FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For the Quarterly Period Ended September 30, 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)
(972) 770-5600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Financial Position
September 30, 1997 December 31, 1996
------------------ -----------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,889,610 $ 4,017,181
Interest receivable 0 1,200
Other receivables 30,249 28,363
Pension notes issuance costs 1,073,540 1,264,634
Organization and offering costs 227,770 265,102
Prepaid expenses 212,182 285,111
Rental property:
Land 6,318,028 6,318,028
Building, net of accumulated
depreciation of $14,999,566 in 1997 and $13,752,920 in 1996 43,019,467 43,853,213
Other assets 37,735 39,052
----------------- ------------------
Total assets $ 55,808,581 $ 56,071,884
================= ==================
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable $ 351,253 $ 336,446
Interest payable 22,974,071 20,681,172
Pension notes 42,672,000 42,672,000
Other liabilities 934,208 818,377
----------------- ------------------
66,931,532 64,507,995
----------------- ------------------
Partners' deficit:
General Partner-NHP/RHGP-I Limited
Partnership (1,563,675) (1,465,252)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691 investment
units outstanding (9,559,276) (6,970,859)
----------------- ------------------
Total partners' deficit (11,122,951) (8,436,111)
----------------- ------------------
Total liabilities and partners' deficit $ 55,808,581 $ 56,071,884
================= ==================
See notes to financial statements.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Three Months Ended September 30, 1997
Three months ended September 30,
1997 1996
REVENUE:
<S> <C> <C>
Rental income $ 3,785,468 $ 3,561,786
Interest income 22,346 19,771
Other income 55,501 36,206
----------------- ----------------
3,863,315 3,617,763
----------------- ----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 1,016,138 953,087
Management fees, dietary fees and other services 379,788 346,870
Administrative and marketing 152,151 162,441
Utilities 217,240 218,502
Maintenance 131,337 112,381
Resident services, other than salaries 72,057 70,819
Food services, other than salaries 404,760 379,176
Depreciation 415,548 411,634
Taxes and insurance 280,728 275,564
----------------- ----------------
3,069,747 2,930,474
----------------- ----------------
INCOME FROM RENTAL OPERATIONS 793,568 687,289
----------------- ----------------
COSTS AND EXPENSES:
Interest expense - pension notes 1,509,068 1,441,688
Amortization of pension notes issuance costs 63,698 63,698
Amortization of organization and offering costs 12,444 12,444
Other expenses 59,331 34,563
----------------- ----------------
1,644,541 1,552,393
----------------- ----------------
NET (LOSS) $ (850,973) $ (865,104)
================= ================
NET (LOSS) PER ASSIGNEE INTEREST $ (20) $ (20)
================= ================
See notes to financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Nine Months Ended September 30, 1997
Nine months ended September 30,
1997 1996
REVENUE:
<S> <C> <C>
Rental income $ 11,312,802 $ 10,599,375
Interest income 66,908 57,472
Other income 145,880 119,664
----------------- ----------------
11,525,590 10,776,511
----------------- ----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 3,035,525 2,877,275
Management fees, dietary fees and other services 1,132,286 1,052,628
Administrative and marketing 434,381 474,984
Utilities 673,716 666,512
Maintenance 379,627 318,704
Resident services, other than salaries 216,193 216,925
Food services, other than salaries 1,186,222 1,123,939
Depreciation 1,246,645 1,234,902
Taxes and insurance 837,156 810,070
----------------- ----------------
9,141,751 8,775,939
----------------- ----------------
INCOME FROM RENTAL OPERATIONS 2,383,839 2,000,572
----------------- ----------------
COSTS AND EXPENSES:
Interest expense - pension notes 4,527,205 4,325,063
Amortization of pension notes issuance costs 191,094 191,094
Amortization of organization and offering costs 37,332 37,332
Other expenses 269,450 147,648
----------------- ----------------
5,025,081 4,701,137
----------------- ----------------
NET (LOSS) $ (2,641,242) $ (2,700,565)
================= ================
NET (LOSS) PER ASSIGNEE INTEREST $ (61) $ (62)
================= ================
See notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Partners' Deficit
For the Nine Months Ended September 30, 1997
GENERAL PARTNER
CAPITAL REALTY GROUP ASSIGNOR LIMITED
SENIOR HOUSING, INC. PARTNER TOTAL
Partners' deficit
<S> <C> <C> <C>
at December 31, 1996 $ (1,465,252) $ (6,970,859) $(8,436,111)
Distributions (45,598) 0
(45,598)
Net Loss - Nine months
ended September 30, 1997 (52,825) (2,588,417) (2,641,242)
------------------ ---------------- ------------
Partners' deficit
at September 30, 1997 $ (1,563,675) $ (9,559,276) $(11,122,951)
================== ================ ============
Percentage interest
at September 30, 1997 2% 98% 100%
== === ====
See notes to financial statements.
</TABLE>
4
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<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
Nine months ended September 30,
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Rent collections $ 11,310,916 $ 10,605,814
Interest received 68,108 57,537
Other income 145,880 119,664
Salary and related benefits (3,043,414) (2,877,275)
Management fees, dietary fees
and other services (1,138,430) (1,058,043)
Other operating expenses paid (3,777,828) (3,583,265)
Interest paid (2,234,306) (2,242,840)
---------------- -----------------
Net cash provided by
operating activities 1,330,926 1,021,592
---------------- -----------------
Cash flows from investing activities:
Capital Expenditures (412,899) (404,622)
---------------- -----------------
Net cash used in investing activities (412,899) (404,622)
---------------- -----------------
Cash flows from financing activities:
Distributions (45,598) (45,772)
---------------- -----------------
Net cash used in financing activities (45,598) (45,772)
---------------- -----------------
Net increase in cash and
cash equivalents 872,429 571,198
Cash and cash equivalents
at beginning of period 4,017,181 3,478,604
---------------- -----------------
Cash and cash equivalents
at end of period $ 4,889,610 $ 4,049,802
================ =================
See notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
(Continued)
Nine months Ended September 30,
1997 1996
---- ----
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (2,641,242) $ (2,700,565)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,246,645 1,234,902
Amortization of organization
and offering costs 37,332 37,332
Amortization of pension notes
issuance costs 191,094 191,094
Changes in operating assets and liabilities:
Interest receivable 1,200 65
Other assets and receivables (569) 836,263
Prepaid expenses 72,929 145,751
Accounts payable 14,807 (151,217)
Interest payable 2,292,899 2,082,223
Purchase installments 0 (552,000)
Other liabilities 115,831 (102,256)
---------------- ----------------
Total adjustments 3,972,168 3,722,157
---------------- ----------------
Net cash provided by
in operating activities $ 1,330,926 $ 1,021,592
================ ================
See notes to financial statements.
</TABLE>
6
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Notes to Financial Statements
(1) ACCOUNTING POLICIES
Nature of Business
NHP Retirement Housing Partners I Limited Partnership (the "Partnership")
is a limited partnership organized under the laws of the State of
Delaware on March 10, 1986. The Partnership was formed for the purpose of
raising capital by issuing both Pension Notes ("Notes") to tax-exempt
investors and selling additional partnership interests in the form of
Assignee Interests ("Interests") to taxable individuals. Interests
represent assignments of the limited partnership interests of the
Partnership issued to the Assignor Limited Partner, NHP RHP-I Assignor
Corporation. The proceeds from the sale of the Notes and Interests have
been invested in residential rental properties for retirement age
occupants.
Basis of Presentation
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to present
a fair statement of the financial condition and results of operations for
the interim periods presented.
While the General Partner believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that
these financial statements be read in conjunction with the financial
statements and the notes included in the Partnership's Annual Reports
filed in Forms 10-K for the year ended December 31, 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 third fiscal quarter ended September 30,
1997 and 1996, were $1,016,138 and $953,087, respectively. Management
fees, dietary fees and other services reimbursed and expensed by the
7
<PAGE>
Partnership to CSL for the third fiscal quarter ended September 30, 1997
and 1996, were $379,789 and $346,870, respectively.
Distributions of $45,598 were made to the General Partner during the nine
months ended September 30, 1997.
(3) VALUATION OF RENTAL PROPERTY
Generally accepted accounting principles require that the Partnership
evaluate whether it is probable that the estimated undiscounted future
cash flows of its properties, taken individually, will be less than the
respective net book value of the properties. If such a shortfall exists
and is material, then a write-down is warranted. The Partnership performs
such evaluations on an on-going basis. During the nine months ended
September 30, 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.
<TABLE>
<CAPTION>
Available September 30 September 30
Units 1997 1996
----- ---- ----
<S> <C> <C> <C>
The Amberleigh 271 96% 97%
The Atrium at Carmichael 153 98% 95%
Crosswood Oaks 121 88% 84%
Heatherwood 160 94% 88%
Veranda Club 189 91% 89%
</TABLE>
Rent collections for the nine month period increased to $11,310,916 in 1997 from
$10,605,814 in 1996, or 6.6%, primarily from rental rate increases and increased
occupancies. Salaries, management fees and other operating expenses paid
likewise increased, from $7,518,583 in 1996 to $7,959,672 in 1997 or 5.9%,
primarily from increased salary and related benefits expenses, management fees,
dietary fees, and other services, maintenance and food 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
$2,234,306 for the nine month period ended September 30, 1997. Net cash provided
from operations, after the payment of interest expense, during the nine months
ended September 30, 1997 and 1996 was $1,330,926 and $1,021,592, respectively.
Interest on the Pension Notes is accrued at a 13% rate, which totaled $4,527,205
and $4,325,063 for the nine months ended September 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 $22,974,071 and $20,681,172 at September 30, 1997 and
December 31, 1996, respectively.
8
<PAGE>
Capital expenditures increased $8,277 from $404,622 in 1996 to $412,899 in 1997.
Capital improvement programs implemented at several of the properties during
1995 continued during 1996 and 1997.
Cash and cash equivalents at September 30, 1997 and December 31, 1996 amounted
to $4,889,610 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.
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 nine months ended September 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 $2,700,565 to $2,641,242 for the nine
month period ending September 30, 1996 and 1997, respectively. Net loss per
Interest decreased from $62 to $61 for the 42,691 Interests, respectively. This
decreased loss was principally due to increased rental income and occupancies.
Rental income increased to $11,312,802 for the nine months ended September 30,
1997 from $10,599,375 for the same period in 1996, or approximately 6.7%,
primarily as a result of rental rate increases and increased occupancies. Rental
expenses increased to $9,141,751 from $8,775,939 for the nine month period
ending September 30, 1997 and 1996, respectively, or 4.2%. Increased rental
expense was primarily due to increased salaries, management fees, maintenance
and food services. Pension Note interest expense increased from $4,325,063 to
$4,527,205 for the nine month periods ending September 30, 1996 and 1997
respectively. Other expenses relating to Partnership administration increased
from $147,648 to $269,450 for the nine month periods ending September 30, 1996
and 1997, respectively. Increased other expenses was primarily due to increased
professional fees and administrative overhead.
9
<PAGE>
For the three months ended September 30, 1997 as compared with the three months
ended September 30, 1996, the Partnership's revenue and expenses reflect the
same variances as discussed above with the exception that utilities slightly
decreased for the 3 months ending September 30, 1997, and that resident services
slightly increased for the 3 months ending September 30, 1997.
As discussed previously, the Partnership performs an on-going evaluation of the
individual carrying value of each of the rental properties. Based on the
Partnership's evaluation of these carrying values at September 30, 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
By: /s/ James A. Stroud
----------------------------------------
James A. Stroud
Chief Operating Officer
Date: November 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> NHP Retirement Housing FDS
</LEGEND>
<CIK> 0000793730
<NAME> NHP Retirement Housing Partners I, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,889,610
<SECURITIES> 0
<RECEIVABLES> 30,249
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 64,337,061
<DEPRECIATION> (14,999,566)
<TOTAL-ASSETS> 55,808,581
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (11,122,951)
<TOTAL-LIABILITY-AND-EQUITY> 55,808,581
<SALES> 0
<TOTAL-REVENUES> 11,585,590
<CGS> 0
<TOTAL-COSTS> 9,141,751
<OTHER-EXPENSES> 497,876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,527,205
<INCOME-PRETAX> (2,641,242)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,641,242)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
