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 SEPTEMBER 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)
(972) 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>
See notes to financial statements.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,049,802 $ 3,478,604
Interest receivable 1,200 1,265
Other receivables 25,406 858,722
Pension notes issuance costs 1,328,332 1,519,426
Organization and offering costs 277,546 314,878
Prepaid expenses 133,401 279,152
Rental property:
Land 6,318,028 6,318,028
Building, net of accumulated depreciation
of $13,372,733 and $12,137,832 44,112,455 44,942,735
Other assets 33,739 36,686
----------------- -----------------
$ 56,279,909 $ 57,749,496
================= =================
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Liabilities:
<S> <C> <C>
Accounts payable $ 440,011 $ 591,228
Interest payable 19,983,684 17,901,461
Pension notes 42,672,000 42,672,000
Purchase installments 0 552,000
Other liabilities 730,860 833,116
----------------- -----------------
63,826,555 62,549,805
----------------- -----------------
Partners' equity (deficit):
General Partner-NHP/RHGP-I Limited
Partnership (1,432,408) (1,332,625)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691 investment
units outstanding (6,114,238) (3,467,684)
----------------- -----------------
(7,546,646) (4,800,309)
----------------- -----------------
$ 56,279,909 $ 57,749,496
================= ================
</TABLE>
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Three months
ended September 30,
1996 1995
REVENUE:
<S> <C> <C>
Rental income $ 3,561,786 $ 3,446,450
Interest income 19,771 20,738
Other income 36,206 39,803
-------------- --------------
3,617,763 3,506,991
-------------- --------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 953,087 991,071
Management fees, dietary fees and other services 346,870 350,389
Administrative and marketing 162,441 150,529
Utilities 218,502 218,838
Maintenance 112,381 120,997
Resident services, other than salaries 70,819 69,754
Food services, other than salaries 379,176 376,336
Depreciation 411,634 384,427
Taxes and insurance 275,564 275,416
-------------- --------------
2,930,474 2,937,757
-------------- --------------
INCOME FROM RENTAL OPERATIONS 687,289 569,234
-------------- --------------
COSTS AND EXPENSES:
Interest expense - pension notes 1,441,688 1,380,262
Amortization of pension notes
issuance costs 63,698 63,698
Amortization of organization
and offering costs 12,444 12,444
Other expenses 34,563 42,735
-------------- --------------
1,552,393 1,499,139
-------------- --------------
NET (LOSS) $ (865,104) $ (929,905)
============== ==============
NET (LOSS) PER ASSIGNEE INTEREST $ (20) $ (21)
============== ==============
</TABLE>
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Nine months
ended September 30,
1996 1995
REVENUE:
<S> <C> <C>
Rental income $ 10,599,375 $ 10,254,699
Interest income 57,472 62,550
Other income 119,664 135,049
---------------- ----------------
10,776,511 10,452,298
---------------- ----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 2,877,275 2,989,205
Management fees, dietary fees and other services 1,052,628 1,059,249
Administrative and marketing 474,984 394,594
Utilities 666,512 655,395
Maintenance 318,704 328,507
Resident services, other than salaries 216,925 211,474
Food services, other than salaries 1,123,939 1,116,373
Depreciation 1,234,902 1,153,279
Taxes and insurance 810,070 804,725
---------------- ----------------
8,775,939 8,712,801
---------------- ----------------
INCOME FROM RENTAL OPERATIONS 2,000,572 1,739,497
---------------- ----------------
COSTS AND EXPENSES:
Interest expense - pension notes 4,325,063 4,107,212
Amortization of pension notes
issuance costs 191,094 191,094
Amortization of organization
and offering costs 37,332 37,332
Other expenses 147,648 186,837
---------------- ----------------
4,701,137 4,522,475
---------------- ----------------
NET (LOSS) $ (2,700,565) $ (2,782,978)
============ ================
NET (LOSS) PER ASSIGNEE INTEREST $ (62) $ (64)
===== ================
</TABLE>
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
GENERAL PARTNER ASSIGNOR
CAPITAL REALTY GROUP LIMITED
SENIOR HOUSING, INC. PARTNER TOTAL
Equity (deficit)
<S> <C> <C> <C> <C> <C>
at December 31, 1995 $ (1,332,625) $ (3,467,684) $ (4,800,309)
Distributions (45,772) 0 (45,772)
Net Loss - Nine months
ended September 30, 1996 (54,011) (2,646,554) (2,700,565)
------------------- ----------------- -----------------
Equity (deficit)
at September 30, 1996 $ (1,432,408) $ (6,114,238) $ (7,546,646)
=================== ================= =================
Percentage interest
at September 30, 1996 2 % 98% 100%
= ==== = ==== =====
</TABLE>
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
Cash flows from operating activities:
<S> <C> <C>
Rent collections $ 10,605,814 $ 10,274,970
Interest received 57,537 61,262
Other income 119,664 135,049
Salary and related benefits (2,877,275) (2,989,205)
Management fees, dietary fees
and other services (1,058,043) (1,064,175)
Other operating expenses paid (3,583,265) (3,593,762)
Interest paid (2,242,840) (2,234,306)
---------------- --------------
Net cash provided by
operating activities 1,021,592 589,833
---------------- --------------
Cash flows from investing activities:
Capital Expenditures (404,622) (516,826)
---------------- --------------
Net cash used in investing activities (404,622) (516,826)
---------------- --------------
Cash flows from financing activities:
Distributions (45,772) (45,598)
---------------- --------------
Net cash used in financing activities (45,772) (45,598)
---------------- --------------
Net increase in cash and
cash equivalents 571,198 27,409
Cash and cash equivalents
at beginning of period 3,478,604 3,593,147
---------------- --------------
Cash and cash equivalents
at end of period $ 4,049,802 $ 3,620,556
================ ==============
</TABLE>
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
Nine months Ended September 30,
1996 1995
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (2,700,565) $ (2,782,978)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 1,234,902 1,153,279
Amortization of organization
and offering costs 37,332 37,332
Amortization of pension notes
issuance costs 191,094 191,094
Changes in operating assets and liabilities:
Interest receivable 65 (1,288)
Other assets and receivables 836,263 17,518
Prepaid expenses 145,751 102,235
Accounts payable (151,217) 186,904
Interest payable 2,082,223 1,872,906
Purchase installments (552,000) 0
Other liabilities (102,256) (187,169)
---------------- --------------
Total adjustments 3,722,157 3,372,811
---------------- --------------
Net cash provided by
in operating activities $ 1,021,592 $ 589,833
================ ==============
</TABLE>
<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
holders of Interests ("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
<PAGE>
by the Partnership to CSL and CRGSH for the third fiscal quarter ended
September 30, 1996 and 1995, were $953,087 and $991,071, respectively.
Management fees, dietary fees and other services reimbursed and expensed
by the Partnership to CSL and CRGSH for the third fiscal quarter ended
September 30, 1996 and 1995, were $346,870 and $350,389, respectively.
Distributions of $45,772 were made to the General Partner during the nine
months ended September 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 nine months ended
September 30, 1996, based on the Partnership's evaluation of each
respective property, the Partnership did not believe that any 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 September 30 September 30
Units 1996 1995
------ ----- ----
<S> <C> <C> <C>
The Amberleigh 271 97% 95%
The Atrium at Carmichael 153 95% 96%
Crosswood Oaks 122 84% 95%
Heatherwood 160 88% 88%
Veranda Club 189 89% 90%
</TABLE>
Rent collections for the nine month period increased to $10,605,814 in 1996 from
$10,274,970 in 1995, or 3.2%, primarily from rental rate increases. Salaries,
management fees and other operating expenses paid likewise decreased, from
$7,647,142 in 1995 to $7,518,583 in 1996 or 1.7%, primarily from decreased
salary and related benefits 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
$2,242,840 for the nine month period ended September 30, 1996. Net cash provided
from operations, after the payment of interest expense, during the nine months
ended September 30, 1996 was $1,021,592. The Partnership provided cash from
operations of $589,833 for the same period in 1995. Interest on the Pension
Notes is accrued at a 13% rate, which totaled $4,325,063 and $4,107,212 for the
nine months ended
<PAGE>
September 30, 1996 and 1995, respectively, but is 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 $19,983,684 and $17,901,461 at
September 30, 1996 and December 31, 1995, respectively.
Capital expenditures decreased $112,204 from $516,826 in 1995 to $404,622 in
1996. Capital improvement programs implemented at several of the properties
during 1995 continued during 1996.
Cash and cash equivalents at September 30, 1996 and December 31, 1995
amounted to $4,049,802 and $3,620,556, respectively.
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 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 Interests 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 nine months ended September 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 $2,782,978 to $2,700,565 for the nine
month period ending September 30, 1995 and 1996, respectively. Net loss per
Interest decreased from $64 to $62 for the 42,691 Interests, respectively. This
decreased loss was principally due to increased rental income and decreased
salary and relative benefits. Rental income increased to $10,599,375 for the
nine months ended September 30, 1996 from $10,254,699 for the same period in
1995, or approximately 3.4%, primarily as a result of rental rate increases.
Rental expenses increased to $8,775,939 from $8,712,801 for the nine month
period ending September 30, 1996 and 1995, respectively, or .7%. Increased
rental expense was primarily due to increased expenses for administrative and
marketing, and depreciation. Pension Note interest expense increased from
$4,107,212 to $4,325,063 for the nine month periods ending September 30, 1995
and 1996 respectively. Other expenses relating to Partnership administration
decreased from $186,837 to $147,648 for the nine month periods ending September
30, 1995 and 1996, respectively.
For the three months ended September 30, 1996 as compared with the three months
ended September 30, 1995, the Partnership's revenue and expenses reflect the
same variances as discussed above, with the exception that rental expenses
decreased to $2,930,474 from $2,937,757 for the three months ended September 30,
1996 and 1995, respectively, or .3%. Decreased rental expense was primarily due
to decreased expenses for salaries and related benefits, management fees, and
maintenance.
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 September 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.
PART II
All items not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
By: Capital Realty Group Senior Housing, Inc.
General Partner
By:
Keith Johannessen
President
Date:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
financial data schedule
</LEGEND>
<CIK> 0000793730
<NAME> NHP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,049,802
<SECURITIES> 0
<RECEIVABLES> 26,606
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,803,216
<DEPRECIATION> (13,372,733)
<TOTAL-ASSETS> 56,279,909
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (7,546,646)
<TOTAL-LIABILITY-AND-EQUITY> 56,279,909
<SALES> 0
<TOTAL-REVENUES> 10,776,511
<CGS> 0
<TOTAL-COSTS> 8,775,939
<OTHER-EXPENSES> 376,074
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,325,063
<INCOME-PRETAX> (2,700,565)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,700,565)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
