<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, 1996
COMMISSION FILE NUMBER 0-13465
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
MARYLAND 52-1358879
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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,
1996 1995
-------------- -------------
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 970 $ 356
Distribution receivable 11,957 11,957
Investments in and advances to
Local Limited Partnerships (Note 2) - -
--------- ---------
$ 12,927 $ 12,313
========= =========
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
<S> <C> <C>
Liabilities:
Administrative and reporting fee
payable to General Partner (Note 3) $ 678,778 $ 657,180
Due to General Partner 6,911 -
Accrued expenses 51,772 42,761
--------- ---------
737,461 699,941
--------- ---------
Partners' deficit:
General Partner -- The National
Housing Partnership (NHP) (102,610) (102,241)
Original Limited Partner --
1133 Fifteenth Street Associates (107,510) (107,141)
Other Limited Partners -- 11,519
investment units (514,414) (478,246)
-------- ---------
(724,534) (687,628)
-------- ---------
$ 12,927 $ 12,313
======== =========
</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,
------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
REVENUES:
Interest income $ 335 $ 659
------- -------
COSTS AND EXPENSES:
Administrative and reporting fees
to General Partner (Note 3) 21,598 21,598
Other operating expenses 15,643 11,497
------ ------
37,241 33,095
------ ------
NET LOSS $(36,906) $(32,436)
======= =======
NET LOSS ASSIGNABLE TO
LIMITED PARTNERS $(36,168) $(31,788)
======= =======
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, 1996 $(102,241) $(107,141) $(478,246) $(687,628)
Net loss -- three months ended
March 31, 1996 (369) (369) (36,168) (36,906)
-------- -------- --------- ---------
Deficit at March 31, 1996 $(102,610) $(107,510) $(514,414) $(724,534)
======== ======== ======== ========
Percentage interest at March 31,1996 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 1,113
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,
-------------------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 335 $ 659
Operating expenses paid (6,632) (18,486)
--------- ---------
Net cash used in operating activities (6,297) (17,827)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from General Partner 6,911 -
--------- ---------
Net increase (decrease) in cash and cash equivalents 614 (17,827)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 356 47,636
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 970 $ 29,809
========= =========
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
Net loss $(36,906) $(32,436)
--------- ---------
Adjustments to reconcile net loss to net cash used in operating
activities:
Increase in administrative and reporting fees payable 21,598 21,598
Increase (decrease) in other accrued expenses 9,011 (6,989)
--------- ---------
Total adjustments 30,609 14,609
--------- ---------
Net cash used in operating activities $ (6,297) $(17,827)
========= =========
</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 for the year ended December 31, 1995.
(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
-5-
<PAGE> 7
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
obligations of the Local Limited Partnerships, and is not 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, 1996 and December 31, 1995, investments
in all ten Local Limited Partnerships had been reduced to zero. As a
result, the Partnership did not recognize $527,546 and $289,590 of
losses from Local Limited Partnerships during the three months ended
March 31, 1996 and 1995, respectively. As of March 31, 1996 and
December 31, 1995, the Partnership has not recognized a total of
$13,458,239 and $12,930,693, 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, 1996
and December 31, 1995. To the extent these advances are repaid by the
Local Limited Partnerships in the future, the repayments will be
credited as distributions in excess of investment in Local Limited
Partnerships. These advances are carried as a payable to the
Partnership by the Local Limited Partnerships.
No working capital advances or repayments occurred between the
Partnership and the Local Limited Partnerships during the three months
ended March 31, 1996 and 1995. The combined amount carried as due to
the Partnership by the Local Limited Partnerships was $392,730 as of
March 31, 1996.
The following are combined statements of operations for the three
months ended March 31, 1996 and 1995, 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,
------------------------------------
1996 1995
------------ -----------
<S> <C> <C>
Rental income $1,799,088 $1,786,533
Other income 81,158 47,252
--------- ----------
Total income 1,880,246 1,833,785
--------- ----------
Operating expenses 1,236,035 1,150,571
Interest, taxes and insurance 889,834 672,347
Depreciation 288,014 304,026
--------- ----------
Total expenses 2,413,883 2,126,944
--------- ----------
Net loss $ (533,637) $ (293,159)
========= ==========
National Housing
Partnership Realty
Fund I share of losses $ (527,546) $ (289,590)
========= ==========
</TABLE>
(3) TRANSACTIONS WITH THE GENERAL PARTNER
During the three month periods ended March 31, 1996 and 1995, 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 for administrative
and reporting fees was $678,778 and $657,180 at March 31, 1996 and
December 31, 1995, respectively.
During the three months ended March 31, 1996 the General Partner
advanced $6,911 to the Partnership to fund operating expenses. The
amount owed to the General Partner by the Partnership for operating
advances was $6,911 at March 31, 1996. Interest is charged on
borrowings at the Chase Manhattan Bank rate of prime plus 2%. Accrued
interest on this loan as of March 31, 1996 totaled $62.
-7-
<PAGE> 9
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
The advances and accrued administrative and reporting fees payable to
the General Partner will be paid as cash flow permits or from proceeds
generated from the sale or refinancing of one or more of the
underlying properties of the Local Limited Partnerships.
-8-
<PAGE> 10
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, 1996 was
$6,297 as compared to cash used in operations of $17,827 for the three months
ended March 31, 1995. The decrease in cash used in operations resulted from a
decrease in operating expenses paid during the three months ended March 31,
1996 compared to the three months ended March 31,1995.
No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the three months ended March 31, 1996 and
1995. The combined amount carried as due to the Partnership by the Local
Limited Partnerships was $392,730 as of March 31, 1996. Since the Partnership's
investment account in the Local Limited Partnerships has been reduced to zero,
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, 1996,
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, 1996
and 1995. 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 $970 at March 31, 1996. The ability of
the Partnership to meet its on-going cash requirements, in excess of cash on
hand at March 31, 1996, 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, 1996, 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
-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
current year. However, there can be no assurance that future distributions will
be adequate to fund the operations beyond the current year.
The Partnership currently owes the General Partner $678,778 for administrative
and reporting services performed. The payment of the 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.
NCHP was a significant participant in the drafting and passage of the Low
Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA).
LIHPRHA creates a procedure under which owners of properties assisted under the
HUD Section 236 or 221(d)(3) program may be eligible to receive financial
incentives in return for agreeing to extend their property's use as low income
housing. Virtually all of the Local Limited Partnership Properties may be
eligible for these incentives; however, not all may benefit from the particular
incentives provided for under LIHPRHA. The appropriation for the Department of
Housing and Urban Development (which administers LIHPRHA) for the 1996 fiscal
year was recently approved, and funding for LIHPRHA is limited. Management
expects that funding for LIHPRHA is unlikely to be renewed in future fiscal
years. Anticipating these developments, Notices of Intent to participate in the
LIHPRHA program have been filed for Fairmeadows, Southridge, Gates Mills I,
Northgate, San Jose and Talladega. All filings except San Jose are in the
early stages of processing, and only San Jose is anticipated to be in a
position to receive incentives. The ability of the Partnership to sell or
refinance any of the Local Limited Partnership Properties under LIHPRHA could
be adversely affected by the aforementioned events (lack of program funding and
likely termination of the LIHPRHA program after fiscal year 1996).
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 assume ownership of
both NHP's and the Partnership'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.
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 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 Notices of Intent to have
Fairmeadows and Southridge participate in LIHPRHA and has begun processing the
properties through the program. Should no agreement be
-10-
<PAGE> 12
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
reached, and the noteholders declare the notes in default, these Local Limited
Partnerships may not be able to participate in the LIHPRHA program and the
Partnership may lose its interest in these Local Limited Partnerships. 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. There
can be no assurance that the General Partner will be successful in its efforts
to renegotiate the terms of these notes.
On October 2, 1995, Forest Green and Village Green Limited Partnerships entered
into a discount buyout agreement for early settlement of their deferred
acquisition notes and related accrued interest payable. The agreements provide
for a total buyout amount of $175,000 per Local Limited Partnership, payable in
two installments. The first installments of $120,000 each, which were applied
against accrued interest on deferred acquisition note payable, were paid upon
execution of the agreements. The final installments of $55,000 each were paid
on May 1, 1996.
The Forest Green Local Limited Partnership paid the final installment with
surplus cash generated during 1995. The final installment for the Village Green
Local Limited Partnership was made with $21,201 of surplus cash generated
during 1995 and by obtaining partner loans from the Partnership and the General
Partner of $23,472 and $237, respectively. Upon payment of the final
installment, the balances of the total deferred acquisition notes payable and
related accrued interest ($1,416,723 and $1,427,754, respectively, as of March
31, 1996) has been relieved.
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 increased to $36,906 for the three months ended
March 31, 1996, from a net loss of $32,436 for the three months ended March 31,
1995. Net loss per unit of limited partnership interest was $3 for the 11,519
units outstanding for both periods. The increase in net loss was primarily due
to an increase in operating expenses. The Partnership did not recognize
$527,546 of its allocated share of losses from the ten Local Limited
Partnerships for the three months March 31, 1996, 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 increased $237,956
between periods, primarily due to an increase in operating expenses and
interest accrued on deferred acquisition
-11-
<PAGE> 13
NATIONAL HOUSING PARTNERSHIP REALTY FUND I
(A MARYLAND LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
notes for Fairmeadows and Southridge, partially offset by an increase in rental
income between periods.
-12-
<PAGE> 14
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 13, 1996 By: /s/
- - ------------ -------------------------------------------
Jeffrey J. Ochs
As Vice President, Finance and Accounting,
and Chief Accounting Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 970
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,927
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,927
<CURRENT-LIABILITIES> 737,461
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (724,534)
<TOTAL-LIABILITY-AND-EQUITY> 12,927
<SALES> 0
<TOTAL-REVENUES> 335
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 37,241
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (36,906)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,906)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,906)
<EPS-PRIMARY> (3)
<EPS-DILUTED> (3)
</TABLE>
