<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
COMMISSION FILE NUMBER 0-13465
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 52-1358879
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1225 EYE STREET, N.W.
WASHINGTON, D.C. 20005
(Address of principal executive offices)
(Zip Code)
(202) 347-6247
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities 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> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 29,809 $ 47,636
Investments in and advances to
Local Limited Partnerships (Note 2) - -
--------- ---------
$ 29,809 $ 47,636
========= =========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Administrative and reporting fee
payable to General Partner (Note 3) $ 592,386 $ 570,788
Accrued expenses 30,261 37,250
--------- ---------
622,647 608,038
--------- ---------
Partners' deficit:
General Partner -- The National
Housing Partnership (NHP) (101,293) (100,969)
Original Limited Partner --
1133 Fifteenth Street Associates (106,193) (105,869)
Other Limited Partners -- 11,519
investment units (385,352) (353,564)
--------- ---------
(592,838) (560,402)
--------- ---------
$ 29,809 $ 47,636
========= =========
</TABLE>
See notes to financial statements.
-1-
<PAGE> 3
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME $ 659 $ 287
--------- ---------
COSTS AND EXPENSES
Loss on investment in Local
Limited Partnerships (Note 2) - 2,300
Administrative and reporting fees
to General Partner (Note 3) 21,598 21,598
Other operating expenses 11,497 9,532
--------- ---------
33,095 33,430
--------- ---------
NET LOSS $ (32,436) $ (33,143)
========= =========
NET LOSS ASSIGNABLE
TO LIMITED PARTNERS $ (31,788) $ (32,481)
========= =========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST $ (3) $ (3)
========= =========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 4
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENT OF PARTNER'S DEFICIT
<TABLE>
<CAPTION>
The National 1133
Housing Fifteenth Other
Partnership Street Limited
(NHP) Associates Partners Total
----------- ---------- -------- -----
<S> <C> <C> <C> <C>
Deficit at January 1, 1995 $(100,969) $(105,869) $(353,564) $(560,402)
Net loss -- three months ended
March 31, 1995 (324) (324) (31,788) (32,436)
--------- --------- --------- ---------
Deficit at March 31, 1995 $(101,293) $(106,193) $(385,352) $(592,838)
========= ========= ========= =========
Percentage interest at
March 31, 1995 1% 1% 98% 100%
========= ========= ========= =========
(A) (B) (C)
</TABLE>
(A) General Partner
(B) Original Limited Partner
(C) Consists of 11,519 investments units of 0.0085% held by 1,110
investors
See notes to financial statements.
-3-
<PAGE> 5
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 659 $ 287
Operating expenses paid (18,486) (31,532)
--------- ---------
Net cash used in operating activities (17,827) (31,245)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to Local Limited Partnerships - (2,300)
--------- ---------
Net decrease in cash and cash equivalents (17,827) (33,545)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 47,636 86,538
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,809 $ 52,993
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss (32,436) (33,143)
--------- ---------
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on investment in Local Limited Partnerships - 2,300
Increase in administrative and reporting fees payable 21,598 21,598
Decrease in other accrued expenses (6,989) (22,000)
--------- ---------
Total adjustments 14,609 1,898
--------- ---------
Net cash used in operating activities $ (17,827) $ (31,245)
========= =========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 6
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
ORGANIZATION
National Housing Partnership Realty Fund I (the "Partnership") is a
limited partnership organized under the laws of the State of Maryland
under the Maryland Revised Uniform Limited Partnership Act on October
21, 1983. The Partnership was formed for the purpose of raising
capital by offering and selling limited partnership interests and then
investing in limited partnerships ("Local Limited Partnerships"), each
of which owns and operates an existing rental housing project which is
financed and/or operated with one or more forms of rental assistance
or financial assistance from the U.S. Department of Housing and Urban
Development ("HUD").
The General Partner raised capital for the Partnership by offering and
selling to additional limited partners 11,519 investment units at a
price of $1,000 per unit. The Partnership acquired limited
partnership interests ranging from 98% to 99% in ten Local Limited
Partnerships, each of which was organized to acquire and operate an
existing rental housing project.
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the financial condition and results of operations
for the interim periods presented. All such adjustments are of a
normal and recurring nature.
While the General Partner believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that
these financial statements be read in conjunction with the financial
statements and notes included in NHP Realty Fund I's Annual Report
filed in Form 10-K, as amended, for the year ended December 31, 1994.
(2) INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS
The Partnership owns a 98% limited partnership interest in Gates Mills
I Limited Partnership and 99% limited partnership interests in nine
other Local Limited Partnerships. Because the Partnership, as a
limited partner, does not exercise control over the activities of the
Local Limited Partnerships in accordance with the partnership
agreements, the investments in Local Limited Partnerships are
accounted for using the equity method. Thus, the investments (and the
advances made to the Local Limited Partnerships as discussed below)
are carried at cost less the Partnership's share of the Local Limited
Partnerships' losses and distributions. However, because the
Partnership is not legally liable for the obligations of the Local
Limited Partnerships, and is not
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<PAGE> 7
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
otherwise committed to provide additional support to them, it does not
recognize losses once its investments, reduced for its share of losses
and cash distributions, reach zero in each of the individual Local
Limited Partnerships. As of March 31, 1995 and December 31, 1994,
investments in all ten Local Limited Partnerships had been reduced to
zero. As a result, the Partnership did not recognize $289,590 and
$380,610 of losses from Local Limited Partnerships during the three
months ended March 31, 1995 and 1994, respectively. As of March 31,
1995 and December 31, 1994, the Partnership has not recognized a total
of $11,765,999 and $11,476,409, respectively, of its allocated share
of cumulative losses from the Local Limited Partnerships in which its
investment is zero.
Advances made by the Partnership to the individual Local Limited
Partnerships are considered part of the Partnership's investment in
Local Limited Partnerships. When advances are made, they are charged
to operations as a loss on investment in the Local Limited Partnership
using previously unrecognized cumulative losses. As discussed above,
due to the cumulative losses incurred by the Local Limited
Partnerships, the aggregate balance of investments in and advances to
Local Limited Partnerships has been reduced to zero at March 31, 1995
and December 31, 1994. To the extent these advances are repaid by the
Local Limited Partnerships in the future, the repayments will be
credited as distributions and repayments received in excess of
investment in Local Limited Partnerships. These advances are carried
as a payable to the Partnership by the Local Limited Partnerships.
During the three months ended March 31, 1994, the Partnership advanced
$2,300 of working capital to two Local Limited Partnerships, while no
advances of working capital were made by the Partnership during the
three months ended March 31, 1995. These advances were charged to
operations as loss on investment in Local Limited Partnerships. No
repayments of advances were made to the Partnership during the three
months ended March 31, 1995 and 1994. The combined amount carried as
due to the Partnership by the Local Limited Partnerships was $297,500
as of March 31, 1995.
The following are combined statements of operations for the three
months ended March 31, 1995 and 1994, respectively, of the Local
Limited Partnerships in which the Partnership has invested. The
statements are compiled from financial statements of the Local Limited
Partnerships, prepared on the accrual basis of accounting, as supplied
by the management agents of the projects, and are unaudited.
-6-
<PAGE> 8
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1995 1994
---- ----
<S> <C> <C>
Rental income $ 1,786,533 $1,722,952
Other income 47,252 76,381
----------- ----------
Total income 1,833,785 1,799,333
----------- ----------
Operating expenses 1,150,571 1,246,905
Interest, taxes and insurance 672,347 628,750
Depreciation 304,026 308,600
----------- ----------
Total expenses 2,126,944 2,184,255
----------- ----------
Net loss $ (293,159) $ (384,922)
=========== ==========
National Housing
Partnership Realty
Fund I share of losses $ (289,590) $ (380,610)
=========== ==========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER
During the three month periods ended March 31, 1995 and 1994, the
Partnership accrued administrative and reporting fees payable to the
General Partner in the amount of $21,598 for services provided to the
Partnership. The Partnership did not make any payments to the General
Partner for these fees during each of the respective periods. The
amount due the General Partner by the Partnership was $592,386 and
$570,788 at March 31, 1995 and December 31, 1994, respectively.
The accrued administrative and reporting fees payable to the General
Partner will be paid only as cash flow permits or from the sale or
refinancing of one or more of the underlying properties of the Local
Limited Partnerships.
-7-
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
LIQUIDITY AND CAPITAL RESOURCES
The properties in which the Partnership has invested, through its investments
in the Local Limited Partnerships, receive one or more forms of assistance from
Federal, state or local governments or agencies. As a result, the Local
Limited Partnerships' ability to transfer funds either to the Partnership or
among themselves in the form of cash distributions, loans or advances is
generally restricted by these government-assistance programs. These
restrictions, however, are not expected to impact the Partnership's ability to
meet its cash obligations.
Net cash used in operations for the three months ended March 31, 1995 was
$17,827 as compared to cash used in operations of $31,245 for the three months
ended March 31, 1994. The decrease in cash used in operations resulted from a
decrease in operating expenses paid during the three months ended March 31,
1995 compared to the three months ended March 31, 1994.
During the three months ended March 31, 1994, the Partnership advanced $2,300
to two of the Local Limited Partnerships for working capital. No advances were
made during the three months ended March 31, 1995. At March 31, 1995, the
combined amount carried by the Local Limited Partnerships, as due to the
Partnership, amounted to $297,500. Future advances made will be charged to
operations; likewise, future repayments will be credited to operations.
Distributions received from Local Limited Partnerships represent the
Partnership's proportionate share of the excess cash available for distribution
from the Local Limited Partnerships. As a result of the use of the equity
method of accounting for the Partnership's investments, as of March 31, 1995,
investments in all Local Limited Partnerships had been reduced to zero. For
these investments, cash distributions received are recorded in income as
distributions received in excess of investment in Local Limited Partnerships.
There were no cash distributions during the three months ended March 31, 1995
and 1994. The receipt of distributions in future quarters and years is
dependent upon the operations of the underlying properties of the Local Limited
Partnerships.
Cash and cash equivalents amounted to $29,809 at March 31, 1995. The ability
of the Partnership to meet its on-going cash requirements, in excess of cash on
hand at March 31, 1995, is dependent upon the future receipt of distributions
from the Local Limited Partnerships or proceeds from sales or refinancing of
one or more of the underlying properties of the Local Limited Partnerships.
Cash on hand at March 31, 1995, plus any distributions from the underlying
operations of the combined Local Limited Partnerships is expected to adequately
fund the operations of the Partnership in the current year.
-8-
<PAGE> 10
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Partnership currently owes the General Partner $592,386 for administrative
and reporting services performed. The payment of these unpaid administrative
and reporting fees will most likely result from the sale or refinancing of the
underlying properties of the Local Limited Partnerships, rather than through
recurring operations.
Some of the Properties in which the Partnership has invested may be eligible to
participate in the Low Income Housing Preservation and Resident Homeownership
Act of 1990 (LIHPRHA). LIHPRHA creates a procedure under which properties
assisted under the HUD Section 236 or 221(d)(3) programs may be eligible to
receive financial incentives in return for agreeing to extend their property's
use as low income housing.
Congress and the Administration are currently considering various proposals to
significantly reduce or eliminate funding for the LIHPRHA program, and to
restructure various federal housing programs under the jurisdiction of the
Department of Housing and Urban Development. NHP is actively working to affect
the policy decisions being made and to limit any detrimental effect on its
portfolio. Depending on the final outcome of this process, however, operations
at the Properties and/or the ability to sell or refinance under LIHPRHA could
be affected.
All the Local Limited Partnerships in which the Partnership has invested carry
deferred acquisition notes due to the original owners of the Properties. In
the event of a default on these notes, the noteholders would re-assume both
NHP's and the Partnerships's interests in the Local Limited Partnerships.
Notes related to the acquisition of Fairmeadows and Southridge had final
maturity dates in 1994, and the notes related to Gates Mills and Hurbell IV had
1994 due dates but were extended for five years. All of the other notes have
final maturity dates between 1997 and 1999.
In their audit report dated March 18, 1995, the Partnership's auditors added an
additional "emphasis" paragraph to their report on the Partnership's 1994 and
1993 financial statements included in the Form 10-K. The comments made in the
"emphasis" paragraph generally repeat disclosures made by the Partnership in
the footnotes to the 1994 financial statements, primarily footnote 3. In the
"emphasis" paragraph, the auditors stated "The Local Limited Partnerships do
not have funds sufficient to retire these obligations," and "This event raises
substantial doubt about the ability of these Partnerships to continue as going
concerns." A loss of interests in these Local Limited Partnerships may cause
the partners in the Partnership to incur adverse tax consequences. The impact
of the tax consequences is dependent upon each partner's individual tax
situation.
The Fairmeadows and Southridge notes finally matured on September 24, 1994 and
October 18, 1994, respectively. The noteholders have not yet formally declared
the notes in default. The General Partner has been negotiating with the
noteholders to extend the maturity date of the
-9-
<PAGE> 11
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
notes and to discount the notes in order that both the noteholders and the
partners can receive a financial benefit from participation in LIHPRHA. To
date, these negotiations have been unsuccessful. The General Partner has filed
Notice of Intent to have Fairmeadows and Southridge participate in LIHPRHA and
has begun processing the properties through the program. Should no agreement
be reached, and the noteholders declare the notes in default, the Partnership
may not be able to participate in the LIHPRHA program and may lose its interest
in these Local Limited Partnerships.
RESULTS OF OPERATIONS
The Partnership has invested as a limited partner in Local Limited Partnerships
which operate ten rental housing properties. In prior years, results of
operations of NHP Realty Fund I were significantly impacted by the
Partnership's share of the losses of the Local Limited Partnerships. These
losses included depreciation and accrued deferred acquisition note interest
expense which are noncash in nature. Because the investments in and advances
to Local Limited Partnerships have been reduced to zero, the Partnership's
share of the operations of the Local Limited Partnerships is no longer being
recorded.
The Partnership's net loss decreased to $32,436 for the three months ended
March 31, 1995 from a net loss of $33,143 for the three months ended March 31,
1994. Net loss per unit of limited partnership interest was $3 for the 11,519
units outstanding for both periods. The Partnership did not recognize $289,590
of its allocated share of losses from the ten Local Limited Partnerships for
the three months ended March 31, 1995, as the Partnership's net carrying basis
in these Partnerships had been reduced to zero. The Partnership's share of
losses from the Local Limited Partnerships, if not limited to its investment
account balance, would have decreased $91,020 between periods, primarily due to
an increase in rental income and a decrease in operating expenses between
periods.
-10-
<PAGE> 12
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.
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
------------------------------------------
(Registrant)
By: The National Housing Partnership,
its sole General Partner
By: National Corporation for Housing
Partnerships, its sole General Partner
May 15, 1995 By: /s/ John M. Novack
- - - - - - - ------------ -------------------------------------------------
John M. Novack
As Senior Vice President, Finance and Accounting,
and Chief Accounting Officer
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 29,809
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,809
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,809
<CURRENT-LIABILITIES> 622,647
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (592,838)
<TOTAL-LIABILITY-AND-EQUITY> 29,809
<SALES> 0
<TOTAL-REVENUES> 659
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 33,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (32,436)
<INCOME-TAX> 0
<INCOME-CONTINUING> (32,436)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,436)
<EPS-PRIMARY> (3)
<EPS-DILUTED> (3)
</TABLE>
