UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 2000
[ ] 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 16
Page 1 of 17
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Part I: Financial Information
Item 1. Financial Statements:
Balance Sheets, June 30, 2000 and December 31, 1999 3-4
Statements of Operations for the Six Months
Ended June 30, 2000 and 1999 5
Statements of Cash Flows for the Six Months Ended
June 30, 2000, and 1999 6
Notes to Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Part II: Other Information
Item 3. Defaults Upon Senior Securities 16
Item 6. Exhibits and Reports on Form 8-K 16
2
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
(Unaudited) (Audited)
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 344,852 $ 526,940
Interest receivable 2,076 --
State tax refund receivable 211,271 --
Deferred legal fees 32,672 40,109
------------ ------------
Total current assets 590,871 567,049
Investments in local limited
partnerships 897,078 1,475,083
------------ ------------
Total assets $ 1,487,949 $ 2,042,132
============ ============
(continued)
3
<PAGE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
(Unaudited) (Audited)
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Liabilities and Partners' Deficit
Current liabilities:
Purchase Money Notes, current maturities $ 10,053,816 $ 12,436,808
Accounts payable to affiliates 237,271 188,272
Accounts payable 2,527 1,565
Accrued expenses 51,968 98,597
Accrued interest payable 138,038 141,318
------------ ------------
Total current liabilities 10,483,620 12,866,560
Purchase money notes, net of current maturities 331,430 648,199
------------ ------------
Total liabilities 10,815,050 13,514,759
------------ ------------
Contingencies -- --
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (159) (128)
Accumulated losses (189,403) (210,889)
------------ ------------
(185,360) (206,815)
------------ ------------
Limited partners (21,566 Units at
June 30, 2000 and December 31, 1999):
Capital contributions (net of
offering costs of $1,134,440) 9,649,520 9,649,520
Capital distributions (465,762) (462,706)
Accumulated losses (18,325,499) (20,452,626)
------------ ------------
(9,141,741) (11,265,812)
------------ ------------
Total partners' deficit (9,327,101) (11,472,627)
------------ ------------
Total liabilities and partners'
deficit $ 1,487,949 $ 2,042,132
============ ============
<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 Six Months Ended
June 30, June 30,
--------------------------------- --------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income $ 4,408 $ 81,673 $ 10,166 $ 94,640
----------- ----------- ----------- -----------
Expenses:
Interest expense 176,463 386,406 359,271 1,135,343
General and
administrative expenses 27,484 34,813 57,991 66,360
----------- ----------- ----------- -----------
Total expenses 203,947 421,219 417,262 1,201,703
----------- ----------- ----------- -----------
Loss before equity in local
limited partnership investments
and Extraordinary items (199,539) (339,546) (407,096) (1,107,063)
Equity in income of Local
Limited Partnership
investments 118,470 56,744 121,610 72,369
----------- ----------- ----------- -----------
Net Loss before
Extraordinary items (81,069) (282,802) (285,486) (1,034,694)
Extraordinary items:
Gain on sale of investments
in Local Limited Partnerships -- 2,654,107 2,434,099 2,654,107
----------- ----------- ----------- -----------
Net income (loss) $ (81,069) $ 2,371,305 $ 2,148,613 $ 1,619,413
=========== =========== =========== ===========
Units used in computing
Basic Net Income(Loss) per
Limited Partnership Unit 21,566 21,566 21,566 21,566
=========== =========== =========== ===========
Basic loss per Limited
Partnership Unit before
Extraordinary items $ (3.78) $ (12.98) $ (13.11) $ (47.50)
=========== =========== =========== ===========
Basic net income (loss) per
Limited Partnership Unit $ (3.78) $ 108.86 $ 98.63 $ 74.34
=========== =========== =========== ===========
<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 Six Months Ended
June 30,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash distributions from Local Limited
Partnerships $ 129,618 $ 251,371
Interest payment on purchase money notes (123,760) (245,730)
Uncashed interest payments on Purchase
money notes from prior years 841
Cash paid for general and administration expenses (27,029) (14,576)
Interest received 8,090 12,207
----------- -----------
Net cash provided (used) by operating activities (13,081) 4,113
----------- -----------
Cash Flows from financing activity:
Capital distributions (3,087) (5,641)
----------- -----------
Net cash used in financing activities (3,087) (5,641)
----------- -----------
Cash Flows from investing activities:
Cash proceeds from sale of investments in
Local Limited Partnerships 100,000 483,451
Closing costs (54,553) --
Cash paid for deferred legal fees (96) --
Estimated state taxes paid from proceeds from sale of
investments in Local Limited Partnerships (211,271) --
----------- -----------
Net cash provided (used) by investing activities (165,920) 483,451
----------- -----------
Net increase (decrease) in cash and cash equivalents (182,088) 481,923
Cash and cash equivalents at:
Beginning of period 526,940 42,284
----------- -----------
End of period $ 344,852 $ 524,207
=========== ===========
Reconciliation of net loss before extraordinary items to net cash provided (used) by
operating activities:
Net loss before extraordinary items $ (285,486) $(1,034,694)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Share of income of local limited
partnership investments (121,610) (72,369)
Cash distributions from local limited
Partnerships 129,618 251,371
Interest expense added to purchase money
notes, net of discount amortization 238,757 964,358
Interest income added to long-term
notes receivable, net of discount
amortization, and interest received -- (82,432)
(Decrease) increase in:
Interest receivable (2,076) --
Accrued interest payable (3,244) (73,902)
Accounts payable to affiliates 48,998 49,027
Accounts payable 962 17,254
Accrued expenses (19,000) (14,500)
----------- -----------
Net cash provided by operating activities $ (13,081) $ 4,113
=========== ===========
<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 June 30, 2000.
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, 1999.
3. Investments in Local Limited Partnerships
The following is a summary of cumulative activity for investments in
Local Limited Partnerships since their dates of acquisition:
(Unaudited) (Audited)
June 30, December 31,
2000 1999
----------- ------------
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 (3,331,079) (3,450,761)
Cash distributions received from Local
Limited Partnerships (4,199,189) (4,069,602)
Cash distributions received from Local
Limited Partnerships recognized as
investment income 95,060 93,162
Value of Local
Limited Partnership investments sold (1,035,518) (465,520)
----------- -----------
Investments in Local Limited Partnerships $ 897,078 $ 1,475,083
=========== ===========
(Continued)
7
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Investments in Local Limited Partnerships, continued
Summarized financial information from the combined statements of operations
of all Local Limited Partnerships is as follows:
For the Six Months Ended
June 30,
---------------------------
2000 1999
---- ----
Rental and other income $ 1,619,168 $ 2,704,338
Expenses:
Operating expenses 978,608 1,747,669
Interest expense 288,437 506,319
Depreciation and amortization 294,530 489,155
----------- -----------
Total expenses 1,561,575 2,743,143
----------- -----------
Net income (loss) $ 57,593 $ (38,805)
=========== ===========
Partnership's share of net income (loss) $ 58,955 $ (37,668)
=========== ===========
Other partners' share of net income (loss) $ (1,362) $ (1,137)
=========== ===========
The differences between the Partnership's share of income in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the six months ended June 30, 2000 and 1999 and the share of net income (loss)
in the above Summarized Statements of Operations consists of the following:
For the Six Months Ended
June 30,
---------------------------
2000 1999
---- ----
Share of income in Local Limited
Partnership Investments in the
Partnership's Statement of Operations $ 121,610 $ 72,369
Partnership's share of income (loss) in the
above summarized Statements of Operations 58,955 (37,668)
----------- -----------
Difference $ 62,655 $ 110,037
=========== ===========
Partnership's unrecorded share of losses (income):
Linden Park $ -- $ 54,521
Brierwood Ltd. 6,642 8,131
Brierwood II, Ltd. 13,743 6,042
Pine Forest Apartments, Ltd. 17,793 5,995
Surry Manor 8,365 29,317
Glendale Manor 6,590
Meadowwood 7,594
Prior year loss carry forward applied
against 1999 net income
Meadowwood -- (11,636)
Glendale Manor -- (1,335)
----------- -----------
Subtotal 60,729 91,035
Cash Distributions
recorded as investment income 1,928 19,002
----------- -----------
Total $ 62,655 $ 110,037
=========== ===========
(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 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 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 $3,087 during the first six
months of 2000 have been treated as distributions from the Local Limited
Partnerships and a distribution to the partners of Liberty Housing Partners
Limited Partnership.
4. Transactions with Affiliates
During the six months ended June 30, 2000, and 1999 the Partnership
recognized general and administrative expenses owed to the Managing General
Partner, as follows:
2000 1999
---- ----
Reimbursement of Partnership
administration expenses $24,000 $25,019
Partnership management fees 25,000 25,000
As of June 30, 2000, and December 31, 1999, accounts payable to
affiliates totaling $237,271 and $188,272, respectively, represent amounts owed
for reimbursements of Partnership administration expenses of $120,000 and
$96,001, respectively, and partnership management fees of $117,271 and $92,271,
respectively.
(Continued)
9
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Statement of Distributable Cash from Operations
Distributable Cash From Operations for the six months ended June 30,
2000, as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $ 10,166
Less: General and administrative expenses per
Statement of Operations (57,991)
--------
Cash from Operations, as defined (47,825)
--------
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
Disposition of Investments
On February 1, 2000, the Partnership sold its 98% interest as a limited
partner (the "Partnership Interest") in Osuna Apartments Company ("Osuna") to
the Sovereign Management Corporation, the company retained by Osuna to manage
its apartment complex (the "Purchaser"). In consideration for the sale of the
Partnership Interest, the Partnership received a net cash purchase price of
$100,000. In connection with the sale, the holders of the Purchase Money Notes
(the "Notes") issued by the Partnership in connection with its acquisition of
the Partnership Interest released the Partnership from all liabilities in
connection with the Notes. After transaction expenses, the Partnership
recognized a gain estimated to be $2,434,099 on the sale of the investment.
As of June 30, 2000 seven series of the Purchase Money Notes, relating to
Fuquay-Varina Homes for the Elderly, Ltd., Oxford Homes for the Elderly, Ltd.,
Williamston Homes for the Elderly, Ltd., Austintown Associates, Meadowwood Ltd.,
Brierwood Ltd, and Pine Forest Apartments, Ltd. had matured and were in default.
The remaining two series of Purchase Money Notes, relating to Glendale Manor
Apartments and Surry Manor, Ltd. mature on August 29, 2000 and July 9, 2001,
respectively. None of the series of Purchase Money Notes is cross-defaulted to
the others, nor are the series of Purchase Money Notes cross-collateralized in
any manner.
The aggregate outstanding principal amount of and accrued and unpaid
interest on the Purchase Money Note obligations of the Partnership, as of June
30, 2000, was $10,580,214. The outstanding obligations are expected to increase
annually as interest continues to accrue under the Purchase Money Notes. The
aggregate outstanding principal amount of the Purchase Money Notes reported on
the Partnership's Balance Sheet ($10,385,246 at June 30, 2000), 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 unamortized discount was
written off in 1999 on those Purchase Money Notes that matured.
The decrease in Purchase Money Note obligations from December 31, 1999 to
June 30, 2000 reflects $2,938,554 in Purchase Money Note obligations from which
the Partnership was released in connection with the sale of the Partnership's
interest in Osuna.
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 Purchase Money Notes.
11
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources, continued
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.
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 Partnerships receive rental income pursuant
to Section 8 rental assistance contracts which expire at various times from May
2000 through March 2005. Under the Multifamily Assisted Housing and Reform and
Affordability Act (MAHRAA) of 1997, as amended, Congress set forth the
legislation for a permanent "mark-to-market" program and provided for permanent
authority for the renewal of Section 8 Contracts. Owners with Section 8
contracts expiring after September 30, 1998 are subject to the provisions of
MAHRAA. On September 11, 1998, HUD issued an interim rule to provide
clarification of the implementation of the mark-to-market program. Since then,
revised guidance has been provided through various HUD housing notices, most
recently HUD housing notice 99-36, which addresses project-based Section 8
contracts expiring in fiscal year 2000.
Under this notice, project owners have several options for Section 8
contract renewals, depending on the type of project and rent level. Options
include marking rents up to market, renewing other contracts with rents at or
below market, referring projects to the Office of Multifamily Housing Assistance
Restructuring (OMHAR) for mark-to-market or "OMHAR lite" renewals, renewing
contracts that are exempted from referral to OMHAR, renewing contracts for
portfolio re-engineering demonstration and preservation projects, and opting out
of the Section 8 program. Owners must submit their option to HUD at least 120
days before expiration of their contract. Each option contains specific rules
and procedures that must be followed to comply with the requirements of housing
notice 99-36.
12
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources, continued
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. The general
partner of Williamston Homes received a five year renewal to March, 2005,
subject to annual Federal appropriation of funds. The remaining properties are
working with HUD to renew their existing contracts for two to five year periods.
The Partnership cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of certain Local
Limited Partnerships currently receiving such subsidy or similar subsidies.
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
$150,000 plus the assumption of the related Purchase Money Note obligations. The
sale of these interests requires consent from all the related Purchase Money
Note holders. Such consents have been requested and, although certain
documentation remains outstanding, management believes that unanimous consent
has been obtained. Management anticipates closing these transactions in the
third quarter of 2000.
Management had also entered into an agreement with the local general
partner of Austintown Associates to sell the Partnership's 98% limited
partnership interest, subject, among other things, to the consent of the related
Purchase Money Note holders. A meeting with the Purchase Money Note holders to
discuss this transaction was held in November 1999. The Partnership has not
received unanimous consent of the Purchase Money Note holders and accordingly
the agreement expired on April 1, 2000. Management is continuing discussions
with the local general partner regarding possibilities for disposing of this
investment.
Management presently anticipates entering into an agreement to sell the
Partnership's 94% interests in Brierwood I & II, Pine Forest and Meadowwood
Apartments. The sale of the Partnership's interests in Brierwood I, Pine Forest
and Meadowwood Apartments also requires consent from all the related Purchase
Money Note holders. Management presently anticipates selling the Partnership's
94% Limited Partnership interests in these properties in the third 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 third quarter of 2000.
13
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources, continued
No assurance can be given that the Partnership will be able to
successfully conclude any of the above transactions. If Partnership funds are
insufficient to pay when due the Purchase Money Notes, the holders of the
Purchase Money Notes will have the right to foreclose on the Partnership's
respective interests in the Local Limited Partnerships. The sale or other
disposition by the Partnership of its interests in the Local Limited
Partnerships, including in connection with such a foreclosure, 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 Unit holders.
Such recapture may cause some or all of the Unit holders to have taxable income
from the Partnership without cash distributions from the Partnership with which
to satisfy the tax liability resulting therefrom.
At June 30, 2000, the Partnership had total cash and cash equivalents of
$344,852, which consisted of funds segregated pursuant to the terms of the
consulting agreement with the General Partner of Linden Park Associates of
$145,065 and cash reserves of $199,787. The reserves include $841 representing
uncashed checks issued to certain Purchase Money Note holders for interest due
under their notes. This amount is also included in accrued interest payable. The
increase in cash reserves compared to $120,946 at December 31, 1999 was
primarily funded from the proceeds of the sale of the Partnership's interest in
Osuna Apartments.
Estimated state taxes totaling $211,271 were paid from the proceeds of
the sale of the Partnership's investments in Fiddlers Creek Apartments. The
Partnership has subsequently reevaluated this obligation and has applied for a
refund of amounts previously remitted.
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 Purchase Money Notes), 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 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
$285,486 in the first six months of 2000 from $1,034,694 in the first six months
of 1999 primarily as a result of the decrease in the Partnership's interest
expense of $776,072.
14
<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 February 1, 2000 the Partnership sold its investment in Osuna
Apartments. The Partnership realized a net gain of $2,434,099, determined as
follows:
Cash received $ 100,000
Forgiveness of Purchase Money Notes 2,938,554
Less: Investment in Osuna Apartments (569,998)
Less: Consulting fees paid in connection with
the disposition (26,924)
Less: Professional fees (7,533)
-----------
Gain on sale of investment in Osuna Apartments Company $ 2,434,099
===========
In the first six months of 2000, the Partnership's interest income
reflects interest earned on reserves of $10,166. In the first six months of
1999, interest income totaling $94,640 consisted of interest earned on reserves
of $2,022 and interest net of discount amortization on the long-term notes
receivable of $18,094 and the write off of the unamortized discount of $74,524.
The Partnership's interest expense decreased to $359,271 in the first six
months of 2000 from $1,135,343 in the first six months of 1999. The decrease is
attributable to the decrease in discount amortization included in interest
expense of $661,696 and the reduction of interest accrued totaling $114,376 due
to the sales of the Fiddlers Creek investment and Osuna Apartments Company,
which included the assumption or release of the related Purchase Money Notes, on
May 28, 1999 and February 1, 2000, respectively.
The Partnership's equity in income from the Local Limited Partnerships
was $121,610 in the first six months of 2000 and $72,369 in the first six months
of 1999.
15
<PAGE>
Part II
Other Information
Item 3. Defaults Upon Senior Securities.
On September 29, 1999 the Purchase Money Notes 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
June 30, 2000, the aggregate arrearages under these notes amounted to
$2,571,102.
The Purchase Money Notes 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 June 30, 2000, the aggregate arrearages under these notes
amounted to $6,603,421.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K.
On February 15, 2000, the Partnership filed a Current Report on Form 8-K
to report the disposition on February 1, 2000 of its limited partner interest in
Osuna Apartments Company. The Form 8-K was amended on April 13, 2000, to include
pro forma financial information for the Partnership, reflecting the disposition.
16
<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: 8/11/00
17
