FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
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 incorporation (I.R.S. Employer
or organization) Identification No.
14160 DALLAS PARKWAY, SUITE 300
DALLAS, TX 75240
(Address of principal executive offices)
(Zip Code)
(214) 770-5600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<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
<S> <C> <C>
March 31, 1998 December 31, 1997
-------------- -----------------
ASSETS
------
Cash and cash equivalents $ 5,037,402 $ 4,495,733
Other receivables 21,481 31,892
Pension notes issuance costs 946,144 1,009,842
Organization and offering costs 202,882 215,326
Prepaid expenses 309,338 300,654
Rental property:
Land 6,820,468 6,820,468
Building, net of accumulated depreciation of
15,890,210 in 1998 and $15,456,154 in 1997 42,380,347 42,670,005
Other assets 42,111 41,920
----------------- ------------------
Total assets $ 55,760,173 $ 55,585,840
================= ==================
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable $ 362,633 $ 320,796
Interest payable 24,560,656 23,730,407
Pension notes 42,672,000 42,672,000
Other liabilities 905,609 882,625
----------------- ------------------
68,500,898 67,605,828
----------------- ------------------
Partners' deficit:
General Partner-NHP/RHGP-I Limited
Partnership (1,626,140) (1,596,670)
Assignor Limited Partner-NHP RHP-I
Assignor Corporation-42,691 investment
units outstanding (11,114,585) (10,423,318)
----------------- ------------------
Total partners' deficit (12,740,725) (12,019,988)
----------------- ------------------
Total liabilities and partners' deficit $ 55,760,173 $ 55,585,840
================= ==================
</TABLE>
See notes to financial statements
1
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Operations
For the Three Months Ended March 31, 1998
<S> <C> <C>
Three months ended March 31,
1998 1997
---- ----
REVENUE:
Rental income $ 4,024,049 $ 3,774,565
Interest income 28,289 24,420
Other income 62,697 41,772
----------------- -----------------
4,115,035 3,840,757
----------------- -----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 1,007,692 1,003,343
Management fees, dietary fees and other services 378,688 373,535
Administrative and marketing 147,033 128,973
Utilities 255,854 256,345
Maintenance 115,573 115,405
Resident services, other than salaries 60,165 71,389
Food services, other than salaries 393,926 385,682
Depreciation 434,057 415,548
Taxes and insurance 296,424 279,797
----------------- -----------------
3,089,412 3,030,017
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 1,025,623 810,740
----------------- -----------------
COSTS AND EXPENSES:
Interest expense - pension notes 1,582,983 1,509,068
Amortization of pension notes issuance costs 63,698 63,698
Amortization of organization and offering costs 12,444 12,444
Other expenses 71,873 127,480
----------------- -----------------
1,730,998 1,712,690
----------------- -----------------
NET (LOSS) $ (705,375) $ (901,950)
----------------- =================
NET (LOSS) PER ASSIGNEE INTEREST
$ (17) $ (21)
================= =================
</TABLE>
See notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statement of Partners' Deficit
For the Three Months Ended March 31, 1998
<S> <C> <C> <C>
GENERAL PARTNER
CAPITAL REALTY GROUP ASSIGNOR LIMITED
SENIOR HOUSING, INC. PARTNER TOTAL
-------------------- ---------------- -----
Partners' deficit
at December 31, 1997 $ (1,596,670) $ (10,423,318) $ (12,019,988)
Distributions (15,362) 0 (15,362)
Net Loss - Three months
ended March 31, 1998 (14,108) (691,267) (705,375)
------------------ ---------------- ----------------
Partners' deficit
at March 31, 1998 $ (1,626,140) $ (11,114,585) $ (12,740,725)
================== ================ ================
Percentage interest
at March 31, 1998 2% 98% 100%
== === ====
</TABLE>
See notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
<S> <C> <C>
Three months ended March 31,
1998 1997
---- ----
Cash flows from operating activities:
Rent collections $ 4,034,460 $ 3,768,004
Interest received 28,289 24,420
Other income 62,697 41,772
Salary and related benefits (1,013,955) (1,005,993)
Management fees, dietary fees
and other services (381,311) (374,368)
Other operating expenses paid (1,276,016) (1,309,200)
Interest paid (752,734) (752,733)
---------------- ----------------
Net cash provided by
operating activities 701,430 391,902
---------------- ----------------
Cash flows from investing activities:
Capital Expenditures (144,399) (72,640)
---------------- ----------------
Net cash used in investing activities (144,399) (72,640)
---------------- ----------------
Cash flows from financing activities:
Distributions (15,362) (15,362)
---------------- ----------------
Net cash used in financing activities (15,362) (15,362)
---------------- ----------------
Net increase in cash and
cash equivalents 541,669 303,900
Cash and cash equivalents
at beginning of period 4,495,733 4,017,181
---------------- ----------------
Cash and cash equivalents
at end of period $ 5,037,402 $ 4,321,081
================ ================
</TABLE>
See notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
A Limited Partnership
Statements of Cash Flows
(Continued)
<S> <C> <C>
Three months Ended March 31,
1998 1997
---- ----
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (705,375) $ (901,950)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 434,057 415,548
Amortization of organization
and offering costs 12,444 12,444
Amortization of pension notes
issuance costs 63,698 63,698
Changes in operating assets and liabilities:
Other assets and receivables 10,220 (5,166)
Prepaid expenses (8,684) (4,853)
Accounts payable 41,837 32,285
Interest payable 830,249 756,335
Other liabilities 22,984 23,561
---------------- ----------------
Total adjustments 1,406,805 1,293,852
---------------- ----------------
Net cash provided by
operating activities $ 701,430 $ 391,902
================ ================
</TABLE>
See notes to financial statements
5
<PAGE>
8
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, 1997.
(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 first fiscal quarter ended March 31, 1998
6
<PAGE>
and 1997, were $1,007,692 and $1,003,343, respectively. Management fees,
dietary fees and other services reimbursed and expensed by the
Partnership to CSL for the first fiscal quarter ended March 31, 1998 and
1997, were $378,688 and $373,535, respectively.
Distributions of $15,362 were made to the General Partner during the
three months ended March 31, 1998.
(3) VALUATION OF RENTAL PROPERTY
Generally accepted accounting principles require that the Partnership
evaluate whether it is probable that the estimated undiscounted future
cash flows of its properties, taken individually, will be less than the
respective net book value of the properties. If such a shortfall exists
and is material, then a write-down is warranted. The Partnership performs
such evaluations on an on-going basis. During the three months ended
March 31, 1998, 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>
<S> <C> <C> <C>
Available March 31 March 31
Units 1998 1997
----- ---- ----
The Amberleigh 271 95% 97%
The Atrium at Carmichael 153 97% 97%
Crosswood Oaks 122 93% 88%
Heatherwood 160 96% 79%
Veranda Club 189 95% 96%
</TABLE>
Rent collections for the three month period increased to $4,034,460 in 1998 from
$3,768,004 in 1997, or 7.1%, primarily from rental rate increases and increased
occupancies. Salaries, management fees and other operating expenses paid
slightly decreased, from $2,689,561 in 1997 to $2,671,282 in 1998 or 0.7%,
primarily from decreased operating expenses.
Cash generated from rental operations prior to the payment of interest expense
was sufficient to pay all of the interest on the Pension Notes, which was
$752,734 for the three month period ended March 31, 1998. Net cash provided from
operations, after the payment of interest expense, during the three months ended
March 31, 1998 and 1997 was $701,430 and $391,902, respectively. Interest on the
Pension Notes is accrued at a 13% rate, which totaled $1,582,983 and $1,509,068
for the three months ended March 31, 1998 and 1997, 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
$24,560,656 and $23,730,407 at March 31, 1998 and December 31, 1997,
respectively.
7
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Capital expenditures increased $71,759 from $72,640 in 1997 to $144,399 in 1998.
Capital improvement programs implemented at several of the properties during
1995 continued during 1996, 1997 and 1998.
Cash and cash equivalents at March 31, 1998 and December 31, 1997 amounted to
$5,037,402 and $4,495,733, 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 1997 and 1998, cash generated
from operations over the past several years prior to 1994 had not been adequate
to meet the Partnership's minimum interest payment requirements. The annual
shortfall was approximately $59,000 during 1993, and averaged approximately $1.5
million annually in the five-year period prior to 1993. The shortfall has been
funded by Partnership's cash reserves, which principally resulted from funds
remaining from the initial offering of Partnership Interests and Pension Notes,
after the acquisition of the Partnership's properties. If interest payments
continue to be deferred at the current rate of 6%, the total accrual for unpaid
interest and principal will approximate $81 million at December 31, 2001, the
maturity date of the Pension Notes, which is far in excess of projected cash
reserves. Accordingly, there will need to be very significant improvements in
cash flows from operations and/or increases in the disposition and refinancing
values of the Properties to fund both the accrued interest and the face value of
the Pension Notes upon their maturity. Except as indicated below, Management's
general plans are to continue to manage the Properties prudently to achieve
positive cash flows from operations after interest payments.
The General Partner is currently evaluating various opportunities that may
include the sale of a substantial amount of the Partnership's properties.
Interest accruals are increasing at a rate greater than the appreciation of the
assets on a yearly basis. The sale of a substantial amount of the properties
would allow the Partnership to pay down part of the debt, which would have the
effect of lowering these accruals.
RESULTS OF OPERATIONS
- ---------------------
The Partnership's net loss for the three months ended March 31, 1998 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 $901,950 to $705,375 for the three
month periods ending March 31, 1997 and 1998, respectively. Net loss per
Interest decreased from $21 to $17 for the 42,691 Interests, respectively. This
decreased loss was principally due to increased rental income and occupancies.
Rental income increased to $4,024,049 for the three months ended March 31, 1998
from $3,774,565 for the same period in 1997, or approximately 6.6%, primarily as
a result of rental rate increases. Rental expenses increased to $3,089,412 from
$3,030,017, or 2.0% for the three month periods ending March 31, 1998 and 1997,
respectively. Increased rental expense was primarily due to increased
administrative and marketing expenses, taxes and insurance, and depreciation.
Pension Note interest expense increased from $1,509,068 to $1,582,983 for the
three month periods ending March 31, 1997 and 1998 respectively. Other expenses
8
<PAGE>
relating to Partnership administration decreased from $127,480 to $71,873 for
the three month periods ending March 31,1997 and 1998, respectively.
As discussed previously, the Partnership performs an on-going evaluation of the
individual carrying value of each of the rental properties. Based on the
Partnership's evaluation of these carrying values at March 31, 1998, it was
determined that no additional write-downs were warranted. The Partnership will
continue to evaluate the properties in the future, and additional write-downs
may be necessary.
PART II
- -------
All items not applicable.
- -------------------------
9
<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: May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Sheet for NHP Retirement Housing Partners I, L.P.
</LEGEND>
<CIK> 0000793730
<NAME> NHP Retirement Housing Partners I, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 5,037,402
<SECURITIES> 0
<RECEIVABLES> 21,481
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 65,091,025
<DEPRECIATION> (15,890,210)
<TOTAL-ASSETS> 55,760,173
<CURRENT-LIABILITIES> 0
<BONDS> 42,672,000
0
0
<COMMON> 0
<OTHER-SE> (12,740,725)
<TOTAL-LIABILITY-AND-EQUITY> 55,760,173
<SALES> 0
<TOTAL-REVENUES> 4,115,035
<CGS> 0
<TOTAL-COSTS> 3,089,412
<OTHER-EXPENSES> 148,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,582,983
<INCOME-PRETAX> (705,375)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (705,375)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
