ost-Effective Amendment No. 2 to the Partnership's Registration Statement
o. 2-86262 effective March 22, 1984 and incorporated herein by reference.
(10)(b) Development Agreement and exhibits thereto for the acquisition of the
Autumn Ridge property (included as an exhibit to the Partnership's
Form 10-K for the fiscal year ended December 31, 1985 and
incorporated herein by reference).
(10)(c) Development Agreement and exhibits thereto for the acquisition of a
joint venture interest in the Villa Antigua Joint Venture (included
as an exhibit to the Partnership's Form 10-K for the fiscal year
ended December 31, 1985 and incorporated herein by reference).
(10)(d) Documents pertaining to the permanent loan refinancing for the Sin
Vacas Joint Venture (included as an exhibit to the Partnership's Form
10-K for the fiscal year ended December 31, 1987 and incorporated
herein by reference).
(10)(e) Documents pertaining to the permanent loan refinancing for the Autumn
Ridge Joint Venture (included as an exhibit to the Partnership's Form
10-K for the fiscal year ended December 31, 1987 and incorporated
herein by reference).
(10)(f) Documents pertaining to the permanent loan for the Villa Antigua
Joint Venture (included as an exhibit to the Partnership's Form 10-K
for the fiscal year ended December 31, 1987 and incorporated herein
by reference).
(10)(g) Property management agreement between Autumn Ridge Joint Venture and
Berry and Boyle Residential Services.(included as an exhibit to the
Partnership's Form 10-K for the fiscal year ended December 31, 1990
and incorporated herein by reference).
(10)(h) Documents pertaining to the permanent loan refinancing for the Sin
Vacas Joint Venture (included as an exhibit to the Partnership's Form
10-K for the fiscal year ended December 31, 1992 and incorporated
herein by reference).
(10)(i) Documents pertaining to the permanent loan refinancing for the Autumn
Ridge Joint Venture (included as an exhibit to the Partnership's Form
10-K for the fiscal year ended December 31, 1992 and incorporated
herein by reference).
(10)(j) Documents pertaining to the permanent loan refinancing for the Villa
Antigua Joint Venture (included as an exhibit to the Partnership's
Form 10-K for the fiscal year ended December 31, 1992 and
incorporated herein by reference).
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Dec-31-1995
<CASH> 480,413
<SECURITIES> 1,067,446
<RECEIVABLES> 631
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,040,329
<DEPRECIATION> (4,418,093)
<TOTAL-ASSETS> 16,274,825
<CURRENT-LIABILITIES> 297,541
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,282,006
<TOTAL-LIABILITY-AND-EQUITY> 16,274,825
<SALES> 0
<TOTAL-REVENUES> 2,725,119
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,616,837
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 799,167
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 309,115
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
