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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of Securities Exchange Act of 1934
Commission File
For the fiscal year ended December 31, 1997 Number 0-15740
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
Delaware 04-2924048
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(State of organization) (IRS Employer Identification No.)
5 Cambridge Center, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 234-3000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of Class)
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Registrant's revenues for its most recent fiscal year were $10,939,000.
No market exists for the limited partnership interests of the Registrant, and,
therefore, no aggregate market value can be computed.
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART I
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Item 1. Description of Business.
-----------------------
Organization
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Riverside Park Associates Limited Partnership (the "Registrant" or
"Partnership") was formed on May 14, 1986 pursuant to the Delaware Revised
Uniform Limited Partnership Act for the purpose of acquiring, renovating and
operating an apartment complex known as "Riverside Park." Riverside Park
consists of a 28.1-acre parcel of land in Fairfax County, Virginia, improved
with three buildings containing 1,222 apartment units, 1,822 parking spaces,
three swimming pools, five tennis courts and retail facilities (the land and
improvements are referred to collectively herein as the "Property"). The general
partner of the Registrant (the "General Partner") is Winthrop Financial
Associates, A Limited Partnership. (See "Change in Control.")
Development
- -----------
The Registrant was initially capitalized with a capital contribution
from the General Partner in the amount of $99.00. The Registrant raised an
additional $47,532,600 in capital contributions through an offering of 566 units
of limited partnership interest (the "Units") in the Registrant in a private
placement pursuant to Regulation D under the Securities Act of 1933, as amended
(the "Offering"). At March 30, 1987, subscriptions for all 566 Units had been
received by the Registrant and investors subscribing for such Units had been
admitted to the Registrant as limited partners (the "Limited Partners").
The Registrant's business is (i) to own and operate the Property with a
view to providing cash flow to the Limited Partners and (ii) to sell or
refinance the Property at such time as the General Partner believes it to be
economically advantageous.
Employees
- ---------
The Registrant has no employees. Services are performed for the
Registrant by the General Partner and its affiliates. Until November 1997,
management services were performed for the Registrant by on-site personnel all
of whom were employees of Winthrop Management, an affiliate of the General
Partner, which directly managed the Registrant's property. Since November 1997,
such services have been performed by employees of Insignia Residential Group,
L.P., an affiliate of the associate general partner of the General Partner. All
payroll and associated
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expenses of such on-site personnel are fully reimbursed by the Registrant to
Winthrop Management or Insignia Residential Group, L.P., as applicable. Pursuant
to a management agreement, Winthrop Management provided, and Insignia
Residential Group, L.P. currently provides, certain property management services
to the Registrant in addition to providing on-site management.
Competition
- -----------
The real estate business is highly competitive and the Registrant's
properties have active competition from similar properties in the vicinity
including, in certain instances, properties owned by affiliates of the
Registrant. Furthermore, various limited partnerships controlled by the General
Partner and/or its affiliates are also engaged in business which may be
competitive with the Registrant. The Registrant is also competing for potential
buyers with respect to the ultimate sale of its properties. See "Item 6,
Management's Discussion and Analysis or Plan of Operation."
Partnership Agreement Amendment
- -------------------------------
In August 1995, the General Partner amended Section 11.12 of the
Registrant's partnership agreement to clarify and remove certain ambiguities
pertaining to the requirements for calling and voting at a meeting of limited
partners, or taking action by written consent of partners in lieu thereof. Such
requirements include, among other matters, that any action by written consent
may be initiated only by the General Partner or by one or more limited partners
holding not less than 10% of the outstanding Units.
Change in Control
- -----------------
The General Partner is a Maryland public limited partnership organized
in 1984 to acquire all of the outstanding stock of First Winthrop Corporation, a
Delaware corporation ("First Winthrop"). The general partners of the General
Partner are Linnaeus Associates Limited Partnership ("Linnaeus") and IPT I LLC
("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia").
On July 18, 1995 Londonderry Acquisition II Limited Partnership, a
Delaware limited partnership ("Londonderry II"), an affiliate of Apollo Real
Estate Advisors, L.P. ("Apollo"), acquired, among other things, a general
partner interest in W.L. Realty, L.P. ("W.L. Realty") and a sixty four percent
(64%) limited partnership interest in W.L. Realty. The General Partner owns the
remaining thirty-five percent (35%) limited partnership interest.
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As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
which in turn, was the sole, and is currently the managing, general partner of
the General Partner. On October 28, 1997, IPT was admitted as an associate
general partner of the General Partner. Pursuant to the terms of the Second
Amended and Restated Agreement of Limited Partnership of the General Partner,
IPT has the right to cause the General Partner to take such action as it deems
necessary in connection with the activities of the Registrant. The General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Registrant. See "Item 9, Directors, Executive
Officers, Promoters and Control Persons; Compliance With Section 16(a) of the
Exchange Act," for information relating to the current officers of the General
Partner.
On March 17, 1998, Insignia entered into an agreement to merge its
national residential property management operations, and its controlling
interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a
publicly traded real estate investment trust. The closing, which is anticipated
to happen in the third quarter of 1998, is subject to customary conditions,
including government approvals and the approval of Insignia's shareholders. If
the closing occurs, AIMCO will then control the associate general partner of the
General Partner.
Tender Offer
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On October 6, 1995, Riverside Acquisition, L.P., a Delaware limited
partnership ("Riverside"), comprised of Riverside Acquisition Corporation, a
Delaware corporation, which was a wholly owned subsidiary of First Winthrop, as
general partner, and the General Partner, as the limited partner, made a tender
offer to purchase up to 200 Units for cash consideration of $31,100 per Unit. On
November 9, 1995, Riverside increased its offer to $40,000 per Unit. As reported
on Riverside's Schedule 13D filed with the Securities and Exchange Commission in
December 1995, Riverside purchased 200 Units tendered by Limited Partners,
representing 35.3% of the 566 Units outstanding. The beneficial interests of
Riverside were subsequently acquired by an affiliate of Apollo.
The tender offer was commenced shortly following the mailing on
September 22, 1995 of a consent solicitation to the Limited Partners by The
Alternative Group Limited Partnership ("TAG"). TAG sought the consent of a
majority in interest of the Limited Partners to remove the General Partner as
the general partner of the Registrant, with the goal of liquidating the assets
of the Registrant. The solicitation was unsuccessful.
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On October 28, 1997, Riverside sold the Units it had acquired to
Insignia. See "Item 11, Security Ownership of Certain Beneficial Owners and
Management."
Item 2. Description of Properties.
-------------------------
The Registrant's primary asset is its ownership interest in the
Property which is described in Item 1, "Description of Business". The Property
was acquired on May 15, 1986 for an original purchase price of $59,125,000. As
of December 31, 1997, substantially all Property's apartment units had been
renovated. Approximately $715,000 was spent on capital improvements in 1997
consisting of land improvements and continuous renovating and upgrading of
apartment units. These capital improvements were funded by a combination of the
property's reserves and cash flow from operations.
For 1998, approximately $550,000 has been budgeted for balcony
replacements, $260,000 for roof replacements, and $750,000 for elevator system
replacement and a building access security system. In addition, approximately
$654,000 of routine capital expenditures are budgeted for 1998.
The Property has generated positive cash flow after debt service and
capital improvements every year since its acquisition by the Registrant.
The following table sets forth the average annual occupancy rate and
per unit average annual rental rate at the Property for the years ended
December 31, 1997 and 1996:
1997 1996
---- ----
Average Occupancy Rate 95% 96%
Average per Unit Rental Rate $8,440 $8,132
On September 25, 1996, the Registrant obtained a new first mortgage
loan in the amount of $47,000,000. The mortgage loan bears interest at a rate of
Libor plus 2.75% (8.437% at December 31, 1997), requires monthly payments of
interest and principal of approximately $375,000 based upon a 25 year
amortization schedule and matures in September, 2001 with a balloon payment due
of approximately $43,514,000. The Registrant was required to fund reserves at
closing to complete certain required improvements and established tax and
insurance escrows. The Registrant is required to deposit approximately $31,000
per month into a replacement reserve account. See "Item 7, Financial Statements
- - Note B." Approximately $6,575,000 of the loan proceeds from the financing
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were distributed to the partners. See Item 5, "Market for Registrant's Common
Equity and Related Stockholder Matters."
Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of the Property as of December
31, 1997 (in thousands):
Gross
Carrying Accumulated Federal
Value Depreciation Rate Method Tax Basis
----- ------------ ---- ------ ---------
$73,235 $31,697 5-27.5 yrs. S/L $24,001
The real estate taxes paid on the Property in 1997 were approximately
$747,000 which were based on a rate of 1.23%.
Item 3. Legal Proceedings.
-----------------
The Registrant is unaware of any pending and outstanding litigation
that is not of a routine nature. The General Partner believes that all such
pending or outstanding routine litigation will be resolved without a material
adverse effect upon the business, financial condition or operations of the
Registrant.
Item 4. Submission of Matters to a Vote of Securities Holders.
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No matters were submitted to a vote of security holders during the
period covered by this report.
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PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
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There is no established trading market for the Registrant's Units. The
Registrant's Partnership Agreement places significant restrictions on the rights
of Limited Partners to assign their interests in the Registrant. Transfers of
Units are infrequent and occur only through private transactions. In this
regard, as described in Item 1, "Description of Business", on October 28, 1997,
Riverside transferred the 200.58 Units it owned, representing a 35.44% of the
total Units outstanding, to Insignia Financial Group, Inc.
As of March 15, 1998, there were 658 holders of 566 outstanding Units.
The Registrant's Partnership Agreement requires that any Cash Flow (as
defined therein) be distributed to the Partners at such times during each
calendar year as the General Partner determines, but in any event not later than
sixty (60) days after the end of the Registrant's fiscal year. All distributions
of Cash Flow are to be made in proportion to the partners' respective Percentage
Interests (as defined in the Partnership Agreement). There are no restrictions
on the Registrant's present or future ability to make distributions of Cash
Flow. During the years ended December 31, 1997 and December 31, 1996, the
Registrant made cash distributions with respect to the Units to holders thereof
in the aggregate amounts of $1,415,000 and $7,641,000 (inclusive of a $6,509,000
distribution from refinancing proceeds), respectively. None of the cash that was
distributed constituted a return of Limited Partners'capital. See "Item 6,
Management's Discussion and Analysis or Plan of Operation," for information
relating to the Registrant's future distributions.
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Item 6. Management's Discussion and Analysis or Plan of Operation.
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Liquidity and Capital Resources
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The Registrant's sole asset is the Property which is leased to tenants
subject to leases of up to one year. The Registrant requires cash to pay
principal and interest on the Mortgage Loan and to pay operating expenses in
connection with the Property, including management fees and general and
administrative expenses. The Registrant continues to have positive cash flow
after its operating and debt service requirements and provides cash
distributions to its partners. Although there can be no assurance that
operations will continue to generate income in an amount sufficient to permit
continued distributions to the partners, it is expected that the Registrant's
income will be sufficient in future years to continue to pay these expenses as
well as to provide for cash distributions to its partners. The Registrant has
also distributed to Limited Partners some of the funds that had been set aside
as reserves from prior years' cash available for distribution. The General
Partner anticipates that the Registrant's reserves will be adequate to fund any
unanticipated expenses.
The level of liquidity based on cash and cash equivalents experienced a
$158,000 decrease at December 31, 1997, as compared to December 31, 1996. The
Partnership's $2,965,000 of cash provided by operating activities was more than
offset by $1,082,00 of cash used for property improvements and replacement
reserves (investing activities) and $2,041,000 of partner distributions and
mortgage principal payments (financing activities). The Partnership invests its
working capital reserves in a money market fund. Cash provided by operating
activities increased during 1997, as compared to 1996, due to decreased other
assets due to the timing of payments for prepaid expenses and increased
revenues, as discussed below.
On September 25, 1996, the Registrant closed a new first mortgage loan
in the amount of $47,000,000. The mortgage loan bears interest of Libor plus
2.75%, requires monthly payments of interest and principal of approximately
$375,000 based upon a 25 year amortization schedule and matures in September,
2001. The Registrant was required to fund reserves at closing to complete
certain required improvements and established tax and insurance escrows. The
Registrant is required to fund an ongoing replacement reserve. The Registrant
distributed $6,509,000 of the loan proceeds from the financing to its limited
partners and approximately $66,000 to the general partner during the fourth
quarter of 1996.
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Riverside acquired 200 Units through its 1995 tender offer which Units
were subsequently transferred on October 28, 1997 to Insignia (see "Item 1,
Description of Business - Tender Offer"). The General Partner believes that the
transfer of such Units will not have a significant impact on future operations
or the liquidity of the Registrant.
Results of Operations
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Net loss of the Partnership was $1,034,000 for the year ended
December 31, 1997 as compared to a net loss of $1,553,000 for the year ended
December 31, 1996. The decrease in net loss is attributable to an increase in
revenues from $10,462,000 to $10,939,000 for such periods and a decrease in
expenses from $12,015,000 to $11,973,000 for such periods.
Revenues increased primarily due to an increase in rental revenue of
$264,000 due to an increase in average rental rates at the Property which more
than offset a slight decrease in average occupancy. The decrease in expenses is
attributable to a decrease in general and administrative expense which more than
offset an increase in operating expense. Contributing to the increase in
operating expenses were increased maintenance costs, primarily due to an
increase in interior painting of approximately $112,000, and increased property
expenses. Increased salary expenses accounted for the majority of the property
expense increase, as temporary staffing services were relied on to relieve an
office staff shortage and an additional maintenance position was added for 1997.
The General Partner believes that inflation and changing economic
conditions did not have a significant affect on the operating results of the
Registrant during 1996. The General Partner does not anticipate the results of
operations in future years to be significantly different from operations in
1996. However, the Property continues to be subject to the risks associated with
real estate ownership and management, such as varying occupancy levels resulting
from inflation and other economic conditions. While the General Partner believes
that market conditions are slowly beginning to improve, there can be no
assurance that this improvement will continue.
Year 2000
- ---------
The Registrant is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment and
will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to
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be completed not later than December 31, 1998, which is prior to any anticipated
impact on its operating systems. The General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Registrant. It is not expected that any costs of these
modifications borne by the Registrant, if any, will be material.
Other
- -----
Certain items discussed in this annual report may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to be materially
different from any results, performance or achievements expressed or implied by
such forward-looking statements. Such forward-looking statements speak only as
of the date of this annual report. The Registrant expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Registrant's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
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Item 7. Financial Statements
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Report of Reznick Fedder & Silverman, Independent Auditors
Balance Sheet - December 31, 1997
Statements of Operations - Years ended December 31, 1997 and 1996
Statement of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1997 and 1996
Statements of Cash Flows - Years ended December 31, 1997 and 1996
Notes to Financial Statements
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INDEPENDENT AUDITORS' REPORT
To the Partners of
Riverside Park Associates Limited Partnership
We have audited the accompanying balance sheet of Riverside Park Associates
Limited Partnership as of December 31, 1997, and the related statements of
operations, partners' capital (deficit) and cash flows for each of the two years
in the period ended December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Riverside Park Associates
Limited Partnership as of December 31, 1997, and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 31, 1998
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
December 31, 1997
(in thousands, except for unit data)
Assets
Cash and cash equivalents $ 2,478
Receivables and deposits 337
Restricted escrow 428
Other assets 1,002
Investment properties
Land $ 6,357
Buildings and related personal property 66,878
---------
73,235
Less accumulated depreciation (31,697) 41,538
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$ 45,783
========
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 241
Tenant security deposits payable 170
Other liabilities 631
Mortgage note payable 46,157
Partners' Capital (Deficit)
General partner's $ (1,175)
Limited partners' (566 units issued and
outstanding) (241) (1,416)
--------- --------
$ 45,783
========
See Accompanying Notes to Financial Statements
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years ended December 31,
1997 1996
---- ----
Revenues:
Rental income $ 9,764 $ 9,500
Other income 1,175 962
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Total income 10,939 10,462
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Expenses:
Operating 3,841 3,642
General and administrative 371 533
Depreciation 2,767 2,865
Interest 4,266 4,250
Property taxes 728 725
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Total expenses 11,973 12,015
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Net loss $ (1,034) $ (1,553)
======== ========
Net loss allocated to general partner (3%) $ (31) $ (47)
Net loss allocated to limited partners (97%) (1,003) (1,506)
-------- --------
$ (1,034) $ (1,553)
======== ========
Net loss per limited partnership unit $ (1,772) $ (2,661)
======== ========
Distributions per limited partnership unit $ 2,500 $ 13,500
======== ========
See Accompanying Notes to Financial Statements
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
----------- --------- --------- --------
Original capital contributions 566 $ -- $ 47,533 $ 47,533
=== ========= ========= ========
Partners' (deficit) capital
at December 31, 1995 566 $ (952) $ 11,324 $ 10,372
Distributions paid -- (101) (7,641) (7,742)
Net loss for the year ended
December 31, 1996 -- (47) (1,506) (1,553)
--- --------- --------- --------
Partners' (deficit) capital
at December 31, 1996 566 (1,100) 2,177 1,077
Distributions paid -- (44) (1,415) (1,459)
Net loss for the year ended
December 31, 1997 -- (31) (1,003) (1,034)
--- --------- --------- --------
Partners' deficit
at December 31, 1997 566 $ (1,175) $ (241) $ (1,416)
=== ========= ========= ========
See Accompanying Notes to Financial Statements
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
1997 1996
-------- --------
Cash flows from operating activities
Net loss $ (1,034) $ (1,553)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 2,767 2,865
Amortization of loan costs 333 187
Change in accounts:
Receivables and deposits 214 73
Other assets 476 (62)
Accounts payable 73 (112)
Tenant security deposits payable 16 1
Other liabilities 120 130
-------- --------
Net cash provided by operating
activities 2,965 1,529
-------- --------
Cash flows from investing activities
Property improvements and replacements (715) (621)
Deposits to restricted escrow (367) (61)
-------- --------
Net cash used in investing activities (1,082) (682)
-------- --------
Cash flows from financing activities
Payments on mortgage note payable (580) (38,377)
Proceeds from mortgage refinancing -- 47,000
Distributions to partners (1,459) (7,742)
Payment of loan costs (2) (1,404)
-------- --------
Net cash used in financing activities (2,041) (523)
-------- --------
Net (decrease) increase in cash and cash
equivalents (158) 324
Cash and cash equivalents at beginning of period 2,636 2,312
-------- --------
Cash and cash equivalents at end of period $ 2,478 $ 2,636
======== ========
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 3,936 $ 4,052
======== ========
See Accompanying Notes to Financial Statements
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1997
Note A - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
- -------------
Riverside Park Associates Limited Partnership (the "Partnership"), a Delaware
limited partnership, was formed on May 14, 1986 to acquire, renovate and operate
a three-building apartment complex known as Riverside Park (the "Property"). The
Property consists of 1,222 apartment units, 1,822 parking spaces, and
recreational and retail facilities situated on approximately 28.1 acres of land.
The Partnership will terminate on December 31, 2035, or earlier upon the
occurrence of certain events specified in the Partnership Agreement. The general
partner of the Partnership is Winthrop Financial Associates, A Limited
Partnership, a Maryland Limited Partnership (the "General Partner" or "WFA").
The Partnership Agreement provides that the Partnership may sell additional
limited partnership interests to raise additional equity, if WFA determines that
additional funds are required.
Allocations to Partners:
- ------------------------
Profits, losses and cash flow from normal operations are allocated 3% to WFA and
97% to the limited partners. After distribution of certain priority items,
partnership residuals will be distributed 25% to WFA and 75% to the limited
partners.
Investment Properties:
- ----------------------
Investment properties are stated at cost. Acquisition fees are capitalized as a
cost of real estate. The Partnership records impairment losses on long-lived
assets used in operations when events and circumstances indicate that the assets
might be impaired and the undiscounted cash flows estimated to be generated by
those assets are less than the carrying amounts of those assets.
Depreciation:
- -------------
Buildings and improvements are depreciated on the straight-line method over
their estimated useful lives ranging from 10 to 27.5 years for buildings and
improvements and from 5 to 10 years for furnishings for financial and reporting
purposes. For income tax purposes accelerated lives and methods are used.
Loan Costs:
- -----------
Loan costs are capitalized and are amortized by the straight-line method as
interest expense over the term of the related note. Loan costs, net of
accumulated amortization of $416,000, approximate $990,000, which are included
in other assets at December 31, 1997.
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements (Continued)
Note A - Organization and Summary of Significant Accounting Policies (continued)
- --------------------------------------------------------------------
Leases:
- -------
The Partnership generally leases its apartment units for one year or less. The
Partnership recognizes income as earned on its leases. Rental payments received
in advance are deferred until earned. All leases between the partnership and
tenants of the property are operating leases.
Income Taxes:
- -------------
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision has been made in the financial
statements of the Partnership for income taxes. The Partnership reports certain
transactions differently for tax than for financial statement purposes.
Fair Value of Financial Instruments:
- ------------------------------------
The Partnership believes that the carrying amount of its financial instruments
(except for long term debt) approximates their fair value due to the short term
maturity of these instruments. The fair value of the Partnership's long term
debt, after discounting the scheduled loan payments to maturity, based on
estimated rates currently available, approximates its carrying balance.
Cash and Cash equivalents:
- --------------------------
The Partnership considers all highly liquid investments with a maturity, when
purchased, of three months or less to be cash equivalents. At certain times, the
amount of cash deposited at a bank may exceed the limit on insured deposits.
Tenant Security Deposits:
- -------------------------
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.
Restricted Escrow:
- ------------------
As a result of the 1996 refinancing, the Property makes monthly deposits to
establish and maintain a replacement reserve designated for repairs and
replacements at the property. At December 31, 1997, this reserve totaled
approximately $428,000.
Advertising costs:
- ------------------
Advertising costs of approximately $185,000 in 1997 and $181,000 in 1996 were
charged to expenses as incurred and are included in operating expenses.
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RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements (Continued)
Note A - Organization and Summary of Significant Accounting Policies (continued)
- --------------------------------------------------------------------
Use of Estimates:
- -----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications:
- ------------------
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
Note B - Mortgage note payable
On September 25, 1996, the Partnership refinanced its mortgage note payable with
General Electric Capital Corporation ("GE Capital") in the aggregate amount of
$47,000,000. The new loan bears interest at a rate of one month LIBOR plus 2.75%
(8.4375% at December 31, 1997). Upon refinancing, the Partnership entered into
an "Interest Rate Cap Agreement" with a third party which has a term of three
years and provides for protection against the LIBOR rate exceeding 7.25%. The
interest rate cap agreement was assigned by the Partnership to GE Capital as
additional security on the loan. Principal and interest are payable by the
Partnership in monthly installments of approximately $375,000 commencing on
November 1, 1996 through September 27, 2001 with a balloon payment of
approximately $43,514,000 due at maturity. In addition, the Partnership is
required to pay GE Capital a repayment fee in the amount of $470,000 upon
maturity, prepayment or after acceleration.
The Partnership is required to deposit into a capital improvement reserve a
monthly amount of approximately $31,000, to be held by GE Capital and disbursed
back to the Partnership for capital improvements and capital repairs to the
property, as approved by GE Capital. At December 31, 1997, the balance of these
reserves was approximately $428,000.
The mortgage note payable is nonrecourse and is secured by pledge of the
Partnership's property and by pledge of revenues from the rental property.
Scheduled principal payments due on the mortgage note payable subsequent to
December 31, 1997, based on the current interest rate, are as follows (in
thousands):
December 31, 1998 $ 625
1999 680
2000 740
2001 44,112
--------
$ 46,157
========
9
<PAGE>
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements (Continued)
Note C - Investment Properties and Accumulated Depreciation (in thousands)
Initial Cost
To Partnership
---------------------------
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
- ----------- ------------ ---- -------- -----------
Riverside Park $46,157 $6,357 $52,768 $14,110
------ ----- ------ ------
Totals $46,157 $6,357 $52,768 $14,110
====== ===== ====== ======
Gross Amount At Which Carried
At December 31, 1997
<TABLE>
<CAPTION>
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
----------- ---- -------- ----- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Riverside Park $6,357 $66,878 $73,235 $31,697 05/15/86 5-27.5
----- ------ ------ ------
Totals $6,357 $66,878 $73,235 $31,697
===== ====== ====== ======
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1997 1996
------- -------
Investment Properties
- ---------------------
Balance at beginning of year $72,520 $71,899
Property improvements 715 621
------- -------
Balance at end of year $73,235 $72,520
======= =======
Accumulated Depreciation
- ------------------------
Balance at beginning of year $28,930 $26,065
Additions charged to expense 2,767 2,865
------- -------
Balance at end of year $31,697 $28,930
======= =======
10
<PAGE>
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements (Continued)
Note C - Investment Properties and Accumulated Depreciation (in thousands)
(continued)
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996 is approximately $66,878,000 and $66,163,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1997 and 1996, is approximately $42,877,000 and $40,111,000,
respectively.
Note D - Income Taxes
The following is a reconciliation of reported net loss and Federal taxable
income (loss) (in thousands):
1997 1996
Net loss as reported $ (1,034) $ (1,553)
Depreciation differences (9) 201
Deferred revenue 152 --
Other (26) 33
-------- --------
Taxable loss $ (917) $ (1,319)
======== ========
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 1997 (in thousands):
Partners' deficit for financial
statement purposes $ (1,416)
Accumulated depreciation (11,190)
Deferred revenue 152
Other 14
--------
Partners' deficit for federal income
tax purposes $ (12,440)
=========
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Limited Partnership Agreement ("Partnership Agreement") provides for
payments to affiliates for property management services based on a percentage of
revenue and an annual partnership and investor service fee of $110,000 subject
to a 6% annual increase commencing in January 1989.
On October 28, 1997, Insignia Financial Group ("Insignia") acquired 100% of the
Class B stock of First Winthrop Corporation ("FWC"), the sole shareholder of the
Partnership's General Partner. In connection with this transaction, a nominee of
Insignia was elected as a director of the General Partner and has been appointed
to the board of directors of the General Partner. The nominee has the authority
to appoint members to a newly created residential committee. This committee is
generally authorized to act on behalf of the General Partner in managing the
business activities of the Registrant. On October 28, 1997, the Partnership
terminated Winthrop Management as the managing agent, and appointed an affiliate
of Insignia to assume management of the property. The General Partner does not
believe this transaction will have a material effect on the affairs and
operations of the Registrant.
11
<PAGE>
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements (Continued)
Note E - Transactions with Affiliated Parties (continued)
The following fees were paid to affiliates of Insignia, FWC, and affiliates of
FWC during the years ended December 31, 1997 and 1996 (in thousands):
1997 1996
---- ----
Property management fees (included in
operating expenses) $423 $415
Partnership and investor service fees
(included in general and administrative
expenses) 186 176
As of December 31, 1997, Insignia owns 200.58 (approximately 35.4% of the 566
Units outstanding) limited partner Units of the Partnership.
Note F - Distributions
During the year ended December 31, 1997, the Partnership paid distributions
totaling approximately $1,459,000 to the partners. For the year ended December
31, 1996, the Partnership paid distributions of approximately $7,742,000 to the
partners; approximately $6,575,000 of the 1996 distribution was from loan
proceeds from refinancing. The remaining distributions were made from cash
available for distribution (as defined in the Partnership Agreement) from the
prior year or funds that had been reserved from operations in prior years.
12
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
----------------------------------------------------------------
None.
11
<PAGE>
PART III
--------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
-------------------------------------------------------------
The Registrant has no officers or directors. The General Partner
manages and controls substantially all of the Registrant's affairs and has
general responsibility and ultimate authority in all matters affecting its
business. On October 28, 1997, IPT I LLC ("IPT"), an affiliate of Insignia
Financial Group, Inc. ("Insignia"), was admitted as an associate general partner
of the General Partner. Pursuant to the terms of the Second Amended and Restated
Agreement of Limited Partnership of the General Partner, IPT has the right to
cause the General Partner to take such action as it deems necessary in
connection with the activities of the Registrant.
As of March 1, 1998, the names of the directors and executive officers
of the General Partner and the position held by each of them, are as follows:
Has Served as
Position Held with the a Director or
Name Managing General Partner Officer Since
---- ------------------------ -------------
Michael L. Ashner Chief Executive Officer 1-96
Carroll D. Vinson Vice President - Residential 10-97
Edward Williams Chief Financial Officer 4-96
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
Michael L. Ashner, age 46, has been the Chief Executive Officer of the
General Partner since January 15, 1996. From June 1994 until January 1996, Mr.
Ashner was a Director, President and Co-chairman of National Property Investors,
Inc., a real estate investment company ("NPI"). Mr. Ashner was also a Director
and executive officer of NPI Property Management Corporation ("NPI Management")
from April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been
President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships.
Carroll D. Vinson, age 57, has been Vice President - Residential of the
General Partner since October 1997. He has acted as Chief Operating Officer of
Insignia Properties Trust since May 1997. During 1993 to August 1994, Mr. Vinson
was
12
<PAGE>
affiliated with Crisp, Hughes & Co. (regional CPA firm) and engaged in
various other investment and consulting activities which included portfolio
acquisitions, asset dispositions, debt restructurings and financial reporting.
Briefly, in early 1993, Mr. Vinson served as President and Chief Executive
Officer of Angeles Corporation, a real estate investment firm.
Edward V. Williams, age 57, has been the Chief Financial Officer of the
General Partner since April 1996. From June 1991 through March 1996, Mr.
Williams was Controller of NPI and NPI Management. Prior to 1991, Mr. Williams
held other real estate related positions including Treasurer of Johnstown
American Companies and Senior Manager at Price Waterhouse.
Peter Braverman, age 46, has been a Senior Vice President of the
General Partner since January 1996. From June 1995 until January 1996, Mr.
Braverman was a Vice President of NPI and NPI Management. From June 1991 until
March 1994, Mr. Braverman was President of the Braverman Group, a firm
specializing in management consulting for the real estate and construction
industries. From 1988 to 1991, Mr. Braverman was a Vice President and Assistant
Secretary of Fischbach Corporation, a publicly traded, international real estate
and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates II, A Limited Partnership; Winthrop
Residential Associates III, A Limited Partnership; 1626 New York Associates
Limited Partnership; 1999 Broadway Associates Limited Partnership; Nantucket
Island Associates Limited Partnership; One Financial Place Limited Partnership;
Presidential Associates I Limited Partnership; Springhill Lake Investors Limited
Partnership; Twelve AMH Associates Limited Partnership; Winthrop California
Investors Limited Partnership; Winthrop Growth Investors I Limited Partnership;
Winthrop Interim Partners I, A Limited Partnership; Southeastern Income
Properties Limited Partnership; Southeastern Income Properties II Limited
Partnership; and Winthrop Miami Associates Limited Partnership.
Except as indicated above, neither the Registrant nor the General
Partner has any significant employees within the meaning of Item 401(b) of
Regulation S-B. There are no family
13
<PAGE>
relationships among the officers and directors of the General Partner.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Registrant under Rule 16a-3(e) during the Registrant's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Registrant with respect to its most recent fiscal year, the Registrant is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Registrant that failed to file
on a timely basis, as disclosed in the above Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.
Item 10. Executive Compensation.
----------------------
The Registrant is not required to and did not pay any compensation to
the officers or directors of the General Partner. The General Partner does not
presently pay any compensation to any of its officers (See "Item 12, Certain
Relationships and Related Transactions").
Item 11. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
(a) Security ownership of Certain Beneficial Owners.
-----------------------------------------------
The General Partner owns all of the general partnership interests in
the Registrant. As general partner, it is entitled, in the aggregate, to 3% of
the Registrant's net income or loss for tax purposes and to cash flow from
normal operations. Under the Registrant's Partnership Agreement, the right to
manage the business of the Registrant is vested in the General Partner.
The following table sets forth certain information regarding limited
partnership units of the Registrant owned by each person who is known by the
Registrant to own beneficially or exercise voting or dispositive control over
more than 5% of the Registrant's limited partnership units, by each of the
directors and by all directors and executive officers of the Managing General
Partner as a group as of December 31, 1997.
Name of Amount and nature of
Beneficial Owner Beneficial Owner % of Class
---------------- ---------------- ----------
Insignia Financial Group Inc.(1) 200.58 35.44
- ---------------
(1) Information is derived from the Schedule 13D filed by Insignia with the
Securities and Exchange Commission. The principal office of Insignia is One
Insignia Financial Plaza, Greenville, South Carolina 29602.
14
<PAGE>
As a result of its ownership of 200.58 limited partnership units,
Insignia could be in a position to significantly influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, Insignia would in all likelihood
vote the Units it acquired in a manner favorable to the interest of the General
Partner because of its affiliation with the General Partner. Under the
Registrant's Partnership Agreement, the voting rights of the Limited Partners
are limited and, in some circumstances, are subject to the prior receipt of
certain opinions of counsel or judicial decisions.
(b) Security Ownership of Management.
--------------------------------
Except with respect to the tender offer referenced above, none of the
officers, directors or general partners of the General Partner individually owns
or possesses the right to acquire any Units in the Registrant.
(c) Changes in Control.
------------------
There exists no arrangement known to the Registrant the operation of
which may at a subsequent date result in a change in control of the Registrant
except as follows:
On March 17, 1998, Insignia entered into an agreement to merge its
national residential property management operations, and its controlling
interest in Insignia Properties Trust, with Apartment Investment and Management
Company ("AIMCO"), a publicly traded real estate investment trust. The closing,
which is anticipated to happen in the third quarter of 1998, is subject to
customary conditions, including government approvals and the approval of
Insignia's shareholders. If the closing occurs, AIMCO will then control the
associated general partner of the General Partner.
Item 12. Certain Relationships and Related Transactions.
----------------------------------------------
(a) Transactions with Management and Others.
---------------------------------------
The General Partner receives no remuneration or other compensation from
the Registrant.
Under the Registrant's Partnership Agreement, the General Partner and
its affiliates are entitled to receive various fees, commissions, cash
distributions, allocation of taxable income or loss and expense reimbursements
from the Registrant. The following table sets forth the amounts of the fees,
commissions
15
<PAGE>
and cash distributions which the Registrant paid to or accrued for
the account of the General Partner and its affiliates for the years ended
December 31, 1997 and 1996 (in thousands):
Recipient Type of Compensation 1997 1996
---- ----
Winthrop Management Property Management Fee(1)(2) $353 $415
Winthrop Management Investor Service Fee(2)(3) 162 176
Insignia Residential Group, L.P. Property Management Fee(4) 70 --
Insignia Financial Group, Inc. Investor Service Fee(2)(3) 24 --
Winthrop Financial Associates Cash Distribution(5) 44 101
TOTAL: $653 $692
- -------------
(1) Equal to 4% of gross collected revenues of the Property.
(2) Until October 28, 1997, Winthrop Management provided such services for
the Registrant. Subsequent to October 28, 1997, Insignia provided such
services.
(3) Equal to $110,000 increased by 6% annually beginning January 1989.
(4) Commencing October 28, 1997, Insignia Residential Group began providing
such services for the Registrant.
(5) Equal to 3% of total cash distributed to partners.
(b) Certain Business Relationships.
------------------------------
The Registrant has no business relationship with entities of which the
officers, directors or general partners of the General Partner are officers,
directors or ten percent shareholders other than as set forth in Item 11(a)
above.
As a result of its ownership of 200.58 limited partnership Units,
Insignia could be in a position to significantly influence all voting decisions
with respect to the Registrant. Under the Registrant's Partnership Agreement,
unitholders holding a majority of the Units are entitled to take action with
respect to a variety of matters. When voting on matters, Insignia would in all
likelihood vote the Units it acquired in a manner favorable to the interests of
the General Partner because of its affiliation with the General Partner.
(c) Indebtedness of Management.
--------------------------
As of December 31, 1997, there is no indebtedness to the Registrant by
the General Partner or any of its officers, directors or general partners.
(d) Transactions with Promoters.
---------------------------
None.
16
<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
17
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RIVERSIDE PARK ASSOCIATES LIMITED
PARTNERSHIP
By: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP,
General Partner
By: /s/ Michael L. Ashner
---------------------------
Michael L. Ashner
Chief Executive Officer
Date: March 31, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature/Name Title Date
- -------------- ----- ----
/s/ Michael Ashner Chief Executive March 31, 1998
- ------------------ Officer and Director
Michael Ashner
/s/ Edward Williams Chief Financial Officer March 31, 1998
- ------------------
Edward Williams
/s/ Carroll Vinson Vice President - March 31, 1998
- ------------------ Residential
Carroll Vinson
18
<PAGE>
Index to Exhibits
-----------------
Exhibit
Number Document
- ------ --------
3.4. Riverside Park Associates Limited Partnership Amended and Restated
Limited partnership Agreement, dated July 15, 1986(1)
3.4. Certificate of Limited Partnership of Riverside Park Associates Limited
Partnership, filed with the Secretary of State of Delaware May 14,
1986(2)
3.4.(c) Amendment to Amended and Restated Partnership Agreement of Riverside
Park Associates Limited Partnership dated August 23, 1995 (3)
10(a) Loan Agreement, dated September 25, 1995, between the Registrant and
General Electric Capital Corporation ("GECC")
10(b) Promissory Note, dated September 25 1996, from the Registrant to GECC
in the original principal amount of $47,000,000
10(c) Deed of Trust, Security Agreement and Fixture Filing, dated as of
September 25, 1996, between the Registrant and GECC
10(d) Residential Management Agreement dated July 2, 1986 between the
Registrant and First Winthrop Properties, Inc.(2)
27 Financial Data Schedule
- ---------------
(1) Incorporated by reference to the Exhibits to the Registrant's
Registration Statement on Form 10, filed on April 29, 1987. (Commission
Partnership file number 0-15740.)
(2) Incorporated by reference to the Exhibits to the Registrant's Annual
Report filed on Form 10-K, on March 30, 1988.
19
