UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 1999
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)
Delaware 13-3228969
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securi-
ties 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 ____
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAMBRIDGE ADVANTAGED PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
December 25, March 25,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment - net,
less accumulated depreciation
of $51,561,145 and $71,906,694,
respectively $ 53,416,693 $ 76,007,692
Property and equipment -
held for sale - net, less
accumulated depreciation of
$18,978,406 and $14,328,726,
respectively 21,662,937 20,352,011
Cash and cash equivalents 5,335,894 2,658,449
Cash - restricted for tenants'
security deposits 848,430 1,213,550
Mortgage escrow deposits 9,493,001 10,549,951
Prepaid expenses and other assets 1,448,038 1,655,056
Total assets $ 92,204,993 $112,436,709
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable $ 48,386,731 $ 68,827,382
Purchase money notes payable
(Note 2) 48,186,722 62,215,705
Due to selling partners (Note 2) 75,492,921 81,667,934
Accounts payable, accrued
expenses and other liabilities 2,854,704 3,538,143
Tenants' security deposits payable 819,154 1,152,240
Due to general partners of
subsidiaries and their affiliates 624,159 1,606,773
Due to general partners and
affiliates 2,485,393 2,435,696
Total liabilities 178,849,784 221,443,873
Minority interest 591,302 593,370
Commitments and contingencies
(Note 5)
Partners' deficit:
Limited partners (85,826,207) (107,967,004)
General partners (1,409,886) (1,633,530)
Total partners' deficit (87,236,093) (109,600,534)
Total liabilities and partners' deficit $ 92,204,993 $112,436,709
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
December 25, December 25,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Revenues:
Rentals, net $ 5,472,842 $ 6,845,778 $18,407,566 $20,976,221
Other 291,852 304,438 932,042 859,600
Gain on sale of
property (Note 4) 35,103 0 13,294,740 7,553,720
Total revenues 5,799,797 7,150,216 32,634,348 29,389,541
Expenses
Administrative and
management 1,103,428 1,260,465 3,666,855 3,815,129
Administrative and
management-
related parties
(Note 3) 605,975 698,689 1,944,519 2,124,372
Operating 973,745 1,199,164 3,591,043 4,119,173
Repairs and
maintenance 1,576,891 1,891,495 5,162,685 5,548,458
Taxes and
insurance 590,844 804,117 2,213,627 2,658,236
Interest 1,710,496 2,130,612 5,540,281 6,743,414
Depreciation 1,121,555 1,589,857 3,788,505 4,563,146
Total expenses 7,682,934 9,574,399 25,907,515 29,571,928
Net (loss)
income before
minority interest (1,883,137) (2,424,183) 6,726,833 (182,387)
Minority interest in
income of
subsidiaries (325,972) (1,563) (3,066,640) (4,436)
(Loss) income before
extra-ordinary
item (2,209,109) (2,425,746) 3,660,193 (186,823)
Extraordinary item-
forgiveness of
indebtedness
income (Note 4) 31,691 4,074,387 18,704,248 4,074,387
Net (loss) income $(2,177,418) $ 1,648,641 $22,364,441 $ 3,887,564
Limited Partners
Share:
(Loss) income
before
extraordinary
item $(2,187,018) $(2,401,489) $ 3,623,591 $ (184,955)
Extraordinary
item 31,374 4,033,643 18,517,206 4,033,643
Net (loss) income $(2,155,644) $ 1,632,154 $22,140,797 $ 3,848,688
Number of units
outstanding 12,074 12,074 12,074 12,074
(Loss) income before
extraordinary
item per limited
partner unit $ (181) $ (199) $ 300 $ (15)
Extraordinary item
per limited
partner unit 3 334 1,534 334
Net (loss) income
per limited
partner unit $ (178) $ 135 $ 1,834 $ 319
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statement of Changes In Partners' Deficit
(Unaudited)
<CAPTION>
Limited General
Total Partners Partners
<S> <C> <C> <C>
Balance -
March 26, 1999 $(109,600,534) $(107,967,004) $(1,633,530)
Net income 22,364,441 22,140,797 223,644
Balance -
December 25, 1999 $ (87,236,093) $ (85,826,207) $(1,409,886)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<CAPTION>
Nine Months Ended
December 25,
1999 1998*
<S> <C> <C>
Cash flows from operating activities:
Net income $22,364,441 $ 3,887,564
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on sale of property (Note 4) (13,294,740) (7,553,720)
Extraordinary item-forgiveness of
indebtedness income (Note 4) (18,704,248) (4,074,387)
Depreciation 3,788,505 4,563,146
Minority interest in income
of subsidiaries 3,066,640 4,436
Decrease in cash-restricted
for tenants' security deposits 20,671 13,604
Increase in mortgage
escrow deposits (400,407) (530,538)
Increase in prepaid
expenses and other assets (472,978) (727,352)
Increase in due to selling partners 4,567,592 5,636,689
Payments of interest to selling
partners (346,415) (2,230,430)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 617,530 (751,956)
(Decrease) increase in tenants' security
deposits payable (38,087) 43,629
Increase in due to general partners
of subsidiaries and their affiliates 672,940 298,148
Decrease in due to general partners
of subsidiaries and their affiliates (86,898) (233,442)
Increase in due to
general partners and affiliates 49,697 820,313
Total adjustments 20,560,198 (4,721,860)
Net cash provided by (used in)
operating activities 1,804,243 (834,296)
Cash flows from investing activities:
Proceeds from sale of properties 16,471,897 600,000
Acquisitions of property and
equipment (756,189) (1,153,069)
(Increase) decrease in mortgage
escrow deposits (610,981) 22,323
Net cash provided by (used in)
investing activities 15,104,727 (530,746)
Cash flows from financing activities:
Decrease in purchase
money notes payable (323,783) (3,664,631)
Proceeds from mortgage note payable 0 8,000,000
Principal payment of mortgage
notes payable (10,839,034) (2,448,659)
Decrease in capitalization of
minority interest (3,068,708) (3,667)
Net cash (used in) provided by
financing activities (14,231,525) 1,883,043
Net increase in cash and cash
equivalents 2,677,445 518,001
Cash and cash equivalents -
beginning of period 2,658,449 1,976,935
Cash and cash equivalents -
end of period $ 5,335,894 $ 2,494,936
Supplemental disclosures of noncash
activities:
Increase in purchase money
notes payable due to capitalization
of prepaid expenses and other assets $ 0 $ 162,039
Increase in property and equipment -
held for sale reclassified from
property and equipment 1,310,926 12,621,114
Forgiveness of indebtedness
(Note 4):
Decrease in purchase money
note payable (8,310,859) 0
Decrease in due to selling
partners (10,396,190) (4,074,387)
Decrease in prepaid expenses and
other assets 2,801 0
Summarized below are the components
of the gain on sale of property:
Decrease in property and equipment,
net of accumulated depreciation 18,247,757 3,687,171
Decrease in cash - restricted for tenants'
security deposits 344,449 73,664
Decrease in mortgage escrow deposits 2,068,338 0
Decrease in prepaid expenses and
other assets 677,195 460,947
Decrease in purchase money
notes payable (5,394,341) (2,545,263)
Decrease in due to selling partners 0 (4,257,845)
(Decrease) increase in accounts payable,
accrued expenses and other liabilities (1,300,969) 790,759
Decrease in tenant's security
deposits payable (294,999) (67,472)
(Decrease) increase in due to
general partners of subsidiaries
and their affiliates (1,568,656) 4,319
Decrease in mortgage notes payable (9,601,617) (5,100,000)
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES
LIMITED PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 25, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements for the nine months ended
December 25, 1999 include the accounts of Cambridge Advan-
taged Properties Limited Partnership (the "Partnership") and fifty-
one subsidiary partnerships ("subsidiaries," "subsidiary partner-
ships" or "Local Partnerships") five of which only have activity
through the date of sale of the Partnership's Local Partnership
interest and two of which only have activity through the date of
sale of their property and the related assets and liabilities. The
consolidated financial statements for the nine months ended De-
cember 25, 1998 include the account of the Partnership and fifty-
two subsidiary partnerships, one of which only has activity
through the date of sale of the Partnership's Local Partnership
interest. 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 one of its Gen-
eral Partners (a "General Partner"), which affiliate has a contrac-
tual obligation to act on behalf of the Partnership, to remove the
general partner of the subsidiary partnerships (the "Local General
Partner") 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 quarter
ends December 25. All subsidiaries have fiscal quarters ending
September 30. Accounts of the subsidiary partnerships have been
adjusted for intercompany transactions from October 1 through
December 25. The Partnership's fiscal quarter ends on December
25 in order to allow adequate time for the subsidiaries' financial
statements to be prepared and consolidated. The books and rec-
ords of the Partnership 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 subsidi-
aries attributable to minority interest arise from cash contributions
from 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. There were approximately $400 and $3,200 and
$2,000 and $6,900 such losses for the three and nine months ended
December 25, 1999 and 1998, respectively. The Partnership's in-
vestment in each subsidiary is equal to the respective subsidiary's
partners' equity less minority interest capital, if any. In consolida-
tion, all subsidiary partnership losses are included in the Partner-
ship's capital account except for losses allocated to minority inter-
est capital.
The unaudited financial statements have been prepared on the
same basis as the audited financial statements included in the
Partnership's Form 10-K for the year ended March 25, 1999. In the
opinion of the General Partners, the accompanying unaudited
financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the fi-
nancial position of the Partnership as of December 25, 1999, the
results of operations for the three and nine months ended Decem-
ber 25, 1999 and 1998 and cash flows for the nine months ended
December 25, 1999 and 1998. However, the operating results for
the nine months ended December 25, 1999 may not be indicative
of the results for the year.
Certain information and note disclosures normally included in
financial statements prepared in accordance with GAAP have
been omitted. It is suggested that these consolidated financial
statements should be read in conjunction with the financial state-
ments and notes thereto included in the Partnership's March 25,
1999 Annual Report on Form 10-K.
Note 2 - 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 note relates (the "Purchase
Money Notes"). A portion of these 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 com-
pound 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 December 25,
1999 and March 25 1999 include $4,336,417 of interest accrued
through August 31, 1989.
The Purchase Money Notes, which now provide for simple inter-
est, will not be in default if not less than 60% of the cash flow ac-
tually distributed to the Partnership by the corresponding subsidi-
ary partnership (generated by the operations, as defined) is ap-
plied 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 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 notes.
Unpaid interest of approximately $75,000,000 and $81,000,000 as
of December 25, 1999 and March 25 1999, respectively, has been
accrued and is included in due to selling partners in the consoli-
dated 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 one
subsidiary partnership and six years with respect to three subsidi-
ary partnerships). In connection with such extensions, the Part-
nership incurred an extension fee of 1 1/2 % per annum of the
outstanding principal balance of the Purchase Money Notes.
Through December 25, 1999, 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 (five years with respect to two
subsidiary partnerships) and extension fees in the amount of
$589,426 were incurred by the Partnership. Such Purchase Money
Notes are now extended with maturity dates ranging from Sep-
tember 1999 to October 2003. Of such fees incurred, $442,372 was
accrued and added to the Purchase Money Notes balance. The
extension fees are being amortized over the term of the extension.
The Partnership expects that upon maturity of the Purchase
Money Notes, it will be required to refinance or sell its invest-
ments in the Local Partnerships in order to pay the Purchase
Money Notes. 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 agree-
ments are in existence without HUD's approval. Based on the
historical operating results of the Local Partnerships and the cur-
rent economic conditions, including changes in tax laws, it is un-
certain as to whether the proceeds from such sales will be suffi-
cient to meet the outstanding balances of principal, accrued inter-
est and extension fees. Management of the Partnership is working
with the selling partners to restructure and/or refinance the Pur-
chase Money Notes. No assurance can be given that manage-
ment's efforts will be successful. The Purchase Money Notes are
without personal recourse to either the Partnership or any of its
partners and the selling partners' recourse, in the event of non-
payment, would be to foreclose on the Partnership's interests in
the respective subsidiary partnerships.
Although the Purchase Money Notes have matured and not been
paid, the Partnership continues to work to restructure and/or
refinance the Purchase Money Notes and management of the
Partnership is proposing a number of approaches. We cannot
predict the outcome of these events at this time.
The Purchase Money Notes for Carlton Terrace Apartments Lim-
ited Partnership, Villa Apollo Associates Limited Partnership and
Villa Apollo #2 Associates Limited Partnership were amended on
March 10, 1999. The Purchase Money Notes aggregating
$4,329,400 were reduced to a total principal balance of $1,529,166.
As a result of these transactions, forgiveness of indebtedness in-
come of $10,180,000 for accrued interest was recognized. The
Partnership sold its interest in the above named properties on June
18, 1999 (see Note 4).
Cash flow distributions aggregating approximately $4,611,000 and
$186,000 were made to the Partnership for the nine months ended
December 25, 1999 and 1998, respectively, of which approximately
$68,000 and $112,000, respectively, was used to pay interest on the
Purchase Money Notes. Distributions of proceeds from sales of
properties aggregating approximately $4,498,000 and $0 were
made to the Partnership during the nine months ended December
25, 1999 and 1998, respectively, none of which were used to pay
principal and interest on the Purchase Money Notes.
Note 3 - Related Party Transactions
<TABLE>
The costs incurred to related parties for the three and nine months
ended December 25, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Nine Months Ended
December 25, December 25,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $ 283,000 $ 285,500 $ 849,000 $ 856,500
Expense reimburse-
ment (b) 53,917 34,499 121,090 108,389
Local administra-
tive fee (c) 18,000 21,000 53,000 63,000
Total general and
administrative-
General Partners 354,917 340,999 1,023,090 1,027,889
Property manage-
ment fees incurred
to affiliates of the
subsidiary
partnerships'
general partners 251,058 357,690 921,429 1,096,483
Total general and
administrative-
related parties $ 605,975 $ 698,689 $1,944,519 $2,124,372
*Reclassified for comparative purposes
</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. Part-
nership management fees owed to the General Partners amount-
ing to approximately $1,671,000 and $1,572,000 were accrued and
unpaid as of December 25, 1999 and March 25, 1999, respectively.
Without the General Partner's continued allowance of accrual
without payment of certain fees and expense reimbursements, the
Partnership will not be in a position to meet its obligations. The
General Partner has continued allowing the accrual without pay-
ment of these amounts but is under no obligation to continue do
so.
(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 General Partners performs asset monitoring for the Partner-
ship. These services include site visits and evaluations of the sub-
sidiary partnerships' performance. Expense reimbursements and
asset monitoring fees owed to the General Partners amounting to
approximately $55,000 and $45,000 were accrued and unpaid as of
December 25, 1999 and March 25, 1999, respectively.
(c) H/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.
Note 4 - Sale of Properties
General
The Partnership is currently in the process of disposing of its in-
vestments. It is anticipated that this process will take a number of
years. As of December 25, 1999, the Partnership has disposed of
eighteen of its sixty-one original investments. Eight 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 is 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 Partner-
ship will be sufficient to return their original investment. Moreo-
ver, the Local General Partners and Noteholders generally have
decision-making rights with respect to the sale of each property
which therefore makes it more cumbersome for the General Part-
ners to sell each property.
In order to facilitate an orderly disposition of the Partnership's
assets, the Partnership formed a new entity: Cambridge Advan-
taged Liquidating L.L.C. (the "Trust"), a Delaware limited liability
company which is completely owned by the Partnership.
On July 21, 1999, the Partnership contributed its limited partner-
ship 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 Pur-
chase Money Note. The contribution did not involve any consid-
eration being paid to the Partnership, therefore, there should not
be any tax effect to the limited partners of the Partnership.
Information Regarding Dispositions.
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, resulting in a gain in the amount of
$7,553,720.
On September 25, 1998, Lancaster Manor Associates, Ltd. ("Lan-
caster") borrowed $8,000,000 from the Bank of Boston and utilized
the proceeds to prepay the existing HUD first mortgage of ap-
proximately $1,520,000 and to redeem the Purchase Money Note
of approximately $9,975,000 at a discount price of $5,901,000, re-
sulting in forgiveness of indebtedness income of $4,074,387. The
new loan bears interest at a floating rate based upon the Bank of
Boston's announced "base rate" plus 1%. The loan matured De-
cember 24, 1998 and was renewed for another 90 days (March 25,
1999). On March 12, 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 ap-
proximately $8,437,000. For tax purposes, the entire gain to be
realized by the Partnership is anticipated to be approximately
$9,000,000.
On February 26, 1999, the Partnership's limited partnership inter-
ests 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 re-
sulted in forgiveness of indebtedness income of $3,357,000 and
$2,653,000 for tax purposes, respectively. The entire gain to be
realized by the Partnership is anticipated to be approximately
$8,145,000 and $7,367,000, respectively.
On April 12, 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 $111,000. 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. For tax purposes, the entire gain to be realized by the
Partnership is anticipated to be approximately $3,700,000.
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 January 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. The Purchase Money Notes were as-
sumed by the Local Partnership. For tax purposes, the entire gain
to be realized by the Partnership is anticipated to be approxi-
mately $4,948,000.
On June 18, 1999, the Partnership's limited partnership interest in
Villa Apollo Associates Limited Partnership was sold to the gen-
eral partners for $220,138, resulting in a gain in the amount of
approximately $372,000. The Purchase Money Notes were as-
sumed by the Local Partnership. For tax purposes, the entire gain
to be realized by the Partnership is anticipated to be approxi-
mately $1,454,000.
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 as-
sumed by the Local Partnership. For tax purposes, the entire gain
to be realized by the Partnership is anticipated to be approxi-
mately $4,118,000.
On December 14, 1999, the property and related assets and liabili-
ties of Oakbrook Villa Apartments were sold to an unaffiliated
third party for $8,350,000 resulting in a gain in the amount of ap-
proximately $811,000 and forgiveness of indebtedness income of
approximately $22,000 as a result of forgiveness of amounts due to
general partners and affiliates. The Partnership used approxi-
mately $2,374,000 of the net proceeds to settle the remaining prin-
cipal balance of the Purchase Money Note and accrued interest
thereon which amounted to $7,506,000, resulting in forgiveness of
indebtedness income of approximately $5,132,000. Therefore, the
entire forgiveness of indebtedness income realized by the Partner-
ship from this transaction is approximately $5,154,000. For tax
purposes, the entire gain to be realized by the Partnership is an-
ticipated to be approximately $13,923,000.
Bellfort Apts. ("Bellfort")
On November 2, 1999, Bellfort entered into a purchase and sale
agreement with a third party for a purchase price of $175,000.
Conifer 317 ("Pinewood")
On November 2, 1999, 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.
Summer Arms Apts. ("Summer Arms")
On November 10, 1999, 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 June 2000. No assur-
ances can be given that the closing will actually occur.
Cabarrus Arms ("Cabarrus")
On November 10, 1999, 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 June 2000. No
assurances can be given that the closing will actually occur.
Cloisters ("Sundown")
On December 22, 1999, 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 March 2000. No
assurances can be given that the closing will actually occur.
Conifer 307 ("Fircrest")
On January 5, 2000, Fircrest extended the closing date for the pur-
chase and sale agreement to January 31, 2000. No assurance can
be given that the closing will actually occur.
Note 5 - Commitments and Contingencies
There were no material changes and/or additions to disclosures
regarding the subsidiary partnerships which were included in the
Partnership's Annual Report on Form 10-K for the period ended
March 25, 1999.
Note 6 - Subsequent Event
Cranbrook Manor Apartments ("Cranbrook")
On October 18, 1999, the Partnership's limited partnership interest
and the related Purchase Money Note and interest thereon in
Cranbrook was assigned to a third party effective January 1, 2000,
resulting in a gain of approximately $2,945,000. Fees due to a
affiliate in the amount of approximately $38,000 were forgiven.
For tax purposes, the entire gain to be realized by the Partnership
is anticipated to be approximately $4,534,000.
Bellfort Apts. ("Bellfort")
On January 6, 2000, the property and related assets and liabilities
of Bellfort were sold to an unaffiliated third party for $175,100,
resulting in a gain of approximately $7,717,000. For tax purposes,
the entire gain to be realized by the Partnership is anticipated to be
approximately $10,661,000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary sources of funds are the cash distribu-
tions from operations of the Local Partnerships in which the Part-
nership has invested and net proceeds from pending and future
sales. These sources are available to meet the obligations of the
Partnership. During the nine months ended December 25, 1999,
the Partnership received approximately $4,611,000 of cash flow
distributions, of which approximately $68,000, was used to pay
interest on the Purchase Money Notes. Distributions of proceeds
from sales of properties aggregating approximately $4,498,000
were made to the Partnership during the nine months ended De-
cember 25, 1999, none of which were used to pay principal and
interest on the Purchase Money Notes. Certain fees and expense
reimbursements owed to the General Partners amounting to ap-
proximately $2,001,000 were accrued and unpaid as of December
25, 1999. The General Partners believe that the Partnership's re-
serves, net proceeds from pending and future sales and future
cash flow distributions will be adequate for its operating needs.
During the nine months ended December 25, 1999, cash and cash
equivalents of the Partnership and its fifty-one consolidated Local
Partnerships increased approximately $2,677,000. This increase
was due to cash provided by operating activities ($1,804,000) and
proceeds from the sale of properties ($16,472,000) which exceeded
acquisitions of property and equipment ($756,000), repayments of
mortgage notes payable ($10,839,000), a decrease in purchase
money notes payable ($324,000), an increase in mortgage escrow
deposits ($611,000) and a decrease in capitalization of minority
interest ($3,069,000). Included in the adjustments to reconcile the
net income to cash provided by operating activities are gain on
sale of property ($13,295,000), forgiveness of indebtedness income
($18,704,000) and depreciation ($3,789,000).
For a discussion of Purchase Money Notes Payable, see Note 2 to
the financial statements.
For a discussion of the sale of properties in which the Partnership
owns direct and indirect interest, see Note 4 to the financial state-
ments.
For a discussion of contingencies affecting certain Local Partner-
ships, see Note 5 to the financial statements. 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
contingencies is not anticipated to impact future results of opera-
tions, 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 proper-
ties.
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. Manage-
ment 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 is experiencing downturns in the economy, the re-
maining 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
The results of operations of the Partnership, as well as the Local
Partnerships, remained fairly consistent during the nine months
ended December 25, 1999 and 1998, excluding Lancaster and Val-
ley Arms which sold their property 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 Asso-
ciates Limited Partnership in which the Partnership sold its Local
Partnership interests (collectively the "Sold Assets"), gain on sale
of properties, forgiveness of indebtedness income and other in-
come. 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 Part-
nerships were acquired.
Rental income decreased approximately 20% and 12% for the
three and nine months ended December 25, 1999 as compared to
1998. Excluding the Sold Assets, rental income increased ap-
proximately 2% for both the three and nine months ended Decem-
ber 25, 1999 as compared to 1998 primarily due to rental rate in-
creases.
Other income decreased approximately 4% and increased ap-
proximately 8% for the three and nine months December 25, 1999
as compared to 1998. Excluding the Sold Assets, such income
increased approximately 24% and 19% for the three and nine
months ended December 25, 1999 as compared to 1998 primarily
due to increases in late charges, miscellaneous fees and interest
income at four Local Partnerships and an increase in interest in-
come at the Partnership level due to higher cash and cash equiva-
lent balances in 1999.
Total expenses, excluding the Sold Assets and repairs and mainte-
nance, remained fairly consistent with increases of less than 1% for
both the three and nine months ended December 25, 1999 as com-
pared to 1998.
Repairs and maintenance decreased approximately $315,000 for
the three months ended December 25, 1999 as compared to 1998.
Excluding the Sold Assets, such expense increased approximately
$145,000 due to roof repairs at one Local Partnership and small
increases at two other Local Partnerships.
Administrative and management, administrative and manage-
ment-related parties, operating, taxes and insurance, interest and
depreciation decreased approximately $157,000 and $148,000,
$93,000 and $180,000, $225,000 and $528,000, $213,000 and
$444,000, $420,000 and $1,203,000, $468,000 and $775,000, respec-
tively, for the three and nine months ended December 25, 1999 as
compared to 1998 primarily due to decreases relating to the Sold
Assets. Excluding the Sold Assets and Oakbrook Villa Apart-
ments, Cranbrook Manor, Fircrest, Casa Ramon Apartments, Bell-
fort, Pinewood, Sundown, Summer Arms and Cabarrus for depre-
ciation only, such expenses remained fairly consistent with in-
creases (decreases) of approximately $26,000 and $155,000, $23,000
and $28,000, $42,000 and $54,000, ($52,000) and ($118,000),
($91,000) and ($153,000) and $72,000 and $121,000, respectively,
for the three and nine months ended December 25, 1999 as com-
pared to 1998. Oakbrook Villa Apartments, Cranbrook Manor,
Fircrest, Casa Ramon Apartments, Bellfort, Pinewood, Sundown,
Summer Arms and Cabarrus are not being depreciated during the
quarter because they are classified as assets held for sale.
A gain on sale of property in the amount of approximately $35,000
and $0, $13,295,000 and $7,554,000 was recorded for the three and
nine months ended December 25, 1999 and 1998, respectively, and
forgiveness of indebtedness income in the amount of approxi-
mately $32,000 and $4,074,000 and $18,704,000 and $4,074,000 was
recorded for the three and nine months ended December 25, 1999
and 1998, respectively (see Note 4 to the financial statements).
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
None
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Caroline Forest Apartments
On October 26, 1999, the Partnership together with Cambridge/
Related Housing Associates Limited Partnership, brought suit as
plaintiffs against L.S. Waldrop a/k/a Louis Waldrop ("Waldrop"),
C.F. Realty Corp., and John P. Middleton, Jr. in the Supreme Court
of the State of New York, County of New York. In the complaint,
plaintiffs, holders of a 99% limited partnership interest in Caroline
Forest Apartments Limited Partnership ("Caroline Forest"), assert
that the general partners of Caroline Forest and one of their prin-
cipals breached their fiduciary and contractual obligations under
the Caroline Forest Partnership Agreement to use their best efforts
to obtain a buyer for the property owned by Caroline Forest.
Plaintiffs are seeking actual and punitive damages against defen-
dants, a judgment declaring that plaintiffs have been relieved of
their obligation to pay all amounts due under a promissory note
dated as of November 30, 1984 in the principal amount of $626,400
in favor of Waldrop which defendants contend matured on No-
vember 30, 1999, and a preliminary and permanent injunction
enjoining Waldrop from liquidating, selling or otherwise dispos-
ing of the plaintiffs' limited partnership interests which were
pledged to him as security for the note's payment. On December
13, 1999, defendants moved to dismiss the action, contending that
documentary evidence exists which negates plaintiffs' claims,
personal jurisdiction over defendants is lacking, and the disputes
between the parties should be adjudicated in the State of Virginia.
Plaintiffs are in the process of preparing their papers in opposition
to the defendants motion.
West Scenic, Robindale and Oakwood Manor
On or about November 3, 1999, Reed S. McConnell, John A. Kin-
cannon, Joe T. Smith, Apartment House Builders, Inc., Grassy
Lake Farm, Inc., William Kincannon, Lyndell E. Lay and William
R. Pratt commenced an action entitled McConnell, et al. v. Hutton
Advantage Properties L.P., et al., Case No. EQ 99-5769 (the
"McConnell Action"), in the Chancery Court of Pulaski County,
Arkansas, against the Partnership, its general partners, certain
affiliates of the general partners, and other persons who are not
affiliated with the Partnership or its general partners. The com-
plaint in the McConnell Action initially alleged in a single count
that the plaintiffs were defrauded in connection with the Partner-
ship's acquisition of its interests in the West Scenic, Robindale East
and Oakwood Manor local partnerships in 1984. In December
1999, the plaintiffs in the McConnell Action amended their com-
plaint to add a second claim alleging that the purchase notes for
the West Scenic, Oakwood and Robindale properties have ma-
tured and are in default. The plaintiffs in the McConnell Action
seek rescission of the 1984 transactions under which the Partner-
ship acquired its interests in the West Scenic, Robindale East and
Oakwood Manor local partnerships, reformation of the nonre-
course notes respecting those local partnerships, declaratory relief,
money damages and attorneys fees. The time to answer or other-
wise respond to the amended complaint for the Partnership, its
general partners and the other defendants affiliated with the gen-
eral partners has not yet run. The Partnership, its general partners
and the other defendants affiliated with the general partners in-
tend to defend the McConnell Action vigorously.
Florence Apartments, Decatur Apartments, Bonnie Doone Apart-
ments and Dickens Ferry Apartments
On or about October 27, 1999, Resco Management, Inc. ("Resco"),
as trustee of the Liquidating Trust which holds the Purchase
Money Notes secured by the partnership limited partnership in-
terests in Florence Apartments, Ltd., Decatur Apartments, Ltd.,
Bonnie Doone Apartments, Ltd., and Dickens Ferry Apartments,
Ltd., gave notice that because the Purchase Money Notes were
past due and in default, Resco would shortly be filing substitution
amendments substituting itself as limited partner in the foregoing
limited partnerships instead of and in place of the Partnership. In
that notice, Resco indicated that it was prepared to discuss an
alternative solution. Since that time, the Partnership and Resco
have been involved in negotiations, which have not yet been com-
pleted, for the Partnership to transfer its interests to Resco and for
the parties to exchange releases.
University Gardens Apartments and Southside Villa Apartments
On or about December 29, 1999, Skyline Properties, Inc. ("Sky-
line"), as trustee of the liquidating trusts which hold the Purchase
Money Notes secured by the Partnership's limited partnership
interests in University Gardens Apartments, Ltd. and Southside
Villa Apartments, Ltd. gave notice that because the Purchase
Money Notes were past due and in default, Skyline would be
filing substitution amendments on January 28, 2000 substituting
itself as limited partner in the foregoing limited partnerships in-
stead of and in place of the Partnership. The Partnership is in the
process of evaluating what action, if any, to take in response to
such notice.
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CAMBRIDGE ADVANTAGED
PROPERTIES LIMITED PARTNERSHIP
(Registrant)
By: Related Beta Corporation,
a General Partner
Date: January 25, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: January 25, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
By: ASSISTED HOUSING ASSOCIATES,
INC., a General Partner
Date: January 25, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: January 25, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
By: CAMBRIDGE AND RELATED ASSOCIATES
LIMITED PARTNERSHIP
By: Related Beta Corporation,
Date: January 25, 2000
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: January 25, 2000
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted
from the financial statements for Cambridge Advantaged Proper-
ties Limited Partnership and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<CIK> 0000748847
<NAME> Cambridge Advantaged Properties Limited Partnership
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-25-2000
<PERIOD-START> MAR-26-1999
<PERIOD-END> DEC-25-1999
<CASH> 15,677,325
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,448,038
<PP&E> 145,619,181
<DEPRECIATION> 70,539,551
<TOTAL-ASSETS> 92,204,993
<CURRENT-LIABILITIES> 6,783,410
<BONDS> 172,066,374
0
0
<COMMON> 0
<OTHER-SE> (86,644,791)
<TOTAL-LIABILITY-AND-EQUITY> 92,204,993
<SALES> 0
<TOTAL-REVENUES> 32,634,348
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,367,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,540,281
<INCOME-PRETAX> 6,726,833
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 18,704,248
<CHANGES> 0
<NET-INCOME> 22,364,441
<EPS-BASIC> 1,834
<EPS-DILUTED> 0
</TABLE>
