SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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) 576-5122
(Registrant's telephone number, including area code)
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 ___
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<PAGE>
<TABLE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------
ASSETS
June 30,
1997 December 31,
(Unaudited) 1996
Property, at cost:
<S> <C> <C>
Land $3,677,028 $3,677,028
Buildings and improvements 14,067,756 14,067,757
Equipment, furnishings and fixtures 1,698,484 1,576,836
-------------- ---------------
19,443,268 19,321,621
Less accumulated depreciation (5,006,424) (4,810,314)
-------------- ---------------
14,436,844 14,511,307
Cash and cash equivalents 772,320 1,065,855
Real estate tax escrows 95,645 41,632
Deposits 4,010 3,818
Accounts receivable 1,415 2,605
Deferred expenses, net of
accumulated amortization of $194,491 and $175,041 - 19,450
-------------- ---------------
Total assets $15,310,234 $15,644,667
============== ===============
LIABILITIES AND PARTNERS' EQUITY
<S> <C> <C>
Mortgage notes payable $8,487,499 $8,559,930
Accounts payable 40,357 115,410
Accrued expenses 208,084 195,794
Due to affiliates (Note 7) 2,132 8,975
Rents received in advance - 4,538
Tenant security deposits 61,995 55,320
-------------- ---------------
Total liabilities 8,800,067 8,939,967
General Partners equity (192,294) (192,294)
Limited Partners equity 6,702,461 6,896,994
-------------- ---------------
Total liabilities and partners' equity $15,310,234 $15,644,667
============== ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C>
Rental income $626,048 $675,625 $1,283,865 $1,368,048
Interest Income 9,705 16,131 20,602 32,934
------------ ------------- -------------- ---------------
Total Revenue 635,753 691,756 1,304,467 1,400,982
Expenses:
Operations 303,530 303,735 583,589 573,582
Interest expense 194,180 197,363 389,182 395,476
Depreciation and amortization 107,781 108,078 215,561 208,707
General and administrative 73,908 135,263 116,142 208,125
------------ ------------- -------------- ---------------
Total Expenses 679,399 744,439 1,304,474 1,385,890
------------ ------------- -------------- ---------------
Net income (loss) ($43,646) ($52,683) ($7) $15,092
============ ============= ============== ===============
Net income (loss) allocated to:
General Partners ($436) ($527) ($0) $755
Per unit Net income (loss)
allocated to Investor Limited Partner
interest: 32,421 units issued ($1.33) ($1.61) ($0.00) $0.44
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1995 ($170,140) $7,461,041 $7,290,901
Minority interest absorbed - (8,895) (8,895)
Cash distributions (20,476) (389,052) (409,528)
Net Income (1,678) (166,100) (167,778)
------------- -------------- ---------------
Balance at December 31, 1996 ($192,294) $6,896,994 $6,704,700
Cash distributions - (194,526) (194,526)
Net income (0) (7) (7)
------------- -------------- ---------------
Balance at June 30, 1997 ($192,294) $6,702,461 $6,510,167
============= ============== ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
Cash flows from operating 1997 1996
---- ----
activities:
<S> <C> <C>
Interest received $20,602 $53,657
Cash received from rental income 1,285,810 1,357,008
General and administrative expenses (163,735) (246,610)
Operations expense (658,424) (589,136)
Interest paid (389,182) (395,476)
-------------- ---------------
Net cash provided by operating activities 95,071 179,443
Cash flows from investing activities:
Purchase of fixed assets (121,648) (56,697)
Cash received from short-term investments - 161,128
-------------- ---------------
Net cash provided by investing activities (121,648) 104,431
Cash flows from financing activities:
Distributions to partners (194,526) (194,526)
Deposits - (2,125)
Principal payments on mortgage notes payable (72,432) (66,136)
-------------- ---------------
Net cash used by financing activities (266,958) (262,787)
-------------- ---------------
Net increase (decrease) in cash and cash equivalents (293,535) 21,087
Cash and cash equivalents at beginning of the period 1,065,855 480,389
-------------- ---------------
Cash and cash equivalents at end of the period $772,320 $501,476
============== ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------
Reconciliation of net income (loss) to net cash provided by operating
activities:
Six Months Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Net income (loss) ($7) $15,092
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 215,561 208,707
Change in assets and liabilities net of effects
of investing and financing activities:
Decrease in real estate tax escrows (54,013) (66,307)
(Increase) decrease in accounts and interest receivable 1,190 18,454
Increase (decrease) in accounts payable and accrued expenses (62,762) 42,401
Increase (decrease) in due to affiliates (6,843) (27,864)
Decrease in rent received in advance (4,730) (11,267)
Increase in tenant security deposit 6,675 227
-------------- ---------------
Net cash provided by operating activities $95,071 $179,443
============== ===============
</TABLE>
<PAGE>
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
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 June 30, 1997, the
total number of Limited Partners was 1,917. 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 six months ended June, 1997 and 1996.
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 properties: Sin Vacas, Pinecliff and 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. 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.
D. 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
E. 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.
F. 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.
G. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
H. Long-Lived Assets
The Partnership's long-lived assets include property and equipment and
deferred expenses. The Partnership evaluates rental properties for
impairment when conditions exist which may indicate that it is probable
that the sum of expected future cash flows (undiscounted) from rental
properties is less than its carrying value. Upon determination that a
permanent impairment has occurred, rental properties are reduced to
fair value. For the year ended December 31, 1996 and the quarter ended
June 30, 1997, permanent impairment conditions did not exist at any of
the Partnership's properties.
3. Cash and Cash Equivalents:
Cash and cash equivalents at June 30, 1997, and December 31, 1996, consisted of
the following:
1997 1996
---------- ----------
Cash on hand ............................. $ 95,799 $ 854,769
Certificate of deposit ................... 211,086
Money market account ..................... 676,521
---------- ----------
$ 772,320 $1,065,855
<PAGE>
4. 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 controls
and owns a majority interest in the Sin Vacas Joint Venture, the accounts and
operations of the Sin Vacas Joint Venture have been consolidated into the
Partnership.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI is
also the developer of the Villa Sin Vacas property.
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
$275,167. At June 30, 1997, the total capital contributions and acquisition
costs incurred were $2,713,937 and $418,686, respectively.
For the six months ended June 30, 1997 and 1996, Sin Vacas had net income of
$5,835 and a net loss of $17,584, respectively.
JANUARY 1, 1996 THROUGH MAY 13, 1996
Net cash from operations (as defined in the joint venture agreement) was 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 were
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.
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
controls and owns a majority interest in the Villa Antigua Joint Venture, the
accounts and operations of the Villa Antigua Joint Venture have been
consolidated into the Partnership.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI is
also the developer of the Villa Antigua property.
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 $85,440. At June 30, 1997, the total capital contributions and
acquisition costs were $2,580,117 and $381,729, respectively.
Villa Antigua had net income of $58,269 and $122,461 for the six months ended
June, 1997 and 1996, respectively.
JANUARY 1, 1996 THROUGH MAY 13, 1996
Net cash from operations (as defined in the joint venture agreement) was 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
were 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.
Sin Vacas and Villa Antigua
MAY 14, 1996 THROUGH JUNE 30, 1997
On May 14, 1996, the Partnership and certain affiliates consummated an agreement
with Evans Withycombe Management, Inc. and certain of its affiliates ("EWI")
which separated the interests of EWI and the Partnership, thus affording the
Partnership greater flexibility in the operation and disposition of the
properties. In consideration of a payment by the Partnership to EWI of $73,775
and delivery of certain mutual releases, EWI (i) relinquished 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) assigned 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), which resulted in the dissolution of the Sin
Vacas Joint Venture and the Villa Antigua Joint Venture. EWI may still share in
the cash flow distributions or proceeds from sale of the properties if certain
performance levels are met.
<PAGE>
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 controls and owns a majority interest in the Autumn Ridge Joint
Venture, the accounts and operations of the Autumn Ridge Joint Venture have been
consolidated into the Partnership.
The co-venture partner was Highland Properties, Inc. ("Highland"), a Colorado
based residential development,construction and management firm. Highland
developed the property known as L'Auberge Pinecliff.
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 $323,811. At June 30, 1997, the total capital contributions and
acquisition costs incurred were $4,192,309 and $497,475, respectively.
For the six months ended June 30, 1997 and 1996, L'Auberge Pinecliff had a net
income of $32,604 and $88,700, respectively.
JANUARY 1, 1996 THROUGH JULY 2, 1996:
Net cash from operations (as defined in the joint venture agreement) was 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
were 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
affected by the relative balances in the individual partners' capital accounts.
JULY 3, 1996 THROUGH JUNE 30, 1997
On July 3, 1996, the Partnership and certain affiliates consummated an agreement
with Highland Properties, Inc. ("Highland") which separated the interests of
Highland and the Partnership, thus affording the Partnership greater flexibility
in the operation and disposition of the property. In consideration of a payment
by the Partnership to Highland totaling $7,718 and delivery of certain mutual
releases, Highland (i) relinquished its option to exercise its rights of first
refusal with regard to the sale of the property and (ii) assigned all of its
interest in the L'Auberge Pinecliff Joint Venture to the Partnership, (while
preserving the economic interests of the venturer in these Joint Ventures),
which resulted in the dissolution of the L'Auberge Pinecliff Joint Venture.
Highland may still share in the cash flow distributions or proceeds from sale of
the properties if certain performance levels are met.
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". These joint ventures were effectively terminated on December 31,
1996. The Partnership has eliminated various minority interests related to these
joint ventures; as such, the Partnership owns 100% of the underlying assets at
December 31, 1996.
5. Mortgage Notes Payable:
All of the property owned by the Partnership is pledged as collateral for the
nonrecourse mortgage notes payable outstanding at June 30, 1997 and December 31,
1996 which consisted of the following:
1997 1996
---------- ----------
Villas at Sin Vacas .................... $2,408,299 $2,428,851
Pinecliff .............................. 3,086,363 3,112,702
Villa Antigua .......................... 2,992,837 3,018,377
---------- ----------
$8,487,499 $8,559,930
========== ==========
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
lender has agreed to extend the maturity date of the note from July 15, 1997 to
July 15, 1998, with the same interest rate.
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 lender has
agreed to extend the maturity date of the note from July 15, 1997 to July 15,
1998, with the same interest rate.
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, based on a
fixed interest rate of 9.125%. The lender has agreed to extend the maturity date
of the note from July 15, 1997 to July 15, 1998, with the same interest rate.
Interest accrued at June 30, 1997, and December 31, 1996, consisted of the
following:
1997 1996
------- -------
Villas at Sin Vacas ........................ $ 9,235 $ 9,235
Pinecliff .................................. 11,835 11,835
Villa Antigua .............................. 11,476 11,476
------- -------
$32,546 $32,546
======= =======
The principal balance of the mortgage notes payable appearing on the
consolidated balance sheet approximates the fair value of such notes.
6. 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.
7. Related-Party Transactions:
Due to affiliates at June 30, 1997, and December 31, 1996, consisted of
reimbursable costs payable to L'Auberge Communities Inc., an affiliate of the
General Partners, in the amounts of $2,132 and $8,975, respectively.
For the six months ended June 30, 1997 and 1996, general and administrative
expenses included $26,870 and $39,440, 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
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.
Residential Services - L'Auberge, formerly Berry and Boyle Residential Services,
the property manager of Pinecliff, Villas Sin Vacas and Villa Antigua, is an
affiliate of the General Partners of the Partnership. For the six months ended
June 30, 1997, property management fees of $50,038 were paid to Residential
Services - L'Auberge. For the six months ending June 30, 1996, Residential
Services-L'Auberge was paid $24,880 for the management of L'Auberge Pinecliff.
For the management of Villa sin Vacas and Villa Antigua, $39,440 of property
management fees were paid to Evans Withycombe, Inc., until the termination of
the Management Agreement on May 15, 1996.
8. Subsequent Event:
On May 6, 1997, the Partnership entered into a Purchase and Sales Agreement (
the "Agreement") 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 is approximately $5,040,000 and the purchase price
for Villa Antigua, Phase I, is approximately $6,248,000. The Agreement is
subject to completion of customary due diligence to the satisfaction of the
purchaser, and the purchaser obtaining a financing commitment for the purchase
of the property on commercially reasonable terms and conditions. Under the terms
of the Agreement, it is anticipated that the closing would occur within
approximately 3 to 5 months after the date of the Agreement.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and 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 Autumn Ridge 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,
Autumn Ridge and Villa Antigua projects and other excess offering proceeds. The
remaining net proceeds of $1,636,981 have been used to establish initial
working capital reserves sufficient to meet future needs of the Partnership,
including contributions to the various properties that may be required.
Through June 30, 1997, $373,990 cumulatively was contributed to the properties
for this purpose.
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. Thus far in
1997, the aggregate net decrease in working capital reserves was $293,535. This
decrease resulted primarily from cash provided by operations of $95,071 offset
by distributions to partners of $194,526, purchase of fixed assets of $121,648,
and $72,432 of principal payments on mortgage notes payable.
Property Status
Villas at Sin Vacas
As of June 30, 1997, the property was 83% occupied, compared to 80%
approximately one year ago. At June 30, 1997 and 1996, the market rents for the
various unit types were as follows:
Unit Type ............................... 1997 1996
- ---------------------------------------------- ------ ------
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 June 30, 1997, the property was 83% occupied, compared to 90%
approximately one year ago. At June 30, 1997 and 1996, the market rents for the
various unit types were as follows:
Unit Type .................................... 1997 1996
- ---------------------------------------------- ------ ------
One bedroom one bath ....................... $ 905 $ 910
Two bedroom two bath ....................... 1,118 1,120
<PAGE>
Villa Antigua
As of June 30, 1997, the property was 81% occupied, compared to 87%
approximately one year ago. At June 30, 1997 and 1996, the market rents for the
various unit types were as follows:
Unit Type ............................... 1997 1996
- ---------------------------------------------- ------ ------
One bedroom one bath ......................... $ 760 $ 775
Two bedroom two bath ......................... 925 925
Three bedroom two bath ....................... 1,105 1,080
Results of Operations
For the three months ended June 30, 1997, the Partnership's operating results
were comprised of its share of the income and expenses from the Sin Vacas,
Pinecliff and Villa Antigua, 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 Partnership Total
<S> <C> <C> <C> <C> <C>
Total revenue $173,400 $247,148 $206,203 $9,002 $635,753
Expenses:
General and administrative 73,908 73,908
Operations 91,907 115,327 96,296 303,530
Depreciation and amortization 31,670 45,450 30,661 107,781
Interest 55,098 70,611 68,471 194,180
------------- --------------- --------------- --------------- ---------------
178,675 231,388 195,428 73,908 679,399
------------- --------------- --------------- --------------- ---------------
Net income ($5,275) $15,760 $10,775 ($64,906) ($43,646)
============= =============== =============== =============== ===============
</TABLE>
For the three months ended June 30, 1996, the Partnership's operating results
were comprised of its share of the income and expenses from the Sin Vacas,
Pinecliff and Villa Antigua, 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 Partnership Total
<S> <C> <C> <C> <C> <C>
Revenue $169,042 $279,976 $227,734 15,004 691,756
Expenses:
General and administrative 1,686 259 133,318 135,263
Operations 114,214 106,934 81,837 750 303,735
Depreciation and amortization 33,229 44,057 30,792 108,078
Interest 56,001 71,768 69,594 197,363
------------- -------------- --------------- -------------- -----------------
205,130 222,759 182,482 134,068 744,439
------------- -------------- --------------- -------------- -----------------
Net loss ($36,088) $57,217 $45,252 ($119,064) ($52,683)
============= ============== =============== ============== =================
</TABLE>
For the six months ended June, 1997, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, Pinecliff
and Villa Antigua, 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 Partnership Total
<S> <C> <C> <C> <C> <C>
Total revenue $358,472 $482,174 $444,376 $19,445 $1,304,467
Expenses:
General and administrative 116,142 116,142
Operations 178,869 217,148 187,554 18 583,589
Depreciation and amortization 63,339 90,901 61,321 215,561
Interest 110,429 141,521 137,232 389,182
-------------- ---------------- -------------- --------------- ---------------
352,637 449,570 386,107 116,160 1,304,474
-------------- ---------------- -------------- --------------- ---------------
Net income $5,835 $32,604 $58,269 ($96,715) ($7)
============== ================ ============== =============== ===============
</TABLE>
For the six months ended June 30, 1996, the Partnership's operating results were
comprised of its share of the income and expenses from the Sin Vacas, Pinecliff
and Villa Antigua, 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 Partnership Total
<S> <C> <C> <C> <C> <C>
Revenue $357,910 $528,120 $484,257 30,695 1,400,982
Expenses:
General and administrative 1,686 259 206,180 208,125
Operations 199,406 209,024 162,152 3,000 573,582
Depreciation and amortization 62,187 86,587 59,933 208,707
Interest 112,215 143,809 139,452 395,476
------------- --------------- -------------- -------------- ----------------
375,494 439,420 361,796 209,180 1,385,890
------------- --------------- -------------- -------------- ----------------
Net loss ($17,584) $88,700 $122,461 ($178,485) $15,092
============= =============== ============== ============== ================
</TABLE>
Comparison of Operating Results for the Six Months Ended June 30, 1997 and 1996:
Total revenue decreased by $96,515 or 7% primarily due to a decrease in rental
income as a result of competitive pressure from new apartment properties in the
lease up phase in the local market. Operating expenses increased by $10,007 (2%)
primarily due to one-time costs of preparing the properties for disposition,
including an increase advertising, promotions, repairs and maintenance. General
and administrative expenses have decreased by $91,983, of which $73,775 was the
Evans Withycombe termination fee in 1996. A contributing factor to the
additional reduction of $18,208 was primarily due to the re-stabilization of
costs associated with Partnership administrative, financial and investor
services functions following the office relocation to Colorado Springs.
Thus far in 1997, the Partnership has made $194,526 of cash distributions to its
Limited Partners and $-0- to the General Partners.
<PAGE>
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings
Response: None
ITEM 2. Changes in Securities
Response: None
ITEM 3. Defaults Upon Senior Securities
Response: None
ITEM 4. Submission of Matters to a Vote of Security Holders
Response: None
ITEM 5. Other Information
Response: None
ITEM 6. Exhibits and Reports on Form 8-K
Response: None
SIGNATURES
Pursuant to the requirements 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/ Stephen B. Boyle_______________________________
Stephen B. Boyle, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 772,320
<SECURITIES> 0
<RECEIVABLES> 1,415
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,443,844
<DEPRECIATION> (5,006,424)
<TOTAL-ASSETS> 15,310,234
<CURRENT-LIABILITIES> 312,568
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,487,499
<TOTAL-LIABILITY-AND-EQUITY> 15,310,234
<SALES> 0
<TOTAL-REVENUES> 1,304,467
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 915,292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 389,182
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
