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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the fiscal year ended March 25, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
Commission File Number 0-13782
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 13-3228969
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Initial Limited Partnership Interests
(Title of Class)
Additional Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
DOCUMENTS INCORPORATED BY REFERENCE
None
Index to exhibits may be found on page 207
Page 1 of 217
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PART I
Item 1. Business.
GENERAL
Cambridge Advantaged Properties Limited Partnership (formerly Hutton Advantaged
Properties Limited Partnership) (the "Partnership") is a limited partnership
which was formed under the laws of the Commonwealth of Massachusetts on June 28,
1984. The General Partners of the Partnership ("General Partners") are Assisted
Housing Associates Inc. (formerly Cambridge Assisted Housing Associates Inc.)
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership. The general partners of Cambridge/Related are the Assisted General
Partner and the Related General Partner. The General Partners manage and control
the affairs of the Partnership. See Item 10, Directors and Executive Officers of
the Registrant, below.
On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. In connection with the Transfer, the Partnership paid to the
Assisted General Partner the accrued asset management fees owed to it in the
aggregate amount of $1,334,116. See Note 8 - Related Party Transactions to the
Financial Statements included in Item 8. below.
Effective May 19, 1994, the Partnership's name was changed to Cambridge
Advantaged Properties Limited Partnership.
On August 9, 1984, pursuant to a prospectus dated August 9, 1984 as supplemented
by the supplements thereto dated September 7, 1984, October 5, 1984 and November
20, 1984 (as so supplemented the "Prospectus"), the Partnership commenced a
public offering (the "Offering", as so supplemented). Pursuant to the Offering,
the Partnership issued 6,674 Units (as defined below) in 1984, each Unit
consisting of one initial limited partnership interest (the "Initial Limited
Partnership Interest") and one warrant to purchase an additional limited
partnership interest (the "Additional Limited Partnership Interest") and
together with the Initial Limited Partnership Interests (the "Limited
Partnership Interests") during the period from January 1, 1985 through January
25, 1985 (a "Unit"), and 5,400 Additional Limited Partnership Interests in 1985.
The Partnership received $53,754,300 (net of Offering expenses and sales
commissions of $6,615,700) as a result of the Offering. The Offering was
completed in March 1985 and no further issuance of Additional Limited
Partnership Interests is anticipated.
INVESTMENT OBJECTIVES/GOVERNMENT INCENTIVES
The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships"), each of which owns or leases and operates an existing
residential housing development (an "Apartment Complex") which is receiving some
form of local, state or federal assistance, including, without limitation,
mortgage insurance, rental assistance payments, permanent mortgage financing
and/or interest reduction payments ("Government Assistance"). In acquiring its
interests in the Local Partnerships ("Local Partnership Interests"), the
Partnership's investment objectives are, to:
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(1) Provide current tax benefits in the form of passive tax losses which limited
partners may use to offset passive taxable income from other sources;
(2) provide long-term capital appreciation through an increase in the value of
the Partnership's investments in Local Partnerships;
(3) provide cash distributions from sale or refinancing transactions; and
(4) preserve and protect the Partnership's capital.
The Partnership is in the process of winding up its operations as it continues
to sell its assets; therefore investment objectives (1), (2) and (4) are no
longer applicable. The Partnership has to date distributed approximately
$4,017,000 from sales transactions and expects to continue to make distributions
from excess sales proceeds, although such aggregate distributions are not
currently anticipated to equal the original investment. The Partnership will no
longer be generating passive losses due to the sale of properties. However,
passive losses previously allocated (to the extent unused) are available to
offset the income expected to be generated from the sales effort.
Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in government assisted
housing. See "Government Programs and Regulations," below. Notwithstanding these
incentives, there remain significant risks. These risks include, but are not
limited to, the uncertainty as to the financial strength and expertise of the
general partners of the Local Partnerships ("Local General Partners"); the
long-term nature of investments in government-assisted housing which limits the
ability of the Partnership to vary its investment portfolio in response to
changing economic, financial and investment conditions; and changes in local
economic circumstances and housing patterns which have an impact on real estate
values. Apartment Complexes benefiting from Government Assistance also require
greater management expertise and may have higher operating expenses than
conventional apartment buildings. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, below.
INVESTMENTS
The Local Partnership Interests owned by the Partnership were acquired from
unaffiliated sellers. The Partnership became the principal limited partner in
these Local Partnerships pursuant to local limited partnership agreements
entered into with the Local General Partners. As a limited partner, the
Partnership's liability for obligations of the Local Partnerships is limited to
its investment. The Local General Partners of the Local Partnerships retain
responsibility for maintaining, operating and managing the Apartment Complexes.
The Partnership is a limited partner, with an ownership interest of 98.99% in
each of the 40 remaining subsidiary partnerships.
Each Local Partnership also has as a special limited partner (the "Local
Affiliated Partner") either C/R Special Partnership or another affiliate of the
General Partners, which, under certain circumstances, has the right to replace
the Local General Partners of the Local Partnership and also has certain rights
with respect to voting on or approving of certain matters, including the sale of
the Apartment Complex. These rights were given to the Local Affiliated Partner
rather than the Partnership so as to avoid claims that by the existence or
exercise of such rights, the Partnership was taking part in the control of the
Local Limited Partnerships' operations and should thereby incur liability as a
General Partner of the Local Partnerships. The Local Affiliated Partner has
agreed to exercise these rights as a fiduciary of the Limited Partners of the
Partnership.
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PURCHASE MONEY NOTES
Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 are obligations at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2000 and 1999 include $4,336,417 of interest accrued
through August 31, 1989.
The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and ultimate
repayment dates of the Purchase Money Notes. The Purchase Money Notes, after the
extended due dates, call for the simple accrual of interest on the balance of
principal, interest and Purchase Money Note Extensions Fees Payable as of the
date of maturity at the lesser of 12% or legally allowable rate; or prime plus
2% or the legally allowable rate. Unpaid interest of approximately $70,501,000
and $81,000,000 as of March 25, 2000 and 1999, respectively, has been accrued
and is included in due to selling partners in the consolidated balance sheets.
In general, the interest on and the principal of each Purchase Money Note is
also payable to the extent of the Partnership's actual receipt of proceeds of
the sale or refinancing of the Apartment Complex.
The Partnership extended the terms of the Purchase Money Notes for up to three
additional years (four years with respect to three subsidiary partnerships). In
connection with such extensions, the Partnership incurred an extension fee of
1/2 % per annum of the outstanding principle balance of the Purchase Money
Notes. Through March 25, 2000, the maturity dates of the Purchase Money Notes
associated with the remaining properties owned by the subsidiary partnerships
(ranging from August to December 1996) were extended for three years (four years
with respect to one subsidiary partnership, five years with respect to three
subsidiary partnerships and nine years with respect to one subsidiary
partnership) and extension fees in the amount of $559,249 were incurred by the
Partnership. Five Purchase Money Notes are now extended, with maturity dates
ranging from June 2001 to April 2008. The remaining Purchase Money Notes are
past maturity and the Partnership is working with the Local General Partners and
Purchase Money Note holders to refinance or sell the properties. No assurance
can be given that management's efforts will be successful. Of such fees
incurred, $440,543 was accrued and added to the Purchase Money Notes balance.
The extension fees are being amortized over the term of the extension. The
Partnership cannot sell or otherwise liquidate its investments in those Local
Partnerships which have subsidy agreements with the United States Department of
Housing and Urban Development ("HUD") during the period that such agreements are
in existence without HUD's approval. Based on the historical operating results
of the Local Partnerships and the current economic conditions, including changes
in tax laws, it is uncertain as to whether the proceeds from such sales will be
sufficient to meet the outstanding balances of principal, accrued interest and
extension fees. The Purchase Money Notes are without personal recourse to either
the Partnership or any of its partners and the selling partner's recourse, in
the event of nonpayment, would be to foreclose on the Partnership's interests in
the respective subsidiary partnerships.
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Distributions aggregating approximately $6,993,000, $376,000 and $1,474,000 were
made to the Partnership during each of the years ended March 25, 2000 ("1999
Fiscal Year"), March 25, 1999 ("1998 Fiscal Year") and March 25, 1998 ("1997
Fiscal Year", and collectively with the 1999 Fiscal Year and 1998 Fiscal Year,
the "1999, 1998 and 1997 Fiscal Years"), respectively, of which approximately
$1,067,000, $227,000 and $883,000, respectively, was used to pay interest on the
Purchase Money Notes. In addition, approximately $6,000, $13,000 and $144,000
for the 1999, 1998 and 1997 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes. In addition, approximately $2,712,000,
$2,112,000 and $1,031,000 was paid by the subsidiary partnerships as interest on
Purchase Money Notes during the 1999, 1998 and 1997 Fiscal Years, respectively.
TAX MATTERS
The Tax Reform Act of 1986 (the "TRA") provides that as of 1991, the passive
losses generated by the Partnership can only be used to shelter passive income
or, in the alternative, may be carried forward to offset a gain, if any, upon
the sale of properties.
GOVERNMENT PROGRAMS AND REGULATIONS
The General Partners will carefully analyze the opportunities available upon the
expiration of the properties' HUD contracts, as well as the tax consequences of
each option to investors. Prior to expiration of the properties' HUD contracts,
and based on the historical operating results and current economic conditions
including changes in tax laws, it is uncertain as to whether there would be a
return to the investors upon the sale of the applicable properties in the
Partnership's portfolio.
The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limit the owners' abilities to sell or
refinance the properties. In order to maintain the existing inventory of
affordable housing, Congress passed a series of related acts including the
Emergency Low Income Preservation Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (together the "Preservation
Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996
Act"). In exchange for maintaining the aforementioned use restrictions, the
Preservation Acts provide financial incentives for owners of government assisted
properties. The 1996 Act provides financial assistance by funding the sale of
such properties to not-for-profit owners and also restores the owners' abilities
to prepay their HUD mortgage and convert the property to condominiums or
market-rate rental housing.
The following eight Local Partnerships filed for incentives under the
Preservation Acts: Lansing, MI - Cranbrook Manor Apts., Romulus, MI - Oakbrook
Villa Apts., New Bedford, MA - Buttonwood Acres, Wyandotte, MI Villa Apollo
Associates Limited Partnership and Villa Apollo # 2 Limited Partnership, South
Dartmouth, MA - Solemar, Sterling Heights, MI - Carlton Terrace Apartments, and
San Diego, CA - Lancaster Manor Apartments. The Buttonwood Acres property was
sold on August 11, 1997. The Oakbrook Villa Apts. property was sold on December
14, 1999. The Villa Apollo Associates Limited Partnership, Villa Apollo #2
Limited Partnership and Carlton Terrace Apartments partnership interests were
sold on June 18, 1999. The Lancaster Manor Apartments property was sold on March
16, 1999. The Cranbrook Manor Apts. partnership interest was sold on January 1,
2000.
Funding for the 1996 Act is subject to appropriations by Congress. Congress has
not appropriated any funds for preservation since 1997. Accordingly, no
assurance can be given that any of the Local Partnerships will obtain such
incentives.
In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance
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Payments Contracts ("Section 8 Contracts") to be based upon market rentals in
instances where the existing Section 8 Contracts exceed current market rents. As
a result, Section 8 Contracts that are renewed in the future in projects insured
by the Federal Housing Administration ("FHA") may not provide sufficient cash
flow to permit owners of properties to meet the debt service requirements of
these existing FHA-insured mortgages. MAHRA also provides for the restructuring
of these mortgage loans so that the annual debt service on the restructured loan
(or loans) can be supported by Section 8 rents established at the market rents.
The restructured loans will be held by the current lender or another lender.
There can be no assurance that a property owner will be permitted to restructure
its mortgage indebtedness pursuant to the new rules implementing MAHRA or that
an owner, or the holder of the mortgage, would choose to restructure the
mortgage if it were able to participate. MAHRA went into effect on September 11,
1998 when interim regulations implementing the program were published. It should
be noted that there are many uncertainties as to the economic and tax impact on
a property owner because of the combination of the reduced Section 8 contract
rents and the restructuring of the existing FHA-insured mortgage loan under
MAHRA.
On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that was eligible for prepayment had to give notice of such
prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.
Effective January 1, 1999, the State of California now requires owners of a
property benefiting from FHA-insured mortgages under Section 236 or 221(a)(3) to
provide a nine-month notice of contract termination or prepayment of the
FHA-insured loan. In addition, the owner must offer the properties for sale to
those entities who agree to maintain the property as affordable housing.
On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.
SALES OF UNDERLYING PROPERTIES/LOCAL PARTNERSHIP INTERESTS
GENERAL
The Partnership is currently in the process of disposing of its investments. It
is anticipated that this process will take a number of years. As of March 25,
2000, the Partnership has disposed of twenty-one of its sixty-one original
investments. Five additional investments are listed for sale and the Partnership
anticipates that a number of the thirty-five remaining investments will be
listed for sale by December 31, 2000. There can be no assurance as to when the
Partnership will dispose of its last remaining investments or the amount of
proceeds which may be received. However, based on the historical operating
results of the Local Partnerships and the
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current economic conditions including changes in tax laws, it is unlikely that
the proceeds from such sales received by the Partnership will be sufficient to
return their original investment. Moreover, the Local General Partners and
noteholders generally have decision-making rights with respect to the sale of
each property which makes it more cumbersome for the General Partners to sell
each property.
In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly owned by the
Partnership.
On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Perry Apartments, Ltd., Boonie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
In each case, the interests were contributed subject to each respective Purchase
Money Note. The contribution did not involve any consideration being paid to the
Partnership, therefore, there should not be any tax effect to the limited
partners of the Partnership.
On May 7, 1997, the properties and the related assets and liabilities of
Knollwood I, Ltd., Knollwood II, Ltd., Knollwood III, Ltd., and Knollwood IV,
Ltd. (together, the "Knollwoods") were sold to a third party for $20,750,000,
which took title subject to the principal balance of the associated Purchase
Money Notes in the amount of $6,026,521, resulting in a gain in the amount of
approximately $6,159,000. No proceeds were used to settle the accrued interest
on the associated Purchase Money Notes which amounted to approximately
$5,622,000, resulting in forgiveness of indebtedness income.
On June 30, 1997, the property and related assets and liabilities of Parklane
II, Ltd. ("Parklane") were sold to a third party for $3,712,000, which took
title subject to the principal balance of a portion of the associated Purchase
Money Notes which amounted to $1,252,632, resulting in a gain in the amount of
approximately $568,000. The Partnership used $450,000 of the net proceeds to
settle the remaining principal balance of the Purchase Money Notes and accrued
interest thereon which amounted to $2,821,789, resulting in forgiveness of
indebtedness income of approximately $2,634,000.
On August 1, 1997, the Partnership's Local Partnership Interest in Northgate
Townhouse Apartments ("Northgate") was sold to a third party for $500,000,
resulting in a loss in the amount of approximately $825,000. No proceeds were
used to settle the associated Purchase Money Notes and accrued interest which
resulted in forgiveness of indebtedness income of approximately $6,911,000.
On August 1, 1997, the Partnership's Local Partnership Interest in Westminster
Manor Apartments ("Westminster") was sold to a third party for $500,000,
resulting in a loss in the amount of approximately $1,139,000. No proceeds were
sold to settle the associated Purchase Money Notes and accrued interest resulted
in forgiveness of indebtedness income of approximately $8,270,000.
On August 11, 1997, the Partnership's Local Partnership Interest in Buttonwood
Acres at New Bedford ("Buttonwood") was sold back to Buttonwood for $532,750,
resulting in a loss in the amount of approximately $343,000. No proceeds were
used to settle the associated Purchase Money Notes and accrued interest which
resulted in forgiveness of indebtedness income of approximately $4,821,000.
On May 22, 1998, the Partnership's Local Partnership Interest in Rockdale West
at New Bedford ("Rockdale") was sold back to Rockdale for $600,000 and the
related Purchase Money
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Note was assigned to the Local General Partner, resulting in a gain in the
amount of approximately $7,525,000.
On February 26, 1999, the Partnership's limited partnership interests in Park of
Pecan I, Ltd. and Park of Pecan II, Ltd. were sold to an unaffiliated third
party for $130,000 each resulting in a gain in the amount of approximately
$377,000 and $614,000, respectively. No proceeds were used to settle the
associated Purchase Money Notes, accrued interest and certain accrued expenses
which resulted in forgiveness of indebtedness income of $3,357,000 and
$2,653,000 for tax purposes, respectively.
On March 16, 1999, the property and related assets and liabilities of Lancaster
Manor Associates, Ltd. were sold to an unaffiliated third party for $13,500,000,
resulting in a gain of approximately $8,437,000.
On April 13, 1999, the property and related assets and liabilities of Valley
Arms were sold to an unaffiliated third party for $1,600,000, resulting in a
gain in the amount of approximately $161,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,514,000, resulting in forgiveness of
indebtedness income.
On June 6, 1999, Casa Ramon Apartments entered into a purchase and sale
agreement with a third party for a purchase price of $4,500,000. The closing is
expected to occur in June 2000. No assurances can be given that the closing will
actually occur.
On June 18, 1999, the Partnership's limited partnership interest in Carlton
Terrace Apartments, Limited Partnership was sold to the general partners for
$589,623, resulting in a gain in the amount of approximately $1,675,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,323,000,
resulting in forgiveness of indebtedness income. The Purchase Money Notes were
assumed by the Local Partnership.
On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
Associates Limited Partnership was sold to the general partners for $220,138,
resulting in a gain in the amount of approximately $372,000. The Purchase Money
Notes were assumed by the Local Partnership. No proceeds were used to settle the
associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,129,000, resulting in forgiveness of
indebtedness income.
On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
#2 Associates Limited Partnership was sold to the general partners for $562,136,
resulting in a gain in the amount of approximately $1,709,000. The Purchase
Money Notes were assumed by the Local Partnership. No proceeds were used to
settle the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $4,728,000, resulting in forgiveness of
indebtedness income.
On November 2, 1999, Conifer 317 ("Pinewood") entered into a purchase sale
agreement with a third party for a purchase price of $2,075,000. The closing is
expected to occur in December 2000. No assurances can be given that the closing
will actually occur.
On November 10, 1999, Summer Arms Apts. ("Summer Arms") entered into a letter of
intent to sell the property to a third party for the purchase price of $700,000.
The closing is expected to occur in late 2000. No assurances can be given that
the closing will actually occur.
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On November 10, 1999, Cabarrus Arms ("Cabarrus") entered into a letter of intent
to sell the property to a third party for the purchase price of $1,250,000. The
closing is expected to occur in late 2000. No assurances can be given that the
closing will actually occur.
On December 14, 1999, the property and related assets and liabilities of
Oakbrook Villa Apartments were sold to an unaffiliated third party for
$8,350,000, resulting in a loss in the amount of approximately $522,000. The
Partnership used approximately $2,438,000 of the net proceeds to settle the
remaining principal balance of the Purchase Money Note and accrued interest
thereon which amounted to $7,205,000, resulting in forgiveness of indebtedness
income of approximately $4,366,000.
On December 22, 1999, Cloisters ("Sundown") entered into a letter of intent to
sell the property to a third party for the purchase price of $2,700,000. The
closing is expected to occur in late 2000. No assurances can be given that the
closing will actually occur.
On October 18, 1999, the Partnership's limited partnership interest and the
related Purchase Money Note and interest thereon in Cranbrook Manor Apartments
("Cranbrook") was assigned to a third party effective January 1, 2000, resulting
in a gain of approximately $2,895,000. Fees due to a affiliate in the amount of
approximately $46,000 were forgiven.
On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss of approximately $4,185,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $11,484,000 and operating deficit loans of
approximately $456,000, resulting in forgiveness of indebtedness income.
On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain of approximately $3,177,000. Approximately $1,397,000 of the proceeds
was used to pay off the Purchase Money Note.
COMPETITION
The real estate business is highly competitive and each of the Local
Partnerships in which the Partnership has invested owns an Apartment Complex
which must compete for tenants with other rental housing in its area. However,
the rental assistance and the preferred interest rates on mortgage financing
generally make it possible to offer the apartments to eligible tenants at a cost
to the tenant significantly below the market rate for comparable conventionally
financed apartments in the area.
EMPLOYEES
The Partnership does not have any employees. All services are performed for the
Partnership by its General Partners and their affiliates. The General Partners
receive compensation in connection with such activities as set forth in Items 11
and 13 herein. In addition, the Partnership reimburses the General Partners and
certain of their affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership Agreement ("Partnership Agreement").
Item 2. Properties.
As of March 25, 2000, the Partnership holds a 98.99% limited partnership
interest in each of forty Local Partnerships, which own forty Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2000, the properties and the related assets and liabilities owned by four
subsidiary partnerships were sold to a third party and the Partnership's Local
Partnerships Interests in four subsidiary partnerships were sold to third
parties and the Local Partnership's general partner, respectively. Through the
fiscal year ended March
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25, 2000, the properties and the related assets and liabilities owned by eleven
subsidiary partnerships were sold to third parties and the Partnership's Local
Partnership Interests in ten subsidiary partnerships were sold to third parties
and the Local Partnership's general partner, respectively (see Item 7, below).
Set forth below is certain information concerning the Apartment Complexes and
their operations and finances. See Schedule III to the financial statements
included herein for information regarding encumbrances and for additional
information pertaining to the Apartment Complexes.
Each of the Local Partnerships owns one Apartment Complex. The Apartment
Complexes are located in Alabama (10), Arkansas (8), California (1), Florida
(1), Georgia (3), Indiana (3), Kentucky (1), Massachusetts (1), Michigan (4),
Missouri (1), North Carolina (1), Oregon (1), South Carolina (1), Texas (2),
Virginia (1) and Washington (1).
The 40 Apartment Complexes owned by the Local Partnerships at March 25, 2000
contain a total of 3,996 rental units. The largest of the Apartment Complexes
consists of 300 units; the smallest Apartment Complex contains 49 units.
Construction of each Apartment Complex was completed between 1970 and 1983.
The Apartment Complexes are occupied by low, moderate and middle-income tenants,
some of whom are elderly. Each Apartment Complex, except for the Apartment
Complexes owned by Saraland Apartments, Ltd., Park of Pecan I, Ltd. and Park of
Pecan II, Ltd., is located in the vicinity of other housing developments
receiving Government Assistance. The Partnership's partnership interests in Park
of Pecan I, Ltd. and Park of Pecan II, Ltd. were sold on February 26, 1999.
-10-
<PAGE>
All of the Apartment Complexes are subject to existing permanent first mortgages
(the "Mortgage Loans"). In some cases the Apartment Complexes are also subject
to supplemental mortgages (the "Supplemental Mortgage Loans"). See Schedule III.
<TABLE>
<CAPTION>
LOCAL PARTNERSHIP SCHEDULE
Government Percentage of Units
Assistance Occupied at December 31,
Name and Location Year HUD ------------------------------------------------------
(Number of Units) Completed Programs(a) 1999 1998 1997 1996 1995
----------------- --------- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Knollwood I 1978 Sec.221(d)(4) (e) (e) (e) 96% 98%
Mobile, AL (192)
Knollwood II 1979 Sec.221(d)(4) (e) (e) (e) 99% 99%
Mobile, AL (192)
Knollwood III 1981 Sec.221(d)(4) (e) (e) (e) 99% 99%
Mobile, AL (192)
Knollwood, IV 1983 Sec.221(d)(4) (e) (e) (e) 98% 97%
Mobile, AL (128)
Parklane II 1977 Sec.221(d)(4) (e) (e) (e) 99% 98%
Mobile, AL(140)
Cedarbay 1981 Sec.221(d)(4) 93% 94% 88% 84% 89%
Mobile, AL(112)
Northwoods III Apts 1982 Sec.221(d)(4) 87% 88% 96% 96% 99%
Pensacola, FL (192)
Westminster Manor Apts 1972 Sec.221(d)(4) (f) (f) (f) 97% 97%
Arvada, CO (280) HAP
Northgate Townhouse Apts 1977 Sec.221(d)(4) (f) (f) (f) 99% 95%
Thornton, CO (184) HAP
Hackley Village 1971 Sec.236 98% 100% 94% 100% 100%
Muskegon, MI (54) HAP
Huntley #1 1972 Sec.236 95% 98% 95% 99% 99%
Holt, MI (88) HAP
Huntley #2 1973 Sec.236 97% 99% 100% 99% 98%
Holt, MI (72) HAP
Seymour O'Brien Manor Apts 1972 Sec.236 100% 98% 95% 96% 98%
Seymour, IN (56) HAP
Washington Highland Apts 1972 Sec.236 93% 100% 88% 98% 99%
Washington, IN (56) HAP
Vincennes Niblack Apts 1972 Sec.236 91% 94% 86% 97% 98%
("Autumn Ridge Apartments") HAP
Vincennes, IN (144)
Casa Ramon Apartments 1974 Sec.236 99% 100% 100% 100% 100%
Orange, CA (75) HAP
Nu-Elm Apartments 1972 Sec.236 99% 94% 100% 99% 99%
Springfield, MI (72) HAP
Buttonwood Acres 1973 Sec.236 (f) (f) (f) 100% 96%
New Bedford, MA (132) HAP(b)
Rockdale West 1974 Sec.236 (i) (i) 100% 100% 97%
New Bedford, MA (225) HAP(b)
Solemar 1976 (c) 98% 100% 100% 100% 96%
South Dartmouth, MA (200)
Decatur Apartments 1971 Sec.236 (l) 84% 74% 93% 89%
Decatur, AL (100) HAP
-11-
<PAGE>
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government Percentage of Units
Assistance Occupied at December 31,
Name and Location Year HUD ------------------------------------------------------
(Number of Units) Completed Programs(a) 1999 1998 1997 1996 1995
----------------- --------- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Florence Apartments 1973 Sec.236 (l) 94% 90% 89% 95%
Florence, AL (96)
Saraland Apartments (g) 1972 Sec.236 0% 0% 0% 97% 98%
Saraland, AL (60) HAP
University Garden Apts 1971 Sec.236 100% 100% 100% 100% 100%
Waxahachie, TX (104)
Southside Village Apts 1972 Sec.236 96% 97% 100% 98% 99%
Brownwood, TX (104) HAP
Dickens Ferry Apartments 1972 Sec.236 (l) 95% 94% 90% 95%
Mobile, AL (80) HAP
Bonnie Doone Apartments 1972 Sec.236 (l) 97% 93% 88% 94%
Athens, AL (60) HAP
Conifer 208 (Conifer Village) 1972 Sec.236 97% 100% 95% 100% 98%
Spokane, WA (64) HAP
Conifer 307 (Fircrest) 1973 Sec.236 (k) 97% 95% 97% 96%
Beaverton, OR (60) HAP
Conifer 317 (Pinewood) 1974 Sec.236 98% 92% 94% 96% 94%
Hillsboro, OR (50)
Bicentennial Apts 1976 Sec.221(d)(4) (d) (d) (d) (d) 71%
Houston, TX (292)
Bellfort Apts 1979 Sec.221(d)(4) (k) 93% 94% 94% 94%
Houston, TX (272) HAP
Cloisters (Sundown) 1974 Sec.236 98% 98% 98% 98% 99%
Birmingham, AL (192) HAP
Cabarrus Arms 1974 Sec.236 96% 96% 96% 96% 94%
Kannapolis, NC (76) HAP
Summer Arms Apts 1974 Sec.236 96% 96% 100% 91% 96%
Sumter, SC (100) HAP
Lexington Village 1973 Sec.236 97% 98% 98% 99% 100%
Conyers, GA (108) HAP
Ware Manor 1971 Sec.236 98% 98% 99% 94% 99%
Waycross, GA (84) HAP
Nottingham Woods Apts 1974 Sec.236 92% 96% 99% 99% 99%
Oxford, AL (144)
Hathaway Court 1974 Sec.236 100% 99% 99% 99% 96%
Covington, KY (159) HAP
Tall Pines 1972 Sec.236 99% 97% 98% 100% 98%
La Grange, GA (115) HAP
Shelton Beach Apts 1975 Sec.221(d)(4) 83% 91% 96% 94% 97%
Saraland, AL (112)
Northpointe II 1978 Sec.221(d)(4) 86% 86% 94% 98% 98%
Saraland, AL (80)
Caroline Forest Apts 1973 Sec.236 100% 100% 100% 99% 99%
Salem, VA (72) (m)
Park of Pecan I 1979 Sec.221(d)(4) (i) (i) 93% 94% 90%
Rosenberg, TX (137)
-12-
<PAGE>
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government Percentage of Units
Assistance Occupied at December 31,
Name and Location Year HUD ------------------------------------------------------
(Number of Units) Completed Programs(a) 1999 1998 1997 1996 1995
----------------- --------- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Park of Pecan II 1978 Sec.221(d)(4) (i) (i) 88% 93% 88%
Rosenberg, TX (136)
Villa Apollo No. 1 1971 Sec.236 (j) 90% 90% 89% 95%
Brownstown Township, MI (112) HAP
Carlton Terrace Apartments 1973 Sec.236 (j) 98% 99% 99% 99%
Sterling Heights, MI (300)
Cranbrook Manor Apartments 1970 Sec.236 (j) 78% 82% 80% 93%
Lansing, MI (136) HAP
Oakbrook Villa Apartments 1970 Sec.236 (k) 91% 84% 90% 94%
Romulus, MI (352) HAP
Pebble Creek 1973 Sec.236 100% 99% 99% 98% 100%
East Lansing, MI (186)
Villa Apollo No. 2 1971 Sec.236 (j) 89% 86% 89% 93%
Brownstown Township, MI (286) HAP
Greenwood Manor 1974 Sec.236 92% 80% 94% 92% 99%
Pine Bluff, AR (64) HAP
Malvern Manor 1974 Sec.236 98% 92% 100% 96% 97%
Malvern, AR (50) HAP
Hereford Manor 1973 Sec.236 84% 92% 94% 98% 98%
Siloam Springs, AR (50) HAP
Henslee Heights 1974 Sec.236 100% 97% 97% 99% 99%
Pine Bluff, AR (78) HAP
Oakwood Manor 1972 Sec.236 82% 92% 92% 91% 96%
Little Rock, AR (200) HAP
West Scenic Apartments 1971 Sec.236 95% 95% 97% 93% 97%
North Little Rock, AR (150)
Robindale East Apartments 1974 Sec.236 91% 87% 91% 88% 92%
Blytheville, AR (88) HAP
Southwest Apartments 1970 Sec.236 94% 96% 94% 100% 98%
Little Rock, AR (49) HAP
Valley Arms 1975 Sec.236 (k) 28% 55% 74% 76%
Statesville, NC (100) HAP
Lancaster Manor 1970 Sec.221(d)(3) (h) (h) 100% 100% 100%
San Diego, CA (248)
</TABLE>
(a) The Partnership invested in Local Partnerships owning existing Apartment
Complexes which receive either federal or state subsidies. HUD through FHA,
administers a variety of subsidies for low and moderate-income housing. FHA
administers similar housing programs for non-urban areas. The federal programs
generally provide one or a combination of the following forms of assistance: (1)
mortgage loan insurance, (2) rental subsidies and (3) reduction of mortgage
interest payments.
(1) HUD provides mortgage insurance for rental housing projects pursuant to a
number of sections of Title II of the National Housing Act ("NHA"), including
Section 236, Section 221(d)(4), Section 221(d)(3) and Section 220. Under all of
these programs, HUD will generally provide insurance equal to 100% of the total
replacement cost of the project to non-profit own-
-13-
<PAGE>
ers and 90% of the total replacement cost to limited-distribution owners.
Mortgages are provided by institutions approved by HUD, including banks, savings
and loan companies and local housing authorities. Section 221(d)(4) of NHA
provides for federal insurance of private construction and permanent mortgage
loans to finance new construction of rental apartment complexes containing five
or more units. The most significant difference between the Section 221(d)(4)
program and the Section 221(d)(3) program is the maximum amount of the loan
which may be obtained. Under the Section 221(d)(3) program, non-profit sponsors
may obtain a permanent mortgage equal to 100% of the total replacement cost; no
equity contribution is required of a non-profit sponsor. In all other respects
the Section 221(d)(3) program is substantially similar to the Section 221(d)(4)
program.
(2) Many of the tenants in HUD insured projects receive some form of rental
assistance payments, primarily through the Section 8 Housing Assistance Payments
Program (the "Section 8 Program"). Apartment Complexes not receiving assistance
through the Section 8 Program ("Section 8 Payments") will generally have
limitations on the amounts of rent which may be charged. One requirement imposed
by HUD regulations effective for apartment complexes initially approved for
Section 8 Payments on or after November 5, 1979 is to limit the amount of the
owner's annual cash distributions from operations to 10% of the owner's equity
investment in an apartment complex if the apartment complex is intended for
occupancy by families and to 6% of the owner's equity investment in an apartment
complex intended for occupancy by elderly persons. The owner's equity investment
in the apartment complex is 10% of the project's replacement cost as determined
by HUD.
(3) Section 236 Program. As well as providing mortgage insurance, the Section
236 program also provides an interest credit subsidy which reduces the cost of
debt service on a project mortgage, thereby enabling the owner to charge the
tenants lower rents for their apartments. Interest credit subsidy payments are
made monthly by HUD directly to the mortgagee of the project. Each payment is in
an amount equal to the difference between (i) the monthly interest payment
required by the terms of the mortgage to pay principal, interest and the annual
mortgage insurance premium and (ii) the monthly payment which would have been
required for principal and interest if the mortgage loan bore interest at the
rate of 1%. These payments are credited against the amounts otherwise due from
the owner of the project, who makes monthly payments of the balance.
(b) The Local Partnership receives monthly rent supplements from HUD through
MHFA and the New Bedford Housing Authority.
(c) MHFA provides interest credit subsidies pursuant to Section 13A of the
Massachusetts Acts of 1966. The Local Partnership also receives monthly rent
supplements from the Dartmouth Housing Authority and the South Shore Housing
Authority pursuant to Section 707 of the Massachusetts Act of 1966.
(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997 (see Item 7. below).
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998 (see Item 7. below).
(f) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 1998 (see Item 7. below).
(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene found
to be present in the air of some apartments (see Item 7. below).
-14-
<PAGE>
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999 (see Item 7. below).
(i) The Partnership's Local Partnership Interest in this Local Partnership was
sold during the fiscal year ended March 25, 1999 (see Item 7. below).
(j) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during March 25, 2000 (see Item 7. below).
(k) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000 (see Item 7. below).
(l) As a result of on-going litigation related to the Roar Properties (as
defined herein), occupancy rates have not been provided by the management agent
pursuant to the instructions from the Local General Partner.
(m) The Partnership's Local Partnership Interest in this Local Partnership was
sold on March 31, 2000 (see Item 7. below).
All leases are generally for periods not exceeding one to two years and no
tenant occupies more than 10% of the rentable square footage.
Rents from commercial tenants (to which average rental per square foot applies)
comprise less than 5% of the rental revenues of the Partnership. Rents for the
residential units are determined annually by HUD and reflect increases in
consumer price indices in various geographic areas.
Management continuously reviews the physical state of the properties and budgets
improvements when required, which are generally funded from cash flow from
operations or release of replacement reserve escrows.
Management continuously reviews the insurance coverage of the properties and
believes such coverage is adequate.
See Item 1, Business, above for the general competitive conditions to which the
properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost for the properties as shown in Schedule
III to the financial statements included herein.
Item 3. Legal Proceedings.
This information is incorporated by reference to the discussion of Saraland in
the Results of Operations of Certain Local Partnerships contained in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, below.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fiscal year
covered by this report through the solicitation of proxies or otherwise.
-15-
<PAGE>
PART II
Item 5. Market for the Registrant's Limited Partnerships Interests and Related
Security Holder Matters.
As of March 25, 2000, the Partnership had issued and outstanding 12,074 Limited
Partnership Interests, of which 6,674 are Initial Limited Partnership Interests
and 5,400 are Additional Limited Partnership Interests, each representing a
$5,000 capital contribution to the Partnership, for aggregate gross proceeds of
$60,370,000. Additional Limited Partnership Interests are the Limited
Partnership Interests acquired upon the exercise of warrants or sold by the
Partnership upon the nonexercise of the warrants. The warrants are rights
granted pursuant to the Partnership Agreement as part of the purchase of an
Initial Limited Partner Interest. No further issuance of Initial Limited
Partnership Interests or Additional Limited Partnership Interests is anticipated
and all warrants have expired.
The offering of Units consisting of Initial Limited Partnership Interests and
warrants to purchase Additional Limited Partnership Interests terminated in
1984. The offering of Additional Limited Partnership Interests terminated in
March 1985.
No public market has developed, and it is not anticipated that any public market
will develop, for the secondary purchase and sale of any Limited Partnership
Interests. Limited Partnership Interests may be transferred only if certain
requirements are satisfied, including the rendering of an opinion of counsel to
the Partnership that such transfer would not cause a termination of the
Partnership under Section 708 of the Internal Revenue Code and would not violate
any federal or state securities laws.
As of May 26, 2000, there were approximately 4,484 registered holders of Limited
Partnership Interests.
In March 2000, a distribution of approximately $1,980,000 and $20,000 was paid
to the Limited Partners and General Partners, respectively, from net proceeds
from the sale of properties by Local Partnerships in which the Partnership had
invested (see Item 7. below). Of the total distributions of approximately
$2,000,000 for the year ended March 25, 2000, there was no return of capital
determined in accordance with generally accepted accounting principles. In March
1998, a distribution of approximately $1,997,000 and $20,000 was paid to the
Limited Partners and General Partners, respectively, from net proceeds from the
sale of properties by Local Partnerships in which the Partnership had invested
(see Item 7. below). Of the total distributions of approximately $2,017,000 for
the year ended March 25, 1998, there was no return of capital determined in
accordance with generally accepted accounting principles. With the exception of
these distributions, the Partnership had made no distributions to its Limited
Partners from its inception on June 28, 1984 to March 25, 2000. There are no
material restrictions upon the Partnership's present or future ability to make
distributions in accordance with the provisions of the Partnership Agreement.
The Partnership has invested as a limited partner in Local Partnerships owning
Apartment Complexes which receive Governmental Assistance under programs which
in many instances restrict the cash return available to owners. See Item 8,
Footnote 11(e) below, for a discussion of these restrictions. The Partnership
does not anticipate providing significant cash distributions to its Limited
Partners in circumstances other than refinancing or sale of the Apartment
Complexes or the Local Partnership Interests.
-16-
<PAGE>
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the
Partnership. Additional detailed financial information is set forth in audited
financial statements and footnotes contained in Item 8 hereof and in the
schedules contained in Item 14 hereof.
<TABLE>
<CAPTION>
Year Ended March 25,
----------------------------------------------------------------------------
OPERATIONS 2000 1999 1998 1997 1996
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 38,002,609 $ 36,695,719 $ 37,441,984 $ 37,758,333 $ 37,145,300
Operating expenses (35,058,379) (39,658,795) (45,106,539) (50,688,289) (48,422,076)
Loss on impairment 0 (2,399,391) 0 (939,612) (4,343,215)
of assets
Minority interest (3,110,714) (4,662) 57,040 3,063 (24,042)
------------ ------------ ------------ ------------ ------------
Loss before (166,484) (5,367,129) (7,607,515) (13,866,505) (15,644,033)
extra-ordinary item
Extraordinary 23,069,821 4,232,663 28,257,707 11,502,877 0
item-forgiveness ------------ ------------ ------------ ------------ ------------
of indebtedness
Net income (loss) $ 22,903,337 $ (1,134,466) $ 20,650,192 $ (2,363,628) $(15,644,033)
============ ============ ============ ============ ============
Loss before $ (14) $ (440) $ (624) $ (1,137) $ (1,283)
extra-ordinary
item per BAC
Extraordinary item 1,892 347 2,317 943 0
per Unit ------------ ------------ ------------ ------------ ------------
Net income (loss) $ 1,878 $ (93) $ 1,693 $ (194) $ (1,283)
per Unit ============ ============ ============ ============ ============
<CAPTION>
Year Ended March 25,
----------------------------------------------------------------------------
FINANCIAL POSITION 2000 1999 1998 1997 1996
------------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C>
Total assets $ 81,413,006 $112,436,709 $121,697,254 $157,162,664 $165,610,335
============ ============ ============ ============ ============
Long-term obligations $162,421,389 $212,711,021 $223,367,991 $275,088,044 $281,339,303
============ ============ ============ ============ ============
Total liabilities $169,474,875 $221,443,873 $230,161,240 $284,145,026 $290,195,162
============ ============ ============ ============ ============
Minority interest $ 635,465 $ 593,370 $ 2,082 $ 116,611 $ 150,518
============ ============ ============ ============ ============
</TABLE>
During the year ended March 25, 1996, total assets decreased primarily due to
depreciation, partially offset by net additions to property and equipment.
During the same period, long-term obligations and total liabilities increased
primarily due to accruals of interest on Purchase Money Notes, partially offset
by payments equal to 60% of the cash flow distributions from the underlying
properties. For the years ended March 25, 1999, 1997 and 1996, there were also
decreases in assets due to loss on impairment of assets. During the years ended
March 25, 1997, 1998, 1999 and 2000, total assets decreased primarily due to
depreciation and the sale of properties (see Note 10 in Item 8, Financial
Statements and Supplementary Data), partially offset by net additions to
property and equipment. Long-term obligations and total liabilities decreased
for the years ended March 25, 1997, 1998, 1999 and 2000 primarily due to the
forgiveness of indebtedness on Purchase Money Notes and amounts due to selling
partners as a result of the sale, principal repayments of mortgage notes payable
and payments of interest on Purchase Money Notes, partially offset by accruals
of interest on Purchase Money Notes.
-17-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Partnership's capital was originally invested primarily in 61 Local
Partnerships, in which the Partnership made an initial investment of $50,293,934
(including acquisition expenses). These investments are highly illiquid. At the
beginning of the fiscal year 1999, the Partnership had interest in 48 Local
Partnerships. During the fiscal year ended March 25, 2000, the property and the
related assets and liabilities owned by four subsidiary partnerships were sold
to a third party and the Partnership's Local Partnership Interests in four
subsidiary partnerships were sold to a third party and the Local Partnership's
general partner, respectively. Through the fiscal year ended March 25, 2000, the
properties and the related assets and liabilities owned by eleven subsidiary
partnerships were sold to third parties and the Partnership's Local Partnership
Interests in ten subsidiary partnerships were sold to third parties and the
Local Partnership's general partner, respectively. As of March 25, 2000, the
Partnership owned interests in 40 Local Partnerships.
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery (see below).
During the year ended March 25, 2000, cash and cash equivalents of the
Partnership increased approximately $1,437,000. This increase is due to cash
provided by operating activities ($795,000) and proceeds from the sale of
property ($24,705,000) which exceeded an increase in mortgage escrow deposits
($708,000), principal payments of purchase money notes ($791,000), repayments of
mortgage notes payable ($15,055,000), a decrease in the capitalization of
minority interest ($3,069,000), distributions paid ($2,000,000), costs paid
relating to sale of property ($1,188,000) and acquisition of property and
equipment and property and equipment held for sale ($1,253,000). Included in the
adjustments to reconcile the net income to cash provided by operating activities
is gain on sale of property ($12,822,000), forgiveness of indebtedness income
($23,070,000) and depreciation ($4,916,000).
The Partnership's primary sources of funds are the cash distributions from
operations of the Local Partnerships in which the Partnership has invested and
net proceeds from pending and future sales. These sources are available to meet
obligations of the Partnership. However, the cash distributions received from
the Local Partnerships to date have not been sufficient to meet all such
obligations of the Partnership. Accordingly, certain fees and expense
reimbursements owed to the General Partners amounting to approximately
$2,293,000, $1,891,000 and $947,000, were accrued and unpaid as of March 25,
2000, 1999 and 1998, respectively. Without the General Partners' advances and
continued accrual without payment of certain fees and expense reimbursements,
the Partnership will not be in a position to meet its obligations. The General
Partners have continued advancing and allowing the accrual without payment of
these amounts but are under no obligation to do so. Proceeds received from
future sales will be used to pay any outstanding amounts due to the General
Partners.
Distributions aggregating approximately $6,993,000, $376,000 and $1,474,000 were
made to the Partnership during the 1999, 1998 and 1997 Fiscal Years,
respectively, of which approximately $1,067,000, $227,000 and $883,000,
respectively, was used to pay interest on the Purchase
-18-
<PAGE>
Money Notes. In addition, approximately $6,000, $13,000 and $144,000 for the
1999, 1998 and 1997 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes. In addition, approximately $2,712,000,
$2,112,000 and $1,031,000 was paid by the subsidiary partnerships as interest on
Purchase Money Notes during the 1999, 1998 and 1997 Fiscal Years, respectively.
Partnership management fees owed to the general partners amounting to
approximately $1,942,000 and $1,572,000 were accrued and unpaid as of March 25,
2000 and 1999, respectively.
TAX MATTERS
The Tax Reform Act of 1986 provides that as of 1991, the passive losses
generated by the Partnership can only be used to shelter passive income or, in
the alternative, may be carried forward to offset a gain, if any, upon the sale
of properties.
GOVERNMENT PROGRAMS AND REGULATIONS
The General Partners will carefully analyze the opportunities available upon the
expiration of the properties' HUD contracts, as well as the tax consequences of
each option to investors. Prior to expiration of the properties' HUD contracts,
and based on the historical operating results and current economic conditions
including changes in tax laws, it is uncertain as to whether there would be a
return to the investors upon the sale of the applicable properties in the
Partnership's portfolio.
The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limit the owners' abilities to sell or
refinance the properties. In order to maintain the existing inventory of
affordable housing, Congress passed a series of related acts including the
Emergency Low Income Preservation Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (together the "Preservation
Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996
Act"). In exchange for maintaining the aforementioned use restrictions, the
Preservation Acts provide financial incentives for owners of government assisted
properties. The 1996 Act provides financial assistance by funding the sale of
such properties to not-for-profit owners and also restores the owners' abilities
to prepay their HUD mortgage and convert the property to condominiums or
market-rate rental housing.
The following eight Local Partnerships filed for incentives under the
Preservation Acts: Lansing, MI - Cranbrook Manor Apts., Romulus, MI - Oakbrook
Villa Apts., New Bedford, MA - Buttonwood Acres, Wyandotte, MI Villa Apollo
Associates Limited Partnership and Villa Apollo # 2 Limited Partnership, South
Dartmouth, MA - Solemar, Sterling Heights, MI - Carlton Terrace Apartments, and
San Diego, CA - Lancaster Manor Apartments. The Buttonwood Acres property was
sold on August 11, 1997. The Oakbrook Villa Apts. property was sold on December
14, 1999. The Villa Apollo Associates Limited Partnership, Villa Apollo #2
Limited Partnership and Carlton Terrace Apartments partnership interests were
sold on June 18, 1999. The Lancaster Manor Apartments property was sold on March
16, 1999. The Cranbrook Manor Apts. partnership interest was sold on January 1,
2000.
Funding for the 1996 Act is subject to appropriations by Congress. Congress has
not appropriated any funds for preservation since 1997. Accordingly, no
assurance can be given that any of the Local Partnerships will obtain such
incentives.
In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance
-19-
<PAGE>
Payments Contracts ("Section 8 Contracts") to be based upon market rentals in
instances where the existing Section 8 Contracts exceed current market rents. As
a result, Section 8 Contracts that are renewed in the future in projects insured
by the Federal Housing Administration ("FHA") may not provide sufficient cash
flow to permit owners of properties to meet the debt service requirements of
these existing FHA-insured mortgages. MAHRA also provides for the restructuring
of these mortgage loans so that the annual debt service on the restructured loan
(or loans) can be supported by Section 8 rents established at the market rents.
The restructured loans will be held by the current lender or another lender.
There can be no assurance that a property owner will be permitted to restructure
its mortgage indebtedness pursuant to the new rules implementing MAHRA or that
an owner, or the holder of the mortgage, would choose to restructure the
mortgage if it were able to participate. MAHRA went into effect on September 11,
1998 when interim regulations implementing the program were published. It should
be noted that there are many uncertainties as to the economic and tax impact on
a property owner because of the combination of the reduced Section 8 contract
rents and the restructuring of the existing FHA-insured mortgage loan under
MAHRA.
On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that was eligible for prepayment had to give notice of such
prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.
Effective January 1, 1999, the State of California now requires owners of a
property benefiting from FHA-insured mortgages under Section 236 or 221(a)(3) to
provide a nine-month notice of contract termination or prepayment of the
FHA-insured loan. In addition, the owner must offer the properties for sale to
those entities who agree to maintain the property as affordable housing.
On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.
PURCHASE MONEY NOTES
For a discussion of Purchase Money Notes Payable, see Note 7 to the Financial
Statements.
SALE OF UNDERLYING PROPERTIES/LOCAL PARTNERSHIP INTERESTS
For a discussion of the sale of properties in which the Partnership owns direct
and indirect interest, see Note 10 to the Financial Statements.
For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss for which the Partnership would be liable is its net investment in the
respective Local Partnerships, the resolution of the existing
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contingencies is not anticipated to impact future results of operations,
liquidity or financial condition in a material way except that the Partnership
would lose its investment in the properties and any potential proceeds from the
sale or refinancing of the properties.
Except as described above, management is not aware of any trends or events,
commitments or uncertainties, which have not been otherwise disclosed, that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the United States experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.
RESULTS OF OPERATIONS
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.
At March 25, 2000, the Partnership has not recorded a loss on impairment of
assets. Through March 25, 2000, the Partnership has recorded approximately
$7,682,000 as a loss on impairment of assets.
The following is a summary of the results of operations of the Partnership for
the 1999, 1998 and 1997 Fiscal Years.
The results of operations of the Partnership, as well as the Local Partnerships,
excluding gain on sale of property, forgiveness of indebtedness income, other
income and loss on impairment of assets remained fairly constant for the 1999,
1998 and 1997 Fiscal Years. Contributing to the relatively stable operations at
the Local Partnerships is the fact that all of the Apartment Complexes receive
Government Assistance. HUD has provided mortgage insurance to four of the Local
Partnerships pursuant to Section 221(d)(4) of the NHA, thirty-seven of the Local
Partnerships receive mortgage insurance or have entered into interest reduction
agreements with HUD under its Section 236 program and receive interest subsidy
payments from HUD. One Local Partnership receives interest credit subsidies from
MHFA pursuant to Section 13A of the Massachusetts Act of 1966 and monthly rent
supplements pursuant to Section 707 of the Massachusetts Acts of 1966. In
addition, HUD (or MHFA) has provided rental assistance payments for a percentage
of the apartment units owned by twenty-eight of the Local Partnerships pursuant
to HAP Contracts.
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The Partnership's primary source of income continues to be its portion of the
Local Partnership's operating results. The majority of Local Partnership income
continues to be in the form of rental income with the corresponding expenses
being divided among operations, depreciation, and mortgage interest. In
addition, the Partnership incurred interest expense relating to the Purchase
Money Notes which were issued when the Local Partnership Interests were
acquired.
Net income (loss) during the 1999, 1998 and 1997 Fiscal Years totaled
$22,903,337, $(1,134,466) and $20,650,192, respectively.
Excluding the 1999 and 1997 Fiscal Years, in which the Partnership generated
passive income due to sales of the properties and the related assets and
liabilities owned by subsidiary partnerships and the Partnership's Local
Partnership Interest in subsidiary partnerships, the Partnership has met the
investment objective of generating tax benefits in the form of passive losses
(which Limited Partners may use to offset passive income from other sources).
This passive income may be offset by the carryforward of any unused passive
losses from prior years; however to date the Partnership has been unable to
provide cash distributions to the Limited Partners other than from the proceeds
of sale of underlying properties.
1999 VS. 1998
Rental income decreased by 14% for the 1999 Fiscal Year as compared to the 1998
Fiscal Year. Excluding Lancaster Manor Associates LTD., Oakbrook Villa
Apartments and Valley Arms which sold their properties and the related assets
and liabilities and Rockdale, Park of Pecan I, Ltd., Park of Pecan II, Ltd.,
Carlton Terrace Apartments Limited Partnership, Villa Apollo Associates Limited
Partnership and Villa Apollo #2 Associates Limited Partnership in which the
Partnership sold its Local Partnership interests (collectively the "Sold
Assets"), rental income increased by approximately 3% during the 1999 Fiscal
Year compared to the 1998 Fiscal Year primarily due to rental rate increases.
A gain on sale properties and forgiveness of indebtedness income was recorded in
the 1999 Fiscal Year (see Notes 10 and 11, respectively, in the Item 8.
Financial Statements and Supplemental Data, below).
Total expenses, excluding the Sold Assets, financial and loss on impairment of
assets, remained fairly consistent with an increase of approximately 2% for the
1999 Fiscal Year as compared to the 1998 Fiscal Year.
Financial expense decreased approximately 8% for the 1999 Fiscal Year as
compared to the 1998 Fiscal Year. Excluding the Sold Assets, such expense
increased approximately 27% during the 1999 Fiscal Year as compared to the 1998
Fiscal Year primarily due to an increase in Purchase Money Note interest expense
as a result of their maturity.
Operating, taxes and insurance, and depreciation decreased approximately
$928,000, $665,000 and $929,000, respectively for the 1999 Fiscal Year as
compared to the 1998 Fiscal Year. Excluding the Sold Assets and Bellfort,
Cranbrook, Fircrest, Casa Ramon, Pinewood, Sundown, Summer Arms and Cabarrus for
depreciation only, such expenses remained fairly consistent with increases
(decreases) of approximately $69,000, $6,000 and ($98,000), respectively, for
the 1999 Fiscal Year as compared to the 1998 Fiscal Year. Bellfort, Cranbrook,
Fircrest, Casa Ramon, Pinewood, Sundown, Summer Arms and Cabarrus have stopped
being depreciated because they are classified as assets held for sale.
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1998 VS. 1997
Rental income decreased by 12% for the 1998 Fiscal Year as compared to the 1997
Fiscal Year. Excluding Knollwoods and Parklane, which sold their properties and
Northgate, Westminster, Buttonwood and Rockdale, in which the Partnership's
interest was sold (collectively the "1998 Sold Assets"), rental income increased
by approximately 1% during the 1998 Fiscal Year as compared to the 1997 Fiscal
Year primarily due to rental rate increases.
A gain on sale of properties and forgiveness of indebtedness income was recorded
in the 1998 Fiscal Year (see Notes 10 and 11, respectively, in Item 8, Financial
Statements and Supplemental Data).
Other income decreased approximately $34,000 for the 1998 Fiscal Year as
compared to the 1997 Fiscal Year. Excluding the 1998 Sold Assets, such income
increased approximately 11% during the 1998 Fiscal Year as compared to the 1997
Fiscal Year primarily due to increase in interest income, laundry income and
late charges at five Local Partnerships.
Total expenses, excluding the 1998 Sold Assets and loss on impairment of assets,
remained fairly consistent with an increase of 2% for the 1998 Fiscal Year as
compared to the 1997 Fiscal Year.
Administrative and management-related parties, repairs and maintenance financial
and depreciation decreased approximately $357,000, $971,000, $1,410,000 and
$1,320,000, respectively, for the 1998 Fiscal Year as compared to the 1997
Fiscal Year. Excluding the 1998 Sold Assets, and Park of Pecan I Ltd., Park of
Pecan II Ltd., Lancaster Manor, Oakbrook Villa, Cranbrook manor, Fircrest and
Valley Arms for depreciation only, such expenses remained fairly consistent with
(decreases) increases of approximately $(262,000), $24,000, $365,000 and
$66,000, respectively, for the 1998 Fiscal Year as compared to the 1997 Fiscal
Year. Park of Pecan I Ltd., Park of Pecan II Ltd., Lancaster Manor, Oakbrook
Villa, Cranbrook Manor, Fircrest and Valley Arms have stopped being depreciated
because they are classified as an asset held for sale.
RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS
BELLFORT ASSOCIATES, LTD.
Bellfort Associates, Ltd. ("Bellfort") has been in default on the required
interest payments due on the wraparound Purchase Money Note payable to Finger
Companies since 1992. The original maturity date of the Purchase Money Note was
the twelfth anniversary of the transaction date or November 1, 1996. However,
the debt agreement allows Bellfort the option to extend the term of the Purchase
Money Note an additional year on the twelfth, thirteenth and fourteenth
anniversaries. On November 1, 1997 and November 1, 1998, Bellfort exercised the
option to extend the term. On November 1, 1999, all of the outstanding principal
plus deferred interest came due, and since Bellfort's operations did not
generate sufficient cash flows to pay principal and interest on the Purchase
Money Note, the terms of the Purchase Money Note were being renegotiated at
December 31, 1999. Accumulated deferred interest at December 31, 1999 and 1998
was approximately $4,379,000 and $4,058,000, respectively. The Purchase Money
Note is secured by a first lien on and security interest in the Partnership's
and Bellfort's special limited partner's rights, titles and interests in
Bellfort. Payments on this Purchase Money Note cannot exceed the required
payments on the underlying Multifamily Mortgage Trust ("MMT") note described
below.
The Purchase Money Note wraps around an underlying mortgage note. The underlying
mortgage is collateralized by a deed of trust on the rental property. In June
1996, the underlying mortgage note was sold by HUD, which had assumed the
underlying mortgage note in December 1991, to MMT.
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Prior to August 1996, the underlying mortgage note was in default first with HUD
and then with MMT. In order to avoid any acceleration or other exercise of
remedies for the defaulted mortgage, MMT allowed the previous owners to bring
the underlying mortgage note current with a payment of approximately $294,000.
Upon making the underlying mortgage note current, the debt agreement for the
underlying mortgage note payable required monthly payments of approximately
$47,000 with $37,000 relating to principal and interest payments due on the
first of each month and such payments have been made as of December 31, 1999.
Bellfort's operations have not generated sufficient cash flows to service its
existing debt structure and Bellfort's Purchase Money Note payable was due on
November 1, 1999. Bellfort's forecasted cash flows for 2000 indicate a
significant shortfall of amounts needed to repay such Purchase Money Note and
the related deferred interest. On January 6, 2000, the property and the related
assets and liabilities of Bellfort were sold to the Purchase Money Note holder
for $175,100, resulting in a loss in the amount of approximately $4,185,000 and
forgiveness of indebtedness income of approximately $11,940,000.
The Partnership's investment in Bellfort has been reduced to zero by prior
years' losses. The minority interest balance was $0 at March 25, 2000 and 1999.
Bellfort's net loss after minority interest amounted to approximately $585,000,
$524,000 and $586,000 for the 1999, 1998 and 1997 Fiscal Years, respectively.
PARK OF PECAN I, LTD. AND PARK OF PECAN II LTD.
Park of Pecan I, Ltd. ("Park of Pecan I") and Park of Pecan II, Ltd. ("Park of
Pecan II") have experienced operating losses since inception and had net
capital deficiencies. The Partnership's investments in Park of Pecan I and II
were reduced to zero by prior years' losses. Park of Pecan I and II's minority
interest balances were $0 as of March 25, 2000 and 1999. Park of Pecan I's net
(income) loss after minority interest amounted to approximately $(3,600,000),
$832,000 and $219,000 for the 1999, 1998 and 1997 Fiscal Years, respectively.
Park of Pecan II's net (income) loss after minority interest amounted to
approximately $(3,133,000), $548,000 and $224,000 for the 1999, 1998 and 1997
Fiscal Years, respectively.
On February 26, 1999, the Partnership's limited partnership interests in Park of
Pecan I, Ltd. and Park of Pecan II, Ltd. were sold to an unaffiliated third
party for $130,000 each resulting in a gain in the amount of approximately
$377,000 and $614,000, respectively. No proceeds were used to settle the
associated Purchase Money Notes, accrued interest and certain accrued expenses
which resulted in forgiveness of indebtedness income of $3,357,000 and
$2,653,000 for tax purposes, respectively.
CRANBROOK MANOR APARTMENTS LIMITED PARTNERSHIP
During the year ended December 31, 1999, Cranbrook Manor Apartments Limited
Partnership ("Cranbrook") incurred a net loss of approximately $154,000 and
total liabilities exceeded total assets by approximately $2,403,000. In
addition, Cranbrook receives housing assistance payments and a mortgage interest
subsidy from HUD under provisions of Section 8 and Section 236, respectively, of
the National Housing Act. Cranbrook entered into housing assistance agreements
(the "Section 8 agreements") with the FHA. Cranbrook's Section 8 agreements have
been renewed until March 31, 2000. Cranbrook's cash flows may be insufficient to
meet its current obligations in the ordinary course of business. Should cash
flows be insufficient, management plans to pursue a workout agreement with the
mortgage holders. There are no assurances that the Section 8 agreement will be
renewed under comparable economic terms upon the expiration of the agreements.
As of December 31, 1999, it is not possible to estimate the effect of the
potential loss of this subsidy. However, the termination of reduction of the
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benefits under this program by the government could have an adverse effect on
the operations of Cranbrook. These factors, among others, indicate that there is
substantial doubt about Cranbrook's ability to continue as a going concern for a
reasonable period of time. The financial statements do not include any
adjustments relating to the recoverability and classification of liabilities
that might be necessary should Cranbrook be unable to continue as a going
concern. Cranbrook's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a timely
basis and to ultimately attain successful operations.
On January 1, 2000, the Partnership's Local Partnership Interest in Cranbrook
was sold to an unaffiliated third party for $99,990 resulting in a loss in the
amount of approximately $2,995,000 and forgiveness of indebtedness income of
approximately $46,000. The Partnership's investment in Cranbrook was reduced
to zero by prior years' losses. The minority interest balances were $0 at both
March 25, 2000 and 1999, respectively. Cranbrook's net loss after minority
interest amounted to approximately $154,000, $991,000 and $246,000 for the
1999, 1998 and 1997 Fiscal Years, respectively.
SARALAND APARTMENTS, LTD.
Saraland Apartments, Ltd. ("Saraland") has been placed on the Environmental
Protection Agency's (the "EPA") "Superfund Cleanup List." The EPA has named the
project, Redwing Carriers, Inc. and others as potentially responsible parties.
The EPA has estimated cleanup costs could total $12,000,000 or more. To date,
Redwing Carriers, Inc. has incurred approximately $1.9 million in cleanup costs.
Redwing Carriers, Inc. seeks to recover all or a pro rata share of its response
costs from Saraland and others.
Based upon EPA's Record of Decision for the Saraland site, the remedy selected
had, at the time of issuance of the Record of Decision on December 15, 1992, a
present worth cost of $7,002,562. Redwing Carriers, Inc. subsequently refused to
perform the remedy and the EPA had undertaken to do so itself. The EPA relocated
the tenants from the apartment complex and closed the apartment complex. Since
September, 1993, the EPA has not notified the Partnership about whether it
intends to take further legal action.
On May 13, 1997, a number of former residents at the Saraland Apartment Complex
served a purported class action complaint upon Hutton Advantaged Properties,
Ltd. and H/R Special Limited Partnership, as well as Redwing Carriers, Inc.,
Saraland, Saraland's general partners and others alleging that all defendants
are liable to the class members for adverse health consequences and other
expenses attendant to hazardous substance exposure caused by the conduct of all
defendants at the Saraland site. On June 5, 1998, this action against the
Partnership was dismissed with prejudice, and accordingly, this matter is now
concluded.
The above conditions raise substantial doubt about Saraland's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of these uncertainties. The
Partnership's investment in Saraland was reduced to $0 by prior and current
years' losses at March 25, 2000 and 1999, respectively, and the minority
interest balance was $22,000 at each date. Saraland's net loss (income) after
minority interest amounted to approximately $20,000, $24,000 and ($7,900) for
the 1999, 1998 and 1997 Fiscal Years, respectively.
VALLEY ARMS, LTD.
During the year ended December 31, 1999, Valley Arms, Ltd. ("Valley Arms")
incurred net income of approximately $76,000 and as of that date, Valley Arms'
total liabilities exceeded its total assets by approximately $21,000. The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. In addition, the auditors disclaimed an
opinion on the 1999 Fiscal Year financial statements due to the refusal of
management to provide written representations. The Partnership filed a petition
for bank-
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ruptcy under Chapter 11 of the bankruptcy code on January 13, 1998, and sold its
revenue producing assets on April 13, 1999. The results of these events will
likely result in the extinguishment of Valley Arms' liabilities and disbursement
of the remaining cash to the partners. These factors, among others, raise
substantial doubt about Valley Arms' ability to continue as a going concern. The
financial statements do not include any adjustments that might be necessary if
Valley Arms is unable to continue as a going concern. On April 13, 1999, the
property and the related assets and liabilities of Valley Arms were sold to a
third party for $1,600,000, resulting in a gain in the amount of approximately
$161,000 and forgiveness of indebtedness income of approximately $2,514,000. The
Partnership's investment in Valley Arms was reduced to zero at March 25, 2000
and 1999, and the minority interest balance was $0 at each date. Valley Arms'
net income (loss) after minority interest amounted to approximately $76,000,
($506,000) and ($79,000) for the 1999, 1998 and 1997 Fiscal Years, respectively.
b) Subsidiary Partnership - Other
DICKENS FERRY APARTMENTS, LTD.
Dickens Ferry Apartments, Ltd. ("Dickens Ferry") relies on the continuance of
the Section 8 rent subsidy contract which represents 50% of gross income. The
current contracts expire on July 31, 2000 and renewal is uncertain. Management
of Dickens Ferry intends to actively pursue renewal of the rental subsidy
contract with HUD. The Partnership's investment in Dickens Ferry was
approximately $567,000 at both March 25, 2000 and 1999, respectively, and the
minority interest balance was $0 at each date. Dickens Ferry's net (loss) income
after minority interest amounted to approximately $(1,000), $24,000 and $5,000
for the 1999, 1998 and 1997 Fiscal Years, respectively.
OTHER
The Partnership's investment as a limited partner in the Local Partnerships is
subject to the risks incident to the management and ownership of improved real
estate. The Partnership's investments also could be adversely affected by poor
economic conditions, which generally could increase vacancy levels, rental
payment defaults, and operating expenses, any or all of which could threaten the
financial viability of one or more of the Local Limited Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving Government Assistance. These include: governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent units in the Apartment Complexes; difficulties in obtaining government
approval for rent increases; limitations on the percentage of income which low
and moderate-income tenants may pay as rent; the possibility that Congress may
not appropriate funds to enable HUD to make the rental assistance payments it
has contracted to make; and the possibility that, when the rental assistance
contracts expire, there may not be market demand for apartments at full market
rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs, such as fuel, utilities, and labor.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
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Item 8. Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
Sequential
Page
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<S> <C>
(a) 1. Financial Statements
Independent Auditors' Report 28
Consolidated Balance Sheets at March 25, 2000 and 1999 176
Consolidated Statements of Operations for the Years Ended March 25,
2000, 1999 and 1998 177
Consolidated Statements of Changes in Partners' Deficit for the Years
Ended March 25, 2000, 1999 and 1998 178
Consolidated Statements of Cash Flows for the Years Ended March 25,
2000, 1999 and 1998 179
Notes to Consolidated Financial Statements 182
</TABLE>
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INDEPENDENT AUDITORS' REPORT
To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries
We have audited the consolidated balance sheets of Cambridge Advantaged
Properties Limited Partnership and Subsidiaries as of March 25, 2000 and 1999,
and the related consolidated statements of operations, changes in partners'
deficit, and cash flows for the years ended March 25, 2000, 1999 and 1998 (the
1999, 1998 and 1997 Fiscal Years, respectively). The financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements for 48 (1999 Fiscal Year), 52 (1998 Fiscal Year)
and 60 (1997 Fiscal Year) subsidiary partnerships whose net (income) losses
aggregated ($30,130,274), $1,776,341 and $589,225 for the 1999, 1998 and 1997
Fiscal Years, respectively, and whose assets constituted 91% and 96% of the
Partnership's assets at March 25, 2000 and 1999, respectively, presented in the
accompanying consolidated financial statements. The financial statements of
these subsidiary partnerships were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for these subsidiary partnerships, is based
solely upon the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based upon our audits and the reports of the other auditors, the
accompanying consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Cambridge Advantaged
Properties Limited Partnership and Subsidiaries at March 25, 2000 and 1999, and
the results of their operations and their cash flows for the years ended March
25, 2000, 1999 and 1998, in conformity with generally accepted accounting
principles.
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As discussed in Note 10, the Partnership is currently in the process of
disposing of its investments. It is anticipated that this process will take a
number of years.
As discussed in Note 11(a), the consolidated financial statements include the
financial statements of six subsidiary partnerships with significant
contingencies and uncertainties regarding their continuing operations. These
uncertainties raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The auditors of these subsidiary
partnerships modified their reports due to the uncertainty of these subsidiary
partnerships' abilities to continue in existence. The auditors for one of
these subsidiary partnerships disclaimed an opinion on the 1999 Fiscal Year
financial statements due to the refusal of management to provide written
representations. These six subsidiary partnerships' net (income) losses
aggregated ($6,049,701), $3,424,315 and $1,346,174 for the 1999, 1998 and 1997
Fiscal Years, respectively, and their assets aggregated $7,241,548 and
$12,837,164 at March 25, 2000 and 1999, respectively. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
As discussed in Note 7, the principal of and all accrued interest on the
Purchase Money Notes are due at final maturity. Five Purchase Money Notes are
now extended, with maturity dates ranging from June 2001 to April 2008. The
remaining Purchase Money Notes are past maturity and the Partnership is
attempting to refinance or sell the properties. It is uncertain as to whether
the proceeds from such sales will be sufficient to meet the outstanding
balances of the Purchase Money Notes and accrued interest thereon. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 22, 2000
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[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Knollwood I, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Knollwood I, Ltd. for the year ended December 31, 1997. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
As described in note A to the financial statement, effective as of January 1,
1997, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On May 6, 1997, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 13, 1998
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[Letterhead of Resnick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Knollwood II, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Knollwood II, Ltd. for the year ended December 31, 1997. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
As described in note A to the financial statement, effective as of January 1,
1997, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On May 6, 1997, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 13, 1998
-31-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Knollwood III, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Knollwood III, Ltd. for the year ended December 31, 1997. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
As described in note A to the financial statement, effective as of January 1,
1997, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On May 6, 1997, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 13, 1998
-32-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Knollwood IV, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Knollwood IV, Ltd. for the year ended December 31, 1997. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the changes in net assets in liquidation for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.
As described in note A to the financial statement, effective as of January 1,
1997, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On May 6, 1997, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 13, 1998
-33-
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Parklane II, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Parklane II, Ltd. for the year ended December 31, 1997. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the changes in net assets in liquidation for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.
As described in note A to the financial statement, effective as of January 1,
1997, the partnership adopted a plan to sell the rental property and liquidate
the partnership in lieu of continuing the business. On June 30, 1997, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 13, 1998
-34-
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Cedarbay, Ltd.
We have audited the accompanying balance sheets of Cedarbay, Ltd. as of December
31, 1999 and 1998, and the related statements of revenue and expenses, partners'
capital and cash flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cedarbay, Ltd. as of December
31, 1999 and 1998, and the results of its operations, the changes in partners'
capital and cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 2000
-35-
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Cedarbay, Ltd.
We have audited the accompanying balance sheets of Cedarbay, Ltd. as of December
31, 1998 and 1997, and the related statements of revenue and expenses, partners'
capital and cash flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cedarbay, Ltd. as of December
31, 1998 and 1997, and the results of its operations, the changes in partners'
capital and cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 22, 1999
-36-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northwoods III Apartments, Ltd.
We have audited the accompanying balance sheets of Northwoods III Apartments,
Ltd. as of December 31, 1999 and 1998, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwoods III Apartments, Ltd.
as of December 31, 1999 and 1998, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 12, 2000
-37-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northwoods III Apartments, Ltd.
We have audited the accompanying balance sheets of Northwoods III Apartments,
Ltd. as of December 31, 1998 and 1997, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northwoods III Apartments, Ltd.
as of December 31, 1998 and 1997, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Resnick Fedder & Silverman
Bethesda, Maryland
January 12, 1999
-38-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
WESTMINSTER MANOR APARTMENTS
28777 Northwestern Highway, Suite 100
Southfield, MI 48034
We have audited the accompanying Balance Sheet of WESTMINSTER MANOR APARTMENTS
(a limited partnership) as of July 31, 1997 and the related Statements of
Revenue and Expense, Partners' Equity, Cash Flows and Supplemental Information
on Pages 9-11 for the Seven Months Ended then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of WESTMINSTER MANOR APARTMENTS as of
July 31, 1997 and the results of its operations and its cash flows for the Seven
Months Ended then ended, in conformity with generally accepted accounting
principles. The supporting data included in this report have been subjected to
the same auditing procedures applied in the examination of the basic financial
statements and, in our opinion, are presented fairly in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 20, 1998
-39-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
NORTHGATE TOWNHOUSE APARTMENTS
28777 Northwestern Highway, Suite 100
Southfield, MI
We have audited the accompanying Balance Sheet of NORTHGATE TOWNHOUSE APARTMENTS
(a limited partnership) as of July 31, 1997 and the related Statements of
Revenue and Expense, Partners' Equity, Cash Flows and Supplemental Information
on Pages 8-10 for the seven months then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of NORTHGATE TOWNHOUSE APARTMENTS as of
July 31, 1997 and the results of its operations and its cash flows for the seven
months then ended, in conformity with generally accepted accounting principles.
The supporting data included in this report has been subjected to the same
auditing procedures applied in the examination of the basic financial statements
and, in our opinion, are presented fairly in all material respects in relation
to the basic financial statements taken as a whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
March 10, 1998
-40-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Hackley Village Associates #1
We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 1999, and the related
statements of income, and cash flows, and changes in partner's equity for the
year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of December 31, 1999, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government auditing Standards, we have also issued a report
dated February 5, 2000, on our consideration of Hackley Village Associates'
internal controls and a report dated February 5, 2000, on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
February 5, 2000
-41-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Hackley Village Associates #1
We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 1998, and the related
statements of income, and cash flows, and changes in partner's equity for the
year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of December 31, 1998, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government auditing Standards, we have also issued a report
dated February 10,1999, on our consideration of Hackley Village Associates'
internal controls and a report dated February 10,1999, on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
February 10,1999
-42-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Hackley Village Associates #1
We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 1997, and the related
statements of income, and cash flows, and changes in partner's equity for the
year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of December 31, 1997, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government auditing Standards, we have also issued a report
dated January 27, 1998, on our consideration of Hackley Village Associates'
internal controls and a report dated January 27, 1998, on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 27, 1998
-43-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 1999, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 1998 and 1999. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44029 LDP-SUP as
at December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issue a report
dated January 15, 2000 on our consideration of Huntley Associates' internal
controls and a report dated January 15, 2000 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2000
-44-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 1998, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 1997 and 1998. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44029 LDP-SUP as
at December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issue a report
dated January 14, 1999 on our consideration of Huntley Associates' internal
controls and a report dated January 14, 1999 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 14,1999
-45-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 1997, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 1996 and 1997. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An Audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44029 LDP-SUP as
at December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issue a report
dated January 15, 1998 on our consideration of Huntley Associates' internal
controls and a report dated January 15, 1998 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 1998
-46-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 1998 and 1999. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2000 on our consideration of Huntley Associates #2's internal
controls and a report dated January 15, 2000 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2000
-47-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 1998, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 1997 and 1998. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 1999 on our consideration of Huntley Associates #2's internal
controls and a report dated January 15, 1999 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 1999
-48-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 1997, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 1996 and 1997. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1998 on our consideration of Huntley Associates #2's internal
controls and a report dated January 22, 1998 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 1998
-49-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
1999, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the year ended December 31, 1999. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 2000 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 19, 2000 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 19, 2000
-50-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
1998, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the year ended December 31, 1997 and 1998. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 24, 1999 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 24, 1999 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 24, 1999
-51-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
1997, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 1996 and 1997. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 1998 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 29, 1998 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 29, 1998
-52-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditors Report
To the Partners of
Washington Highland Apartments
We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 1999,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statements of cash flows for the year
ended December 31, 1999. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 13, 2000 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 13, 2000 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 13, 2000
-53-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditors Report
To the Partners of
Washington Highland Apartments
We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 1998,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statements of cash flows for the year
ended December 31, 1998 and December 31, 1997. These financial statements are
the responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 1999 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 19, 1999 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 19,1999
-54-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditors Report
To the Partners of
Washington Highland Apartments
We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 1997,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statements of cash flows for the years
ended December 31, 1997 and December 31, 1995. These financial statements are
the responsibility of the project's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 19, 1998 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 19, 1998 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 19, 1998
-55-
<PAGE>
[Letterhead of BORDMAN & WINNICK]
Independent Auditors Report
To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of Project No. 073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as of December 31, 1999, and the related statements of
operations and changes in partner's equity for the year then ended. We have also
audited the statements of cash flows for the year ended December 31, 1999. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project No. 073-58501 LDP at
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 2000 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 26, 2000 on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 26, 2000
-56-
<PAGE>
[Letterhead of BORDMAN & WINNICK]
Independent Auditors Report
To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of Project No. 073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as of December 31, 1998, and the related statements of
operations and changes in partner's equity for the year then ended. We have also
audited the statements of cash flows for the years ended December 31, 1998 and
December 31, 1997. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project No. 073-58501 LDP as at
December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1998 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 22, 1998 on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 1998
-57-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of Project #073-58501 LDP of
Vincennes Niblack Apartments (A Limited Partnership) as at December 31, 1997,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statements of cash flows for the years
ended December 31, 1997 and 1996. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-58501 LDP as at
December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Vincennes Niblack Apartments. Such information has been subject to the auditing
procedures applied in the audit of basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 24, 1998 on our consideration of Vincennes Niblack Apartments' (A
Limited Partnership) internal controls and reports dated January 24, 1998 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 24, 1998
-58-
<PAGE>
[Letterhead of Bordman & Winnick]
To the Partners of
Casa Ramon Apartments
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the year ended
December 31, 1999. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #122-44476 LDP-SUP as
at December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 12) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 17, 2000 on our consideration of Casa Ramon Apartments' internal
controls and a report dated February 20, on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 17, 2000
-59-
<PAGE>
[Letterhead of Bordman & Winnick]
To the Partners of
Casa Ramon Apartments
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at December 31, 1998, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the year ended
December 31, 1998 and 1997. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #122-44476 LDP-SUP as
at December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 12) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 25, 1999 on our consideration of Casa Ramon Apartments' internal
controls and a report dated February 20, on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 25, 1999
-60-
<PAGE>
[Letterhead of Bordman & Winnick]
To the Partners of
Casa Ramon Apartments
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at December 31, 1997, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 1997 and 1996. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #122-44476 LDP-SUP as
at December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 12) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 23, 1998 on our consideration of Casa Ramon Apartments' internal
controls and a report dated February 20, on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 23, 1998
-61-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 1999, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the years ended
December 31, 1999 and December 31, 1998. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #084-44035 LDP as of
December 31, 1999, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 2000 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 27, 2000 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 27, 2000
-62-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 1998, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the years ended
December 31, 1998 and December 31, 1997. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #084-44035 LDP as of
December 31, 1998, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1999 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 22, 1999 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 1999
-63-
<PAGE>
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 1997, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the years ended
December 31, 1997 and December 31, 1996. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #084-44035 LDP as of
December 31, 1997, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 1997 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 21, 1997 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 21, 1997
-64-
<PAGE>
[Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Buttonwood Acres at New Bedford
(a Limited Partnership)
Quincy, Massachusetts
We have audited the accompanying balance sheet of Buttonwood Acres at New
Bedford (a Limited Partnership) as of August 11, 1997, and the related
statements of operations, partners' equity and cash flows for the period from
January 1, 1997 to August 11, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Buttonwood Acres at New Bedford
(a Limited Partnership) as of August 11, 1997, and the results of its
operations, changes in its partners' equity and cash flows for the period from
January 1, 1997 to August 11, 1997, in conformity with generally accepted
accounting principles.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
April 3, 1998
-65-
<PAGE>
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Rockdale West at New Bedford
(a Limited Partnership)
Quincy, Massachusetts
We have audited the accompanying balance sheet of Rockdale West at New Bedford
(a Limited Partnership) as of May 22, 1998, and the related statements of
operations, partners' equity deficiency and cash flows for the period from
January 1, 1998 to May 22, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rockdale West at New Bedford (a
Limited Partnership) as of May 22, 1998, and the results of its operations,
changes in partners' equity deficiency and cash flows for the period from
January 1, 1998 to May 22, 1998, in conformity with generally accepted
accounting principles.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 20, 1999
-66-
<PAGE>
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Rockdale West at New Bedford
(a Limited Partnership)
Quincy, Massachusetts
We have audited the accompanying balance sheet of Rockdale West at New Bedford
(a Limited Partnership), MHFA Project No. 71-225-N, as of December 31, 1997, and
the related statements of operations, partners' equity (deficiency) and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rockdale West at New Bedford (a
Limited Partnership) as of December 31, 1997, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated February 12, 1998 on our consideration of the Partnership's internal
controls and on its compliance with the requirements applicable to the
Partnership's nonmajor HUD-assisted program transactions.
This report is intended for the information of the partners and management of
Rockdale West at New Bedford, the Massachusetts Housing Finance Agency and HUD.
However, this report is a matter of public record and its distribution is not
limited.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 12, 1998
-67-
<PAGE>
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts
We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 1999, and the
related statements of operations, partners' equity (deficiency) and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solemar at South Dartmouth
Limited Partnership as of December 31, 1999, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report
dated February 23, 2000 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations. That report is a integral part of an audit performed
in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 23, 2000
-68-
<PAGE>
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts
We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 1998, and the
related statements of operations, partners' equity (deficiency) and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solemar at South Dartmouth
Limited Partnership as of December 31, 1998, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 9, 1999 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 9, 1999
-69-
<PAGE>
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo P.C.]
Independent Auditors' Report
The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts
We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 1997, and the
related statements of operations, partners' equity (deficiency) and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solemar at South Dartmouth
Limited Partnership as of December 31, 1997, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 12, 1998 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations.
This report is intended for the information of the partners and management of
Solemar at South Dartmouth Limited Partnership and the Massachusetts Housing
Finance Agency. However, this report is a matter of public record and its
distribution is not limited.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
February 12, 1998
-70-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama
We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), Project No. 062-44012-LD as of December 31, 1999, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, specific requirements applicable to the nonmajor HUD program, and
specific requirements applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2000
-71-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama
We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), as of December 31, 1998, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1998 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1999
-72-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama
We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), as of December 31, 1997, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1998
-73-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Florence Apartments, Ltd.
Florence, Alabama
We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), as of December 31, 1999, and the related statements of profit and
loss, changes in owners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD programs
and specific requirements applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2000
-74-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Florence Apartments, Ltd.
Florence, Alabama
We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), as of December 31, 1998, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1998 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1999
-75-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Florence Apartments, Ltd.
Florence, Alabama
We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), as of December 31, 1997, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1998
-76-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), as of December 31, 1999, and the related statements of profit and
loss, changes in owners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
the footnotes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
-77-
<PAGE>
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 31, 2000
-78-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), as of December 31, 1998, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1998 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
the footnotes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
-79-
<PAGE>
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1999
-80-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.HUD Field Office Director
Mobile, Alabama Birmingham, AL
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), Project No. 062-44065-LD, as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
the footnotes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated April 1, 1998 on our
consideration of the Project's internal controls and reports dated April 1, 1998
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD program, specific
requirements applicable to the nonmajor HUD program, and specific requirements
applicable to Fair Housing and Non-Discrimination.
-81-
<PAGE>
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
April 1, 1998
-82-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]1
INDEPENDENT AUDITOR'S REPORT
To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited partnership) as of December 31, 1999
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at December 31, 1999 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 11, 2000 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
11, 2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of University Gardens Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 11, 2000
-83-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]1
INDEPENDENT AUDITOR'S REPORT
To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited partnership) as of December 31, 1998
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at December 31, 1998 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 4, 1999 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
4, 1999 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of University Gardens Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 4, 1999
-84-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited partnership) as of December 31, 1997
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at December 31, 1997 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 6, 1998 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
6, 1998 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of University Gardens Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 6, 1998
-85-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]1
INDEPENDENT AUDITOR'S REPORT
To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited partnership) as of December 31, 1999
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at December 31, 1999 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 5, 2000 on our consideration of Southside Village
Apartments, Ltd.'s internal control structure and reports dated February 5, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the non-major HUD program and
specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Southside Village Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 5, 2000
-86-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]1
INDEPENDENT AUDITOR'S REPORT
To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited partnership) as of December 31, 1998
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at December 31, 1998 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 5, 1999 on our consideration of Southside Village
Apartments, Ltd.'s internal control structure and reports dated February 5, 1999
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the non-major HUD program and
specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Southside Village Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 5, 1999
-87-
<PAGE>
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited partnership) as of December 31, 1997
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at December 31, 1997 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 6, 1998 on our consideration of Southside Village
Apartments, Ltd.'s internal control structure and reports dated February 7, 1998
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the non-major HUD program and
specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Southside Village Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
-88-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), Project No. 062-44055-LD as of December 31, 1999, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2000 on our
consideration of the Project's internal controls and reports dated January 17,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
specific requirements applicable to the nonmajor HUD program, and specific
requirements applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 17, 2000
-89-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), as of December 31, 1998, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1998 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1999
-90-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), as of December 31, 1997, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1998
-91-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama
We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), Project No. 062-44045-LD, as of December 31, 1999, and the
related statements of profit and loss, changes in owners' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1999 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2000 on our
consideration of the Project's internal controls and reports dated January 15,
2000 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD
programs, specific requirements applicable to the nonmajor HUD program, and
specific requirements applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2000
-92-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama
We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), as of December 31, 1998, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1998 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1999
-93-
<PAGE>
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama
We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), as of December 31, 1997, and the related statements of profit and
loss, changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
1997 and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 19, 1998
-94-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 208, A Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 208, A Limited
Partnership, sponsor of FHA Project No. 171-44038, as of December 31, 1999 and
1998, and the related statements of income, changes in partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an audit to
obtain reasonable assurance about weather the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 208, A Limited
Partnership, as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
9 to 13 is presented for purposes of additional analysis for the year ended
December 31, 1999, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated February 14, 2000, on our consideration of the Partnership's internal
controls and reports, dated February 14, 2000, on its compliance with laws and
regulations.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 14, 2000
-95-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 208, A Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 208, A Limited
Partnership, sponsor of FHA Project No. 171-44038, as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 208, A Limited
Partnership, as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 8, 1999
-96-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 307 Oreg. Ltd.
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 307 Oreg. Ltd. (a
limited partnership), sponsor of FHA Project No. 126-44038, as of December 31,
1999 and 1998, and the related statements of operations, changes in partners'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 307 Oreg. Ltd., as of
December 31, 1999 and 1998, and the results of its operations, changes in
partners' equity and cash flow for the years then ended in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
10 to 14 is presented for purposes of additional analysis for the year ended
December 31, 1999, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated January 24, 2000, on our consideration of the Partnership's internal
controls and reports, dated January 24, 2000, on its compliance with laws and
regulations.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
January 24, 2000
-97-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 307 Oreg. Ltd.
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 307 Oreg. Ltd. (a
limited partnership), sponsor of FHA Project No. 126-44038, as of December 31,
1998 and 1997, and the related statements of operations, changes in partners'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 307 Oreg. Ltd., as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 13, 1999
-98-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
1999 and 1998, and the related statements of income, changes in partners' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 317, An Oregon Limited
Partnership, as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
10 to 14 is presented for purposes of additional analysis for the year ended
December 31, 1999, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated January 22, 2000, on our consideration of the Partnership's internal
controls and reports, dated January 22, 2000, on its compliance with laws and
regulations.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
January 22, 2000
-99-
<PAGE>
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
1998 and 1997, and the related statements of income, changes in partners' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 317, An Oregon Limited
Partnership, as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 10, 1999
-100-
<PAGE>
[Letterhead of Deloitte & Touche LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bellfort Associates, Ltd.
We have audited the accompanying balance sheets of Bellfort Associates, Ltd.
(the "Partnership"), a Texas limited partnership, as of December 31, 1999 and
1998, and the related statements of operations, partners' deficiency, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Bellfort Associates, Ltd. as of December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 4 to the
financial statements, the Partnership's operations have not generated and are
not expected to generate sufficient cash flows to service its existing debt
structure, and the Partnership's purchase note payable is due November 1, 1999.
These matters raise substantial doubt about the Partnership's ability to
continue as a going concern. The Partnership's plans concerning these matters
are also described in Note 4. The financial statements do not include any
adjustments as of December 31, 1999 that might result from the outcome of this
uncertainty. As described in Note 4, in January 2000, the Partnership sold its
interest in the apartment project described in Note 1 in exchange for cash and
forgiveness of debt.
/s/ Deloitte & Touche LLP
Houston, Texas
March 20, 2000
-101-
<PAGE>
[Letterhead of Deloitte & Touche LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bellfort Associates, Ltd.
We have audited the accompanying balance sheets of Bellfort Associates, Ltd.
(the "Partnership"), a Texas limited partnership, as of December 31, 1998 and
1997, and the related statements of operations, partners' deficiency, and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Bellfort Associates, Ltd. as of December 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 4 to the
financial statements, the Partnership's operations have not generated and are
not expected to generate sufficient cash flows to service its existing debt
structure, and the Partnership's purchase note payable is due November 1, 1999.
These matters raise substantial doubt about its ability to continue as a going
concern. The Partnership's plans concerning these matters are also described in
Note 4. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Deloitte & Touche LLP
Houston, Texas
February 24, 1999
-102-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cloisters Associates, Ltd.
Atlanta, Georgia
We have audited the balance sheets of Cloisters Associates, Ltd.("the
Partnership") as of December 31, 1999 and 1998, and the related statements of
operations, changes in partners' capital (deficit), and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cloisters Associates, Ltd. at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs."
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 27, 2000
-103-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cloisters Associates, Ltd.
Atlanta, Georgia
We have audited the balance sheets of Cloisters Associates, Ltd. as of December
31, 1998 and 1997, and the related statements of operations, changes in
partners' capital (deficit), and cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs."
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cloisters Associates, Ltd. at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 25, 1999
-104-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cabarrus Arms Associates
Atlanta, Georgia
We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 1999 and 1998, and the related statements of
operations, changes in partners' capital (deficit), and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cabarrus Arms Associates at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
As described in Notes A and F to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 26, 2000
-105-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cabarrus Arms Associates
Atlanta, Georgia
We have audited the balance sheets of Cabarrus Arms Associates as of December
31, 1998 and 1997, and the related statements of operations, changes in
partners' capital (deficit), and cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Notes A and F to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cabarrus Arms Associates at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 20, 1999
-106-
<PAGE>
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Summer Arms Apartments, Ltd.
Sumter, South Carolina
We have audited the accompanying balance sheets of Summer Arms Apartments, Ltd.
(a limited partnership) as of December 31, 1999, 1998 and 1997, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Summer Arms
Apartments, Ltd. (a limited partnership) as of December 31, 1999, 1998 and 1997,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 28, 2000
-107-
<PAGE>
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Lexington Village Company
Conyers, Georgia
We have audited the accompanying balance sheets of Lexington Village Company (a
limited partnership) as of December 31, 1999, 1998 and 1997, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lexington Village Company (a
limited partnership) as of December 31, 1999, 1998 and 1997, and the results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 28, 2000
-108-
<PAGE>
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Ware Manor Associates
Waycross, Georgia
We have audited the accompanying balance sheets of Ware Manor Associates (a
limited partnership) as of December 31, 1999, 1998 and 1997 and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ware Manor Associates (a
limited partnership) as of December 31, 1999, 1998 and 1997, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 28, 2000
-109-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia
We have audited the balance sheets of Nottingham Woods Apartments Limited
("the Partnership") as of December 31, 1999 and 1998, and the related statements
of operations, changes in partners' deficit, and cash flows for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nottingham Woods Apartments
Limited at December 31, 1999 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 28, 2000
-110-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia
We have audited the balance sheets of Nottingham Woods Apartments Limited as of
December 31, 1998 and 1997, and the related statements of operations, changes in
partners' capital (deficit), and cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nottingham Woods Apartments
Limited at December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 26, 1999
-111-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Hathaway Court Associates
Atlanta, Georgia
We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 1999 and 1998, and the related statements of
operations, changes in partners' capital deficit, and cash flows for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hathaway Court Associates at
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 27, 2000
-112-
<PAGE>
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Hathaway Court Associates
Atlanta, Georgia
We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 1998 and 1997, and the related statements of
operations, changes in partners' capital deficit, and cash flows for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Notes A and E to the financial statements, in 1998 the
Partnership changed its method of accounting for partners' distributions. The
change in accounting principle was made to comply with the Department of Housing
and Urban Development "Uniform Financial Reporting Standards for HUD Housing
Programs".
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hathaway Court Associates at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 22, 1999
-113-
<PAGE>
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Tall Pines Associates
LaGrange, Georgia
We have audited the accompanying balance sheets of Tall Pines Associates (a
limited partnership) as of December 31, 1999, 1998 and 1997, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tall Pines Associates as of
December 31, 1999, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 28, 2000
-114-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelton Beach Apartments, Ltd.
We have audited the accompanying balance sheets of Shelton Beach Apartments,
Ltd. as of December 31, 1999 and 1998, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shelton Beach Apartments, Ltd.
as of December 31, 1999 and 1998, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 12, 2000
-115-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelton Beach Apartments, Ltd.
We have audited the accompanying balance sheets of Shelton Beach Apartments,
Ltd. as of December 31, 1998 and 1997, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shelton Beach Apartments, Ltd.
as of December 31, 1998 and 1997, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 12, 1999
-116-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northpointe II, Ltd.
We have audited the accompanying balance sheets of Northpointe II, Ltd. as of
December 31, 1999 and 1998, and the related statements of revenue and expenses,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northpointe II, Ltd. as of
December 31, 1999 and 1998, and the results of its operations, the changes in
partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 12, 2000
-117-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northpointe II, Ltd.
We have audited the accompanying balance sheets of Northpointe II, Ltd. as of
December 31, 1998 and 1997, and the related statements of revenue and expenses,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northpointe II, Ltd. as of
December 31, 1998 and 1997, and the results of its operations, the changes in
partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 12, 1999
-118-
<PAGE>
[Letterhead of KPMG LLP]
Independent Auditors' Report
The Partners
Caroline Forest Apartments:
We have audited the accompanying balance sheets of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1999 and 1998, and the related
statements of operations, changes in partners' equity and cash flows for each of
the years in the three-year period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1999 and 1998, and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Roanoke, Virginia
February 15, 2000
-119-
<PAGE>
[Letterhead of KPMG LLP]
Independent Auditors' Report
The Partners
Caroline Forest Apartments:
We have audited the accompanying balance sheets of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1998 and 1997, and the related
statements of operations, changes in partners' equity and cash flows for each of
the years in the three-year period ended December 31, 1998. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caroline Forest Apartments (a
Virginia Limited Partnership) as of December 31, 1998 and 1997, and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1998 in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Roanoke, Virginia
February 15, 1999
-120-
<PAGE>
[Letterhead of Frierson & Associates, PC]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Park of Pecan I, Ltd.:
We have audited the accompanying balance sheet of Park of Pecan I, Ltd., (a
Texas limited partnership) as of February 26, 1999, and the related statements
of loss and partners' deficit and cash flows for the period then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan I, Ltd. as of
February 26, 1999, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Frierson & Associates, P.C.
May 14, 1999
Houston, Texas
-121-
<PAGE>
[Letterhead of Frierson & Associates, PC]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Park of Pecan I, Ltd.:
We have audited the accompanying balance sheet of Park of Pecan I, Ltd., (a
Texas limited partnership) as of December 31, 1998, and the related statements
of loss and partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan I, Ltd. as of
December 31, 1998, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Frierson & Associates, P.C.
February 28, 1999
Houston, Texas
-122-
<PAGE>
Report of Independent Public Accountant
To the Partners of
Park of Pecan I, Ltd.:
I have audited the accompanying balance sheet of PARK OF PECAN I, LTD., (a Texas
limited partnership) as of December 31, 1997, and the related statements of loss
and partners' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Park of Pecan I, Ltd. as of
December 31, 1997, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Randal B. McDonald Jr., CPA
Houston, Texas.
March 2, 1998,
-123-
<PAGE>
[Letter of Frierson & Associates, PC]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Park of Pecan II, Ltd.:
We have audited the accompanying balance sheet of Park of Pecan II, Ltd., (a
Texas limited partnership) as of February 26, 1999, and the related statements
of loss and partners' deficit and cash flows for the period then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan II, Ltd. as of
February 26, 1999, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Frierson & Associates, PC
Houston, Texas
May 14, 1999
-124-
<PAGE>
[Letter of Frierson & Associates, PC]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Park of Pecan II, Ltd.:
We have audited the accompanying balance sheet of Park of Pecan II, Ltd., (a
Texas limited partnership) as of December 31, 1998, and the related statements
of loss and partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Park of Pecan II, Ltd. as of
December 31, 1998, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Frierson & Associates, PC
Houston, Texas
February 28, 1999
-125-
<PAGE>
Report of Independent Public Accountant
To the Partners of
Park of Pecan II, Ltd.:
I have audited the accompanying balance sheet of PARK OF PECAN II, LTD., (a
Texas limited partnership) as of December 31, 1997, and the related statements
of loss and partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Park of Pecan II, Ltd. as of
December 31, 1997, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has suffered recurring losses from
operations resulting in a net capital deficiency. The Partnership's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Randal B. McDonald Jr., CPA
Houston, Texas.
March 2, 1998,
-126-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
Villa Apollo Associates Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034
We have audited the accompanying balance sheet of Villa Apollo Associates
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, and cash flows and,
supplemental schedules on pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Villa Apollo Associates Limited
Partnership as of June 18, 1999 and the results of its operations and its cash
flows for the period January 1, 1999 through June 18, 1999, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 14, 2000
-127-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
Villa Apollo Associates Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034
We have audited the accompanying Comparative Balance Sheet of Villa Apollo
Associates Limited Partnership (a limited partnership) as of December 31, 1998
and 1997 and the related Comparative Statements of Revenue and Expense,
Partners' Deficiency and, Cash Flows and, Supplemental Schedules on Page 9-11
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Villa Apollo Associates Limited
Partnership as of December 31, 1998 and 1997 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
February 8, 1999
-128-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
Carlton Terrace Apartments Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034
We have audited the accompanying balance sheet of Carlton Terrace Apartments
Limited Partnership (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, and cash flows and, the
supplemental schedules on pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Carlton Terrace Apartments Limited
Partnership as of June 18, 1999 and the results of its operations and its cash
flows for the period January 1, 1999 through June 18, 1999, in conformity with
generally accepted accounting principles. The supporting data included in this
report have been subjected to the same auditing procedures applied in the
examination of the basic financial statements and, in our opinion, are presented
fairly in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 15, 2000
-129-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
Carlton Terrace Apartments Limited Partnership
28777 Northwestern Highway, Suite 100
Southfield, MI 48034
We have audited the accompanying Comparative Balance Sheet of Carlton Terrace
Apartments Limited Partnership (a limited partnership) as of December 31, 1998
and 1997 and the related Comparative Statements of Revenue and Expense,
Partners' Deficiency, and Cash Flows and, the supplemental information on Pages
9-11 for the years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Carlton Terrace Apartments Limited
Partnership as of December 31, 1998 and 1997 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
February 5, 1999
-130-
<PAGE>
[Letterhead of Kirschner Hutton Perlin, P.C.]
Independent Auditors' Report
Partners
Cranbrook Manor Apartments Limited Partnership
We have audited the accompanying balance sheet of Cranbrook Manor Apartments
Limited Partnership, Project No. 047-44002-LD-SUP, as of December 31, 1999,
and the related statements of profit and loss, changes in partners' deficit
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cranbrook Manor Apartments
Limited Partnership as of December 31, 1999, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
(pages 12 to 14) is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership's inability to generate sufficient cash
flow to meet its obligations and sustain its operations raise substantial doubt
about the Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 28, 2000 on our
consideration of the Cranbrook Manor Apartments Limited Partnership's
internal control and a reports dated January 28, 2000 on its compliance with
specific requirements applicable to major HUD programs and specific
requirements applicable to Fair Housing and Non-Discrimination.
-131-
<PAGE>
/s/ Kirschner Hutton Perlin, P.C.
E.I.N. 38-2308034
Audit Partner - Kenneth R. Perlin
Southfield, MI
January 28, 2000
-132-
<PAGE>
[Letterhead of Plante & Moran, LLP]
Independent Auditor's Report
To the Partners
Cranbrook Manor Apartments Limited Partnership
We have audited the accompanying balance sheet of HUD Project No.
047-44002-LDP-SUP, Cranbrook Manor Apartments Limited Partnership (a Michigan
limited partnership), as of December 31, 1998 and the related statements of
profit and loss, changes in partners' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cranbrook Manor Apartments
Limited Partnership as of December 31, 1998, and the results of its operations,
changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership is experiencing difficulty in generating
sufficient cash flow to meet its obligations and sustain its operations, which
raises substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In accordance with Government Auditing Standards, we have also issued a report
dated February 5, 1999 on our consideration of the Partnership's internal
controls and a report dated February 5, 1999 on its compliance with laws and
regulations.
-133-
<PAGE>
As discussed in Note 1 and Note 7, the Partnership's fixed assets, previously
reported at a net book value of $2,810,400, should have been reported as assets
held for sale with an expected total recoverable cost of $2,100,000. Recoverable
cost represents a write-down in the carrying cost of the fixed assets and
reflects no accumulated depreciation. Depreciation expense was reduced by
$12,888 as a result of this change. This discovery was made subsequent to the
issuance of the financial statements. The financial statements have been
restated to reflect this correction.
/s/ Plante & Moran, LLP
By: Linda P. Hubbard
Engagement Partner
Troy, Michigan
Federal ID Number: 38-1357951
Phone Number:(248) 952-5200
February 5, 1999 except for Note 1 and Note 7, as to which the date is
April 10, 1999
-134-
<PAGE>
Independent Auditor's Report
To the Partners
Cranbrook Manor Apartments Limited Partnership
We have audited the accompanying balance sheet of HUD Project No.
047-44002-LDP-SUP, Cranbrook Manor Apartments Limited Partnership (a Michigan
limited partnership), as of December 31, 1997, and the related statements of
profit and loss, changes in partners' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cranbrook Manor Apartments
Limited Partnership as of December 31, 1997, and the results of its operations,
changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership is experiencing difficulty in generating
sufficient cash flow to meet its obligations and sustain its operations, which
raises substantial doubt about the Partnership's ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
In accordance with Government Auditing Standards, we have also issued a report
dated January 23, 1998 on our consideration of the Partnership's internal
controls and a report dated January 23, 1998 on its compliance with laws and
regulations.
/s/ Plante & Moran, LLP
By: Linda P. Hubbard
Engagement Partner
Federal ID Number:38-1357951
Phone Number:(248) 644-0300
Bloomfield Hills, Michigan
January 23, 1998
-135-
<PAGE>
[Letterhead of Kirschner Hutton Perlin, P.C.]
Independent Auditors' Report
To the Partners
Oakbrook Villa Apartments Limited Partnership
We have audited the accompanying balance sheet of Oakbrook Villa Apartments
Limited Partnership as of December 31, 1999, and the related statements of
operations, partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oakbrook Villa Apartments
Limited Partnership as of December 31, 1999 and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, Michigan
February 16, 2000
-136-
<PAGE>
[Letterhead of Plante & Moran, LLP]
Independent Auditor's Report
To the Partners
Oakbrook Villa Apartments Limited Partnership
We have audited the accompanying balance sheet of HUD Project No. 044-44001-LDP,
Oakbrook Villa Apartments Limited Partnership (a Michigan limited partnership),
as of December 31, 1998 and the related statements of profit and loss, changes
in partners' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oakbrook Villa Apartments
Limited Partnership as of December 31, 1998 and the results of its operations,
changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership is experiencing difficulty in generating
cash flow to meet its obligations and sustain its operations, which raises
substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In accordance with Government Auditing Standards, we have also issued a report
dated February 5, 1999 on our consideration of the Partnership's internal
controls and a report dated February 5, 1999 on its compliance with laws and
regulations.
-137-
<PAGE>
As discussed in Note 1, the Partnership's fixed assets previously reported as
operating net fixed assets of $7,968,977 should have been reported as assets
held for sale of $8,199,267. The increase in the carrying value was the result
of decreased depreciation expense of $230,290 on the assets held for sale. This
discovery was made subsequent to the issuance of the financial statements. The
financial statements have been restated to reflect this correction.
/s/ Plante & Moran, LLP
By: Linda P. Hubbard
Engagement Partner
Troy, Michigan
Federal ID Number: 38-1357951
Phone Number:(248) 952-5200
February 5, 1999 except for Note 1, as to
which the date is April 10, 1999
-138-
<PAGE>
[Letterhead of Plante & Moran, LLP]
Independent Auditor's Report
To the Partners
Oakbrook Villa Apartments Limited Partnership
We have audited the accompanying balance sheet of HUD Project No. 044-44001-LDP,
Oakbrook Villa Apartments Limited Partnership (a Michigan limited partnership),
as of December 31, 1997 and the related statements of profit and loss, changes
in partners' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oakbrook Villa Apartments
Limited Partnership as of December 31, 1997, and the results of its operations,
changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 23, 1998 on our consideration of the Partnership's internal
controls and a report dated January 23, 1998 on its compliance with laws and
regulations.
/s/ Plante & Moran, LLP
By: Linda P. Hubbard
Engagement Partner
Bloomfield Hills, Michigan
Federal ID Number:38-1357951
Phone Number:(248) 644-0300
January 23, 1998
-139-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 1999, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 1999 and 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 1999, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 8 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2000 on our consideration of the partnership's internal
control structure and a report dated January 15, 2000 on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 15, 2000
-140-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 1998, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 1997 and 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 1998, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 8 to 15 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 1999 on our consideration of the partnership's internal
control structure and a report dated January 29, 1999 on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 29, 1999
-141-
<PAGE>
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 1997, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 1996 and 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 1997, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 8 to 15 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 1998 on our consideration of the partnership's internal
control structure and a report dated January 27, 1998 on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 27, 1998
-142-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
VILLA APOLLO #2 LIMITED PARTNERSHIP
28777 Northwestern Highway,
Suite 100
Southfield, MI 48034
We have audited the accompanying balance sheet of VILLA APOLLO #2 LIMITED
PARTNERSHIP (a limited partnership) as of June 18, 1999 and the related
statements of revenue and expense, partners' deficiency, and cash flows and,
supplemental schedules on Pages 9-11 for the period January 1, 1999 through June
18, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Villa Apollo #2 Limited Partnership
as of June 18, 1999 and the results of its operations and its cash flows for the
period January 1, 1999 through June 18, 1999, in conformity with generally
accepted accounting principles. The supporting data included in this report have
been subjected to the same auditing procedures applied in the examination of the
basic financial statements and, in our opinion, are presented fairly in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
January 5, 2000
-143-
<PAGE>
[Letterhead of Nessel, Smith, Leff & Borsen, PLLC]
INDEPENDENT AUDITORS' REPORT
To the Partners
VILLA APOLLO #2 LIMITED PARTNERSHIP
28777 Northwestern Highway,
Suite 100
Southfield, MI 48034
We have audited the accompanying Comparative Balance Sheet of VILLA APOLLO #2
LIMITED PARTNERSHIP (a limited partnership) as of December 31, 1998 and 1997 and
the related Comparative Statements of Revenue and Expense, Partners' Deficiency,
and Cash Flows, and Supplemental Schedules on Pages 9-11 for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects the financial position of Villa Apollo #2 Limited Partnership
as of December 31, 1998 and 1997 and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles. The supporting data included in this report have been subjected to
the same auditing procedures applied in the examination of the basic financial
statements and, in our opinion, are presented fairly in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Nessel, Smith, Leff & Borsen, PLLC
Certified Public Accountants
Farmington Hills, MI
February 8, 1999
-144-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Greenwood Manor, Ltd.:
We have audited the accompanying balance sheet of Greenwood Manor, Ltd., (the
"Partnership") as of December 31, 1999, and the related statements of income,
changes in partners' capital, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenwood Manor, Ltd. as of
December 31, 1999, and the results of its operations, changes in partners'
capital, and cash flows for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 4, 2000, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
February 4, 2000, on its compliance with specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part the basic financial statements of Greenwood Manor, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 4, 2000
-145-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Greenwood Manor, Ltd.:
We have audited the accompanying financial statements of Greenwood Manor, Ltd.
(Project Number 082-44070 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1998, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 22, 1999, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 22, 1999, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
shown on pages 11-13 is presented for the purpose of additional analysis and is
not a required part the basic financial statements of the Partnership. Such
information has been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 22, 1999
-146-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Greenwood Manor, Ltd.:
We have audited the accompanying financial statements of Greenwood Manor, Ltd.
(Project Number 082-44070 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 13, 1998, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 13, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part the basic financial statements of the Partnership,
but are required by the Consolidated Audit Guide for Audits of HUD Programs,
issued by the U.S. Department of Housing and Urban Development, Office of
Inspector General. Such schedules, which are the responsibility of the General
Partner, have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 13, 1998
-147-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Malvern Manor, Ltd.:
We have audited the accompanying financial statements of Malvern Manor, Ltd.
(the "Partnership") as of December 31, 1999, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 23, 2000, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
February 23, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 23, 2000
-148-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Malvern Manor, Ltd.:
We have audited the accompanying financial statements of Malvern Manor, Ltd.
(Project Number 082-44049 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1998, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 29, 1999, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
January 29, 1999, on its compliance with specific requirements applicable to
major HUD programs, specific requirements to nonmajor HUD transactions and
specific requirements to nonmajor HUD transactions and specific requirements
applicable to fair housing and non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 - 13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated on all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 29, 1999
-149-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Malvern Manor, Ltd.:
We have audited the accompanying financial statements of Malvern Manor, Ltd.
(Project Number 082-44049 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 23, 1998, on our consideration of Malvern Manor, Ltd.'s internal
control and a report dated January 23, 1998, on its compliance with laws and
regulations.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 23, 1998
-150-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Hereford Manor, Ltd.:
We have audited the accompanying financial statements of Hereford Manor, Ltd.
(the "Partnership") as of December 31, 1999, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at December 31,
1999, and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated February 14, 2000, on our
consideration of Hereford's internal control and reports dated February 14,
2000, on its compliance with specific requirements applicable to major HUD
programs, specific requirements applicable to nonmajor HUD transactions and
specific requirements applicable to fair housing and nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 14, 2000
-151-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Hereford Manor, Ltd.:
We have audited the accompanying financial statements of Hereford Manor, Ltd.
(Project Number 082-44071 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1998, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1998, and
the results of its operations, changes in partners' equity and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated January 27, 1999, on our
consideration of Hereford's internal control and reports dated January 27, 1999,
on its compliance with specific requirements applicable to major HUD programs,
specific requirements applicable to nonmajor HUD transactions and specific
requirements applicable to fair housing and nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 27, 1999
-152-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Hereford Manor, Ltd.:
We have audited the accompanying financial statements of Hereford Manor, Ltd.
(Project Number 082-44071 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1997, and
the results of its operations, changes in partners' equity and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated January 22, 1998, on our
consideration of Hereford's internal control and reports dated January 22, 1998,
on its compliance with specific requirements applicable to major HUD programs,
specific requirements applicable to nonmajor HUD transactions and specific
requirements applicable to fair housing and nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, by the U.S. Department of Housing and Urban Development, Office of
Inspector General. Such schedules, which are the responsibility of the General
Partner, have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 22, 1998
-153-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Henslee Heights, Ltd.:
We have audited the accompanying financial statements of Henslee Heights, Ltd.
(the "Partnership") as of December 31, 1999, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated February 11, 2000, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated February 11, 2000, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 - 13 is presented for the purpose of additional
analysis. Such information has been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 11, 2000
-154-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Henslee Heights, Ltd.:
We have audited the accompanying financial statements of Henslee Heights, Ltd.
(Project Number 082-44076 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1998, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 22, 1999, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 22, 1999, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 - 13 is presented for the purpose of additional
analysis. Such information has been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 22, 1999
-155-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Henslee Heights, Ltd.:
We have audited the accompanying financial statements of Henslee Heights, Ltd.
(Project Number 082-44076 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 22, 1998, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 22, 1998, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
nondiscrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 22, 1998
-156-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Oakwood Manor, Ltd.:
We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(the "Partnership") as of December 31, 1999, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a reported dated February 8, 2000, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
February 8, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 8, 2000
-157-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Oakwood Manor, Ltd.:
We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(Project Number 082-44034 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1998, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a reported dated February 9, 1999, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
February 9, 1999, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 9, 1999
-158-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Oakwood Manor, Ltd.:
We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(Project Number 082-44034 LD/SUP) (a limited partnership hereinafter referred to
as the "Partnership") as of December 31, 1997, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a reported dated February 5, 1998, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
February 5, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 5, 1998
-159-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
West Scenic Apartments, Ltd.:
We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (the "Partnership") as of December 31, 1999, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued a report dated February 9,
2000, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated February 9, 2000, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to nonmajor
HUD transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 9, 2000
-160-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
West Scenic Apartments, Ltd.:
We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (Project Number 082-44017 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1998, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued a report dated February 8,
1999, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated February 8, 1999, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to nonmajor
HUD transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 8, 1999
-161-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
West Scenic Apartments, Ltd.:
We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (Project Number 082-44017 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1997, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued a report dated February 4,
1998, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated February 4, 1998, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to nonmajor
HUD transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 4, 1998
-162-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (the "Partnership") as of December 31, 1999, and for the year
then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 10, 2000, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated February 10, 2000, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 10, 2000
-163-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (Project Number 082-44045 LD/SUP) (a limited partnership
hereinafter referred to as the "Partnership") as of December 31, 1998, and for
the year then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 10, 1999, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated February 10, 1999, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 10, 1999
-164-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (Project Number 082-44045 LD/SUP) (a limited partnership
hereinafter referred to as the "Partnership") as of December 31, 1997, and for
the year then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 9, 1998, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated February 9, 1998, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 9, 1999
-165-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Southwest Apartments, Ltd.:
We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (the "Partnership") as of December 31, 1999, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1999, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 24, 2000, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
February 24 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 24, 2000
-166-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Southwest Apartments, Ltd.:
We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (Project Number 082-44020 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1998, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 27, 1999, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 27, 1999, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11-13 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 27, 1999
-167-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Southwest Apartments, Ltd.:
We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (Project Number 082-44020 LD/SUP) (a limited partnership hereinafter
referred to as the "Partnership") as of December 31, 1997, and for the year then
ended, listed in the foregoing table of contents. These financial statements are
the responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 22, 1998, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 22, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 11-14 are presented for the purpose of additional analysis
and are not a required part of basic financial statements of the Partnership,
but are required by the Consolidated Audit Guide for Audits of HUD Programs,
issued by the U.S. Department of Housing and Urban Development, Office of
Inspector General. Such schedules, which are the responsibility of the General
Partner, have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 22, 1998
-168-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Valley Arms, Ltd.:
We are engaged to audit the accompanying balance sheet of Valley
Arms, Ltd. (the "Partnership") as of December 31, 1999, and the related
statements of profit and loss, partners' equity (deficit), and
cash flows for the year then ended. These financial statements are the
responsibility of the General Partner.
Management has refused to provide written representations as to its
responsibility for the fair presentation of the financial statements and other
matters which could materially affect the amounts and classification of items
included in the financial statements. Such representations are required under
generally accepted auditing standards.
Since the management of the Company has refused to provide written
representations as noted in the preceding paragraph, the scope of our work was
not sufficient to enable us to express, and we do not express, and opinion on
the financial statements referred to above.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership filed a petition for bankruptcy under
Chapter 11 during the year ended December 31, 1998, and sold its sole revenue
producing asset on April 13, 1999, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
March 13, 2000
-169-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Valley Arms, Ltd.:
We have audited the accompanying financial statements of Valley Arms, Ltd.
(Project Number 053-44191 LDP) (a limited partnership hereinafter referred to as
the "Partnership") as of December 31, 1998, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1998, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has incurred a net loss, its total current
liabilities exceed its total current assets, it is delinquent on its mortgage
payments and it filed a petition for bankruptcy under Chapter 11 subsequent to
December 31, 1998, which raises substantial doubt about its ability to continue
as a going concern. Management's plan regarding those matters are described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 5, 1999, on our
consideration of Valley Arms, Ltd's internal control and a report dated February
5, 1999, on its compliance with specific requirements applicable to major HUD
programs, specific requirements applicable to nonmajor HUD transactions and
specific requirements applicable to fair housing and non-discrimination.
-170-
<PAGE>
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 13-15 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 5, 1999
-171-
<PAGE>
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Valley Arms, Ltd.:
We have audited the accompanying financial statements of Valley Arms, Ltd.
(Project Number 053-44191 LDP) (a limited partnership hereinafter referred to as
the "Partnership") as of December 31, 1997, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 1997, and
the results of its operations, changes in partners' equity, and cash flows for
the year then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership has incurred a net loss, its total current
liabilities exceed its total current assets, it is delinquent on its mortgage
payments and it filed a petition for bankruptcy under Chapter 11 subsequent to
December 31, 1997, which raises substantial doubt about its ability to continue
as a going concern. Management's plan regarding those matters are described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated April 1, 1998, on our
consideration of Valley Arms, Ltd's internal control and a report dated April 1,
1998, on its compliance with specific requirements applicable to major HUD
programs, specific requirements applicable to nonmajor HUD transactions and
specific requirements applicable to fair housing and nondiscrimination.
-172-
<PAGE>
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Partnership on pages 13-16 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements of the
Partnership, but are required by the Consolidated Audit Guide for Audits of HUD
Programs, issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Such schedules, which are the responsibility of the
General Partner, have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
April 1, 1998
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<PAGE>
[Letterhead of Bick Fredman & Co.]
Independent Auditor's Report
The General and Limited Partners
Lancaster Manor Associates, Ltd.
Cleveland, Ohio
We have audited the statements of net assets in liquidation of Lancaster Manor
Associates, Ltd. (a California Limited Partnership), as of August 31, 1999, and
the related statement of changes in net assets in liquidation for the period
from March 17, 1999 to August 31, 1999. In addition, we have audited the
statement of operations for the period January 1, 1999 to March 16, 1999 and the
statement of partners' (deficit) equity and cash flow for the eight months ended
August 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 3 to the financial statements, the partners of Lancaster
Manor Associates, Ltd. approved a plan of liquidation on March 16, 1999, and the
Company commenced liquidation shortly thereafter. As a result, the Company has
changed its basis of accounting for periods subsequent to March 16, 1999 from
the going-concern basis to a liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Lancaster Manor
Associates, Ltd. as of August 31, 1999, the changes in net assets in liquidation
for the period from March 17, 1999 to August 31, 1999, and the results of its
operations for the period from January 1, 1999 to March 16, 1999, and its cash
flows for the eight months then ended in conformity with generally accepted
accounting principles applied on the bases described in the preceding
paragraph..
/s/ Bick Fredman & Co.
Cleveland, Ohio
September 2, 1999
-174-
<PAGE>
[Letterhead of Bick Fredman & Co.]
Independent Auditor's Report
The General and Limited Partners
Lancaster Manor Associates, Ltd.
Cleveland, Ohio
We have audited the accompanying balance sheets of Lancaster Manor Associates,
Ltd. (a California Limited Partnership), as of December 31, 1998 and 1997, and
the related statements of operations, partners' deficit and cash flows for the
years then ended. These financial statements are the responsibility of the
Project's management, our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lancaster Manor Associates,
Ltd. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 13, 1999 except for Note 9, as to
which the date is March 29, 1999
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 25,
-------------------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Property and equipment - net, less accumulated
depreciation (Notes 2, 4 and 6) $ 52,714,919 $ 76,007,692
Property and equipment -
held for sale (Notes 2, 4, 6 and 7) 13,550,070 20,352,011
Cash and cash equivalents (Notes 2 and 11) 4,095,787 2,658,449
Cash - restricted for tenants' security deposits (Note 3) 768,762 1,213,550
Mortgage escrow deposits (Notes 3, 5 and 6) 9,180,023 10,549,951
Prepaid expenses and other assets (Note 8) 1,103,445 1,655,056
------------- -------------
Total assets $ 81,413,006 $ 112,436,709
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable (Notes 3 and 6) $ 44,171,128 $ 68,827,382
Purchase money notes payable (Note 7) 43,969,115 62,215,705
Due to selling partners (Note 7) 74,281,146 81,667,934
Accounts payable, accrued expenses and other liabilities 2,827,606 3,538,143
Tenants' security deposits payable 751,121 1,152,240
Due to general partners of subsidiaries and their affiliates (Note 8) 631,826 1,606,773
Due to general partners and affiliates (Note 8) 2,842,933 2,435,696
------------- -------------
169,474,875 221,443,873
------------- -------------
Minority interest (Note 2) 635,465 593,370
------------- -------------
Commitments and contingencies (Notes 6, 7, 8 and 11)
Partners' deficit
Limited partners (87,272,836) (107,967,004)
General partners (1,424,498) (1,633,530)
------------- -------------
(88,697,334) (109,600,534)
------------- -------------
Total liabilities and partners' deficit $ 81,413,006 $ 112,436,709
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
-176-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Rentals, net $ 23,915,060 $ 27,829,020 $ 31,646,760
Other 1,265,116 1,341,851 1,376,085
Gain on sale of property (Note 10) 12,822,433 7,524,848 4,419,139
------------ ------------ ------------
Total revenues 38,002,609 36,695,719 37,441,984
------------ ------------ ------------
Expenses
Administrative and management 4,826,465 5,357,328 5,894,581
Administrative and management-related parties
(Note 8) 2,595,161 2,836,983 3,222,918
Operating 4,319,192 5,247,392 5,781,810
Repairs and maintenance 6,653,986 7,190,605 8,161,433
Taxes and insurance 2,972,307 3,636,893 3,925,855
Financial, principally interest 8,775,674 9,545,162 10,955,425
Depreciation 4,915,594 5,844,432 7,164,517
Loss on impairment of assets (Note 4) 0 2,399,391 0
------------ ------------ ------------
Total expenses 35,058,379 42,058,186 45,106,539
------------ ------------ ------------
Income (loss) before minority interest and
extraordinary item 2,944,230 (5,362,467) (7,664,555)
Minority interest (income) loss of subsidiaries (3,110,714) (4,662) 57,040
------------ ------------ ------------
Loss before extraordinary item (166,484) (5,367,129) (7,607,515)
Extraordinary item-forgiveness of
indebtedness income (Notes 6 and 10) 23,069,821 4,232,663 28,257,707
------------ ------------ ------------
Net income (loss) $ 22,903,337 $ (1,134,466) $ 20,650,192
============ ============ ============
Limited Partners Share:
Loss before extraordinary item $ (164,819) $ (5,313,457) $ (7,531,440)
Extraordinary item 22,839,123 4,190,336 27,975,130
------------ ------------ ------------
Net income (loss) $ 22,674,304 $ (1,123,121) $ 20,443,690
============ ============ ============
Number of units outstanding 12,074 12,074 12,074
============ ============ ============
Loss before extraordinary item per
limited partner unit $ (14) $ (440) $ (624)
Extraordinary item per limited partner unit 1,892 347 2,317
------------ ------------ ------------
Net income (loss) per limited partnership unit $ 1,878 $ (93) $ 1,693
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
<TABLE>
<CAPTION>
Limited General
Total Partners Partners
------------- ------------- -------------
<S> <C> <C> <C>
Balance - March 26, 1997 $(127,098,973) $(125,290,459) $(1,808,514)
Net income 20,650,192 20,443,690 206,502
Distributions (2,017,287) (1,997,114) (20,173)
------------- ------------- -------------
Balance - March 26, 1998 (108,466,068) (106,843,883) (1,622,185)
Net loss (1,134,466) (1,123,121) (11,345)
------------- ------------- -------------
Balance - March 26, 1999 (109,600,534) (107,967,004) (1,633,530)
Net income 22,903,337 22,674,304 229,033
Distributions (2,000,137) (1,980,136) (20,001)
------------- ------------- -------------
Balance - March 25, 2000 $ (88,697,334) $ (87,272,836) $ (1,424,498)
============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
-178-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 22,903,337 $(1,134,466) $20,650,192
------------ ------------ ------------
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Gain on sale of property (12,822,433) (7,524,848) (4,419,139)
Extraordinary item-forgiveness of
indebtedness income (23,069,821) (4,232,663) (28,257,707)
Depreciation 4,915,594 5,844,432 7,164,517
Loss on impairment of assets 0 2,399,391 0
Minority interest in income (loss) of subsidiaries 3,110,714 4,662 (57,040)
(Increase) decrease in assets:
Cash-restricted for tenants' security deposits 189,549 (19,068) 161,347
Mortgage escrow deposits - operating 1,280,704 (1,495,602) 52,361
Prepaid expenses and other assets 34,065 283,234 219,148
Increase (decrease) in liabilities:
Due to selling partners 7,669,061 7,773,292 8,728,681
Payments of interest to selling partners (4,044,678) (3,200,066) (1,817,708)
Accounts payable, accrued expenses and
other liabilities (254,074) 998,791 (970,910)
Tenants' security deposits payable (178,669) 35,913 (135,737)
Due to general partners of subsidiaries and
their affiliates 661,678 483,091 324,757
Due to general partners of subsidiaries and
their affiliates (7,266) (238,308) (64,411)
Due to general partners and affiliates 407,237 958,042 (1,029,721)
------------ ------------ ------------
Total adjustments (22,108,339) 2,070,293 (20,101,562)
------------ ------------ ------------
Net cash provided by operating activities 794,998 935,827 548,630
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of property 24,705,022 0 25,732,750
Costs paid relating to sale of property (1,187,934) 0 (245,721)
Acquisitions of property and equipment (1,220,933) (1,735,804) (2,050,996)
Acquisitions of property and equipment -
held for sale (31,665) 0 0
Decrease (increase) in mortgage
escrow deposits (707,958) 953,006 504,953
------------ ------------ ------------
Net cash (used in) provided by investing activities 21,556,532 (782,798) 23,940,986
------------ ------------ ------------
</TABLE>
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from financing activities:
Principal payments of purchase money notes (790,799) (3,794,400) (7,598,428)
Proceeds from mortgage notes payable 0 8,000,000 1,900,000
Principal payments of mortgage notes payable (15,054,637) (3,659,965) (17,357,632)
Distributions paid (2,000,137) 0 (2,017,287)
Decrease in capitalization of
minority interest (3,068,619) (17,150) (57,489)
------------ ------------ ------------
Net cash provided by (used in) financing activities (20,914,192) 528,485 (25,130,836)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 1,437,338 681,514 (641,220)
Cash and cash equivalents at beginning of year 2,658,449 1,976,935 2,618,155
------------ ------------ ------------
Cash and cash equivalents at end of year $ 4,095,787 $ 2,658,449 $ 1,976,935
============ ============ ============
Supplemental disclosure of cash flows information:
Cash paid during the year for interest $ 2,179,927 $ 4,180,202 $ 3,826,430
============ ============ ============
Supplemental disclosures of noncash investing and
financing activities:
Increase in property and equipment-held for
sale reclassified from property and equipment $ 10,444,529 $ 17,206,721 $ 4,441,392
Increase in purchase money notes payable due to
the capitalization of prepaid expenses and other
assets 0 291,442 312,799
Increase in accounts payable, accrued expenses
and other liabilities for acquisitions of
property and equipment 21,325 43,436 0
Decrease in due to selling partners for
reclassification of accrued distributions
to minority interest 0 (603,776) 0
Forgiveness of indebtedness:
Decrease in purchase money notes payable (12,061,450) (32,270) (8,088,707)
Decrease in due to selling partners (11,011,171) (4,200,393) (20,169,000)
Decrease in prepaid expenses and other assets 2,800 0 0
</TABLE>
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Summarized below are the components
of the gain on sale of property:
Decrease in property and equipment,
net of accumulated depreciation $ 9,174,908 $ 3,701,379 $ 28,555,274
Decrease in property and equipment -
held for sale 17,276,248 0 0
Decrease in cash - restricted for tenants'
security deposits 255,239 73,615 123,546
Decrease in mortgage escrow deposits 797,182 223,780 266,623
Decrease in prepaid expenses and
other assets 514,746 46,720 140,216
Decrease in mortgage notes payable (9,601,617) (4,427,726) (7,630,058)
Decrease in purchase money notes payable (5,394,341) (2,545,263) 0
Decrease in due to selling partners 0 (4,257,845) 0
(Decrease) increase in accounts payable,
accrued expenses and other liabilities (475,901) (272,036) 369,788
Decrease in tenant's security deposits payable (222,450) (67,472) (121,874)
Decrease in due to general partners of
subsidiaries and their affiliates (1,629,359) 0 (635,625)
</TABLE>
See accompanying notes to consolidated financial statements.
-181-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
NOTE 1 - Organization
Cambridge Advantaged Properties Limited Partnership (the "Partnership") was
formed pursuant to the laws of the State of Massachusetts on June 28, 1984. The
Partnership invests, as a limited partner, in other limited partnerships
(referred to herein as "Local Partnerships" or "subsidiary partnerships"), each
of which owns and operates an existing residential housing development (an
"Apartment Complex") that is financed and/or operated with some form of local,
state or federal assistance, including mortgage insurance, rental assistance
payments, permanent mortgage financing and/or interest reduction payments
("Government Assistance").
The General Partners of the Partnership are Assisted Housing Associates Inc.,
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership. The general partners of Cambridge/Related are the Assisted General
Partner and the Related General Partner. The General Partners manage and control
the affairs of the Partnership.
Pursuant to the public offering, the Partnership received $53,754,000 (net of
offering expenses and sales commissions of $6,615,700) from 4,452 investors in
12,074 limited partnership interests. The offering was completed in March 1985
and no further issuance of initial limited partnership interests or additional
limited partnership interests is anticipated.
As of March 25, 2000, the Partnership holds a 98.99% limited partnership
interest in each of forty Local Partnerships, which own forty Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2000, the properties and the related assets and liabilities owned by four
subsidiary partnerships were sold to a third party and the Partnership's Local
Partnership Interests in four subsidiary partnerships were sold to third parties
and the Local Partnership's general partner, respectively. Through the fiscal
year ended March 25, 2000, the properties and the related assets and liabilities
owned by eleven subsidiary partnerships were sold to third parties and the
Partnership's Local Partnership Interests in ten subsidiary partnerships were
sold to third parties and the Local Partnership's general partner, respectively
(see Note 10).
The terms of the Partnership Agreement provide, among other things, that profits
and losses, in general, be shared 99% by the limited partners and 1% by the
General Partners.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership
and 48 (four of which have activity through the date of sale of their properties
and the related assets and liabilities and four of which only have activity
through the date of sale of the Partnership's interest), 52 (one of which only
had activity through the date of sale of its property and the related assets and
liabilities and three of which only have activity through the date of sale of
the Partnership's interest) and 60 (five of which only have activity through the
date of sale of their
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
properties and the related assets and liabilities and three of which only have
activity though the date of sale of the Partnership's interest) subsidiary
partnerships in which the Partnership is a limited partner for the years ended
March 25, 2000, 1999 and 1998, respectively. The Partnership is a limited
partner, with an ownership interest of 98.99% in each of the subsidiary
partnerships. Through the rights of the Partnership and/or an affiliate of a
General Partner, which affiliate has a contractual obligation to act on behalf
of the Partnership, to remove the general partner of the subsidiary partnerships
and to approve certain major operating and financial decisions, the Partnership
has a controlling financial interest in the subsidiary partnerships.
For financial reporting purposes, the Partnership's fiscal year ends March 25.
All subsidiaries have fiscal years ending December 31. Accounts of subsidiaries
have been adjusted for intercompany transactions from January 1 through March
25. The Partnership's fiscal year ends on March 25 in order to allow adequate
time for the subsidiaries' financial statements to be prepared and consolidated.
The books and records are maintained on the accrual basis of accounting in
accordance with generally accepted accounting principles ("GAAP").
All intercompany accounts and transactions have been eliminated in
consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.
Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated $0, $22,781 and $0 for the years ended March 25, 2000 (the "1999
Fiscal Year"), March 25, 1999 (the "1998 Fiscal Year") and March 25, 1998 (the
"1997 Fiscal Year", and together with the 1999 Fiscal Year and the 1998 Fiscal
Year, the "1999, 1998 and 1997 Fiscal Years"), respectively. The Partnership's
investment in each subsidiary is equal to the respective subsidiary's partners'
equity less minority interest capital, if any. In consolidation, all subsidiary
partnership losses are included in the Partnership's capital account except for
losses allocated to minority interest capital.
b) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.
-183-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
For the year ended March 25, 2000, the Partnership has not recorded a loss on
impairment of assets. Through March 25, 2000, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.
c) Interest Subsidies
Interest expense has been reduced by interest subsidies (Note 6).
d) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.
e) Income Taxes
No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the responsibility of the individual
partners. For income tax purposes, the Partnership has a fiscal year ending
December 31 (Note 9).
f) Loss Contingencies
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery.
g) Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
h) Adoption of New Accounting Standards
During April 1998, the Financial Accounting Standards Board issued Statement of
Position 98-5 ("SOP 98-5") "Reporting on the Costs of Start-Up Activities." SOP
98-5 provides guidance on the financial reporting of start-up costs and
organization costs. SOP 98-5 is effective for all fiscal quarters beginning
after December 15, 1998.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:
CASH AND CASH EQUIVALENTS, CASH-RESTRICTED FOR TENANTS' SECURITY DEPOSITS AND
MORTGAGE ESCROW DEPOSITS
The carrying amount approximates fair value.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
MORTGAGE NOTES PAYABLE
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.
The estimated fair values of the Partnership's mortgage notes payable are as
follows:
<TABLE>
<CAPTION>
March 25, 2000 March 25, 1999
------------------------- -------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Mortgage Notes Payable for which it is:
Practicable to estimate fair value $24,468,030 $24,895,557 $38,475,342 $39,059,816
Not practicable to estimate
fair value $19,703,098 (a) $30,352,040 (a)
Purchase Money Notes payable for which it is:
Practicable to estimate fair value $ 0 $ 0 $ 6,445,005 $ 3,402,728
Not practicable to estimate
fair value $43,969,115 (b) $55,770,700 (b)
Due to selling partners for which it is:
Not practicable to estimate
fair value $74,281,146 (b) $81,667,934 (b)
</TABLE>
(a) Management believes it is not practical to estimate the fair value of the
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the partnerships.
(b) For the reasons discussed in Note 7, it is not practicable to estimate the
fair value of these notes, or accrued interest thereon.
The carrying amount of other financial instruments that require such disclosure
approximates fair value.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
NOTE 4 - Property and Equipment and Property and Equipment-Held for Sale
The components of property and equipment and their estimated useful lives are as
follows:
<TABLE>
<CAPTION>
March 25
---------------------------- Estimated
2000 1999 Useful Lives
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 4,995,389 $ 8,521,248
Buildings and improvements 95,088,292 132,869,277 5 - 40 Years
Furniture and fixtures 4,486,858 6,523,861 3 - 10 Years
------------ -------------
104,570,539 147,914,386
Less: Accumulated depreciation (51,855,620) (71,906,694)
------------ ------------
$ 52,714,919 $ 76,007,692
============ ============
</TABLE>
Property acquisition fees of $5,131,535 were earned by the General Partners of
the Partnership and have been capitalized as a cost of property and equipment.
Depreciation expense for the 1999, 1998 and 1997 Fiscal Years amounted to
$4,915,594, $5,844,432 and $7,164,517, respectively.
As of December 31, 1998, Cranbrook's, Park of Pecan I's, Park of Pecan II's and
Valley Arm's carrying value of long-lived assets were deemed to be impaired and
written down to the expected recoverable amount. The recoverable amount was
determined on the basis of arms-length transactions between the Local
Partnerships and third parties interested in purchasing the properties. The
asset impairment losses of $723,289, $779,313, $516,789 and $380,000,
respectively, is the difference between the carrying value and the recoverable
amount of the apartment complexes and was charged as an entity expense at
December 31, 1998. Cranbrook has been actively marketed for sale since November
16, 1998 and, as of such time, no depreciation expense has been recognized on
the property. On February 26, 1999, the Partnership's Local Partnership Interest
in Park of Pecan I and Park of Pecan II were sold to an unaffiliated third party
(see Note 10). On April 12, 1999, the Partnership's Local Partnership Interest
in Valley Arms was sold to an unaffiliated third party (see Note 12). On January
1, 2000, the Partnership's Local Partnership Interest in Cranbrook was sold to
an unaffiliated third party (see Note 12).
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
The components of property and equipment held for sale are as follows:
<TABLE>
<CAPTION>
March 25,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
Land $ 2,359,074 $ 1,838,593
Buildings and improvements 25,212,911 29,957,957
Furniture and fixtures 1,393,387 2,884,187
------------ ------------
28,965,372 34,680,737
Less: Accumulated depreciation (15,415,302) (14,328,726)
------------ ------------
$ 13,550,070 $ 20,352,011
============ ============
</TABLE>
NOTE 5 - Mortgage Escrow Deposits
Mortgage escrow deposits consist of the following:
<TABLE>
<CAPTION>
March 25,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
Reserves for replacements $ 5,001,138 $ 4,657,511
Real estate taxes, insurance and other 4,178,885 5,892,440
------------ ------------
$ 9,180,023 $10,549,951
============ ============
</TABLE>
NOTE 6 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $370,000, including principal and interest at rates varying from
6.75% to 8.75% per annum, through October 2027. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership, the assignment of certain subsidiary
partnership's rents and leases and is without further recourse.
Under the terms of regulatory agreements with the Secretary of the HUD,
subsidiary partnerships with mortgage note balances aggregating approximately
$34,055,000 and $50,502,000 at December 31, 1999 and 1998, respectively,
providing for interest at rates ranging from 6.75% to 8.50% per annum, paid only
that portion of the monthly payments that would be required if the interest rate
was in the range of 1% - 3% per annum; the balance was subsidized under Section
236 of the National Housing Act.
In addition, one subsidiary partnership with mortgage note balances of
approximately $4,157,000 and $4,258,000 at December 31, 1999 and 1998,
respectively, entered into interest reduction subsidy agreements with the
Massachusetts Housing Finance Agency ("MHFA"), which effectively reduced the
interest rates on the mortgage note balances to 7.7%.
-187-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
Annual principal payment requirements for each of the next five years are as
follows:
<TABLE>
<CAPTION>
Amount
-----------
<S> <C>
2000 $ 2,331,741
2001 1,887,352
2002 2,031,113
2003 2,186,019
2004 2,354,021
Thereafter 33,380,882
-----------
Total $44,171,128
===========
</TABLE>
The mortgage agreements require monthly deposits to replacement reserves of
approximately $156,000 and monthly deposits to escrow accounts for real estate
taxes, hazard, and mortgage insurance and other (Note 5).
LANCASTER MANOR ASSOCIATES, LTD.
On September 25, 1998, Lancaster Manor Associates, Ltd. ("Lancaster") borrowed
$8,000,000 from the Bank of Boston and utilized the proceeds to prepay the
existing HUD first mortgage of approximately $1,520,000 and to redeem the
Purchase Money Note of approximately $10,134,000 at a discount price of
$4,233,000, resulting in forgiveness of indebtedness income of $4,232,663. The
new loan bears interest at a floating rate based upon the Bank of Boston's
announced "base rate" plus 1%. The loan matured December 24, 1998 and was
renewed for another 90 days (March 25, 1999). On November 25, 1998, Lancaster
entered into a purchase and sale agreement with an unaffiliated third party for
a purchase price of $13,500,000. On March 16, 1999, the property and the related
assets and liabilities of Lancaster were sold, resulting in a gain in the amount
of approximately $7,623,000.
NOTE 7 - Purchase Money Notes Payable
Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 are obligations at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2000 and 1999 include $4,336,417 of interest accrued
through August 31, 1989.
The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and ultimate
repayment dates of the Purchase Money Notes. The Purchase Money Notes, after the
extended due dates, call for the simple accrual of interest on the balance of
principal, interest and Purchase Money Note Extensions Fees Payable as of the
date
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
of maturity at the lesser of 12% or legally allowable rate; or prime plus 2% or
the legally allowable rate. Unpaid interest of approximately $70,501,000 and
$81,000,000 as of March 25, 2000 and 1999, respectively, has been accrued and is
included in due to selling partners in the consolidated balance sheets. In
general, the interest on and the principal of each Purchase Money Note is also
payable to the extent of the Partnership's actual receipt of proceeds of the
sale or refinancing of the Apartment Complex.
The Partnership extended the terms of the Purchase Money Notes for up to three
additional years (four years with respect to three subsidiary partnerships). In
connection with such extensions, the Partnership incurred an extension fee of
1/2 % per annum of the outstanding principle balance of the Purchase Money
Notes. Through March 25, 2000, the maturity dates of the Purchase Money Notes
associated with the remaining properties owned by the subsidiary partnerships
(ranging from August to December 1996) were extended for three years (four years
with respect to one subsidiary partnership, five years with respect to three
subsidiary partnerships and nine years with respect to one subsidiary
partnership) and extension fees in the amount of $559,249 were incurred by the
Partnership. Five Purchase Money Notes are now extended, with maturity dates
ranging from June 2001 to April 2008. The remaining Purchase Money Notes are
past maturity and the Partnership is working with the Local General Partners and
Purchase Money Note holders to refinance or sell the properties. No assurance
can be given that management's efforts will be successful.. Of such fees
incurred, $440,543 was accrued and added to the Purchase Money Notes balance.
The extension fees are being amortized over the term of the extension. The
Partnership cannot sell or otherwise liquidate its investments in those Local
Partnerships which have subsidy agreements with the United States Department of
Housing and Urban Development ("HUD") during the period that such agreements are
in existence without HUD's approval. Based on the historical operating results
of the Local Partnerships and the current economic conditions, including changes
in tax laws, it is uncertain as to whether the proceeds from such sales will be
sufficient to meet the outstanding balances of principal, accrued interest and
extension fees. The Purchase Money Notes are without personal recourse to either
the Partnership or any of its partners and the selling partner's recourse, in
the event of nonpayment, would be to foreclose on the Partnership's interests in
the respective subsidiary partnerships.
Distributions aggregating approximately $6,993,000, $376,000 and $1,474,000 were
made to the Partnership during each of the years ended March 25, 2000 ("1999
Fiscal Year"), March 25, 1999 ("1998 Fiscal Year") and March 25, 1998 ("1997
Fiscal Year" and collectively with the 1999 Fiscal Year and 1998 Fiscal Year,
the "1999, 1998 and 1997 Fiscal Years"), respectively, of which approximately
$1,067,000, $227,000 and $883,000, respectively, was used to pay interest on the
Purchase Money Notes. In addition, approximately $6,000, $13,000 and $144,000
for the 1999, 1998 and 1997 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes. In addition, approximately $2,712,000,
$2,112,000 and $1,031,000 was paid by the subsidiary partnerships as interest on
purchase money notes during the 1999, 1998 and 1997 Fiscal Years, respectively.
-189-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
NOTE 8 - Related Party Transactions
The costs incurred to related parties were as follows:
<TABLE>
<CAPTION>
Year Ended March 25,
------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Partnership management fees (a) $1,120,334 $1,130,749 $1,142,000
Expense reimbursement (b) 146,687 130,575 162,636
Local administrative fee (c) 63,730 70,000 83,750
---------- ---------- ----------
Total general and administrative-
General Partners 1,330,751 1,331,324 1,388,386
---------- ---------- ----------
Property management fees incurred to
affiliates of the subsidiary partnerships'
general partners 1,264,410 1,505,659 1,834,532
---------- ---------- ----------
Total general and administrative-related parties $2,595,161 $2,836,983 $3,222,918
========== ========== ==========
</TABLE>
(a) After all other expenses of the Partnership are paid, an annual partnership
management fee of up to .5% of invested assets is payable to the Partnership's
General Partners and affiliates. Partnership management fees owed to the General
Partners amounting to approximately $1,942,000 and $1,572,000 were accrued and
unpaid as of March 25, 2000 and 1999, respectively. Without the General
Partners' advances and continued accrual without payment of certain fees and
expense reimbursements, the Partnership will not be in a position to meet its
obligations. The General Partners have continued advancing and allowing the
accrual without payment of these amounts but are under no obligation to do so.
Proceeds received from future sales will be used to pay any outstanding amounts
due to the General Partners.
(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the Related General Partner performs asset monitoring for the
Partnership. These services include site visits and evaluations of the
subsidiary partnerships' performance. Expense reimbursements and asset
monitoring fees owed to the Related General Partner amounting to $76,268 and
$44,685 were accrued and unpaid as of March 25, 2000 and 1999, respectively.
(c) C/R Special Partnership, the special limited partner, owning a .01%
interest, is entitled to receive a local administrative fee of up to $2,500 per
year from each subsidiary partnership.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
Due to local general partners and affiliates at December 31, 1999 and 1998
consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
-------- ----------
<S> <C> <C>
Operating advances (a) (b) $ 0 $ 186,209
Operating deficit loan (b) 455,550 455,550
Management and other fees 176,276 965,014
-------- ----------
$631,826 $1,606,773
======== ==========
</TABLE>
(a) Operating advances include three loans payable to local general partners and
affiliates.
(b) These loans are unsecured, noninterest bearing and payable out of available
surplus cash of the respective subsidiary partnership or at the time of sale or
refinancing.
NOTE 9 - Income Taxes
A reconciliation of the financial statement net income (loss) to the income tax
income for the Partnership and its subsidiaries is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Financial statement net income (loss) $ 22,903,337 $ (1,134,466) $ 20,650,192
Difference resulting from parent company
having a different fiscal year for income tax
and financial reporting purposes 1,711,100 (49,001) 606,254
Difference resulting primarily from depreciation
and amortization expense recorded for financial
reporting purposes and income tax purposes (375,373) (1,973,899) (1,652,343)
Loss on impairment of assets recorded for
financial reporting purposes 0 2,399,391 0
Difference between gain on sale of assets
recorded for financial reporting purposes and
for income tax purposes 7,081,882 (4,722,175) 18,645,239
Difference between a forgiveness of indebtedness
income recorded for financial reporting
purposes and for income tax purposes 10,399,748 9,575,279 (3,490,125)
Other, including accruals for financial reporting
purposes not deductible for tax purposes
until paid 761,520 727,272 2,208,922
------------ ------------ ------------
Income as shown on the income tax return
for the calendar year ended $ 42,482,214 $ 4,822,401 $ 36,968,139
============ ============ ============
</TABLE>
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
NOTE 10 - Sale of Properties
GENERAL
The Partnership is currently in the process of disposing of its investments. It
is anticipated that this process will take a number of years. As of March 25,
2000, the Partnership has disposed of twenty-one of its sixty-one original
investments. Five additional investments are listed for sale and the Partnership
anticipates that a number of the thirty-five remaining investments will be
listed for sale by December 31, 2000. There can be no assurance as to when the
Partnership will dispose of its last remaining investments or the amount of
proceeds which may be received. However, based on the historical operating
results of the Local Partnerships and the current economic conditions including
changes in tax laws, it is unlikely that the proceeds from such sales received
by the Partnership will be sufficient to return their original investment.
Moreover, the Local General Partners and noteholders generally have
decision-making rights with respect to the sale of each property which makes it
more cumbersome for the General Partners to sell each property.
In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly owned by the
Partnership.
On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Perry Apartments, Ltd., Boonie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
In each case, the interests were contributed subject to each respective Purchase
Money Note. The contribution did not involve any consideration being paid to the
Partnership, therefore, there should not be any tax effect to the limited
partners of the Partnership.
On May 7, 1997, the properties and the related assets and liabilities of
Knollwood I, Ltd., Knollwood II, Ltd., Knollwood III, Ltd., and Knollwood IV,
Ltd. (together, the "Knollwoods") were sold to a third party for $20,750,000,
which took title subject to the principal balance of the associated Purchase
Money Notes in the amount of $6,026,521, resulting in a gain in the amount of
approximately $6,159,000. No proceeds were used to settle the accrued interest
on the associated Purchase Money Notes which amounted to approximately
$5,622,000, resulting in forgiveness of indebtedness income.
On June 30, 1997, the property and related assets and liabilities of Parklane
II, Ltd. ("Parklane") were sold to a third party for $3,712,000, which took
title subject to the principal balance of a portion of the associated Purchase
Money Notes which amounted to $1,252,632, resulting in a gain in the amount of
approximately $568,000. The Partnership used $450,000 of the net proceeds to
settle the remaining principal balance of the Purchase Money Notes and accrued
interest thereon which amounted to $2,821,789, resulting in forgiveness of
indebtedness income of approximately $2,634,000.
On August 1, 1997, the Partnership's Local Partnership Interest in Northgate
Townhouse Apartments ("Northgate") was sold to a third party for $500,000,
resulting in a loss in the amount of approximately $825,000. No proceeds were
used to settle the associated Purchase Money Notes and accrued interest which
resulted in forgiveness of indebtedness income of approximately $6,911,000.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
On August 1, 1997, the Partnership's Local Partnership Interest in Westminster
Manor Apartments ("Westminster") was sold to a third party for $500,000,
resulting in a loss in the amount of approximately $1,139,000. No proceeds were
sold to settle the associated Purchase Money Notes and accrued interest resulted
in forgiveness of indebtedness income of approximately $8,270,000.
On August 11, 1997, the Partnership's Local Partnership Interest in Buttonwood
Acres at New Bedford ("Buttonwood") was sold back to Buttonwood for $532,750,
resulting in a loss in the amount of approximately $343,000. No proceeds were
used to settle the associated Purchase Money Notes and accrued interest which
resulted in forgiveness of indebtedness income of approximately $4,821,000.
On May 22, 1998, the Partnership's Local Partnership Interest in Rockdale West
at New Bedford ("Rockdale") was sold back to Rockdale for $600,000 and the
related Purchase Money Note was assigned to the Local General Partner, resulting
in a gain in the amount of approximately $7,525,000.
On February 26, 1999, the Partnership's limited partnership interests in Park of
Pecan I, Ltd. and Park of Pecan II, Ltd. were sold to an unaffiliated third
party for $130,000 each resulting in a gain in the amount of approximately
$377,000 and $614,000, respectively. No proceeds were used to settle the
associated Purchase Money Notes, accrued interest and certain accrued expenses
which resulted in forgiveness of indebtedness income of $3,357,000 and
$2,653,000 for tax purposes, respectively.
On March 16, 1999, the property and related assets and liabilities of Lancaster
Manor Associates, Ltd. were sold to an unaffiliated third party for $13,500,000,
resulting in a gain of approximately $8,437,000.
On April 13, 1999, the property and related assets and liabilities of Valley
Arms were sold to an unaffiliated third party for $1,600,000, resulting in a
gain in the amount of approximately $161,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,514,000, resulting in forgiveness of
indebtedness income.
On June 6, 1999, Casa Ramon Apartments entered into a purchase and sale
agreement with a third party for a purchase price of $4,500,000. The closing is
expected to occur in June 2000. No assurances can be given that the closing will
actually occur.
On June 18, 1999, the Partnership's limited partnership interest in Carlton
Terrace Apartments, Limited Partnership was sold to the general partners for
$589,623, resulting in a gain in the amount of approximately $1,675,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $3,323,000,
resulting in forgiveness of indebtedness income. The Purchase Money Notes were
assumed by the Local Partnership.
On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
Associates Limited Partnership was sold to the general partners for $220,138,
resulting in a gain in the amount of approximately $372,000. The Purchase Money
Notes were assumed by the Local Partnership. No proceeds were used to settle the
associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $2,129,000, resulting in forgiveness of
indebtedness income.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
On June 18, 1999, the Partnership's limited partnership interest in Villa Apollo
#2 Associates Limited Partnership was sold to the general partners for $562,136,
resulting in a gain in the amount of approximately $1,709,000. The Purchase
Money Notes were assumed by the Local Partnership. No proceeds were used to
settle the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $4,728,000, resulting in forgiveness of
indebtedness income.
On November 2, 1999, Conifer 317 ("Pinewood") entered into a purchase sale
agreement with a third party for a purchase price of $2,075,000. The closing is
expected to occur in December 2000. No assurances can be given that the closing
will actually occur.
On November 10, 1999, Summer Arms Apts. ("Summer Arms") entered into a letter of
intent to sell the property to a third party for the purchase price of $700,000.
The closing is expected to occur in late 2000. No assurances can be given that
the closing will actually occur.
On November 10, 1999, Cabarrus Arms ("Cabarrus") entered into a letter of intent
to sell the property to a third party for the purchase price of $1,250,000. The
closing is expected to occur in late 2000. No assurances can be given that the
closing will actually occur.
On December 14, 1999, the property and related assets and liabilities of
Oakbrook Villa Apartments were sold to an unaffiliated third party for
$8,350,000, resulting in a loss in the amount of approximately $522,000. The
Partnership used approximately $2,438,000 of the net proceeds to settle the
remaining principal balance of the Purchase Money Note and accrued interest
thereon which amounted to $7,205,000, resulting in forgiveness of indebtedness
income of approximately $4,366,000.
On December 22, 1999, Cloisters ("Sundown") entered into a letter of intent to
sell the property to a third party for the purchase price of $2,700,000. The
closing is expected to occur in late 2000. No assurances can be given that the
closing will actually occur.
On October 18, 1999, the Partnership's limited partnership interest and the
related Purchase Money Note and interest thereon in Cranbrook Manor Apartments
("Cranbrook") was assigned to a third party effective January 1, 2000, resulting
in a gain of approximately $2,895,000. Fees due to a affiliate in the amount of
approximately $46,000 were forgiven.
On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss of approximately $4,185,000. No proceeds were used to settle
the associated Purchase Money Note and accrued interest which had a total
outstanding balance of approximately $11,484,000 and operating deficit loans of
approximately $456,000, resulting in forgiveness of indebtedness income.
On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain of approximately $3,177,000. Approximately $1,397,000 of the proceeds
was used to pay off the Purchase Money Note.
-194-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
NOTE 11 - Commitments and Contingencies
a) Subsidiary Partnerships - Events of Default and Going Concern
The financial statements for six subsidiary partnerships have been prepared
assuming each will continue as a going concern. The circumstances described
below raise substantial doubt about each subsidiary partnership's ability to
continue as a going concern. The auditors for these six subsidiary partnerships
modified their reports on the 1999 Fiscal Year financial statements due to the
uncertainty of each subsidiary partnership's ability to continue as a going
concern. These financial statements do not include any adjustments that would be
necessary in the event the subsidiary partnerships are unable to continue as a
going concern. The six subsidiary partnerships are Bellfort Associates, Ltd.
("Bellfort"), Park of Pecan I, Ltd. ("Park of Pecan I"), Park of Pecan II, Ltd.
("Park of Pecan II"), Cranbrook Manor Apartments Limited Partnership
("Cranbrook"), Saraland Apartments, Ltd. ("Saraland") and Valley Arms, Ltd.
("Valley Arms").
RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS
BELLFORT ASSOCIATES, LTD.
Bellfort Associates, Ltd. ("Bellfort") has been in default on the required
interest payments due on the wraparound Purchase Money Note payable to Finger
Companies since 1992. The original maturity date of the Purchase Money Note was
the twelfth anniversary of the transaction date or November 1, 1996. However,
the debt agreement allows Bellfort the option to extend the term of the Purchase
Money Note an additional year on the twelfth, thirteenth and fourteenth
anniversaries. On November 1, 1997 and November 1, 1998, Bellfort exercised the
option to extend the term. On November 1, 1999, all of the outstanding principal
plus deferred interest came due, and since Bellfort's operations did not
generate sufficient cash flows to pay principal and interest on the Purchase
Money Note, the terms of the Purchase Money Note were being renegotiated at
December 31, 1999. Accumulated deferred interest at December 31, 1999 and 1998
was approximately $4,379,000 and $4,058,000, respectively. The Purchase Money
Note is secured by a first lien on and security interest in the Partnership's
and Bellfort's special limited partner's rights, titles and interests in
Bellfort. Payments on this Purchase Money Note cannot exceed the required
payments on the underlying Multifamily Mortgage Trust ("MMT") note described
below.
The Purchase Money Note wraps around an underlying mortgage note. The underlying
mortgage is collateralized by a deed of trust on the rental property. In June
1996, the underlying mortgage note was sold by HUD, which had assumed the
underlying mortgage note in December 1991, to MMT.
Prior to August 1996, the underlying mortgage note was in default first with HUD
and then with MMT. In order to avoid any acceleration or other exercise of
remedies for the defaulted mortgage, MMT allowed the previous owners to bring
the underlying mortgage note current with a payment of approximately $294,000.
Upon making the underlying mortgage note current, the debt agreement for the
underlying mortgage note payable required monthly payments of approximately
$47,000 with $37,000 relating to principal and interest payments due on the
first of each month and such payments have been made as of December 31, 1999.
Bellfort's operations have not generated sufficient cash flows to service its
existing debt structure and Bellfort's Purchase Money Note payable was due on
November 1, 1999. Bellfort's forecasted cash flows for 2000 indicate a
significant shortfall of amounts needed to repay such
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
Purchase Money Note and the related deferred interest. On January 6, 2000, the
property and the related assets and liabilities of Bellfort were sold to the
Purchase Money Note holder for $175,100, resulting in a loss in the amount of
approximately $4,185,000 and forgiveness of indebtedness income of approximately
$11,940,000.
The Partnership's investment in Bellfort has been reduced to zero by prior
years' losses. The minority interest balance was $0 at March 25, 2000 and 1999.
Bellfort's net loss after minority interest amounted to approximately $585,000,
$524,000 and $586,000 for the 1999, 1998 and 1997 Fiscal Years, respectively.
PARK OF PECAN I, LTD. AND PARK OF PECAN II LTD.
Park of Pecan I, Ltd. ("Park of Pecan I") and Park of Pecan II, Ltd. ("Park of
Pecan II") have experienced operating losses since inception and had net
capital deficiencies. The Partnership's investments in Park of Pecan I and II
were reduced to zero by prior years' losses. Park of Pecan I and II's
minority interest balances were $0 as of March 25, 2000 and 1999. Park of
Pecan I's net (income) loss after minority interest amounted to approximately
$(3,600,000), $832,000 and $219,000 for the 1999, 1998 and 1997 Fiscal Years,
respectively. Park of Pecan II's net (income) loss after minority interest
amounted to approximately $(3,133,000), $548,000 and $224,000 for the 1999,
1998 and 1997 Fiscal Years, respectively.
On February 26, 1999, the Partnership's limited partnership interests in Park of
Pecan I, Ltd. and Park of Pecan II, Ltd. were sold to an unaffiliated third
party for $130,000 each resulting in a gain in the amount of approximately
$377,000 and $614,000, respectively. No proceeds were used to settle the
associated Purchase Money Notes, accrued interest and certain accrued expenses
which resulted in forgiveness of indebtedness income of $3,357,000 and
$2,653,000 for tax purposes, respectively.
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
CRANBROOK MANOR APARTMENTS LIMITED PARTNERSHIP
During the year ended December 31, 1999, Cranbrook Manor Apartments Limited
Partnership ("Cranbrook") incurred a net loss of approximately $154,000 and
total liabilities exceeded total assets by approximately $2,403,000. In
addition, Cranbrook receives housing assistance payments and a mortgage interest
subsidy from HUD under provisions of Section 8 and Section 236, respectively, of
the National Housing Act. Cranbrook entered into housing assistance agreements
(the "Section 8 agreements") with the FHA. Cranbrook's Section 8 agreements have
been renewed until March 31, 2000. Cranbrook's cash flows may be insufficient to
meet its current obligations in the ordinary course of business. Should cash
flows be insufficient, management plans to pursue a workout agreement with the
mortgage holders. There are no assurances that the Section 8 agreement will be
renewed under comparable economic terms upon the expiration of the agreements.
As of December 31, 1999, it is not possible to estimate the effect of the
potential loss of this subsidy. However, the termination of reduction of the
benefits under this program by the government could have an adverse effect on
the operations of Cranbrook. These factors, among others, indicate that there is
substantial doubt about Cranbrook's ability to continue as a going concern for a
reasonable period of time. The financial statements do not include any
adjustments relating to the recoverability and classification of liabilities
that might be necessary should Cranbrook be unable to continue as a going
concern. Cranbrook's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a timely
basis and to ultimately attain successful operations.
On January 1, 2000, the Partnership's Local Partnership Interest in Cranbrook
was sold to an unaffiliated third party for $99,990 resulting in a loss in the
amount of approximately $2,995,000 and forgiveness of indebtedness income of
approximately $46,000. The Partnership's investment in Cranbrook was reduced
to zero by prior years' losses. The minority interest balances were $0
at both March 25, 2000 and 1999, respectively. Cranbrook's net loss after
minority interest amounted to approximately $154,000, $991,000 and $246,000 for
the 1999, 1998 and 1997 Fiscal Years, respectively.
SARALAND APARTMENTS, LTD.
Saraland Apartments, Ltd. ("Saraland") has been placed on the Environmental
Protection Agency's (the "EPA") "Superfund Cleanup List." The EPA has named the
project, Redwing Carriers, Inc. and others as potentially responsible parties.
The EPA has estimated cleanup costs could total $12,000,000 or more. To date,
Redwing Carriers, Inc. has incurred approximately $1.9 million in cleanup costs.
Redwing Carriers, Inc. seeks to recover all or a pro rata share of its response
costs from Saraland and others.
Based upon EPA's Record of Decision for the Saraland site, the remedy selected
had, at the time of issuance of the Record of Decision on December 15, 1992, a
present worth cost of $7,002,562. Redwing Carriers, Inc. subsequently refused to
perform the remedy and the EPA had undertaken to do so itself. The EPA relocated
the tenants from the apartment complex and closed the apartment complex. Since
September, 1993, the EPA has not notified the Partnership about whether it
intends to take further legal action.
On May 13, 1997, a number of former residents at the Saraland Apartment Complex
served a purported class action complaint upon Hutton Advantaged Properties,
Ltd. and H/R Special Limited Partnership, as well as Redwing Carriers, Inc.,
Saraland, Saraland's general partners and others alleging that all defendants
are liable to the class members for adverse health consequences and other
expenses attendant to hazardous substance exposure caused by the con-
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
duct of all defendants at the Saraland site. On June 5, 1998, this action
against the Partnership was dismissed with prejudice, and accordingly, this
matter is now concluded.
The above conditions raise substantial doubt about Saraland's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of these uncertainties. The
Partnership's investment in Saraland was reduced to $0 by prior and current
years' losses at March 25, 2000 and 1999, respectively, and the minority
interest balance was $22,000 at each date. Saraland's net loss (income) after
minority interest amounted to approximately $20,000, $24,000 and ($7,900) for
the 1999, 1998 and 1997 Fiscal Years, respectively.
VALLEY ARMS, LTD.
During the year ended December 31, 1999, Valley Arms, Ltd. ("Valley Arms")
incurred net income of approximately $76,000 and as of that date, Valley
Arms' total liabilities exceeded its total assets by approximately $21,000.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. In addition, the auditors
disclaimed an opinion on the 1999 fiscal year financial statements due to the
refusal of management to provide written representations. The Partnership
filed a petition for bankruptcy under Chapter 11 of the bankruptcy code on
January 13, 1998, and sold its revenue producing assets on April 13, 1999.
The results of these events will likely result in the extinguishment of
Valley Arms' liabilities and disbursement of the remaining cash to the
partners. These factors, among others, raise substantial doubt about Valley
Arms' ability to continue as a going concern. The financial statements do not
include any adjustments that might be necessary if Valley Arms is unable to
continue as a going concern. On April 13, 1999, the property and the related
assets and liabilities of Valley Arms were sold to a third party for
$1,600,000, resulting in a gain in the amount of approximately $161,000 and
forgiveness of indebtedness income of approximately $2,514,000. The
Partnership's investment in Valley Arms was reduced to zero at March 25, 2000
and 1999, and the minority interest balance was $0 at each date. Valley Arms'
net income (loss) after minority interest amounted to approximately $76,000,
($506,000) and ($79,000) for the 1999, 1998 and 1997 Fiscal Years,
respectively.
b) Subsidiary Partnership - Other
DICKENS FERRY APARTMENTS, LTD.
Dickens Ferry Apartments, Ltd. ("Dickens Ferry") relies on continuance of the
Section 8 rent subsidy contract which represents 50% of gross income. The
current contracts expire on July 31, 2000 and renewal is uncertain. Management
of Dickens Ferry intends to actively pursue renewal of the rental subsidy
contract with HUD. The Partnership's investment in Dickens Ferry was
approximately $567,000 at both March 25, 2000 and 1999, respectively, and the
minority interest balance was $0 at each date. Dickens Ferry's net (income) loss
after minority interest amounted to approximately $(1,000), $24,000 and $5,000
for the 1999, 1998 and 1997 Fiscal Years, respectively.
MCCONNELL V. HUTTON ADVANTAGED PROPERTIES L.P.
On or about November 3, 1999, eight alleged holders of beneficial interests in
Purchase Money Notes issued by the Partnership in connection with the
Partnership's acquisition of limited partnership interests in the West Scenic
Apartments, Ltd., Oakwood Manor, Ltd. and Robindale East Apartments, Ltd. local
limited partnerships brought an action in the Chancery Court of Pulaski County,
Arkansas, entitled McConnell, et al., v. Hutton Advantaged Properties Limited
Partnership, et al., Case No. EQ 99-5769 (the "McConnell Action"). Plaintiffs'
original complaint contained a single count alleging fraud in connection with
the Partnership's acquisition of limited partnership interests in those three
local partnerships and named as defendants the Partnership, its general
partners, its special limited partner and the general partner of the special
limited partner, as well as two other defendants who are not affiliated with the
Part-
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
nership. On or about December 27, 1999, the plaintiffs in the McConnell Action
amended their complaint to add a second count alleging that the Purchase Money
Notes issued by the Partnership had matured and were in default.
The amended complaint sought the following relief on its fraud claim: (1)
rescission of the Purchase Money Notes, acquisition documents and related
transaction documents for the Partnership's acquisition of limited partnership
interests in the West Scenic, Oakwood Manor, and Robindale East transactions
(which all occurred in December 1984); (2) a declaration that all prior payments
received by plaintiffs in connection with those transactions be declared rent
for the Partnership's and another person's alleged use of the acquired interests
since December 1984; (3) in the alternative to the rescission remedy, that the
non-recourse Purchase Money Notes issued by the Partnership be reformed to be
recourse Purchase Money Notes against the Partnership, its general partners and
others, so that plaintiffs could recover all costs of foreclosure and attorneys'
fees incurred in the McConnell Action; and (4) regardless of such reformation,
an award of attorneys' fees incurred by plaintiffs in the McConnell Action
against the Partnership, the defendants affiliated with it and others. On their
claim on the Purchase Money Notes, plaintiffs sought: (1) judgment against the
Partnership for the unpaid principal and interest owed on Purchase Money Notes
issued by the Partnership in connection with its acquisition of limited
partnership interest in the West Scenic, Oakwood Manor, and Robindale East
transactions; (2) an award of attorneys' fees and costs; and (3) a declaration
that plaintiffs have a "good, valid, first superior and enforceable lien" on the
limited partnership interests and other collateral pledged in support of those
Purchase Money Notes and that plaintiffs are authorized to dispose of such
collateral in a commercially reasonable manner and to apply the net proceeds
from such disposition against any judgment awarded in favor of plaintiffs.
On or about January 26, 2000, the Partnership and the defendants affiliated with
it moved to dismiss the amended complaint on the ground that the Court lacked
personal jurisdiction over them. While that motion was being briefed, plaintiffs
announced their intention to amend their complaint again and the parties
commenced settlement discussions.
The parties have reached an agreement in principle to settle this action, which
settlement contemplates the sale of partnership interest or real estate owned by
the West Scenic, Oakwood Manor, and Robindale East limited partnerships and an
allocation of the sale proceeds between the plaintiffs, the Partnership and
others. The parties are currently in the process of trying to document and
implement this proposed settlement. There can be no assurance that the parties
will successfully conclude this settlement. If the parties fail to conclude this
settlement, the Partnership and the defendants affiliated with it intend to
defend the McConnell Action vigorously.
SOUTHWEST APARTMENTS LTD. (THE GOSSERS)
In or around November 1999, the Partnership received correspondence from an
attorney representing Dr. and Mrs. Bob Gosser, (the "Gossers") who are allegedly
the holders of beneficial interests in Purchase Money Notes issued by the
Partnership in connection with its acquisition of limited partnership interests
in Southwest Apartments, Ltd. local limited partnership in December 1984. Those
Purchase Money Notes issued by the Partnership have, on their face, matured and
have not been paid in full. The attorney for the Gossers threatened to assert
against the Partnership claims relating to those Purchase Money Notes. No such
action has yet been commenced.
The Partnership has reached a settlement in principle with the Gossers to settle
the dispute between parties. The proposed settlement contemplates the sale of
the real property owned by
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
Southwest Apartments, Ltd. and an allocation of the proceeds from the sale
between the Gossers, the Partnership and others. The proposed settlement is in
the process of being documented and implemented. There can be no assurance that
the parties will successfully conclude this settlement.
UNIVERSITY GARDEN APARTMENTS, LTD. AND SOUTHSIDE VILLAGE APARTMENTS, LTD.
By letters dated December 29, 1999, from counsel for Skyline Properties, Inc.,
Trustee of the University Gardens Apartments, Ltd. Partners Liquidating Trust
and Southside Village Apartments, Ltd. Partners Liquidating Trust, ("Skyline"),
the Partnership was informed of Skyline's intent to file an Involuntary
Substitution Affidavit pursuant to Section 7.1 of the relevant Security
Agreements. Pursuant to a standstill agreement between the parties, the parties
are negotiating for a sale of the limited partnership interests owned by the
Partnership to Skyline. Due to the ongoing nature of the negotiations, there can
be no assurance that the parties will successfully conclude in a settlement.
MARCRUM
In or about May, 2000, the Partnership learned that the alleged owners of the
beneficial interests in Purchase Money Notes issued by the Partnership in 1984
in connection with its acquisition of limited partnership interests in four
local limited partnerships, Bonnie Doone Apartments, Ltd., Dickens Ferry
Apartments, Ltd., Decatur Apartments, Ltd., and Florence Apartments, Ltd., had
in February 2000 purported to foreclose on the Partnership's interests in those
partnerships by the filing of involuntary substitution affidavits in the Office
of the Judge of Probate of Lauderdale County, Alabama as the result of the
Partnership's alleged default under such Purchase Money Notes. The Partnership
has reached an agreement in principle with the noteholders pursuant to which the
noteholders will file the papers necessary to revoke the purported foreclosure
whereupon the Partnership will convey the limited partnership interests in the
four local partnerships to them for nominal consideration. The proposed
agreement is in the process of being documented and implemented. There can be no
assurance that the parties will successfully close this transaction.
LANCASTER MANOR ASSOCIATES
The Partners of Lancaster Manor Associates, Ltd. approved a plan of liquidation
on March 16, 1999, and the partnership commenced liquidation shortly thereafter.
As a result, the partnership has changed its basis of accounting for periods
subsequent to March 16, 1999 from the going-concern basis to a liquidation
basis.
c) Management Agreement
The subsidiary partnerships have entered into management agreements of which
some are with affiliates of the subsidiaries' general partners, which require
annual fees ranging from approximately 4% to 13% of gross rental revenues. Such
management fees amounted to $1,957,698, $2,171,954, and $2,509,259 for the 1999,
1998 and 1997 Fiscal Years, respectively.
d) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") up to $100,000. As of March 25, 2000, uninsured cash and
cash equivalents approximated $4,700,000.
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
e) Housing Assistance Payments Contracts
In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals in instances where the existing Section 8 Contracts exceed
current market rents. As a result, Section 8 Contracts that are renewed in the
future in projects insured by the Federal Housing Administration ("FHA") may not
provide sufficient cash flow to permit owners of properties to meet the debt
service requirements of these existing FHA-insured mortgages. MAHRA also
provides for the restructuring of these mortgage loans so that the annual debt
service on the restructured loan (or loans) can be supported by Section 8 rents
established at the market rents. The restructured loans will be held by the
current lender or another lender. There can be no assurance that a property
owner will be permitted to restructure its mortgage indebtedness pursuant to the
new rules implementing MAHRA or that an owner, or the holder of the mortgage,
would choose to restructure the mortgage if it were able to participate. MAHRA
went into effect on September 11, 1998 when interim regulations implementing the
program were published. It should be noted that there are many uncertainties as
to the economic and tax impact on a property owner because of the combination of
the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRA.
On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that was eligible for prepayment had to give notice of such
prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.
Effective January 1, 1999, the State of California now requires owners of a
property benefiting from FHA-insured mortgages under Section 236 or 221(a)(3) to
provide a nine-month notice of contract termination or prepayment of the
FHA-insured loan. In addition, the owner must offer the properties for sale to
those entities who agree to maintain the property as affordable housing.
On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2000
f) Other
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 20%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving government assistance, for
example the possibility that Congress may not appropriate funds to enable HUD to
make rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owner's equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships during the period that the subsidy
agreements are in existence, without HUD's approval. Furthermore, there may not
be market demand for apartments at full market rents when the rental assistance
contracts expire.
NOTE 12 - Subsequent Event
CAROLINE FOREST APARTMENTS
On March 31, 2000, the Partnership's Limited Partnership Interest in Caroline
Forest Apts. was sold to the Purchase Money Note Holder for $90,000, resulting
in a loss in the amount of approximately $337,000 and forgiveness of
indebtedness income of approximately $1,734,000.
CONIFER 208
On May 3, 2000, Conifer 208 entered into a purchase and sale agreement with a
third party for a purchase price of $1,750,000. The closing is expected to occur
in August 2000. No assurances can be given that the closing will actually occur.
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Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by the General Partners.
Assisted Housing Associates, Inc. ("Assisted General Partner"), Related Beta
Corporation ("The Related General Partner") and Cambridge/Related Associates
Limited Partnership ("Cambridge/Related") are all affiliates of Related. The
general partner of Related is The Related Realty Group, Inc., of which Stephen
M. Ross is president, director and a stockholder. The General Partners will
manage and control the affairs of the Partnership directly and by engaging other
affiliates of Related. The general partners of Cambridge/Related are the
Assisted General Partner and The Related General Partner.
The Assisted General Partner was incorporated in Delaware on June 25, 1985 and
the Related General Partner was incorporated in Delaware on January 23, 1984.
On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. In connection with the Transfer, the Partnership paid to the
Assisted General Partner the accrued asset management fees owed to it in the
aggregate amount of $1,334,116. See Note 8 - Related Party Transactions to the
Financial Statements included in Item 8. above.
Certain information concerning the directors and executive officers of the
General Partners is set forth below.
The directors and executive officers of the Related General Partner are as
follows:
NAME POSITION
Stephen M. Ross Director
Alan P. Hirmes President
Stuart J. Boesky Vice President
Denis Kiley Vice President
Marc D. Schnitzer Vice President
Mark E. Carbone Vice President
Glenn F. Hopps Treasurer
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Teresa Wicelinski Secretary
STEPHEN M. ROSS, 60, is President, Director and shareholder of The Related
Realty Group, Inc., the General Partner of The Related Companies, L.P. He
graduated from the University of Michigan School of Business Administration with
a Bachelor of Science degree and from Wayne State University School of Law with
a Juris Doctor degree. Mr. Ross then received a Master of Laws degree in
taxation from New York University School of Law. He joined the accounting firm
of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York,
where he worked for two large Wall Street investment banking firms in their real
estate and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. in 1972 to develop, manage, finance and acquire
subsidized and conventional apartment developments. Mr. Ross also serves on the
Board of Trustees of Charter Municipal Mortgage Acceptance Company.
ALAN P. HIRMES, 45, has been a Certified Public Accountant in New York since
1978. Prior to joining Capital in October 1983, Mr. Hirmes was employed by
Weiner & Co., Certified Public Accountants. Mr. Hirmes is also a Vice President
of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts
degree.
STUART J. BOESKY, 44, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye, Fialkow Richard & Rothstein (which subsequently merged with Strook &
Strook & Lavan) and from 1978 to 1980 was a consultant specializing in real
estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law.
DENISE L. KILEY, 40, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Related in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981 through 1985 she was an auditor
with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College.
MARC D. SCHNITZER, 39, joined Related in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983.
MARK E. CARBONE, 43, rejoined Related in 1998 where his primary responsibility
has been disposition of real estate. From 1994 to 1998 he was President of WHC,
Inc., a distressed asset real estate fund. From 1986 to 1994 he was President of
Marigold Real Estate and Development, Inc., a real estate development company
located in Greenwich, CT. From 1979 to 1986 he was a Vice President at Related
Capital Company. He received a Bachelor of Arts in Government from Harvard
University in 1979.
GLENN F. HOPPS, 37, joined Related in December 1990, and prior to that date Mr.
Hopps was employed by Marks Shron & Company and Weissbarth, Altman and
Michaelson certified public accountants. Mr. Hopps graduated from New York State
University at Albany with a Bachelor of Science Degree in Accounting.
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TERESA WICELINSKI, 34, joined Related in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski, graduated from Pace University with a Bachelor of Arts Degree in
Accounting.
The directors and executive officers of the Assisted General Partner are as
follows:
NAME POSITION
Michael Brenner Director
Alan P. Hirmes President
Stuart J. Boesky Executive Vice President
Mark E. Carbone Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
MICHAEL BRENNER, 54, is a Director of Aegis, and is the Executive Vice President
and Chief Financial Officer of TRCLP. Prior to joining TRCLP in 1996, Mr.
Brenner was a partner with Cooper & Lybrand, having served as managing partner
of its Industry Programs and Client Satisfaction initiatives from 1993-1996,
managing partner of the Detroit group of offices from 1986-1993 and Chairman of
its National Real Estate Industry Group from 1984-1986. Mr. Brenner graduated
summa cum laude from the University of Detroit with a Bachelors degree in
Business Administration and from the University of Michigan with a Masters of
Business Administration, with distinction. Mr. Brenner also serves on the Board
of Trustees of Charter Municipal Mortgage Acceptance Company and Aegis Realty,
Inc.
Biographical information with respect to Messrs, Hirmes, Boesky, Carbone, Ms.
Kiley, Hopps and Ms. Wicelinski is set forth above.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. However, under the terms of
the Amended and Restated Agreement of Limited Partnership of the Partnership,
the General Partners and their affiliates are entitled to receive compensation
from the Partnership in consideration of certain services rendered to the
Partnership by such parties. In addition, the General Partners collectively hold
a 1% interest in all profits, losses and distributions attributable to
operations and a subordinated 15% interest in such items attributable to sales
and refinancings. See Note 8 to the Financial Statements in Item 8 above, which
information is incorporated herein by reference thereto. Certain directors and
officers of the General Partners receive compensation from the General Partner
and their affiliates for services performed for various affiliated entities
which may include services performed for the Partnership.
Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partners and/or
-205-
<PAGE>
their affiliates is limited by the terms of the Partnership Agreement and may
not be increased therefrom on a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The General Partners own all of the outstanding general partnership interests in
the Partnership. The General Partners have a 1% interest in all profits, losses
and distributions of the Partnership from operations and a subordinated 15%
interest in such items from sale or refinancing proceeds. Except as aforesaid,
no person is known to own beneficially in excess of 5% of the outstanding
partnership interests.
At March 25, 2000, security ownership by the General Partners and their
affiliates is as listed:
<TABLE>
<CAPTION>
Percentage of
Outstanding
Name of General Partner
Title of Class Beneficial Ownership Amount Interest
-------------- -------------------- --------- ----------------
<S> <C> <C> <C>
General Partnership Assisted Housing
Interest in the Associates Inc. $10 13.2%
Partnership
Related Beta Corporation 6 19.8%
General Partnership
Interest in the Cambridge/Related Associates
Partnership Limited Partnership 4 67.0%
------
100.0%
</TABLE>
No director or executive officer of any General Partner owns any Initial Limited
Partnership Interests or Additional Limited Partnership Interests.
Item 13. Certain Relationships and Related Transactions.
The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed below and in Item 11 above
and also Note 8 to the Financial Statements in Item 8 above, which is
incorporated herein by reference. However, there have been no direct financial
transactions between the Partnership and the directors and officers of the
General Partners.
C/R Special Partnership is the special limited partner of each Local
Partnership, with a .01% interest in profits, losses and distributions from such
Local Partnerships. As set forth in Item 1, C/R Special Partnership has been
admitted to the Local Partnerships for the purpose of monitoring the Local
Partnerships and exercising certain rights under the Local Partnership
Agreements on behalf of the Partnership.
-206-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
<TABLE>
<CAPTION>
Sequential
Page
----------
<S> <C> <C>
(a) 1. Financial Statements
Independent Auditors' Report 28
Consolidated Balance Sheets at March 25, 2000 and 1999 176
Consolidated Statements of Operations for the Years Ended March 25,
2000, 1999 and 1998 177
Consolidated Statements of Changes in Partners' Deficit for the Years
Ended March 25, 2000, 1999 and 1998 178
Consolidated Statements of Cash Flows for the Years Ended March 25,
2000, 1999 and 1998 179
Notes to Consolidated Financial Statements 182
(a) 2. FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 211
Schedule I - Condensed Financial Information of Registrant 212
Schedule III - Real Estate and Accumulated Depreciation 215
The remaining schedules are omitted because the required information
is included in the financial statements and notes thereto, or they are
not applicable or not required.
(a) 3. EXHIBITS
(3) Amended and Restated Agreement and Certificate of Limited Partnership
as filed with the Secretary of State of the State of the Commonwealth
of Massachusetts.**
(10A) Form of Escrow Agreement**
(21) Subsidiaries of the Registrant 208
(27) Financial Data Schedule (filed herewith) 217
</TABLE>
** Incorporated by reference to exhibits filed with Amendment No. 1 to
Cambridge Advantaged Properties L.P.'s Registration Statement on Form
S-11 Registration File No. 2-91993.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter.
-207-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(Continued)
(c) SUBSIDIARIES OF THE REGISTRANT (Exhibit 21)
<TABLE>
<CAPTION>
Jurisdiction
of Formation
------------
<S> <C>
Cedar Bay, LTD AL
Northwoods III Apts. LTD AL
Hackley Village Associates MI
Huntley Associates #1 MI
Huntley Associates #2 MI
Seymour O'Brien Manor Apts. MI
Washington Highland Apts. MI
Vincennes Niblack Apts. MI
Casa Ramon Apartments NY
Nu-Elm Apartments MO
Pebble Creek LDHA MI
Solemar at South Dartmouth L.P. MA
Decatur Apartments, LTD TX
Florence Apartments, LTD TX
Saraland Apartments, LTD TX
University Garden Apts. LTD TX
Southside Village Apts., LTD TX
Dickens Ferry Apartments, LTD TX
Bonnie Doone Apartments, LTD TX
Conifer 208 WA
Cloisters Associates, LTD GA
Cabarrus Arms Associates, LTD GA
Summer Arms Apts. LTD GA
Lexington Village Company GA
Ware Manor Associates GA
Nottingham Woods Apts., LTD GA
Hathaway Court Associates KY
Tall Pines Associates GA
Shelton Beach Apts., LTD AL
Northpointe II, LTD AL
Caroline Forest Apts. VA
Greenwood Manor, LTD AR
Malvern Manor AR
Hereford Manor, LTD AR
Henslee Heights, LTD AR
Oakwood Manor, LTD AR
West Scenic Apartments, LTD AR
Robindale East Apartments, LTD AR
Southwest Apartments, LTD AR
Valley Arms, LTD AR
</TABLE>
(d) Not applicable
-208-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed below on
its behalf by the undersigned, thereunto duly authorized.
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
(Registrant)
By: RELATED BETA CORPORATION
a General Partner
Date: June 22, 2000
By: /s/ Alan P. Hirmes
-------------------
Alan P. Hirmes
President
By: ASSISTED HOUSING ASSOCIATES, INC.
a General Partner
Date: June 22, 2000
By: /s/ Alan P. Hirmes
-------------------
Alan P. Hirmes
President
By: CAMBRIDGE AND RELATED ASSOCIATES
LIMITED PARTNERSHIP
By: Related Beta Corporation
Date: June 22, 2000
By: /s/ Alan P. Hirmes
-------------------
Alan P. Hirmes
President
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
------------------- ------------------------------------------------- -------------
<S> <C> <C>
/s/ Alan P. Hirmes President (principal executive and financial June 22, 2000
------------------ officer) of Related Beta Corporation
Alan P. Hirmes and Assisted Housing Associates, Inc.
/s/ Glenn F. Hopps Treasurer (principal accounting
------------------ officer) of Related Beta Corporation June 22, 2000
Glenn F. Hopps and Assisted Housing Associates, Inc.
/s/ Stephen M. Ross Director of Related Beta Corporation June 22, 2000
-------------------
Stephen M. Ross
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries
In connection with our audits of the consolidated financial statements of
Cambridge Advantaged Properties Limited Partnership and Subsidiaries included in
the Form 10-K as presented in our opinion dated June 22, 2000 on pages 28 and
29, and based on the reports of other auditors, we have also audited supporting
Schedule I for the 1999, 1998 and 1997 Fiscal Years and Schedule III at March
25, 2000. In our opinion, and based on the reports of the other auditors
(certain of which were modified due to the uncertainty of these subsidiary
partnerships' abilities to continue in existence), these consolidated
schedules present fairly, when read in conjunction with the related
consolidated financial statements, the financial data required to be set
forth therein.
As discussed in Note 10, the Partnership is currently in the process of
disposing of its investments. It is anticipated that this process will take a
number of years.
As discussed in Note 11(a), the consolidated financial statements include the
financial statements of six subsidiary partnerships with significant
contingencies and uncertainties regarding their continuing operations. These
uncertainties raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. The auditors of these subsidiary
partnerships modified their reports due to the uncertainty of these subsidiary
partnerships' abilities to continue in existence. The auditors for one of
these subsidiary partnerships disclaimed an opinion on the 1999 Fiscal Year
financial statements due to the refusal of management to provide written
representations. These six subsidiary partnerships' net (income) losses
aggregated ($6,049,701), $3,424,315 and $1,346,174 for the 1999, 1998 and 1997
Fiscal Years, respectively, and their assets aggregated $7,241,548 and
$12,837,164 at March 25, 2000 and 1999, respectively. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
As discussed in Note 7, the principal of and all accrued interest on the
Purchase Money Notes are due at final maturity. Five Purchase Money Notes are
now extended, with maturity dates ranging from June 2001 to April 2008. The
remaining Purchase Money Notes are past maturity and the Partnership is
attempting to refinance or sell the properties. It is uncertain as to whether
the proceeds from such sales will be sufficient to meet the outstanding
balances of the Purchase Money Notes and accrued interest thereon. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 22, 2000
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 25,
------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Cash and cash equivalents $ 3,866,045 $ 327,667
Investment in and advances to subsidiary partnerships 24,956,282 25,402,952
Other assets 118,868 133,234
------------- -------------
Total assets $ 28,941,195 $ 25,863,853
========== ============
LIABILITIES AND PARTNERS' DEFICIT
Purchase money notes payable $ 34,440,034 $ 35,813,190
Due to general partner and affiliates 2,156,197 1,778,382
Due to selling partners 67,519,432 63,581,967
Other liabilities 74,301 272,603
------------- -------------
Total liabilities 104,189,964 101,446,142
Partners' deficit (75,248,769) (75,582,289)
------------- ------------
Total liabilities and partners' deficit $ 28,941,195 $ 25,863,853
============ ============
</TABLE>
Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' deficit on the consolidated balance sheet will differ
from partners' deficit shown above.
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Other income $ 130,078 $ 15,131 $ 68,702
----------- ----------- -----------
Total revenues 130,078 15,131 68,702
----------- ----------- -----------
Expenses
Administrative and management 465,656 510,804 455,123
Administrative and management-related parties 1,267,021 1,261,324 1,304,636
Financial, principally interest 6,632,833 4,933,026 5,768,447
---------- ---------- ----------
Total expenses 8,365,510 6,705,154 7,528,206
---------- ---------- ----------
Loss from operations (8,235,432) (6,690,023) (7,459,504)
Gain (loss) on sale of investments in subsidiary
partnerships 4,628,105 7,524,849 (2,311,139)
Forgiveness of indebtedness income 2,513,753 0 28,257,707
Distribution income of subsidiary partnerships
in excess of investments 1,602,789 111,901 81,676
Equity in income (loss) of subsidiary
partnerships (*) 1,824,442 (622,434) 5,898,451
----------- ----------- -----------
Net income $ 2,333,657 $ 324,293 $24,467,191
=========== =========== ==========
</TABLE>
(*) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to $23,339,586, $3,586,522 and $0 for
the years ended March 25, 2000, 1999 and 1998.
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Year Ended March 25,
--------------------------------------------
2000 1999 1998
------------ ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,333,657 $ 324,293 $ 24,467,191
----------- ---------- ----------
Adjustments to reconcile net income
to net cash used in operating activities:
(Gain) loss on sale of investments in subsidiary
partnerships (4,628,105) (7,524,849) 2,311,139
Forgiveness of indebtedness income (2,513,753) 0 (28,257,707)
Equity in (income) loss of subsidiary
partnerships (1,824,442) 622,434 (5,898,451)
Decrease (increase) in other assets 11,565 (12,823) 16,641
Increase (decrease) in liabilities:
Due to general partners and affiliates 377,815 905,084 (1,097,203)
Due to selling partners 6,632,833 4,933,026 5,768,447
Payments to selling partners (1,067,005) (239,872) (1,031,022)
Other liabilities (198,302) 261,213 (17,608)
---------- ---------- -----------
Total adjustments (3,209,394) (1,055,787) (28,205,764)
----------- ---------- -----------
Net cash used in operating activities (875,737) (731,494) (3,738,573)
----------- ---------- -----------
Cash flows from investing activities:
Proceeds from sale of investments in
subsidiary partnerships 1,509,325 600,000 527,181
Distributions from subsidiaries 5,389,892 264,211 12,405,352
--------- ---------- ----------
Net cash provided by investing activities 6,899,217 864,211 12,932,533
--------- ---------- ----------
Cash flows from financing activities:
Principal payments of purchase money
notes payable (484,965) 0 (7,577,873)
Increase in purchase money notes payable 0 160,197 131,767
Distributions to partners (2,000,137) 0 (2,017,287)
---------- ---------- ----------
Net cash (used in) provided by financing activities (2,485,102) 160,197 (9,463,393)
----------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents 3,538,378 292,914 (269,433)
Cash and cash equivalents, beginning of year 327,667 34,753 304,186
---------- ---------- -----------
Cash and cash equivalents, end of year $ 3,866,045 $ 327,667 $ 34,753
========== ========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2000
Cost (a)
Initial Cost to Partnership Capitalized
--------------------------- Subsequent to
Buildings and Acquisition:
Subsidiary Partnership's Residential Property Encumbrances Land Improvements Improvements
--------------------------------------------- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C>
(10) Pebble Creek $3,945,640 $ 266,942 $ 4,968,283 $ 1,318,984
(1) Knollwood I (e) 0 311,807 5,924,337 (6,236,144)
(1) Knollwood II (e) 0 310,663 5,902,600 (6,213,263)
(1) Knollwood III (e) 0 310,257 5,899,971 (6,210,228)
(1) Knollwood IV (e) 0 210,423 3,998,047 (4,208,470)
(1) Parklane II (e) 0 228,684 4,344,999 (4,573,683)
(6) Northwoods III 2,978,662 183,789 3,492,002 32,432
(1) Northpointe I (Shelton Beach) 2,240,369 156,968 2,982,380 152,664
(1) Cedarbay 2,800,183 184,523 3,505,947 7,963
(1) Northpointe II 1,787,239 118,651 2,254,361 44,589
(9) Rockdale West (i) 0 610,192 8,240,035 (8,850,227)
(9) Buttonwood Acres (f) 0 382,930 4,392,292 (4,775,222)
(9) Solemar I 5,974,921 567,644 7,359,738 839,120
(2) West Scenic 2,471,685 201,556 3,893,464 311,503
(2) Greenwood Manor 1,220,592 84,416 1,603,982 30,734
(2) Henslee Heights 1,505,410 107,068 2,035,034 64,165
(2) Hereford Manor 917,252 70,391 1,319,817 10,683
(2) Oakwood Manor 4,121,658 295,312 5,627,044 564,992
(2) Robindale East 1,647,231 121,808 2,314,340 175,877
(12) Valley Arms (j) 0 257,254 2,648,264 (2,905,518)
(2) Malvern Manor 1,029,992 73,494 1,396,388 6,480
(2) Southwest 908,505 68,995 1,310,896 16,691
(3) Lancaster Manor Associates (h) 0 392,991 7,476,427 (7,869,418)
(16) Caroline Apartments 1,261,861 122,239 1,804,976 632,206
(1) Florence Apartments 1,922,907 135,644 2,533,694 244,896
(1) Saraland Apartments (g) 1,110,475 79,104 1,487,507 (1,566,611)
(1) Bonnie Doone 1,231,411 89,034 1,649,278 22,016
(13) Pinewood Village (Conifer 317) 885,753 110,658 1,229,121 339,835
(17) Conifer Village (Conifer 208) 1,053,294 83,189 1,569,170 229,542
(13) Fircrest Manor (Conifer 307) 584,915 133,179 1,479,049 176,568
(4) Westminster Manor (f) 0 457,575 8,662,800 (9,120,375)
(4) Northgate Townhouse (f) 0 336,820 6,280,710 (6,617,530)
(15) Pecan Park I (i) 0 193,864 3,682,091 (3,875,955)
(15) Pecan Park II (i) 0 187,760 3,481,597 (3,669,357)
(15) Bicentennial Square (d) 0 1,147,629 6,576,179 (7,723,808)
(15) Bellfort Arms (j) 7,105,526 1,130,077 6,996,265 101,338
(8) Hathaway Court 2,950,674 217,960 4,157,713 208,158
(5) Lexington Village 1,829,092 133,830 2,580,297 222,880
(5) Ware Manor 1,451,883 108,955 2,079,603 219,277
(14) Summer Arms 1,676,178 123,135 2,381,092 76,784
(12) Cabarrus Arms 1,236,964 102,987 1,850,151 237,469
(1) Sundown Apts. (Cloister) 3,823,035 357,930 5,134,467 465,598
(5) Tall Pines 1,838,468 166,974 2,657,152 575,360
(1) Nottingham Woods 2,449,301 185,145 3,556,877 231,815
<CAPTION>
Gross Amount at which Carried At Close of Period
----------------------------------------------------
Buildings and Accumulated
Subsidiary Partnership's Residential Property Land Improvements Total Depreciation
--------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
(10) Pebble Creek $ 266,942 $ 6,287,267 $ 6,554,209 $ 2,598,981
(1) Knollwood I (e) 0 0 0 0
(1) Knollwood II (e) 0 0 0 0
(1) Knollwood III (e) 0 0 0 0
(1) Knollwood IV (e) 0 0 0 0
(1) Parklane II (e) 0 0 0 0
(6) Northwoods III 183,789 3,524,434 3,708,223 1,781,065
(1) Northpointe I (Shelton Beach) 156,968 3,135,044 3,292,012 1,578,133
(1) Cedarbay 184,523 3,513,910 3,698,433 1,794,133
(1) Northpointe II 118,651 2,298,950 2,417,601 1,159,809
(9) Rockdale West (i) 0 0 0 0
(9) Buttonwood Acres (f) 0 0 0 0
(9) Solemar I 567,644 8,198,858 8,766,502 3,330,510
(2) West Scenic 201,556 4,204,967 4,406,523 2,205,994
(2) Greenwood Manor 84,416 1,634,716 1,719,132 834,964
(2) Henslee Heights 107,068 2,099,199 2,206,267 908,710
(2) Hereford Manor 70,391 1,330,500 1,400,891 611,271
(2) Oakwood Manor 295,312 6,192,036 6,487,348 3,255,482
(2) Robindale East 121,808 2,490,217 2,612,025 1,279,547
(12) Valley Arms (j) 0 0 0 0
(2) Malvern Manor 73,494 1,402,868 1,476,362 625,438
(2) Southwest 68,995 1,327,587 1,396,582 684,750
(3) Lancaster Manor Associates (h) 0 0 0 0
(16) Caroline Apartments 122,239 2,437,182 2,559,421 1,553,489
(1) Florence Apartments 135,644 2,778,590 2,914,234 1,399,502
(1) Saraland Apartments (g) 0 0 0 0
(1) Bonnie Doone 89,034 1,671,294 1,760,328 871,254
(13) Pinewood Village (Conifer 317) 128,622 1,550,992 1,679,614 754,653
(17) Conifer Village (Conifer 208) 81,264 1,800,637 1,881,901 954,699
(13) Fircrest Manor (Conifer 307) 133,179 1,655,617 1,788,796 784,766
(4) Westminster Manor (f) 0 0 0 0
(4) Northgate Townhouse (f) 0 0 0 0
(15) Pecan Park I (i) 0 0 0 0
(15) Pecan Park II (i) 0 0 0 0
(15) Bicentennial Square (d) 0 0 0 0
(15) Bellfort Arms (j) 1,130,077 7,097,603 8,227,680 3,608,209
(8) Hathaway Court 217,960 4,365,871 4,583,831 3,244,049
(5) Lexington Village 133,830 2,803,177 2,937,007 1,978,052
(5) Ware Manor 108,955 2,298,880 2,407,835 1,645,673
(14) Summer Arms 123,135 2,457,876 2,581,011 1,810,485
(12) Cabarrus Arms 102,987 2,087,620 2,190,607 1,480,203
(1) Sundown Apts. (Cloister) 357,930 5,600,065 5,957,995 4,035,468
(5) Tall Pines 166,974 3,232,512 3,399,486 2,171,501
(1) Nottingham Woods 184,312 3,789,525 3,973,837 2,712,079
<CAPTION>
Life on which
Depreciation in
Latest Income
Date of Date Statement is
Subsidiary Partnership's Residential Property Construction Acquired Computed(b)(c)
--------------------------------------------- ------------ --------- ---------------
<S> <C> <C> <C>
(10) Pebble Creek (c) Nov. 1984 5 - 27.5
(1) Knollwood I (e) (c) Sept. 1984 30
(1) Knollwood II (e) (c) Sept. 1984 30
(1) Knollwood III (e) (c) Sept. 1984 30
(1) Knollwood IV (e) (c) Sept. 1984 30
(1) Parklane II (e) (c) Sept. 1984 30
(6) Northwoods III (c) Oct. 1984 15 - 30
(1) Northpointe I (Shelton Beach) (c) Nov. 1984 15 - 30
(1) Cedarbay (c) Sept. 1984 15 - 30
(1) Northpointe II (c) Nov. 1984 15 - 30
(9) Rockdale West (i) (c) Oct. 1984 15-27
(9) Buttonwood Acres (f) (c) Oct. 1984 20
(9) Solemar I (c) Oct. 1984 15-27
(2) West Scenic (c) Dec. 1984 10 - 30
(2) Greenwood Manor (c) Dec. 1984 30
(2) Henslee Heights (c) Dec. 1984 35
(2) Hereford Manor (c) Dec. 1984 35
(2) Oakwood Manor (c) Dec. 1984 5 - 30
(2) Robindale East (c) Dec. 1984 10 - 30
(12) Valley Arms (j) (c) Dec. 1984 35
(2) Malvern Manor (c) Dec. 1984 35
(2) Southwest (c) Dec. 1984 30
(3) Lancaster Manor Associates (h) (c) Dec. 1984 30
(16) Caroline Apartments (c) Nov. 1984 28
(1) Florence Apartments (c) Oct. 1984 15 - 30
(1) Saraland Apartments (g) (c) Oct. 1984 5 - 30
(1) Bonnie Doone (c) Nov. 1984 27.5 - 30
(13) Pinewood Village (Conifer 317) (c) Nov. 1984 15 - 30
(17) Conifer Village (Conifer 208) (c) Nov. 1984 19 - 30
(13) Fircrest Manor (Conifer 307) (c) Nov. 1984 20 - 30
(4) Westminster Manor (f) (c) Oct. 1984 30
(4) Northgate Townhouse (f) (c) Oct. 1984 30
(15) Pecan Park I (i) (c) Dec. 1984 30
(15) Pecan Park II (i) (c) Dec. 1984 18 - 30
(15) Bicentennial Square (d) (c) Dec. 1984 30 - 40
(15) Bellfort Arms (j) (c) Nov. 1984 30
(8) Hathaway Court (c) Nov. 1984 20
(5) Lexington Village (c) Nov. 1984 15 - 27.5
(5) Ware Manor (c) Nov. 1984 15 - 27.5
(14) Summer Arms (c) Nov. 1984 20
(12) Cabarrus Arms (c) Nov. 1984 7 - 20
(1) Sundown Apts. (Cloister) (c) Nov. 1984 10 - 20
(5) Tall Pines (c) Nov. 1984 20 - 27.5
(1) Nottingham Woods (c) Nov. 1984 10 - 20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2000
(continued)
Cost (a)
Initial Cost to Partnership Capitalized
--------------------------- Subsequent to
Buildings and Acquisition:
Subsidiary Partnership's Residential Property Encumbrances Land Improvements Improvements
--------------------------------------------- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C>
(7) Seymour O'Brien Manor 1,068,058 77,893 1,483,726 329,620
(7) Washington Highlands 1,092,968 79,571 1,508,983 461,909
(7) Vincennes Niblack ("Autumn Ridge Apartments) 2,453,457 184,718 3,502,697 992,613
(11) Nu Elm 1,367,799 100,552 1,913,293 412,812
(3) Casa Ramon 1,714,982 121,197 2,318,916 287,426
(10) Hackley Village 996,009 80,562 1,530,639 18,669
(10) Huntley Associates I 1,649,384 125,087 2,376,634 396,684
(10) Huntley Associates II 1,243,206 98,140 1,864,671 313,229
(1) Decatur 1,890,295 135,554 2,531,304 100,798
(1) Dickens Ferry 1,504,174 108,914 2,058,001 239,871
(15) University Gardens 1,684,751 127,004 2,288,254 53,303
(15) Southside Villages 1,890,255 135,624 2,508,705 18,325
(10) Carlton Terrace (k) 0 755,304 8,627,605 (9,382,909)
(10) Apollo Villa (k) 0 229,304 2,903,658 (3,132,962)
(10) Apollo Villa II (k) 0 577,304 7,260,975 (7,838,279)
(10) Cranbrook Manor (k) 3,222,123 261,948 3,510,485 (108,113)
(10) Oakbrook Villa (j) 401,705 411,597 9,143,169 (9,554,766)
---------- ---------- ----------- ------------
$88,140,242 $14,730,719 $222,052,152 $(103,246,960)
========== ========== =========== ============
<CAPTION>
Gross Amount at which Carried At Close of Period
----------------------------------------------------
Buildings and Accumulated
Subsidiary Partnership's Residential Property Land Improvements Total Depreciation
--------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
(7) Seymour O'Brien Manor 77,893 1,813,346 1,891,239 810,221
(7) Washington Highlands 79,571 1,970,892 2,050,463 792,433
(7) Vincennes Niblack ("Autumn Ridge Apartments) 184,718 4,495,310 4,680,028 1,798,926
(11) Nu Elm 100,552 2,326,105 2,426,657 1,049,249
(3) Casa Ramon 121,197 2,606,342 2,727,539 1,276,500
(10) Hackley Village 80,562 1,549,308 1,629,870 689,464
(10) Huntley Associates I 125,087 2,773,318 2,898,405 1,200,667
(10) Huntley Associates II 98,140 2,177,900 2,276,040 940,097
(1) Decatur 135,554 2,632,102 2,767,656 1,361,489
(1) Dickens Ferry 108,914 2,297,872 2,406,786 1,132,485
(15) University Gardens 127,004 2,341,557 2,468,561 1,443,326
(15) Southside Villages 135,624 2,527,030 2,662,654 1,558,918
(10) Carlton Terrace (k) 0 0 0 0
(10) Apollo Villa (k) 0 0 0 0
(10) Apollo Villa II (k) 0 0 0 0
(10) Cranbrook Manor (k) 261,948 3,402,372 3,664,320 1,564,278
(10) Oakbrook Villa (j) 0 0 0 0
--------- ----------- ----------- ----------
$7,354,463 $126,181,448 $133,535,911 $67,270,922
========= =========== =========== ==========
<CAPTION>
Life on which
Depreciation in
Latest Income
Date of Date Statement is
Subsidiary Partnership's Residential Property Construction Acquired Computed(b)(c)
--------------------------------------------- ------------ --------- ---------------
<S> <C> <C> <C>
(7) Seymour O'Brien Manor (c) Oct. 1984 5 - 27.5
(7) Washington Highlands (c) Oct. 1984 5 - 27.5
(7) Vincennes Niblack ("Autumn Ridge Apartments) (c) Oct. 1984 5 - 27.5
(11) Nu Elm (c) Oct. 1984 5 - 27.5
(3) Casa Ramon (c) Oct. 1984 5 - 27.5
(10) Hackley Village (c) Oct. 1984 5 - 27.5
(10) Huntley Associates I (c) Oct. 1984 5 - 27.5
(10) Huntley Associates II (c) Oct. 1984 5 - 27.5
(1) Decatur (c) Oct. 1984 15 - 40
(1) Dickens Ferry (c) Nov. 1984 15 - 40
(15) University Gardens (c) Nov. 1984 25
(15) Southside Villages (c) Nov. 1984 25
(10) Carlton Terrace (k) (c) Dec. 1984 25
(10) Apollo Villa (k) (c) Dec. 1984 25
(10) Apollo Villa II (k) (c) Dec. 1984 25
(10) Cranbrook Manor (k) (c) Dec. 1984 5 - 40
(10) Oakbrook Villa (j) (c) Dec. 1984 5 - 40
</TABLE>
(a) No carrying costs have been capitalized since all properties were acquired
after completion of construction.
(b) Furniture and fixtures, included in buildings and improvements, are
depreciated primarily by the straight-line method over the estimated useful
lives ranging from 5 to 15 years.
(c) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight-line method over the estimated useful
lives determined by the Partnership at date of acquisition.
(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(f) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1998. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene
found to be present in the air of some apartments. See Note 11 in Item 8,
Financial Statements and Supplementary Data.
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(i) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1999. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(j) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000. See Note 10 in Item 8, Financial
Statements and Supplementary Data
(k) The Partnership's Local Partnership Interests in These Local Partnerships
were sold during the fiscal year ended March 25, 2000. See Note 10 in Item
8, Financial Statements and Supplementary Data
GEOGRAPHIC LOCATIONS: (1)
Alabama, (2) Arkansas, (3) California, (4) Colorado, (5) Georgia, (6)
Florida, (7) Indiana, (8) Kentucky, (9) Massachusetts, (10) Michigan, (11)
Missouri, (12) North Carolina, (13) Oregon, (14) South Carolina, (15)
Texas, (16) Virginia, (17) Washington.
<TABLE>
<CAPTION>
Cost of Property and Equipment
------------------------------------------------------------
Year Ended March 25,
------------------------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $182,595,123 $193,023,214 $240,084,646
Additions during period:
Improvements 1,244,208 1,613,624 2,050,996
Depreciation expense
Deductions during period:
Dispositions (50,303,420) (10,943,894) (49,112,428)
Loss on impairment 0 (1,097,821) 0
----------- ----------- -----------
Balance at close of period $133,535,911 $182,595,123 $193,023,214
=========== =========== ===========
<CAPTION>
Accumulated Depreciation
------------------------------------------------------------
Year Ended March 25,
------------------------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $ 86,235,420 $ 86,496,195 $99,888,832
Additions during period:
Improvements
Depreciation expense 4,915,594 5,844,432 7,164,517
Deductions during period:
Dispositions (23,880,092) (6,105,207) (20,557,154)
Loss on impairment 0 0 0
----------- ----------- ----------
Balance at close of period $ 67,270,922 $ 86,235,420 $86,496,195
=========== =========== ==========
</TABLE>
At the time the local partnerships were acquired by Cambridge Advantaged
Properties Limited Partnership, the entire purchase price paid by Cambridge
Advantaged Properties Limited Partnership was pushed down to the local
partnerships as property and equipment with an offsetting credit to capital.
Since the projects were in the construction phase at the time of acquisition,
the capital accounts were insignificant at the time of purchase. Therefore,
there are no material differences between the original cost basis for tax and
GAAP
