SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
(Mark One)
{X} Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 1996
{ } Transition report under Section 13 or 15(d) of the Exchange Act for
the transition period From to
Commission file number 0-14752.
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
---------------------------------------
(Exact name of Small Business Issuer as Specified in Its Charter)
DELAWARE 35-1665759
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14160 Dallas Parkway, Suite 300, Dallas, Texas 75240
(Address of Principal Executive Offices)
(972) 770-5600
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ___
Traditional Small Business Disclosure Format Yes x No ____
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL SENIOR LIVING COMMUNITIES, LP
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
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<CAPTION>
<S> <C> <C>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
ASSET
PROPERTY AND EQUIPMENT, Net $ 16,552,242 $ 17,352,655
OTHER ASSETS:
Cash and cash equivalents 8,877,889 9,743,330
Cash, restricted 204,628 203,788
Accounts receivable, net of allowance
for doubtful accounts of $159,035 and
$141,452, respectively 332,905 409,486
Prepaid expenses and other 201,390 128,728
Deferred charges, less accumulated amortization
of $255,388 and $141,760, respectively 237,888 328,665
Investment in limited partnerships (Note 4) 7,847,769 896,405
---------------- --------------
Total assets $ 34,254,711 $ 29,063,057
================ ==============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued expenses and other liabilities $ 1,756,781 $ 1,354,639
Notes payable 1,997,153 2,035,148
Customer deposits 311,104 279,982
---------------- --------------
Total liabilities 4,065,038 3,669,769
---------------- --------------
DEFERRED INCOME (Note 4) 3,315,977 0
PARTNERS' CAPITAL:
General partner 62,093 41,469
Limited partner 1 1
Beneficial unit certificates, 1,264,000
issued and outstanding 26,811,602 25,351,818
---------------- --------------
Total partners' capital 26,873,696 25,393,288
---------------- --------------
Total liabilities and partners' capital $ 34,254,711 $ 29,063,057
================ ==============
See notes to financial statements
1
</TABLE>
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
------------------------------------------------------
(UNAUDITED)
-----------
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<CAPTION>
<S> <C> <C>
Three Months ended September 30,
--------------------------------
1996 1995
---- ----
RENTAL AND OTHER INCOME
Multi-family $ 339,065 $ 289,016
Independent 1,844,799 1,842,676
Assisted Living 394,120 404,465
Nursing 1,067,569 1,111,420
Other 246,521 226,057
-------------- --------------
3,892,074 3,873,634
INTEREST INCOME 76,541 101,906
INCOME ON INVESTMENTS 57,555 0
-------------- --------------
Total income 4,026,170 3,975,540
-------------- --------------
EXPENSES:
Salaries, wages and benefits 1,466,581 1,471,850
Operating and other administrative expenses 1,688,121 1,602,948
Depreciation and amortization 401,928 450,445
-------------- --------------
Total expenses 3,556,630 3,525,243
-------------- --------------
NET INCOME $ 469,540 $ 450,297
============== ==============
NET INCOME ALLOCATION:
General partner $ 4,695 $ 4,503
Beneficial unit certificate holders 464,845 445,794
-------------- --------------
Total $ 469,540 $ 450,297
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .38 $ .35
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,215,508 1,264,000
============== ==============
See notes to financial statements
2
</TABLE>
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
-----------------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Nine Months ended September 30,
-------------------------------
1996 1995
---- ----
RENTAL AND OTHER INCOME
Multi-family $ 986,653 $916,069
Independent 5,452,522 5,330,916
Assisted Living 1,198,940 1,252,901
Nursing 3,500,975 3,461,302
Other 684,565 659,416
--------------- --------------
11,823,655 11,620,604
INTEREST INCOME 281,080 242,056
INCOME ON INVESTMENTS 516,598 0
--------------- --------------
Total income 12,621,333 11,862,660
--------------- --------------
EXPENSES:
Salaries, wages and benefits 4,356,034 4,348,193
Operating and other administrative expenses 4,982,645 4,721,950
Depreciation and amortization 1,220,242 1,331,567
--------------- --------------
Total expenses 10,558,921 10,401,710
--------------- --------------
NET INCOME $ 2,062,412 $ 1,460,950
=============== ==============
NET INCOME ALLOCATION:
General partner $ 20,624 $ 14,610
Beneficial unit certificate holders 2,041,788 1,446,340
--------------- --------------
Total $ 2,062,412 $ 1,460,950
=============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ 1.68 $ 1.14
=============== ==============
OUTSTANDING BENEFICIAL
UNIT CERTIFICATES 1,215,508 1,264,000
=============== ==============
3
See notes to financial statements
</TABLE>
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
--------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
<S> <C> <C>
Beneficial
Unit Limited General
Certificates Partner Partner Total
BALANCE, December 31, 1995 $ 25,351,818 $ 1 $ 41,469 $ 25,393,288
Net Income 557,058 - 5,627 562,685
--------------- ----------- ---------- ------------
BALANCE, March 31, 1996 $ 25,908,876 $ 1 $ 47,096 $ 25,955,973
Net Income 1,019,885 - 10,302 1,030,187
Repurchased Beneficial Unit
Certificates (447,504) - - (447,504)
--------------- ----------- ---------- ------------
BALANCE, June 30, 1996 26,481,257 1 57,398 26,538,656
Net Income 464,845 - 4,695 469,540
Repurchased Beneficial Unit
Certificates (134,500) - - (134,500)
---------------- ----------- ---------- ------------
BALANCE, September 30, 1996 $ 26,811,602 $ 1 $ 62,093 $ 26,873,696
================ =========== ========== ============
See notes to financial statements
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
-----------------------------------------------------
(UNAUDITED)
-----------
For the Nine Months
-------------------
Ended September 30,
-------------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,062,412 $ 1,460,950
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation 1,106,613 1,270,744
Amortization of deferred financing charges 113,629 60,823
Provision for bad debt 16,500 21,184
Amortization of deferred income (76,296) 0
Equity in earnings of investee (414,778) 0
Changes in assets and liabilities, net of effects of acquisitions:
Cash, restricted (840) (150,726)
Accounts receivable 60,081 (280,299)
Prepaid expenses and other (72,662) (67,007)
Accrued expenses and other liabilities 402,142 (124,949)
Customer Deposits 31,122 27,638
-------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,227,923 2,218,358
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (306,200) (296,098)
Investments in limited partnerships (3,144,313) (685,798)
Repurchase of beneficial unit certificates (582,004) 0
-------------- --------------
NET CASH USED IN
INVESTING ACTIVITIES (4,032,517) (981,896)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (37,995) (46,574)
Deferred charges (22,852) (110,000)
-------------- --------------
NET CASH USED IN
FINANCING ACTIVITIES (60,847) (156,574)
-------------- --------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (865,441) 1,079,888
CASH AND CASH EQUIVALENTS, Beginning of Period 9,743,330 8,018,471
-------------- --------------
CASH AND CASH EQUIVALENTS, End of Period $ 8,877,889 $ 9,098,359
============== ==============
See notes to financial statements
5
</TABLE>
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
---------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1996
------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Principals of Consolidation
- ---------------------------
The accompanying consolidated balance sheet, as of September 30, 1996, includes
the accounts of the Partnership and its 99%-owned subsidiary, Retirement
Partnership, Ltd. All significant intercompany accounts and transactions have
been eliminated in consolidation. The 1% minority interest in Retirement
Partnership, Ltd. is not presented separately due to its immateriality.
The financial information has been prepared in accordance with the Partnership's
customary accounting practices and has not been audited. In the opinion of
management, the information presented reflects all adjustments necessary for a
fair statement of interim results. All such adjustments are of a normal and
recurring nature. The financial statements should be read in conjunction with
the consolidated financial statements and the footnotes thereto included in the
Partnership's annual report filed in Form 10-KSB for the year ended December 31,
1995.
Property and Equipment
- ----------------------
The Partnership provides for depreciation and amortization on property and
equipment using the straight-line method by charges to operations in amounts to
allocate the cost of the property and equipment over their estimated useful
lives.
The carrying value of property and equipment is reviewed if the facts and
circumstances suggest that it may be impaired. As of September 30, 1996, no
reserve for impaired value has been provided.
Cash Equivalents
- ----------------
The Partnership considers investments with original maturities of three months
or less to be cash equivalents.
Revenue Recognition
- -------------------
Revenue from the four retirement living communities and the two multifamily
apartment complexes is recognized in the period in which the unit rental and/or
food services relate.
Revenue from the two Projects (Towne Centre and Canton Regency) which offer
assisted living, intermediate, and skilled health care (in addition to
retirement living), is recognized as services are performed. The Towne Centre
health care center (the "Center") is a provider of services under the Indiana
Medicaid program. Accordingly, the Center is entitled to reimbursement under
6
<PAGE>
the foregoing program at rates which are lower than private pay rates. Patient
service revenue for Medicaid patients is recorded at the reimbursement rates.
The Towne Centre and Canton Regency health care centers (the "Centers") are also
providers of services under the Medicare program.
The Centers are entitled to reimbursement under the foregoing program in amounts
which approximate the lower of cost or charges for caring for these patients.
During the period, the Centers received payments from this program on an
estimated basis. Any differences between estimated and actual reimbursements are
recognized in the subsequent year.
2. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Partnership had $54,628 and $53,788 in certificates of deposit at September
30, 1996 and December 31, 1995, respectively, restricted for utility deposits.
The certificates of deposit mature one year from the original purchase date.
In conjunction with the Partnership's increased mortgage loan commitment on June
30, 1995 (see LIQUIDITY AND CAPITAL RESOURCES), a compensating balance of
$150,000 was established with the mortgage company.
3. TRANSACTIONS WITH RELATED PARTIES:
----------------------------------
In accordance with the Partnership Agreement, the general partner, Retirement
Living Communities, L.P. ("RLC"), does not receive any fees from the Partnership
but may be reimbursed by the Partnership for any actual costs and expenses
incurred in connection with the operations of the Partnership. In addition, an
affiliate of RLC is managing the assets of the Partnership. Partnership expenses
incurred by RLC and affiliates, which were expensed by the Partnership for the
third fiscal quarter ended September 30, 1996 and 1995, were approximately
$81,400 and $103,927, respectively. Management fees reimbursed and expensed by
the Partnership to RLC and affiliates for the third fiscal quarter ended
September 30, 1996 and 1995, were approximately $247,545 and $247,614,
respectively.
In addition, the Partnership has no employees. An affiliate of RLC makes gross
payroll deposits and health insurance premium payments on behalf of the
properties owned by the Partnership, which are reimbursed by the Partnership,
and is required to fund any excess health insurance claims not covered by the
Partnership's health premiums or related insurance policy. Reimbursed gross
payroll deposits and health insurance premiums, which were expensed by the
Partnership during the third fiscal quarter of 1996 and 1995, were approximately
$1,380,740 and $1,359,297, respectively.
In connection with the extension of the Silver Lakes mortgage, an affiliate of
RLC received a 1% financing fee of $20,352 in the first quarter of 1996.
In connection with increasing the Partnership's mortgage loan commitment from
$12,000,000 to $17,500,000, an affiliate of RLC received a 2% financing fee of
$110,000 in the third quarter of
7
<PAGE>
1995. In May 1995, the Partnership contracted with Quality Home Care, Inc., an
affiliate of RLC, to provide nursing services to the assisted living residents
at The Harrison facility. The contract was executed to comply with certain state
regulations. As part of the contract, the Partnership has transferred its share
of assisted living revenues and expenses for The Harrison to Quality Home Care,
Inc. resulting in an approximate decrease of $70,000 in net annualized profits.
In addition, a 50% partner of RLC is chairman of the board of a bank where the
Partnership holds the majority of its operating cash accounts.
The general partner and managing agent of Healthcare Properties, L.P. and NHP
Retirement Housing Partners I, L.P. is an affiliate of RLC. See Note 4.
In April 1996, an affiliate of RLC recognized an $878,592 gain on the
Partnership's purchase of Healthcare Properties, L.P. limited partnership
interests (see Note 4-ACQUISITION OF INVESTMENTS).
4. ACQUISITION OF INVESTMENTS
--------------------------
During 1995, the Partnership made various purchases of limited partnership
interests in Healthcare Properties, L.P. As of December 31, 1995, the
Partnership had cumulatively paid $308,825 for a 5.8% ownership in Healthcare
Properties, L.P. During the first quarter of 1996, the Partnership purchased
additional limited partnership interests in Healthcare Properties, L.P. for
$607,170, during the second quarter of 1996, the Partnership purchased
additional limited partnership interests for $1,963,845, and during the third
quarter of 1996, the Partnership purchased additional limited partnership
interests for $484,262, bringing the Partnership's total interest in Healthcare
Properties, L.P. to 29.9%. Healthcare Properties, L.P. is a portfolio comprised
of 8 nursing home facilities.
Of the additional 14.91% in limited partnership interests in Healthcare
Properties, L.P. purchased in the second quarter of 1996, 9.36% was purchased
from Capital Realty Group Senior Housing, Inc. (CRGSH), an affiliate of RLC, who
had acquired the interests in 1993. The Partnership paid $1,269,077 to such
affiliate, who recognized a $878,592 gain on the transaction. Because of this
purchase, the Partnership changed its method of accounting for its investment in
Healthcare Properties, L.P. from the cost method to the equity method of
accounting. Through September 30, 1996, this change in accounting has resulted
in recognizing $3,428,089 of equity in Healthcare Properties, L.P. over the
Partnership's cost as deferred income, of which $35,817 relates to 1995 and
first quarter 1996 net investment earnings from Healthcare Properties, L.P. and
the balance of $3,392,272 to be amortized over 20 years.
During 1995, the Partnership made various purchases of outstanding pension notes
of NHP Retirement Housing Partners I, L.P. As of December 31, 1995, the
Partnership had cumulatively paid $587,580 for a 3.25% ownership of outstanding
pension notes of NHP Retirement Housing Partners I, L.P. During the first
quarter of 1996, the Partnership purchased pension notes for $17,640. During the
second quarter of 1996, the Partnership purchased additional pension notes for
$9,720, and during the third quarter of 1996, the Partnership purchased
additional limited partnership interests for $60,822 bringing the Partnership's
total interest in NHP Retirement
8
<PAGE>
Housing Partners I, L.P. pension notes to 3.7%. NHP Retirement Housing Partners
I, L.P. owns a portfolio of 5 independent living retirement facilities. The
pension notes bear simple interest at 13% annum. Interest of 7% is paid
quarterly, with the remaining 6% interest deferred. Deferred interest and
principal matures on December 31, 2001. During the first quarter of 1996, the
Partnership paid $855 for a 1.87% ownership of limited partnership interests in
NHP Retirement Housing Partners I, L.P.
5. SUBSEQUENT EVENT
----------------
On November 5, 1996, the Partnership sold the Lakeridge and Silver Lakes
Apartments to an unrelated party at a combined sales price of $4,793,000, paid
in cash. After payment of the mortgage loan on the Silver Lakes Apartments and
refund of its escrow balance, the Partnership received cash of approximately
$2,549,000 on the sale. Due to the sale of Silver Lakes and Lakeridge,
Partnership assets at September 30, 1996 would have decreased approximately
$4,156,000, total revenues for the nine months ended September 30, 1996 would
have decreased approximately $1,050,000, and there would not have been a
significant impact to net income.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial statements of
Capital Senior Living Communities, L.P. (the "Partnership") included in this
Report.
As of September 30, 1996, the Partnership's assets included four retirement
projects (Harrison, Cottonwood Village, Canton Regency, and Towne Centre), a
multi-family apartment project (Lakeridge Apartments, formerly known as Village
Green II Apartments), a 3% interest in Encore Limited Partnership, a 29.9%
limited partnership interest in Healthcare Properties, L.P., 3.7% of the
outstanding pension notes of NHP Retirement Housing Partners I, L.P., a 1.87%
limited partnership interest in NHP Retirement Housing Partners I, L.P., and a
99% interest in Retirement Partnership, Ltd. (the "Partnership Subsidiary"),
which owns a multi-family apartment project (Silver Lakes Apartments, formerly
known as Village Green I Apartments).
Silver Lakes Apartments was pledged as collateral to secure repayment of a
mortgage loan payable to a nonaffiliated mortgage company with an outstanding
balance of $1,997,153 at September 30, 1996. The maturity date on this loan was
extended to December 1, 1996. On November 5, 1996, the Partnership sold the
Lakeridge and Silver Lakes Apartments to an unrelated party at a combined sales
price of $4,793,000. After payment of the mortgage loan on the Silver Lakes
Apartments and refund of its escrow balance, the Partnership received
approximately $2,549,000 on the sale.
RESULTS OF OPERATIONS
- ---------------------
The Partnership's primary source of funds is net rental income from the
ownership and management of the six real estate projects owned by the
Partnership.
THIRD QUARTER OF 1996 COMPARED WITH THIRD QUARTER OF 1995
- ---------------------------------------------------------
9
<PAGE>
Rental and other income for the third fiscal quarter ended September 30, 1996
and 1995 was $3,892,074 and $3,873,634 respectively. Rental and other income
increased .5% from the third quarter 1995 to 1996, and was primarily
attributable to higher rents. Interest income for the third fiscal quarter ended
September 30, 1996 and 1995, was $76,541 and $101,906, respectively. Interest
income decreased $25,365 from the third quarter ended 1995 to the third quarter
ended 1996 due to a delay in receipt of interest income on the Partnership's
investment in NHP Retirement Housing Partners I., L.P. pension notes. During the
three months ended September 30, 1996, the Partnership recognized $57,555 of
equity participation and amortization of deferred income relating to the
Partnership's investment in Healthcare Properties, L.P. Operating expenses are
maintained by property and by natural expense classification, but are not
allocated by revenue type. Salaries, wages, and benefits of $1,466,581 were paid
by the Partnership for the third fiscal quarter of 1996. Approximately
$1,380,740 of such amount was paid to Capital Senior Living, Inc. ("CSL"), an
affiliate of RLC, as reimbursement for its direct out-of-pocket costs under the
property management agreements for salaries, wages, and benefits of on-site
employees employed at the properties, with the remainder being contract labor
and reimbursement to CSL for an allocable portion of its home office employees'
salaries and wages for time expended on matters attributable to the properties.
Corresponding payments of salaries and wages for the third fiscal quarter of
1995 was $1,471,850 (with approximately $1,359,297 paid to CSL). Salaries,
wages, and benefits decreased .4% from the third quarter 1995 to 1996. Operating
and other administrative expenses increased from $1,602,948 in 1995 to
$1,688,121 in 1996, or 5.3%, and was mainly attributable to an increase in fees
and therapy costs. Depreciation and amortization for 1996 was $401,928 and
$450,445 in 1995. The decrease in depreciation and amortization expense of 10.8%
from 1995 to 1996 was due to certain assets being fully depreciated in 1995.
The Partnership expects its future operating results will depend in large part
on its operating costs and occupancy levels in its facilities. If the operating
costs increase or occupancy levels decline, the Partnership's operating results
will be adversely affected.
FIRST NINE MONTHS OF 1996 COMPARED WITH FIRST NINE MONTHS OF 1995
- -----------------------------------------------------------------
Rental and other income for the nine months ended September 30, 1996 and 1995
was $11,823,655 and $11,620,604, respectively. Rental and other income increased
1.75% from the nine months ended September 30, 1995 to 1996, and was primarily
attributable to higher rents. Interest income for the nine months ended
September 30, 1996 and 1995, was $281,080 and $242,056, respectively. Interest
income increased $39,024 from the nine months ended September 30, 1995 to 1996
due to additional cash available for investment. During the nine months ended
September 30, 1996, income on investments of $516,598 was recognized, of which
$25,523 was received from the Partnership's investment in Encore Limited
Partnership and $491,075 recognized on equity participation and amortization of
deferred income relating to the Partnership's investment in Healthcare
Properties, L.P. Operating expenses are maintained by property and by natural
expense classification, but are not allocated by revenue type. Salaries, wages,
and benefits of $4,356,034 were paid by the Partnership for the nine months
ended September 30, 1996. Approximately $4,072,781 of such amount was paid to
CSL and CRGSH, affiliates of RLC, as reimbursement for their direct
out-of-pocket costs under the property management agreements for salaries,
wages, and benefits of on-site employees employed at the properties, with the
remainder being contract labor and reimbursement for an
10
<PAGE>
allocable portion of its home office employees' salaries and wages for time
expended on matters attributable to the properties. Corresponding payments of
salaries and wages for the nine months ended September 30, 1995 was $4,348,193
(with approximately $4,007,245 paid to CSL and CRGSH). The increase in such
payments of .2% from 1995 to 1996 was attributable to increased labor costs.
Operating and other administrative expenses increased from $4,721,950 in 1995 to
$4,982,645 in 1996, or 5.5% and was mainly attributable to an increase in
utilities, therapy, fees and repair and maintenance costs. Depreciation and
amortization for 1996 was $1,220,242 and $1,331,567 in 1995. The decrease in
depreciation and amortization expense of 8.4% from 1995 to 1996 was due to
certain assets being fully depreciated in 1995.
The Partnership expects its future operating results will depend in large part
on its operating costs and occupancy levels in its facilities. If the operating
costs increase or occupancy levels decline, the Partnership's operating results
will be adversely affected.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The General Partner believes cash and cash equivalents of $8,877,889 at
September 30, 1996 is adequate for the working capital needs of the Partnership.
These reserves will be used to support ongoing working capital needs, pay
existing debt obligations, meet the capital and marketing improvements necessary
to succeed in a competitive atmosphere, and fund future acquisitions or
development of real estate projects.
The Partnership's business is no longer the ownership of tax-exempt bonds.
Instead, the Partnership will hold and operate real properties. This will
adversely impact the tax-exempt nature of the Partnership's operations in that
it will cause the operations of the Partnership to be fully taxable for federal
income tax purposes and will require the individual BUC holders to report their
respective shares of any taxable income of the Partnership. Moreover, as a
result of federal tax law changes in 1986, BUC holders will not be able to use
losses from any other source, other than "passive activity" losses, to offset
their share of the Partnership's taxable income.
On July 29, 1994, the Partnership obtained a $12,000,000 open end mortgage loan
from a non-affiliated mortgage company, and pledged the Cottonwood, Harrison,
Towne Centre and Canton Regency Retirement Community as collateral. On June 30,
1995, the Partnership increased its mortgage loan commitment from $12,000,000 to
$17,500,000. The loan expires July 29, 1998. As of September 30, 1996, there
have been no advances made to the Partnership on this loan.
The management of the Partnership believes that through improved management of
the properties' operations, the liquidity of the Partnership and the return on
the BUC holder's investment will be maximized. Potential additional sources of
liquidity could include new mortgage financings on one or more of the existing
unencumbered facilities and a potential sale of one or more of the existing
facilities.
PARTNERSHIP PROPERTIES
- ----------------------
11
<PAGE>
The following table sets forth summary information concerning the six
income-producing real properties owned by the Partnership as of September 30,
1996. As discussed above, the Lakeridge and Silver Lakes Apartments were sold on
November 5, 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of Units At Occupancy
Project Name/Location September 30, 1996 09/30/95 09/30/96
--------------------- ------------------ -------- --------
Cottonwood Retirement 65 - residential 97% 94%
Community
Cottonwood, Arizona
The Harrison Retirement 124 - residential 88% 89%
Community
Indianapolis, Indiana
Towne Centre Retirement 147 - residential 96% 95%
Community 34 - assisted living
Merrillville, Indiana 64 - nursing
Canton Regency Retirement 147 - residential 95% 95%
Community 34 - assisted living
Canton, Ohio 50 - nursing
Lakeridge Apartments 138 - residential 92% 90%
Kissimmee, Florida
Silver Lakes Apartments 132 - residential 90% 96%
Kissimmee, Florida
</TABLE>
PART II OTHER INFORMATION
Item 5. Other Information
On November 5, 1996, the Partnership sold the Lakeridge and Silver Lakes
Apartments to an unrelated party at a combined sales price of $4,793,000, paid
in cash. After payment of the mortgage loan on the Silver Lakes Apartments and
refund of its escrow balance, the Partnership received cash of approximately
$2,549,000 on the sale.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant during the quarter
ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
By: RETIREMENT LIVING COMMUNITIES, L.P.
General Partner
By: CAPITAL RETIREMENT GROUP, INC.
General Partner
Date: November 13, 1996 By: \s\ Keith Johannessen
---------------------
President
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549-1004
Re: Capital Senior Living Communities, L.P. (the "Company")
Form 10-QSB for the Quarter Ended September 30, 1996
Commission File No. 0-14752
Our File No.: 3101529.270
Ladies and Gentlemen:
On behalf of the Company, enclosed for electronic filing please find
one copy of Form 10-QSB for the quarter ended September 30, 1996.
Please call the undersigned with any questions or comments. Collect calls will
be accepted at 972/419-8311.
Yours truly,
Mike Parsons
MDP/lds
Enclosures
S:\CLIENT-O\15006\160\SEC11.12
<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,082,517
<SECURITIES> 7,847,769
<RECEIVABLES> 491,940
<ALLOWANCES> (159,035)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,378,574
<DEPRECIATION> (7,826,332)
<TOTAL-ASSETS> 34,254,711
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0
0
<COMMON> 0
<OTHER-SE> 26,873,696
<TOTAL-LIABILITY-AND-EQUITY> 34,254,711
<SALES> 0
<TOTAL-REVENUES> 12,621,333
<CGS> 0
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<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 168,072
<INCOME-PRETAX> 2,062,412
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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