UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-13520
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2828131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 Christina Street, Suite 203, Newton, MA 02161
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 244-2242
Former address, if changed from last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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.
[X] Yes [ ] No
There are no Exhibits
Page 1 of 13
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements:
Balance Sheets, June 30, 1998 and December 31, 1997 3-4
Statements of Operations for the Three Months
Ended June 30, 1998, and 1997 and the Six Months
Ended June 30, 1998 and 1997 5
Statements of Cash Flows for the Six Months Ended
June 30, 1998, and 1997 6
Notes to Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
2
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
(Unaudited) (Audited)
June 30, 1998 December 31, 1997
------------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 56,260 $ 65,685
---------- ----------
Total current assets 56,260 65,685
Long-term notes and accrued interest
receivable 151,394 143,485
Investments in local limited
partnerships 1,859,567 2,019,775
---------- ----------
Total assets $2,067,221 $2,228,945
========== ==========
(continued)
3
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
(Unaudited) (Audited)
June 30, 1998 December 31, 1997
-------------- -----------------
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable to affiliates $ 124,273 $ 75,271
Accounts payable 5,375 1,410
Accrued expense -- 16,000
Accrued interest payable 351,987 370,165
------------ ------------
Total current liabilities 481,635 462,846
Purchase money notes 12,641,492 11,544,195
------------ ------------
Total liabilities 13,123,127 12,007,041
------------ ------------
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (28) (22)
Accumulated losses (211,322) (198,550)
------------ ------------
(207,148) (194,370)
------------ ------------
Limited partners (21,566 Units at
June 30, 1998 and 21,576 Units
at December 31, 1997):
Capital contributions (net of
offering costs of $1,134,440) 9,649,520 9,649,520
Capital distributions (2,771) (2,211)
Accumulated losses (20,495,507) (19,231,035)
------------ ------------
(10,848,758) (9,583,726)
------------ ------------
Total partners' deficit (11,055,906) (9,778,096)
------------ ------------
Total liabilities and partners'
deficit $ 2,067,221 $ 2,228,945
============ ============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income $ 8,426 $ 9,352 $ 20,710 $ 26,579
----------- ----------- ----------- -----------
Expenses:
Interest expense 642,294 538,074 1,265,737 1,052,742
General and administrative
expense 28,450 36,420 59,192 67,156
----------- ----------- ----------- -----------
Total expenses 670,744 574,494 1,324,929 1,119,898
----------- ----------- ----------- -----------
Loss before equity in local
limited partnership operations (662,318) (565,142) (1,304,219) (1,093,319)
Equity in income (loss) of
local limited partnership
investments (76,216) 35,354 26,975 84,860
----------- ----------- ----------- -----------
Net Loss $ (738,534) $ (529,788) $(1,277,244) $(1,008,459)
=========== =========== =========== ===========
Basic net loss per Limited
Partnership Unit $ (33.90) $ (24.31) $ (58.62) $ (46.27)
=========== =========== =========== ===========
Units used in computing basic
net loss per Limited 21,566 21,576 21,571 21,576
Partnership Unit =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
June 30,
---------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash distributions from local limited
partnerships $ 187,183 $ 369,947
Interest payments on purchase money notes (186,617) (369,947)
Cash paid for Partnership administration
expenses (22,225) (90,393)
Interest received 12,800 18,653
----------- -----------
Net cash used in
operating activities (8,859) (71,740)
----------- -----------
Cash Flows from financing activity:
Capital distributions (566) --
----------- -----------
Net cash used by financing
activity (566) --
----------- -----------
Net decrease in cash and cash equivalents (9,425) (71,740)
Cash and cash equivalents at:
Beginning of period 65,685 163,915
----------- -----------
End of period $ 56,260 $ 92,175
=========== ===========
Reconciliation of net loss to net cash used in operating activities:
Net loss $(1,277,244) $(1,008,459)
Adjustments to reconcile net loss to net
cash used in operating activities:
Share of income of local limited
partnership investments (26,975) (84,860)
Cash distributions from local limited
partnerships 187,183 369,947
Interest expense added to purchase money
notes, net of discount amortization 1,097,297 590,410
Interest income added to long-term
notes receivable, net of discount
amortization, and interest received (7,909) (7,909)
Increase in other current assets -- (17)
(Decrease) increase in:
Accrued interest payable (18,178) 92,385
Accounts payable to affiliates 49,002 (11,500)
Accounts payable 3,965 3,863
Accrued expenses (16,000) (15,600)
----------- -----------
Net cash used in operating
activities $ (8,859) $ (71,740)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Organization of Partnership
Liberty Housing Partners Limited Partnership (the "Partnership") was
formed under the Massachusetts Uniform Limited Partnership Act on March 20, 1984
for the primary purpose of investing in other limited partnerships which own and
operate government assisted multi-family rental housing complexes (the "Local
Limited Partnerships").
2. Significant Accounting Policies
In the opinion of the General Partner, the accompanying unaudited
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of the Partnership as of June 30, 1998.
The financial statements, which do not include all of the information and
footnote disclosures required by generally accepted accounting principles,
should be read in conjunction with the Partnership's audited financial
statements for the year ended December 31, 1997.
3. Investments in Local Limited Partnerships
The following is a summary of cumulative activity for investments in
Local Limited Partnerships since their dates of acquisition:
(Unaudited) (Audited)
June 30, December 31,
1998 1997
----------- ------------
Total acquisition cost to the Partnership $ 9,356,379 $ 9,356,379
Additional capital contributed by the
Partnership 11,425 11,425
Partnership's share of losses of Local
Limited Partnerships (3,768,593) (3,744,473)
Cash distributions received from Local
Limited Partnerships (3,790,739) (3,603,556)
Cash distributions received from Local
Limited Partnerships recognized as
investment income 51,095 --
----------- -----------
Investments in Local Limited Partnerships $ 1,859,567 $ 2,019,775
=========== ===========
(Continued)
7
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Investments in Local Limited Partnerships, continued
Summarized financial information from the combined statements of
operations of all Local Limited Partnerships is as follows:
For the Six Months Ended
June 30,
--------------------------
1998 1997
---- ----
Rental and other income $ 2,731,973 $ 2,720,631
Expenses:
Operating expenses 1,884,244 1,730,564
Interest expense 506,946 517,885
Depreciation and amortization 488,655 483,766
----------- -----------
Total expenses 2,879,845 2,732,215
----------- -----------
Net income(loss) $ (147,872) $ (11,584)
=========== ===========
Partnership's share of net income (loss) $ (146,643) $ (11,223)
=========== ===========
Other partners' share of net income (loss) $ (1,229) $ (361)
=========== ===========
The differences between the Partnership's share of income in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the six months ended June 30, 1998 and 1997 and the share of net loss in the
above Summarized Statements of Operations consists of the following:
For the Six Months Ended
June 30,
------------------------
1998 1997
--------- ---------
Share of income in Local Limited
Partnership Investments in the
Partnership's Statement of Operations $ 26,975 $ 84,860
Partnership's share of income (loss) in the
above summarized Statements of Operations (146,643) (11,223)
--------- ---------
Difference $ 173,618 $ 96,083
========= =========
Partnership's unrecorded share of losses:
Linden Park $ 44,297 $ 27,486
Brierwood Ltd. 12,989 9,711
Brierwood II, Ltd. 3,416 3,023
Pine Forest Apartments, Ltd. 13,066 9,614
Surry Manor 30,733 14,129
Glendale Manor 18,022 --
--------- ---------
Subtotal unrecorded losses 122,523 63,963
Cash Distributions
recorded as investment income 51,095 32,120
--------- ---------
Total $ 173,618 $ 96,083
========= =========
(Continued)
8
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Investments in Local Limited Partnerships, continued
The Partnership recorded its share of losses in Linden Park, Brierwood
Ltd., Brierwood II, Ltd., Pine Forest Apartments, Ltd., Surry Manor and Glendale
Manor until its related investment was reduced to zero. Subsequent to that
point, any cash distributions received from these six partnerships have been or
will be recognized as investment income rather than as a reduction in Investment
in Local Limited Partnerships on the Partnership's Balance Sheet. The
Partnership is not obligated to make additional capital contributions to fund
the deficit in its capital accounts in these Local Limited Partnerships.
Certain Local Limited Partnerships have made payments on behalf of the
Partnership for non-resident state withholding taxes in accordance with state
income tax regulations. These amounts totaling $566 during the first six months
of 1998 have been treated as distributions from the Local Limited Partnerships
and a distribution to the partners of Liberty Housing Partners Limited
Partnership.
4. Transactions with Affiliates
During the six months ended June 30, 1998, and 1997 the Partnership
recognized general and administrative expenses owed to the Managing General
Partner, as follows:
1998 1997
---- ----
Reimbursement of Partnership
administration expenses $24,026 $29,176
Partnership management fees 25,000 25,000
As of June 30, 1998 and December 31, 1997, accounts payable to
affiliates totaling $124,273 and $75,271, respectively, represent amounts owed
for reimbursements of Partnership administration expenses of $44,002 and
$20,000, respectively, and partnership management fees of $80,271 and $55,271,
respectively.
(Continued)
9
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Statement of Distributable Cash from Operations
Distributable Cash From Operations for the six months ended June 30,
1998, as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $ 20,710
Less: Interest income added to long-term notes
receivable, net of discount amortization (7,909)
General and administrative expenses per
Statement of Operations (59,192)
--------
Cash from Operations, as defined (46,391)
--------
Distributable Cash from Operations, as defined $ --
========
10
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The aggregate outstanding principal amount of and accrued and unpaid
interest on the Purchase Money Note obligations of the Partnership, as of June
30,1998, was approximately $15,338,599. The aggregate outstanding principal
amount of the Purchase Money Notes reported on the Partnership's Balance Sheet
($12,641,492 at June 30, 1998), reflects a discount using an imputed interest
rate of approximately 21%, which was applied to the face amount of the notes on
the respective investment purchase dates and which is used to calculate an
annual interest accrued in accordance with generally accepted accounting
principles that will equate to the legal obligation expected at maturity of the
notes.
As of June 30, 1998, the unpaid principal amount of and accrued and
unpaid interest on the Linden Park Associates Limited Partnership Notes equaled
$2,412,743.
At June 30, 1998, the Partnership had reserves of $56,260 in cash and
cash equivalents. Accrued interest totaling $186,617 due on certain Purchase
Money Notes from distributions received from the related Local Limited
Partnerships was distributed in the second quarter of 1998.
In 1998, the Partnership accrued interest of $19,475 on the Linden Park
Associates Limited Partnership Notes held by the Partnership and received
$11,566 of interest payments on these notes. As of June 30, 1998, the
outstanding balance of principal and accrued and unpaid interest receivable on
these notes amounted to $243,347, prior to unamortized discount of $91,953.
Partnership Operations
The Partnership is engaged solely in the business of owning interests in
the Local Limited Partnerships rather than the direct ownership of real estate.
The Partnership's net loss increased to $1,277,244 in the first six
months of 1998 from $1,008,459 in the first six months of 1997 primarily as a
result of the increase in the Partnership's interest expense of $212,995, and
the decrease in income of local limited partnership investments recognized of
$57,885.
The Partnership's interest income reflects interest earned on reserves
and interest net of discount amortization on the long term notes receivable.
Total interest income decreased $5,869 to $20,710 in the first six months of
1998 compared to $26,579 in the first six months of 1997. This decrease is
attributable to lower cash balances maintained by the Partnership and lower
interest payments received on the Linden Park Associates Limited Partnership
Notes held by the Partnership.
11
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Partnership Operations, continued
The Partnership's interest expense increased to $1,265,737 in the first
six months of 1998 from $1,052,742 in the first six months of 1997. Such
increase is attributable to the accrual of interest under the Purchase Money
Notes.
The Partnership's equity in income from the Local Limited Partnerships
was $26,975 in the first six months of 1998 and $84,860 in the first six months
of 1997. The $57,885 decrease in income recognized in the first six months of
1998 is attributable to an increase of $76,859 in the Partnership's recorded
share of the net loss of the Local Limited Partnerships, net of an increase of
$18,975 in cash distributions which would have reduced the related investment
balances below zero. The increase in net loss of the Local Limited Partnerships
is attributable principally to an increase in the expenses for repairs at
certain of the Local Limited Partnerships.
12
<PAGE>
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.
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
By: TNG Properties Inc.
Managing General Partner
By: /s/ Michael A. Stoller
Michael A. Stoller
President and CEO
By: TNG Properties Inc.
Managing General Partner
By: /s/ Wilma R. Brooks
Wilma R. Brooks
Chief Financial Officer
Date: August 10, 1998
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements of Liberty Housing Partners Limited Partnership
at and for the period ended June 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 56,260
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,260
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,067,221
<CURRENT-LIABILITIES> 481,635
<BONDS> 12,641,492
0
0
<COMMON> 0
<OTHER-SE> (11,055,906)
<TOTAL-LIABILITY-AND-EQUITY> 2,067,221
<SALES> 0
<TOTAL-REVENUES> 47,685
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 59,192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,265,737
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,277,244)
<EPS-PRIMARY> (58.62)
<EPS-DILUTED> 0
</TABLE>
