FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996
Commission File Number 0-16815
NHP RETIREMENT HOUSING PARTNERS I
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its charter)
DELAWARE 52-1453513
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
14160 DALLAS PARKWAY, SUITE 300
DALLAS, TX 75240
(Address of principal executive offices)
(Zip Code)
(214) 770-5600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former
fiscal year, if changed since
last report.)
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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Financial Position
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 3,812,175 $ 3,478,604
Interest receivable 1,200 1,265
Other receivables 4,908 858,722
Pension notes issuance costs 1,392,030 1,519,426
Organization and offering costs 289,990 314,878
Prepaid expenses 206,216 279,152
Rental property:
Land 6,318,028 6,318,028
Building, net of accumulated depreciation
of $12,961,100 and $12,137,832 44,350,777 44,942,735
Other assets 34,475 36,686
-------------- --------------
$ 56,409,799 $ 57,749,496
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable $ 428,709 $ 591,228
Interest payable 19,287,049 17,901,461
Pension notes 42,672,000 42,672,000
Purchase installments 0 552,000
Other liabilities 688,378 833,116
-------------- --------------
63,076,136 62,549,805
-------------- --------------
Partners' equity (deficit):
General Partner-NHP/RHGP-I Limited
Partnership (1,399,901) (1,332,625)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691 investment
units outstanding (5,266,436) (3,467,684)
-------------- ----------
(6,666,337) (4,800,309)
-------------- --------------
$ 56,409,799 $ 57,749,496
============== ==============
<FN>
See notes to financial statements.
</FN>
</TABLE>
1
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Three months Ended June 30, 1996
<TABLE>
<CAPTION>
Three months
ended June 30,
1996 1995
REVENUE:
<S> <C> <C>
Rental income $ 3,489,768 $ 3,400,720
Interest income 19,559 21,945
Other income 38,698 46,720
------------- -------------
3,548,025 3,469,385
------------- -------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 945,014 998,458
Management fees, dietary fees and other services 354,696 359,788
Administrative and marketing 157,451 140,567
Utilities 208,721 210,777
Maintenance 103,754 102,774
Resident services, other than salaries 76,370 75,633
Food services, other than salaries 368,319 368,908
Depreciation 411,634 384,426
Taxes and insurance 265,258 268,379
------------- -------------
2,891,217 2,909,710
------------- -------------
INCOME FROM RENTAL OPERATIONS 656,808 559,675
------------- -------------
COSTS AND EXPENSES:
Interest expense - pension notes 1,441,687 1,362,526
Amortization of pension notes
issuance costs 63,698 63,698
Amortization of organization
and offering costs 12,444 12,444
Other expenses 36,359 63,378
------------- -------------
1,554,188 1,502,046
------------- -------------
NET (LOSS) $ (897,380) $ (942,371)
============= =============
NET (LOSS) PER ASSIGNEE INTEREST $ (21) $ (22)
============= =============
<FN>
See notes to financial statements.
</FN>
</TABLE>
2
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Six months Ended June 30, 1996
<TABLE>
<CAPTION>
Six months
ended June 30,
1996 1995
REVENUE:
<S> <C> <C>
Rental income $ 7,037,589 $ 6,808,249
Interest income 37,701 41,812
Other income 83,458 95,246
------------- -------------
7,158,748 6,945,307
------------- -------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 1,924,188 1,998,134
Management fees, dietary fees and other services 705,758 708,860
Administrative and marketing 312,543 244,065
Utilities 448,010 436,557
Maintenance 206,323 207,510
Resident services, other than salaries 146,106 141,720
Food services, other than salaries 744,763 740,037
Depreciation 823,268 768,852
Taxes and insurance 534,506 529,309
------------- -------------
5,845,465 5,775,044
------------- -------------
INCOME FROM RENTAL OPERATIONS 1,313,283 1,170,263
------------- -------------
COSTS AND EXPENSES:
Interest expense - pension notes 2,883,375 2,726,950
Amortization of pension notes
issuance costs 127,396 127,396
Amortization of organization
and offering costs 24,888 24,888
Other expenses 113,085 144,102
------------- -------------
3,148,744 3,023,336
------------- -------------
NET (LOSS) $ (1,835,461) $(1,853,073)
============== ===========
NET (LOSS) PER ASSIGNEE INTEREST $ (43) $ (43)
============== =============
<FN>
See notes to financial statements.
</FN>
</TABLE>
3
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Partners' Equity (Deficit)
For the Six months Ended June 30, 1996
<TABLE>
<CAPTION>
GENERAL PARTNER ASSIGNOR
CAPITAL REALTY GROUP LIMITED
SENIOR HOUSING, INC. PARTNERS TOTAL
Equity (deficit)
<S> <C> <C> <C> <C> <C>
at December 31, 1995 $ (1,332,625) $ (3,467,684) $ (4,800,309)
Distributions (30,567) 0 (30,567)
Net Loss - Six months
ended June 30, 1996 (36,709) (1,798,752) (1,835,461)
------------------ ---------------- ----------------
Equity (deficit)
at June 30, 1996 $ (1,399,901) $ (5,266,436) $ (6,666,337)
================== ================ ================
Percentage interest
at June 30, 1996 2% 98% 100%
=== ==== =====
<FN>
See notes to financial statements.
</FN>
</TABLE>
4
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
Cash flows from operating activities:
<S> <C> <C>
Rent collections $ 7,064,526 $ 6,839,428
Interest received 37,766 41,754
Other income 83,458 95,246
Salary and related benefits (1,924,188) (1,998,134)
Management fees, dietary fees
and other services (712,009) (712,827)
Other operating expenses paid (2,456,318) (2,507,871)
Interest paid (1,497,787) (752,734)
---------------- --------------
Net cash provided by
operating activities 595,448 1,004,862
---------------- --------------
Cash flows from investing activities:
Capital Expenditures (231,310) (291,209)
---------------- --------------
Net cash used in investing activities (231,310) (291,209)
---------------- --------------
Cash flows from financing activities:
Distributions (30,567) (15,362)
---------------- --------------
Net cash used in financing activities (30,567) (15,362)
---------------- --------------
Net increase in cash and
cash equivalents 333,571 698,291
Cash and cash equivalents
at beginning of period 3,478,604 3,593,147
---------------- --------------
Cash and cash equivalents
at end of period $ 3,812,175 $ 4,291,438
================ ==============
<FN>
See notes to financial statements.
</FN>
</TABLE>
5
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
(Continued)
<TABLE>
<CAPTION>
Six months Ended June 30,
1996 1995
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (1,835,461) $ (1,853,073)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 823,268 768,852
Amortization of organization
and offering costs 24,888 24,888
Amortization of pension notes
issuance costs 127,396 127,396
Changes in operating assets and liabilities:
Interest receivable 65 (58)
Other assets and receivables 856,025 27,601
Prepaid expenses 72,936 39,057
Accounts payable (162,519) 139,685
Interest payable 1,385,588 1,974,216
Purchase installments (552,000) 0
Other liabilities (144,738) (243,702)
---------------- --------------
Total adjustments 2,430,909 2,857,935
---------------- --------------
Net cash provided by
in operating activities $ 595,448 $ 1,004,862
================ ==============
<FN>
See notes to financial statements.
</FN>
</TABLE>
6
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Notes to Financial Statements
(1) ACCOUNTING POLICIES
Nature of Business
NHP Retirement Housing Partners I Limited Partnership (the
"Partnership") is a limited partnership organized under the laws of the
State of Delaware on March 10, 1986. The Partnership was formed for the
purpose of raising capital by issuing both Pension Notes ("Notes") to
tax-exempt investors and selling additional partnership interests in
the form of Assignee Interests ("Interests") to taxable individuals.
Interests represent assignments of the limited partnership interests of
the Partnership issued to the Assignor Limited Partner, NHP RHP-I
Assignor Corporation. The proceeds from the sale of the Notes and
Interests have been invested in residential rental properties for
retirement age occupants.
Basis of Presentation
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to
present a fair statement of the financial condition and results of
operations for the interim periods presented.
While the General Partner believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that
these financial statements be read in conjunction with the financial
statements and the notes included in the Partnership's Annual Reports
filed in Forms 10-K for the year ended December 31, 1995.
(2) TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
Until January 23, 1995, the sole general partner of the Partnership was
NHP/RHGP-1 Limited Partnership (NHP/RHGP-1). On December 19, 1991,
NHP/RHGP-1 executed an amended and restated purchase agreement with
Capital Realty Group Properties, Inc. (CRGP) for the transfer of the
General Partner's interest in the Partnership, subject to the approval
of Assignee Holders. CRGP's rights and obligations under the purchase
agreement were subsequently assigned to Capital Realty Group Senior
Housing, Inc. (CRGSH). Pursuant to a Consent Solicitation dated October
25, 1994, Assignee Holders holding more than 64% of the equity
interests in the Partnership approved the election of CRGSH, as the
replacement general partner of the Partnership. Effective January 23,
1995, CRGSH has become the new sole general partner of the Partnership
and NHP/RHGP-I has withdrawn as general partner.
Personnel working at the Property sites and certain home office
personnel who perform services for the Partnership are employees as of
February 1, 1995 of Capital Senior Living, Inc. (CSL), an affiliate of
CRGSH and prior to February 1, 1995 were employees of CRGSH. The
Partnership reimburses CRGSH or CSL for the salaries, related benefits,
and overhead reimbursements of such personnel as reflected in the
accompanying financial statements. Salary, related benefits and
overhead reimbursements reimbursed and expensed by the Partnership to
CSL and CRGSH for the second fiscal quarter ended June 30, 1996 and
1995, were $945,014 and $998,458 , respectively. Management fees,
dietary fees and other services reimbursed and expensed by the
Partnership to CSL and CRGSH for the second fiscal quarter ended June
30, 1996 and 1995, were $354,696 and $359,788, respectively.
7
<PAGE>
Distributions of $30,567 were made to the General Partner during the
six months ended June 30, 1996.
(3) VALUATION OF RENTAL PROPERTY
Generally accepted accounting principles require that the Partnership
evaluate whether it is probable that the estimated undiscounted future
cash flows of its properties, taken individually, will be less than the
respective net book value of the properties. If such a shortfall exists
and is material, then a write-down is warranted. The Partnership
performs such evaluations on an on-going basis. During the six months
ended June 30, 1996, based on the Partnership's evaluation of each
respective property, no additional write-down was warranted.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The following schedule summarizes the occupancy levels at the four properties
wholly owned by the partnership and at Amberleigh in which the partnership has a
99.9% partnership interest.
<TABLE>
<CAPTION>
Available June 30 June 30
Units 1996 1995
------ ----- ----
<S> <C> <C> <C>
The Amberleigh 271 97% 92%
The Atrium at Carmichael 153 89% 98%
Crosswood Oaks 122 86% 90%
Heatherwood 160 89% 83%
Veranda Club 189 87% 90%
</TABLE>
Rent collections for the six month period increased to $7,064,526 from
$6,839,428 in 1996, or 3.3%, primarily from rental rate increases. Operating
expenses paid decreased, from $5,218,832 to $5,092,515 in 1996, or 2.4%,
primarily from decreased salary and related benefits and Partnership
administrative expenses.
Cash generated from rental operations prior to the payment of interest expense
was sufficient to pay all of the interest on the Pension Notes, which was
$1,497,787 for the six month period ended June 30, 1996. Net cash provided from
operations, after the payment of interest expense, during the six months ended
June 30, 1996 and 1995 was $595,448 and $1,004,862, respectively. Cash provided
from operations is significantly less for the six months ended June 30, 1996 in
comparison to 1995 due to a delinquent first quarter pension note payment of
$736,519 not paid until the third quarter 1995. This was due to the fact that
the Partnership was replacing its investor service agent. Interest on the
Pension Notes is accrued at a 13% rate, which totaled $2,883,375 and $2,726,950
for the six months ended June 30, 1996 and 1995, respectively, but was paid
based on a 7% pay rate. The remaining 6% unpaid portion continues to be accrued
and is due at maturity. Total accrued and unpaid interest amounted to
$19,287,049 and $17,901,461 at June 30, 1996 and December 31, 1995,
respectively.
8
<PAGE>
Capital expenditures decreased $59,899 from $291,209 in 1995 to $231,310 in
1996. Capital improvement programs implemented at several of the properties
during 1995 continued during 1996.
Cash and cash equivalents at June 30, 1996 and December 31, 1995 amounted to
$3,812,175 and $3,478,604, respectively. Though operations improved in the
current year, if operations do not improve significantly in the long-term,
future funds may not be available to meet operating requirements, including the
ultimate payment of principal and deferred interest on the Pension Notes. This
cash need has caused the General Partner to determine that it is not financially
appropriate to make distributions to Assignee Interest Holders. The General
Partner anticipates that distributions will continue to be suspended until
operating results significantly improve.
Although cash flow from operations improved in 1996, cash generated from
operations over the past several years prior to 1994 had not been adequate to
meet the Partnership's minimum interest payment requirements. The annual
shortfall was approximately $59,000 during 1993, and averaged approximately $1.5
million annually in the five-year period prior to 1993. The shortfall has been
funded by Partnership's cash reserves, which principally resulted from funds
remaining from the initial offering of Partnership Assignee Interest and Pension
Notes, after the acquisition of the Partnership's Properties. If interest
payments continue to be deferred at the current rate of 6%, the total accrual
for unpaid interest and principal will approximate $81 million at December 31,
2001, the maturity date of the Pension Notes, which is far in excess of
projected cash reserves. Accordingly, there will need to be very significant
improvements in cash flows from operations and/or increases in the disposition
and refinancing values of the Properties to fund both the accrued interest and
the face value of the Pension Notes upon their maturity. Management's plans are
to continue to manage the Properties prudently to achieve positive cash flows
from operations after interest payments.
RESULTS OF OPERATIONS
The Partnership's net loss for the six months ended June 30, 1996 includes
rental operations from each of the Partnership's properties. The net loss also
includes depreciation, amortization of pension notes issuance costs,
amortization of organization and offering costs and accrued pension note
interest expense which are noncash in nature.
The Partnership's net loss decreased from $1,853,073 to $1,835,461 for the six
month period ending June 30, 1995 and 1996, respectively. Net loss per Assignee
Interest of $43 remaining relatively the same for the 42,691 Assignee Interests
during the comparative six month period for 1995 and 1996. Rental income
increased to $7,037,589 for the six months ended June 30, 1996 from $6,808,249
for the same period in 1995, or approximately 3.4% primarily as a result of
rental rate increases. Rental expenses increased to $5,845,465 from $5,775,044
for the six month period ending June 30, 1996 and 1995, respectively, or 1.2%.
Increased rental expense was primarily due to increased expenses for
administrative and marketing, utilities, and depreciation. Pension note interest
expense increased from $2,726,950 to $2,883,375 for the six month periods ending
June 30, 1995 and 1996 respectively. Other expenses relating to Partnership
administration decreased from $144,102 to $113,085 for the six month periods
ending June 30, 1995 and 1996, respectively.
For the three months ended June 30, 1996 as compared with the three months ended
June 30, 1995, the Partnership's revenue and expesnes reflect the same variances
as discussed above, with the exception that second quarter 1996 maintenance
expenses increased, and second quarter 1996 utilities, food services, taxes and
insurance decreased in comparison to the second quarter of 1995.
As discussed previously, the Partnership performs an on-going evaluation of the
individual carrying value of each of the rental properties. Based on the
Partnership's evaluation of these carrying values at June 30, 1996, it was
determined that no additional write-downs were warranted. The Partnership will
continue to evaluate the properties in the future, and additional write-downs
may be necessary.
9
<PAGE>
PART II
All items not applicable.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NHP RETIREMENT HOUSING PARTNERS I, LIMITED PARTNERSHIP
By: Capital Realty Group Senior Housing, Inc.
General Partner
By: ________________________
Keith Johannessen
President
Date: August , 1996
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000793730
<NAME> NHP RETIREMENT HOUSING PARTNERS I, L.P.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 3,812,175
<SECURITIES> 0
<RECEIVABLES> 6,108
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,629,904
<DEPRECIATION> (12,961,099)
<TOTAL-ASSETS> 56,409,799
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (6,666,337)
<TOTAL-LIABILITY-AND-EQUITY> 56,409,799
<SALES> 0
<TOTAL-REVENUES> 3,548,025
<CGS> 0
<TOTAL-COSTS> 2,891,217
<OTHER-EXPENSES> 112,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,441,687
<INCOME-PRETAX> (897,380)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (897,380)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
