SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1995, or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
to
Commission file number 0-16815
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE 52-1453513
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14160 Dallas Parkway, Suite 300, Dallas, Texas75240
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:(214) 770-5600
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
42,711 Limited Partnership Assignee 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 twelve
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 (S 229.405 of this
Chapter) 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
The Registrant's outstanding securities consist of assignee
interests in limited partnership interests which have no readily
ascertainable market value since there is no public trading
market for these securities on which to base a calculation of
aggregate market value.
<PAGE>
Documents incorporated by reference. None
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
1995 Form 10-K Annual Report
TABLE OF CONTENTS
PART I
Page
Item 1. Business 1
Item 2. Properties 2
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders3
PART II
Item 5. Market for the Registrant's Pension Notes and Limited
Partnership Assignee Interests and Related Partnership
Matters 3
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial
Condition
and Results of Operations 4
Item 8. Financial Statements and Supplementary Data 6
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 21
PART III
Item 10. Directors and Executive Officers of the Registrant21
Item 11. Executive Compensation 24
Item 12. Security Ownership of Certain Beneficial Owners and
Management 24
Item 13. Certain Relationships and Related Transactions 24
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 25
<PAGE>
PART I
Item 1. Business
NHP Retirement Housing Partners I Limited Partnership (the
Partnership), a Delaware limited partnership was formed under the
Delaware Revised Uniform Limited Partnership Act as of March 10,
1986. On September 23, 1986, the Partnership commenced offering
25,000 Assignee Interests and 50,000 Pension Notes, both at a
price of $1,000 per unit (the Offering) . The Partnership
subsequently exercised its right to increase the offering to
75,000 Assignee Interests and 100,000 Pension Notes. The
offering was managed by NHP Real Estate Securities, Inc. and was
terminated on September 22, 1987, with subscriptions for 42,711
Assignee Interests and 42,697 Pension Notes.
The Assignee Interests were sold to taxable individuals or
entities and represent assignments of limited partnership
interests in the Partnership issued to NHP RHP-I Assignor
Corporation (Assignor Corporation), a Delaware corporation, the
assignor and sole limited partner. Pension Notes were sold to
qualified profit-sharing, pension and other retirement trusts,
bank commingled trust funds for such trusts, Keogh Plans and
IRAs, government pension and retirement trusts, and other
entities intended to be exempt from Federal taxation. The
Pension Notes are nonrecourse obligations of the Partnership
issued under a Trust Indenture between the Partnership and The
National Bank of Washington, (NBW) Washington, D.C., as Trustee,
and have a preference over the Assignee Interests with respect to
payment. In August 1990, the assets of NBW were purchased by
Riggs National Bank, Washington, D.C. which became the successor
trustee.
At December 31, 1994, the General Partner of the Partnership
was NHP/RHGP-I Limited Partnership (NHP/RHGP-I), a Delaware
limited partnership, and NHP/RHGP-I held a 2% interest as general
partner in the Partnership. The sole general partner of
NHP/RHGP-I is The National Housing Partnership (NHP), a District
of Columbia limited partnership. NHP's sole general partner is
National Corporation for Housing Partnerships (NCHP), a District
of Columbia corporation. All of the outstanding shares of NCHP,
and 99% of NHP's limited partnership interests are owned by NHP
Incorporated, a Delaware corporation. NHP Incorporated's
controlling shareholders are Demeter Holdings Corporation (a
Massachusetts nonprofit corporation, which is wholly-
owned/controlled by the President and Fellows of Harvard College,
a Massachusetts educational corporation created by the
constitution of Massachusetts), and Capricorn Investors, L.P. (a
Delaware investment limited partnership, whose general partner is
Capricorn Holdings, G.P., a Delaware general partnership).
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<PAGE>
As of December 31, 1994, the limited partners of NHP/RHGP-I
are 1225 Eye Street RHP-I Associates, a Maryland limited
partnership whose general partner is NHP and whose limited
partner is a key employee of NCHP, and NHP.
On December 19, 1991, NHP/RHGP-I executed an amended and
restated purchase agreement with Capital Realty Group Properties,
Inc. (CRG), a Texas corporation, for the transfer of its general
partner interests in the Partnership. CRG assigned its rights
under this purchase agreement to an affiliate, Capital Realty
Group Senior Housing, Inc. (CRGSH), a Texas corporation. The
substitution of CRGSH as sole general partner of the Partnership
required the consent of 50% or more of the outstanding Assignee
Interests which had been issued by the Partnership and assigned
by Assignor Corporation to the Assignee Holders. Under the
Partnership Agreement, holders of the nonrecourse Pension Notes
are not entitled to vote. 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 became the new sole general
partner of the Partnership. CRGSH is a wholly owned subsidiary
of Capital Realty Group Corporation, a Texas corporation
(Capital). Capital is owned 50% by James A. Stroud (through a
trust) and 50% by Jeffrey L. Beck. The address of the principal
executive offices of CRGSH is the same as the Partnership: 14160
Dallas Parkway, Suite 300, Dallas, Texas 75240, and their
telephone number at such address is the same as the Partnership
(214)770-5600.
The Partnership's business is to acquire existing and to
develop new residential rental properties for retirement age
occupants (the Properties) to the extent possible on an all cash
basis (without third party mortgage indebtedness) and to operate
such Properties. The Partnership presently owns four properties
in fee and has a 99.99% interest in a fifth property. See Item
2. Properties for a description of these Properties and the
business plan for these Properties.
Effective January 1, 1992, CRGSH was selected by NHP/RHGP-I
to manage the five Properties of the Partnership. Effective June
1, 1993, the Partnership entered into a Partnership Management
Agreement with CRGSH to provide administrative services on behalf
of the Partnership. This Partnership management agreement was
terminated effective upon CRGSH becoming the substitute general
partner. CRGSH became the General Partner effective January 23,
1995 and assigned its contract rights to manage the Partnership
properties to Capital Senior Living, Inc. ("CSL") effective
February 1, 1996.
The Partnership did not have any employees as of December
31, 1995.
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<PAGE>
Regulatory Matters
Federal, state and local government regulations govern
fitness and adequacy, equipment, personnel and standards of
medical care at a health care facility, as well as health and
fire codes. Changes in the applicable regulations could
adversely affect the operations of a property, which could also
affect the financial results of the Partnership. Risks of
inadequate cost reimbursement from various government programs
such as Medicaid and Medicare may also impact lessees' ability to
fulfill their lease obligations to the Partnership. Any impact
from proposed health care legislation is not known at this time;
however, such impact could adversely affect cost reimbursements
from various government programs.
Item 2. Properties
The following is a schedule of the Properties owned by the
Partnership. All of the Properties are owned in fee directly by
the Partnership except The Amberleigh, which is owned by a
limited partnership in which the Partnership is a 99.99% partner.
The Properties are encumbered by mortgages in favor of the
trustee for the benefit of the Pension Note holders.
<TABLE>
<CAPTION>
Units Occupied Units Occupied
Number as a Percentage of as a Percentage of
Property of Total Units, as of Total Units, as of
Name/Location Units December 31, 1995 December 31, 1994
<S> <C> <C> <C>
The Heatherwood, 160 89% 91%
Southfield, Michigan
Veranda Club 189 93% 92%
Boca Raton, Florida
The Amberleigh 271 95% 93%
At Woodstream Farms
Williamsville, New York
The Atrium at Carmichael 153 93%97%
Sacramento, California
Crosswood Oaks 122 83% 87%
Sacramento, California
</TABLE>
The cornerstones of the General Partner's business plan for
continuing to improve the Properties' performance are expanding
the services offered to residents to include special services or
home health care programs, continued effective use of creative
marketing techniques such as outreach to local hospitals and
physicians, and sound, cost effective site operations. The
introduction of special services and home health care is intended
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<PAGE>
to end the premature loss of tenants which some of the
Partnership's properties have experienced in the past. Special
services and home health care also tends to attract the well
elderly to a community because they see the possibility of
receiving assistance in their day-to-day living (e.g., bathing,
dressing, eating and taking medication) without having to move to
another home at a difficult time. Thus, offering special
services and home health care tends to attract more people who
know they can stay for a longer period, with obvious benefits to
the community's occupancy and resident turnover. The General
Partner believes this philosophy provides an opportunity for
improved operations at the Properties.
Due to aging of the Properties and the Partnership's goal to
remain competitive in the real estate markets, the General
Partner developed a capital improvement program that was
implemented in 1994 and scheduled to be completed in 1996. The
program varies by property, but generally includes painting of
the building, replacement of carpet and curtains, purchase of new
furniture and furniture refurbishment, and purchase of new
equipment. In 1994 and 1995, $430,197 and $712,919,
respectively, was spent for capital expenditures. Budgeted
capital expenditures for 1996 are approximately $388,412.
Item 3. Legal Proceedings
The Partnership is not involved in any material legal
proceedings as of March 27, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Pension Notes and Limited
Partnership Assignee Interests and Related Partnership
Matters
(a) Assignee Interests and Pension Notes were sold through
a public offering managed by NHP Real Estate
Securities, Inc. There is not currently, and it is not
anticipated that there will be, any established public
trading market for resale of Assignee Interests or
Pension Notes. Accordingly, an investor may be unable
to sell or otherwise dispose of his interest in the
Partnership.
(b) As of March 15, 1996, there were 2,449 registered
holders of Assignee Interests and 3,945 registered
holders of Pension Notes.
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<PAGE>
As of March 15, 1996, an affiliate of the general
partner of the Partnership purchased approximately
1,430 Pension Notes, or approximately 3.35% of the
Partnership's outstanding Pension Notes at an average
price of $423 per Pension Note.
(c) Each Pension Note bears stated interest in an amount
equal to 13 percent per annum, 9 percent of which was
subject to deferral through December 31, 1988 and 6
percent of which is subject to deferral thereafter.
Interest is payable quarterly. Quarterly distributions
of Cash Available for Distribution (as defined in the
Partnership Agreement) are payable to Assignee Interest
Holders within 60 days after the end of each three-
month period, subject to the General Partner's right to
restrict or suspend such distributions for limited
periods, if the General Partner, in its absolute
discretion, determines that such restriction or
suspension is in the best interests of the Partnership.
For each of the years ended December 31, 1995, 1994 and
1993, interest paid to the Pension Note Holders as a
group totalled $2,987,040 per year. With respect to
the fourth quarter of 1995, interest payments paid to
Pension Note Holders on February 29, 1996 amounted to
$752,734.
No cash distributions were paid to the Assignee
Interest Holders during 1995, 1994, or 1993. As
presented in the Statement of Cash Flows (pages 12 and
13), cash and cash equivalents decreased $114,543 and
$155,963 for the years ended December 31, 1995 and
1994, respectively. 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 be suspended until operating results
significantly improve. See Item 7 below.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C>
Revenue $14,020,626 $13,445,022 $12,247,313 $10,947,444$10,089,174
Loss due to reduction
in carrying value of
rental property $ 0 $ 0 $ 3,300,000 $ 0$ 0
Net loss $ 3,690,549 $ 3,773,975 $ 7,580,517 $ 4,670,855$ 5,043,413
Net Loss per Assignee Interest$ 85$ 87$ 174$ 107$
116
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Total assets $57,749,496 $58,967,958 $60,399,012$65,821,271$68,504,078
Long-term obligations -
Pension Notes, and related
interest payable $60,573,461 $58,039,450 $55,729,421$53,604,651$51,693,480
Cash distributions per
Assignee Interest$ 0$ 0$ 0$ 0$ 0
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Income from rental operations increased to $2,377,625 from
$2,177,663 and $1,380,087 for the years ended December 31, 1995,
1994, and 1993, respectively. Rental revenue increased in 1995
to $13,754,959 from $13,187,354 in 1994, or an increase of 4.3%,
primarily as a result of rental rate increases. Rental expenses
also increased to $11,643,001 in 1995 from $11,267,359 in 1994,
or an increase of 3.3%, reflecting increased costs primarily in
salaries, administration, depreciation, taxes and insurance costs
and food services. The Partnership's net loss is $3,690,549,
$3,773,975 and $7,580,517 for the years ended December 31, 1995,
1994 and 1993, respectively. A $3,300,000 charge to reduce the
carrying value of rental property was recorded in 1993.
Rental revenue increased in 1994 to $13,187,354 from $11,999,118
in 1993, or an increase of 9.9%, primarily as a result of
increased rental rates. Rental expenses also increased to
$11,267,359 in 1994 from $10,867,226 in 1993, or an increase of
3.7%, reflecting increased costs in salaries, utilities,
maintenance, resident services and food services.
Liquidity and Capital Resources
Net cash provided by operating activities during 1995 was
$659,336, representing a significant improvement over 1994's net
cash provided by operating activities of $334,887 and 1993's net
cash used in operations of $58,971. Rent collections increased
in 1995 to $13,747,228 from $13,180,197 in 1994, an increase of
4.3%, primarily from rental rate increases. Rental collections
likewise increased from $11,998,352 in 1993 to $13,180,197 in
1994, or an increase of 9.9%, primarily from rental rate
increases. Operating expenses paid increased from $10,116,279 in
1994 to $10,366,496 in 1995, or an increase of 2.5%, reflecting
increased salary costs, food, administration, depreciation, taxes
and insurance costs. Operating expenses paid increased from
$9,320,154 in 1993 to $10,116,279 in 1994, or an increase of
8.5%, reflecting increased costs in salaries, utilities,
maintenance, resident and food service. Interest paid was
$2,987,040 in 1995, 1994 and 1993.
For the year ended December 31, 1993, cash generated from rental
operations prior to the payment of interest expense was not
sufficient to pay all of the interest on the $42,672,000 of
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<PAGE>
outstanding Pension Notes. For the years ended 1995 and 1994,
cash generated from rental operations was sufficient to pay the
base interest amount of $2,987,040. The 1993 shortfall in cash
flow from operations to meet the interest payments was funded
from available cash on hand during 1993. Interest payments on
the Pension Notes are accrued at a 13% rate, but were paid based
on a 7% pay rate in 1995, 1994, and 1993. The remaining 6%
unpaid portion for these years as well as amounts deferred in
prior years in accordance with the terms of the Pension Notes
continues to be accrued and is due at maturity, December 31,
2001. Accrued and unpaid interest at December 31, 1995, amounted
to $17,901,461. At the time of the maturity of the Pension
Notes, total principal and accrued interest due will approximate
$81 million.
Cash and cash equivalents at December 31, 1995, amounted to
$3,478,604 as compared to $3,593,147 at December 31, 1994. Cash
required by operations, including interest on Pension Notes, has
been funded by maturing short-term investments or available cash
on hand. 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 or for
payment of the Pension Notes and accrued interest as described
below. 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 to the Assignee Interest Holders
will be suspended until operating results significantly improve.
The Trust Indenture Agreement (the Indenture) governing the
terms of the Pension Notes provides for certain events of
default. The Partnership would be in default under the Notes for
any of the following reasons: (i) the failure of the Partnership
to pay interest on a quarterly basis for any quarter at the
stated pay rate of 7%; (ii) the default in payment of principal
of the Pension Notes at maturity or upon call or redemption of
the Notes; (iii) default by the Partnership in the performance or
breach of any covenant; and (iv) institution or decree of
bankruptcy of the Partnership. All covenants included in the
Indenture are non-financial in nature. Additionally, the
Indenture provides for call or redemption of the Notes either at
the election of the Partnership or upon sale or refinancing of
the underlying properties of the Partnership.
The Partnership Agreement limited the number of Pension Notes to
50,000, or $50 million during the Offering. Of the available
50,000, 42,697 Pension Notes were subscribed. The Partnership
Agreement does not specifically prohibit the Partnership from
incurring additional mortgage indebtedness related to the
Properties by borrowing from banks and other institutional
lenders in order to finance the acquisition and development of
Properties. Although it is the present intent of the Partnership
to hold the Properties free and clear of third party mortgage
indebtedness (other than the mortgages in favor of the Pension
Notes), to the extent that financing is available at favorable
rates and would be in the best interest of investors, the
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<PAGE>
Partnership may obtain future financings for Properties, subject
to applicable limitations.
Although cash flow from operations significantly improved in
1995, cash generated from operations over the past several years
prior to 1994 has 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. Given the
level of the Partnership's cash reserves at December 31, 1995, if
the Partnership is unable to increase cash generated from
operations over time, cash reserves may be exhausted and the
Partnership may be unable to meet its obligations.
If interest payments continue to be deferred at the current rate
(see Note 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.
Properties owned by the Partnership may still exceed current
market values as of December 31, 1995. Should the Partnership be
forced to dispose of one or more of its Properties, it could
incur a loss. The Partnership, however, does not intend to sell
any Properties in the near future, but rather intends to continue
to hold and operate them as rental Properties. As a result, the
Partnership has not obtained appraisals of the current market
value of its Properties.
Management's plans are to continue to manage the Properties
prudently to achieve positive cash flows from operations after
interest payments.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data of the
Partnership are included on pages 9 through 22 of this report.
-8-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
ASSETS
(Note 6)
<S> <C> <C>
Cash and cash equivalents (Note 2) $ 3,478,604 $ 3,593,147
Interest receivable 1,265 1,242
Other receivables (Note 4) 858,722 850,991
Pension notes issuance costs 1,519,426 1,774,218
Organization and offering costs 314,878 364,654
Prepaid expenses 279,152 273,393
Rental property (Notes 4 and 10):
Land 6,318,028 6,318,028
Buildings and improvements, net of
accumulated depreciation of $12,137,832 in 1995 and
$10,612,319 in 1994 44,942,735 45,755,329
Other assets 36,686 36,956
Total assets $ 57,749,496 $ 58,967,958
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accounts payable $ 591,228 $ 502,854
Interest payable (Note 6) 17,901,461 15,367,450
Pension notes (Note 6) 42,672,000 42,672,000
Purchase installments (Note 4) 552,000 552,000
Other liabilities (Note 4) 833,116 922,454
62,549,805 60,016,758
Partners' equity (deficit):
General Partner (1,332,625) (1,197,854)
Assignor Limited Partner - 42,691
investment units outstanding (3,467,684) 149,054
Total partners' equity (deficit) ( 4,800,309) (1,048,800)
Total liabilities and partners' equity (deficit)$ 57,749,496$ 58,967,958
</TABLE>
See notes to financial statements.
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<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
December 31,
1995 1994 1993
REVENUES:
<S> <C> <C> <C>
Rental income $13,754,959 $13,187,354 $11,999,118
Interest income 83,348 71,462 68,333
Other income 182,319 186,206 179,862
14,020,626
13,445,022 12,247,313
COSTS AND EXPENSES:Salaries, related benefits and overhead reimbursements (Note
3) 3,919,906 3,857,590 3,494,729
Management fees, dietary fees and other services (Note 3)1,326,2721,312,079
1,297,070 Insurance advisory fees and reinsurance premiums (Note 3)091,922
93,739
Administrative and marketing 700,594 608,230 708,751
Utilities 852,805 889,124 783,163Maintenance444,394421,579385,301
Resident services, other than salaries 292,097 263,484 216,168
Food services, other than salaries 1,513,898 1,432,153 1,327,502
Depreciation 1,525,513 1,439,377 1,583,935
Taxes and insurance 1,067,522 951,821 976,868
11,643,001
11,267,359 10,867,226
INCOME FROM RENTAL OPERATIONS 2,377,625 2,177,663 1,380,087
COSTS AND EXPENSES:
Interest expense - pension notes (Note 6)5,521,051 5,297,069 5,111,810
Loss due to reduction in carrying value of rental property (Note 10) 003,300,000
Amortization of pension
notes issuance costs 254,792 254,792 254,792
Amortization of organizationand offering costs 49,776 49,776 49,776
Other expenses 242,555 350,001 244,226
6,068,174
5,951,638 8,960,604
NET LOSS $(3,690,549)$(3,773,975) $(7,580,517)
ALLOCATION OF NET LOSS:General Partner $
(73,811) $ (75,480)$ (151,610)
Assignor Limited Partner (3,616,738) (3,698,495) (7,428,907)
$(3,690,549)$(3,773,975)$ (7,580,517)
NET LOSS PER ASSIGNEE INTEREST $ (85)$ (87)$ (174)
</TABLE>
See notes to financial statements.
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<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
General
Partner-
Capital Realty Assignor
Group Senior Limited
Housing, Inc. Partners Total
<S> <C> <C> <C>
Partners' equity (deficit) at
January 1, 1993 $ (849,455)$ 11,276,456 $ 10,427,001
Distributions (60,656) - (60,656)
Net Loss (151,610) (7,428,907) (7,580,517)
Partners' equity (deficit) at December 31, 1993 (1,061,721) 3,847,549
2,785,828
Distributions (60,653) - (60,653)
Net Loss (75,480) (3,698,495) (3,773,975)
Partners' equity (deficit) at December 31, 1994 (1,197,854) 149,054
(1,048,800)
Distributions (60,960) 0 (60,960)
Net Loss (73,811) (3,616,738) (3,690,549)
Partners' equity (deficit) at December 31, 1995 $(1,332,625) $(3,467,684)
$(4,800,309)
See notes to financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1995 1994 1993
Cash flows from operating activities:
<S> <C> <C> <C>
Rent collections $13,747,228$13,180,197$11,998,352
Interest received 83,325 71,803 70,009
Other income 182,319 186,206 179,862
Management fees, dietary fees
and other services (1,326,188)(1,312,855)(1,297,071)
Salary, related benefits
and overhead reimbursements (3,925,369)(3,858,879)(3,339,988)
Insurance advisory services
and reinsurance premiums 0 (91,922) (93,739)
Other operating expenses paid (5,114,939)(4,852,623)(4,589,356)
Interest paid (2,987,040) (2,987,040) (2,987,040)
Net cash provided by (used in) operating activities 659,336 334,887 (58,971)
Cash flows from investing activity:
Capital expenditures (712,919) (430,197) (203,447)
Net cash used in investing activity (712,919) (430,197) (203,447)
Cash flows from financing activity:
Distributions (60,960) (60,653) (60,656)
Net cash used in financing activity (60,960) (60,653) (60,656)
Net decrease in cash and cash equivalents (114,543) (155,963) (323,074)
Cash and cash equivalents at beginning of year 3,593,147 3,749,110 4,072,184
Cash and cash equivalents at end of year $3,478,604 $3,593,147$ 3,749,110
</TABLE>
See notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(continued)
Years Ended December 31,
1995 1994 1993
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(3,690,549)$(3,773,975)
$(7,580,517)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Loss due to reduction in carrying value
of rental property 0 0 3,300,000
Depreciation 1,525,513 1,439,377 1,583,935
Amortization of organization costs 49,776 49,776 49,776
Amortization of pension notes issuance costs 254,792 254,792 254,792
Changes in operating assets and liabilities:
Interest receivable (23) 341 1,676
Other assets and receivables (7,461) (5,569) 92,906
Prepaid expenses (5,759) (33,429) 19,547
Accounts payable 88,374 (51,631) 159,100
Interest payable 2,534,011 2,310,029 2,124,770
Other liabilities (89,338) 145,176 (64,956)
Net cash provided by (used in) operating activities$ 659,336$ 334,887$ (58,971)
</TABLE>
See notes to financial statements.
-13-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
1. SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
Organization
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.
A description of the Projects now owned directly or
indirectly and operated by the Partnership is as follows:
The Amberleigh. This project is a 271 unit retirement
living center located in Williamsville, New York. The
facility was approximately 95% and 93% occupied at
December 31, 1995 and 1994, respectively.
The Atrium of Carmichael. This project is a 153 unit
retirement living center located in Sacramento,
California. This facility was approximately 93% and
97% occupied at December 31, 1995 and 1994,
respectively.
Crosswood Oaks. This project is an 122 unit retirement
living center located in Sacramento, California. This
facility was approximately 83% and 87% occupied at
December 31, 1995 and 1994, respectively.
The Heatherwood. This project is an 160 unit
retirement living center located in Southfield,
Michigan. This facility was approximately 89% and 91%
occupied at December 31, 1995 and 1994, respectively.
Veranda Club. This project is an 189 unit retirement
living center located in Boca Raton, Florida. This
-14-
<PAGE>
facility was approximately 93% and 92% occupied at
December 31, 1995 and 1994, respectively.
Significant Accounting Policies
Offering costs and issuance costs related to the sale
of Notes are being amortized using the straight line method
over the term of the Notes. Accumulated amortization at
December 31, 1995 was $2,038,336. Selling commissions
related to the sale of Interests were recorded as a direct
reduction to the capital account of the holders of
Interests. Organization costs, certain pre-occupancy
marketing costs and offering costs related to the sale of
Interests are being amortized over a period of sixty months.
Accumulated amortization at December 31, 1995 was $398,208.
Direct costs of acquisition, including acquisition fees
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
and expenses paid to the General Partner, have been
capitalized as a part of buildings and improvements. Other
fees and expenses of the Partnership are recognized as
expenses in the period the related services are performed.
Interest expense on Notes is calculated using an
effective interest method (see Note 6). Operating deficit
and cash flow guarantee payments received from the sellers
of The Heatherwood, The Atrium and Crosswood Oaks are
recognized as a reduction of the basis of the respective
properties.
Buildings and improvements are recorded at the lower of
cost or net recoverable value (Note 10) and depreciated
using the straight-line method, assuming a 30-year life and
a 30% salvage value.
The cost of rental property and their useful lives are
summarized as follows:
<TABLE>
<CAPTION>
Useful Life 1995 1994
<S> <C> <C>
Land $ 6,318,028 $ 6,318,028
Land improvements 30 years $ 52,043 $ 39,910
Building and building
improvements 30 years 55,067,422 54,783,283
Furniture and equipment 5 years 1,961,102 1,544,455
-15-
<PAGE>
57,080,567 56,367,648
Less-accumulated
depreciation ( 12,137,832) ( 10,612,319)
$44,942,735 $45,755,329
</TABLE>
Rental income is recognized when earned based on
residents' signed rental agreements. Rental payments
received in advance are deferred and recognized when earned.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumption that effect the
amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
2 CASH AND CASH EQUIVALENTS
As of December 31, 1995 and 1994, cash and cash
equivalents consisted of demand deposits and repurchase
agreements. All repurchase agreements have an original
maturity of three months or less and, therefore, are
considered to be cash equivalents.
Cash and cash equivalents also includes $493,425 and
$437,601 of tenant security deposits at December 31, 1995
and 1994, respectively, which are designated for the purpose
of providing refunds to tenants upon move-out.
3. TRANSACTIONS WITH THE GENERAL PARTNER AND ITS AFFILIATES
Through January 22, 1995, the sole general partner of
the Partnership was NHP/RHGP-I Limited Partnership
(NHP/RHGP-I). The sole limited partner of the Partnership
is NHP RHP-I Assignor Corporation, a Delaware corporation
which is an affiliate of NHP/RHGP-I.
-16-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
On December 19, 1991, the General Partner 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 an affiliate, Capital Realty Group Senior
Housing, Inc. (CRGSH). CRGSH is the management agent under
a five year contract with an option to renew for an
additional five years under certain conditions. 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. Effective February 1, 1995,
CRGSH assigned its contract rights to manage the
Partnership's properties to Capital Senior Living, Inc.
("CSL"). CRGSH and CSL received $1,326,188, $1,312,855, and
$1,297,071 in 1995, 1994 and 1993, respectively, for
management fees, dietary services fees and other operating
expense reimbursements related to services provided to the
Properties and the Partnership.
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 CSL, an
affiliate of CRGSH, and prior to February 1, 1995 were
employees of CRGSH. The Partnership reimburses CRGSH or CSL
for the salaries and related benefits of such personnel as
reflected in the accompanying financial statements. During
1995, 1994 and 1993, such reimbursements for salaries,
related benefits and overhead reimbursements amounted to
$3,925,369, $3,858,879 and $3,339,988, respectively.
In addition, the Partnership paid $91,922 and $93,739
to an affiliate of NHP/RHGP-I for insurance advisory
-17-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
services and reinsurance premiums during 1994 and 1993,
respectively.
During 1995, an affiliate of the General Partner
purchased approximately 1,388 Pension Notes, or
approximately 3.25% of the Partnership's outstanding Pension
Notes at an average price of $423 per Note.
4. ACQUISITION OF RENTAL PROPERTY
In connection with the purchase of the Heatherwood in
1988, the Partnership has recorded receivables of $826,877
from the seller and purchase installments and other
liabilities due to the seller totalling $816,583. The
Partnership is attempting to negotiate a settlement of these
amounts. Amounts due to the Seller at December 31, 1995
include $264,583 in property management fees and the
remaining $525,000 plus accrued interest of $27,000 purchase
installment payment due to the seller.
5. CASH DISTRIBUTION POLICIES
The Partnership Agreement allows for quarterly payments
of substantially all Cash Available For Distribution Before
Interest Payments (as defined in the Partnership Agreement),
subject to the following: (i) distributions to Assignee
Holders may be restricted or suspended for limited periods
when the General Partner determines in its absolute
discretion that it is in the best interests of the
Partnership; and (ii) all Assignee Holder distributions are
subject to the payment of Partnership expenses and
maintenance of working capital reserves.
Cash Available For Distribution Before Interest
Payments generally consists of cash received from the
ordinary operations of the Partnership less operating
expenses, without reduction for interest payments to Pension
Note Holders, and working capital reserves. Distributions
of Cash Available For Distribution Before Interest Payments
are made in the following order of priority, to the extent
available:
First, to the General Partner in an amount equal to 2
percent of Cash Available For Distribution Before
Interest Payments for each quarterly cash distribution
period (payable only if the Note Holders receive the
distribution as described below).
-18-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
Second, to the Note Holders in an amount equal to an
annual return of 7 percent on the adjusted principal
amount of their Pension Notes for each quarterly cash
distribution period.
Third, to the Assignee Holders in an amount equal to an
annual return of 7 percent on their adjusted capital
contributions for each quarterly cash distribution
period.
Fourth, to the Note Holders and Assignee Holders pro
rata based on the relationship between the adjusted
principal amount of the Pension Notes to the adjusted
capital contributions of the Assignee Holders until the
Note Holders have received an amount equal to an
aggregate annual return of 10 percent on the adjusted
principal amount of their Pension Notes for each
quarterly cash distribution period and the Assignee
Holders have received an amount equal to an aggregate
annual return of 10 percent on their adjusted capital
contributions for each quarterly cash distribution
period.
Fifth, to the General Partner as a Partnership
Incentive Fee in an amount equal to 8 percent of Cash
Available For Distribution Before Interest Payments for
the fiscal year. If the amount of Cash Available for
Distribution Before Interest Payments for any fiscal
year is insufficient to pay the General Partner its
Partnership Incentive Fee, the fee shall not accrue and
shall not be paid from Cash Available For Distribution
Before Interest Payments payable in subsequent fiscal
years.
Sixth, the balance to the Note Holders and Assignee
Holders pro rata based on the relationship between the
adjusted principal amount of the Pension Notes to the
adjusted capital contributions of the Assignee Holders.
However, the amount of interest payable to the Note
Holders shall not exceed a cumulative noncompounded
return of 13 percent per annum on the adjusted
principal amount of their Pension Notes. No payments
of Cash Available For Distribution Before Interest
Payments shall reduce the principal balance of the
Pension Notes.
-19-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
No distributions were paid to the Assignee Interest
Holders during 1995, 1994 or 1993 (also see Note 12). The
General Partner anticipates that distributions to Assignee
Interest Holders will be suspended until operating results
significantly improve.
Cash received from sales or refinancings of any
Partnership Property, after retirement of applicable
mortgage debt and the payment of all expenses related to the
transaction and any payments of debt service on the Pension
Notes including interest at a noncompounded rate of 13% per
annum less any prior payments (see Note 6), is to be
distributed in the following manner:
-20-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
First, to the Interest Holders until their adjusted
capital accounts are reduced to zero;
Second, to the Interest Holders until cumulative cash
distributions received equal a 13% non-compounded
return on their adjusted capital accounts, reduced by
prior distributions;
Third, to the General Partner in the form of a
disposition fee; and
Fourth, 85% to the Interest Holders and 15% to the
General Partner.
Net income or loss from operations is allocated to the
Interest Holders as a class and to the General Partner in
proportion to available cash distributed during the fiscal
year. If no cash is distributed during the year, net income
or loss is allocated 90% to the Assignee Holders as a class
and 10% to the General Partner. Other provisions exist if
there is net income or loss other than from operations. As
discussed in Note 7, 2% for 1995, 1994 and 1993 of the Cash
Available For Distribution Before Interest Payments was paid
to the General Partner. During 1994 and 1993, the General
Partner assigned $60,653 and $30,263, respectively, of such
distributions to CRGSH. Accordingly, net loss for each of
the three years ended December 31, 1995 was allocated in the
same manner.
6. PENSION NOTES
The Notes bear stated simple interest at a rate equal
to 13% per annum. Payment of up to 9% of stated interest
was subject to deferral through December 31, 1988 and
payment of up to 6% of stated interest is subject to
deferral thereafter. Deferred interest does not bear
interest. Interest not deferred is payable quarterly.
Using an effective interest method, interest on principal
and accrued interest of the Notes has been accrued at the
rate of approximately 9% per annum compounded quarterly.
The approximate 9% effective interest rate was calculated
using estimates of the amounts of interest that will be
deferred and the time period in which such deferred amounts
will be paid and will provide a liability for the full
amount of deferred interest upon the maturity of the Notes.
If interest had been provided based on 13% versus the
-21-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
effective rate of approximately 9%, an additional liability
of approximately $4,821,379 would be recorded at December
31, 1995 and future interest expense would be reduced by
this amount. The Partnership made payments of $2,987,040
per year in 1995, 1994 and 1993 to Note holders. The
Partnership's obligation to repay the principal amount of
the Notes, which mature on December 31, 2001, and stated
interest thereon, is secured by a lien on the Partnership's
assets (see Note 9). The liability of the Partnership under
the Notes is limited to the assets of the Partnership. The
Notes are subject to redemption in whole or in part upon not
less than 30 nor more than 60 days prior notice, at the
election of the Partnership.
7. DISTRIBUTIONS TO PARTNERS
During 1995, 1994 and 1993, the General Partner
received distributions, representing 2% of the Cash
Available For Distribution Before Interest Payments to the
Note Holders. During 1994 and 1993, the General Partner
assigned such distributions to CRGSH as part of the
management arrangement. The Partnership did not make a
distribution to the holders of Assignee Interests during
1995, 1994 or 1993.
-22-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
8. INCOME TAXES
The Partnership is not taxed on its income. The
partners are taxed in their individual capacities upon their
distributive share of the Partnership's taxable income and
are allowed the benefits to be derived from possibly off-
setting their distributive share of the tax loss against
taxable income from other sources subject to application of
passive loss rules and subject to "At Risk" basis
limitation. The taxable income or loss differs from amounts
included in the statement of operations primarily because of
different methods used in computing depreciation and
interest on the Notes and determining start-up and marketing
expenses for financial reporting and Federal income tax
purposes.
For Federal income tax purposes, the Partnership
computes depreciation of buildings and improvements using
the Modified Accelerated Cost Recovery System (MACRS) and
the Accelerated Cost Recovery System (ACRS), while for
financial statement purposes, depreciation is computed using
the straight-line method, assuming a 30-year life and a 30%
salvage value. Interest on Notes is computed in accordance
with Internal Revenue Service regulations for original issue
discount for Federal income tax purposes, while for
financial statement purposes, interest on Notes is computed
using an effective interest method. Start-up and marketing
costs incurred prior to initial occupancy are capitalized
and amortized over sixty months for Federal income tax
purposes, while for financial statement purposes, only those
start-up and marketing costs that are expected to benefit
future operations have been capitalized and amortized over
sixty months.
A reconciliation between financial statement net loss and
net loss for tax purposes follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
Net loss per
<S> <C> <C> <C>
financial statements $3,690,549 $3,773,975 $7,580,517
Temporary differences in determining
losses for Federal income tax purposes
-23-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
Depreciation 671,332 923,302 782,341
Amortization of start-up
and marketing costs (48,116) (19,366) (48,116)
Interest expense -
pension notes (2,673,201) (2,471,909) (2,282,284)
Loss due to reduction in carrying
value of rental
property $ -$ -$(3,300,000)
Miscellaneous (18,001) (11,175) 140,622
Loss per tax return $ 1,622,563 $ 2,194,827 $ 2,873,080
</TABLE>
The basis of building and improvements, net of accumulated
depreciation, for Federal income tax purposes was
$38,724,490 and $40,208,416 at December 31, 1995 and 1994,
respectively.
-24-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
9. FUTURE OPERATIONS AND CASH FLOWS
Although cash flow from operations improved in 1995,
cash generated from operations over the past several years
prior to 1994 has not been adequate to meet the
Partnership's minimum interest payment requirements. 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. Given the level of the Partnership's cash
reserves at December 31, 1995, if the Partnership is unable
to increase cash generated from operations over time, cash
reserves may be exhausted and the Partnership may be unable
to meet its obligations.
If interest payments continue to be deferred at the
current rate (see Note 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 plans to continue to manage the Properties
prudently to achieve positive cash flows from operations
after interest payments.
10. VALUATION OF RENTAL PROPERTY
In accordance with FASB Statement No 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", the Partnership records
impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might
be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts
of those assets. If such a shortfall exists, a write-down
would be warranted based on the estimated shortfall of
discounted cash flows. The Partnership performs such
evaluations on an ongoing basis by comparing each property's
net book value to the total estimated future operating cash
flow for years through 2001 (the year the Pension Notes
mature) plus cash projected to be received upon an assumed
-25-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
sale of the properties on December 31, 2001. Sales
proceeds, net of an estimated 3% cost of disposal, are
estimated using a 10% capitalization rate of the net
operating income projected for each property for the year
2001. As a result of operating budget revisions during 1993
which reduced projected undiscounted cash flows, evaluations
prepared at September 30, 1993 indicated that write-downs at
that date were necessary. Therefore, as of September 30,
1993, write-downs in the amounts of $2,000,000 and $800,000
were recorded on the Crosswood Oaks and Atrium properties,
respectively. As of December 31, 1993, an evaluation of
projected future undiscounted cash flows disclosed that, as
of December 31, 1993, additional write-downs of $400,000 and
$100,000 were required on the Crosswood Oaks and Atrium
properties, respectively. After recording these additional
amounts, the total write-down recorded for 1993 was
$3,300,000 and is reflected as loss due to reduction in
carrying value of rental property in the accompanying
statements of operations for the year ended December 31,
1993. The primary factors that resulted in the reduced
projected undiscounted cash flows as compared in the
previous year were increased projected future capital
expenditures for these two properties as well as reductions
in the projected occupancy rates and higher operating costs
as a percentage of revenue than that originally projected.
The Partnership will continue to evaluate the operations of
all of its Properties, and should actual cash flows fall
short of projected cash flows on any of its properties,
further reductions in carrying value may be necessary.
Based on the Partnership's evaluation of each respective
property during December 31, 1995 and 1994, no additional
write-downs were taken.
Even after the write-downs discussed above, the
carrying value of Crosswood Oaks and The Atrium as well as
the other Properties owned by the Partnership may still
exceed current market values as of December 31, 1995.
Should the Partnership be forced to dispose of one or more
of its Properties, it could incur a loss. The Partnership,
however, does not intend to sell any Properties in the near
future, but rather intends to continue to hold and operate
them as rental properties. As a result, the Partnership has
not obtained appraisals of the current market value of its
Properties.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS:
-26-
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(continued)
The carrying amounts and fair values of financial
instruments at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash
<S> <C> <C> <C> <C>
equivalents $ 3,478,604 $ 3,478,604 $3,593,147 $3,593,147
Pension Notes 42,672,000 17,932,740 42,672,000 17,078,800
</TABLE>
The following methods and assumptions were used by the
General Partner in estimating its fair value disclosures for
financial instruments:
Cash and cash equivalents: The carrying amounts
reported in the balance sheet for cash and cash
equivalents approximate fair value.
Pension Notes: The fair values of Pension Notes are
based on quoted market price.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
The Partnership's former independent accountant,
Deloitte & Touche LLP, was dismissed by the Partnership on
July 17, 1995. Deloitte & Touche's report on the financial
statements for either of the past two years did not contain
an adverse opinion or disclaimer of opinion, or was modified
as to uncertainty, audit scope, or accounting principles.
The Partnership engaged Ernst & Young as its independent
accountant on July 17, 1995.
Part III
Item 10. Directors and Executive Officers of the Registrant
(a). The Partnership has no directors, executive
officers or significant employees of its own.
(b). On January 23, 1995, CRGSH became the sole
general partner of the Partnership.
CRGSH is a privately owned corporation initially
organized on December 1, 1988. Its principal business
activity has been the ownership and management of real
-27-
<PAGE>
property for its own account and for the account of various
limited partnerships of which it is the general partner.
CRGSH is a wholly owned subsidiary of Capital Realty Group
Corporation, a Texas corporation ("Capital"), with its
corporate headquarters in Dallas, Texas. Capital is owned
50% by James A. Stroud (through a trust) and 50% by Jeffrey
L. Beck.
The Partnership properties during 1994 and through
February 1, 1995, were managed by CRGSH. On February 1,
1995, CRGSH assigned its contract rights to manage the
Partnership properties to Capital Senior Living. CSL is
owned in the same manner as Capital.
The following are the directors and executive officers
of CSL, and previously CRGSH:
Name Position
James A. Stroud Chief Operating Officer, Secretary
and Director
Jeffrey L. Beck Chief Executive Officer and Director
Keith N. Johannessen President
Fred Tanner Executive Vice President
Rob L. Goodpaster National Director of Marketing
Marilyn J. Teel Vice President
David Brickman Vice President
Robert F. Hollister Controller
James A. Stroud, age 45. Mr. Stroud has served as an
officer and a director of CRGSH since December 1988, most
recently serving as Chief Operating Officer and Secretary
since May 1991. He owns 50% (through a trust) of Capital
Realty Group Corporation. From 1984 until 1985, he was
Executive Vice-President of Equity Management
Corporation, Dallas, Texas, a full service real estate
company. From 1980 to 1983, he was director in charge of
the Tax Department of the law firm of Baker, Glast &
Middleton, Dallas, Texas. From 1978 until 1980, he was
an associate with Brice & Mankoff (formerly Durant and
Mankoff), a law firm in Dallas, Texas. Mr. Stroud is a
Certified Public Accountant and a licensed attorney. He
received his B.B.A. from Texas Tech University with
highest honors, his J.D. from the University of Texas
with honors, and his L.L.M. in taxation from New York
University with honors. While at New York University, he
was a graduate editor of the New York University Tax Law
Review and a Wallace Scholar. Mr. Stroud is a founder
and director of the Assisted Living Facilities
Association of America, a member of the Health Industry
Council, President-elect of National Investment
Conference ("NASLI"), and has delivered speeches on
health care topics to the National Association for Senior
Living Industries, NASLI, and the Urban Land Institute.
-28-
<PAGE>
Jeffrey L. Beck, age 51. Mr. Beck has served as an
officer and a director of CRGSH since December 1988, most
recently serving as Chief Executive Officer since
November 1990. He owns 50% of Capital Realty Group
Corporation. From 1975 to 1985, he was President of Beck
Properties, Inc., which was the predecessor of Capital.
From 1973 to 1974, he was Regional Controller with
Trammell Crow & Company, a real estate company based in
Dallas, Texas. Mr. Beck is Chairman of the Board of
Directors of Park Central Bank of Dallas. Mr. Beck
serves as Chairman of the American Senior Housing
Association.
Keith N. Johannessen, age 39. Mr. Johannessen became
Executive Vice President of CRGSH in May 1993 with
responsibility for supervising the day-to-day operations
of CRGSH's retirement communities. In March 1994, Mr.
Johannessen became President of CRGSH. From September
1992 through May 1993, Mr. Johannessen was a Senior
Manager in the North Central Region for the health care
practice of Ernst & Young, responsible for assisting in
the development and direction of the firm's long term
care center consulting projects in the region as well as
on a national basis. From August 1987 through September
1992, Mr. Johannessen was Executive Vice President with
Oxford Retirement Services, Inc. responsible for the
sales, marketing and operations of retirement communities
and nursing homes. From August 1978 to August 1987, Mr.
Johannessen was employed by Life Care Services
Corporation in a variety of operations management
positions, from single retirement projects to multi-
facility responsibilities. He is a licensed nursing home
administrator and holds a Bachelor of Arts Degree from
Nyack College, New York. Mr Johannessen is active in the
American Senior Housing Association, National Association
for Senior Living Industries and the American Association
of Homes for the Aging.
Fred Tanner, age 40. Mr. Tanner became Executive Vice
President of CRGSH in 1994, providing operational support
to congregate, assisted living and nursing facilities.
Additionally, he is responsible for the development and
oversight of home health programs. Prior to joining
CRGSH, Mr. Tanner served in similar operational roles
with Greystone Communities from May 1993 to November 1994
and Central Park Lodges from December 1988 to May 1993.
His experience includes the multiple supervision of both
endowment and rental, including independent, assisted
living and nursing care facilities. Mr. Tanner's
involvement in the industry began in 1979 at the
Methodist Home for the Aged in Charlotte, North Carolina.
In 1983 he served as an Executive Director of retirement
communities in Kansas and Tennessee before becoming a
Regional Director of Operations for the Forum Group in
Indianapolis, Indiana. Mr. Tanner is a member of the
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<PAGE>
American Senior Housing Association, where he heads the
committee formulating the association's assisted living
regulatory policy. Mr. Tanner is a graduate of the
University of North Texas Center for Studies in Aging
with a M.A. in Gerontology/Retirement Community
Administration.
Rob L. Goodpaster, age 43. Mr. Goodpaster became
National Director of Marketing of CRGSH in December 1992,
with overall responsibility for marketing and lease-up
functions of CRGSH's managed properties. With 19 years
of experience in the industry, Mr. Goodpaster has an
extensive background in retirement housing marketing.
His experience includes analyzing demographics,
developing and implementing marketing plans, creating
outreach and advertising programs, hiring and training
sales personnel and implementing lead management and
tracking systems. Prior to joining Capital, Mr.
Goodpaster was National Director of Marketing for Autumn
America from January 1990 to November 1992. From 1985
until December 1989, he was President of Retirement
Living Concepts, Inc. where he marketed retirement
properties throughout the United States. Mr. Goodpaster
was formerly Vice President, Marketing for U.S.
Retirement Corp. from 1984 to 1985 and Vice President,
Development for American Retirement Corp. from 1980 to
1984. Mr. Goodpaster is a graduate of Ball State
University with a B.S. in Business Management and
Marketing. Mr. Goodpaster is a member of the National
Association for Senior Living Industry and the Texas
Association of Retirement Communities.
Marilyn J. Teel, age 42. Ms. Teel has served as Vice
President of CRGSH since 1992. Ms. Teel has over 15
years experience in the senior housing industry. She has
had extensive experience in marketing, leasing and
management operations for retirement communities and
assisted living facilities. She joined CRGSH in 1991 and
is currently responsible for overseeing day-to-day
property operations as well as marketing and leasing
operations for multiple retirement communities, assisted
living facilities and nursing home facilities. From 1987
through 1988, Ms. Teel was marketing director with
OverCash Goodman Company, a company located in Fort
Worth, Texas, providing nursing home and congregate care.
From 1988 until 1991, Ms. Teel was the on-site
administrator for various retirement communities. She is
a member of the Texas Association of Retirement
Communities and the NASLI.
David Brickman, age 37. Mr. Brickman has served as Vice
President and Counsel of CRGSH since 1992. Mr. Brickman
received his bachelor of Arts degree from Brandeis
University. He holds a J.D. from the University of South
Carolina Law School, an M.B.A. from the University of
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<PAGE>
South Carolina School of Business Administration and a
Masters of Health Administration from Duke University.
Prior to joining Capital in 1992, he served as in-house
counsel from 1986 through 1987 with Cigna Health Plan
Inc., from 1987 through 1989 with American General Group
Insurance Company and from 1989 until joining Capital,
with LifeCo Travel Management Company located in Houston,
Texas. Mr. Brickman is also responsible for asset
management activities, operational activities and
investor relations for Capital's portfolio.
Robert F. Hollister, age 40. Mr. Hollister has served
as Controller of CRGSH since 1992. Mr. Hollister
received his Bachelor of Science in Accounting from the
University of Maryland. His experience includes public
accounting experience as well as private experience in
fields such as securities, construction, and nursing
homes. Prior to joining Capital in 1992, Mr. Hollister
was the chief financial officer and controller for
Kavanaugh Securities, Inc. from December 1985 until 1992.
Mr. Hollister is the property controller and supervises
the day-to-day accounting and financial aspects of
Capital. Mr. Hollister is a Certified Financial Planner
and a member of both local and national professional
accounting organizations.
The executive officers of CSL are required to spend only
such time on the Partnership's affairs as is deemed
necessary in the sole judgment of CSL. A significant
amount of these officers' time is expected to be spent on
matters unrelated to the Partnership.
Based solely upon a review of Forms 3, 4 and 5 and any
amendments thereto furnished to the Partnership pursuant
to Rule 16a-3(c) of the Securities and Exchange
Commission (SEC) rules, the Partnership is not aware of
any failure of any officer or director of CRGSH or
beneficial owner of more than ten percent of the Assignee
Interests to file timely with the SEC any Forms 3, 4 or 5
relating to the Partnership for 1995.
Item 11. Executive Compensation
NHP Retirement Housing Partners I Limited Partnership
has no officers or directors. However, various fees and
reimbursements are paid to the General Partner or its
affiliates. The following is a summary of such fees paid
or accrued during the year ended December 31, 1995:
Paid or payable from operating cash flow:
Cash distributions of $60,960 to the General Partner,
which represents 2% of Cash Available for Distribution
Before Interest Payments to the Note Holders.
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<PAGE>
Management fees, dietary service fees, and other
operating expense reimbursements of $1,326,188 and
salaries, related benefits and overhead reimbursements of
$3,925,369, were paid to the General Partner and CSL, an
affiliate of the General Partner
Item 12. Security Ownership of Certain Beneficial Owners and
Management
No person is known by the Partnership to own more than
5% of Assignee Interests.
As of March 15, 1996, an affiliate of the General
Partner, purchased approximately 1,430 Pension Notes, or
approximately 3.35% of the Partnership's outstanding
Pension Notes of an average price of $423 per Pension
Note.
Item 13. Certain Relationships and Related Transactions.
An outside member of NCHP's Board of Directors, Lloyd N.
Cutler, is of counsel to the law firm of Wilmer, Cutler &
Pickering, which firm was retained by NCHP and certain of
its affiliates for legal services during the last fiscal
year.
The Partnership had no transactions or business
relationships with NHP, CRGSH, or its affiliates except
as described in Items 8 (Note 3 in the Financial
Statements), 10, and 11.
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<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) Documents filed as part of this report:
1.Financial Statements
The financial statements, notes and reports listed
below are included herein:
Page
Report of Ernst & Young LLP, Independent Auditors7
Report of Independent Public Accountants 8
Statements of Financial Position,
December 31, 1995 and 1994 9
Statements of Operations for the Years
Ended December 31, 1995, 1994 and 1993 10
Statements of Partners' Equity (Deficit)
for the Years Ended December 31, 1995, 1994
and 1993 11
Statements of Cash Flows for the
Years Ended December 31, 1995,
1994 and 1993 12
Notes to Financial Statements 14
2. Financial Statement Schedules
All schedules
have been
omitted as the
r e q u i r e d
information is
inapplicable or
the information
is presented in
the financial
statements or
related notes.
3. Exhibits
None.
(b) Reports on Form 8-K
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<PAGE>
No reports on Form 8-K were filed during the last
quarter of fiscal 1995.
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<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: \s\ James A. Stroud
James A. Stroud
Chief Operating Officer and Director
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 capacities and on the
dates indicated.
By: \s\ James A. Stroud
James A. Stroud
Chief Operating Officer and Director
(Chief financial, and accounting officer)
By: \s\ Jeffrey L. Beck
Jeffrey L. Beck
Chief Executive Officer and Director
Date: March 29, 1996
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<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Partners
NHP Retirement Housing Partners I Limited Partnership
We have audited the accompanying statement of financial position
of NHP Retirement Housing Partners I Limited Partnership as of
December 31, 1995, and the related statements 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 conduced 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 NHP Retirement Housing Partners I Limited Partnership at
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.
Ernst & Young LLP
Dallas, Texas
February 16, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at December 31, 1995 and the consolidated statements
of operations and cash flows for the nine months ended December 31, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000793730
<NAME> NATIONAL
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,478,604
<SECURITIES> 0
<RECEIVABLES> 859,987
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 63,398,595
<DEPRECIATION> (12,137,832)
<TOTAL-ASSETS> 57,749,496
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (4,800,309)
<TOTAL-LIABILITY-AND-EQUITY> 57,749,496
<SALES> 0
<TOTAL-REVENUES> 14,020,626
<CGS> 0
<TOTAL-COSTS> 11,643,001
<OTHER-EXPENSES> 547,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,521,051
<INCOME-PRETAX> (3,690,549)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,690,549)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Report of Independent Public Accountants
To The Partners
NHP Retirement Housing Partners I
Limited Partnership
We have audited the accompanying statement of financial
position of NHP Retirement Housing Partners I Limited
Partnership (the Partnership) as of December 31, 1994,
and the related statements of operations, partners' equity
(deficit) and cash flows for the periods ended
December 31, 1994 and 1993. 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, such financial statements present fairly, in
all material respects, the financial position of NHP Retirement
Housing Partners I Limited Partnership as of December 31, 1994, and
the results of its operations and its cash flows for the periods
ended December 31, 1994 and 1993, in conformity
with generally accepted accounting principles presents fairly,
in all material respects, when read in conjunction with the related
financial statements, the information therein set forth.
As discussed in Note 9 to the financial statements, the
Partnership generated cash losses from operations over the past
several years prior to 1995. This shortfall from operations was
funded by the Partnership's existing cash and maturing short-term
investments remaining from its initial public offering. Should
the cash generated from operations not continue to improve
over the next several years, the Partnership's cash reserves may
not be adequate to fund interest payments or other Partnership
obligations. Management's plans regarding these matters are
described in Note 9.
As discussed in Note 10 to the financial statements, the
carrying values of the Partnership's rental properties may
exceed the current market values of the properties at
December 31, 1994. Should the Partnership be forced to
dispose of one or more of its Properties, it could incur a loss.
Management's plans in regard to operations and the carrying
value of the Partnership's properties are described in Notes 9
and 10. During 1993, a $3,300,000 write-down was taken on the
Partnership's rental properties; there can be no assurance that
further write-downs will not be needed in the future.
As discussed in Notes 6 and 9, the Partnership defers a
significant portion of the interest on its Pension Notes.
Accordingly, there would need to be very significant improvements in
the cash flows from operations and/or increases in the values of
the Properties to fund both the accrued interest and the face
value of the Pension Notes upon their maturity.
Deloitte & Touche
Washington, D.C.
February 17, 1995
<PAGE>
March 29, 1996
Securities and Exchange Commission
450 5th Street N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: NHP Retirement Housing Partners I Limited Partnership
SEC File Number: 0-16815
Madam or Sir:
Enclosed please find Form 10-K for the year ended December 31,
1995 for the above referenced partnership.
Please acknowledge receipt of this filing by stamping and
returning the enclosed copy of this letter in the self-addressed,
stamped envelope provided. If there are any questions regarding
this filing, please contact the undersigned.
Very truly yours,
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Pamela Crace
Investor Relations Director
PJC/pb
Enclosure
<PAGE>
