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, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-14941
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 13-3330195
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Limited Partnership Interests
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
Page 1 of 89
<PAGE>
PART I
Item 1. Business.
General
Cambridge Advantaged Properties II Limited Partnership (formerly Hutton
Advantaged Properties II Limited Partnership) (the "Partnership") is a limited
partnership which was formed under the laws of the State of Delaware on June 25,
1985. The General Partners of the Partnership are Advantaged Housing Associates,
Inc. (formerly Hutton Advantaged Housing Associates, Inc.) (the "Advantaged
General Partner"), a Delaware corporation, Related Advantaged Residential
Associates Inc., (the "Related General Partner"), a Delaware corporation and an
affiliate of The Related Companies, Inc. ("Related"), a New York limited
partnership, and Related and Cambridge Associates Limited Partnership (formerly
Related and Hutton Associates Limited Partnership) ("Related/Cambridge
Associates"), a Delaware limited partnership. The general partners of
Related/Cambridge Associates are the Advantaged 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 May 19, 1994, the Partnership's name was changed to Cambridge
Advantaged Properties II Limited Partnership.
On August 9, 1985, pursuant to a prospectus dated August 9, 1985 as
supplemented by the supplements thereto dated September 20, 1985 and October 25,
1985 (as so supplemented, the "Prospectus"), the Partnership commenced a public
offering (the "Offering"). Pursuant to the Offering, the Partnership issued and
sold 7,150 Limited Partnership Interests resulting in $35,750,000 in Gross
Proceeds from 2,926 investors (before offering expenses and sales commissions of
$3,896,518). The Offering was completed in January 1986 and no further issuance
of Limited Partnership Interests is anticipated.
The Partnership was formed to invest, as a limited partner, in other
limited partnerships (referred to herein as "Local Partnerships", "subsidiaries"
or "subsidiary partnerships"), each of which owns or leases and operates an
existing residential housing development ("Apartment Complexes") which benefit
from financing at rates below those otherwise available from conventional
lenders that is made available through various federal and state government
programs or through the issuance of tax-exempt bonds ("Advantaged Financing").
In acquiring its interests in the Local Partnerships ("Local Partnership
Interests"), the Partnership's investment objectives are, to:
(1) provide current tax benefits in the form of tax losses which
Limited Partners may use to offset 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.
Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in housing which benefits
from Advantaged Financing. The intent of these incentives was to reduce certain
market risks and provide investors with (i) tax benefits, (ii) long-term capital
appreciation, and (iii) limited cash distributions. Notwithstanding these
factors, there remain significant risks. These risks include, but are not
limited to, the financial strength and expertise of the general partners of the
Local Partnerships ("Local General Partners"); the long-term nature of
investments in Advantaged Housing which limits the ability of the Partnership to
vary its investments 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
Advantaged Financing also require greater management expertise and may have
higher operating
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expenses than conventional apartment buildings. See Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Further information concerning the Advantaged Financing programs in
which the Local Partnerships participate can be found in Item 2, Properties.
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. 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. However, Related/Cambridge Associates, a
general partner of the Partnership, is a special limited partner of each Local
Partnership, and, under certain circumstances, has the right to replace the
Local 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 Related/Cambridge Associates
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 Partnerships' operations and should thereby incur liability for all debts
and obligations of the Local Partnerships (if this were found to be the case,
the Partnership's interest in one Local Partnership could have been reached by
creditors of another Local Partnership). Related/Cambridge Associates has agreed
to exercise these rights as a fiduciary of the Limited Partners of the
Partnership.
The Partnership purchased the Local Partnership Interests for a
purchase price consisting in each case of a cash down payment, and a deferred
cash payment, as evidenced by an Installment Promissory Note. Such notes were
and are payable upon the occurrence of certain events, generally in two stages,
upon completion of construction and upon the later of permanent loan closing or
attainment of 95% occupancy. The cash payments were made in part as the purchase
price of the Local Partnership Interests and in part as capital contributions to
the Local Partnerships. Such contributions were generally used by the Local
Partnership to pay partnership management fees to the Local General Partners,
fees to the Local General Partners for guaranteeing the funding of operating
deficits (generally for a period of three to five years and subject to a maximum
amount), and payments to Related/Cambridge Associates or its affiliates for
acquisition fees, development consulting fees, administrative service fees, and
organizational expense reimbursements in an amount of up to 6.6% of the
aggregate cash payments made by the Partnership to the Local Partnership and the
persons from whom the Partnership purchased its Local Partnership Interest.
The Tax Reform Act of 1986 (the "TRA") provides that commencing in 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
upon the sale of properties.
As of March 25, 1996, several Local Partnerships are experiencing
financial difficulties. As a consequence, recoverability of a significant
portion of the Partnership's investments will depend upon material improvements
in their operating results and their ability to meet debt service obligations.
In addition, the level of cash distributions provided to the Partnership by the
Local Partnership has not been sufficient, and may not be sufficient in the
future, to cover the Partnership's operating expenses. As a result, the
Partnership has required, and may in the future require, funding from other
sources for such purposes. See Item 3, Legal Proceedings and Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations for further discussion.
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 below market interest rates on Advantaged 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.
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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.
Item 2. Properties.
The Partnership holds a 98% Limited Partnership Interest in 12 Local
Partnerships. Set forth in the table entitled "Local Partnership Schedule," on
page 5 is certain information concerning the Apartment Complexes and their
operations and financing. See Schedules III and XI to the consolidated financial
statements included herein for additional information pertaining to the
Apartment Complexes, including a description of the mortgage encumbering each
Apartment Complex.
Each of the Local Partnerships owns one Apartment Complex. The
Apartment Complexes are located in California (2), Florida (3), Kansas (2),
Oklahoma (1), Texas (2) and Virginia (2). Three of the Apartment Complexes are
in the suburbs of major cities, while the remaining Apartment Complexes are in
close proximity to the downtown business districts of their respective cities.
The Apartment Complexes are occupied by low, moderate and middle-income tenants.
The occupancy rates are set forth in the "Local Partnership Schedule." The
aggregate number of rental units contained in the Apartment Complexes is 3,468.
The largest Apartment Complex contains 520 units and the smallest contains 156
units.
All of the Apartment Complexes are subject to existing permanent first
mortgage loans ("Mortgage Loans on Real Estate"), the details of which may be
found in Schedule III.
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<PAGE>
LOCAL PARTNERSHIP SCHEDULE
<TABLE>
<CAPTION>
Name and Location of Percentage of Units Occupied at December 31,
Property (Number of Units) Government Assistance(a) 1995 1994 1993 1992 1991
- - ---------------------------------------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Triangle/Oaks Limited Partnership
Jacksonville, FL (520) Tax exempt financing 91% 93% 95% 87% 92%
Sheridan Square Associates of Lawton
Lawton, OK (276) Conventional financing 88% 96% 91% 91% 98%
Apple Creek Associates of Denton, Ltd
Denton, TX (308) Tax exempt financing 97% 93% 94% 89% 95%
Galveston-Stewart's Landing, Ltd
Galveston, TX (216) ss.221(d)(4) 96% 88% 94% 88% 98%
Woodridge, Ltd
Lenexa, KS (248) Tax exempt financing 95% 96% 96% 89% 97%
Players Club at Fort Myers, Ltd
Ft. Myers, FL (288) Tax exempt financing 90% 92% 97% 82% 94%
Suntree at Fort Myers, Ltd
Ft. Meyers, FL (240) Tax exempt financing 94% 95% 98% 82% 92%
The Harbours Associates
Newport News, VA (396) Tax exempt financing 92% 92% 90% 85% 93%
Brookwood Apartments L.P.
Wichita, KS (216) ss.221(d)(4) 97% 95% 98% 94% 100%
Westwind II Associates
Roanoke, VA (156) Tax exempt financing 97% 98% 95% 84% 79%
McAdam Park-336, Ltd
Palmdale, CA (336) Tax exempt financing 50% 62% 87% 72% 88%
Suncreek-268, Ltd
Sacramento, CA (268) Tax exempt financing 93% 94% 97% 80% 95%
</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.
FmHA administers similar housing programs for nonurban areas. The Federal
programs generally provide one or a combination of the following forms of
assistance: (i) mortgage loan insurance and (ii) rental subsidies.
i) 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 nonprofit owners 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 221(d)(4) program and the
221(d)(3) program is the maximum amount of the loan which may be obtained. Under
the 221(d)(3) program, nonprofit sponsors may obtain a permanent mortgage equal
to 100% of the total replacement cost; no equity contribution is required of a
nonprofit sponsor. In all other respects the 221(d)(3) program is substantially
similar to the 221(d)(4) program.
ii) 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
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<PAGE>
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.
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) comprised 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. No improvements are
expected to require additional financing.
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 of the properties as shown in
Schedule III to the financial statements included herein.
Item 3. Legal Proceedings.
None
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.
PART II
Item 5. Market for the Registrant's Limited Partnership Interests and
Related Security Holder Matters.
As of March 25, 1996, the Partnership had issued and outstanding 7,150
Limited Partnership Interests, each representing a $5,000 capital contribution
per unit to the Partnership, for aggregate Gross Proceeds of $35,750,000.
Limited Partnership Interests are not traded in any organized market.
It is not anticipated that any public market will develop for the purchase and
sale of the Limited Partnership Interests. Limited Partnership Interests may be
transferred only if certain requirements are satisfied, including 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 March 25, 1996, there were 2,950 registered holders of Limited
Partnership Interests.
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The Partnership has made no distributions to its Limited Partners since
its inception on June 25, 1985. There are no material restrictions upon the
Partnership's present or future ability to make distributions in accordance with
the provisions of the Partnership's Amended and Restated Agreement and
Certificate of Limited Partnership. 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). The Partnership does not anticipate
providing significant cash distributions to its Limited Partners.
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<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 the
audited financial statements and footnotes contained in Item 8 hereof and in
Schedules contained in Item 14 hereof.
<TABLE>
<CAPTION>
Year Ended March 25
------------------------------------------------------------------------
OPERATIONS 1996 1995 1994 1993 1992
- - ----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 19,483,652 $ 19,418,028 $ 19,391,028 $ 18,832,386 $ 17,979,595
Operating expenses (25,288,830) (24,345,121) (25,111,610) (25,483,188) (25,808,673)
Provision for impairment
of assets (1,116,378) 0 0 0 0
Minority interest (42,752) (15,637) 68,916 73,055 85,858
------------ ------------ ------------ ------------ ------------
Loss before
extraordinary item (6,964,308) (4,942,730) (5,650,857) (6,577,747) (7,743,220)
Extraordinary item -
forgiveness of
indebtedness 6,416,231 3,494,274 0 151,862 0
------------ ------------ ------------ ------------ ------------
Net loss $ (548,077) $ (1,448,456) $ (5,650,857) $ (6,425,885) $ (7,743,220)
============ ============ ============ ============ ============
Number of limited
partnership units
outstanding 7,150 7,150 7,150 7,150 7,150
============ ============ ============ ============ ============
Net loss allocable to:
General Partners $ (5,481) $ (14,485) $ (56,509) $ (64,259) $ (77,432)
Limited Partners (542,596) (1,433,971) (5,594,348) (6,361,626) (7,665,788)
------------ ------------ ------------ ------------ ------------
Net loss $ (548,077) $ (1,448,456) $ (5,650,857) $ (6,425,885) $ (7,743,220)
============ ============ ============ ============ ============
Per Limited
Partnership Unit:
Loss before
extraordinary item $ (964) $ (684) $ (782) $ (911) $ (1,072)
Extraordinary item 888 484 0 21 0
------------ ------------ ------------ ------------ ------------
Net loss $ (76) $ (200) $ (782) $ (890) $ (1,072)
============ ============ ============ ============ ============
March 25
------------------------------------------------------------------------
FINANCIAL POSITION 1996 1995 1994 1993 1992
- - ----------- ------------ ------------ ------------ ------------ ------------
Total assets $ 94,239,730 $ 97,393,817 $101,702,764 $106,141,832 $109,471,134
============ ============ ============ ============ ============
Long-term obligations $116,955,198 $120,109,587 $122,455,599 $121,109,562 $119,284,937
============ ============ ============ ============ ============
Total liabilities $130,038,490 $132,687,043 $135,563,171 $134,282,466 $131,782,795
============ ============ ============ ============ ============
Minority interest $ 3,629,565 $ 3,587,022 $ 3,571,385 $ 3,640,301 $ 3,043,389
============ ============ ============ ============ ============
</TABLE>
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During the years ended March 25, 1992 through 1996, total assets
decreased primarily due to depreciation, partially offset by net additions to
property and equipment. During the years ended March 25, 1992 through 1994,
long-term obligations and total liabilities increased primarily due to accruals
of interest on mortgage notes payable. There was a decrease in long-term
obligations and total liabilities in both 1996 and 1995 due to forgiveness of
indebtedness at Harbours, Westwind II, Woodbridge and at Triangle/Oaks
Partnership, respectively. For the year ended March 25, 1996, there was also a
decrease in assets due to a provision for impairment of assets.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The Partnership's capital has been invested primarily in 12 Local
Partnerships in which the Partnership made an initial investment of $29,354,485
(including acquisition expenses) in the Local Partnerships. These investments
are highly illiquid. In addition, the Partnership has obtained loans from an
affiliate of the Related General Partner which, together with Partnership funds,
have been advanced to five local partnerships (Note 9).
Cash of the Partnership and its consolidated twelve subsidiaries
increased by approximately $703,000 during the 1995 Fiscal Year. This increase
is primarily attributable to proceeds from mortgage notes of approximately
$25,515,000 and cash flows generated by operations of approximately $1,074,000,
which exceeded principal payment of mortgage notes of approximately $23,777,000,
an increase in deferred costs of approximately $1,244,000 and an increase in
mortgage escrow deposits of approximately $845,000. Included in the adjustments
to reconcile the net loss to cash flows from operations is depreciation and
amortization in the amount of approximately $4,129,000, and a provision for
impairment of assets in the amount of approximately $1,116,000.
The Partnership's primary source of funds are the cash distributions
from operations of the Local Partnerships in which the Partnership has invested.
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. During the 1995,
1994, and 1993 Fiscal Years, no distributions were received. Accordingly, the
Related General Partner advanced funds to meet the Partnership's third party
obligations of approximately $1,980,000, $1,857,000 and $1,587,000 as of March
25, 1996, 1995, and 1994, respectively. In addition, certain fees and expense
reimbursements owed to the General Partners amounting to approximately $831,000,
$694,000 and $545,000 were accrued and unpaid as of March 25, 1996, 1995, and
1994, respectively. Without the General Partners' advances and continued accrual
without payment of certain fees and expense reimbursements, the Partnership will
not be in the 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.
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.
For discussions of contingencies affecting certain Local Partnerships,
see Results of Operations of Certain Local Partnerships below.
Management is not aware of any trends or events, commitments or
uncertainties, which have not otherwise been disclosed, that will or are likely
to impact liquidity in a material way. Management believes the only impact would
be for 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
country is 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 are carried at the lower of depreciated cost or
estimated amounts recoverable through future operations and ultimate disposition
of the property. Cost includes the purchase price, acquisition fees and
expenses, and any other costs incurred in acquiring the properties. A provision
for loss on impairment of assets is generally recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. Property investments themselves
are reduced to estimated fair value (generally using discounted cash flows) when
the property is considered to be permanently impaired and the depreciated cost
exceeds estimated fair value. Through March 25, 1996, the Partnership has
recorded approximately $1,116,300 as an allowance for loss on impairment of
assets.
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In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Company is required to review long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
An impairment loss should be recognized whenever the review demonstrates that
the book value of a long-lived asset is not recoverable.
Effective March 26, 1996, the Partnership intends to adopt SFAS No.
121, consistent with the required adoption period. The Partnership does not
expect the implementation to have a material impact on its financial condition
or its results of operations.
The results of operations of the Partnership, as well as the Local
Partnerships, excluding the provision for impairment of assets and extraordinary
items-forgiveness of indebtedness, remain relatively constant for the 1995, 1994
and 1993 Fiscal Years. The Partnership's income continues to be principally from
rental income with the corresponding expenses being divided among operations,
depreciation and amortization, and mortgage interest.
Rental income has remained fairly steady with increases of less than 1%
and approximately 1% for the 1995 and 1994 Fiscal Years, respectively, primarily
due to rental rate increases partially offset by decreases in occupancy at
McAdam.
Other income decreased approximately $151,000 for the 1994 Fiscal Year
as compared to the 1993 Fiscal Year. The decrease was partially due to insurance
proceeds received by McAdam Park-336, Ltd. ("McAdam") during the 1993 Fiscal
Year for items expensed in the 1992 Fiscal Year and partially due to an increase
in income in the 1993 Fiscal Year from a "completion guarantee" agreement that
Suncreek-268, Ltd. ("Suncreek") has with the General Partner. Under this
agreement, the general partner guaranteed achievement of break-even operations.
Funds included in other income in accordance with this agreement totaled
$245,000 and $380,000 in the 1994 and 1993 Fiscal Years, respectively.
Total expenses, excluding the provision for impairment of assets,
increased 2% for the 1995 Fiscal Year as compared to the 1994 Fiscal Year.
A provision for impairment of assets was recorded in the 1995
Fiscal Year. See Note 4 in Item 8, Financial Statements and Supplemental
Data.
Total expenses, excluding repairs and maintenance, increased 8% for the
1995 Fiscal Year as compared to the 1994 Fiscal Year and, decreased 5% for the
1994 Fiscal Year as compared to the 1993 Fiscal Year.
Repairs and maintenance increased approximately $303,000 for the 1995
Fiscal Year as compared to the 1994 Fiscal Year. This increase is primarily due
to increases at McAdam Park to improve the grounds, interior and exterior of the
buildings in the attempt to attract new tenants and improve occupancy.
Repairs and maintenance increased approximately $277,000 for the 1994
Fiscal Year as compared to the 1993 Fiscal Year. This increase is primarily due
to increases at Players Club at Fort Myers, Ltd. ("Players Club"), Suntree at
Fort Myers, Ltd. ("Suntree"), and Apple Creek Associates of Denton, Ltd. ("Apple
Creek"). The increases at Players Club and Suntree were primarily due to several
physical improvements made to the properties, including the painting of all
buildings and the clubhouses in order to remain in compliance with local fire
safety codes, to enhance and preserve the value of the properties and for these
properties to compete in their markets. The increase at Apple Creek was
primarily due to repairs to three apartments which were damaged by fire as a
result of the building being struck by lightning.
For Fiscal Years 1995 and 1994 Extraordinary item-forgiveness of
indebtedness amounted to approximately $6,416,000 and $3,494,000, respectively.
See note 11 in Item 8, Financial Statements and Supplemental Data.
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Results of Operations of Certain Local Partnerships
The auditors for four subsidiary partnerships modified their reports on
the 1995 Fiscal Year financial statements due to the uncertainty of each
subsidiary partnership's ability to continue as a going concern. The four
subsidiary partnerships are Galveston-Sewarts Landing, Ltd. ("Galveston"),
Players Club, Suntree and McAdam. Two other Local Partnerships, Sheridan Square
Associates of Lawton ("Sheridan") and Suncreek, also experience operating
deficits. A seventh Local Partnership, Triangle/Oaks Limited Partnership
("Oaks"), is in default of their mortgage agreement. Three other Local
Partnerships, Woodridge, Ltd. ("Woodridge"), Harbours Associates ("Harbours")
and Westwinds II Associates ("Westwinds II"), completed refinancing of their
mortgage debt. Two other Local Partnerships, Apple Creek and Brookwood
Apartments, L.P. ("Brookwood") modified their mortgage agreement.
Sheridan
As of December 31, 1995, the Partnership had advanced $310,926 of
subordinated interest free loans to Sheridan, none of which has been advanced
since the 1992 Fiscal Year. Sheridan has sustained continued operating deficits
and has a net capital deficiency at March 31, 1996 of approximately $3,583,000.
The Partnership's investment in Sheridan has been reduced to zero by
prior years' losses. The minority interest balance in Sheridan was approximately
$311,000 and $317,000 at March 25, 1996 and March 25, 1995, respectively.
Sheridan's net loss after minority interest amounted to approximately $327,000,
$244,000 and $313,000 for the 1995, 1994 and 1993 Fiscal Years, respectively.
Galveston
Galveston has sustained continued operating deficits and has a net
partners' deficiency of approximately $5,656,000 at March 25, 1996. Galveston
mortgage note was originally due to HUD. During 1995, HUD assigned and
transferred the mortgage note to Beal Bank. On December 14, 1995, Galveston was
notified that the mortgage note was in default and the subsidiary was in arrears
on required principal and interest in the amount of approximately $427,000 and
$2,359,000, respectively. Beal Bank has commenced foreclosure proceedings.
Galveston is in the process of trying to negotiate a provisional workout or
modification agreement with Beal Bank but there can be no assurance that such
negotiations will be successful. As of March 25, 1996 the Partnership and
Whitney Management Corporation, an affiliate of the Related General Partner and
the local general partner, had advanced $606,445 of interest-free loans to
Galveston of which approximately $549,000 remains unpaid at March 25, 1996. The
Partnership's investment in Galveston has been reduced to zero by prior years'
losses. The minority interest balance in Galveston was zero at both March 25,
1996 and 1995. Galveston's net loss after minority interest amounted to
approximately $1,377,000, $357,000 and $343,000 for the 1995, 1994, and 1993
Fiscal Years, respectively.
Players Club and Suntree
Players Club and Suntree have incurred operating losses and cash flow
deficits due to low occupancy levels. At March 25, 1996, Players Club and
Suntree have partners' deficiencies of approximately $2,715,000 and $2,044,000,
respectively. In addition, the Local General Partners' operating deficit
guarantees have expired and there is no further obligation to continue to fund
operating deficits. The Partnership entered into agreements with bondholders in
January 1993 (further modified effective January 1996 and again extended and
modified effective January 1997). The extension of the forbearance agreements
call for minimum debt service payments at the rate of 7.5% for Suntree and 7.0%
for Players Club through 1996, at which time the minimum pay rates are then
scheduled to increase to the original stated rates of 8%. The difference between
the minimum pay rate and the stated rate is payable from all future available
cash flow or is deferred to be paid from sales/refinancing proceeds.
Recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operation of the
subsidiary partnership, which is dependent upon their abilities to meet
financing requirements on a continuing basis, to maintain present financing, and
to succeed in future operations. In addition, management has taken steps to
control the subsidiary partnerships' operating expenses.
-12-
<PAGE>
The Partnership's investments in Players Club and Suntree have been
reduced to zero by prior years' losses. The minority interest balance for
Players Club was approximately $18,000 and $29,000 at March 25, 1996 and 1995,
respectively. In the case of Suntree, the minority interest balance for Suntree
was approximately $18,000 and $24,000 at March 25, 1996 and 1995, respectively.
Players Club's net loss after minority interest amounted to approximately
$544,000, $597,000 and $435,000 for the 1995, 1994 and 1993 Fiscal Years,
respectively. Suntree's net loss after minority interest amounted to
approximately $307,000, $401,000 and $370,000 for the 1995, 1994 and 1993 Fiscal
Years, respectively.
McAdam
Through March 25, 1996, the Partnership has advanced $473,007 to McAdam
to enable it to make debt-service payments,. This advance was treated as a
voluntary loan and will be noninterest bearing. The loan is subordinate to the
mortgage notes and repayment can occur only from resale of the property or
refinancing of the mortgage debt. As a result of recurring losses from
operations and negative cash flows from operating activities, McAdam has been
unable to meet its debt obligations and by October 30, 1994, the Partnership
could no longer advance funds to keep the debt service current. Accordingly, in
October 1994, McAdam stopped paying debt service and defaulted on its mortgage
obligation.
During November 1995, McAdam completed a refinancing of its mortgage
debt. Prior to the refinancing, the project was encumbered with $14,685,000 of
aggregate mortgage debt, consisting of a first mortgage of $12,920,000 and a
second mortgage, payable only to the extent of available cash flow, of
$1,765,000. The existing debt was refinanced through the issuance of tax-exempt
refunding bonds in the amount of $6,500,000 and by increasing the project's
second mortgage to $8,185,000. Accrued unpaid interest in the amount of
$1,346,343 was forgiven by the mortgagee.
Prior to completing the refinancing, on October 13, 1995, McAdam and
Fannie Mae ("Purchaser") entered into an Option Agreement that grants the
Purchaser the option to purchase the project for $14,685,000. The Purchaser paid
$50,000 in consideration of the option and was to exercise its rights under the
Option Agreement during the period commencing on May 23, 1996 and ending on
August 17, 1996. On May 31, 1996, the purchaser exercised this option and took
possession of the property.
These matters raise substantial doubt about McAdam's ability to
continue as a going concern. The financial statements do not contain any
adjustments which might result from the outcome of these matters.
As of March 25, 1996, McAdam's total liabilities exceeded total
assets by approximately $6,754,000 and the net loss for the year ended March 25,
1996 totaled approximately $1,440,000.
The Partnership's investment in McAdam has been reduced to zero by
prior years' losses. The minority interest balance in McAdam was zero at March
25, 1996 and 1995, respectively. McAdam's net loss after minority interest
amounted to approximately $837,000, $1,101,000 and $917,000 for the 1995, 1994
and 1993 Fiscal Years, respectively.
Oaks
On September 13, 1991, the Oaks filed a petition under Chapter 11. The
filing of the petition was brought about by the rehabilitation proceedings
involving the Mutual Benefit Life Insurance Co. ("Mutual Benefit"). Mutual
Benefit was the credit enhancer for bonds issued by the Florida Housing Finance
Agency. During 1988, the Oaks was refinanced with the tax exempt bonds. The
filing of the rehabilitation proceedings constituted a technical non monetary
default under the mortgage and other security documents. In order to avoid the
possibility of a required early payment of the total mortgage due to the
technical default, the Partnership filed for reorganization under Chapter 11.
On May 14, 1992, the Oaks dismissed the Chapter 11 petition in favor of
a court-ordered Standstill Agreement which protected the Oaks from foreclosure
while alleviating the Oaks of expenses relating to the Chapter 11 motion. The
Standstill Agreement expired on August 15, 1992, however, the bank must give 15
days notice before taking action on any previously noticed defaults. The Oaks is
currently operating outside the protection of the bankruptcy courts and has not
-13-
<PAGE>
received any further notices of default from the bank. The Mutual Benefit
rehabilitation proceeding continues to constitute a technical, nonmonetary
default under the mortgage and other security documents.
During the 1993 Fiscal Year, a declaratory relief action was filed. It
acknowledges that default events have occurred and prohibits the trustee from
exercising any default remedies providing that the Oaks complies with the terms
of the agreement. During March 1994, the trustee agreed to forbear from
exercising default remedies, provided among other things, that the subsidiary
partnership is current in making debt service payments in the future. No
remarketing of the bonds, as originally scheduled for February 1, 1994, has
occurred.
During 1994, the debt of the Oaks was modified. As a result of the
modification, three subordinated notes previously recorded as a liability of the
Partnership in the amount of $1,472,166 were surrendered by the mortgagee and
cancelled. In addition, interest previously accrued on the subordinated and wrap
notes were also cancelled. Trustee fees were forgiven and legal costs incurred
during 1994 were netted against the reduced liabilities resulting in a
recognized extraordinary gain of $3,494,274 during the 1994 Fiscal Year.
The Partnership's investment in the Oaks has been reduced to zero by
prior year losses. The minority interest balance in the Oaks was approximately
$426,000 and $434,000 at March 25, 1996 and 1995, respectively. Oaks' losses
after minority interest amounted to approximately $402,000 for the 1995 Fiscal
Year. Oaks' net income after minority interest amounted to approximately
$2,902,000 for the 1994 Fiscal Year. Oak's net loss after minority interest
amounted to approximately $1,233,000 for the 1993 Fiscal Year.
Suncreek
In 1985 Suncreek - 268 Ltd. ("Suncreek") a subsidiary partnership,
obtained a $10,000,000 variable rate mortgage loan from the County of
Sacramento, California (County) which matures April 2007, requires monthly
interest payments and is collateralized by the project. Pursuant to the terms of
an interest rate guarantee agreement between the Local General Partner and
Suncreek, the interest rate is effectively fixed at 9.9%. Interest paid to the
Local General Partner totaled $990,000 for the year ended December 31, 1995.
In connection with the mortgage loan, Suncreek obtained a $10,000,000
irrevocable letter of credit, which was provided to the County as additional
collateral. On April 15, 1995 the mortgage loan was paid by drawing upon the
letter of credit. Suncreek is negotiating with Resolution Trust Corporation,
which currently holds the original mortgage loan, to repay the loan at the
discounted amount of $6,800,000 plus accrued and unpaid interest. The Local
General Partner believes this transaction will be consummated shortly.
Additionally, Suncreek is negotiating with a financial institution to obtain new
permanent financing.
The Partnership's investment in Suncreek has been reduced to zero by
prior years' losses. The minority interest balance in Suncreek was approximately
$337,000 and $346,000 at March 25, 1996 and 1995, respectively. Suncreek's net
loss after minority interest amounted to approximately $413,000, $427,000 and
$390,000 for the 1995, 1994, and 1993 Fiscal Years, respectively.
Apple Creek
Apple Creek Associates of Denton, Ltd. ("Apple Creek") first mortgage
note matured during February 1995. Since the maturity date Apple Creek had been
involved in negotiations to obtain a loan modification on the first mortgage and
had continued to make required interest and principal payments. On February 29,
1996, Apple Creek executed a loan modification agreement, which provided among
other things for an extension of the maturity date of the loan for five years .
Terms of the note requires monthly payments of principal and interest computed
at an interest rate of 8.5%, based on an amortization period of 25 years. In
addition, Apple creek agreed to remit on a quarterly basis 25% of cash flow
generated by the property to be considered a principal reduction. During the
first three years of the loan extension, Apple Creek has the option to make
additional principal reductions in an amount not to exceed $300,000. As a
condition of the loan modification agreement, Apple Creek is required to pay for
all closing costs and pay a 1% fee of the restated principal balance at closing.
The Second and Third Notes require interest to accrue at 12% per annum, after
maturity, until paid.
-14-
<PAGE>
Brookwood
During May 1995, Brookwood completed a modification of its mortgage
debt which reduced the interest rate from 9.75% to 8.25% and reduced the monthly
installment of principal and interest from $48,916 to $42,901. The mortgage note
may be prepaid beginning June 1, 2005 in whole or in part, without penalty or
premium, on the first day of any month upon thirty days' written notice. Under
the agreements with the mortgage lender and HUD, Brookwood is required to make
monthly escrow deposits for taxes, insurance and replacement of project assets,
and is subject to restrictions as to operating policies, operating expenditures
and distributions to partners.
Woodridge
During June 1995, Woodridge completed a refinancing of its first
mortgage debt which matured on June 1, 1995. Under the refinancing, $7,285,000
in variable rate first mortgage tax exempt refunding bonds were issued by the
Kansas Development Finance Authority on behalf of Woodridge. The refunding
proceeds extinguished the existing mortgage in the amount of $7,850,000 and
accrued interest of $700,000 at a discounted pay-off of approximately $6,250,000
in cash plus a $900,000 second mortgage payable only from available net cash
flow and principal due at its maturity in June of 2005. Monthly amortization
payments will be paid to a sinking fund escrow account to be used to redeem
bonds at a sale or refinancing. These payments are calculated on a 30-year
schedule at a 10.65% interest rate. Effective December 1, 1995, Woodridge
elected to refund the bonds with a fixed rate to the maturity of the bonds June
1, 2005. The fixed rate of interest is 5.9% per annum. As a result of the
refinancing, an extraordinary gain of approximately $1,462,000 was realized.
Harbours
During October 1995, Harbours completed a refinancing of its mortgage
in the amount of $13,689,000 and, on that date, the existing mortgage in the
amount of $15,525,000 was extinguished at a discounted pay-off of $13,015,000.
In connection with the refinancing, the 1984 bonds issued by the Newport News
Redevelopment and Housing Authority for Harbours were refunded with bonds issued
by the Virginia Housing Development Authority ("VHDA") which in turn made a loan
to Harbours. The new loan fromVHDA bears interest at 7.375%, will be amortized
over a 25 year period, requires monthly payments of principal and interest of
approximately $100,050 and matures on November 1, 2020. The mortgage may be
prepaid beginning November 1, 2005 with a prepayment penalty of 6% reduced by 1%
for each 12 month period after that date but not less that 1%. Under agreement
with the VHDA, Harbours is required to make monthly escrow deposits for taxes,
insurance and replacement of project assets, and is subject to restrictions as
to operating policies, operating expenditures and distributions to partners. The
liability of Harbours under the mortgage note is limited to the underlying value
of the real estate collateral plus other amounts deposited with the lender. As a
result of the refinancing, an extraordinary gain from the mortgage discount of
$2,510,000 net of the write off of certain other assets of $209,731 related to
the bonds was realized.
Westwind II
During 1995, Westwind II completed a refinancing of its mortgage in the
amount of $4,540,700 and, on that date, the existing mortgage in the amount of
$5,660,000 was extinguished at a discounted pay-off of $4,040,000. In connection
with the refinancing, the 1985 bonds issued by the City of Roanoke Redevelopment
and Housing Authority for Westwind II were refunded with bonds issued by the
City of Roanoke Redevelopment and Housing Authority which loaned those proceeds
to Highland Mortgage Company which in turn made a loan to Westwind II. The new
loan from Highland Mortgage Company bears interest at 6.94%, will be amortized
over a 35 year period, requires monthly payments of principal and interest of
approximately $28,820 and matures on November 1, 2030. The mortgage may be
prepaid beginning November 1, 2005 with a prepayment penalty of 3% reduced by 1%
for each 12 month period after that date. Under agreement with the mortgage
lender and FHA, Westwood II is required to make monthly escrow deposits for tax,
insurance and replacement of project assets, and
-15-
<PAGE>
is subject to restrictions as to operating policies, operating expenditures and
distributions to partners. The liability of Westwind II under the mortgage note
is limited to the underlying value of the real estate collateral plus other
amounts deposited with the lender. As a result of the refinancing, an
extraordinary gain from the mortgage discount of $1,620,000, net of unamortized
deferred mortgage costs of $59,284 was realized.
Other
Management's Intentions
In view of the matters described in the preceding paragraphs,
recoverability of the Partnership's investment in the subsidiary partnerships is
dependent upon continued operations of the subsidiary partnerships, which in
turn is dependent upon the subsidiary partnership's ability to meet financing
requirements on a continuing basis and to succeed in future operations.
Management of the Partnership intends to continue to support the
efforts of the Local General Partners of these subsidiary partnerships to
refinance or restructure mortgage indebtedness and to provide consultation and
advice in such matters as required.
General
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 future economic conditions generally, which, could increase
vacancy levels, rental payment defaults, and increased operating expenses, any
or all of which could threaten the financial viability of one or more of the
Local Limited Partnerships.
There are substantial risks associated with the operation of Apartment
Complexes benefiting from Advantaged Financing. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government approval
for rent increases; and limitations on the percentage of income which low and
moderate-income tenants may pay as rent.
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. Inflation also affects the Local
Partnerships adversely by increasing operating costs as, for example, for such
items as fuel, utilities and labor.
In view of the adverse operating results of certain of the Local
Partnerships as discussed above in this Item 7, recoverability of a major
portion of the Partnership's recorded assets is dependent upon continued
operations of the various Local Partnerships, which in turn is dependent upon
their ability to meet financing requirements on a continued basis. This must be
achieved through continued work-out agreements and/or through improved
operations of the Local Partnerships.
The Partnership continues to meet 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); however, the refinancing
transactions of the Local Partnerships to date have been insufficient to provide
cash distributions to the Limited Partners.
-16-
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Sequential
Page
----------
(a) 1. Financial Statements
Independent Auditors' Report ............................. 18
Consolidated Balance Sheets at March 25, 1996 and 1995 ............ 55
Consolidated Statements of Operations for the Years Ended March 25,
1996, 1995 and 1994 ............................................... 56
Consolidated Statements of Changes in Partners' Deficit for the
Years Ended March 25, 1996, 1995 and 1994 ......................... 57
Consolidated Statements of Cash Flows for the Years Ended March 25,
1996, 1995, and 1994 .............................................. 58
Notes to Consolidated Financial Statements ........................ 60
The financial statements of the Local Partnerships are not included
separately herein
-17-
<PAGE>
[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG, LLP--LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Cambridge Advantaged Properties II
Limited Partnership and Subsidiaries
We have audited the consolidated balance sheets of Cambridge Advantaged
Properties II Limited Partnership and Subsidiaries as of March 25, 1996 and
1995, and the related consolidated statements of operations, changes in
partners' deficit, and cash flows for the years ended March 25, 1996, 1995 and
1994 (the 1995, 1994 and 1993 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 11 (1995 and 1994
Fiscal Years) and 10 (1993 Fiscal Year) subsidiary partnerships whose losses
before extraordinary item constituted 83%, 72%, and 78% of the Partnership's
losses during the 1995, 1994 and 1993 Fiscal Years, respectively, and whose
assets constituted 89% and 88% of the Partnership's assets at March 25, 1996 and
1995, 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 II Limited Partnership and Subsidiaries at March 25, 1996
and 1995, and the results of their operations and cash flows for the years ended
March 25, 1996, 1995 and 1994, in conformity with generally accepted accounting
principles.
<PAGE>
The accompanying consolidated financial statements of Cambridge
Advantaged Properties II Limited Partnership and Subsidiaries have been prepared
assuming that the consolidated entity and its subsidiary partnerships will
continue as going concerns. As discussed in Notes 2 and 12, the auditors of four
(Fiscal 1995) subsidiary partnerships have modified their reports due to the
uncertainties of the subsidiary partnerships' abilities to continue as going
concerns. These subsidiary partnerships' losses before extraordinary item
constituted 60%, 50% and 37% of the Partnership's losses before extraordinary
item during the 1995, 1994 and 1993 Fiscal Years, respectively, and their assets
constituted 31% and 33% of the Partnership's assets at March 25, 1996 and 1995,
respectively. The consolidated entity and its subsidiary partnerships have
significant contingencies which raise substantial doubt about their ability to
continue as going concerns. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
/s/ TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP
TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP
New York, New York
June 14, 1996
<PAGE>
[DICKEY & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Triangle/Oaks Limited Partnership
We have audited the accompanying balance sheet of TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1995, and the related statement of operations,
partners' equity/(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 TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Dickey & Wolf
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, Missouri
January 17, 1996
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Triangle/Oaks Limited Partnership
We have audited the accompanying balance sheet of TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1994, and the related statement of operations,
partners' equity/(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 TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1994, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Dickey, Franklin & Wolf, LLC
DICKEY, FRANKLIN & WOLF, LLC
Certified Public Accountants
Harrisonville, Missouri
February 1, 1995
<PAGE>
[DICKEY, FRANKLIN, HALBHUBER & COOK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Triangle/Oaks Limited Partnership
We have audited the accompanying balance sheet of TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1993, and the related statement of operations,
partners' equity/(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 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 TRIANGLE/OAKS LIMITED
PARTNERSHIP as of December 31, 1993, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Dickey, Franklin, Halbhuber & Cook
DICKEY, FRANKLIN, HALBHUBER & COOK
Lee's Summit, Missouri
February 2, 1994
<PAGE>
[DICKEY & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sheridan Square Associates of Lawton
We have audited the accompanying balance sheet of Sheridan Square Associates of
Lawton, (a Oklahoma Limited Partnership) as of December 31, 1995, and the
related statements of operations, changes in partners' equity (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 Sheridan Square Associates of
Lawton as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Dickey & Wolf
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 26, 1996
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sheridan Square Associates of Lawton,
A Limited Partnership
Lawton, Oklahoma
We have audited the accompanying balance sheet of Sheridan Square Associates of
Lawton, A Limited Partnership as of December 31, 1994, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the year then ended. These financial statements are the responsibility of
the management of Sheridan Square Associates of Lawton, A Limited Partnership.
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 Sheridan Square Associates of
Lawton, A Limited Partnership as of December 31, 1994, and the results of its
operations and its 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. The Partnership has suffered
recurring losses from operations
<PAGE>
To the Partners
Sheridan Square Associates of Lawton
Page Two
and has a net capital deficiency. These matters raise substantial doubt about
the ability of the Partnership to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Dickey, Franklin & Wolf, LLC
DICKEY, FRANKLIN & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 27, 1995
<PAGE>
[DICKEY, FRANKLIN, HALBHUBER & COOK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sheridan Square Associates of Lawton,
A Limited Partnership
Lawton, Oklahoma
We have audited the accompanying balance sheet of Sheridan Square Associates of
Lawton, A Limited Partnership as of December 31, 1993 and the related statements
of operations, changes in partners' equity (deficit), and cash flows for the
year then ended. These financial statements are the responsibility of the
management of Sheridan Square Associates of Lawton, A Limited Partnership. 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 Sheridan Square Associates of
Lawton, A Limited Partnership as of December 31, 1993 and the results of its
operations and its 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. The Partnership has suffered
recurring losses from operations
<PAGE>
To the Partners
Sheridan Square Associates of Lawton
Page Two
and has a net capital deficiency. These matters raise substantial doubt about
the ability of the Partnership to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Dickey, Franklin, Halbhuber & Cook
DICKEY, FRANKLIN, HALBHUBER & COOK
Certified Public Accountants
Harrisonville, MO
January 29, 1994
<PAGE>
[DICKEY & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Apple Creek Associates of Denton, Ltd.
We have audited the accompanying balance sheets of APPLE CREEK ASSOCIATES OF
DENTON, LTD. as of December 31, 1995 and 1994, and the related statements of
operations, statements of changes in partners' equity (deficit), and statements
of cash flows for the years then ended. These financial statements are the
responsibility of 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of APPLE CREEK ASSOCIATES OF
DENTON, LTD. as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ Dickey & Wolf
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 26, 1996
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Apple Creek Associates of Denton, Ltd.
We have audited the accompanying balance sheets of APPLE CREEK ASSOCIATES OF
DENTON, LTD. as of December 31, 1994 and 1993, and the related statements of
operations, statements of changes in partners' equity (deficit), and statements
of cash flows for the years then ended. These financial statements are the
responsibility of 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of APPLE CREEK ASSOCIATES OF
DENTON, LTD. as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ Dickey, Franklin & Wolf, LLC
DICKEY, FRANKLIN & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 27, 1995
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Galveston-Stewart's Landing, Ltd.
We have audited the accompanying balance sheet of GALVESTON-STEWART'S LANDING,
LTD. (a Texas Limited Partnership) as of December 31, 1995, and the related
statements of operations, changes in partners' equity (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 GALVESTON-STEWART'S LANDING,
LTD. as of December 31, 1995, and the results of its operations and its 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 shown in the financial
statements, the Partnership incurred a net loss of $(1,377,231) during the year
ended December 31, 1995. In addition, as explained in Note 8, Beal Bank had
commenced foreclosure on the property during 1995. These conditions raise
substantial doubt about the Partnership's ability to continue as a going
concern.
The ability of the Partnership to continue depends upon its ability to obtain
additional or restructured financing and ultimately to attain a level of
operating profit sufficient to enable it to meets its obligations. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Dickey & Wolf
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 26, 1996
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Galveston-Stewart's Landing, Ltd.
Galveston, TX
We have audited the accompanying balance sheet of GALVESTON-STEWART'S LANDING,
LTD., FHA Project Number 114-35294 (a Limited Partnership), as of December 31,
1994, and the related statements of profit and loss (on HUD Form No. 92410),
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 HUD Audit Guide. 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 GALVESTON-STEWART'S LANDING,
LTD. as of December 31, 1994, and the results of its operations and its 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 shown in the financial
statements, the Partnership incurred a net loss of $(308,759) during the year
ended December 31, 1994. As further explained in Note 4 of the financial
statements, the Department of Housing and Urban Development had commenced
foreclosure on the property in 1991. However, during 1994, HUD has accepted a
provisional workout agreement with GALVESTON-STEWART'S LANDING, LTD.
<PAGE>
To the Partners
Galveston-Stewart's Landing, Ltd.
Page Two
The ability of the Partnership to continue depends upon its ability to attain a
level of operating profit sufficient to enable it to meets its obligations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Dickey, Franklin & Wolf, LLC
DICKEY, FRANKLIN & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 27, 1995
<PAGE>
[DICKEY, FRANKLIN, HALBHUBER & COOK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Galveston-Stewart's Landing, Ltd.
Galveston, TX
We have audited the accompanying balance sheet of GALVESTON-STEWART'S LANDING,
LTD., FHA Project Number 114-35294 (a Limited Partnership), as of December 31,
1993, and the related statements of profit and loss (on HUD Form No. 92410),
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 HUD Audit Guide. 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 GALVESTON-STEWART'S LANDING,
LTD. as of December 31, 1993, and the results of its operations and its 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 shown in the financial
statements, the Partnership incurred a net loss of $(343,002) during the year
ended December 31, 1993. As further explained in Note 4 of the financial
statements, the Department of Housing and Urban Development commenced
foreclosure on the property in 1991. During 1993, management has negotiated and
executed a provisional workout agreement with HUD.
<PAGE>
To the Partners
Galveston-Stewart's Landing, Ltd.
Page Two
The ability of the Partnership to continue depends upon its ability to attain a
level of operating profit sufficient to enable it to meets its obligations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Dickey, Franklin, Halbhuber & Cook
DICKEY, FRANKLIN, HALBHUBER & COOK
Certified Public Accountants
Harrisonville, MO
January 29, 1994
<PAGE>
[DICKEY & WOLF, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Woodridge, Ltd.
We have audited the accompanying balance sheet of WOODRIDGE, LTD., (a California
Limited Partnership) as of December 31, 1995, and the related statement of
operations, partners' equity/(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 WOODRIDGE, LTD. as of December
31, 1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Dickey & Wolf
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 26, 1996
<PAGE>
[DICKEY, FRANKLIN & WOLF, LLC LETTERHEAD]
To the Partners
Woodridge, Ltd.
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of WOODRIDGE, LTD., (a California
Limited Partnership) as of December 31, 1994, and the related statement of
operations, partners' equity/(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 WOODRIDGE, LTD. as of December
31, 1994, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Dickey, Franklin & Wolf
DICKEY, FRANKLIN & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
Januay 21, 1995
<PAGE>
[DICKEY, FRANKLIN, HALBHUBER & COOK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Woodridge, Ltd.
We have audited the accompanying balance sheet of WOODRIDGE, LTD., (a California
Limited Partnership) as of December 31, 1993, and the related statement of
operations, partners' equity/(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 WOODRIDGE, LTD. as of December
31, 1993, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Dickey, Franklin, Halbhuber & Cook
DICKEY, FRANKLIN, HALBHUBER & COOK
Certified Public Accountants
Harrisonville, MO
January 22, 1994
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Players Club at Fort Myers, Ltd.
We have audited the accompanying balance sheets of Players Club at Fort
Myers, Ltd. as of December 31, 1995 and 1994, and the related statements of
operations, partners' deficit 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 audit.
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 Players Club at Fort Myers,
Ltd. as of December 31, 1995 and 1994, and the results of its operations, the
changes in partners' deficit and its cash flows for the years 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 B to the
financial statements, the partnership has incurred operating and cash deficits
and low occupancy levels which raises substantial doubt about the partnership's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note B. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
February 2, 1996
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Players Club at Fort Myers, Ltd.
We have audited the accompanying balance sheets of Players Club at Fort
Myers, Ltd. as of December 31, 1994 and 1993, and the related statements of
operations, partners' deficit 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 Players Club at Fort Myers,
Ltd. as of December 31, 1994 and 1993, and the results of its operations, the
changes in partners' deficit and cash flows for the years 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 B to the
financial statements, the partnership has incurred operating and cash deficits
and low occupancy levels which raises substantial doubt about the partnership's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note B. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ RESNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 18, 1995
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Suntree at Fort Myers, Ltd.
We have audited the accompanying balance sheets of Suntree at Fort Myers,
Ltd. (a California limited partnership) as of December 31, 1995 and 1994, and
the related statements of operations, partners' deficit 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 Suntree at Fort Myers, Ltd.
as of December 31, 1995 and 1994, and the results of its operations, the changes
in partners' deficit and its cash flows for the years 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 B to the
financial statements, the partnership has incurred operating and cash deficits
and low occupancy levels which raises substantial doubt about the partnership's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note B. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 29, 1996
<PAGE>
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Suntree at Fort Myers, Ltd.
We have audited the accompanying balance sheets of Suntree at Fort Myers,
Ltd. (a California limited partnership) as of December 31, 1994 and 1993, and
the related statements of operations, partners' deficit 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 Suntree at Fort Myers, Ltd.
as of December 31, 1994 and 1993, and the results of its operations, the changes
in partners' deficit and cash flows for the years 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 B to the
financial statements, the partnership has incurred operating and cash deficits
and low occupancy levels which raises substantial doubt about the partnership's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note B. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 20, 1995
<PAGE>
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
To the Partners of
The Harbours Associates
We have audited the accompanying balance sheets of The Harbours Associates (a
limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' deficit, 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 The Harbours Associates at
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ BDO Seidman, LLP
February 9, 1996
<PAGE>
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
To the Partners of
The Harbours Associates
We have audited the accompanying balance sheets of The Harbours Associates (a
limited partnership) as of December 31, 1994 and 1993, and the related
statements of operations, partners' deficit, 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 The Harbours Associates at
December 31, 1994 and 1993, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ BDO Seidman
February 9, 1995
<PAGE>
[GEORGE, BOWERMAN, OSBORN & COMPANY, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Brookwood Apartments, L.P.
(A Kansas Limited Partnership)
We have audited the accompanying balance sheet of Brookwood Apartments, L.P. (A
Kansas Limited Partnership) as of December 31, 1995, and the related statements
of operations, partners' capital (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.
As described in Note 1, the accompanying financial statements reflect certain
reorganization adjustments of the Partnership on a "push-down" basis. However,
in connection with the reorganization, the Partnership has not discounted
certain debt which, in our opinion, should be discounted and has capitalized
certain deferred financing costs which, in our opinion, should have been written
off in order to conform with generally accepted accounting principles. If these
additional reorganization adjustments had been made, deferred financing costs
and mortgage note payable would have been reduced by $305,099 in the
accompanying balance sheet. These departures from generally accepted accounting
principles do not have a material effect on the results of operations or cash
flows of Brookwood Apartments, L.P. (A Kansas Limited Partnership) for the year
ended December 31, 1995.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Brookwood
Apartments, L.P. (A Kansas Limited Partnership) for the year ended December 31,
1995 and, except for the effects on the balance sheet of not reflecting certain
purchase accounting adjustments as discussed in the preceding paragraph, its
financial position at December 31, 1995 is in conformity with generally accepted
accounting principles.
/s/ George, Bowerman, Osborn & Company, P.A.
Wichita, Kansas
January 24, 1996
<PAGE>
[GEORGE, BOWERMAN, OSBORN & COMPANY, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Brookwood Apartments, L.P.
(A Kansas Limited Partnership)
We have audited the accompanying balance sheet of Brookwood Apartments, L.P. (A
Kansas Limited Partnership) as of December 31, 1994, and the related statements
of operations, partners' capital (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.
As described in Note 1, the accompanying financial statements reflect certain
reorganization adjustments of the Partnership on a "push-down" basis. However,
in connection with the reorganization, the Partnership has not discounted
certain debt which, in our opinion, should be discounted and has capitalized
certain deferred financing costs which, in our opinion, should have been written
off in order to conform with generally accepted accounting principles. If these
additional reorganization adjustments had been made, deferred financing costs
and mortgage note payable would have been reduced by $320,493 in the
accompanying balance sheet. These departures from generally accepted accounting
principles do not have a material effect on the results of operations or cash
flows of Brookwood Apartments, L.P. (A Kansas Limited Partnership) for the Year
ended December 31, 1994.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Brookwood
Apartments, L.P. (A Kansas Limited Partnership) for the year ended December 31,
1994 and, except for the effects on the balance sheet of not reflecting certain
purchase accounting adjustments as discussed in the preceding paragraph, its
financial position at December 31, 1994 is in conformity with generally accepted
accounting principles.
/s/ George, Bowerman, Osborn & Company, P.A.
Wichita, Kansas
January 18, 1995
<PAGE>
[GEORGE, BOWERMAN, OSBORN & COMPANY, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Brookwood Apartments, L.P.
We have audited the accompanying balance sheet of Brookwood Apartments, L.P. as
of December 31,1993, and the related statements of operations, partners' capital
(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.
As described in Note 1, the accompanying financial statements reflect certain
reorganization adjustments of the Partnership on a "push-down" basis. However,
in connection with the reorganization, the Partnership has not discounted
certain debt which, in our opinion, should be discounted and has capitalized
certain deferred financing costs which, in our opinion, should have been written
off in order to conform with generally accepted accounting principles. If these
additional reorganization adjustments had been made, deferred financing costs
and mortgage note payable would have been reduced by $335,986 in the
accompanying balance sheet. These departures from generally accepted accounting
principles do not have a material effect on the results of operations or cash
flows of Brookwood Apartments, L.P. for the year ended December 31, 1993.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Brookwood
Apartments, L.P. for the year ended December 31, 1993 and, except for the
effects on the balance sheet of not reflecting certain purchase accounting
adjustments as discussed in the preceding paragraph, its financial position at
December 31, 1993 is in conformity with generally accepted accounting
principles.
/s/ George, Bowerman, Osborn & Company, P.A.
Wichita, Kansas
February 4, 1994
<PAGE>
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
To the Partners
Westwind II Associates
We have audited the accompanying balance sheets of Westwind II Associates (a
limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' deficit 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 Westwind II Associates as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ BDO Seidman, LLP
February 9, 1996
<PAGE>
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
To the Partners
Westwind II Associates
We have audited the accompanying balance sheets of Westwind II Associates (a
limited partnership) as of December 31, 1994 and 1993, and the related
statements of operations, partners' deficit 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 Westwind II Associates as of
December 31, 1994 and 1993, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ BDO Seidman
February 9, 1995
<PAGE>
[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of
McAdam Park - 336, Ltd.
We have audited the accompanying balance sheet of McAdam Park - 336, Ltd. (the
"Partnership") as of December 31, 1995, and the related statements of
operations, 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McAdam Park - 336, Ltd. as of
December 31, 1995 and the results of its operations and its 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 2 to the
financial statements, the Partnership has incurred significant recurring losses
from operations and has not made mortgage payments since October 1994. These
items 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.
/s/ Trien, Rosenberg, Felix, Rosenberg, Barr & Weinberg, LLP
TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG, LLP
June 14, 1996
<PAGE>
[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of
McAdam Park - 336, Ltd.
We have audited the accompanying balance sheet of McAdam Park - 336, Ltd. (the
"Partnership") as of December 31, 1994, and the related statements of
operations, 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McAdam Park - 336, Ltd. as of
December 31, 1994 and the results of its operations and its 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 2 to the
financial statements, the Partnership has incurred significant recurring losses
from operations and has not made mortgage payments since October 1994. These
items 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.
/s/ Trien, Rosenberg, Felix, Rosenberg, Barr & Weinberg
TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG
April 5, 1995
<PAGE>
[TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of
McAdam Park - 336, Ltd.
We have audited the accompanying balance sheet of McAdam Park - 336, Ltd. (the
"Partnership") as of December 31, 1993, and the related statements of
operations, 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McAdam Park - 336, Ltd. as of
December 31, 1993 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Trien, Rosenberg, Felix, Rosenberg, Barr & Weinberg
TRIEN, ROSENBERG, FELIX, ROSENBERG, BARR & WEINBERG
March l0, 1994
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
Report of Independent Accountants
To the Partners
Suncreek - 268, Ltd.
We have audited the accompanying balance sheet of Suncreek - 268, Ltd. as of
December 31, 1995, and the related statements of operations, 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Suncreek - 268, Ltd. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand LLP
Portland, Oregon
February 8, 1996
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
Report of Independent Accountants
To the Partners
Suncreek - 268, Ltd.
We have audited the accompanying balance sheet of Suncreek - 268, Ltd. as of
December 31, 1994, and the related statements of operations, 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Suncreek - 268, Ltd. as of
December 31, 1994, and the results of its operations and its 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 and negative
cash flows from operations and its mortgage note payable may be subject to
mandatory redemption, factors that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that migrht result from the outcome of this uncertainty.
/s/ Coopers & Lybrand LLP
Portland, Oregon
February 8, 1995
<PAGE>
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Suncreek - 268, Ltd.
We have audited the accompanying balance sheets of Suncreek - 268, Ltd. as of
December 31, 1993 and 1992, and the related statements of operations, changes in
partners' deficit 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
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 Suncreek - 268, Ltd. as of
December 31, 1993 and 1992, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accountina
principles.
/s/ Coopers & Lybrand, LLP
Portland, Oregon
February 4, 1994
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 25
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Property and equipment - at cost, less accumulated depreciation
(Notes 2, 4 and 7) $ 88,408,189 $ 93,379,277
Cash and cash equivalents (Notes 2 and 12) 1,022,522 319,200
Cash - restricted for tenants' security deposits 601,598 599,156
Mortgage escrow deposits (Notes 5 and 7) 1,875,866 1,298,924
Deferred costs, net of accumulated amortization (Notes 2 and 6) 1,945,386 1,218,508
Prepaid expenses and other assets 386,169 578,752
------------ ------------
Total assets $ 94,239,730 $ 97,393,817
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable (Notes 7 and 11) $116,955,198 $120,109,587
Due to selling partners (Note 8) 641,303 641,303
Accounts payable, accrued expenses and other liabilities 6,961,794 6,804,076
Tenants' security deposits payable 595,263 599,156
Due to general partners of subsidiaries and their affiliates 1,760,369 1,681,427
Due to general partners and affiliates (Note 9) 3,124,563 2,851,494
------------ ------------
130,038,490 132,687,043
------------ ------------
Minority interest (Note 2) 3,629,565 3,587,022
------------ ------------
Commitments and contingencies (Note 12)
Partners' deficit (39,428,325) (38,880,248)
------------ ------------
Total liabilities and partners' deficit $ 94,239,730 $ 97,393,817
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-19-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 25
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental, net $18,305,514 $18,292,506 $18,115,133
Other 1,178,138 1,125,522 1,276,704
----------- ----------- -----------
Total revenues 19,483,652 19,418,028 19,391,837
----------- ----------- -----------
Expenses
Selling and renting 1,211,297 1,135,615 1,211,036
Administrative and management 1,874,078 1,908,112 1,744,119
Administrative and management-related parties (Note 9) 950,989 985,580 971,194
Operating 1,751,876 1,741,630 1,809,915
Repairs and maintenance 3,297,559 2,995,015 2,717,853
Taxes and insurance 2,512,801 2,345,711 2,181,288
Financial, principally interest 9,561,637 9,032,353 9,815,372
Depreciation and amortization 4,128,593 4,201,105 4,660,833
Provision for impairment of assets (Note 4) 1,116,378 0 0
----------- ----------- -----------
Total expenses 26,405,208 24,345,121 25,111,610
----------- ----------- -----------
(6,921,556) (4,927,093) (5,719,773)
Minority interest in (income) loss of subsidiaries (42,752) (15,637) 68,916
----------- ----------- -----------
Loss before extraordinary item (6,964,308) (4,942,730) (5,650,857)
Extraordinary item - forgiveness of indebtedness
income (Note 11) 6,416,231 3,494,274 0
----------- ----------- -----------
Net loss $ (548,077) $(1,448,456) $(5,650,857)
=========== =========== ===========
Net loss allocable to:
General Partners $ (5,481) $ (14,485) $ (56,509)
Limited Partners (542,596) (1,433,971) (5,594,348)
----------- ----------- -----------
$ (548,077) $(1,448,456) $(5,650,857)
=========== =========== ===========
Number of limited partnership units outstanding 7,150 7,150 7,150
=========== =========== ===========
Per limited partnership unit:
Loss before extraordinary item $ (964) $ (684) $ (782)
Extraordinary item 888 484 0
----------- ----------- -----------
Net loss $ (76) $ (200) $ (782)
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-20-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
<TABLE>
<CAPTION>
Total Limited Partners General Partners
------------ ------------ ---------
<S> <C> <C> <C>
Balance - March 26, 1993 $(31,780,935) $(31,145,580) $(635,355)
Net loss (5,650,857) (5,594,348) (56,509)
------------ ------------ ---------
Balance - March 25, 1994 (37,431,792) (36,739,928) (691,864)
Net loss (1,448,456) (1,433,971) (14,485)
------------ ------------ ---------
Balance - March 25, 1995 (38,880,248) (38,173,899) (706,349)
Net loss (548,077) (542,596) (5,481)
------------ ------------ ---------
Balance - March 25, 1996 $(39,428,325) $(38,716,495) $(711,830)
============ ============ =========
</TABLE>
See accompanying notes to consolidated financial statements.
-21-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year Ended March 25
1996 1995 1994
------------ ---------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (548,077) $(1,448,456) $(5,650,857)
------------ ---------- -----------
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Extraordinary item - forgiveness of indebtedness
(Note 11) (6,416,231) (3,494,274) 0
Depreciation and amortization 4,128,593 4,201,105 4,660,833
Provision for impairment of assets 1,116,378 0 0
Minority interest income (loss) of subsidiaries 42,752 15,637 (68,916)
(Increase) decrease in assets:
Cash-restricted for tenants' security deposits (2,442) (7,171) 47,396
Mortgage escrow deposits 267,998 222,549 (272,645)
Deferred costs 0 194 0
Prepaid expenses and other assets (17,148) 36,253 551,501
Increase (decrease) in liabilities:
Accounts payable, accrued expenses and other liabilities 2,204,058 1,249,372 (247,717)
Tenants' security deposits payable (3,893) 7,171 (47,396)
Increase in due to general partners of
subsidiaries and their affiliates 28,514 (440,135) 215,347
Due to general partners and affiliates 273,069 344,197 14,434
------------ ---------- -----------
Total adjustments 1,621,648 2,134,898 4,852,837
------------ ---------- -----------
Net cash provided by (used in) operating activities 1,073,571 686,442 (798,020)
------------ ---------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (69,119) (77,753) (81,246)
(Increase) decrease in mortgage escrow deposits -
replacement reserves (844,940) (70,018) (305,833)
------------ ---------- -----------
Net cash (used in) investing activities (914,059) (147,771) (387,079)
------------ ---------- -----------
Net cash from operating and investing activities,
carried forward 159,512 538,671 (1,185,099)
</TABLE>
See accompanying notes to consolidated financial statements.
-22-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
<TABLE>
<CAPTION>
Year Ended March 25
1995 1994 1993
------------ ---------- -----------
<S> <C> <C> <C>
Net cash from operating and investing activities,
brought forward 159,512 538,671 (1,185,099)
------------ ---------- -----------
Cash flows from financing activities:
Proceeds from mortgage note payable 25,514,700 0 1,258,409
Principal payments of mortgage notes payable (23,776,639) (466,012) (29,291)
Decrease in minority interest (209) 0 0
Increase in deferred costs (1,244,470) 0 (36,900)
Increase in due to general partners of subsidiaries
and their affiliates 50,428 0 0
Refund of deferred costs 0 0 5,831
------------ ---------- -----------
Net cash (used in) provided by financing activities 543,810 (466,012) 1,198,049
------------ ---------- -----------
Net increase (decrease) in cash 703,322 72,659 12,950
Cash and cash equivalents at beginning of year 319,200 246,541 233,591
------------ ---------- -----------
Cash and cash equivalents at end of year $ 1,022,522 $ 319,200 $ 246,541
============ ========== ===========
Supplemental disclosure of cash flows information:
Cash paid during the year for interest $ 7,120,065 $8,126,210 $ 8,551,216
============ ========== ===========
Supplemental disclosures of noncash financing activities:
Restructuring of indebtedness:
Restructuring of mortgage notes payable $ 4,892,450 $1,472,166 $ 0
Decrease in accounts payable, accrued expenses
and other liabilities 0 2,098,555 0
Deferred financing costs financed by
by mortgage notes payable 0 0 116,919
Decrease in prepaid and other assets 0 76,447 0
Accrued interest forgiven in connection with
restructuring of mortgage notes payable 2,046,343 0 0
Other assets forgiven in connection with restructuring
of mortgage notes payable 209,731 0 0
Net Deferred financing costs written off in connection
with restructuring of mortgage notes payable 312,828 0 0
</TABLE>
-23-
See accompanying notes to consolidated financial statements.
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 1 - Organization
Cambridge Advantaged Properties II Limited Partnership (formerly Hutton
Advantaged Properties II Limited Partnership) ("the Partnership") was formed
pursuant to the laws of the State of Delaware on June 25, 1985. The Partnership
invests, as a limited partner, in limited partnerships ("Local Partnerships",
"Subsidiaries" and "Subsidiary Partnerships"), each of which owns and operates
residential housing developments, which benefit from financing at rates below
those otherwise available from conventional lenders, made available through
various federal and state government programs or through the issuance of
tax-exempt bonds ("Advantaged Financings").
The Partnership holds an interest in 12 Local Partnerships which own 12
Apartment Complexes receiving government assistance.
The General Partners of the Partnership are Advantaged Housing
Associates Inc. (formerly Hutton Advantaged Housing Associates, Inc.) (the
"Advantaged General Partner"), a Delaware corporation and an affiliate of
Lehman Brothers, Inc. ("Lehman"), Related Advantaged Residential Associates
Inc. (the "Related General Partner"), a Delaware corporation and an
affiliate of The Related Companies, Inc. ("Related"), a New York limited
partnership and Related and Cambridge Associates Limited Partnership
(formerly Related and Hutton Associates Limited Partnership)
("Related/Cambridge Associates"), a Delaware limited partnership. The
general partners of Related/Cambridge Associates are the Advantaged General
Partner and the Related General Partner.
Pursuant to the public offering, which occurred from 1985 through 1986,
the Partnership received $35,750,000 of Gross Proceeds from 7,150 Limited
Partnership Interests. No further issuance of Limited Partnership Interests is
anticipated.
The terms of the Partnership's Restated Agreement of Limited
Partnership (the "Limited Partnership Agreement") provide, among other things,
that, subject to certain exceptions, profits and losses be shared 99% by the
limited partners and 1% by the general partners.
Effective May 19, 1995, the Partnership's name was changed from
Hutton Advantaged Properties II Limited Partnership to Cambridge Advantaged
Properties II Limited Partnership.
NOTE 2 - Summary of Significant Accounting Policies
a) Going Concern
As of March 25, 1996, several Local Partnerships are experiencing
financial difficulties. There is substantial doubt about the Partnership's
ability to continue as a going concern. Recoverability of a significant portion
of the Partnership's investments will depend upon material improvements in the
ability of each subsidiary partnership to meet its debt service obligations. In
addition, the level of cash distributions provided to the Partnership by the
Local Partnerships have not been sufficient, and may not be sufficient in the
future, to cover the Partnership's operating expenses. As a result, the
Partnership has required, and may in the future require, funding from other
sources for such purposes. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties. See
Note 12 for management's intentions.
b) Basis of Consolidation
The consolidated financial statements include the accounts of the
Partnership and 12 subsidiary partnerships in which the Partnership is a limited
partner, with an ownership interest of 98%.
-24-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 2 - Summary of Significant Accounting Policies (continued)
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.
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 approximately $47,500, $39,400, and $40,800 for the years
ended March 25, 1996, 1995 and 1994, respectively (the 1995, 1994 and 1993
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.
c) 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 less than three months.
d) Property and Equipment
Property and equipment are carried at the lower of depreciated cost
or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, 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 provision for loss on impairment of
assets is generally recorded when estimated amounts recoverable through future
operations and sale of the property on an undiscounted basis are below
depreciated cost. Property investments themselves are reduced to estimated fair
value (generally using discounted cash flows) when the property is considered to
be permanently impaired and the depreciated cost exceeds estimated fair value.
Through March 25, 1996, the Partnership has recorded approximately $1,116,000 as
an allowance for loss on impairment of assets.
e) Amortization
Deferred costs are being amortized over their respective periods of
benefit.
f) 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 10).
-25-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 2 - Summary of Significant Accounting Policies (continued)
g) 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.
h) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
i) Accounting Pronouncements Not Yet Implemented
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Partnership is required to review long-lived assets
and certain identifiable intangibles for impairment whenever events or changes
in circumstances indicate that the book value of an asset may not be
recoverable. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective March 26, 1996, the Partnership intends to adopt SFAS No.
121, consistent with the required adoption period. The Partnership does not
expect the implementation to have a material impact on its financial condition
or its future results of operations.
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, Certificates of Deposit, Mortgage Escrow
Deposits and Cash-Restricted for Tenants' Security Deposits
The carrying amount approximates fair value.
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 note payable
are as follows:
March 25, 1996
------------------------
Carrying
Mortgage Notes Payable for which it is: Amount Fair Value
------------ -----------
Practicable to estimate fair value $85,445,797 $81,476,701
Not Practicable (a) $31,509,401 $ 0
-26-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 3 - Fair Value of Financial Instruments (continued)
(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.
Accounts payable and accrued expenses
The estimated fair value of the Partnership's accounts payable and
accrued expenses which are different than carrying value are as follows:
March 25, 1996
------------------------
Carrying
Amount Fair Value
------------ -----------
Accounts payable and accrued expenses for which it is:
Practicable to estimate fair value $3,904,929 $ 302,545
The carrying amount of other assets and liabilities reported on the
statement of financial position that require such disclosure approximates fair
value.
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful
lives are as follows:
March 25 Estimated
1996 1995 Useful Lives
------------ ------------ ------------
Land* $ 11,960,011 $ 12,197,065
Buildings and improvements 116,307,408 117,186,512 15-40 Years
Furniture and fixtures 5,880,928 5,812,029 5-15 Years
------------ ------------
134,148,347 135,195,606
Less: Accumulated
depreciation (45,740,158) (41,816,329)
------------ ------------
$ 88,408,189 $ 93,379,277
============ ============
*For one subsidiary partnership, land is leased but no payment is
required until certain cash flow levels are achieved. No payments were required
in the 1995, 1994, and 1993 Fiscal Years, respectively.
Depreciation expense for the 1995, 1994, and 1993 Fiscal Years amounted
to $3,923,830, $3,961,144, and $4,160,496, respectively.
Galveston-Stewarts Landing, Ltd. ("Galveston") has experienced
significant cash flow problems and is presently in default on the Mortgage Note
Payable. Beal Bank, the mortgage noteholder, has provided formal notice
-27-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 4 - Property and Equipment (continued)
of their intent of foreclosure. As a result of the current period loss combined
with a history of operating and cash flows losses, it was determined that an
impairment of property and equipment existed at December 31, 1995. The
impairment loss was determined to be $1,116,378 and reported separately in the
Consolidated Statements of Operations. The amount of the impairment loss was
determined based in the difference in the carrying value of property and
equipment (net of depreciation) and the appraisal provided by Beal Bank, the
underlying mortgage holder. The appraisal was dated January 29, 1996, in the
amount of $4,050,000.
NOTE 5 - Mortgage Escrow Deposits
Mortgage escrow deposits consist of the following:
March 25
-------------------------
1996 1995
---------- ----------
Reserve for replacements $1,398,198 $ 553,258
Real estate taxes, insurance
and other 477,668 745,666
---------- ----------
$1,875,866 $1,298,924
========== ==========
NOTE 6 - Deferred Costs
The components of deferred costs and their periods of amortization are
as follows:
March 25
------------------------- Period
1996 1995 (Month)
---------- ---------- -------
Organization fee (a)(b) $ 102,709 $ 102,709 60
Bond and financing fees 2,517,632 2,390,803 65-240
---------- ----------
2,620,341 2,493,512
Less: Accumulated
amortization (674,955) (1,275,004)
---------- ----------
$1,945,386 $1,218,508
========== ==========
(a) Represents fees to the Partnership's general partners and
affiliates.
(b) Payable from capital contributions of the Partnership to the
subsidiary partnerships.
Amortization of deferred costs for the 1995, 1994 and 1993 Fiscal Years
aggregated $204,764, $239,961, and $500,337, respectively.
During the 1995, 1994 and 1993 Fiscal Years, respectively,
approximately $60,000, $899,000 and $2,900,000 of fully amortized deferred costs
were written off.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 7 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $701,000, including principal and interest at rates varying from
5% to 12% per annum, through 2030. 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.
Annual principal payment requirements for each of the next five fiscal
years are as follows:
Year Ending December 31 Amount
------------------------ ----------
1996 $ 15,319,486
1997 674,176
1998 716,469
1999 761,542
2000 8,075,557
Thereafter 91,407,968
------------
$116,955,198
============
The mortgage agreements require monthly deposits to replacement
reserves of approximately $16,722 and monthly deposits to escrow accounts for
real estate taxes, hazard and mortgage insurance and other (Note 5).
Suncreek - 268, Ltd.
In 1985 Suncreek-268, Ltd. ("Suncreek"), a subsidiary partnership
obtained a $10,000,000 variable rate mortgage loan from the County of
Sacramento, California (County) which matures April 2007, requires monthly
interest payments and is collateralized by the project. Pursuant to the terms of
an interest rate guarantee agreement between the Local General Partner and
Suncreek, the interest rate is effectively fixed at 9.9%. Interest paid to the
Local General Partner totaled $990,000 for the year ended December 31, 1995.
In connection with the mortgage loan, Suncreek obtained a $10,000,000
irrevocable letter of credit, which was provided to the County as additional
collateral. On April 15, 1995 the mortgage loan was paid by drawing upon the
letter of credit. Suncreek is negotiating with Resolution Trust Corporation, who
currently holds the original mortgage loan, to repay the loan at the discounted
amount of $6,800,000 plus accrued and unpaid interest. The general partner
believes this transaction will be consummated shortly. Additionally, the
Partnership is negotiating with a financial institution to obtain new permanent
financing.
The Partnership's investment in Suncreek has been reduced to zero by
prior years' losses. The minority interest balance in Suncreek was approximately
$337,000 and $346,000 at March 25, 1996 and 1995, respectively. Suncreek's net
loss after minority interest amounted to approximately $413,000, $427,000 and
$390,000 for the 1995, 1994, and 1993 Fiscal Years, respectively.
The Harbours Associates
During October 1995, The Harbours Associates ("Harbours") completed a
refinancing of its mortgage in the amount of $13,689,000 and, on that date, the
existing mortgage in the amount of $15,525,000 was extinguished at a discounted
pay-off of $13,015,000. In connection with the refinancing, the 1984 bonds
issued by the Newport News Redevelopment and Housing Authority for Harbours were
refunded with bonds issued by the
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 7 - Mortgage Notes Payable (continued)
Virginia Housing Development Authority which in turn made a loan to Harbours.
The new loan form Virginia Housing Development Authority bears interest at
7.375%, will be amortized over a 25 year period, requires monthly payments of
principal and interest of approximately $100,050 and matures on November 1,
2020. The mortgage may be prepaid beginning November 1, 2005 with a prepayment
penalty of 6% reduced by 1% for each 12 month period after that date but not
less that 1%. Under agreement with the VHDA, Harbours is required to make
monthly escrow deposits for taxes, insurance and replacement of project assets,
and is subject to restrictions as to operating policies, operating expenditures
and distributions to partners. The liability of Harbours under the mortgage note
is limited to the underlying value of the real estate collateral plus other
amounts deposited with the lender. As a result of the refinancing, an
extraordinary gain from the mortgage discount of $2,510,000, net of the write
off of certain other assets of $209,731 related to the bonds was realized.
Westwind II Associates
During 1995, Westwind II Associates ("Westwind II") completed a
refinancing of its mortgage in the amount of $4,540,700 and, on that date, the
existing mortgage in the amount of $5,660,000 was extinguished at a discounted
pay-off of $4,040,000. In connection with the refinancing, the 1985 bonds issued
by the City of Roanoke Redevelopment and Housing Authority for Westwind II were
refunded with bonds issued by the City of Roanoke Redevelopment and Housing
Authority which loaned those proceeds to Highland Mortgage Company which in turn
made a loan to Westwind II. The new loan from Highland Mortgage Company bears
interest at 6.94%, will be amortized over a 35 year period, requires monthly
payments of principal and interest of approximately $28,820 and matures on
November 1, 2030. The mortgage may be prepaid beginning November 1, 2005 with a
prepayment penalty of 3% reduced by 1% for each 12 month period after that date.
Under agreement with the mortgage lender and FHA, Westwood II is required to
make monthly escrow deposits for tax, insurance and replacement of project
assets, and is subject to restrictions as to operating policies, operating
expenditures and distributions to partners. The liability of Westwind II under
the mortgage note is limited to the underlying value of the real estate
collateral plus other amounts deposited with the lender. As a result of the
refinancing, an extraordinary gain from the mortgage discount of $1,620,000, net
of unamortized deferred mortgage costs of $59,284 was realized.
Woodridge, Ltd.
During June 1995, Woodridge, Ltd. ("Woodridge") completed a refinancing
of its first mortgage debt which matured on June 1, 1995. Under the refinancing,
$7,285,000 in variable rate first mortgage tax exempt refunding bonds were
issued by the Kansas Development Finance Authority on behalf of Woodridge. The
refunding proceeds extinguished the existing mortgage in the amount of
$7,850,000 and accrued interest of $700,000 at a discounted pay-off of
approximately $6,250,000 in cash plus a $900,000 second mortgage payable only
from available net cash flow and principal due at its maturity in June of 2005.
Monthly amortization payments will be paid to a sinking fund escrow account to
be used to redeem bonds at a sale or refinancing. These payments are calculated
on a 30-year schedule at a 10.65% interest rate. Effective December 1, 1995,
Woodridge elected to refund the bonds with a fixed rate to the maturity of the
bonds June 1, 2005. The fixed rate of interest is 5.9% per annum. As a result of
the refinancing, an extraordinary gain of approximately $1,462,000 was realized.
Brookwood Apartments, L.P.
During May 1995, Brookwood Apartments, L.P. completed a modification of
its mortgage debt which reduced the interest rate from 9.75% to 8.25% and
reduced the monthly installment of principal and interest from $48,916 to
$42,901. The mortgage note may be prepaid beginning June 1, 2005 in whole or in
part, without penalty or premium, on the first day of any month upon thirty days
written notice. Under the agreements with the mortgage
-30-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 7 - Mortgage Notes Payable (continued)
lender and HUD, the Partnership is required to make monthly escrow deposits for
taxes, insurance and replacement of project assets, and is subject to
restrictions as to operating policies, operating expenditures and distributions
to partners.
Apple Creek
Apple Creek Associates of Denton, Ltd. ("Apple Creek") first mortgage
note matured during February 1995. Since the maturity date Apple Creek had been
involved in negotiations to obtain a loan modification on the first mortgage and
had continued to make required interest and principal payments. On February 29,
1996, Apple Creek executed a loan modification agreement, which provided among
other things for an extension of the maturity date of the loan for five years .
Terms of the note requires monthly payments of principal and interest computed
at an interest rate of 8.5%, based on an amortization period of 25 years. In
addition, Apple creek agreed to remit on a quarterly basis 25% of cash flow
generated by the property to be considered a principal reduction. During the
first three years of the loan extension, Apple creek has the option to make
additional principal reductions in an amount not to exceed $300,000. As a
condition of the loan modification agreement, Apple Creek is required to pay for
all closing costs and pay a 1% fee of the restated principal balance at closing.
The Second and Third Notes require interest to accrue at 12% per annum, after
maturity, until paid.
McAdam Park
During November 1995, McAdam Park-336 Ltd. ("McAdam") completed a
refinancing of its mortgage debt. The existing debt was refinanced through the
issuance of tax exempt refunding bonds in the amount of $6,500,000 and by
increasing the project's second mortgage to $8,185,000. (See Note 11 and 12.)
NOTE 8 - Due to Selling Partners
Short-term notes payable in the original amount of $14,171,840 were
issued to the selling partners of the subsidiary partnerships as part of the
purchase price, plus cash payments of $4,894,910. Payment dates of the
noninterest bearing notes are subject to various conditions including break-even
and occupancy rental levels. As of March 25, 1996, $641,303 remains payable.
NOTE 9 - Related Party Transactions
One of the general partners of the Partnership, Related/Cambridge
Associates, has a 1% interest as a special limited partner in each of the
subsidiary partnerships.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 9 - Related Party Transactions (continued)
Whitney Management Corp., an affiliate of the Related General Partner,
is the general partner of one and managing agent of four of the properties.
Fees incurred to related parties for the years ended March 25, 1996,
1995 and 1994 were as follows:
Year Ended March 25
----------------------------
1996 1995 1994
-------- -------- --------
Partnership management fees (a) $ 60,000 $ 60,000 $ 60,000
Expense reimbursement (b) 77,677 89,368 89,121
Property management fees (c) 803,312 826,212 812,073
Local administrative fee (d) 10,000 10,000 10,000
-------- -------- --------
$950,989 $985,580 $971,194
======== ======== ========
(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 have
been charged to operations and are included in administrative and
management-related parties expenses. Partnership management fees owed to the
general partners amounting to approximately $457,000 and $397,000 were accrued
and unpaid as of March 25, 1996 and 1995, respectively.
(b) An affiliate of the Related General Partner performs services for
the Partnership which include, but are not limited to: accounting and financing
management, registrar, transfer and assignment functions, asset management,
investor communications, printing and other administrative services. 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 Partnership. These services include site visits and
evaluations of the subsidiary partnerships' performances. Expense reimbursements
and asset monitoring fees owed to the General Partner amounting to approximately
$373,000 and $297,000 were accrued and unpaid as of March 25, 1996 and 1995,
respectively.
(c) Property management fees incurred by subsidiary partnerships
amounted to $862,480, $879,563 and $864,728 for the 1995, 1994, and 1993 Fiscal
Years, respectively. Of these fees, $433,519, $323,726 and $328,070, were
incurred to affiliates of the subsidiary partnerships. In addition, $587,800,
$616,956 and $600,836, were incurred to affiliates of the Related General
Partner for the 1995, 1994 and 1993 Fiscal Years, respectively. Of such amounts
incurred to affiliates of the Related General Partner, $218,007, $114,470 and
$116,833, are also included in amounts incurred to affiliates of the subsidiary
partners because they were incurred to affiliates of both.
(d) Related/Cambridge Associates, a limited partner of the subsidiary
partnerships is entitled to receive a local administrative fee of up to $2,500
from each subsidiary partnership.
Related/Cambridge Associates, a General Partner of the Partnership, is
a special limited partner of each Local Partnership, with a 1% interest in
profits, losses and distributions. There were no cash distributions from
operations for the years ended March 25, 1996 and 1995.
C/R Florida Associates, L.P., a Delaware limited partnership ("C/R
Florida"), is the general partner of Players Club at Fort Myers, Ltd. ("Players
Club") and Suntree at Fort Myers, Ltd. ("Suntree"), with a 1% interest in
profits, losses and distributions. The Related General Partner and the
Advantaged General Partner are the general partners of C/R Florida.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 9 - Related Party Transactions (continued)
During September 1988, the Partnership obtained a $793,867 loan from an
affiliate of the Related General Partner. This loan accrues interest at the
bank's prime rate plus 1% and is repayable from all available cash sources.
These funds, together with $2,545,223 of Partnership funds, were advanced by the
Partnership to complete Triangle/Oaks Limited Partnership ("the Oaks")
refinancing and to provide adequate working capital for the local partnership.
Approximately $2,800,000 remains outstanding at March 25, 1996 (Note 13).
As of December 31, 1995, an affiliate of the Related General Partner
advanced $310,926 to the Partnership, none of which was advanced in the 1995 or
1994 Fiscal Years. These funds were advanced by the Partnership to Sheridan to
provide working capital . Such note is noninterest bearing.
(Note 13).
As of December 31, 1995, the Partnership and Whitney Management
Corporation, an affiliate of the Local General Partner, and the Partnership had
advanced $606,445 to Galveston, none of which was advanced during the 1994 or
1993 Fiscal Years. These funds were advanced to provide working capital to the
subsidiary partnership. Such note is noninterest bearing (Note 12).
The Partnership has advanced $473,007 to McAdam Park-336, Ltd.
("McAdam") in connection with the restructuring of their mortgage debt,
including $213,000 during the 1994 Fiscal Year, and approximately $260,000
during the 1992 Fiscal Year. Although this advance is treated as a voluntary
loan as defined in the subsidiary partnership agreement, by separate agreement
with the mortgagee, these advances will be noninterest bearing. The loan is
subordinate to the mortgage notes and repayment is expected only from resale of
the Property or refinancing of the mortgage debt (Note 12).
As of December 31, 1995, the Partnership had advanced Apple Creek
Associates of Denton, Ltd. ("Apple Creek") approximately $850,000, none of which
was advanced during the 1995 or 1994 Fiscal Years.
Due to local general partners and affiliates at March 25, 1996 and 1995
consists of the following:
December 31,
-------------------------
1995 1994
---------- ----------
Operating deficit loans (*) $1,625,441 $1,560,013
Long-term note payable (**) 25,000 40,000
Management and other operating advances 109,928 81,414
---------- ----------
$1,760,369 $1,681,427
========== ==========
(*) Operating deficit loans include five loans payable to local general
partners and affiliates which are unsecured, non-interest bearing and are
payable out of available surplus cash, of the respective subsidiary partnership,
or at the time of sale or refinancing.
(**) One subsidiary partnership has a long-term note payable to its
local general partner. The note, which matures in 1997, requires monthly
principal payments in the amount of $1,250 plus interest at the prime rate.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 10 - Income Taxes
A reconciliation of the financial statement net loss to the income tax
loss for the Partnership and its consolidated subsidiaries is as follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement net loss $ (548,077) $(1,448,456) $(5,650,857)
Difference between depreciation expense
recorded for financial reporting purposes and the
accelerated cost recovery system utilized for
income tax purposes (1,068,098) (1,260,062) (1,645,147)
Other 453 (375,334) 521,219
----------- ----------- -----------
Loss as shown on the income tax return for the
calendar year ended $ 1,615,722 $(3,083,852) $(6,774,785)
=========== =========== ===========
</TABLE>
NOTE 11 - Extraordinary Item - Forgiveness of Indebtedness Income
Extraordinary items-forgiveness of indebtedness consist of the follows:
Year Ended March 25
----------------------------------
1995 1994 1993
---------- ----------- ----
Woodridge $1,462,450 $ 0 $ 0
Westwind II 1,560,716 0 0
Harbours 2,300,269 0 0
McAdam Park-336 Ltd. 1,092,796 0 0
Triangle/Oaks Limited Partnership 0 3,494,274 0
---------- ----------- ----
$6,416,231 $ 3,494,274 $ 0
========== =========== ====
Woodridge
During 1995, Woodridge completed a refinancing of its first mortgage
debt which matured on June 1, 1995 (see Note 7 above). As a result of the
refinancing, the previous mortgage including past due interest was discounted
and paid and an extraordinary gain of $1,462,450 was realized.
Westwind II
During 1995 Westwind II incurred an extraordinary gain of $1,560,716 on
the early retirement of the debt related to the Multifamily Rental Housing
Revenue bonds issued by the authority of the Roanoke Redevelopment and Housing
Authority. Westwind II retired the debt at a discount, using the funds obtained
from a mortgage issued by FHA. The debt balance at the time of the refinancing
was $5,660,000 and the amount paid to
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 11 - Extraordinary Item - Forgiveness of Indebtedness Income (continued)
retire the debt was $4,040,000 resulting in a discount of $1,620,000. The gain
was offset by the write off of the net unamortized deferred mortgage costs of
$59,284 related to the bonds.
Harbours
During 1995 Harbours incurred an extraordinary gain of $2,300,269 on
the early retirement of the debt related to the Multifamily Rental Housing
Revenue bonds issued by the authority of the Newport News Redevelopment and
Housing Authority. Harbours retired the debt at a discount, using the funds
obtained from a mortgage issued by Virginia Housing Development Authority. The
debt balance at the time of the refinancing was $15,525,000 and the amount paid
to retire the debt was $13,015,000 resulting in a discount of $2,150,000. The
gain was offset by the write off of certain other assets of $209,731 related to
the bonds.
McAdam
During November 1995, McAdam refinanced its mortgage debt accrued
unpaid interest of $1,346,343 was forgiven by the mortgage and recorded as an
extraordinary item net of unamortized deferred mortgage costs of $253,547. (See
Note 7.)
Oaks
During 1994, the debt of Triangle/Oaks Limited Partnership ("Oaks") was
modified. As a result of the modification, three subordinated notes previously
recorded as a liability of the partnership in the amount of $1,472,166 were
surrendered by the mortgagee and cancelled. In addition, interest previously
accrued on the subordinated and wrap notes were also cancelled. Trustee fees
were forgiven and legal costs incurred during 1994 were netted against the
reduced liabilities resulting in a recognized extraordinary gain of $3,494,274
during the 1994 Fiscal Year.
NOTE 12 - Commitments and Contingencies
a) Events of Default and Going Concern
The financial statements for four 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 four subsidiary
partnerships modified their reports on the 1995 Fiscal Year financial statements
due to the uncertainty of each subsidiary partnership's ability to continue as a
going concern. The four subsidiary partnerships are Galveston, Players Club,
Suntree and McAdam.
In view of the matters described in the preceding paragraph,
recoverability of the Partnership's investment in the subsidiary partnerships is
dependent upon continued operations of the subsidiary partnerships, which in
turn are dependent upon the ability of each subsidiary partnership to meet
financing requirements on a continuing basis and to succeed in future
operations. The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the subsidiary
partnerships be unable to continue in existence.
Management of the Partnership intends to continue to support the
efforts of the Local General Partners of these subsidiary partnerships to
refinance or restructure mortgage indebtedness and to provide
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 12 - Commitments and Contingencies (continued)
a) Events of Default and Going Concern (continued)
consultation and advice in such matters as required.
The following is a description of each subsidiary's events of
default and going concern issues, as well as the courses of action taken by the
respective local general partners to enable the subsidiary partnerships to
achieve such goals.
Galveston
Galveston has sustained continued operating deficits and has a net
partners' deficiency of approximately $5,656,000 at March 25, 1996. Galveston
mortgage note was originally due to HUD. During 1995, HUD assigned and
transferred the mortgage note to Beal Bank. On December 14, 1995, Galveston was
notified that the mortgage note was in default and the subsidiary was in arrears
on required principal and interest in the amount of approximately $427,000 and
$2,359,000, respectively. Beal Bank has commenced foreclosure proceedings.
Galveston is in the process of trying to negotiate a provisional workout or
modification agreement with Beal Bank but there can be no assurance that such
negotiations will be successful. As of March 25, 1996 the Partnership and
Whitney Management Corporation, an affiliate of the Related General Partner and
the local general partner, had advanced $606,445 of interest-free loans to
Galveston of which approximately $549,000 remains unpaid at March 25, 1996. The
Partnership's investment in Galveston has been reduced to zero by prior years'
losses. The minority interest balance in Galveston was zero at both March 25,
1996 and 1995. Galveston's net loss after minority interest amounted to
approximately $1,377,000, $357,000 and $343,000 for the 1995, 1994, and 1993
Fiscal Years, respectively.
Players Club and Suntree
Players Club and Suntree have incurred operating losses and cash
flow deficits due to low occupancy levels. At March 25, 1996, Players Club and
Suntree have partners' deficiencies of approximately $2,715,000 and $2,044,000,
respectively. In addition, the Local General Partners' operating deficit
guarantees have expired and there is no further obligation to continue to fund
operating deficits. The Partnership entered into agreements with bondholders in
January 1993 (further modified effective January 1996 and again extended and
modified effective January 1997). The extension of the forbearance agreements
call for minimum debt service payments at the rate of 7.5% for Suntree and 7.0%
for Players Club through 1996, at which time the minimum pay rates are then
scheduled to increase to the original stated rates of 8%. The difference between
the minimum pay rate and the stated rate is payable from all future available
cash flow or is deferred to be paid from sales/refinancing proceeds.
Recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operation of the
subsidiary partnerships, which is dependent upon their abilities to meet
financing requirements on a continuing basis, to maintain present financing, and
to succeed in future operations. In addition, management has taken steps to
control the subsidiary partnerships' operating expenses.
The Partnership's investments in Players Club and Suntree have been
reduced to zero by prior years' losses. The minority interest balance for
Players Club was approximately $18,000 and $29,000 at March 25, 1996 and 1995,
respectively. In the case of Suntree, the minority interest balance for Suntree
was approximately $18,000 and $24,000 at March 25, 1996 and 1995, respectively.
Players Club's net loss after minority interest amounted to approximately
$544,000, $597,000 and $435,000 for the 1995, 1994 and 1993 Fiscal Years,
respectively. Suntree's net loss after minority interest amounted to
approximately $307,000, $401,000 and $370,000 for the 1995, 1994 and 1993 Fiscal
Years, respectively.
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<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 12 - Commitments and Contingencies (continued)
a) Events of Default and Going Concern (continued)
McAdam
Through March 25, 1996, the Partnership has advanced $473,007 to
McAdam to enable it to make debt-service payments,. This advance was treated as
a voluntary loan and will be noninterest bearing. The loan is subordinate to the
mortgage notes and repayment can occur only from resale of the property or
refinancing of the mortgage debt. As a result of recurring losses from
operations and negative cash flows from operating activities, McAdam has been
unable to meet its debt obligations and by October 30, 1994, the Partnership
could no longer advance funds to keep the debt service current. Accordingly, in
October 1994, McAdam stopped paying debt service and defaulted on its mortgage
obligation.
During November 1995, McAdam completed a refinancing of its mortgage
debt. Prior to the refinancing, the project was encumbered with $14,685,000 of
aggregate mortgage debt, consisting of a first mortgage of $12,920,000 and a
second mortgage, payable only to the extent of available cash flow, of
$1,765,000. The existing debt was refinanced through the issuance of tax-exempt
refunding bonds in the amount of $6,500,000 and by increasing the project's
second mortgage to $8,185,000. Accrued unpaid interest in the amount of
$1,346,343 was forgiven by the mortgagee.
Prior to completing the refinancing, on October 13, 1995, McAdam and
Fannie Mae ("Purchaser") entered into an Option Agreement that grants the
Purchaser the option to purchase the project for $14,685,000. The Purchaser paid
$50,000 in consideration of the option and was to exercise its rights under the
Option Agreement during the period commencing on May 23, 1996 and ending on
August 17, 1996. On May 31, 1996, the purchaser exercised this option and took
possession of the property.
These matters raise substantial doubt about McAdam's ability to
continue as a going concern. The financial statements do not contain any
adjustments which might result from the outcome of these matters.
As of March 25, 1996, McAdam's total liabilities exceeded total
assets by approximately $6,754,000 and the net loss for the year ended March 25,
1996 totaled approximately $1,440,000.
The Partnership's investment in McAdam has been reduced to zero by
prior years' losses. The minority interest balance in McAdam was zero at March
25, 1996 and 1995, respectively. McAdam's net loss after minority interest
amounted to approximately $851,000, $1,101,000 and $917,000 for the 1995, 1994
and 1993 Fiscal Years, respectively.
b) Subsidiary Partnerships - Other
Oaks
On September 13, 1991, the Oaks filed a petition under Chapter 11. The
filing of the petition was brought about by the rehabilitation proceedings
involving the Mutual Benefit Life Insurance Co. ("Mutual Benefit"). Mutual
Benefit was the credit enhancer for bonds issued by the Florida Housing Finance
Agency. During 1988, the Oaks was refinanced with the tax exempt bonds. The
filing of the rehabilitation proceedings constituted a technical non monetary
default under the mortgage and other security documents. In order to avoid the
possibility of a required early payment of the total mortgage due to the
technical default, the Partnership filed for reorganization under Chapter 11.
-37-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 12 - Commitments and Contingencies (continued)
b) Subsidiary Partnerships - Other (continued)
On May 14, 1992, the Oaks dismissed the Chapter 11 petition in favor of
a court-ordered Standstill Agreement which protected the Oaks from foreclosure
while alleviating the Oaks of expenses relating to the Chapter 11 motion. The
Standstill Agreement expired on August 15, 1992, however, the bank must give 15
days notice before taking action on any previously noticed defaults. The Oaks is
currently operating outside the protection of the bankruptcy courts and has not
received any further notices of default from the bank. The Mutual Benefit
rehabilitation proceeding continues to constitute a technical, nonmonetary
default under the mortgage and other security documents.
During the 1993 Fiscal Year, a declaratory relief action was filed. It
acknowledges that default events have occurred and prohibits the trustee from
exercising any default remedies providing that the Oaks complies with the terms
of the agreement. During March 1994, the trustee agreed to forbear from
exercising default remedies, provided among other things, that the subsidiary
partnership is current in making debt service payments in the future. No
remarketing of the bonds, as originally scheduled for February 1, 1994, has
occurred.
During 1994, the debt of the Oaks was modified. As a result of the
modification, three subordinated notes previously recorded as a liability of the
Partnership in the amount of $1,472,166 were surrendered by the mortgagee and
cancelled. In addition, interest previously accrued on the subordinated and wrap
notes were also cancelled. Trustee fees were forgiven and legal costs incurred
during 1994 were netted against the reduced liabilities resulting in a
recognized extraordinary gain of $3,494,274 during the 1994 Fiscal Year.
The Partnership's investment in the Oaks has been reduced to zero by
prior year losses. The minority interest balance in the Oaks was approximately
$426,000 and $434,000 at March 25, 1996 and 1995, respectively. Oaks' losses
after minority interest amounted to approximately $402,000 for the 1995 Fiscal
Year. Oaks' net income after minority interest amounted to approximately
$2,902,000 for the 1994 Fiscal Year. Oak's net loss after minority interest
amounted to approximately $1,233,000 for the 1993 Fiscal Year.
Sheridan Square Associates of Lawton
As of March 25, 1996, the Partnership had advanced $310,926 of
subordinated interest free loans to Sheridan Square Associates of Lawton
("Sheridan"), none of which has been advanced since the 1992 Fiscal Year.
Sheridan has sustained continued operating deficits and has a net capital
deficiency at March 31, 1996 of approximately $3,583,000.
The Partnership's investment in Sheridan has been reduced to zero by
prior years' losses. The minority interest balance in Sheridan was approximately
$311,000 and $317,000 at March 25, 1996 and March 25, 1995, respectively.
Sheridan's net loss after minority interest amounted to approximately $327,000,
$244,000 and $313,000 for the 1995, 1994 and 1993 Fiscal Years, respectively.
c) Land Lease
Suncreek, a subsidiary partnership, leases its land from its general
partner for a term of 99 years commencing December 20, 1985. As specified in the
subsidiary partnership agreement, these lease payments are due only when certain
cash flow levels from operations have been reached or sufficient cash proceeds
from sale or refinancing are obtained. No rent payments were required in 1995,
1994 or 1993. As of December 31, 1995 there is approximately $1,600,000 of
accumulated lease payments that would be payable from the sale or refinancing of
the property, contingent upon obtaining sufficient cash, as specified in the
agreement.
-38-
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 1996
NOTE 12 - Commitments and Contingencies (continued)
d) Uninsured Cash and Cash Equivalents
The Partnership maintains 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, 1996, uninsured cash and
cash equivalents approximated $315,000.
e) Other
The Partnership is subject to 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 25% 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
owners 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 contract expire.
Each subsidiary partnership with restricted assets had liabilities
in excess of assets at December 31, 1995.
-39-
<PAGE>
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.
Advantaged Housing Associates Inc., the Advantaged General Partner, is
an affiliate of Lehman. Related Advantaged Residential Associates Inc., (Related
General Partner), is an affiliate of The Related Companies, L.P. ("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 engage other
affiliates of Related and Lehman, to assist them in connection herewith.
Certain information concerning the directors and executive officers of
the General Partners are set forth below.
Advantaged Housing Associates Inc.
Advantaged Housing Associates Inc. was incorporated in Delaware on June
25, 1985. As described below, several of the executive officers and directors of
the Advantaged General Partner have had significant experience in the real
estate business. The Advantaged General Partner reviews the operations, budgets
and financial results of the Partnership and Local Partnerships on an ongoing
basis. The Advantaged General Partner and/or its affiliates, through
participation on the Investment Committee or otherwise, will provide
consultation and advice with respect to proposed sales and refinancings of the
Partnership's investments in appropriate circumstances. The Advantaged General
Partner also assists in the preparation of, and reviews and comments upon, all
filings required to be made by the Partnership with the Securities and Exchange
Commission, the Internal Revenue Service, and any other federal or state
government body, and communications with and reports to Limited Partners.
The directors and executive officers of the Advantaged General Partner
are as follows:
PAUL L. ABBOTT, 50, is President of the Advantaged General Partner
and the Managing Director of Lehman Brothers. Mr. Abbott joined Lehman in
August 1988, and is responsible for investment management of residential,
commercial and retail real estate. Prior to joining Lehman, Mr. Abbott was
a real estate consultant and a senior officer of a privately held company
specializing in the syndication of private real estate limited
partnerships. From 1974 to 1983, Mr. Abbott was an officer of two life
insurance companies and a director of an insurance agency subsidiary. Mr.
Abbott received his formal education in the undergraduate and graduate
schools of Washington University in St. Louis.
DONALD E. PETROW, 39, is a Vice President of the Advantaged General
Partner and First Vice President of Lehman Brothers. From March 1989, he
has been responsible for the investment management and restructuring of
mortgage and equity investments secured by multi-family apartments and
government assisted housing. From November 1981 to February 1989, Mr.
Petrow, as a Vice President of Lehman, was involved in investment banking
activities relating to commercial real estate direct investments. Prior to
joining Lehman, Mr. Petrow was employed in accounting and equipment leasing
firms. Mr. Petrow holds a B.S. degree in accounting from Saint Peters
College and an M.B.A. in finance from Pace University.
DONALD HABER, 36, is a Vice President of the Advantaged General Partner
and a Vice President of Lehman Brothers, a position he has held since September
1991. Mr. Haber joined Lehman in 1989 as an Assistant Vice President and real
estate specialist in the limited partnership origination group. For eight years
prior to joining Lehman, Mr. Haber held a variety of positions with certain real
estate developers and owners, as well as with the accounting firm of KPMG Peat
Marwick. Mr. Haber holds a bachelor of science degree in accounting from the
University of Florida and is a certified public accountant.
-40-
<PAGE>
Related Advantaged Residential Associates Inc.
Related Advantaged Residential Associates Inc. was incorporated in
Delaware on January 25, 1985. The directors and executive officers of the
Related General Partner are as follows:
STEPHEN M. ROSS, 56, is a Director of the Related General Partner. Mr.
Ross is also president, director and a 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.
J. MICHAEL FRIED, 52, is President and a Director of the Related
General Partner. Mr. Fried is president, a director and a principal shareholder
of Related Capital Corporation ("Capital"), a real estate finance and
acquisition affiliate of the General Partner. In that capacity, he is the chief
executive officer of Capital, and is responsible for initiating and directing
all of Capital's syndication, finance, acquisition and investor reporting
activities. Mr. Fried practiced corporate law in New York City with the law firm
of Proskauer Rose Goetz & Mendelsohn from 1974 until he joined Capital in 1979.
Mr. Fried graduated from Brooklyn Law School with a Juris Doctor degree, magna
cum laude; from Long Island University Graduate School with a master of science
degree in psychology; and from Michigan State University with a bachelor of arts
degree in history.
D. GARRY MUNSON, 51, was an Executive Vice President of the Related
General Partner prior to resigning on January 2, 1992. Mr. Munson graduated
from Cornell University with a bachelor of science degree in industrial and
labor relations and from the University of Pennsylvania Wharton School of
Finance with a Masters in business administration. Mr. Munson founded in
1977, and is currently President and part owner of, Whitney Management
Company, and Munson and Company. Whitney Management Company manages
residential real estate projects. Munson and Company provides consulting
services to the residential real estate industry. Mr. Munson joined Capital
in September 1985 as head of the Acquisition Department.
ALAN P. HIRMES, 41, is a Senior Vice President of the Related
General Partner. Mr. Hirmes 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, 40, is a Vice President of the Related General
Partner. Mr. Boesky 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 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.
LAWRENCE J. LIPTON, 40, is Treasurer and an Assistant Vice
President of the Related General Partner. Mr. Lipton has been a certified
public accountant in New York since 1989. Prior to joining Related, Mr.
Lipton was employed by Deloitte & Touche form 1987 to 1991. Mr. Lipton
graduated from Rutgers College with a bachelor of arts degree and from
Baruch College with a masters of business administration degree.
-41-
<PAGE>
ROBERT BORDONARO, 42, is Assistant Vice President of the Related
General Partner. Mr. Bordonaro is also a controller of The Related
Companies, L.P. Mr. Bordonaro has been a certified public accountant in New
York since 1977. Prior to joining Related, Mr. Bordonaro was employed by
the accounting firms of Weiner & Co. from 1982-1985 and Arthur Young from
1975-1981. Mr. Bordonaro graduated from New York
University with a bachelor of science degree in 1974 and with a masters of
business administration degree in 1975.
LYNN A. McMAHON, 40, is Secretary of the Related General Partner.
Since 1983, she has served as assistant to the President of Capital. From
1978 to 1983 she was employed at Sony Corporation of America in the
Government Relations Department.
SUSAN J. McGUIRE, 49, is Assistant Secretary of the Related General
Partner. She began her employment at Capital in January 1977 as assistant to
the President and Office Manager. In January 1986, Ms. McGuire was promoted
to Vice President of Capital and she is also the Secretary of Capital. From
May 1973 to January 1977, she was employed as an administrative assistant
with Condren, Walker & Co, Inc., an investment banking firm in New York
City. Ms. McGuire attended Queensboro Community College.
-42-
<PAGE>
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 sales and
refinancings. Certain directors and officers of the General Partners receive
compensation from the General Partners and their affiliates for services
performed for various affiliated entities which may include services performed
for the Partnership. See Note 9 to the Financial Statements, which is
incorporated by reference.
Tabular information concerning salaries, bonuses and other types of
compensation payable to execute 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 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, 1996, security ownership by the General Partners and their
affiliates is as listed:
<TABLE>
<CAPTION>
Name of Percentage of Outstanding
Title of Class Beneficial Ownership Amount General Partner Interest
------------ ------------------- ------ ------------------------
<S> <C> <C>
General Partnership Advantaged Housing
Interest in the Associates Inc. $10 13.2%
Partnership
Related Advantaged 6 19.8%
Residential
Associates Inc.
Related and Cambridge
Associates Limited
Partnership 4 67.0%
------
100.0%
</TABLE>
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 in Item 11 and also
Note 9 to the Financial Statements in Item 8 above. However, there have been no
direct financial transactions between the Partnership and the directors and
officers of the General Partners.
Related/Cambridge Associates is a special limited partner of each Local
Partnership, with a 1% interest in profits, losses and distributions from such
Local Partnerships. As discussed in Item 1, Related/Cambridge Associates 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. Related/Cambridge Associates, an
affiliate of the Related General Partner, is also the general partner of four of
the properties.
-43-
<PAGE>
The Related General Partner and the Cambridge General Partner are the
general partners of C/R Florida, which is the Local General Partner of Players
Club and Suntree. The Cambridge General Partner and certain officers, directors
and shareholders of the Related General Partner are the limited partners of C/R
Florida.
Related Management Corporation of Florida, an affiliate of the Related
General Partner, provides property management services to three Local
Partnerships, for which it was paid its usual and customary management fees,
aggregating approximately $309,000, $299,000 and $288,000 during the 1995, 1994
and 1993 Fiscal Years, respectively.
Whitney Management Corp., an affiliate of the Related General Partner,
is the general partner of one and the managing agent of four of the properties.
Property management fees earned by Whitney Management Corp. were approximately
$278,000, $268,000 and $256,000 for the 1995, 1994 and 1993 Fiscal Years,
respectively.
Related Management Corp., an affiliate of the Related General Partner,
provides property management services to one of the Local Partnerships, for
which it was paid its usual and customary management fees, totaling
approximately $0, $50,000, and $57,000 during the 1995, 1994 and 1993 Fiscal
Years, respectively.
-44-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential
Page
(a) 1. Financial Statements
Independent Auditors' Report 18
Consolidated Balance Sheets at March 25, 1996 and
1995 55
Consolidated Statements of Operations for the Years
Ended March 25, 1996, 1995 and 1994 56
Consolidated Statements of Changes in Partners' Deficit for the Years
Ended March 25, 1996, 1995 and 1994 57
Consolidated Statements of Cash Flows for the Years
Ended March 25, 1996, 1995 and 1994 58
Notes to Consolidated Financial Statements 60
The financial statements of the Local Partnerships
are not included separately herein
(a) 2. Financial Statement Schedules
Independent Auditors' Report on Financial Statement
Schedules 84
Schedule III - Real Estate and Accumulated
Depreciation 85
All other schedules have been 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
(3A) Form of Amended and Restated Agreement and
Certificate of Limited Partnership of
the Registrant**
(3B) Amended Certificate of Limited Partnership of
the Registrant, as filed with the
Secretary of State of the State of Delaware**
(10A)Form of Escrow Agreement**
(22) Subsidiaries of the Registrant 88
(27) Financial Data Schedule (filed herewith) 89
**Incorporated by reference to exhibits filed with
Amendment No. 1 to Cambridge Advantaged
Properties II L.P.'s Registration Statement Form
S-11 Registration File No. 2-98773.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
-45-
<PAGE>
SIGNATURES
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:
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP
(Registrant)
By: RELATED ADVANTAGED RESIDENTIAL
ASSOCIATES INC.,
a General Partner
Dated: June 21, 1996
By: /s/ J. Michael Fried
_________________________
J. Michael Fried,
President and Director
By: ADVANTAGED HOUSING ASSOCIATES, INC.
a General Partner
Dated: June 21, 1996
By: /s/ Paul L. Abbott
_________________________
Paul L. Abbott,
President
-49-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the report has been signed below by the following persons on behalf by the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- - --------------------------- -------------------------------------- -----------
<S> <C> <C>
President and Chief Executive Officer
/s/J. Michael Fried (Principal executive officer) and
____________________________ Director of Related Advantaged June 21, 1996
J. Michael Fried Residential Associates, Inc.
/s/ Lawrence J. Lipton Treasurer (principal financial and accounting
____________________________ officer) of Related Advantaged Residential June 21, 1996
Lawrence J. Lipton Associates, Inc.
/s/ Stephen M. Ross Director of Related Advantaged June 21, 1996
____________________________ Residential Associates, Inc.
Stephen M. Ross
Chairman of the Board, President, Chief
/s/ Paul L. Abbott Executive Officer (principal executive officer)
____________________________ and Director of Advantaged Housing June 21, 1996
Paul L. Abbott Associates, Inc.
</TABLE>
-50-
<PAGE>
[Trien, Rosenberg, Felix, Rosenberg, Barr & Wein, LLP letterhead]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Cambridge Advantaged Properties II
Limited Partnership and Subsidiaries
In connection with our audits of the consolidated financial
statements of Cambridge Advantaged Properties II Limited Partnership and
Subsidiaries included in this Form 10-K as presented in our opinion dated June
14, 1996 on pages 18 and 19, which is based in part on the reports of other
auditors, we have also audited supporting Schedule III for the 1995, 1994 and
1993 Fiscal Years. In our opinion, and based on the reports of other auditors,
(certain of which were modified due to the uncertainty of these subsidiary
partnerships' abilities to continue in existence), this consolidated schedule
presents fairly, when read in conjunction with the related consolidated
financial statements, the financial data required to be set forth therein.
The accompanying consolidated financial statements of Cambridge
Advantaged Properties II Limited Partnership and Subsidiaries have been prepared
assuming that the consolidated entity and its subsidiary partnerships will
continue as going concerns. As discussed in Notes 2 and 12, the auditors of four
(Fiscal 1995) subsidiary partnerships have modified their reports due to the
uncertainties of the subsidiary partnerships' abilities to continue as going
concerns. These subsidiary partnerships' losses before extraordinary item
constituted 60%, 50% and 37% of the Partnership's losses before extraordinary
item during the 1995, 1994 and 1993 Fiscal Years, respectively, and their assets
constituted 31% and 33% of the Partnership's assets at March 25, 1996 and 1995,
respectively. The consolidated entity and its subsidiary partnerships have
significant contingencies which raise substantial doubt about their ability to
continue as going concerns. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
/s/ TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP
TRIEN, ROSENBERG, FELIX,
ROSENBERG, BARR & WEINBERG, LLP
New York, New York
June 14, 1996
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 1996
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Partnership Acquisition:
Subsidiary Partnership's Residential Encumbrances Improvements
Property Land Buildings and Improvements
<S> <C> <C> <C> <C>
(2) Triangle/Oaks Limited Partnership $19,370,000 $ 1,412,511 $ 17,812,831 $4,898,346
(4) Sheridan Square Associates of 9,203,377 1,093,520 8,228,192 459,426
Lawton
(5) Apple Creek Associates of Denton, 7,946,355 398,000 8,517,595 (406,708)
Ltd
(5) Galveston-Stewart's Landing, Ltd 6,540,089 1,112,405 6,462,225 (1,069,129)
(a)
(2) Players Club at Fort Myers, Ltd 9,700,000 3,204,124 10,013,904 (2,187,222)
(2) Suntree at Fort Myers, Ltd 7,500,000 2,098,029 8,748,887 (2,196,134)
(3) Woodridge, Ltd 8,185,000 1,368,929 7,072,779 388,180
(6) The Harbours Associates 13,657,062 1,449,985 15,323,441 (255,982)
(6) Westwind II Associates 4,535,570 322,817 4,919,687 750,207
(3) Brookwood Apartments L.P. 5,632,745 368,827 6,803,294 59,464
(1) Suncreek-268, Ltd 10,000,000 0 (b) 9,170,112 2,417,427
(1) McAdam Park-336, Ltd 14,685,000 0 (e) 11,027,615 4,360,763
----------- ----------- ----------- ---------
116,955,198 $12,829,147 $114,100,562 $ 7,218,638
=========== ========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which Carried At Close of Period
Subsidiary Partnership's Residential Buildings and
Property Land Improvements Total
<S> <C> <C> <C>
(2) Triangle/Oaks Limited Partnership $ 1,882,423 $ 22,241,265 $ 24,123,688
(4) Sheridan Square Associates of 1,093,520 8,687,618 9,781,138
Lawton
(5) Apple Creek Associates of Denton, 398,000 8,110,887 8,508,887
Ltd
(5) Galveston-Stewart's Landing, Ltd 875,351 5,630,150 6,505,501
(a)
(2) Players Club at Fort Myers, Ltd 2,668,486 8,362,320 11,030,806
(2) Suntree at Fort Myers, Ltd 1,667,738 6,983,044 8,650,782
(3) Woodridge, Ltd 1,232,864 7,597,024 8,829,888
(6) The Harbours Associates 1,449,985 15,067,459 16,517,444
(6) Westwind II Associates 322,817 5,669,894 5,992,711
(3) Brookwood Apartments L.P. 368,827 6,862,758 7,231,585
(1) Suncreek-268, Ltd 0 (b) 11,587,539 11,587,539
(1) McAdam Park-336, Ltd 0 (e) 15,388,378 15,388,378
----------- ------------ ------------
$11,960,011 $122,188,336 $134,148,347
=========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
Life on which
Depreciation in Latest
Year of Income Statement is
Subsidiary Partnership's Residential Accumulated Construction Date Acquired Computed (c) (d)
Property Depreciation
<S> <C> <C> <C> <C>
(2) Triangle/Oaks Limited Partnership $ 7,499,590 (c) 9/85 40 Years
(4) Sheridan Square Associates of 3,239,848 (c) 10/85 30 Years
Lawton
(5) Apple Creek Associates of Denton, 3,170,448 (c) 10/85 30 Years
Ltd
(5) Galveston-Stewart's Landing, Ltd 2,429,970 (c) 10/85 15-30 Years
(a)
(2) Players Club at Fort Myers, Ltd 3,010,690 (c) 10/85 30 Years
(2) Suntree at Fort Myers, Ltd 2,531,518 (c) 10/85 30 Years
(3) Woodridge, Ltd 2,931,377 (c) 10/85 30 Years
(6) The Harbours Associates 5,648,608 (c) 11/85 30 Years
(6) Westwind II Associates 2,161,619 (c) 12/85 30 Years
(3) Brookwood Apartments L.P. 2,476,240 (c) 12/85 30 Years
(1) Suncreek-268, Ltd 4,693,785 (c) 12/85 27.5 Years
(1) McAdam Park-336, Ltd 5,946,466 (c) 12/85 27.5 Years
-----------
$45,740,159
===========
</TABLE>
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 1996
(Continued)
(a) Included in Gross Amount of Land and Buildings and Improvements at Close of
Period is a provision for impairment of assets in the amount of $237,054
and $879,324, respectively. The total provision in the amount of $1,116,378
is also included in Costs Capitalized Subsequent to Acquisition. See Note 4
in Item 8, Financial Statements and Supplementary Data.
(b) Property subject to a 99 year land lease expiring 2084.
(c) Since all properties were acquired as operating properties, depreciation is
computed using primarily by the straight line method over the estimated
useful lives determined by the Partnership date of acquisition.
(d) 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.
(e) Land was leased from the former general partner. During December 1991, the
bankruptcy court approved the termination of said lease and transfer of
title of the property to McAdam Park-336.
Geographic Locations
(1) California, (2) Florida, (3) Kansas, (4) Oklahoma, (5) Texas, (6) Virginia.
<TABLE>
<CAPTION>
Cost of Property and Equipment Accumulated Depreciation
------------------------------------------- ---------------------------------------
Year Ended March 25,
---------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $135,195,606 $135,135,979 $135,054,733 $41,816,329 $37,873,311 $33,712,815
Additions during period:
Improvements 69,119 130,252 81,246
Depreciation expense 3,923,830 3,961,144 4,160,496
Reductions during period:
Dispositions 0 70,625 0 0 18,126 0
Allowance for impairments 1,116,378 0 0 0 0 0
------------ ------------ ------------ ----------- ----------- -----------
Balance at end of period $134,148,347 $135,195,606 $135,135,979 $45,740,159 $41,816,329 $37,873,311
============ ============ ============ =========== =========== ===========
</TABLE>
At the time the local partnerships were acquired by Cambridge Advantaged
Properties II Limited Partnership, the entire purchase price paid by
Cambridge Advantaged Properties II 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.
<PAGE>
Exhibit 22
Subsidiaries of Registrant State of Organization
- - -------------------------- ---------------------
Triangle/Oaks Limited Partnership MA
Sheridan Square Associates of Lawton OK
Apple Creek Associates of Denton, Ltd TX
Galveston-Stewart's Landing, Ltd TX
Woodridge, Ltd CA
Players Club at Fort Myers, Ltd CA
Suntree at Fort Myers, Ltd CA
The Harbours Associates VA
Brookwood Apartments L.P. KS
Westwind II Associates VA
McAdam Park-336, Ltd OR
Suncreek-268, Ltd OR
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Cambridge Advantage Properties II L.P. and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<CIK> 0000771996
<NAME> Cambridge Advantage Properties II L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-25-1996
<PERIOD-START> MAR-26-1995
<PERIOD-END> MAR-25-1996
<CASH> 1,022,522
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,809,019
<PP&E> 134,148,347
<DEPRECIATION> 45,740,158
<TOTAL-ASSETS> 94,239,730
<CURRENT-LIABILITIES> 13,083,292
<BONDS> 116,955,198
0
0
<COMMON> 0
<OTHER-SE> (35,798,760)
<TOTAL-LIABILITY-AND-EQUITY> 94,239,730
<SALES> 0
<TOTAL-REVENUES> 19,483,652
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,727,194
<LOSS-PROVISION> 1,116,378
<INTEREST-EXPENSE> 9,561,637
<INCOME-PRETAX> (6,921,556)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 6,416,231
<CHANGES> 0
<NET-INCOME> (505,325)
<EPS-PRIMARY> (76)
<EPS-DILUTED> 0
</TABLE>
