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 March 31, 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
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Financial Position
March 31, December 31,
1996 1995
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 3,569,877 $ 3,478,604
Interest receivable 2,530 1,265
Other receivables 12,540 858,722
Pension notes issuance costs 1,455,728 1,519,426
Organization and offering costs 302,434 314,878
Prepaid expenses 283,752 279,152
Rental property:
Land 6,318,028 6,318,028
Building, net of accumulated depreciation
of $12,549,466 and $12,137,832 44,643,806 44,942,735
Other assets 34,688 36,686
------ ------
$ 56,623,383 $ 57,749,496
= ========== = ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable $ 455,161 $ 591,228
Interest payable 18,590,415 17,901,461
Pension notes 42,672,000 42,672,000
Purchase installments 0 552,000
Other liabilities 659,559 833,116
------- -------
62,377,135 62,549,805
---------- ----------
Partners' equity (deficit):
General Partner-NHP/RHGP-I Limited
Partnership (1,366,749) (1,332,625)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691 investment
units outstanding (4,387,003) (3,467,684)
----------- -----------
(5,753,752) (4,800,309)
----------- -----------
$ 56,623,383 $ 57,749,496
= ========== = ==========
2
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<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Three Months Ended March 31, 1996
Three months
ended March 31,
1996 1995
------ -----
REVENUE:
<S> <C> <C>
Rental income $ 3,547,821 $ 3,407,529
Interest income 18,142 19,867
Other income 44,760 48,526
------ ------
3,610,723 3,475,922
--------- ---------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 979,174 999,676
Management fees, dietary fees and other services 351,062 349,072
Administrative and marketing 155,092 103,498
Utilities 239,289 225,780
Maintenance 102,569 104,736
Resident services, other than salaries 69,736 66,087
Food services, other than salaries 376,444 371,129
Depreciation 411,634 384,426
Taxes and insurance 269,248 260,930
------- -------
2,954,248 2,865,334
--------- ---------
INCOME FROM RENTAL OPERATIONS 656,475 610,588
------- -------
COSTS AND EXPENSES:
Interest expense - pension notes 1,441,688 1,364,424
Amortization of pension notes
issuance costs 63,698 63,698
Amortization of organization
and offering costs 12,444 12,444
Other expenses 76,726 80,724
------ ------
1,594,556 1,521,290
--------- ---------
NET (LOSS) $ (938,081) $ (910,702)
= ========= = =========
NET (LOSS) PER ASSIGNEE INTEREST $ (22) $ (21)
= ==== = ====
3
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NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Partners' Equity (Deficit)
For the Three Months Ended March 31, 1996
GENERAL PARTNER ASSIGNOR
CAPITAL REALTY GROUP LIMITED
SENIOR HOUSING, INC. PARTNERS TOTAL
Equity (deficit)
<S> <C> <C> <C>
at December 31, 1995 $ (1,332,625) $ (3,467,684) $ (4,800,309)
Distributions (15,362) 0 (15,362)
Net Loss - Three months
ended March 31, 1996 (18,762) (919,319) (938,081)
-------- --------- ---------
Equity (deficit)
at March 31, 1996 $ (1,366,749) $ (4,387,003) $ (5,753,752)
= =========== = =========== = ===========
Percentage interest
at March 31, 1996 2% 98% 100%
==== ===== ====
4
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NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
Three Months ended March 31,
1996 1995
------ -----
Cash flows from operating activities:
<S> <C> <C>
Rent collections $ 3,567,126 $ 3,414,695
Interest received 16,877 17,809
Other income 44,760 48,526
Salary and related benefits (979,174) (999,676)
Management fees, dietary fees
and other services (353,868) (349,670)
Other operating expenses paid (1,323,647) (1,311,097)
Interest paid (752,734) (752,734)
--------- ---------
Net cash provided by
operating activities 219,340 67,853
------- ------
Cash flows from investing activities:
Capital Expenditures (112,705) (174,962)
--------- ---------
Net cash used in investing activities (112,705) (174,962)
--------- ---------
Cash flows from financing activities:
Distributions (15,362) (15,362)
-------- --------
Net cash used in financing activities (15,362) (15,362)
-------- --------
Net increase (decrease) in cash and
cash equivalents 91,273 (122,471)
Cash and cash equivalents
at beginning of period 3,478,604 3,593,147
--------- ---------
Cash and cash equivalents
at end of period $ 3,569,877 $ 3,470,676
= ========= = =========
5
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NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
(Continued)
Three Months Ended March 31,
1996 1995
------ -----
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (938,081) $ (910,702)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 411,634 384,426
Amortization of organization
and offering costs 12,444 12,444
Amortization of pension notes
issuance costs 63,698 63,698
Changes in operating assets and liabilities:
Interest receivable (1,265) (2,058)
Other assets and receivables 848,180 7,651
Prepaid expenses (4,600) (20,512)
Accounts payable (136,067) 139,629
Interest payable 688,954 611,690
Purchase installments (552,000) 0
Other liabilities (173,557) (218,413)
--------- --------
Total adjustments 1,157,421 978,555
--------- -------
Net cash provided by
in operating activities $ 219,340 $ 67,853
= ======= = ======
6
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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 first fiscal quarter ended March
31, 1996 and 1995, were $979,174 and $999,676, respectively. Management
fees, dietary fees and other services reimbursed and expensed by the
Partnership to CSL and CRGSH for the first fiscal quarter ended March
31, 1996 and 1995, were $351,062 and $349,072, respectively.
Distributions of $15,362 were made to the General Partner
during the three months ended March 31, 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 three months ended March 31, 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.
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<CAPTION>
Available March 31 March 31
Units 1996 1995
------- ------ -----
<S> <C> <C> <C>
The Amberleigh 271 95% 90%
The Atrium at Carmichael 153 89% 96%
Crosswood Oaks 122 82% 87%
Heatherwood 160 90% 90%
Veranda Club 189 92% 93%
</TABLE>
Rent collections for the three month period increased to $3,567,126 from
$3,414,695 in 1996, or 4.5%, primarily from rental rate increases.
Operating expenses paid decreased slightly, from $2,660,443 to $2,656,689
in 1996.
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
$752,734 for the three month period ended March 31, 1996. Net cash provided from
operations, after the payment of interest expense, during the three months ended
March 31, 1996 and 1995 was $219,340 and $67,853 respectively. Interest on the
Pension Notes is accrued at a 13% rate, which totaled $1,441,688 and $1,364,424
for the three months ended March 31, 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
$18,590,415 and $17,901,461 at March 31, 1996 and December 31, 1995,
respectively.
Capital expenditures decreased $62,257 from $174,962 in 1995 to $112,705 in
1996. Capital improvement programs implemented at several of the properties
during 1995 continued during 1996.
Cash and cash equivalents at March 31, 1996 and December 31, 1995 amounted to
$3,569,877 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 three months ended March 31, 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 increased from $910,702 to $938,081 for the three
month period ending March 31, 1995 and 1996, respectively. Net loss per Assignee
Interest increased from $21 to $22 for the 42,691 Assignee Interests
respectively. This increased loss was principally due to an increase in pension
note interest expense. Rental income increased to $3,547,821 for the three
months ended March 31, 1996 from $3,407,529 for the same period in 1995, or
approximately 4.1% primarily as a result of rental rate increases. Rental
expenses increased to $2,954,248 from $2,865,334 for the three month period
ending March 31, 1996 and 1995, respectively, or 3.1%. Increased rental expense
was primarily due to increased expenses for administrative and marketing,
utilities, and depreciation. Pension note interest expense increased from
$1,364,424 to $1,441,688 for the three month periods ending March 31, 1995 and
1996 respectively. Other expenses relating to Partnership administration
decreased from $80,724 to $76,726 for the three month periods ending March 31,
1995 and 1996, respectively.
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 March 31, 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.
PART II
All items not applicable.
7
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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: May 14, 1996
8
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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: \s\ Keith Johannessen
President
Date: May 14, 1996
1
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793730
<NAME> NHP Retirement Housing
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 3,569,877
<SECURITIES> 0
<RECEIVABLES> 15,070
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,511,300
<DEPRECIATION> 12,549,466
<TOTAL-ASSETS> 56,623,383
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (5,753,752)
<TOTAL-LIABILITY-AND-EQUITY> 56,623,383
<SALES> 0
<TOTAL-REVENUES> 3,610,723
<CGS> 0
<TOTAL-COSTS> 2,954,248
<OTHER-EXPENSES> 152,868
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,441,688
<INCOME-PRETAX> (938,081)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (938,081)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
