FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For the Quarterly Period Ended June 30, 1997
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 of other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
14160 DALLAS PARKWAY, SUITE 300
DALLAS, TX 75240
(Address of principal executive offices)
(Zip Code)
(214) 770-5600
(Registrant's telephone number, including area code)
NOT APPLICABLE (Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Financial Position
June 30, 1997 December 31, 1996
------------- -----------------
ASSETS
------
Cash and cash equivalents $ 4,715,944 $ 4,017,181
Interest receivable 0 1,200
Other receivables 15,553 28,363
Pension notes issuance costs 1,137,238 1,264,634
Organization and offering costs 240,214 265,102
Prepaid expenses 206,927 285,111
Rental property:
Land 6,318,028 6,318,028
Building, net of accumulated
depreciation of $14,584,017
in 1997 and $13,752,920 in 1996 43,229,690 43,853,213
Other assets 35,408 39,052
------------ ------------
Total assets $ 55,899,002 $ 56,071,884
============ ============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable $ 376,478 $ 336,446
Interest payable 22,210,056 20,681,172
Pension notes 42,672,000 42,672,000
Other liabilities 897,241 818,377
------------ ------------
66,155,775 64,507,995
------------ ------------
Partners' deficit:
General Partner-NHP/RHGP-I Limited
Partnership (1,531,450) (1,465,252)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691
investment units outstanding (8,725,323) (6,970,859)
------------ ------------
Total partners' deficit (10,256,773) (8,436,111)
------------ ------------
Total liabilities and partners' deficit $ 55,899,002 $ 56,071,884
============ ============
See notes to financial statements.
1
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Three Months Ended June 30, 1997
Three months ended June 30,
1997 1996
---- ----
REVENUE:
Rental income $ 3,752,769 $ 3,489,768
Interest income 20,142 19,559
Other income 48,607 38,698
------------ ------------
3,821,518 3,548,025
------------ ------------
COSTS AND EXPENSES:
Salaries, related benefits and
overhead reimbursements 1,016,044 945,014
Management fees, dietary fees
and other services 378,963 354,696
Administrative and marketing 153,257 157,451
Utilities 200,131 208,721
Maintenance 132,885 103,754
Resident services, other than salaries 72,747 76,370
Food services, other than salaries 395,780 368,319
Depreciation 415,549 411,634
Taxes and insurance 276,631 265,258
------------ ------------
3,041,987 2,891,217
------------ ------------
INCOME FROM RENTAL OPERATIONS 779,531 656,808
------------ ------------
COSTS AND EXPENSES:
Interest expense - pension notes 1,509,069 1,441,687
Amortization of pension notes
issuance costs 63,698 63,698
Amortization of organization and
offering costs 12,444 12,444
Other expenses 82,639 36,359
------------ ------------
1,667,850 1,554,188
------------ ------------
NET (LOSS) $ (888,319) $ (897,380)
============ ============
NET (LOSS) PER ASSIGNEE INTEREST $ (21) $ (21)
============ ============
See notes to financial statements.
2
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Six Months Ended June 30, 1997
Six months ended June 30,
1997 1996
---- ----
REVENUE:
Rental income $ 7,527,334 $ 7,037,589
Interest income 44,562 37,701
Other income 90,379 83,458
------------ ------------
7,662,275 7,158,748
------------ ------------
COSTS AND EXPENSES:
Salaries, related benefits and
overhead reimbursements 2,019,387 1,924,188
Management fees, dietary fees and
other services 752,498 705,758
Administrative and marketing 282,230 312,543
Utilities 456,476 448,010
Maintenance 248,290 206,323
Resident services, other than salaries 144,136 146,106
Food services, other than salaries 781,462 744,763
Depreciation 831,097 823,268
Taxes and insurance 556,428 534,506
------------ ------------
6,072,004 5,845,465
------------ ------------
INCOME FROM RENTAL OPERATIONS 1,590,271 1,313,283
------------ ------------
COSTS AND EXPENSES:
Interest expense - pension notes 3,018,137 2,883,375
Amortization of pension notes
issuance costs 127,396 127,396
Amortization of organization and
offering costs 24,888 24,888
Other expenses 210,119 113,085
------------ ------------
3,380,540 3,148,744
------------ ------------
NET (LOSS) $ (1,790,269) $ (1,835,461)
============ ============
NET (LOSS) PER ASSIGNEE INTEREST $ (42) $ (43)
============ ============
See notes to financial statements.
3
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Partners' Deficit
For the Six Months Ended June 30, 1997
GENERAL PARTNER
CAPITAL REALTY GROUP ASSIGNOR LIMITED
SENIOR HOUSING, INC. PARTNER TOTAL
Partners' deficit
at December 31, 1996 $(1,465,252) $(6,970,859) $ (8,436,111)
Distributions (30,393) 0 (30,393)
Net Loss - Six months
ended June 30, 1997 (35,805) (1,754,464) (1,790,269)
------------ ------------ -------------
Partners' deficit
at June 30, 1997 $ 1,531,450) $(8,725,323) $(10,256,773)
============ ============ =============
Percentage interest
at June 30, 1997 2% 98% 100%
== === ====
See notes to financial statements.
4
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
Six months ended June 30,
1997 1996
---- ----
Cash flows from operating activities:
Rent collections $ 7,540,144 $ 7,064,526
Interest received 45,762 37,766
Other income 90,379 83,458
Salary and related benefits (2,025,702) (1,924,188)
Management fees, dietary fees
and other services (754,917) (712,009)
Other operating expenses paid (2,469,683) (2,456,318)
Interest paid (1,489,253) (1,497,787)
------------- -------------
Net cash provided by
operating activities 936,730 595,448
------------- -------------
Cash flows from investing activities:
Capital Expenditures (207,574) (231,310)
------------- -------------
Net cash used in investing
activities (207,574) (231,310)
------------- -------------
Cash flows from financing activities:
Distributions (30,393) (30,567)
------------- -------------
Net cash used in financing
activities (30,393) (30,567)
------------- -------------
Net increase in cash and
cash equivalents 698,763 333,571
Cash and cash equivalents
at beginning of period 4,017,181 3,478,604
------------- -------------
Cash and cash equivalents
at end of period $ 4,715,944 $ 3,812,175
============= =============
See notes to financial statements.
5
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
(Continued)
Six months Ended June 30,
1997 1996
---- ----
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (1,790,269) $ (1,835,461)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 831,097 823,268
Amortization of organization
and offering costs 24,888 24,888
Amortization of pension notes
issuance costs 127,396 127,396
Changes in operating assets and
liabilities:
Interest receivable 1,200 65
Other assets and receivables 16,454 856,025
Prepaid expenses 78,184 72,936
Accounts payable 40,032 (162,519)
Interest payable 1,528,884 1,385,588
Purchase installments 0 (552,000)
Other liabilities 78,864 (144,738)
------------- -------------
Total adjustments 2,726,999 2,430,909
------------- -------------
Net cash provided by
in operating activities $ 936,730 $ 595,448
============= =============
See notes to financial statements.
6
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Notes to Financial Statements
(1) ACCOUNTING POLICIES
Nature of Business
NHP Retirement Housing Partners I Limited Partnership (the "Partnership")
is a limited partnership organized under the laws of the State of Delaware
on March 10, 1986. The Partnership was formed for the purpose of raising
capital by issuing both Pension Notes ("Notes") to tax-exempt investors and
selling additional partnership interests in the form of Assignee Interests
("Interests") to taxable individuals. Interests represent assignments of
the limited partnership interests of the Partnership issued to the Assignor
Limited Partner, NHP RHP-I Assignor Corporation. The proceeds from the sale
of the Notes and Interests have been invested in residential rental
properties for retirement age occupants.
Basis of Presentation
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to present a
fair statement of the financial condition and results of operations for the
interim periods presented.
While the General Partner believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that these
financial statements be read in conjunction with the financial statements
and the notes included in the Partnership's Annual Reports filed in Forms
10-K for the year ended December 31, 1996.
(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 of Capital Senior
Living, Inc. (CSL), an affiliate of CRGSH. The Partnership reimburses CSL
for the salaries, related benefits, and overhead reimbursements of such
personnel as reflected in the accompanying financial statements. Salary,
related benefits and overhead reimbursements reimbursed and expensed by the
Partnership to CSL for the second fiscal quarter ended June 30, 1997 and
1996, were $1,016,045 and $945,014, respectively. Management fees, dietary
fees and other services reimbursed and expensed by the Partnership to CSL
for the second fiscal quarter ended June 30, 1997 and 1996, were $378,962
and $354,696, respectively.
Distributions of $30,393 were made to the General Partner during the six
months ended June 30, 1997.
7
<PAGE>
(3) VALUATION OF RENTAL PROPERTY
Generally accepted accounting principles require that the Partnership
evaluate whether it is probable that the estimated undiscounted future cash
flows of its properties, taken individually, will be less than the
respective net book value of the properties. If such a shortfall exists and
is material, then a write-down is warranted. The Partnership performs such
evaluations on an on-going basis. During the six months ended June 30,
1997, 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.
Available June 30 June 30
Units 1997 1996
----- ---- ----
The Amberleigh 271 96% 97%
The Atrium at Carmichael 153 99% 88%
Crosswood Oaks 122 88% 84%
Heatherwood 160 86% 89%
Veranda Club 189 93% 87%
Rent collections for the six month period increased to $7,540,144 in 1997 from
$7,064,526 in 1996, or 6.7%, primarily from rental rate increases and increased
occupancies. Salaries, management fees and other operating expenses paid
likewise increased, from $5,092,515 in 1996 to $5,250,302 in 1997 or 3.1%,
primarily from increased salary and related benefits expenses, and management
fees, dietary fees, and other services.
Cash generated from rental operations prior to the payment of interest expense
was sufficient to pay all of the interest on the Pension Notes, which was
$1,489,253 for the six month period ended June 30, 1997. Net cash provided from
operations, after the payment of interest expense, during the six months ended
June 30, 1997 and 1996 was $936,730 and $595,448, respectively. Interest on the
Pension Notes is accrued at a 13% rate, which totaled $3,018,137 and $2,883,375
for the six months ended June 30, 1997 and 1996, 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 $22,210,056 and
$20,681,172 at June 30, 1997 and December 31, 1996, respectively.
Capital expenditures decreased $23,736 from $231,310 in 1996 to $207,574 in
1997. Capital improvement programs implemented at several of the properties
during 1995 continued during 1996 and 1997.
8
<PAGE>
Cash and cash equivalents at June 30, 1997 and December 31, 1996 amounted to
$4,715,944 and $4,017,181, 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 and 1997, cash generated
from operations over the 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. Since 1993, cash
generated from operations has been sufficient to meet the Partnership's minimum
interest payment requirements. 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/or refinancing values of the Properties
to fund both the accrued interest and the face value of the Pension Notes upon
their maturity. Management's plans are to continue to manage the Properties
prudently to achieve positive cash flows from operations after interest
payments.
RESULTS OF OPERATIONS
The Partnership's net loss for the six months ended June 30, 1997 includes
rental operations from each of the Partnership's properties. The net loss also
includes depreciation, amortization of Pension Notes issuance costs,
amortization of organization and offering costs and accrued Pension Note
interest expense which are noncash in nature.
The Partnership's net loss decreased from $1,835,461 to $1,790,269 for the six
month period ending June 30, 1996 and 1997, respectively. Net loss per Interest
decreased from $43 to $42 for the 42,691 Interests, respectively. This decreased
loss was principally due to increased rental income and occupancies. Rental
income increased to $7,527,334 for the six months ended June 30, 1997 from
$7,037,589 for the same period in 1996, or approximately 7.0%, primarily as a
result of rental rate increases and increased occupancies. Rental expenses
increased to $6,072,004 from $5,845,465 for the six month period ending June 30,
1997 and 1996, respectively, or 3.9%. Increased rental expense was primarily due
to inflation. Pension Note interest expense increased from $2,883,375 to
$3,018,137 for the six month periods ending June 30, 1996 and 1997 respectively.
Other expenses relating to Partnership administration increased from $113,085 to
$210,119 for the six month periods ending June 30, 1996 and 1997, respectively.
Increased other expenses was primarily due to increased professional fees.
For the three months ended June 30,1997 as compared with the three months ended
June 30, 1996, the Partnership's revenue and expenses reflect the same variances
as discussed above.
9
<PAGE>
As discussed previously, the Partnership performs an on-going evaluation of the
individual carrying value of each of the rental properties. Based on the
Partnership's evaluation of these carrying values at June 30, 1997, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
PART II
All items not applicable.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NHP Retirement Housing Partners I, Limited Partnership
by: Capital Realty Group Senior Housing, Inc.
General Partner
By: /s/ Keith Johannessen
---------------------------------------
Keith Johannessen
President
Date: August 13, 1997
11
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<CIK> 0000793730
<NAME> NHP Retirement Housing Partners I, L.P.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.00
<CASH> 4,715,944
<SECURITIES> 0
<RECEIVABLES> 15,553
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 64,131,735
<DEPRECIATION> (14,584,017)
<TOTAL-ASSETS> 55,899,002
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (8,725,323)
<TOTAL-LIABILITY-AND-EQUITY> 55,899,002
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<CGS> 0
<TOTAL-COSTS> 6,072,004
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<EPS-PRIMARY> 0
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