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, 2000
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
Statements of Financial Position
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 5,440,406 $ 5,553,357
Other receivables 23,196 25,690
Pension notes issuance costs 208,262 238,013
Prepaid expenses 192,220 119,097
Rental property:
Land 2,497,725 2,497,725
Building, net of accumulated depreciation of
$6,497,235 in 2000 and $6,354,013 in 1999 15,793,397 15,895,147
Other assets 3,962 4,543
----------------- -----------------
Total assets $ 24,159,168 $ 24,333,572
================= =================
LIABILITIES AND PARTNERS' DEFICIT:
Liabilities:
Accounts payable $ 146,200 $ 175,495
Interest payable 15,334,173 14,879,063
Pension notes 20,157,826 20,157,826
Other liabilities 365,487 296,037
----------------- -----------------
36,003,686 35,508,421
----------------- -----------------
Partners' deficit:
General Partner (948,618) (928,115)
Assignor Limited Partner - investment units
outstanding of 42,506 in 2000 and
42,691 in 1999 (10,895,900) (10,246,734)
----------------- -----------------
Total partners' deficit (11,844,518) (11,174,849)
----------------- -----------------
Total liabilities and partners' deficit $ 24,159,168 $ 24,333,572
================= =================
</TABLE>
See notes to financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statement of Operations
(Unaudited)
Three months ended March 31,
2000 1999
---- ----
REVENUE:
<S> <C> <C>
Rental income $ 1,236,626 $ 1,270,263
Interest income 49,096 38,630
Other income 14,223 22,165
----------------- -----------------
1,299,945 1,331,058
----------------- -----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 273,518 270,703
Management fees, dietary fees and other services 154,163 121,373
Administrative and marketing 14,843 34,583
Utilities 100,134 82,437
Maintenance 40,869 39,353
Resident services, other than salaries 10,383 9,321
Food services, other than salaries 133,090 124,643
Depreciation 143,222 142,119
Taxes and insurance 145,528 135,717
----------------- -----------------
1,015,750 960,249
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 284,195 370,809
----------------- -----------------
OTHER EXPENSES:
Interest expense - pension notes 811,145 774,066
Amortization of pension notes issuance costs 29,751 29,751
Amortization of organization and offering costs -- 77,615
Other 105,525 81,113
----------------- -----------------
946,421 962,545
----------------- -----------------
NET LOSS $ (662,226) $ (591,736)
================= =================
NET LOSS PER ASSIGNEE INTEREST $ (16) $ (14)
================= =================
</TABLE>
See notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statement of Partners' Deficit
(Unaudited)
ASSIGNOR
GENERAL LIMITED
PARTNER PARTNER TOTAL
------- -------- -----
<S> <C> <C> <C>
Partners' deficit
at December 31, 1999 $ (928,115) $ (10,246,734) $ (11,174,849)
Distributions (7,258) -- (7,258)
Repurchased assignor limited partner
units -- (185) (185)
Net loss - Three months
ended March 31, 2000 (13,245) (648,981) (662,226)
-------------- -------------- --------------
Partners' deficit
at March 31, 2000 $ (948,618) $ (10,895,900) $ (11,884,518)
============== ============== ==============
Percentage interest
at March 31, 2000 2% 98% 100%
== === ====
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(Unaudited)
Three months ended March 31,
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Rent collections $ 1,239,120 $ 1,267,029
Interest received 49,096 38,630
Other income 14,223 22,165
Salary and related benefits (267,274) (274,569)
Management fees, dietary fees and other services (121,122) (122,008)
Other operating expenses paid (622,044) (649,727)
Interest paid (356,035) (355,661)
---------------- ----------------
Net cash used in operating activities (64,036) (74,141)
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (41,472) (16,037)
---------------- ----------------
Net cash used in investing activities (41,472) (16,037)
---------------- ----------------
Cash flows from financing activities:
Repurchase of assignor limited partnership units (185) --
Distributions (7,258) (7,259)
---------------- ----------------
Net cash used in financing activities (7,433) (7,259)
---------------- ----------------
Net decrease in cash and cash equivalents (112,951) (97,437)
Cash and cash equivalents at beginning of period 5,553,357 5,821,300
---------------- ----------------
Cash and cash equivalents at end of period $ 5,440,406 $ 5,723,863
================ ================
</TABLE>
See notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(Continued)
Three months ended March 31,
2000 1999
---- ----
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (662,226) $ (591,736)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 143,222 142,119
Amortization of organization
and offering costs -- 77,615
Amortization of pension notes
issuance costs 29,751 29,751
Changes in operating assets and liabilities:
Other assets and receivables 3,075 (2,764)
Prepaid expenses (73,123) (84,073)
Accounts payable (29,295) (29,026)
Interest payable 455,110 418,405
Other liabilities 69,450 (34,432)
---------------- ----------------
Total adjustments 598,190 517,595
---------------- ----------------
Net cash used in operating activities $ (64,036) $ (74,141)
================ ================
</TABLE>
See notes to financial statements.
5
<PAGE>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Notes to Financial Statements
March 31, 2000
A. 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 ("Pension 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 Pension Notes
and Interests have been invested in residential rental properties for retirement
age occupants.
Basis of Presentation
The accompanying balance sheet as of December 31, 1999, has been derived from
audited financial statements of the Partnership for the year ended December 31,
1999, and the accompanying unaudited financial statements, as of March 31, 2000
and 1999, have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in the annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to those rules and regulations. For further information, refer to the financial
statements and notes thereto for the year ended December 31, 1999 included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 2000.
In the opinion of management, the accompanying financial statements contain all
adjustments (all of which were normal recurring accruals) necessary to present
fairly the Partnership's financial position as of March 31, 2000 and 1999,
results of operations, changes in Partner's deficit and cash flows for three
month periods ended March 31, 2000 and 1999. The results of operations for the
three-month period ended March 31, 2000 are not necessarily indicative of the
results for the year ending December 31, 2000.
B. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
Effective January 23, 1995, Capital Realty Group Senior Housing, Inc. (CRGSH)
became the sole general partner of the Partnership. On June 10, 1998, the sole
owner of the General Partner, Capital Realty Group Corporation, sold all of its
shares of CRGSH common stock to Retirement Associates, Inc. ("Associates") for
$855,000. The source of the funds is a Promissory Note for $855,000 with a
five-year term and bearing a current interest rate of 8 percent per annum. The
interest will accrue on the Promissory Note and be payable at the maturity of
the Promissory Note. Associates is the maker of the Note and Capital Realty
Group Corporation is the payee. Mr. Robert Lankford is the President of
Associates and has brokered and continues to broker real estate as an
independent contractor with Capital Realty Group Corporation and its affiliates.
6
<PAGE>
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 until June 30, 1998. 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, 2000 and 1999,
were $273,518 and $270,703, respectively. Management fees, dietary fees and
other services reimbursed and expensed by the Partnership to CSL for the first
fiscal quarter ended March 31, 2000 and 1999, were $154,163 and $121,373,
respectively.
Distributions of $7,258 were made to the General Partner during the three months
ended March 31, 2000.
C. 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, 2000, based on the Partnership's
evaluation of its property, the Partnership did not believe that any write-down
was warranted.
D. LEGAL PROCEEDINGS
On or about October 23, 1998, an Interest holder filed a putative class action
complaint on behalf of certain holders of Assignee Interests in NHP in the
Delaware Court of Chancery against the Partnership, Capital Senior Living
Corporation, Capital Senior Living Properties 2 - NHPCT, Inc. and CRGSH
(collectively "the Defendants"). This Assignee Interest holder purchased 90
Assignee Interests in the Partnership in February 1993 for $180. The complaint
alleges, among other things, that the Defendants breached, or aided and abetted
a breach of, the express and implied terms of the Partnership Agreement in
connection with the sale of four properties by the Partnership to Capital Senior
Living Properties 2 - NHPCT, Inc. Capital Senior Living Properties 2 - NHPCT,
Inc. is an affiliate of Capital Senior Living, Inc., the current manager of The
Amberleigh. The complaint seeks, among other relief, rescission of the sale of
these properties and unspecified damages. The Partnership believes the complaint
is without merit and intends to vigorously defend itself in this action. The
Partnership has filed a Motion to Dismiss in this case, which currently is
pending. The Partnership is unable to estimate liability related to this claim,
if any.
E. PENSION NOTES
The Notes bear stated simple interest at a rate equal to 13 percent per annum.
Payment of up to 9 percent of stated interest was subject to deferral through
December 31, 1988 and payment of up to 6 percent of stated interest is subject
to deferral thereafter. Deferred interest does not bear interest. Interest not
deferred is payable quarterly. Using the effective interest method, interest on
principal and accrued interest of the Pension Notes has been accrued at the rate
of approximately 9 percent per annum compounded quarterly. The approximate 9
percent 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. If interest had been provided based on 13 percent versus
the effective rate of approximately 9 percent, an additional liability of
approximately $891,911 would be recorded at March 31, 2000 and future interest
expense would be reduced by this amount. The Partnership's obligation to repay
7
<PAGE>
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. The
liability of the Partnership under the Pension Notes is limited to the assets of
the Partnership. The Pension Notes are subject to redemption in whole or in part
upon not less than 30 or more than 60 days prior notice, at the election of the
Partnership.
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 Amberleigh in
which the Partnership has a 99.9 percent partnership interest.
<TABLE>
<CAPTION>
Available March 31, March 31,
Units 2000 1999
----- ---- ----
<S> <C> <C> <C>
The Amberleigh at Woodstream Farms
Williamsville, New York 271 85% 92%
</TABLE>
On November 5, 1997, the Partnership purchased approximately 3.10 acres of land
adjacent to The Amberleigh for $500,000 plus closing costs for the potential
expansion of the Amberleigh, as well as to prevent another purchaser from buying
the tract and blocking the facility from view from the main intersection. Due to
licensure and financing requirements, the land currently will not be used for
development
Rent collections for the three-month period decreased to $1,239,120 in 2000 from
$1,267,029 in 1999. Decreased rent collections were due to decreased occupancy
at the Amberleigh. Salaries, management fees and other operating expenses paid
likewise decreased, from $1,046,304 in 1999 to $1,010,440 in 2000. Decreased
operating expenses paid primarily were due to increased accrued expenses at
March 31, 2000.
Cash generated from rental operations prior to the payment of interest expense
was insufficient to pay all of the interest on the Pension Notes currently
payable, which was $356,035 for the three-month period ended March 31, 2000. Net
cash used by operations after the payment of interest expense during the three
months ended March 31, 2000 and 1999 was $64,036 and $74,141, respectively.
Interest on the Pension Notes bears stated simple interest at 13 percent rate
per annum, and is paid on a 7 percent rate per annum, however it is accrued
under the effective interest method at a rate of approximately 9 percent per
annum compounded quarterly, which totaled $811,145 and $774,066 for the three
months ended March 31, 2000 and 1999, respectively. The remaining 6 percent
unpaid portion is due at maturity. Total accrued and unpaid interest amounted to
$15,334,173 and $14,879,063 at March 31, 2000 and December 31, 1999,
respectively.
Capital expenditures increased $25,435 from $16,037 in 1999 to $41,472 in 2000
due to increased expenditures for painting, carpeting and appliances.
Cash and cash equivalents at March 31, 2000 and December 31, 1999 amounted to
$5,440,406 and $5,555,357, respectively.
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.
8
<PAGE>
Since 1998, cash generated from operations has been insufficient to meet the
Partnership's minimum interest payment requirements. The Partnership estimates
total unpaid interest and principal will approximate $38 million at December 31,
2001, the maturity date of the Pension Notes, which is in excess of projected
cash reserves. Accordingly, the disposition and/or refinancing value of the
remaining property will need to be sufficient to fund the amount in excess of
projected cash reserves on the Pension Notes upon their maturity.
Results of Operations
The Partnership's net loss for the three months ended March 31, 2000 includes
rental operations from the Partnership's property. The net loss also includes
depreciation, amortization of Pension Notes issuance costs, and accrued Pension
Note interest expense, which are non-cash in nature.
The Partnership net loss increased from $591,736 to $662,226 for the three-month
periods ending March 31, 1999 and 2000, respectively. Net loss per assignee
interest increased from $14 to $16 for the three-month periods ending March 31,
1999 and 2000, respectively. The increase in the Partnership's net loss was
principally due to decreased occupancy and revenues at the Amberleigh, and
increased operating expenses. Total revenues for the three-month periods
decreased from $1,331,058 in 1999 to $1,299,945 in 2000. The decrease in total
revenues was due to decreased occupancy at the Amberleigh. Total operating costs
and expenses increased from $960,249 in 1999 to $1,015,750 in 2000. The increase
in operating expenses primarily was due to increased overhead reimbursements,
utilities, food costs, and taxes. Pension Note interest expense increased from
$774,066 to $811,145 for the three-month periods ending March 31, 1999 and 2000,
respectively. Amortization of organization and offering costs decreased from
$77,615 to $0 for the three-month periods ending March 31, 1999 and 2000,
respectively, due to the write off of $68,599 in organization costs in 1999,
which was required under the American Institute of Certified Public Accountants'
Statement of Position 98-5, Reporting Costs of Start-up Activities. Other
expenses relating to Partnership administration increased from $81,113 to
$105,525 for the three-month periods ending March 31, 1999 and 2000,
respectively, due to increased professional fees and home office allocations.
Year 2000 Issue
The Partnership did not experience any adverse computer disruptions due to the
year 2000 issue and does not expect any disruptions due to the year 2000 issue
in the future.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
The Partnership invests its cash in money market accounts. As a result, the
Partnership believes any impact of market risk to the Partnership's investments
is immaterial.
9
<PAGE>
PART II
Item 1. Legal Proceedings
On or about October 23, 1998, an Interest holder filed a putative class action
complaint on behalf of certain holders of Assignee Interests in NHP in the
Delaware Court of Chancery against the Partnership, Capital Senior Living
Corporation, Capital Senior Living Properties 2 - NHPCT, Inc. and CRGSH
(collectively "the Defendants"). This Assignee Interest holder purchased 90
Assignee Interests in the Partnership in February 1993 for $180. The complaint
alleges, among other things, that the Defendants breached, or aided and abetted
a breach of, the express and implied terms of the Partnership Agreement in
connection with the sale of four properties by the Partnership to Capital Senior
Living Properties 2 - NHPCT, Inc. Capital Senior Living Properties 2 - NHPCT,
Inc. is an affiliate of Capital Senior Living, Inc., the current manager of The
Amberleigh. The complaint seeks, among other relief, rescission of the sale of
these properties and unspecified damages. The Partnership believes the complaint
is without merit and intends to vigorously defend itself in this action. The
Partnership has filed a Motion to Dismiss in this case, which currently is
pending. The Partnership is unable to estimate liability related to this claim,
if any.
All other items are not applicable.
- -----------------------------------
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit:
27.1 Financial Data Schedule
(B) Reports on Form 8-K
None.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
By: Capital Realty Group Senior Housing, Inc.
General Partner
By: /s/ Robert Lankford
----------------------------------
Robert Lankford
President
Date: May 15, 2000
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for NHP Retirement Housing Partners I Limited
</LEGEND>
<CIK> 0000793730
<NAME> NHP Retirement Housing Partners I Limited
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 5,440,406
<SECURITIES> 0
<RECEIVABLES> 23,196
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,788,357
<DEPRECIATION> (6,497,235)
<TOTAL-ASSETS> 24,159,168
<CURRENT-LIABILITIES> 0
<BONDS> 20,157,826
0
0
<COMMON> 0
<OTHER-SE> (11,844,518)
<TOTAL-LIABILITY-AND-EQUITY> 24,159,168
<SALES> 0
<TOTAL-REVENUES> 1,299,945
<CGS> 0
<TOTAL-COSTS> 1,015,750
<OTHER-EXPENSES> 135,276
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 811,145
<INCOME-PRETAX> (662,226)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (662,226)
<EPS-BASIC> (16)
<EPS-DILUTED> (16)
</TABLE>
