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, 1999
[ ] 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.)
100 Second Avenue, Needham, MA 02494
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 444-5251
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 15
Page 1 of 16
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements:
Balance Sheets, September 30, 1999 and December 31, 1998 3-4
Statements of Operations for the Three Months
Ended September 30, 1999, and 1998 and the Nine Months
Ended September 30, 1999 and 1998 5
Statements of Cash Flows for the Nine Months Ended
September 30, 1999, and 1998 6
Notes to Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-14
Part II: Other Information
Item 3. Defaults Upon Senior Securities 15
Item 6. Exhibits and Reports on Form 8-K 15
2
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
(Unaudited) (Audited)
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 532,399 $ 42,284
Notes and accrued interest receivable,
current maturities -- 159,303
------------ ------------
Total current assets 532,399 201,587
Investments in local limited
partnerships 1,467,450 2,052,426
------------ ------------
Total assets $ 1,999,849 $ 2,254,013
============ ============
(continued)
3
<PAGE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
(Unaudited) (Audited)
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Liabilities and Partners' Deficit
Current liabilities:
Purchase Money Notes, current maturities $ 11,856,810 $ 13,151,250
Accounts payable to affiliates 163,773 173,271
Accounts payable 1,619 2,659
Accrued expenses 19,000 16,500
Accrued interest payable 47,345 263,558
------------ ------------
Total current liabilities 12,088,547 13,607,238
Purchase money notes, net of current maturities 1,117,907 985,493
------------ ------------
Total liabilities 13,206,454 14,592,731
------------ ------------
Contingencies -- --
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (128) (72)
Accumulated losses (208,229) (224,106)
------------ ------------
(204,155) (219,976)
------------ ------------
Limited partners (21,566 Units at
September 30, 1999 and December 31, 1998):
Capital contributions (net of
offering costs of $1,134,440) 9,649,520 9,649,520
Capital distributions (462,706) (7,122)
Accumulated losses (20,189,264) (21,761,140)
------------ ------------
(11,002,450) (12,118,742)
------------ ------------
Total partners' deficit (11,206,605) (12,338,718)
------------ ------------
Total liabilities and partners'
deficit $ 1,999,849 $ 2,254,013
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</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,
--------------------------- ---------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income $ 6,402 7,051 $ 101,042 $ 27,761
----------- ----------- ----------- -----------
Expenses:
Interest expense 356,272 687,377 1,491,615 1,953,114
General and
administrative expense 32,672 32,903 99,030 92,095
----------- ----------- ----------- -----------
Total expenses 388,944 720,280 1,590,645 2,045,209
----------- ----------- ----------- -----------
Loss before equity in
local limited
partnership operations (382,542) (713,229) (1,489,603) (2,017,448)
Equity in income of Local
Limited Partnership
Investments 6,408 45,692 78,777 72,667
----------- ----------- ----------- -----------
Net loss before
Extraordinary items (376,134) (667,537) (1,410,826) (1,944,781)
Extraordinary items:
Gain on sale of investment
in Fiddler's Creek Apts (2,054) -- 2,652,053 --
Gain on sale of investment
in Linden Park Associates 346,526 -- 346,526 --
----------- ----------- ----------- -----------
Net income (loss) $ (31,662) $ (667,537) $ 1,587,753 $(1,944,781)
=========== =========== =========== ===========
Units used in computing
Basic Net Loss per
Limited Partnership Unit 21,566 21,566 21,566 21,569
=========== =========== =========== ===========
Basic Net loss per Limited
Partnership Unit before
extraordinary items $ (17.27) $ (30.64) $ (64.76) $ (89.26)
=========== =========== =========== ===========
Basic net income (loss) per
Limited Partnership Unit $ (1.45) $ (30.64) $ 72.89 $ (89.26)
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash distributions from Local Limited
Partnerships $ 251,371 $ 187,183
Interest payments on purchase money notes (245,730) (186,617)
Uncashed interest payments on Purchase
Money Notes from prior years 841 --
Cash paid for Partnership administration expenses (123,067) (29,353)
Interest received 19,287 15,896
----------- -----------
Net cash used by operating activities (97,298) (12,891)
----------- -----------
Cash Flows from financing activity:
Capital distributions (5,641) (566)
Principal and accrued interest received upon
repayment of Linden Park Apartments notes
receivable 241,048 --
----------- -----------
Net cash provided by (used in)financing activity 235,417 (566)
Cash Flows from extraordinary items:
Cash proceeds from sale of investment in
Fiddlers Creek Apartments 483,451 --
Cash proceeds from sale of investment in
Linden Park Associates 395,960 --
Closing costs (77,416) --
Capital Distributions to Limited Partners (449,999) --
----------- -----------
Net Cash provided by extraordinary items 351,996 --
----------- -----------
Net increase (decrease) in cash and cash equivalents 490,115 (13,457)
Cash and cash equivalents at:
Beginning of period 42,284 65,685
----------- -----------
End of period $ 532,399 $ 52,228
=========== ===========
Reconciliation of net loss before extraordinary items to net cash used by
operating activities
Net loss before extraordinary items $(1,410,826) $(1,944,781)
Adjustments to reconcile net loss to net
Cash used by operating activities:
Share of income of local limited
partnership investments (78,777) (72,667)
Cash distributions from local limited
Partnerships 251,371 187,183
Interest expense added to purchase money
notes, net of discount amortization 1,462,940 1,784,672
Interest income added to long-term
notes receivable, net of discount
amortization, and interest received (81,755) (11,863)
(Decrease) increase in:
Accrued interest payable (216,213) (18,178)
Accounts payable to affiliates (9,498) 73,502
Accounts payable (1,040) 5,241
Accrued expenses (13,500) (16,000)
----------- -----------
Net cash used by operating activities $ (97,298) $ (12,891)
=========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
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,
1999. 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, 1998.
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,
1999 1998
------------- ------------
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 (3,511,532) (3,571,307)
Cash distributions received from Local
Limited Partnerships (4,069,572) (3,818,231)
Cash distributions received from Local
Limited Partnerships recognized as
investment income 93,132 74,160
Sale of Investments in Local
Limited Partnerships (412,382) --
----------- -----------
Investments in Local Limited Partnerships $ 1,467,450 $ 2,052,426
=========== ===========
(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,
-----------------------------------
1999 1998
---- ----
Rental and other income $ 3,547,197 $ 4,109,287
Expenses:
Operating expenses 2,304,171 2,763,207
Interest expense 660,498 760,419
Depreciation and amortization 647,948 733,473
----------- -----------
Total expenses 3,612,617 4,257,099
----------- -----------
Net loss $ (65,420) $ (147,812)
=========== ===========
Partnership's share of net loss $ (63,113) $ (146,200)
=========== ===========
Other partners' share of net loss $ (2,307) $ (1,612)
=========== ===========
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, 1999 and 1998 and the share of net loss in
the above Summarized Statements of Operations consists of the following:
For the Nine Months Ended
September 30,
-----------------------------
1999 1998
---- ----
Share of income in Local Limited
Partnership Investments in the
Partnership's Statement of Operations $ 78,777 $ 72,667
Partnership's share of loss in the
above summarized Statements of Operations (63,113) (146,200)
--------- ---------
Difference $ 141,890 $ 218,867
========= =========
Partnership's unrecorded share of losses (income):
Linden Park $ 54,521 $ 60,819
Briarwood Ltd. 17,409 23,720
Briarwood II, Ltd. 10,666 5,528
Pine Forest Apartments, Ltd. 14,354 18,692
Surry Manor 37,331 38,360
Glendale Manor -- 20,653
Prior year loss carry forward applied
against 1999 net income
Meadowwood (7,255) --
Glendale Manor (4,138) --
--------- ---------
Subtotal 122,888 167,772
Cash Distributions
recorded as investment income 19,002 51,095
--------- ---------
Total $ 141,890 $ 218,867
========= =========
(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, Glendale
Manor and Meadowwood, LTD., until its related investment was reduced to zero.
Subsequent to that point, further losses were suspended and any cash
distributions received from these seven 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 $5,641 during the first nine
months of 1999 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, 1999, and 1998 the
Partnership recognized general and administrative expenses owed to the Managing
General Partner, as follows:
1999 1998
---- ----
Reimbursement of Partnership
administration expenses $37,023 $36,136
Partnership management fees 37,500 37,500
As of September 30, 1999 and December 31, 1998, accounts payable to
affiliates totaling $163,773 and $173,271, respectively, represent amounts owed
for reimbursements of Partnership administration expenses of $84,002 and
$68,000, respectively, and partnership management fees of $79,771 and $105,271,
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, 1999, as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $ 101,042
Less: Interest income added to long-term notes
receivable, net of discount amortization (81,755)
General and administrative expenses per
Statement of Operations (99,030)
---------
Cash from Operations, as defined (79,743)
---------
Distributable Cash from Operations, as defined $ --
=========
6. Statement of Distributable Cash from Sales or Refinancings of the
Partnerships Interests
Cash distributions totaling $449,999 were made to the limited partners
on August 30, 1999 from the proceeds of the sale of investments in Fiddlers
Creek Apartments and Linden Park Associates. These distributions were calculated
as follows:
Cash Received $ 879,411
Less: Withholding taxes due the State of North
Carolina (242,100)
Payments and reserves established for closing
costs and operating expenses (187,312)
---------
Distributable Cash from Sales $ 449,999
=========
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
Disposition of Investments
On July 15, 1999, the Partnership sold its interest in Linden Park
Associates in exchange for $395,960 in cash. After transaction expenses, the
Partnership recognized a gain estimated to be $346,526 on the sale of the
investment. Linden Park Associates Limited Partnership refinanced their existing
debt and also paid in full the principal and accrued and unpaid interest due the
Partnership on their notes totaling $241,058. In accordance with the
Partnership's agreement with the General Partner of Linden Park Associates (the
"Linden GP") these funds have been segregated for use to pay the fees and
expenses due the Linden GP. The Linden GP was engaged in 1998 to assist with the
workout or liquidation of the Partnership's portfolio. If the workout or
liquidation of the entire portfolio is successfully completed all of the
segregated funds will be paid to the Linden GP. The remaining balance of the
segregated funds was $166,802 as of September 30, 1999. As of September 30,
1999, the consulting fees paid to the Linden GP in respect of the successful
sales of the Partnership's investment in Fiddlers Creek Apartments and Linden
Park Associates totaled $77,416. In the first nine months of 1999, the
Partnership also reimbursed the Linden GP for expenses incurred totaling $8,674.
The aggregate outstanding principal amount of, and accrued and unpaid
interest on, the outstanding Purchase Money Note ("PMN") obligations of the
Partnership, as of September 30, 1999, was $13,186,884. The aggregate
outstanding principal amount of the Purchase Money Notes reported on the
Partnership's Balance Sheet ($12,974,717 at September 30, 1999), 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.
The decrease in PMN obligations from December 31, 1998 to September 30,
1999 reflects $2,624,966 in PMN obligations assumed by the purchaser of the
Partnership's interest in Fiddlers Creek Apartments in the second quarter of
1999.
The liquidity of the Local Limited Partnerships in which the
Partnership has invested is dependent on the ability of the respective Local
Limited Partnerships, which own and operate government assisted multi-family
rental housing complexes, to generate cash flow sufficient to fund operations
and debt service and to maintain working capital reserves. Each of the Local
Limited Partnerships is regulated by government agencies which require monthly
funding of certain operating and capital improvements reserves and which
regulate the amount of cash to be distributed to owners. Each Local Limited
Partnership's source of funds is rental income received from tenants and
government subsidies. Certain of the Local Limited Partnership's receive rental
income pursuant to Section 8 rental assistance contracts which expire beginning
in 1999 and continuing through 2000. Under the Multifamily Assisted Housing and
Reform and Affordability Act (MAHRAA) of 1997, Congress set forth the
legislation for a permanent "mark-to-market" program and provided for permanent
authority for the renewal of Section 8 Contracts.
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
On September 11, 1998, HUD issued an interim rule to provide clarification of
the implementation of the mark-to-market program. Owners with Section 8
contracts expiring after September 30, 1998 are subject to the provisions of
MAHRAA. As such, each Local Limited Partnership may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8 contract, or request renewal of the Section 8 contract without mortgage
restructuring. Each option contains a specific set of rules and procedures that
must be followed in order to comply with the requirements of MAHRAA. Management
is reviewing the status of each Local Limited Partnership with the local General
Partner to determine which option under the MAHRAA should be exercised by the
Local Limited Partnership.
On September 29, 1999 the Purchase Money Notes outstanding for
Fuquay-Varina, Oxford Homes and Williamston Homes matured. The Purchase Money
Notes outstanding for Compass West Apartments, Meadowwod Ltd, Brierwood Ltd and
Pine Forest matured on October 30, 1999. These seven Purchase Money Notes are
now in default. The Purchase Money Notes outstanding for Osuna Apartments mature
on November 27, 1999 and for Surry Manor and Glendale Manor on July 9, 2001.
Management does not believe that the principal and accrued interest due
on these notes can be realized or supported by the current value of the
respective properties, through either a sale or refinancing. The Partnership's
interests in these Local Limited Partnerships were pledged as security for the
Partnership's obligations under the respective PMN's. The sale or other
disposition by the Partnership of its interests in the Local Limited
Partnerships, including in connection with a foreclosure of the pledged
security, is likely to result in recapture of previously claimed tax losses to
the Partnership and may have other adverse tax consequences to the Partnership
and to the Limited Partners. Such recapture may cause some or all of the Limited
Partners to have taxable income from the Partnership without cash distributions
from the Partnership with which to satisfy the tax liability resulting
therefrom.
Management currently anticipates selling the Partnership's 98% limited
partnership interests in Fuquay Varina, Oxford Homes and Williamston Homes to
the general partner of these partnerships or his affiliate for approximately
$148,485 plus the assumption of the PMN obligations. The sale of these interests
requires consent from all the related PMN holders. Such consents have been
requested.
Management has also entered into an agreement with the general partner of
Compass West Apartments to sell the Partnership's 98% limited partnership
interest. Pursuant to the terms of the agreement, the Partnership and Liberty
LGP would receive cash and notes aggregating $250,000 in exchange for their
interests in Compass West. The consideration purchase price is to be allocated
between Liberty LGP and the Partnership as they may agree. The agreement
provides that the interest transferred by the Partnership will continue to be
encumbered by the pledge securing the related PMN's and the Partnership does not
presently anticipate that the PMN holders would receive any portion of the sale
proceeds.
12
<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
Unanimous consent by the PMN holders is also required to sell these interests.
Meetings with the PMN holders to discuss this transaction have been scheduled in
November 1999.
Management has proposed that the general partner of Osuna Apartments
purchase the interests of the Partnership in Osuna Apartments. The Partnership
is seeking to reach agreement prior to the maturity of the related PMN's on
November 27, 1999.
Management has also entered into negotiations with the general partner
of Briarwood I & II, Pine Forest and Meadowwood Apartments. Management presently
anticipates selling the Partnership's 94% Limited Partnership interests in these
properties by the first quarter of 2000.
The Partnership has commenced discussions with the local manager for
Surry Manor, Ltd. and Glendale Manor Apartments to purchase the Partnership's
interests in those partnerships. Management expects to pursue more detailed
discussions in the fourth quarter of 1999.
No assurance can be given that the Partnership will be able to
successfully conclude any of the above transactions.
At September 30, 1999, the Partnership had total cash and cash
equivalents of $532,399, which consisted of funds segregated pursuant to the
terms of the consulting agreement with the Linden GP of $166,802, withholding
taxes due the State of North Carolina from the sale of investment in Fiddlers'
Creek Apartments of approximately $242,100, and reserves of $123,497. The
reserves include $841 representing uncashed checks issued to certain PMN holders
for interest due under their notes. This amount is also included in accrued
interest payable.
The only sources of Partnership funds are (i) distributions from the
Local Limited Partnerships (substantially all of which are presently required to
be applied to payment of interest accruing on the PMN's), and (ii) Partnership
reserves.
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.
As discussed above, the Partnership is currently in various stages of
negotiations to sell its interests in the remaining eleven local limited
partnerships. If the Partnership is successful in disposing of its remaining
investments, management presently intends to wind up the Partnership's
operations by the end of the Year 2001.
The Partnership's net loss before extraordinary items decreased to
$1,410,826 in the first nine months of 1999 from $1,944,781 in the first nine
months of 1998. In the second quarter of 1999, the Partnership sold its
investment in Fiddlers Creek Apartments. The Partnership realized a net gain of
$2,652,053.
13
<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
On July 15, 1999 the Partnership sold its investment in Linden Park Associates
and realized a net gain of $346,526, determined as follows:
Cash received $ 395,960
Less: Consulting fees paid in connection with
the disposition (41,434)
Less: Legal fees (8,000)
---------
Gain on sale of investment in Linden Park Associates $ 346,526
=========
The Partnership's interest income reflects interest earned on reserves,
interest earned on the notes receivable and the reversal o f the unamortized
discount. Total interest income was $101,042 and $27,761 for the first nine
months of 1999 and 1998, respectively. The difference is primarily due to the
reversal the unamortized discount of $74,524.
The Partnership's interest expense decreased to $1,491,615 in the first
nine months of 1999 from $1,953,114 in the first nine months of 1998. The
decrease is attributable to the sale of the Fiddlers Creek investment, which
included the assumption of the related PMN's, on May 28, 1999.
The Partnership's equity in income from the Local Limited Partnerships
was $78,777 in the first nine months of 1999 and $72,667 in the first nine
months of 1998.
The Year 2000 issue may affect 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 has received certifications from their principal
software provider that all of the core components of the primary software system
critical to the Partnership's operation are Year 2000 compliant. In addition,
the primary network system, its operating system and certain personal computers
attached to that system have been upgraded and are deemed to be Year 2000
compliant.
The auditors for each Local Limited Partnership have reviewed the Year
2000 status of such partnerships. Based on the information reported to the
Partnership by such auditors, management expects that the critical systems
utilized by the Local Limited Partnerships will be timely rendered Year 2000
compliant at little cost to 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.
14
<PAGE>
Part II
Other Information
Item 3. Defaults Upon Senior Securities.
On September 29, 1999 the PMN's outstanding for Fuquay-Varina, Oxford
Homes and Williamston Homes matured. The amounts due at maturity under these
non-recourse obligations consisted of $2,015,000 in aggregate principal amount
and $530,961 in accrued and unpaid interest. As of November 12, 1999, the
aggregate arrearages under these notes amounted to $2,567,119.
The PMN's outstanding for Compass West Apartments, Meadowwood Ltd,
Brierwood Ltd and Pine Forest matured on October 30, 1999. The amounts due at
maturity under these non-recourse obligations consisted of $2,830,000 in
aggregate principal amount and $3,608,251 in accrued and unpaid interest. As of
November 12, 1999, the aggregate arrearages under these notes amounted to
$6,446,741.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed with this reports:
10.18 Agreement to Purchase and Sell Partnership Interests in
Compass West Associates
27 Financial Data Schedule (electronic copy only)
(b) Reports on Form 8-K.
On July 26, 1999, the Partnership filed a Current Report on Form 8-K to
report the disposition on July 15, 1999 of its limited partner interest in
Linden Park Associates Limited Partnership. The Form 8-K was amended on
September 28, 1999, to include pro forma financial information for the
Partnership, reflecting the disposition.
15
<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: 11/12/99
16
EXHIBIT 10.18
AGREEMENT TO PURCHASE AND SELL PARTNERSHIP INTERESTS
This Agreement To Sell Partnership Interests (the "Agreement") is entered into
as of this 1st day of October, 1999, in Youngstown, Ohio by and between
Austintown Apartments LLC, a limited liability corporation organized and validly
existing under the laws of the State of Ohio whose primary place of business is
1050 Compass West, Youngstown, Ohio 44515 ("Austintown Apartments"), Liberty LGP
Limited Partnership, a limited partnership organized and validly existing under
the laws of the Commonwealth of Massachusetts whose primary place of business is
100 Second Avenue, Needham, Massachusetts 02494 ("Liberty LGP"), Liberty Housing
Partners Limited Partnership, a limited partnership organized and existing under
the laws of the Commonwealth of Massachusetts whose primary place of business is
100 Second Avenue, Needham, Massachusetts 02494 ("Liberty Housing"), Mr. James
P. Manchi, an individual whose primary place of business is 1050 Compass West,
Youngstown, Ohio 44515 ("Mr. Manchi"), and Mr. Robert P. Baker, an individual
whose primary place of business is 1050 Compass West, Youngstown, Ohio 44515
("Mr. Baker").
Whereas, Austintown Associates Limited Partnership is a limited partnership that
was organized and is validly existing under the laws of the State of Ohio whose
primary place of business is 1050 Compass West, Youngstown, Ohio 44515
("Austintown Associates"); and
Whereas, the local general partner of Austintown Associates is Mr. Manchi, and
the associate general partner of Austintown Associates is Liberty LGP, and the
sole limited partner of Austintown Associates is Liberty Housing; and
Whereas, the sole business of Austintown Associates is the ownership and
operation of that certain 200 unit multifamily housing project commonly known as
Compass West Apartments, 1050 Compass West, Youngstown, Ohio 44515 (the
"Project"); and
Whereas, Liberty Housing acquired a ninety-eight percent (98.0%) limited
partnership interest in Austintown Associates as a limited partner (the "Liberty
Housing Interest") and Liberty LGP acquired a one percent (1.0%) associate
general partnership interest in Austintown Associates (the "Liberty Housing
Interest"), which limited and general partnership interests were acquired in
connection with a re-syndication of the original limited and general partnership
interests of Austintown Associates; and
Whereas, the original limited partners of Austintown Associates were Mr. Manchi,
Mr. Baker, Stanley Charron, J. Wallace Davis, Nissie Grossman, Maurice Grossman,
Evelyn K. Price, Alvin L. Rosenthal, Theodore G. Bartholdi, Patrick K. Parks,
James Wilson, Edward F. Eagan, Robert M. Dale, Joseph T. Travaline, Lawrence D.
Beaupre, Alford S. Lanes, Noble H. Turner, Hugh R. Jones, Jr., Robert A.
Shapiro, Clyde A. Newton, Thomas J. Foley, James S. Munro, Jr., Samuel D. Kane,
John M. Murphy, Peter Nessen, Robert L. Nessen and Carl E. Heilman
(collectively, the "Original Limited Partners"); and
Whereas, a portion of the purchase price of the Liberty Housing Interest was
paid by Liberty Housing executing and delivering to each Original Limited
Partner a non-recourse promissory note (collectively, the "Original Purchase
Notes" and individually, the "Original Purchase Note"); and
Whereas, Liberty Housing secured repayment of the Original Purchase Notes by
executing and delivering to each Original Limited Partner a pledge agreement
(collectively, the "Pledge Agreements"), which Pledge Agreements granted a
security interest to each Original Limited Partner in an undivided portion of
the Liberty Housing Interest; and
Whereas, Austintown Apartments is desirous of purchasing from Liberty LGP all of
the following, to wit: a) the Liberty LGP Interest; and b) all right, title and
interest that Liberty LGP has had, currently has, and may have in
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the future, in and to Austintown Associates, including, without limitation all
right, title and interest in and to any and all real, personal and intangible
property rights and interests of, in and to Austintown Associates, and excluding
only payment of the prorated management fee pursuant to the provisions of
paragraph 4 of this Agreement (collectively, the "Liberty LGP Related Property
Interests"); and
Whereas, Liberty LGP is desirous of selling its Liberty LGP Interest and Related
Property Interests to Austintown Apartments; and
Whereas Austintown Apartments is desirous of purchasing from Liberty Housing all
of the following, to wit: a) the Liberty Housing Interest; and b) all right,
title and interest that Liberty Housing has had, currently has, and may have in
the future, in and to Austintown Associates, including, without limitation, all
right, title and interest in and to any and all real, personal and intangible
property rights and interests of, in and to Ausintown Associates (collectively,
the Liberty Housing Related Property Interests"); and
Whereas, Liberty Housing is desirous of selling its Liberty Housing Interest and
Liberty Housing Related Property Interests to Austintown Associates; and
Therefore, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which consideration is acknowledged by all the parties, Mr.
Manchi, Mr. Baker, Austintown Apartments, Liberty LGP and Liberty Housing
mutually covenant and agree as follows:
1. Sale and Purchase of Liberty LGP Interest and Liberty LGP Related Property
Interests.
Subject to the terms and conditions set forth herein, Liberty LGP agrees to sell
to Austintown Apartments, and Austintown Apartments agrees to purchase from
Liberty, the Liberty LGP Interest and Liberty LGP Related Property Interests.
2. Sale and Purchase of Liberty Housing Interest and Liberty Housing Related
Property Interests.
Subject to the terms and conditions set forth herein, Liberty Housing agrees to
sell to Austintown Apartments, and Austintown Apartments agrees to purchase from
Liberty Housing, the Liberty Housing Interest and the Liberty Housing Related
Property Interests.
3. Purchase Price.
The total purchase price (the "Purchase Price") of the Liberty LGP Interest,
Liberty LGP Related Property Interests, Liberty Housing Interest and Liberty
Housing Related Property Interests being acquired by Austintown Associates from
Liberty LGP and Liberty Housing pursuant to paragraphs 1 and 2 of this Agreement
is the sum of the following: a) Two Hundred Fifty Thousand Dollars
($250,000.00); b) cancellation of the Original Purchase Note dated October 30,
1984, and drawn payable to the order of Mr. Manchi in the original principal
amount of Four Hundred Thousand Dollars ($400,000.00) (the "Manchi Original
Purchase Note"); and c) cancellation of the Original Purchase Note dated October
30, 1984, and drawn payable to the order of Mr. Baker in the original principal
amount of Four Hundred Thousand Dollars ($400,000.00) (the "Baker Original
Purchase Note"). The Purchase Price shall be paid in accordance with the
provisions set forth in paragraph 4 of this Agreement. The parties acknowledge
that this Agreement does not allocate the Purchase Price between Liberty LGP and
Liberty Housing. The parties agree that the purchase price shall be allocated
between Liberty LGP and Liberty Housing at the sole discretion of Liberty LGP
and Liberty Housing.
The Purchase Price shall be paid and deposited with the Limited Escrow Agent (as
hereinafter defined) on or before the Deposit Date (as hereinafter defined) in
the following manner, to wit:
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3.1 On or before one business day prior to the Deposit Date, Mr. Manchi
and Mr. Baker, shall make the following contributions to the capital
of Austintown Apartments, to wit: a) cash in the amount of One Hundred
Twenty Five Thousand Dollars ($125,000.00); b) the Manchi Original
Purchase Note, which note shall be endorsed by Mr. Manchi, without
recourse, to the order of Austintown Apartments; c) the Baker Original
Purchase Note, which note shall be endorsed by Mr. Baker, without
recourse, to the order of Austintown Apartments; and d) a promissory
note identical in form and content to the promissory note set forth in
Exhibit A to this Agreement (the "Manchi-Baker Promissory Note").
3.2 On or before the Deposit Date, Austintown Apartments shall undertake
the following actions and make the following deposits with the Limited
Escrow Agent, to wit: a) pay the sum of One Hundred Twenty Five
Thousand Dollars ($125,000.00) to the Limited Escrow Agent; b) cancel
the Manchi Original Purchase Note and deliver the same to the Limited
Escrow Agent; c) cancel the Baker Original Purchase Note and deliver
the same to the Limited Escrow Agent; and d) endorse the Manchi-Baker
Promissory Note, with recourse, to the order of Liberty LGP and
Liberty Housing and deliver the same to the Limited Escrow Agent.
4. Prorations.
The parties agree that the sale of the Liberty LGP Interest, Liberty LGP Related
Property Interests, Liberty Housing Interest and Liberty Housing Related
Property Interests shall not be subject to any prorations except the annual
management fee paid to Liberty LGP, which management fee shall be prorated to
the date of Deposit Date. Each party agrees to pay their legal and all other
out-of-pocket expenses associated with the sale of said general and limited
partnership interests.
5. Conveyance of Liberty LGP Interest, Liberty LGP Related Property Interest,
Liberty Housing Interest and Liberty Housing Related Property Interests.
Liberty LGP shall convey its Liberty LGP Interest and LGP Related Property
Interests to Austintown Apartments by a limited warranty assignment, which
assignment shall be identical in form and content to the limited warranty
assignment set forth in Exhibit B to this Agreement and shall be executed and
delivered by Liberty LGP to the Limited Escrow Agent on or before the Deposit
Date.
Liberty Housing shall convey its Liberty Housing Interest and Liberty Housing
Related Property Interests to Austintown Apartments by a limited warranty
assignment, which assignment shall be identical in form and content to the
limited warranty assignment agreement set forth in Exhibit C to this Agreement
and shall be executed and delivered by Liberty LGP to the Limited Escrow Agent
on or before the Deposit Date.
6. Representation and Warranties of Liberty LGP.
Liberty LGP represents and warrants to Austintown Apartments that:
6.1 Liberty LGP is, and will remain during the term of this Agreement and
for three (3) years following the Deposit Date, duly organized,
validly existing and in good standing under the laws and jurisdiction
of its organization and, to the extent necessary, duly authorized and
qualified to transact any and all business contemplated by this
Agreement in the jurisdiction where the Project is located; and
6.2 Liberty LGP possesses and shall continue to possess all requisite
authority, power, licenses, permits, franchises and approvals
necessary to conduct its business and to execute, deliver and comply
with its obligations under this Agreement; and
6.3 Subject only to the occurrence of the conditions precedent set forth
in paragraphs 10 and 11 of this Agreement, the execution and delivery
of this Agreement and Liberty LGP's performance of and compliance with
the terms hereof in the manner contemplated by this Agreement will not
violate its
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limited partnership agreement, any instrument governing its
operations, or any laws which violation could have a material adverse
effect upon the validity, performance and enforceability of any of the
terms of this Agreement applicable to Liberty LGP, and will not
constitute a default or event which, with notice or the lapse of time
or both, would constitute a default, under any contract, agreement, or
other instrument dated on or after December 27, 1995 and to which
Liberty LGP is a party and signatory, or which may be applicable to
any of it assets and of which Liberty LGP has actual knowledge; and
6.4 This Agreement constitutes a valid, legal and binding obligation of
Liberty LGP, enforceable in accordance with its terms; and
6.5 Liberty LGP owns legal and equitable title to the Liberty LGP Interest
and Liberty LGP Related Property Interests being conveyed to
Austintown Apartments under the terms of this Agreement, which legal
and equitable title is free and clear of any liens or encumbrances of
any type or nature; and
6.6 Liberty LGP has no obligation to sell or transfer the Liberty LGP
Interest and Liberty LGP Related Property Interests, except to
Austintown Apartments as provided in this Agreement; and
6.7 To the knowledge of Liberty LGP, there is no litigation or other
claims pending before any court, administrative or other governmental
body involving, or threatened against, the Liberty LGP Interest and
Liberty LGP Related Property Interests being conveyed to Austintown
Apartments under the terms of this Agreement
7. Liberty Housing represents and warrants to Austintown Apartments that:
7.1 Liberty Housing is, and will remain during the term of this Agreement
and for three (3) years following the Deposit Date, duly organized,
validly existing and in good standing under the laws and jurisdiction
of its organization; and
7.2 Liberty Housing possesses and shall continue to possess all requisite
authority, power, licenses, permits, franchises and approvals
necessary to conduct its business and to execute, deliver and comply
with its obligations under this Agreement; and
7.3 Subject only to the occurrence of the conditions precedent set forth
in paragraphs 10 and 11 of this Agreement, the execution and delivery
of this Agreement and Liberty Housing's performance of and compliance
with the terms hereof in the manner contemplated by this Agreement
will not violate its limited partnership agreement, any instrument
governing its operations, or any laws which violation could have a
material adverse effect upon the validity, performance and
enforceability of any of the terms of this Agreement applicable to
Liberty Housing, and will not constitute a default or event which,
with notice or the lapse of time or both, would constitute a default,
under any contract, agreement, or other instrument to which Liberty
Housing is a party or which may be applicable to any of it assets and
of which Liberty Housing has actual knowledge; and
7.4 This Agreement constitutes a valid, legal and binding obligation of
Liberty Housing, enforceable in accordance with its terms; and
7.5 Liberty Housing owns legal and equitable title to the Liberty Housing
Interest and Liberty Housing Related Property Interests being conveyed
to Austintown Apartments under the terms of this Agreement, which
legal and equitable title is free and clear of any liens or
encumbrances of any type or nature except for the lien of the Pledge
Agreements securing the Original Purchase Notes ; and
7.6 Liberty Housing has no obligation to sell or transfer its Liberty
Housing Interest and Liberty Housing Related Property Interests,
except to Austintown Apartments as provided in this Agreement; and
7.7 To the knowledge of Liberty Housing, there is no litigation or other
claims pending before any court, administrative or other governmental
body involving, or threatened against, the general partnership
interest being conveyed to Austintown Apartments under the terms of
this Agreement
8. Austintown Apartments represents and warrants to Liberty LGP and Liberty
Housing that:
8.1 Commencing November 1, 1999, Austintown Apartments will be duly
organized, validly existing and in good standing under the laws and
jurisdiction of its organization, and that at all times after November
1,
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1999, and throughout the remaining term of this Agreement it shall
remain, to the extent necessary, duly authorized and qualified to
transact any and all business contemplated by this Agreement in the
jurisdiction where the Project is located; and
8.2 Austintown Apartments possesses and shall continue to possess all
requisite authority, power, licenses, permits, franchises and
approvals necessary to conduct its business and to execute, deliver
and comply with its obligations under this Agreement; and
8.3 Subject only to the occurrence or waiver of the conditions precedent
set forth in paragraphs 10 and 11 of this Agreement, the execution and
delivery of this Agreement and Austintown Apartments's performance of
and compliance with the terms hereof in the manner contemplated by
this Agreement will not violate its articles of incorporation,
by-laws, any instrument governing its operations, or any laws which
violation could have a material adverse effect upon the validity,
performance and enforceability of any of the terms of this Agreement
applicable to Austintown Apartments, and will not constitute a default
or event which, with notice or the lapse of time or both, would
constitute a default, under any contract, agreement, or other
instrument to which Austintown Apartments is a party or which may be
applicable to any of it assets; and
8.4 This Agreement constitutes a valid, legal and binding obligation of
Austintown Apartments, enforceable in accordance with its terms; and
8.5 Austintown Apartments understands that the interests being conveyed to
it under the terms of paragraphs 1 and 2 of this Agreement have not
been registered or qualified under the Securities Act of 1933 (the
"1933 Act") or the securities laws of any state, and that neither all
nor any part of said interests may be resold unless said sale is
registered under the 1933 Act and such laws or unless an exemption
from registration or qualification is available; and
8.6 Austintown Apartments, by virtue of its ownership and management by
Messrs. Manchi and Baker, considers itself a substantial,
sophisticated investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks associated with acquiring the Liberty LGP Interest,
Liberty LGP Related Property Interests, Liberty Housing Interest and
Liberty Housing Related Property Interests; and
8.7 Austintown Apartments is familiar with and has access to all material
information concerning the Project, the past, current and future
operation of the Project; and
8.8 Austin Incorporated is not acquiring the Liberty LGP Interest, Liberty
LGP Related Property Interests, Liberty Housing Interest or the
Liberty Housing Related Property Interests with a view to distribution
in violation of the 1933 Act. Neither Austintown Apartments nor anyone
acting on its behalf has offered, transferred, pledged, sold or
otherwise disposed of the Liberty LGP Interest, Liberty LGP Related
Property Interests, Liberty Housing Interest or Liberty Housing
Related Property Interests being conveyed to it, any interest in the
Liberty LGP Interest, Liberty LGP Related Property Interests, Liberty
Housing Interest or Liberty Housing Related Property Interests or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Liberty LGP Interest,
Liberty LGP Related Property Interests, Liberty Housing Interest or
the Liberty Housing Related Property Interests, any interest in the
Liberty LGP Interest, Liberty LGP Related Property Interests, Liberty
Housing Interest or Liberty Housing Related Property Interests or any
other similar security from, or otherwise approached or negotiated
with respect to the Liberty LGP Interest, Liberty LGP Related Property
Interests, Liberty Housing Interests, Liberty Housing Related Property
Interests, any interest in the Liberty LGP Interest, Liberty LGP
Related Property Interests, Liberty Housing Interest or Liberty
Housing Related Property Interests or any other similar security with,
any person in any manner, or made any general solicitation by means of
general advertising or in any other manner , or taken any other action
any of which would constitute a distribution of the Liberty LGP
Interest, Liberty LGP Related Property Interests, Liberty Housing
Interest or Liberty Housing Related Property Interests under the 1933
Act or which would render the disposition of the Liberty LGP Interest,
Liberty LGP Related Property Interests, Liberty Housing Interest or
Liberty Housing Related Property Interests a violation of section 5 of
the 1933 Act or require registration pursuant thereto, nor will it
act, nor has it authorized or will authorize any person to act, in
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such manner with respect to the Liberty LGP Interest, Liberty LGP
Related Property Interests, Liberty Housing Interest or Liberty
Housing Related Property Interests.
9. Representation and Warranties of Messrs. Manchi and Baker.
Messrs. Manchi and Baker, individually and jointly, represent to Liberty LGP and
Liberty Housing that:
9.1 That they possess and shall continue to possess all requisite
authority and power necessary to comply with their obligations set
forth in paragraphs 3.1 and 13 of this Agreement; and
9.2 Subject to the occurrence of the conditions set forth in paragraphs 10
and 11 of this Agreement, the compliance with their obligations set
forth in paragraphs 3.1 and 13 of this Agreement will not constitute a
default or event which, with notice or the lapse of time or both,
would constitute a default, under any contract, agreement, or other
instrument to which either of them is a party or which may be
applicable to any of their assets; and
9.3 Paragraphs 3.1 and the applicable provisions of paragraph 13 of this
Agreement constitutes a valid, legal and binding obligation of each of
them, enforceable in accordance with the terms set forth in said
paragraph.
10. Condition Precedent - Departmental Approval.
The parties acknowledge that the transfer of the Liberty LGP Interest and
Liberty Housing Interest can not be effectuated without the prior approval of
the United States Department of Housing and Urban Development's (the
"Department"). Immediately upon the execution of this Agreement by all parties,
and upon the parties receipt of all necessary consents by the Original Limited
Partners as provided for in subparagraph 11 of this Agreement, Austintown
Apartments, at its sole cost and expense, shall prepare and file with the
Department's Cleveland Area Office all documents required by the Department
regarding its approval of the transfer of the Liberty LGP Interest and Liberty
Housing Interest; and Austintown Apartments shall use its best efforts to obtain
the Department's approval concerning the transfer of Liberty LGP Interest and
Liberty Housing Interest. If the parties can not obtain the Department's
approval concerning the transfer of either the Liberty LGP Interest or the
Liberty Housing Interest within six (6) months following receipt of all
necessary consents by the Original Limited Partners as provided for in paragraph
11 of this Agreement, then this Agreement shall automatically become null and
void and no party shall have any further rights or duties hereunder.
11. Condition Precedent - Original Limited Partner Approval.
The parties acknowledge that the terms and conditions set forth in the Pledge
Agreements require that the transfer of the Liberty Housing Interest and Liberty
Related Property Interests as contemplated by this Agreement receive the
unanimous consent of the Original Limited Partners. Immediately upon all
parties' execution of this Agreement, the parties shall fully cooperate with
each other and use their best efforts to obtain said unanimous consent of the
Original Limited Partners. If the parties can not obtain unanimous consent of
the Original Limited Partners to the transfer of the Liberty Housing Interest
and Liberty Housing Related Property Interests as contemplated by this Agreement
on or before April 1, 2000, then this Agreement shall automatically become null
and void and no party shall have any further rights or duties hereunder.
12. Escrow Deposit and Disbursement.
12.1 The parties hereby appoint Letson, Griffith, Woodall, Lavelle &
Rosenberg Co., L.P.A., 155 South Park Avenue, Warren, Ohio, Facsimile
Number 330-392-5419, E-Mail Number (the "Limited Escrow Agent") as the
escrow agent to collect and disburse the closing deposits of the
parties in accordance with the terms set forth herein. The parties
acknowledge that the Limited Escrow Agent has acted as legal counsel
for Messrs. Manachi and Baker and Austintown Apartments concerning
<PAGE>
the purchase of the Liberty LGP Interest, Liberty LGP Related Property
Interests, Liberty Housing Interest and Liberty Housing Related
Property Interests, and the parties hereby waive any conflict of
interest that may arise because the Limited Escrow Agent acted as such
legal counsel and is the party responsible for collecting and
disbursing the deposits of the parties. Messrs. Manchi and Baker shall
be solely responsible for payment of all fees charged by Letson,
Griffith, Lavelle & Rosenberg Co., L.P.A. in connection with its
duties as Limited Escrow Agent. The parties agree that the Limited
Escrow Agent shall have the right to select any legal counsel to
defend any action brought against it by any party to this Agreement
concerning any matter related to this Agreement. The parties, jointly
and severally, agree to apy all legal fees and related expenses
charged by the counsel so selected by the Limited Escrow Agent.
12.2 The Limited Escrow Agent agrees to hold and disburse the deposits of
all parties in accordance with the terms set forth herein.
12.3 On or before the fifth business day following the occurrence of the
condition precedent referred to in paragraph 10 of this Agreement (the
"Deposit Date") all parties shall make their respective deposits with
the Limited Escrow Agent.
12.4 If the Limited Escrow Agent shall first have received the deposits of
all parties on or before the Deposit Date, then the Limited Escrow
Agent shall distribute: a) to Liberty LGP and Liberty Housing the
following: i) the sum of One Hundred Twenty Five Thousand Dollars
($125,000.00); ii) the cancelled Manchi Original Purchase Note; iii)
the cancelled Baker Original Purchase Note; and iv) the Manchi-Baker
Promissory Note; and b) to Austintown Apartments the limited warranty
assignment of the Liberty LGP Interest, Liberty LGP Related Property
Interests, Liberty Housing Interest and Liberty Housing Related
Property Interests deposited by Liberty LGP and Liberty Housing.
12.5 If The Limited Escrow Agent has not received the deposit of all
parties on or before the Deposit Date, then the Limited Escrow Agent
shall immediately send written notice to all parties specifying which
party or parties have failed to make the required deposits and,
thereafter, the Limited Escrow Agent shall continue to hold all
deposits until such time as it has received written notice from any
party who has made its required deposit instructing the Limited Escrow
Agent as to the disposition of said complying party's deposits. Upon
receipt of said written notice, the Limited Escrow Agent shall
immediately comply with the instructions set forth in the written
notice received by it and, thereafter, shall give written notice to
all other parties to this Agreement as to the action undertaken by the
Limited Escrow Agent.
13. Release and Covenant Not To Sue.
In consideration of the covenants and agreements set forth herein, effective
upon the receipt and disbursement of all deposits as set forth in paragraph 12.4
of this Agreement, Liberty LGP and Liberty Housing do hereby release, acquit and
forever discharge Mr. Manchi, Mr. Baker, Austintown Apartments and Austintown
Associates, their related management company, and all other agents, attorneys,
affiliates, heirs, executors, personal representatives, successors and assigns
of and from any and all charges, claims, demands, damages, lawsuits, actions or
causes of action, of any kind or description whatsoever, whether arising out of
tort, contract or otherwise, in law or in equity, excepting only payment of the
management fee proration pursuant to paragraph 4 of this Agreement, which
Liberty LGP and Liberty Housing now have, have had or may hereafter have against
Mr. Manchi, Mr. Baker, Austintown Apartments, Austintown Associates, their
related management company, and all other agents, attorneys, affiliates, heirs,
executors, personal representatives, successors and assigns, resulting from any
matter whatsoever arising in connection with the operation of the Project,
management of the Project by a related management company and any self-dealing
between the related management company, Mr. Manchi, Mr. Baker and Austintown
Associates, the distribution or failure to distribute surplus cash or any other
property of Austintown Associates, including all past, present and future
consequences, losses, negotiations, injuries, expenses, including reasonable
attorneys' fees, and damages of any kind, nature or description relating thereto
from January 1, 1960, to December 31, 2002.
In consideration of the covenants and agreements set forth herein, effective
upon the receipt and disbursement of all deposits as set forth in paragraph 12.4
of this Agreement, Mr. Manchi, Mr. Baker and Austintown Apartments do hereby
release, acquit and forever discharge Liberty LGP and Liberty Housing, their
agents, attorneys, affiliates,
<PAGE>
successors and assigns of and from any and all charges, claims, demands,
damages, lawsuits, actions or causes of action, of any kind or description
whatsoever, whether arising out of tort, contract or otherwise, in law or in
equity, which Mr. Manchi, Mr. Baker or Austintown Apartments, their agents,
attorneys, affiliates, heirs, executors, personal representatives, successors
and assigns, now have, have had or may hereafter have against Liberty LGP or
Liberty Housing, their agents, attorneys, affiliates, successors and assigns,
resulting from any matter whatsoever arising in connection with the operation of
the Project, management of the Project, distribution or failure to distribute
surplus cash or any other property of the Project, and re-syndication of the
original limited and general partnership interests of Austintown Associates,
including all past, present and future consequences, losses, negotiations,
injuries, expenses, including reasonable attorneys' fees, and damages of any
kind, nature or description relating thereto from January 1, 1960, to December
31, 2002.
In consideration of the covenants and agreements set forth herein, effective
upon the receipt and disbursement of all deposits as set forth in paragraph 12.4
of this Agreement, Liberty LGP and Liberty Housing do hereby release, acquit and
forever discharge the accounting firm of Bick-Fredman & Co., Cleveland, Ohio and
Ms. Mary Ann Gehringer, a partner in said accounting firm, their successors and
assigns, of and from any and all charges, claims, demands, damages, lawsuits,
actions or causes of action, of any kind or description whatsoever, whether
arising out of tort, contract or otherwise, in law or in equity, which Liberty
LGP and Liberty Housing, their agents, attorneys, affiliates, successors and
assigns, now have, have had or may hereafter have against Bick-Fredman & Co. and
Ms. Mary Ann Gehringer, their successors and assigns, resulting from any matter
whatsoever arising in connection with the preparation of audited financial
statements concerning the Project, including all past, present and future
consequences, losses, negotiations, injuries, expenses, including reasonable
attorneys' fees, and damages of any kind, nature or description relating thereto
from January 1, 1960, to December 21, 2002.
14. Original Purchase Notes.
The parties acknowledge that, except for the cancelled Manchi Original Purchase
Note and Baker Original Purchase Note, all or a portion of the remaining
Original Purchase Notes may remain in full force and effect after the
consummation of the transaction that is the subject of this Agreement, and that
the Liberty Housing Interest and Liberty Housing Related Property Interest are
being acquired by Austintown Apartments subject to the Pledge Agreements that
secure repayment of the Original Purchase Notes. The parties further acknowledge
and agree that the Original Purchase Notes are non-recourse obligations and the
execution of this Agreement and performance of the terms thereof by the parties
does not, and is not intended to, impose any liability to any holder of any
Original Purchase Note or any third party upon either Austintown Apartments, Mr.
Manchi or Mr. Baker for the non-payment of any principal, interest or other
amounts owing under the terms of the Original Purchase Notes. Subject to the
foregoing limitation of liability, Austintown Apartments agrees to use its best
efforts to insure the timely payment of principal, interest and other amounts
owing under the terms of the Original Purchase Notes.
15. Miscellaneous.
15.1 No amendment or modification of this Agreement shall be valid unless
evidenced by an instrument, in writing, signed by all the parties.
15.2 If any one or more of the covenants, agreements, provisions, or terms
of this Agreement shall be for any reason whatsoever held invalid,
then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
15.3 Notices hereunder shall be in writing, and may be delivered by hand,
first class, registered or certified mail, express delivery, facsimile
or other telecommunication device capable of confirmation of receipt,
addressed to the parties at the addresses first set forth above, or at
such other address as each party may furnish to the other parties in
writing.
15.4 This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Ohio.
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15.5 This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument.
15.6 All representations and warranties set forth in this Agreement shall
remain in full force and effect until the fourth anniversary of the
Deposit Date, and thereafter said representations and warranties shall
become null and void.
In Witness Whereof, the parties have duly executed and delivered this Agreement
as of the day and year first set forth above.
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SIGNATURE PAGE
AUSTINTOWN ASSOCIATES
AGREEMENT TO PURCHASE AND SELL PARTNERSHIP INTERESTS
/s/ James P. Manchi
James P. Manchi
/s/ Robert P. Baker
Robert P. Baker
Austintown Apartments LLC
By: /s/ Robert P. Baker
Managing Member
Liberty LGP Limited Partnership
By: Liberty Housing Corporation, General Partner
By: /s/ Michael A. Stoller
President
Liberty Housing Corporation
Liberty Housing Partners Limited Partnership
By: TNG Properties, Inc, General Partner
By: /s/ Michael A. Stoller
President
TNG Properties, Inc.
Letson, Griffith, Woodall, Lavelle & Rosenberg Co., L.P.A.
By:_______________________________
General Partner
<PAGE>
EXHIBIT A
AGREEMENT TO PURCHASE AND SELL PARTNERSHIP INTERESTS
PURCHASE MONEY NOTE FORM
DATE: [INSERT DATE OF ESCROW DEPOSIT]
CITY: YOUNGSTOWN
STATE: OHIO
1. BORROWER'S PROMISE TO PAY
For value received, we promise to pay the sum of One Hundred Twenty Five
Thousand Dollars ($125,000.00) (this amount is called "principal"), plus
interest, pursuant to section 2 hereof, to the order of the Lender. The Lender
is [insert Austintown Apartments LLC]. We understand that the Lender may
transfer this Note. The Lender or anyone who takes this Note by transfer and who
is entitled to receive payments under this Note is called the "Note Holder".
2. INTEREST
Interest will be charged on unpaid principal until the full amount of principal
has been paid. We will pay interest at an annual rate of nine percent (9.0%),
which interest shall be calculated on the basis of a three hundred sixty-five
(365) day year.
The interest rate required by this section 2 is the rate we will pay both before
and after any default described in Section 6(B) of this Note.
3. PAYMENTS
We will make a payment of principal and interest in the amount of Eighty Six
Thousand Two Hundred and Fifty Dollars ($86,250.00) on [insert first anniversary
date of escrow deposit date], and we will make a final payment of principal and
interest in the amount of Fifty Four Thousand Five Hundred Dollars ($54,500.00)
on [insert second anniversary date of escrow deposit date].
Each payment will be applied to interest before principal. If, on [insert second
anniversary date of escrow deposit date], we still owe any amounts under this
Note, we will pay those amounts in full on that date, which date is called the
"maturity date".
We will make our payments at 100 Second Avenue, Needham, Massachusetts 02494, or
at a different place if required by the Note Holder.
4. BORROWER'S RIGHT TO PREPAY
A payment of principal only is known as a "Prepayment". When we make a
Prepayment, we will tell the Note Holder in writing that we are doing so. We may
make a full prepayment or partial prepayments without paying any
<PAGE>
prepayment charge. The Note Holder will use all of our prepayments to reduce the
amount of principal that we owe under this Note. If we make a partial
prepayment, there will be no changes in the due date or in the amount of our
first annual payment unless the Note Holder agrees in writing to those changes.
All prepayments shall be applied first to accrued interest and then to
principal.
5. LOAN CHARGES
If a law, which applies to this loan and which sets maximum loan charges, is
finally interpreted so that the interest or other loan charges collected or to
be collected in connection with this loan exceed the permitted limits, then: (I)
any such loan charge shall be reduced by the amount necessary to reduce the
charge to the permitted limit; and (II) any sums already collected from us which
exceeded permitted limits will be refunded to us. The Note Holder may choose to
make this refund by reducing the principal we owe under this Note or by making a
direct payment to us.
6. BORROWER'S FAILURE TO PAY AS REQUIRED
(A) Late Charges for Overdue Payments
If the Note Holder has not received the full amount of any annual payment by the
end of fifteen (15) calendar days after the date it is due, we will pay a late
charge to the Note Holder. The amount of the charge will be three percent (3.0%)
of our overdue payment of principal and/or interest. We will pay this late
charge promptly but only once on each late payment.
(B) Default
If I do not pay the full amount of each annual payment on the date it is due, we
will be in default.
(C) Notice of Default
If we are in default, the Note Holder may send us a written notice telling us
that if we do not pay the overdue amount by a certain date, the Note Holder may
require us to pay immediately the full amount of principal which has not been
paid and all the interest that we owe on that amount. That date must be at least
thirty (30) days after the date on which the notice is delivered or mailed to
us.
(D) No Waiver By Note Holder
Even if, at a time when we are in default, the Note Holder does not require us
to pay immediately in full as described above, the Note Holder will still have
the right to do so if we are in default at a later time.
(E) Payment of Note Holder's Costs and Expenses
If the Note Holder has required us to pay immediately in full as described
above, the Note Holder will have the right to be paid back by us for all of its
costs and expenses in enforcing this Note to the extent not prohibited by
applicable law. Those expenses include, for example, reasonable attorneys' fees.
<PAGE>
7. GIVING OF NOTICES
Unless applicable law requires a different method, any notice that must be given
to us under this Note will be given by delivering it or by mailing it by first
class mail to us at 1050 Compass West, Youngstown, Ohio 44515.
Any notice that must be given to the Note Holder under this Note will be given
by mailing it by first class mail to the Note Holder at the address stated in
Section 3(A) above or at a different address if we are given a notice of that
different address.
8. OBLIGATIONS OF PERSONS UNDER THIS NOTE
If more than one person signs this Note, each person is fully and personally
obligated to keep all of the promises made in this Note, including the promise
to pay the full amount owed. Any person who is a guarantor, surety or endorser
of this Note is also obligated to do these things. Any person who takes over
these obligations, including the obligations of a guarantor, surety or endorser
of this Note, is also obligated to keep all of the promises made in this Note.
The Note Holder may enforce its rights under this Note against each person
individually or against all of us together. This means that any one of us may be
required to pay all of the amounts owed under this Note.
9. WAIVERS
We and any other person who has obligations under this Note waive the rights of
presentment and notice of dishonor. "Presentment" means the right to require the
Note Holder to demand payment of amounts due. "Notice of Dishonor" means the
right to require the Note Holder to give notice to other persons that amounts
due have not been paid.
10. GOVERNING LAW
The Note Holder and we agree that this Note and the rights and obligations of
all the parties under this Note shall be governed by and construed under the
applicable laws of the State of Ohio.
WITNESS THE HAND(S) AND SEALS(S) OF THE UNDERSIGNED.
- --------------------------------------
Borrower, James P. Manchi
- ---------------------------------------
Borrower, Robert P. Baker
<PAGE>
EXHIBIT B
AGREEMENT TO PURCHASE AND SELL PARTNERSHIP INTERESTS
ASSIGNMENT FORM
This Assignment is made as of the [insert escrow deposit date], by Liberty LGP
Limited Partnership, a limited partnership organized and validly existing under
the laws of the Commonwealth of Massachusetts whose primary business address is
100 Second Avenue, Needham, Massachusetts 02494 (the "Assignor").
For good and valuable consideration, the receipt and sufficiency of which
consideration is acknowledged by the Assignor, the Assignor does hereby grant,
transfer and assign to Austintown Apartments LLC, a limited liability
corporation organized and existing under the laws of the State of Ohio whose
primary business address is 1050 Compass West, Youngstown, Ohio 44515 all of the
following interests, to wit: a) one hundred percent (100.0%) of the Assignor's
general partnership interest in and to Austintown Associates, a limited
partnership organized and existing under the laws of the State of Ohio whose
primary place of business is 1050 Compass West, Youngstown, Ohio; b) all right,
title and interest, if any, that the Assignor has had, currently has, and may
have in the future, in and to Austintown Associates, including, without
limitation all right, title and interest in and to any and all real, personal
and intangible property rights and interests of, in and to Austintown
Associates.
Wherefore, the Assignor has caused this Assignment to be executed and delivered
as of the day and year first set forth above.
[SIGNATURE BLOCK]
[NOTARY BLOCK]
<PAGE>
EXHIBIT C
AGREEMENT TO PURCHASE AND SELL PARTNERSHIP INTERESTS
ASSIGNMENT FORM
This Assignment is made as of the [insert escrow deposit date], by Liberty
Housing Partners Limited Partnership, a limited partnership organized and
validly existing under the laws of the Commonwealth of Massachusetts whose
primary business address is 100 Second Avenue, Needham, Massachusetts 02494 (the
"Assignor").
For good and valuable consideration, the receipt and sufficiency of which
consideration is acknowledged by the Assignor, the Assignor does hereby grant,
transfer and assign to Austintown Apartments LLC, a limited liability
corporation organized and existing under the laws of the State of Ohio whose
primary business address is 1050 Compass West, Youngstown, Ohio 44515 all of the
following interests, to wit: a) one hundred percent (100.0%) of the Assignor's
limited partnership interest in and to Austintown Associates, a limited
partnership organized and existing under the laws of the State of Ohio whose
primary place of business is 1050 Compass West, Youngstown, Ohio; b) all right,
title and interest, if any, that the Assignor has had, currently has, and may
have in the future, in and to Austintown Associates, including, without
limitation all right, title and interest in and to any and all real, personal
and intangible property rights and interests of, in and to Austintown
Associates.
Wherefore, the Assignor has caused this Assignment to be executed and delivered
as of the day and year first set forth above.
[SIGNATURE BLOCK]
[NOTARY BLOCK]
<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, 1999 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 532,399
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 532,399
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,999,849
<CURRENT-LIABILITIES> 12,088,547
<BONDS> 1,117,907
0
0
<COMMON> 0
<OTHER-SE> (11,206,605)
<TOTAL-LIABILITY-AND-EQUITY> 1,999,849
<SALES> 0
<TOTAL-REVENUES> 179,819
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 99,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,491,615
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,410,826)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,998,579
<CHANGES> 0
<NET-INCOME> 1,587,753
<EPS-BASIC> 72.89
<EPS-DILUTED> 0
</TABLE>
