SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-No.1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
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)
(Exact name of registrant as specified in its charter)
California 04-2817478
(State or other jurisdiction of (I.R.S.
Employer incorporation or organization)
Identification No.)
5110 Langdale Way, Colorado Springs CO 80906
(Address of principal executive offices) (Zip Code)
(719) 527-0544
(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: None
The Exhibit Index is located on page: n/a
<PAGE>
EXPLANATORY NOTE: This Amendment is being filed to correct a typographical
error and make certain other corrections to Item 7.
PART II
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, 1996, $368,990
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 1997 are adequate to
meet the Partnership's operating cash needs in the coming year. With regard to
certain balloon payments on existing first mortgage debt on the Partnership's
properties, the General partners do not anticipate sufficient cash flow from
operations to retire these mortgage notes. As these mortgage notes payable are
due in fiscal 1997, the Partnership will seek to renegotiate these mortgage
notes with its existing lenders or seek new sources of financing for these
properties on a long term basis, although there can be no assurance that the
Partnership will be able to do so. The General Partners believe that existing
cash flows from the properties will be sufficient to support a level of
borrowing that is at least equal to amounts outstanding as of December 31, 1996.
If the general economic climate for real estate in these respective locations
were to deteriorate resulting in an increase in interest rates for mortgage
financing or a reduction in the availability of real estate mortgage financing
or a decline in the market values of real estate it may affect the Partnership's
ability to complete these refinancings.
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 1996, the
aggregate net decrease in working capital reserves was $481,980. This decrease
resulted primarily from cash provided by operations of $349,757 offset by
$281,346 of fixed asset additions, distributions to partners of $389,052 and
$135,348 of principal payments on mortgage notes payable.
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.
Results of Operations
For the year ended December 31, 1996, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, L'Auberge
Pinecliff (formerly Autumn Ridge) and Villa Antigua properties, 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>
Sin L'Auberge Villa Investment Consolidated
Vacas Pinecliff Antigua Total Total
<S> <C> <C> <C> <C> <C>
Total revenue $694,550 $1,022,283 $901,463 $53,445 $2,671,741
Expenses:
General and administrative 1,686 - 259 381,328 383,273
Operations 410,622 437,646 363,192 26,368 1,237,828
Depreciation and 126,677 181,804 122,636 - 431,117
amortization
Interest 223,411 286,313 277,577 - 787,301
------------- -------------- -------------- ------------- -------------
762,396 905,763 763,664 407,696 2,839,519
------------- -------------- --------------- ------------- ------------
Net income (loss) ($67,846) $116,520 $137,799 ($354,251) ($167,778)
============= ============== ============== ============= =============
</TABLE>
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>
Sin L'Auberge Villa Investment Consolidated
Vacas Pinecliff Antigua Total Total
<S> <C> <C> <C> <C> <C>
Total revenue $755,680 $1,041,402 $930,236 $81,023 $2,808,341
Expenses:
General and administrative 7,200 7,244 7,200 183,245 204,889
Operations 353,533 420,726 310,611 - 1,084,870
Depreciation and 118,909 173,174 118,217 - 410,300
amortization
Interest 226,761 290,606 281,800 - 799,167
------------- -------------- -------------- ------------ -------------
706,403 891,750 717,828 183,245 2,499,226
------------- -------------- -------------- -------------- ------------
Net income (loss) $49,277 $149,652 $212,408 ($102,222) $309,115
============= ============== ============== ============= =============
</TABLE>
<PAGE>
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>
Sin Autumn Villa Investment Consolidated
Vacas Ridge Antigua Total Total
<S> <C> <C> <C> <C> <C>
Total revenue $757,490 $979,216 $838,362 $56,007 $2,631,075
Expenses:
General and administrative 7,494 7,793 7,862 143,532 166,681
Operations 339,483 353,665 298,421 - 991,569
Depreciation and 115,612 169,787 116,476 - 401,875
amortization
Interest 229,820 294,553 285,601 - 809,974
-------------- ------------- -------------- ---------------------------
692,409 825,798 708,360 143,532 2,370,099
-------------- ------------- -------------- ---------------------------
Net income $65,081 $153,418 $130,002 ($87,525) $260,976
(Loss)
============== ============= ============== ===========================
</TABLE>
Comparison of 1996 and 1995 Operating Results:
In accordance with its dispositions strategy, (see "Projected 1997 Operating
Results" below). the Partnership incurred one time costs associated with the
Evans Withycombe termination ($73,775), the Highland termination (($7,718) and
their related legal costs. (Refer to Note 5 of the Consolidated Financial
Statements.) In additions, the Partnership incurred one-time costs associated
with its property interior and exterior refurbishment program, the change in
on-site management following the Evans Withycombe termination, the outsourcing
of much of the Partnership's administration work to an administrative agent and
the relocation of the remaining administration, financial and investor services
functions to a more cost efficient location in Colorado Springs, Colorado.
Consequently, competitive pressures and disposition-related activities led to
rental operating expenses (including advertising, promotion, apartment locator
and concession costs) to increase by $152,958 or 14% over the prior year and
total general and administrative expenses of the Partnership increased $178,384
(87%) over the prior year. Fixed asset purchases increased $281,346 from
$141,735 in the prior year and consisted of such items as carpet, appliances,
equipment for fitness and business centers facilities, and remodeling features.
As a result of the factors described above, distributions to partners decreased
$119,446, or 23%, from $528,974 in 1995 to $409,528 in 1996.
Comparison of 1995 and 1994 Operating Results:
Total revenue increased $177,266, or 7% over the prior year, due to increased
rental income of $152,172 or 6%, primarily as a result of rental rate increases
at the Partnership's properties. 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. Rental operating expenses increased $93,301 or 9% over
the prior year primarily as a result of increases in maintenance and advertising
costs. 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 items 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
Projected 1997 Operating Results:
While there can be no assurance that the Partnership will dispose of any or all
of its properties in 1997, on March 25, 1997, the Partnership entered into
letters of intent to sell Villas Sin Vacas in Tucson, Arizona, and Villa
Antigua, Phase I, in Scottsdale, Arizona, to an unaffiliated purchaser. The
purchase price for Villas Sin Vacas would be approximately $5,040,000 and the
purchase price for Villa Antigua, Phase I, would be approximately $6,248,000.
Each letter of intent is subject to completion of customary due diligence to
the satisfaction of the purchaser, the purchaser obtaining a financing
commitment for the purchase of the property on commercially reasonable terms
and conditions, the negotiation and execution of a definitive purchase
agreement, and certain other conditions. Accordingly, there can be no assurance
that the sale of such properties will be consummated in accordance with the
terms of the letters of intent or at all. As a result of the foregoing,
operating results of the Partnership may vary significantly during 1997.
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/ Earl C. Robertson_________________________________
Earl C. Robertson, Executive Vice President
and Chief Financial Officer
Date: April 9, 1997
