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 September 30, 1998
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)
(formerly Berry and Boyle Cluster Housing Properties)
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
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 ___
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------
<TABLE>
ASSETS
September 30,
1998 December 31,
(Unaudited) 1997
Assets held for sale/Property, at cost (Note 8)
<S> <C> <C>
Land $ - $1,242,061
Buildings and improvements - 6,063,055
Equipment, furnishings and fixtures - 642,239
---------------- ---------------
- 7,947,355
Less accumulated depreciation - (2,152,207)
---------------- ---------------
- 5,795,148
Cash and cash equivalents 315,161 421,580
Real estate tax escrows - 24,037
Deposits and prepaid expenses - 133,285
Accounts receivable - 1,400
Deferred expenses, net of accumulated
amortization of $213,035 and $205,147 - 7,888
---------------- ---------------
Total assets $315,161 $6,383,338
================ ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage notes payable $ - $3,058,800
Accounts payable 13,075 83,637
Accrued expenses 20,863 131,588
Due to affiliates (Note 20,384 16,076
7)
Rents received in advance - 1,984
Tenant security deposits - 33,555
---------------- ---------------
Total liabilities 54,322 3,325,640
General Partners' deficit (1,810) (127,847)
Limited Partners' equity 262,650 3,185,545
---------------- ---------------
Total liabilities and partners' equity $315,161 $6,383,338
================ ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenue:
<S> <C> <C> <C> <C>
Rental income $ - $612,106 $414,662 $1,895,970
Interest income 17,328 8,462 39,507 29,064
Gain from sale of properties - 452,214 -
---------------- --------------- -------------- ---------------
Total Revenue 17,328 620,568 906,383 1,925,034
Expenses:
Operations 372,008 182,661 955,597
Interest expense 200,837 117,384 590,019
Depreciation and amortization 117,228 7,888 332,789
General and administrative 47,710 54,437 153,208 170,579
---------------- --------------- -------------- ---------------
Total Expenses 47,710 744,510 461,141 2,048,984
---------------- --------------- -------------- ---------------
Net income (loss) ($30,382) ($123,942) $445,242 ($123,950)
================================== ============== ===============
Net income (loss) allocated to:
General Partners ($304) ($1,239) $126,037 ($1,240)
Basic and diluted per unit Net income (loss) allocated to Investor Limited
Partner interest:
32,421 units issued ($0.93) ($3.78) $9.85 ($3.78)
<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, 1996 ($192,294) $6,896,994 $6,704,700
Cash distributions (15,358) (5,641,254) (5,656,612)
Net loss 79,805 1,929,805 2,009,610
--------------- --------------- ---------------
Balance at December 31, 1997 (127,847) 3,185,545 3,057,698
Cash distributions - (3,242,100) (3,242,100)
Net income 126,037 319,205 445,242
--------------- --------------- ---------------
Balance at September 30, 1998 ($1,810) $262,650 $260,839
=============== =============== ===============
<PAGE>
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
Cash flows from operating activities: 1998 1997
---- ----
<S> <C> <C>
Interest received $39,507 $29,064
Cash received from rental income 379,123 1,900,718
General and administrative expenses (158,136) (203,874)
Operations expense (317,106) (872,010)
Interest paid (129,014) (591,194)
--------------- ---------------
Net cash provided by operating activities (185,626) 262,704
Cash flows from investing activities:
Proceeds from sale of properties 6,608,653
Capital improvements (361,293) (235,094)
Deposit with escrow agent 131,413 -
--------------- ---------------
Net cash provided by investing activities 6,378,773 (235,094)
Cash flows from financing activities:
Distributions to partners (3,242,100) (291,789)
Deposits 1,335 -
Principal payments on mortgage notes payable (3,058,800) (109,899)
--------------- ---------------
Net cash used by financing activities (6,299,565) (401,688)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (106,419) (374,078)
Cash and cash equivalents at beginning of the period 421,580 1,065,855
--------------- ---------------
Cash and cash equivalents at end of the period $315,161 $691,777
=============== ===============
<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:
Nine Months Ended
September 30,
1998 1997
---- ----
<S> <C> <C>
Net income (loss) $445,242 ($123,950)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 7,888 332,789
Gain from sale of property (452,214)
Change in assets and liabilities net of effects of investing and financing
activities:
Decrease (increase) in real estate tax escrows 24,037 (14,035)
Decrease (increase) prepaid expenses 537 (1,175)
Decrease in accounts receivable 1,400 962
(Decrease) increase in accounts payable and accrued expenses (181,285) 66,910
Increase (decrease) in due to affiliates 4,308 (3,545)
Decrease in rent received in advance (1,984) (3,638)
(Decrease) increase in tenant security deposits (33,555) 8,386
--------------- ---------------
Net cash provided by operating activities ($185,626) $262,704
=============== ===============
</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 September 30, 1998,
the total number of Limited Partners was 1,902. 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 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. The Partnership has sold substantially all of the assets and is in
its final liquidation. Once all Partnership obligations have been satisfied, the
remaining Partnership funds, if any, are anticipated to be distributed to the
Limited Partners. Such funds, if any, are expected to be modest in amount. It is
anticipated that the Partnership will be wound up in the first quarter of 1999.
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. Refer to Note 4 regarding the termination
of the Joint Ventures and the sale of Villas Sin Vacas, Villa Antigua
and Pinecliff.
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.
2. Significant Accounting Policies, continued:
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 or extending mortgages on the properties are being
amortized over the mortgage term using the straight-line method, which
approximates the effective interest 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
In 1996, the Partnership adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets to be Disposed of." SFAS 121 requires that long-lived
assets be reviewed for impairment whenever events or changes in
circumstances indicate that their carrying value may not be
recoverable. The adoption of SFAS 121 had no effect on reported results
in 1996. As of the year ended December 31, 1997, the Partnership
recorded the assets at the lower of carrying value or net realizable
value and has included these amounts as Assets Held for Sale.
I. New Accounting Standards
In 1997, the Partnership adopted Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings Per Share." This accounting
standard specifies new computation, presentation, and disclosure
requirements for earnings per share to be applied retroactively. Among
other things, SFAS 128 requires presentation of basic and diluted
earnings per share on the face of the income statement. The computation
of basic and diluted earnings per share was based on income available
to the Limited Partners divided by the weighted average number of units
outstanding during the period. The Partnership has no dilutive type
securities. The adoption of SFAS 128 had no effect on the per unit
results previously reported.
<PAGE>
3. Cash and Cash Equivalents:
Cash and cash equivalents at September 30, 1998 and December 31, 1997 consisted
of the following:
September 30, December 31,
1998 1997
---- ----
Cash on hand $315,161 $132,330
Money market accounts 289,250
------- -------
$315,161 $421,580
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. The Partnership holds a
majority interest in these properties and controls the operations of the joint
ventures.
Villas 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 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 Villas 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, 1998, the total capital contributions and acquisition
costs incurred were $2,713,937 and $418,686, 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.
<PAGE>
4. Joint Venture and Property Acquisitions, continued:
All profits from operations, to the extent of cash distributions were 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 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. The total capital contributions and acquisition costs incurred
were $2,580,117 and $381,729, 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, were 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
affected by the relative balances in the individual partners' capital accounts.
<PAGE>
4.Joint Venture and Property Acquisitions, continued:
Sin Vacas and Villa Antigua
MAY 14, 1996 THROUGH NOVEMBER 25, 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.
On November 25, 1997, Villa Sin Vacas was sold pursuant to the terms of a Sale
Agreement and escrow Instructions (the "Agreement") dated May 6, 1997, as
amended. Villas Sin Vacas was sold to Villas Sin Vacas Townhome Ventures Limited
Partnership, an Arizona Limited Partnership unaffiliated with the Partnership,
the assignee of Capital Management Systems, Inc., a Pennsylvania Corporation.
The net selling price for Villas Sin Vacas was $4,952,091 subject to certain
customary adjustments. The Partnership repaid first mortgage financing in the
amount of $2,396,000 at closing utilizing a portion of proceeds from the sale.
The Partnership recorded a gain on sale of approximately $975,000.
On October 10, 1997, Villa Antigua was sold pursuant to the terms of a Sale
Agreement and escrow Instructions (the "Agreement") dated May 6, 1997, as
amended. Villa Antigua was sold to Villa Sin Antigua Condominium Ventures
Limited Partnership, an Arizona Limited Partnership unaffiliated with the
Partnership, the assignee of Capital Management Systems, Inc., a Pennsylvania
Corporation. The net selling price for Villa Antigua was $6,141,526 subject to
certain customary adjustments. The Partnership repaid first mortgage financing
in the amount of $3,010,362 at closing utilizing a portion of proceeds from the
sale. The Partnership recorded a gain on sale of approximately $1,307,000.
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 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 $318,811.
<PAGE>
4.Joint Venture and Property Acquisitions, continued:
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, were 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 MAY 28, 1998
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.
On May 28, 1998, the Partnership sold its final real estate asset. Pinecliff was
sold to G&I Pinecliff LLC, a Delaware limited liability company unaffiliated
with the Partnership. The purchase price for Pinecliff was $6,700,000, subject
to certain customary adjustments and a $360,000 credit to the purchaser. The
Partnership repaid mortgage financing in the approximate amount of $3,041,860 at
closing utilizing a portion of proceeds from the sale. The Partnership realized
net proceeds of approximately $3,145,390 from the sale of Pinecliff.
<PAGE>
5. Mortgage Notes Payable:
Pinecliff
The original maturity date for these notes was July 15, 1997. On July 10, 1997,
the lender extended the terms of the mortgage note for a period of one year.
Under the modification agreement, the monthly principal and interest payment of
$27,976 and the original interest rate of 9.125% remained unchanged. The terms
of the agreement provide for a prepayment penalty of 0.5% of the outstanding
loan amount in the event the note is paid prior to 60 days before it becomes
due. As discussed in Note 4, the Partnership sold Pinecliff and the outstanding
mortgage debt of $3,041,860 was paid. There was no prepayment penalty assessed
since the debt was paid within 60 days of maturity.
The property owned by the Partnership was pledged as collateral for the
nonrecourse mortgage notes payable outstanding December 31, 1997, which
consisted of the following:
1998 1997
---- ----
Pinecliff - $3,058,800
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.
Gain from the sale of properties is to be allocated as defined in the
Partnership Agreement. The net proceeds on the sale of Pinecliff of $3.1 million
were allocated as follows. The Limited Partners received 100% of the cash
distribution from sale. The total gain on sale of Pinecliff of $452,214 was
allocated as follows. The General Partner received a gain on sale allocation of
$125,972 and the Limited Partners received a gain on sale allocation of
$326,242. These distributions/allocations were in accordance with the terms of
the Partnership Agreement.
7. Related-Party Transactions:
L'Auberge Communities, Inc. is a General Partner of L'Auberge Communities, which
owns a 99% interest in GP L'Auberge Communities, L.P. (formerly Berry and Boyle
Management). Due to affiliates at September 30, 1998 and December 31, 1997
consisted of reimbursable costs payable to L'Auberge Communities, Inc., an
affiliate of the General Partners, in the amounts of $20,384 and $16,076,
respectively.
For the period ended September 30, 1998 and 1997, general and administrative
expenses included $47,620 and $45,064, respectively, of salary reimbursements
paid to the General Partners for certain administrative and accounting personnel
who performed services for the Partnership.
<PAGE>
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
At September 30, 1998, the Partnership had cash and cash equivalents of $315,161
compared with $421,580 at December 31, 1997. The aggregate net decrease of
$106,419 resulted primarily from proceeds from the sale of Pinecliff of
$6,608,653, plus $131,413 received from the escrow agent relating to the sale of
Villa Sin Vacas, plus a refund of deposits of $1,335 offset by distributions to
the limited partners of $3,242,100, principal payments on the mortgage notes
payable of $3,058,800, purchase of fixed assets of $361,293 and the cash needed
for operations of $185,626.
Property Status
On May 28, 1998, the Partnership sold its final real estate asset, Pinecliff, a
96-unit multi-family rental property in Colorado Springs, Colorado. Pinecliff
was sold to G&I Pinecliff LLC, a Delaware limited liability company unaffiliated
with the Partnership. The purchase price for Pinecliff was $6,700,000, subject
to certain customary adjustments and a $360,000 credit to the purchaser. The
Partnership repaid mortgage financing in the approximate amount of $3,041,860 at
closing utilizing a portion of proceeds from the sale. The Partnership realized
net proceeds of approximately $3,145,390 from the sale of Pinecliff.
During the fourth quarter of 1997, the Partnership sold two properties: (1)
Villas at Sin Vacas, a 72-unit multifamily rental property in Tucson, Arizona,
which was sold in November 1997; and (2) Villa Antigua, an 88-unit multifamily
rental property in Scottsdale, Arizona, which was sold in October 1997. The
ownership of each property was formerly structured as a Joint Venture in which
the Partnership owned a majority interest. With regard to the termination of the
Joint Ventures and the sales of properties, see Note 4 of Notes to Consolidated
Financial Statements.
<PAGE>
Results of Operations
For the three months ended September 30, 1998, the Partnership's operating
results were comprised of its share of the income and expenses from Pinecliff ,
as well as partnership level interest income earned on short term investments,
reduced by administrative expenses. A summary of these operating results appears
below.
Investment
Partnership
Total revenue $17,328
Expenses:
General and administrative 47,710
Operations -
Depreciation and amortization -
Interest -
---------------
47,710
---------------
Net loss from operations (30,382)
---------------
Net loss ($30,382)
===============
For the three months ended September 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 ...................... $ 180,182 $ 232,856 $ 200,053 $ 7,477 $ 620,568
Expenses:
General and administrative 54,436 54,437
Operations ....................... 110,364 123,269 138,375 372,008
Depreciation and amortization..... 33,983 50,575 32,670 117,228
Interest ......................... 57,359 72,804 70,674 200,837
--------- --------- --------- --------- ---------
201,706 246,648 241,719 54,436 744,510
--------- --------- --------- --------- ---------
Net income ......................... ($ 21,524) ($ 13,792) ($ 41,666) ($ 46,959) ($123,942)
========= ========= ========= ========= =========
<PAGE>
For the nine months ended September 30, 1998 the Partnership's operating results
were comprised of its share of the income and expenses from Pinecliff, as well
as partnership level interest income earned on short term investments, reduced
by administrative expenses. A summary of these operating results appears below.
L'Auberge Investment Consolidated
Pinecliff Partnership Total
<S> <C> <C> <C>
Total revenue $418,001 $36,168 $454,169
Expenses:
General and administrative - 153,208 153,208
Operations 181,377 1,284 182,661
Depreciation and amortization 7,888 - 7,888
Interest 117,384 - 117,384
------------- --------------- ---------------
306,649 154,492 461,141
------------- --------------- ---------------
Net loss from operations 111,352 (118,342) (6,972)
------------- --------------- ---------------
Gain from sale of property 452,214 452,214
------------- --------------- ---------------
Net income $563,566 ($118,342) $445,242
============= =============== ===============
For the nine months ended September 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.
Sin L'Auberge Villa Investment Consolidated
Vacas Pinecliff Antigua Partnership Total
<S> <C> <C> <C> <C> <C>
Total revenue $538,653 $715,030 $644,429 $26,922 $1,925,034
Expenses:
General and administrative 170,578 170,579
Operations 289,233 340,417 325,929 18 955,597
Depreciation and amortization 97,322 141,476 93,991 332,789
Interest 167,788 214,325 207,906 590,019
------------- --------------- ---------------- ------------- ----------------
554,343 696,218 627,826 170,596 2,048,984
------------- --------------- ---------------- ------------- ----------------
Net income ($15,690) $18,812 $16,603 ($143,674) ($123,950)
============= =============== ================ ============= ================
</TABLE>
Comparison of Operating Results for the Nine Months Ended September 30, 1998 and
1997:
Partnership operations for the nine months ended September 30, 1998 generated
net income of $445,242 compared with net loss of $128,950 for the corresponding
period in 1997. Included in the net income of $445,242 is the gain on the sale
of Pinecliff in the amount of $452,214. The loss from operations was $6,972. The
total operating revenue decreased by $1,470,865 or 76%, due to the fact that
Villa Sin Vacas and Villa Antigua were sold in the fourth quarter of 1997and
Pinecliff was sold in May 1998. Likewise, operating expenses decreased in total
by $772,936 or 81% due to the sales of the properties. General and
administrative expenses have decreased by $17,371 or 10%, due primarily to lower
legal and accounting expenses.
The Partnership distributed the sale proceeds from Pinecliff to the limited
partners in the amount of $3,242,100 or $100 per interest.
<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
(A.) Exhibit - None
(B.) Report on Form 8-K, Item2, dated October 10,1997 filed October 23, 1997
(C.) Report on Form 8-K, Item2, dated May 28, 1998 filed on June 10, 1998
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
Date: November 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Sep-30-1998
<CASH> 315,161
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 315,161
<CURRENT-LIABILITIES> 54,322
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 260,840
<TOTAL-LIABILITY-AND-EQUITY> 315,161
<SALES> 0
<TOTAL-REVENUES> 906,383
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 343,757
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117,384
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 445,242
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
