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, 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
------- -------
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Financial Position
June 30, 2000 December 31, 1999
------------- -----------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 5,534,593 $ 5,553,357
Other receivables 15,327 25,690
Pension notes issuance costs 178,511 238,013
Prepaid expenses 88,448 119,097
Rental property:
Land 2,497,725 2,497,725
Building, net of accumulated depreciation of
$6,642,429 in 2000 and $6,354,013 in 1999 15,717,899 15,895,147
Other assets 3,722 4,543
----------------- ------------------
Total assets $ 24,036,225 $ 24,333,572
================= ==================
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Liabilities:
Accounts payable $ 163,341 $ 175,495
Interest payable 15,804,857 14,879,063
Pension notes 20,157,826 20,157,826
Other liabilities 349,587 296,037
----------------- ------------------
36,475,611 35,508,421
----------------- ------------------
Partners' deficit:
General Partner (967,551) (928,115)
Assignor Limited Partner-42,691 investment
units outstanding (11,471,835) (10,246,734)
------------------ -------------------
Total partners' deficit (12,439,386) (11,174,849)
------------------ -------------------
Total liabilities and partners' deficit $ 24,036,225 $ 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 June 30,
2000 1999
---- ----
<S> <C> <C>
REVENUE:
Rental income $ 1,217,404 $ 1,281,019
Interest income 55,552 43,801
Other income 15,403 18,730
----------------- -----------------
1,288,359 1,343,550
----------------- -----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 260,438 269,105
Management fees, dietary fees and other services 151,683 117,468
Administrative and marketing 19,101 53,176
Utilities 58,326 63,891
Maintenance 43,422 52,799
Resident services, other than salaries 9,504 11,147
Food services, other than salaries 129,025 127,896
Depreciation 145,193 142,664
Taxes and insurance 133,045 129,533
----------------- -----------------
949,737 967,679
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 338,622 375,871
----------------- -----------------
OTHER EXPENSES:
Interest expense - pension notes 823,119 776,129
Amortization of pension notes issuance costs 29,751 29,751
Other 73,440 158,332
----------------- -----------------
926,310 964,212
----------------- -----------------
NET LOSS $ (587,688) $ (588,341)
================= =================
NET LOSS PER ASSIGNEE INTEREST $ (14) $ (14)
================= =================
</TABLE>
See notes to financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statement of Operations
(Unaudited)
Six months ended June 30,
2000 1999
---- ----
<S> <C> <C>
REVENUE:
Rental income $ 2,454,030 $ 2,551,282
Interest income 104,648 82,431
Other income 29,626 40,895
----------------- -----------------
2,588,304 2,674,608
----------------- -----------------
COSTS AND EXPENSES:
Salaries, related benefits and overhead reimbursements 533,956 539,808
Management fees, dietary fees and other services 305,846 238,841
Administrative and marketing 33,944 87,759
Utilities 158,460 146,328
Maintenance 84,291 92,152
Resident services, other than salaries 19,887 20,468
Food services, other than salaries 262,115 252,539
Depreciation 288,415 284,783
Taxes and insurance 278,573 265,250
----------------- -----------------
1,965,487 1,927,928
----------------- -----------------
INCOME FROM RENTAL OPERATIONS 622,817 746,680
----------------- -----------------
OTHER EXPENSES:
Interest expense - pension notes 1,634,264 1,550,195
Amortization of pension notes issuance costs 59,502 59,502
Amortization of organization and offering costs - 77,615
Other 178,965 239,445
----------------- -----------------
1,872,731 1,926,757
----------------- -----------------
NET LOSS $ (1,249,914) $ (1,180,077)
================= =================
NET LOSS PER ASSIGNEE INTEREST $ (29) $ (28)
================= =================
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statement of Partners' Deficit
(Unaudited)
ASSIGNOR LIMITED
GENERAL PARTNER PARTNER TOTAL
--------------- ------- -----
<S> <C> <C> <C>
Partners' deficit
at December 31, 1999 $ (928,115) $ (10,246,734) $ (11,174,849)
Distributions (14,438) - (14,438)
Repurchased assignor limited
partner units - (185) (185)
Net loss - Six months
ended June 30, 2000 (24,998) (1,224,916) (1,249,914)
------------------ ---------------- ----------------
Partners' deficit
at June 30, 2000 $ (967,551) $ (11,471,835) $ (12,439,386)
================== ================ ================
Percentage interest
at June 30, 2000 2% 98% 100%
== === ====
</TABLE>
See notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(Unaudited)
Six months ended June 30
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Rent collections $ 2,464,393 $ 2,554,904
Interest received 104,648 82,431
Other income 29,626 40,895
Salary and related benefits (529,252) (542,082)
Management fees, dietary fees and other services (269,814) (241,472)
Other operating expenses paid (984,105) (1,250,220)
Interest paid (708,470) (703,591)
---------------- ----------------
Net cash provided by (used in)
operating activities 107,026 (59,135)
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (111,167) (35,677)
---------------- ----------------
Net cash used in investing activities (111,167) (35,677)
---------------- ----------------
Cash flows from financing activities:
Repurchase of assignor limited partnership units (185) -
Distributions (14,438) (14,358)
---------------- ----------------
Net cash used in financing activities (14,623) (14,358)
---------------- ----------------
Net decrease in cash and
cash equivalents (18,764) (109,170)
Cash and cash equivalents
at beginning of period 5,553,357 5,821,300
---------------- ----------------
Cash and cash equivalents
at end of period $ 5,534,593 $ 5,712,130
================ ================
</TABLE>
See notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Statements of Cash Flows
(Continued)
Six months Ended June 30,
2000 1999
---- ----
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (1,249,914) $ (1,180,077)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 288,415 284,783
Amortization of organization and offering costs - 77,615
Amortization of pension notes issuance costs 59,502 59,502
Changes in operating assets and liabilities:
Other assets and receivables 11,184 3,592
Prepaid expenses 30,649 33,572
Accounts payable (12,154) (148,758)
Interest payable 925,794 846,604
Other liabilities 53,550 (35,968)
---------------- ----------------
Total adjustments 1,356,940 1,120,942
---------------- ----------------
Net cash provided by (used in)
operating activities $ 107,026 $ (59,135)
================ ================
</TABLE>
See notes to financial statements.
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NHP RETIREMENT HOUSING PARTNERS I LIMITED PARTNERSHIP
Notes to Financial Statements
June 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 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 June 30, 2000 and June 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
June 30, 2000 and June 30, 1999, results of operations, changes in
Partner's deficit and cash flows for the three and six month periods
ended June 30, 2000 and June 30, 1999. The results of operations for the
six month period ended June 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 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
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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.
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
second fiscal quarter ended June 30, 2000 and 1999, were $260,438 and
$269,105, respectively, and for the six month period ended June 30, 2000
and 1999, were $533,956 and $539,808, respectively. Management fees,
dietary fees and other services reimbursed and expensed by the
Partnership to CSL for the second fiscal quarter ended June 30, 2000 and
1999, were $151,683 and $117,468, respectively, and for the six months
ended June 30, 2000 and 1999, were $305,846 and $238,841, respectively.
Distributions of $14,438 were made to the General Partner during the six
months ended June 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 six months ended June
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 Interests 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 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
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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 $724,562 would be recorded at June
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.
<TABLE>
<CAPTION>
Available June 30 June 30
Units 2000 1999
----- ---- ----
<S> <C> <C> <C>
The Amberleigh 271 85% 91%
At Woodstream Farms
Williamsville, New York
</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, there are no current plans to develop this
land.
Rent collections for the six-month period decreased to $2,464,393 in 2000 from
$2,554,904 in 1999 and is primarily due to decreased occupancy at the
Amberleigh. Salaries, management fees and other operating expenses paid likewise
decreased, from $2,033,774 in 1999 to $1,783,171 in 2000. Decreases in paid
operating expenses were primarily due to non-reoccurring payments of Amberleigh
and development costs paid in 1999.
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 $708,470 for the six-month period ended June 30, 2000. Net
cash provided (used) from operations, after the payment of interest expense,
during the six months ended June 30, 2000 and 1999 was $107,026 and $(59,135),
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 $1,634,264 and $1,550,195 for the six months
ended June 30, 2000 and 1999, respectively. The remaining 6% unpaid portion is
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due at maturity. Total accrued and unpaid interest amounted to $15,804,857 and
$14,879,063 at June 30, 2000 and December 31, 1999, respectively.
Capital expenditures increased $75,490 from $35,677 in 1999 to $111,167 in 2000
due to increased expenditures for painting, carpeting, appliances and a bus.
Cash and cash equivalents at June 30, 2000 and December 31, 1999 amounted to
$5,534,593 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 Assignee holders.
Since 1998, cash generated from operations has been insufficient to meet the
Partnership's minimum interest payment requirements with exception of the
current quarter ending June 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.
RESULTS OF OPERATIONS
---------------------
The Partnership's net loss for the six months ended June 30, 2000 includes
rental operations from the Partnership's property. 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 net loss increased from $1,180,077 to $1,249,914 for the
six-month period ending June 30, 1999 and 2000, respectively. Net loss per
Assignee Interest increased from $28 to $29 for the six-month period ending June
30, 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 six-month period decreased
from $2,674,608 in 1999 to $2,588,304 in 2000. The decrease in total revenues
was primarily due to decreased occupancy at the Amberleigh. Total operating
costs and expenses increased from $1,927,928 in 1999 to $1,965,487 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 $1,550,195 to $1,634,264 for the six-month period ending
June 30, 1999 and 2000, respectively. Amortization of organization and offering
costs decreased from $77,615 to $0 for the six-month period ending June 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 $239,445 to $178,965 for
the six-month period ending June 30, 1999 and 2000, respectively, due to
decreased professional fees.
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.
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PART II
ITEM 1. LEGAL PROCEEDINGS
On or about October 23, 1998, an Interests 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 Interests 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: August 14, 2000
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