UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the period ended March 31, 1995 Commission file number 0-15725
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SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1449733
- ----------------------- ------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
218 North Charles Street, Suite 500, Baltimore, Maryland 21201
- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(410)962-0595
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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____
DESCRIPTION OF AMENDMENTS:
The following changes were made pursuant to SEC Comments dated August 18,
1995.
A) In Note 4, Investment in Real Estate Partnerships, summarized financial
information has been adjusted to reflect depreciation as a charge
against operating income.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
INDEX TO FORM 10-Q/A
Part I- FINANCIAL INFORMATION
Item
1. Financial Statements - Amended to reflect change in Note 4.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
BALANCE SHEETS
SERIES I
IN THOUSANDS, EXCEPT BAC DATA
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $4,968 $5,240
Interest receivable 438 357
Investment in mortgage revenue bonds and working
capital loans, net of valuation allowance
of $1,430,000 in 1995 and 1994 (Note 2) 44,113 44,113
Investment in real estate partnerships (Note 3) 46,727 104,709
Investment in joint investment pool (Note 5) 54,068 -
Other assets 18 622
--------------- ---------------
TOTAL ASSETS $150,332 $155,041
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $86 $663
Distributions payable - 5,044
Due to affiliates (Note 4) 14 64
--------------- ---------------
TOTAL LIABILITIES 100 5,771
--------------- ---------------
Partners' Capital
General Partners (295) (305)
Limited Partners (beneficial assignee certificates-
issued and outstanding 200,000 certificates) 150,527 149,575
--------------- ---------------
TOTAL PARTNERS' CAPITAL 150,232 149,270
--------------- ---------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, & 5)
TOTAL LIABILITIES AND PARTNERS' CAPITAL $150,332 $155,041
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME- (unaudited)
SERIES I
IN THOUSANDS EXCEPT PER BAC DATA
<TABLE>
<CAPTION> For the three For the three
months ended months ended
March 31, March 31,
1995 1994
--------------- ---------------
<S> <C> <C>
INCOME
Interest on mortgage revenue bonds and $885 $885
parity working capital loans
Interest on short-term investments 49 22
Equity in joint investment pool (718) -
Equity in property net income 917 1,446
--------------- ---------------
TOTAL INCOME 1,133 2,353
--------------- ---------------
EXPENSES
Operating expenses (Note 4) 171 197
--------------- ---------------
NET INCOME $962 $2,156
=============== ===============
NET INCOME ALLOCATED TO GENERAL PARTNERS $10 $22
=============== ===============
NET INCOME ALLOCATED TO LIMITED PARTNERS $952 $2,134
=============== ===============
NET INCOME PER BAC $4.76 $10.67
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS- (unaudited)
SERIES I
IN THOUSANDS
<TABLE>
<CAPTION> For the three For the three
months ended months ended
March 31, March 31,
1995 1994
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $962 $2,156
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in property net income (917) (1,446)
Equity in joint investment pool loss 718
Interest distributions from investment in
real estate partnerships 1,968 2,079
Interest distribution from investment in joint
investment pool 282 -
(Increase) decrease in interest receivable (81) -
(Increase) decrease in other assets 604 -
Increase (decrease) in accounts payable
and accrued expenses (577) 11
Increase (decrease) in due to affiliates (50) 13
--------------- ---------------
Net cash provided by operating activities 2,909 2,813
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Transfer of proceeds from investment in joint investment pool 1,863 -
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (5,044) (5,052)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (272) (2,239)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 5,240 5,032
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $4,968 $2,793
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SERIES I
FOR THE PERIOD DECEMBER 31, 1994 THROUGH MARCH 31, 1995
IN THOUSANDS
<TABLE>
<CAPTION>
LIMITED PARTNERS
BENEFICIAL
ASSIGNEE GENERAL
CERTIFICATES PARTNERS TOTAL
---------------- --------------- ---------------
<S> <C> <C> <C>
Balance, December 31, 1994 $149,575 ($305) $149,270
Net income (unaudited) 952 10 962
---------------- --------------- ---------------
Balance, March 31, 1995 (unaudited) $150,527 ($295) $150,232
================ =============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
BALANCE SHEETS
SERIES II
IN THOUSANDS, EXCEPT BAC DATA
<TABLE>
<CAPTION> March 31,
1995 December 31,
(Unaudited) 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $2,649 $2,615
Interest receivable 199 199
Investment in mortgage revenue bonds and
parity working capital loans (Note 2) 30,440 30,440
Investment in real estate partnerships (Note 3) - 47,982
Investment in joint investment pool (Note 5) 45,460 -
Other assets 9 504
--------------- ---------------
TOTAL ASSETS $78,757 $81,740
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $35 $447
Distributions payable - 2,669
Due to affiliates (Note 4) 51 31
--------------- ---------------
TOTAL LIABILITIES 86 3,147
--------------- ---------------
Partners' Capital
General Partners (80) (81)
Limited Partners (beneficial assignee certificates-
issued and outstanding 96,256 certificates) 78,751 78,674
--------------- ---------------
TOTAL PARTNERS' CAPITAL 78,671 78,593
--------------- ---------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, & 5)
TOTAL LIABILITIES AND PARTNERS' CAPITAL $78,757 $81,740
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME- (unaudited)
SERIES II
IN THOUSANDS EXCEPT PER BAC DATA
<TABLE>
<CAPTION> For the three For the three
months ended months ended
March 31, March 31,
1995 1994
--------------- ---------------
<S> <C> <C>
INCOME
Interest on mortgage revenue bonds and
parity working capital loans $597 $597
Interest on short-term investments 25 13
Equity in joint investment pool (761) - -
Equity in property net income 296 434
--------------- ---------------
TOTAL INCOME 157 1,044
--------------- ---------------
EXPENSES
Operating expenses (Note 4) 79 94
--------------- ---------------
NET INCOME $78 $950
=============== ===============
NET INCOME ALLOCATED TO GENERAL PARTNERS $1 $10
=============== ===============
NET INCOME ALLOCATED TO LIMITED PARTNERS $77 $940
=============== ===============
NET INCOME PER BAC $0.80 $9.77
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS- (unaudited)
SERIES II
IN THOUSANDS
<TABLE>
<CAPTION> For the three For the three
months ended months ended
March 31, March 31,
1995 1994
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $78 $950
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in property net income (296) (434)
Equity in joint investment pool loss 761 -
Interest distributions from investment in
real estate partnerships 895 754
Interest distribution from investment in joint
investment pool 44 -
(Increase) decrease in other assets 495 (4)
Increase (decrease) in accounts payable
and accrued expenses (412) (6)
Increase (decrease) in due to affiliates 20 6
--------------- ---------------
Net cash provided by operating activities 1,585 1,266
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Transfer of proceeds from investment in joint investment pool 1,118 -
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (2,669) (2,915)
--------------- ---------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS 34 (1,649)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,615 3,035
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,649 $1,386
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SERIES II
FOR THE PERIOD DECEMBER 31, 1994 THROUGH MARCH 31, 1995
IN THOUSANDS
<TABLE>
<CAPTION>
LIMITED PARTNERS
BENEFICIAL
ASSIGNEE GENERAL
CERTIFICATES PARTNERS TOTAL
---------------- --------------- ---------------
<S> <C> <C> <C>
Balance, December 31, 1994 78,674 (81) 78,593
Net income (unaudited) 77 1 78
---------------- --------------- ---------------
Balance, March 31, 1995 (unaudited) 78,751 (80) 78,671
================ =============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(SERIES I AND SERIES II)
NOTE 1 - STATEMENT OF INFORMATION FURNISHED
The accompanying unaudited financial statements have been prepared in
accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March 31,
1995 and the results of operations and cash flows for the periods ended
March 31, 1995 and 1994. These results have been determined on the
basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the SCA Tax Exempt
Fund Limited Partnership's (the "Partnership") 1994 Annual Report on
Form 10-K.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
accompanying financial statements be read in conjunction with the
financial statements and notes thereto included in the Partnership's 1994
Annual Report on Form 10-K.
NOTE 2 - INVESTMENT IN MORTGAGE REVENUE BONDS
AND PARITY WORKING CAPITAL LOANS
The Partnership has invested in various mortgage revenue bonds, whose
proceeds were used to make nonrecourse participating first mortgage
loans on multifamily housing developments. The Partnership's rights and
specific terms are defined by the various loan documents which were
negotiated at the time of settlement. The basic terms and structure of
each transaction were described in Note 3 to the December 31, 1994
financial statements included in Form 10-K.
As of March 31, 1995, Series I held 14 mortgage revenue bonds, five of
which are treated as investments in mortgage revenue bonds aggregating
$43,177,900, net of a valuation allowance of $1,430,000 and four of
which are treated as investments in real estate partnerships (see Note 3).
The remaining Series I mortgage revenue bonds (five) were reclassified to
the joint investment pool discussed in Note 5. Series II held nine
mortgage revenue bonds at March 31, 1995, three of which are treated as
investments in mortgage revenue bonds aggregating $29,624,600. (See
also Note 3.) The remaining Series II mortgage revenue bonds (six) were
reclassified to the joint investment pool discussed in Note 5.
Lakeview: On April 19, 1995, the Managing General Partner
successfully transferred the Lakeview deed to a New Borrower pursuant
to the terms of a settlement agreement negotiated with the original
borrower. Accordingly, Lakeview will be treated as an Investment in Real
Estate beginning on April 19, 1995, the date of transfer.
Descriptions of the various mortgage revenue bonds and working capital
loans owned by the Partnership at March 31, 1995 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Series I
Investment in Mortgage Base First Tier Face Carrying
Revenue Bonds and Parity Interest Contingent Maturity Amount Amount
Working Capital Loans (Note 2) Rate Rate Date (000's) (000's)
- ----------------------------------- --------------- ---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Alban Place Apartments 7.875 2.375 Oct. 2008 $10,500 $10,500
Frederick, MD
Alban Place Limited Partnership
Northridge Park Apartments 7.500 2.000 June 2012 8,950 8,950
Salinas, CA
Northridge Park Phase II
Lakeview Garden Apartments 7.750 2.500 Aug. 2007 9,308 7,878
Dade Co., FL
Lakeview Garden Apartments
Limited Partnership
Riverset Apartments 7.875 2.100 Nov. 1999 6,535 6,535
Memphis, TN
Auction Street Associates
Limited Partnership
Villa Hialeah 7.875 2.375 Oct. 2009 10,250 10,250
Hialeah, FL
Shelter Group South East -
Hialeah, A Limited Partnership
------------ ---------------
Series I Mortgage Revenue
Bond and Parity Working
Capital Loan Investment Total $45,543 $44,113 (1)
============ ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of In- Base First Tier Face Carrying
Series I Investment in Real Substance Interest Contingent Maturity Amount Amount
Estate Partnerships (Note 3) Foreclosure Rate Rate Date (000's) (000's)
- ----------------------------------- --------------- ---------- ---------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Newport-on-Seven Dec. 1, 1991 8.125 2.375 Aug. 2008 10,800 7,467
St. Louis Park, MN
St. Louis Park Housing Partners,
A Limited Partnership
North Pointe Apartments Dec. 31, 1991 7.875 2.375 Aug. 2006 25,850 19,860
San Bernardino, CA
Cal-Shel Limited Partnership
Creekside Village Apartments Dec. 31, 1992 7.500 2.250 Nov. 2009 11,985 10,251
Sacramento, CA
Creekside Village Limited
Partnership
Willowgreen Apartments Sep. 30, 1993 8.000 2.250 Dec. 2010 9,450 9,149
Tacoma, WA
Willowgreen Associates
Limited Partnership --------------- ---------------
Series I Investment in
Real Estate Partnerships Total 58,085 46,727
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Series II
Investment in Mortgage Base First Tier Face Carrying
Revenue Bonds and Parity Interest Contingent Maturity Amount Amount
Working Capital Loans (Note 2) Rate Rate Date (000's) (000's)
- ----------------------------------- --------------- ---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Riverset Apartments 7.875 2.100 Nov. 1999 $12,640 $12,640
Memphis, TN
Auction Street Associates
Limited Partnership
Southfork Village Apartments 7.875 2.375 Jan. 2009 10,550 10,550
Lakeville, MN
Southfork Apartments
Limited Partnership
Emerald Hills Apartments 7.750 2.500 Apr. 2008 7,250 7,250
Issaquah, WA
Axelrod Emerald Hills Association
Limited Partnership ------------ ---------------
Series II Mortgage Revenue
Bond and Working Capital
Loan Investment Total $30,440 $30,440 (2)
============ ===============
<FN>
(1) Amount includes $43,177,900 of mortgage revenue bonds and $934,600 of parity working capital loans.
(2) Amount includes $29,624,600 of mortgage revenue bonds and $815,400 of parity working capital loans.
</TABLE>
<PAGE>
The Managing General Partner periodically evaluates the carrying values
of investments in mortgage revenue bonds and working capital loans.
There were no valuation adjustments on the investment in mortgage
revenue bonds and working capital loans during the quarters ended March
31, 1995 and 1994, as the Managing General Partner's estimate of net
realizable value exceeded the respective carrying value for each
investment. The Managing General Partner will continue to evaluate the
need for valuation allowances in the future as circumstances change.
NOTE 3 - INVESTMENT IN REAL ESTATE PARTNERSHIPS
As previously discussed in Note 4 to the December 31, 1994 financial
statements included in Form 10-K, the Partnership accounts for certain
investments in mortgage revenue bonds as investments in real estate
partnerships. This accounting treatment is for financial reporting purposes
only and does not affect the income reported for federal income tax
purposes, the amount of distributions to investors or the Managing
General Partner's intentions related to other matters including ongoing
legal actions, if any. The Partnership reclassified all of the current
investments in real estate partnerships prior to 1995.
On February 14, 1995, the Partnership consummated a financing
transaction whereby additional proceeds were raised through the offering
of $67,700,000 in aggregate principal amount of Multifamily Mortgage
Revenue Bond Receipts, (collectively, the "Receipts"). The Receipts are
collateralized by a pool of eleven of the original mortgage revenue bonds
(five in Series I and six in Series II) held by the Partnership. As a result,
the eleven original mortgage revenue bonds, previously recorded as
investments in real estate partnerships, were reclassified to the joint
investment pool (discussed in Note 5). As of March 31, 1995, therefore,
four properties in Series I and none in Series II were accounted for as
investments in real estate partnerships as compared to nine in Series I and
six in Series II at March 31, 1994.
The Partnership continues to share in earnings of properties treated as
investments in real estate partnerships in accordance with the original
terms of the mortgage loans collateralizing the mortgage revenue bonds.
For those properties owned by partnerships controlled by SCA Successor,
Inc., an affiliate of the Managing General Partner, the Partnership has not
waived default; however, the Managing General Partner has no plans or
intentions to accelerate the maturity of the mortgage loans. In addition,
the Partnership is responsible for any post-transfer operating deficits
incurred. No operating deficits were funded by the Partnership during the
first three months of 1995 or 1994.
For investments accounted for as investments in real estate partnerships,
each Series recognized net operating income after depreciation for the
period January 1 through February 14, 1995 for those properties included
in the joint investment pool (five for Series I and six for Series II) as well
as net operating income after depreciation for the three months ended
March 31, 1995 for those properties classified as investments in real estate
partnerships (four for Series I and none for Series II). Series I recognized
net operating income after depreciation of approximately $917,000 and
$1,446,000 (for nine properties as of March 31, 1994) while Series II
recognized approximately $296,000 and $434,000 (for five properties as
of March 31, 1994) for the three months ended March 31, 1995 and 1994,
respectively. For those same periods and for the same number of
properties, Series I collected interest payments of approximately
$1,968,000 and $2,079,000 and Series II collected approximately
$895,000 and $754,000.
The Managing General Partner periodically evaluates the carrying values
of investments in real estate partnerships. During the first quarter of 1995
and 1994, no valuation adjustments were made as estimated net sale or
refinancing proceeds exceeded the respective carrying value for each
investment. The Managing General Partner will continue to evaluate the
need for valuation allowances in the future as circumstances change.
Summarized Financial Information
Combined financial information for the investments in real estate is
presented below. This summary has been derived from the financial
records of the individual partnerships and does not reflect related
valuation adjustments and other basis differences recorded by the
Partnership in its financial statements. Results of operations of the
properties are included subsequent to their respective effective dates for
reclassification to investments in real estate (see Note 2) and excluded
after their reclassification to the joint investment pool (see Note 5).
Accordingly, in Series I, the combined results of operations for the quarter
ended March 31, 1995 includes four properties for the period January 1,
1995 through March 31, 1995 and five properties for the period January
1, 1995 through February 14, 1995. In Series II, the combined results of
operations for the quarter ended March 31, 1995 includes six properties
for the period January 1, 1995 through February 14, 1995. For the
quarter ended March 31, 1994, the combined results of operations for
Series I and Series II includes nine and five properties, respectively.
<PAGE>
<TABLE>
<CAPTION>
Series I
Combined Financial Position (unaudited) March 31, December 31,
(in 000's) 1995 1994
------------ ------------
<S> <C> <C>
Land, buildings and equipment,
net of accumulated depreciation $50,660 $114,160
Other assets 1,223 2,057
------------ ------------
Total Assets $51,883 $116,217
============ ============
Liabilities due to the Partnership
including bonds $64,213 $146,996
Other liabilities 1,110 2,351
Partners' deficit (13,440) (33,130)
------------ ------------
Total liabilities and partners' deficit $51,883 $116,217
============ ============
</TABLE>
<TABLE>
<CAPTION>
Combined Results of Operations (unaudited)
(in 000's)
Three Months Ended March 31,
1995 1994
------------ ------------
<S> <C> <C>
Revenues $3,350 $4,745
Operating expenses 1,864 2,556
Depreciation 569 743
------------ ------------
Net Operating Income $917 $1,446
============ ============
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Series II
Combined Financial Position (unaudited) December 31,
(in 000's) 1994
------------
<S> <C>
Land, buildings and equipment,
net of accumulated depreciation $45,616
Other assets 1,219
------------
Total Assets $46,835
============
Liabilities due to the Partnership
including bonds $57,572
Other liabilities 1,220
Partners' deficit (11,957)
------------
Total liabilities and partners' deficit $46,835
============
</TABLE>
<TABLE>
<CAPTION>
Combined Results of Operations (unaudited)
(in 000's)
Three Months Ended March 31,
1995 1994
------------ ------------
<S> <C> <C>
Revenues $959 $1,894
Operating expenses 483 1,090
Depreciation 180 370
------------ ------------
Net Operating Income $296 $434
============ ============
<PAGE>
NOTE 4 - RELATED PARTY TRANSACTIONS
The Managing General Partner and its affiliates are entitled to
reimbursement for all costs and expenses paid by them on behalf of the
Partnership for administrative services necessary for the prudent operation
of the Partnership. The Partnership does not employ any personnel. All
staff required by the Partnership are employees of the Managing General
Partner or its affiliates which receive direct reimbursement from the
Partnership for all costs related to such personnel including payroll taxes,
workers' compensation and health insurance and other fringe benefits, as
summarized in the table below.
</TABLE>
<TABLE>
<CAPTION>
Periods Ended March 31,
1995 1994
--------------- ---------------
(in 000's)
<S> <C> <C>
Series I
Salaries of noncontrolling persons &
related expenses $89 $67
Other administrative expenses 17 19
--------------- ---------------
Expenses reimbursed $106 $86
=============== ===============
Series II
Salaries of noncontrolling persons &
related expenses $43 $32
Other administrative expenses 8 9
--------------- ---------------
Expenses reimbursed $51 $41
=============== ===============
</TABLE>
Included in Due to Affiliates in the accompanying balance sheets are
amounts payable to the Managing General Partner and its affiliates related
to such administrative and operating costs. At March 31, 1995, the
amounts due approximated $14,000 in Series I and $7,000 in Series II,
while at December 31, 1994, they were approximately $64,000 in Series
I and $31,000 in Series II.
As previously detailed in the Partnership's Prospectus, affiliates of the
Managing General Partner receive fees for mortgage servicing from the
limited partnerships owning the mortgaged properties. With respect to
the investments in real estate partnerships (see Note 3) and those
properties in the joint investment pool (see Note 5), the payment of these
fees has continued after the reclassification from investments in mortgage
revenue bonds, since the bonds are still owned by the Partnership. The
fees paid by all borrowing partnerships to affiliates of the Managing
General Partner approximated $370,000 for the three months ended
March 31, 1995 and 1994.
The General Partners are entitled to an allocation of the Partnership's
profits, losses and cash distributions as specified in the Partnership
Agreement. During the first quarter of 1995 the Partnership paid a cash
distribution of $44,000 and $22,000 to the General Partners of Series I
and Series II, respectively. These amounts represent the General Partners'
portion of the $5,044,000 and $2,669,000 semiannual distributions paid
for Series I and Series II, respectively, on February 10, 1995.
The operating expenses for several properties include property
management fees paid to affiliates of the Managing General Partner.
During the three months ended March 31, 1995 and 1994, these fees
approximated $254,000 for ten properties and $128,000 for seven
properties, respectively.
Shelter Corporation of Canada Limited (SCCL), a general partner of the
Associate General Partner, is contractually obligated under guarantees to
the nonaffiliated borrowers of North Pointe and Whispering Lake to fund
operating deficits. The unpaid balances due under the limited operating
deficit guarantees, including accrued interest as of March 31, 1995,
approximated $250,000 and $350,000 for North Pointe and Whispering
Lake, respectively. Scheduled payments totalling $31,000 and $33,000
were received on the North Pointe obligation during the first three months
of 1995 and 1994, respectively. Under the Whispering Lake obligation,
scheduled payments totalling $44,000 and $47,000 were received during
the first three months of 1995 and 1994, respectively.
NOTE 5 - JOINT INVESTMENT POOL
As previously discussed, on February 14, 1995, the Partnership
consummated a financing transaction which raised additional proceeds
through the offering of $67,700,000 in aggregate principal amount of
Multifamily Mortgage Revenue Bond Receipts, (collectively, the
"Receipts"). The Receipts are collateralized by a pool of eleven of the
original mortgage revenue bonds held by the Partnership (five in Series I
and six in Series II). These eleven bonds all relate to properties that
defaulted on their original debt obligation and were previously recorded
as investments in real estate partnerships. Subsequent to the financing
transaction, the net carrying values of these bonds were reclassified to the
joint investment pool. The cash stream from one additional property,
Creekside Village ("Creekside"), which also defaulted on its original debt
obligation, has been pledged as further security for the transaction. The
operating partnerships for the underlying properties that collateralize the
bonds, including Creekside, were controlled by SCA Successor, Inc., an
affiliate of the Managing General Partner. On January 1, 1995, SCA
Successor, Inc., the General Partner of these operating partnerships,
withdrew and was replaced by SCA Successor II, Inc., an affiliate of the
Managing General Partner, as sole General Partner. The specific bonds
are as follows:
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
MORTGAGE REVENUE REFUNDING BONDS
<TABLE>
<CAPTION>
A Bond
Interest A Bond B Bond Total
Rate Face Amount Face Amount Face Amount
------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Montclair 7.10% $ 8,500,000 $ 6,840,000 $ 15,340,000
Newport Village 7.10% 6,250,000 4,175,000 10,425,000
Nicollet Ridge 7.10% 7,925,000 12,415,000 20,340,000
Steeplechase Falls 7.125% 12,650,000 5,300,000 17,950,000
Barkley Place 7.05% 5,350,000 3,480,000 8,830,000
---------------- ---------------- ----------------
Total Series I 40,675,000 32,210,000 72,885,000
---------------- ---------------- ----------------
Mallard Cove I 7.40% 800,000 1,670,000 2,470,000
Mallard Cove II 7.40% 2,700,000 3,750,000 6,450,000
Whispering Lake 7.10% 8,900,000 8,500,000 17,400,000
Gilman Meadows 7.40% 4,000,000 2,875,000 6,875,000
Hamilton Chase 7.35% 7,625,000 6,250,000 13,875,000
Meadows 7.35% 3,000,000 3,635,000 6,635,000
---------------- ---------------- ----------------
Total Series II 27,025,000 26,680,000 53,705,000
---------------- ---------------- ----------------
TOTAL 67,700,000 58,890,000 126,590,000
Creekside Village N/A N/A 11,760,000
---------------- ---------------- ----------------
TOTAL with Creekside $ 67,700,000 $ 58,890,000 $ 138,350,000
================ ================ ================
</TABLE>
<PAGE>
Eleven bonds in the aggregate principal amount of $126,590,000
were refunded by the issuers of such bonds. As a result, a
Series A Bond and a Series B Bond (whose aggregate principal amount
equals that of the original bonds) were exchanged for each of the original
bonds. The aggregate principal amount of the Series A Bonds and Series
B Bonds is $67,700,000 and $58,890,000, respectively. Each Series B
Bond is subordinate to the related issue of Series A Bonds. In addition,
the maturity date for each bond has been extended as part of the refunding
to January 2030.
The Series A Bonds bear interest at various fixed rates per annum, as
detailed on the schedule above, which is due and payable monthly. The
Series A Bonds are subject to mandatory sinking fund redemptions
commencing January 1, 2001 and continuing through maturity. Interest
paid on the Series A Bonds for the quarter ended March 31, 1995
approximated $369,000 for Series I and $251,000 for Series II.
The Series B Bonds bear interest equal to the greater of (a) three percent
(3%) per annum or (b) the amount of available cash flow not exceeding
16% per annum. Principal on the Series B Bonds will not be amortized,
but will be required to be repaid or refinanced in a lump sum payment at
maturity, January 2030. To the extent the operating partnerships have
available cash flow, interest on the principal amount shall be due and
payable monthly. For the quarter ended March 31, 1995, approximately
$282,000 and $44,000 of interest was paid on the Series B Bonds for
Series I and Series II, respectively.
The Partnership deposited each of the Series A Bonds and Series B Bonds
with the SCA Tax Exempt Trust (the "Trust") which was created to hold
these assets. A Certificate of Participation in the corpus and the income
of the Trust was issued representing interests in the two series of bonds.
The Partnership is the sole holder of the Certificate of Participation.
The Series A Bonds were then deposited by the Trust with a custodian
and the additional proceeds were raised through the sale of Receipts in the
Series A Bonds to new investors. The Receipts are credit enhanced by
Financial Security Assurance Inc. ("FSA") and are rated AAA and Aaa by
Standard and Poors and Moody's, respectively.
Through the Series A Bonds, the Receipt holders have a fixed interest rate
and preferred return position so that a guaranteed, preferred, fixed rate tax
exempt return will be paid from the interest collected. The operating
partnerships entered into an interest rate swap agreement whereby a
portion of the fixed interest rate under the Series A Bonds was swapped
for a floating tax exempt interest rate. This mechanism will allow the
Partnership to realize the potential benefit of traditionally lower floating
interest rates. Under this interest rate swap, the operating partnerships are
obligated to pay a floating rate equivalent to the PSA Municipal Swap
Index, an index of weekly tax exempt variable rate issues. For the quarter
ended March 31, 1995, approximately $75,000 and $50,000 of net
proceeds was received under the swap agreement in Series I and Series II
properties, respectively. Also, an interest rate cap was purchased by the
operating partnerships to limit their exposure resulting from the floating
tax exempt interest rate obligation. Approximately $21,000 and $16,000
of amortization was expensed related to the cost of the interest rate cap
in Series I and Series II properties, respectively. These amounts are
included in net interest expense as adjustments to the cost of the
additional proceeds.
In order to obtain credit enhancement and an investment grade rating of
the Receipts, the Partnership was required to pledge the eleven bonds, as
well as the cash stream from the eleven properties collateralizing the
bonds to FSA. In addition, the cash stream from Creekside has been
pledged to FSA as further security. Any cash in excess of the amount
needed to pay interest on the Receipts is then paid for the benefit of BAC
Holders. The cash flow generated on assets acquired with the new
proceeds, as discussed below, and any net proceeds received under the
swap agreement also will be for the benefit of BAC Holders. These cash
streams are not pledged to the new investors.
In return for the sale of Receipts in the Series A Bonds, the Trust, for the
benefit of the Partnership, received $67.7 million. The proceeds from the
sale of the Receipts have been invested in MLP III Investment Limited
Partnership ("MLP III"), a Maryland limited partnership. MLP III is
owned by the Partnership through a 99% general partner interest and SCA
Limited Partner Corporation, an affiliate of the Managing General Partner,
through a one percent (1%) limited partner interest. MLP III invested the
net proceeds from the sale of the Receipts, approximately $56.8 million,
in MLP II Acquisition Limited Partnership ("MLP II"), a Maryland limited
partnership. MLP II is owned by MLP III through a 98.99% limited
partner interest (39.996% annual profits and distributions interest), MLP
I LLC ("MLP I"), a Maryland limited liability company, through a one
percent (1%) general partner interest (60% annual profits and distributions
interest) and SCA Limited Partner Corp., an affiliate of the Managing
General Partner, through a .01% limited partner interest (.001% annual
profits and distributions interest). MLP I is owned collectively by the
operating partnerships. MLP III and MLP II are both affiliates of the
Managing General Partner. The net proceeds held by MLP II are
currently invested in various short-term investments. Approximately
$10.9 million was used to finance transaction costs, Partnership reserves
and the interest rate cap.
As part of the financing transaction, the operating partnerships entered
into a cross-collateralization agreement among themselves. This cross-
collateralization agreement may result in the operating partnerships being
obligated under the Series A Bond obligations of the other operating
partnerships due to shortfalls in their cash flows or required debt service
coverage ratios. Based upon information currently available, the
Managing General Partner does not anticipate that any payments will be
required under the cross-collateralization agreement.
Unpaid accrued base interest of approximately $15.5 million on the
eleven original bonds and the Parity Working Capital Loans, and interest
thereon, of approximately $4.8 million, were converted to Accrued
Interest Notes and Working Capital Notes, respectively, in equivalent
principal amounts. The Partnership contributed the Accrued Interest
Notes and Working Capital Notes to MLP III who contributed them, in
turn, to MLP II. In addition, MLP II loaned the operating partnerships
approximately $4.2 million (the "Load Loan Notes") to purchase an
interest rate cap which will serve to limit the operating partnerships'
obligation under the floating rate obligations discussed above. The
Accrued Interest Notes, Working Capital Notes and Load Loan Notes,
(collectively the "Notes") in the aggregate principal amount of
approximately $24.5 million, are due on demand, but in any case not later
than January 2030. The Notes bear interest at a compound annual rate
equal to the Blended Annual Rate in effect for that calendar year as
published by the Internal Revenue Service. To the extent the operating
partnerships have available cash flow, interest on the principal amount and
scheduled principal payments shall be due and payable monthly. Principal
payments made on the Notes for the period ended March 31, 1995 were
approximately $113,000 for Series I properties and $85,000 for Series II
properties while interest payments made during the first quarter were
approximately $96,000 and $49,000 in Series I and Series II properties.
The Notes and the Series B Bonds (collectively the "Junior Obligations")
are subordinate in priority and right of payment to the Series A Bonds and
payable only to the extent of cash flow. Payments of principal and interest
on the Junior Obligations are prioritized as follows: (i) interest payments
due to MLP II on the Notes, prorata between the Notes; (ii) principal
payments due to MLP II on the Notes, prorata between the Notes; (iii)
interest payments due to Trust on the Series B Bonds; and (iv) the
principal payment of the Series B Bonds due January 2030.
The Partnership will continue to report Series I and Series II separately
after the financing transaction with each Series having an interest in the
joint investment pool as described below. Income generated from the
additional proceeds will be allocated approximately 60.1% to Series I and
approximately 39.9% to Series II. Such percentages are based on the face
amount of the Series A Bonds related to the refunded bonds of each
respective Series.
The joint investment pool comprises the operating partnerships, MLP I,
MLP II, MLP III and the Trust. The combined balance sheet, income
statement and changes in equity of the joint investment pool as of and for
the quarter ended March 31, 1995 shown below reflects all related
valuation adjustments and other basis differences recorded by the
Partnership in its financial statements through that date. All significant
intercompany balances and transactions have been eliminated.
<PAGE>
JOINT INVESTMENT POOL:
(in thousands)
ASSETS
Land & land improvements $ 11,521
Buildings & improvements 102,916
Furniture & fixtures 3,465
--------------
Subtotal 117,902
Less accumulated depreciation (13,371)
--------------
Total 104,531
Cash and cash equivalents 2,159
Short-term investments 56,830
Interest receivable on short-term investments 384
Accounts receivable and prepaid expenses 139
Other assets 5,904
--------------
TOTAL ASSETS $ 169,947
==============
LIABILITIES AND EQUITY
Accounts payable and accrued expenses $ 2,717
Custody receipts outstandings 67,700
--------------
TOTAL LIABILITIES 70,417
--------------
Minority interest 2
--------------
Equity:
Series I 54,068
Series II 45,460
--------------
TOTAL EQUITY 99,528
--------------
TOTAL LIABILITIES AND EQUITY $ 169,947
==============
<PAGE>
INCOME STATEMENT: Three
(in thousands) Months ended
March 31, 1995
--------------
INCOME:
Net rental income $ 2,494
Interest income 472
--------------
TOTAL INCOME 2,966
--------------
EXPENSES:
Rental expenses 2,000
Operating expenses 1,898
Net interest expense 545
--------------
TOTAL EXPENSES 4,443
--------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST (1,477)
MINORITY INTEREST 2
--------------
NET INCOME (LOSS) $ (1,479)
==============
NET INCOME (LOSS) ALLOCATED TO SERIES I $ (718)
==============
NET INCOME (LOSS) ALLOCATED TO SERIES II $ (761)
==============
STATEMENT OF CHANGES IN EQUITY:
(in thousands)
SERIES I SERIES II
-------------- --------------
Balance, February 14, 1995 $ 55,068 $ 46,265
Net income (loss) (718) (761)
Distributions (282) (44)
-------------- --------------
Balance, March 31, 1995 $ 54,068 $ 45,460
============== ==============
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SCA TAX EXEMPT FUND
LIMITED PARTNERSHIP
(Registrant)
By: SCA REALTY I, INC.
Managing General Partner
By: Thomas R. Hobbs
Thomas R. Hobbs
Senior Vice President
Signing on behalf of registrant and as acting chief financial officer.
DATED: October 6, 1995
