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, 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 incorporation or (I.R.S. Employer
organization) Identification No.)
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
------- -------
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PART I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statements of Financial Position
September 30, 2000 December 31, 1999
------------------ -----------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 5,672,316 $ 5,553,357
Other receivables 20,270 25,690
Pension notes issuance costs 148,760 238,013
Prepaid expenses 27,029 119,097
Rental property
Land 2,497,725 2,497,725
Building, net of accumulated depreciation of
$6,789,359 in 2000 and $6,354,013 in 1999 15,590,396 15,895,147
Other assets 3,772 4,543
----------------- ------------------
Total assets $ 23,960,268 $ 24,333,572
================= ==================
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Accounts payable $ 132,072 $ 175,495
Interest payable 16,288,465 14,879,063
Pension notes 20,157,826 20,157,826
Other liabilities 383,794 296,037
----------------- ------------------
36,962,157 35,508,421
----------------- ------------------
Partners' deficit
General partner (985,831) (928,115)
Assignor limited partners--42,208 and 42,691
investment units outstanding in 2000 and 1999,
respectively (12,016,058) (10,246,734)
----------------- ------------------
Total partners' deficit (13,001,889) (11,174,849)
----------------- ------------------
Total liabilities and partners' deficit $ 23,960,268 $ 24,333,572
================= ==================
</TABLE>
See notes to financial statements
1
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<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statements of Operations
(Unaudited)
Three-months ended September 30,
2000 1999
---- ----
REVENUE
<S> <C> <C>
Rental income $ 1,270,624 $ 1,252,796
Interest income 60,166 51,403
Other income 15,535 15,925
----------------- -----------------
1,346,325 1,320,124
----------------- -----------------
COSTS AND EXPENSES
Salaries, related benefits and overhead reimbursements 269,054 275,409
Management fees, dietary fees and other services 164,511 144,281
Administrative and marketing 17,862 33,558
Utilities 58,595 56,371
Maintenance 46,531 43,845
Resident services, other than salaries 9,619 12,013
Food services, other than salaries 133,007 133,511
Depreciation 146,931 143,494
Taxes and insurance 110,959 123,697
----------------- -----------------
957,069 966,179
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 389,256 353,945
----------------- -----------------
OTHER EXPENSES
Interest expense -- pension notes 835,449 803,291
Amortization of pension notes issuance costs 29,751 29,751
Other 79,082 225,193
----------------- -----------------
944,282 1,058,235
----------------- -----------------
NET LOSS $ (555,026) $ (704,290)
================= =================
NET LOSS PER ASSIGNEE INTEREST $ (13) $ (16)
================= =================
</TABLE>
See notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statements of Operations
(Unaudited)
Nine-months ended September 30,
2000 1999
---- ----
REVENUE
<S> <C> <C>
Rental income $ 3,724,654 $ 3,804,078
Interest income 164,814 133,834
Other income 45,161 56,820
----------------- -----------------
3,934,629 3,994,732
----------------- -----------------
COSTS AND EXPENSES
Salaries, related benefits and overhead reimbursements 803,010 815,217
Management fees, dietary fees and other services 470,357 383,122
Administrative and marketing 51,806 121,317
Utilities 217,055 202,699
Maintenance 130,822 135,997
Resident services, other than salaries 29,506 32,481
Food services, other than salaries 395,122 386,050
Depreciation 435,346 428,277
Taxes and insurance 389,532 388,947
----------------- -----------------
2,922,556 2,894,107
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 1,012,073 1,100,625
----------------- -----------------
OTHER EXPENSES
Interest expense -- pension notes 2,469,713 2,353,486
Amortization of pension notes issuance costs 89,253 89,253
Amortization of organization and offering costs - 77,615
Other 258,047 464,638
----------------- -----------------
(2,817,013) 2,984,992
----------------- -----------------
NET LOSS $ (1,804,940) $ (1,884,367)
================= =================
NET LOSS PER ASSIGNEE INTEREST $ (42) $ (43)
================= =================
</TABLE>
See notes to financial statements
3
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<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statement of Partners' Deficit
(Unaudited)
ASSIGNOR LIMITED
GENERAL PARTNER PARTNERS TOTAL
--------------- -------- -----
<S> <C> <C> <C>
Partners' deficit
at December 31, 1999 $ (928,115) $ (10,246,734) $ (11,174,849)
Distributions (21,617) - (21,617)
Repurchased assignor limited
partners units - (483) (483)
Net loss - nine-months
ended September 30, 2000 (36,099) (1,768,841) (1,804,940)
------------------ ---------------- ---------------
Partners' deficit
at September 30, 2000 $ (985,831) $ (12,016,058) $ (13,001,889)
================== ================ ===============
Percentage interest
at September 30, 2000 2% 98% 100%
== === ====
</TABLE>
See notes to financial statements
4
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<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(Unaudited)
Nine-months ended September 30
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES
Rent collections $ 3,730,074 $ 3,805,450
Interest received 164,814 133,834
Other income 45,161 56,820
Salary and related benefits (805,944) (807,881)
Management fees, dietary fees
and other services (394,376) (384,773)
Other operating expenses paid (1,407,764) (1,991,832)
Interest paid (1,060,311) (1,065,763)
---------------- ----------------
Net cash provided by (used in)
operating activities 271,654 (254,145)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (130,595) (71,192)
---------------- ----------------
Net cash used in investing activities (130,595) (71,192)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITY
Repurchase of assignor limited partnership units (483) -
Distributions (21,617) (21,538)
---------------- ----------------
Net cash used in financing activity (22,100) (21,538)
---------------- ----------------
Net increase (decrease) in cash and
cash equivalents 118,959 (346,875)
Cash and cash equivalents
at beginning of period 5,553,357 5,821,300
---------------- ----------------
Cash and cash equivalents
at end of period $ 5,672,316 $ 5,474,425
================ ================
</TABLE>
See notes to financial statements
5
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(Continued)
Nine-months ended September 30,
2000 1999
---- ----
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net loss $ (1,804,940) $ (1,884,367)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation 435,346 428,277
Amortization of organization and offering costs - 77,615
Amortization of pension notes issuance costs 89,253 89,253
Changes in operating assets and liabilities
Other assets and receivables 6,191 1,872
Prepaid expenses 92,068 (79,367)
Accounts payable (43,423) (132,453)
Interest payable 1,409,402 1,287,723
Other liabilities 87,757 (42,698)
---------------- ----------------
Total adjustments 2,076,594 1,630,222
---------------- ----------------
Net cash provided by (used in)
operating activities $ 271,654 $ (254,145)
================ ================
</TABLE>
See notes to financial statements
6
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NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Notes to Financial Statements
September 30, 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 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 September 30, 2000 and September 30, 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 or about 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
September 30, 2000 and September 30, 1999, results of operations, changes
in Partners' deficit and cash flows for the three and nine month periods
ended September 30, 2000 and September 30, 1999. The results of
operations for the nine month period ended September 30, 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 new sole general partner of the Partnership replacing
the prior General Partner, NHP/RHGP-I Limited 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% 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.
7
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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 10, 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
third fiscal quarter ended September 30, 2000 and 1999, were $269,054 and
$275,409, respectively, and were $803,010 and $815,217 for the nine
months ended September 30, 2000 and 1999, respectively. Management fees,
dietary fees and other services reimbursed and expensed by the
Partnership to CSL for the third fiscal quarter ended September 30, 2000
and 1999, were $164,511 and $144,281 respectively, and were $470,357 and
$383,122 for the nine months ended September 30, 2000 and 1999,
respectively.
Distributions of $21,617 were made to the General Partner during the nine
months ended September 30, 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 nine months ended
September 30, 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
the Parnership 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 is vigorously defending
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 Pension 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 $546,219 would be recorded at
8
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September 30, 2000 and future interest expense would be reduced by this
amount. 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. 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% partnership interest.
Available September 30 September 30
Units 2000 1999
----- ---- ----
The Amberleigh 271 86% 91%
At Woodstream Farms
Williamsville, New York
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 issues, there are no current plans to develop this land.
Rent collections for the nine-month period decreased to $3,730,074 in 2000 from
$3,805,450 in 1999 and is primarily due to decreased occupancy at the
Amberleigh. Salaries, management fees and other operating expenses paid likewise
decreased, from $3,184,486 in 1999 to $2,608,084 in 2000. Decreases in operating
expenses paid were due to increased accounts payable and other liabilities, and
decreased other expenses for the nine months ended September 30, 2000.
Cash generated from rental operations prior to the payment of interest expense
was sufficient to pay all of the interest on the Pension Notes currently
payable, which was $1,060,311 for the nine month period ended September 30,
2000. Net cash provided (used) from operations, after the payment of interest
expense, during the nine months ended September 30, 2000 and 1999 was $271,654
and $(254,145), respectively. Interest on the Pension Notes bears stated simple
interest at 13% rate per annum, and is paid on a 7% rate per annum. It is
accrued, however, under the effective interest method at a rate of approximately
9% per annum compounded quarterly, which totaled $2,469,713 and $2,353,486 for
the nine months ended September 30, 2000 and 1999, respectively. The remaining
6% unpaid portion is due at maturity. Total accrued and unpaid interest amounted
to $16,288,465 and $14,879,063 at September 30, 2000 and December 31, 1999,
respectively.
Capital expenditures increased $59,403 from $71,192 in 1999 to $130,595 in 2000
due to increased expenditures for painting, carpeting, appliances and a bus.
Cash and cash equivalents at September 30, 2000 and December 31, 1999 amounted
to $5,672,316 and $5,553,357, 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 Interest holders.
9
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Since 1998, cash generated from operations has been insufficient to meet the
Partnership's minimum interest payment requirements with exception of the second
and third quarters ending September 30, 2000. 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 at that time. Accordingly, it is not likely that funds will be
sufficient to pay the Pension Notes and deferred interest in whole. If this is
so, there will not be any funds available to pay Interest holders at the
maturity of the Pension Notes.
RESULTS OF OPERATIONS
The Partnership's net loss for the nine months ended September 30, 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 noncash in nature.
The Partnership's net loss decreased from $1,884,367 to $1,804,940 for the
nine-month period ending September 30, 1999 and 2000, respectively. Net loss per
Interest decreased from $43 to $42 for the nine-month period ending September
30, 1999 and 2000, respectively. The decrease in the Partnership's net loss was
principally due to decreased other expenses. Total revenues for the nine month
period decreased from $3,804,078 in 1999 to $3,724,654 in 2000. The decrease in
total revenues was primarily due to decreased occupancy at the Amberleigh. Total
operating costs and expenses increased from $2,894,107 in 1999 to $2,922,556 in
2000. Increased operating costs and expenses were primarily due to increased
management fees, dietary fees and other service expense. Pension Notes interest
expense increased from $2,353,486 to $2,469,713 for the nine-month period ending
September 30, 1999 and 2000, respectively. Amortization of organization and
offering costs decreased from $77,615 to $0 for the nine month period ending
September 30, 1999 and 2000, respectively, due to the write off of $68,599 in
organization costs 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 decreased from $464,638 to
$258,047 for the nine month period ending September 30, 1999 and 2000,
respectively, due to decreased professional fees.
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.
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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 the Partnership
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 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 the case, which currently is
pending. The Partnership is unable to estimate liability related to this claim,
if any.
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.
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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: November 14, 2000
