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 September 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
Exhibits Index on Page 14
Page 1 of 15
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements:
Balance Sheets, September 30, 1998 and December 31, 1997 3-4
Statements of Operations for the Three Months
Ended September 30, 1998, and 1997 and the Nine Months
Ended September 30, 1998 and 1997 5
Statements of Cash Flows for the Nine Months Ended
September 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 11-13
Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K 14
2
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
(Unaudited) (Audited)
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 52,228 $ 65,685
------------ ------------
Total current assets 52,228 65,685
Long-term notes and accrued interest
receivable 155,348 143,485
Investments in local limited
partnerships 1,905,259 2,019,77
------------ ------------
Total assets $ 2,112,835 $ 2,228,945
============ ============
(continued)
3
<PAGE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
(Unaudited) (Audited)
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable to affiliates $ 148,773 $ 75,271
Accounts payable 6,651 1,410
Accrued expense -- 16,000
Accrued interest payable 351,987 370,165
------------ ------------
Total current liabilities 507,411 462,846
Purchase money notes 13,328,867 11,544,195
------------ ------------
Total liabilities 13,836,278 12,007,041
------------ ------------
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (28) (22)
Accumulated losses (217,997) (198,550)
------------ ------------
(213,823) (194,370)
------------ ------------
Limited partners (21,566 Units at
September 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 (21,156,369) (19,231,035)
------------ ------------
(11,509,620) (9,583,726)
------------ ------------
Total partners' deficit (11,723,443) (9,778,096)
------------ ------------
Total liabilities and partners'
deficit $ 2,112,835 $ 2,228,945
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income $ 7,051 $ 11,082 $ 27,761 $ 37,661
----------- ----------- ----------- -----------
Expenses:
Interest expense 687,377 568,723 1,953,114 1,621,465
General and administrative
expense 32,903 33,250 92,095 100,407
----------- ----------- ----------- -----------
Total expenses 720,280 601,973 2,045,209 1,721,872
----------- ----------- ----------- -----------
Loss before equity in local
limited partnership operations (713,229) (590,891) (2,017,448) (1,684,211)
Equity in income of
Local limited partnership
Investments 45,692 124,227 72,667 209,087
----------- ----------- ----------- -----------
Net Loss $ (667,537) $ (466,664) $(1,944,781) $(1,475,124)
=========== =========== =========== ===========
Basic net loss per Limited
Partnership Unit
$ (30.64) $ (21.41) $ (89.26) $ (67.69)
=========== =========== =========== ===========
Units used in computing basic
net loss per Limited 21,566 21,576 21,569 21,576
Partnership Unit =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
--------------------------
1998 1997
---- ----
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 (29,353) (120,710)
Interest received 15,896 25,829
----------- -----------
Net cash used in
operating activities (12,891) (94,881)
----------- -----------
Cash Flows from financing activity:
Capital distributions (566) --
----------- -----------
Net cash used by financing
activity (566) --
----------- -----------
Net decrease in cash and cash equivalents (13,457) (94,881)
Cash and cash equivalents at:
Beginning of period 65,685 163,915
----------- -----------
End of period $ 52,228 $ 69,034
=========== ===========
Reconciliation of net loss to net cash used in operating activities:
Net loss $(1,944,781) $(1,475,123)
Adjustments to reconcile net loss to net
cash used in operating activities:
Share of income of local limited
partnership investments (72,667) (209,087)
Cash distributions from local limited
partnerships 187,183 369,947
Interest expense added to purchase money
notes, net of discount amortization 1,784,672 1,159,132
Interest income added to long-term
notes receivable, net of discount
amortization, and interest received (11,863) (11,863)
Decrease in other current assets -- 31
(Decrease) increase in:
Accrued interest payable (18,178) 92,385
Accounts payable to affiliates 73,502 (7,495)
Accounts payable 5,241 2,792
Accrued expenses (16,000) (15,600)
----------- -----------
Net cash used in operating
activities $ (12,891) $ (94,881)
=========== ===========
The accompanying notes are an integral part of hese 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 September 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)
September 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 (3,722,901) (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 $ 1,905,259 $ 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 Nine Months Ended
September 30,
----------------------------
1998 1997
---- ----
Rental and other income $ 4,109,287 $ 4,335,015
Expenses:
Operating expenses 2,763,207 2,733,215
Interest expense 760,419 776,828
Depreciation and amortization 733,473 726,139
----------- -----------
Total expenses 4,257,099 4,236,182
----------- -----------
Net income(loss) $ (147,812) $ 98,833
=========== ===========
Partnership's share of net income (loss) $ (146,200) $ 98,750
=========== ===========
Other partners' share of net income (loss) $ (1,612) $ 83
=========== ===========
The differences between the Partnership's share of income in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the nine months ended September 30, 1998 and 1997 and the share of net loss in
the above Summarized Statements of Operations consists of the following:
For the Nine Months Ended
September 30,
-------------------------
1998 1997
---- ----
Share of income in Local Limited
Partnership Investments in the
Partnership's Statement of Operations $ 72,667 $ 209,087
Partnership's share of income (loss) in the
above summarized Statements of Operations (146,200) 98,750
--------- ---------
Difference $ 218,867 $ 110,337
========= =========
Partnership's unrecorded share of losses:
Linden Park $ 60,819 $ 36,666
Brierwood Ltd. 23,720 14,061
Brierwood II, Ltd. 5,528 3,967
Pine Forest Apartments, Ltd. 18,692 17,703
Surry Manor 38,360 15,595
Glendale Manor 20,653 --
--------- ---------
Subtotal unrecorded losses 167,772 87,992
Cash Distributions
recorded as investment income 51,095 22,345
--------- ---------
Total $ 218,867 $ 110,337
========= =========
8
(Continued)
<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 nine 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 nine months ended September 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 $36,136 $45,004
Partnership management fees 37,500 37,500
As of September 30, 1998 and December 31, 1997, accounts payable to
affiliates totaling $148,773 and $75,271, respectively, represent amounts owed
for reimbursements of Partnership administration expenses of $56,002 and
$20,000, respectively, and partnership management fees of $92,771 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 nine months ended September
30, 1998, as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $ 27,761
Less: Interest income added to long-term notes
receivable, net of discount amortization (11,863)
General and administrative expenses per
Statement of Operations (92,095)
Cash from Operations, as defined (76,197)
--------
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
September 30,1998, was approximately $15,534,461. The aggregate outstanding
principal amount of the Purchase Money Notes reported on the Partnership's
Balance Sheet ($13,328,867 at September 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 September 30, 1998, the unpaid principal amount of and accrued and
unpaid interest on the Linden Park Associates Limited Partnership Notes equaled
$2,423,205.
At September 30, 1998, the Partnership had reserves of $52,228 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 $26,163 on the Linden Park
Associates Limited Partnership Notes held by the Partnership and received
$14,300 of interest payments on these notes. As of September 30, 1998, the
outstanding balance of principal and accrued and unpaid interest receivable on
these notes amounted to $244,524, prior to unamortized discount of $89,176.
Through the Multifamily Assisted Housing Restructuring and
Affordability Act of 1997 (MAHRAA), the availability of US Government subsidies
has been significantly reduced and restructured. Under the new assistance
program, the Federal Government has moved away from project based subsidies to
tenant vouchers. One year extensions are being granted under the existing
subsidy program, however, the approved rent amount may be adjusted down based on
local fair market rent levels. With this change in approach, the value of the
portfolio is expected to be adversely impacted.
The Purchase Money notes outstanding for eleven of the thirteen
properties held in this portfolio start to become due in September 1999. The
principal and accrued interest due cannot be realized or supported by the
current value of most, if not all of the respective property(ies), through
either a sale or refinancing.
The Partnership continues to explore options for resolving the Purchase
Money Notes. In connection with these efforts the partnership engaged the
General Partner of Linden Park Associates Limited Partnership to assist with the
workout or liquidation of the Partnership's portfolio. The terms of the
engagement provide for the payment of certain fees and expenses. It is
contemplated that these fees and expenses will be paid from the principal and
interest from the Linden Park Associates Limited Partnership notes held by the
Partnership. If the workout or liquidation of the entire portfolio is
successfully completed the Partnership's entire interest in these notes will
have been exhausted.
11
<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, continued
In addition, the Partnership has granted the Linden Park General Partner
an option to acquire the Partnership's interest in Linden Park Associates
Limited Partnership over the next three and one-half years at a purchase price
of $400,000 for the next eighteen months and increasing by $100,000 each year
thereafter.
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 $1,944,781 in the first nine
months of 1998 from $1,475,124 in the first nine months of 1997 primarily as a
result of the increase in the Partnership's interest expense of $331,649, and
the decrease in income of local limited partnership investments recognized of
$136,420.
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 $9,990 to $27,761 in the first nine months of
1998 compared to $37,661 in the first nine 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.
The Partnership's interest expense increased to $1,953,114 in the first
nine months of 1998 from $1,621,465 in the first nine 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 $72,667 in the first nine months of 1998 and $209,087 in the first nine
months of 1997. The $136,420 decrease in income recognized in the first nine
months of 1998 is attributable to: a decrease of $244,950 in net income from the
combined statements of operations of all Local Limited Partnerships; net of an
increase in unrecorded loss of $79,780 and an increase in cash distributions
recognized as investment income of $28,750. The decrease in net income of the
Local Limited Partnerships is attributable to a decrease in revenue recognized
by one of the Local Limited Partnerships, which had received insurance proceeds
in connection with an insured loss in 1997, but had not yet incurred all of the
expenses of repairs.
12
<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 Year 2000 issue may effect the Partnership's operations as a result
of issues arising from systems and services utilized by the Managing General
Partner or by various Local Limited Partnerships. The Managing General Partner
has inventoried its systems and equipment that may require correction for Year
2000 issues. Management believes that the principal software systems which are
critical to the Partnership's operation have been updated with Year 2000
versions. Certain personal computers, hardware and other imbedded systems
require update in order to be rendered Year 2000 compliant. The Managing General
Partner is presently soliciting bids for this remediation work and expects that
it will be completed by the second quarter of 1999. The Partnership will assess
the Year 2000 readiness and contingency plans of the Local Limited Partnerships
in connection with its year end audit.
The Partnership does not expect to bear any part of the costs of the
Managing General Partner's Year 2000 compliance. The Local Limited Partnerships
may bear some or all of the costs of Year 2000 compliance efforts relating to
systems on which the Local Limited Partnerships depend. To the extent that the
Local Limited Partnerships bear such costs, such costs might have a material
adverse effect on the income of the Local Limited Partnerships.
The Partnership does not expect that any failure of the Managing
General Partnership's systems on which it depends to be Year 2000 compliant
would have a material adverse effect on the Partnership. However, the failure of
systems on which a Local Limited Partnership depends could result in adverse
effects, including the failure to properly account for and process income and
expenses and the failure to properly operate the property. The Partnership
cannot presently predict whether such effects would have a material and adverse
effect on the Local Limited Partnerships, and as a result, the Partnership.
13
<PAGE>
PART II
Item 6. Exhibits and reports on Form 8-K.
The following exhibits are included with this report:
Exhibit Number Description
- -------------- -----------
10.17 Letter agreement with John Wagner regarding consulting
services in connection with the liquidation or workout of the
Partnership's portfolio.
14
<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: November 12, 1998
15
EXHIBIT 10.17
September 24, 1998
Mr. John L. Wagner
Beltway Management, Inc.
101 Chestnut Street, #110
Gaithersburg, Maryland 20877
RE: The Liberty Housing Partners Limited Partnership Portfolio
Dear John:
This letter serves to formalize our Agreement regarding your role in liquidating
the Liberty Portfolio. The intent of the parties hereto is to hire you as a
consultant to Liberty Housing Partners Limited Partnership acting as the Agent
of Liberty with Barbara Gilman and Wilma Brooks' direct involvement to liquidate
the Liberty Portfolio on terms as favorable to Liberty and Liberty's investor
partners as possible.
It is understood that in addition to your services, you will also engage Jerry
Levine (Attorney from Holland and Knight) and any other third parties that are
necessary to facilitate the liquidation. The terms of this agreement are as
follows:
Duties:
1. Negotiate the sale, transfer, or workout of all properties in
the Liberty portfolio.
2. Negotiate with property purchase money note holders.
3. Take any actions necessary to liquidate or workout the Liberty
portfolio.
4. Hire an outside accounting firm to perform a current valuation
on all properties in the portfolio in as-is condition and to
review each property's financial performance for propriety of
related party activity. The firm of Grubman and Associates has
hereby been approved to provide these services.
5. All of items 1-3 are subject to approval of TNG Properties,
Inc. acting as general partner of Liberty Housing Partners
Limited Partnership.
Term: The initial term shall be two (2) years and will automatically renew
thereafter on an annual basis unless either party notifies the other of their
intent to terminate this agreement with at least ninety (90) days written notice
prior to the automatic renewal. In addition, this agreement shall be subject to
termination with 60 days written notice by either party.
<PAGE>
Compensation:
1. All interest and principal related to the Linden Park
Associates purchase money notes held by Liberty previously
held by Cantero and Pabarcus (Linden Park Notes) shall be
placed in a trust under joint control of John L. Wagner and
Liberty.
2. On a monthly basis John L. Wagner, Jerry Levine, and any third
party that has performed services shall be compensated from
funds on deposit in this trust account for their time and
expenses. On a monthly basis John L. Wagner shall only be
compensated for his expenses. Prior to payment of any costs,
invoices must be submitted for approval by TNG Properties,
Inc., approval not to be unreasonably withheld. If invoices
are not approved by TNG within 30 days after submission, the
invoices shall be deemed as approved.
3. If the services of John L. Wagner shall be terminated by
Liberty all remaining funds in the trust account shall be
split 50/50 with Liberty including all principal and interest
from the Linden Park Notes whether paid or not, provided that
John L. Wagner has performed reasonable efforts and has
provided Liberty with plans for at least fifty percent of the
portfolio. At the time of execution of this agreement the
principal and interest of the Linden Park notes shall be
deemed as being in the trust account.
4. For any properties liquidated, materially disposed, sold, or
entered into a workout John L. Wagner shall receive a pro-rata
portion of the principal and interest in the trust account.
For purposes of this agreement "pro-rata" shall include the
number of units in each complex, including Linden Park,
divided by the total number of units. Upon completion of the
duties outlined herein, any remaining principal interest, and
other cash deposits remaining in the trust account shall be
paid to John L. Wagner.
5. Fifty percent (50%) of the fee will be earned and paid upon
submission of a project's reasonable plan acceptable to TNG
Properties, Inc. The remaining 50% is earned and paid as each
closing or workout occurs. If Liberty rejects any project's
liquidation plan, disposition, sale, or workout plan which is
reasonable and presented in good faith then John L. Wagner
shall receive the first 50% of the fee and no further fee will
be due. It shall be deemed that John L. Wagner has materially
performed or completed the liquidation, disposition, sale, or
workout of each project only upon closing of a project or
workout on a plan as substantially presented by John L.
Wagner.
6. If it is necessary to litigate with note holders or other
third parties, then Liberty shall have the final determination
regarding litigation. However, the cost of litigation shall be
determined and that cost shall be outside the scope of this
agreement.
<PAGE>
7. As further compensation and a part of the liquidation plan, it
is agreed that the Liberty interest in Linden Park Apartments
(i.e. all remaining General and Limited Partnership interests
so that John L. Wagner owns 100% of Linden Park Apartments)
shall be transferred or sold by Liberty to John L. Wagner or
his designee at a future date to be determined as provided
herein. John L. Wagner shall have the right to acquire the
remaining interest in Linden Park Apartments at any time over
the next three and one-half (3 1/2) years. The purchase price
with imputed interest shall initially be $400,000 during the
first eighteen (18) months of this agreement and that purchase
price shall increase at the rate of $100,000 per year
thereafter. This initial purchase price is based upon a
negotiation of current value, after repayment of debt,
purchase money notes and all other liabilities. The closing
date on such a purchase shall be mutually agreed, but not
later than three (3) months after the maturity of the Purchase
money notes, provided that the Purchase Money Notes have been
extended for that three (3) month period by all of the
Purchase Money Note holders. We are pleased to be working
together in this liquidation plan. Provided you are in
Agreement with this letter, please sign as provided below.
Sincerely,
/s/ Michael A. Stoller
Michael A. Stoller
President and CEO
AGREED:
/s/ John L. Wagner
Name: John L. Wagner Date 9-25-98
<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 September 30, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 52,228
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 52,228
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,112,835
<CURRENT-LIABILITIES> 507,411
<BONDS> 13,328,867
0
0
<COMMON> 0
<OTHER-SE> (11,723,443)
<TOTAL-LIABILITY-AND-EQUITY> 2,112,835
<SALES> 0
<TOTAL-REVENUES> 100,428
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 92,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,953,114
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,944,781)
<EPS-PRIMARY> (89.26)
<EPS-DILUTED> 0
</TABLE>
