FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period _________to_________
Commission file number 0-15740
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Delaware 04-2924048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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. [X]
State issuer's revenues for its most recent fiscal year. $11,204,000.
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. No market exists for
the limited partnership interests of the Registrant; and therefore, no aggregate
market value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
ITEM 1. DESCRIPTION OF BUSINESS
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 operating and holding for
investment 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. IPT I LLC ("IPT I"), an associate general
partner of the General Partner, has the right to cause the General Partner to
take such actions as it deems advisable with respect to the Partnership (see
"Transfer of Control" below). The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2035, unless terminated prior to
such date.
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. 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 has no employees. Property management services are provided for
the Registrant by affiliates of the General Partner.
The business in which the Partnership is engaged is highly competitive. There
are other residential properties within the market area of the Property. The
number and quality of competitive properties, including those which may be
managed by an affiliate of the General Partner, in such market area could have a
material effect on the rental market for the apartments at the Property and the
rents that may be charged for such apartments. While the General Partner and
its affiliates are a significant factor in the United States in the apartment
industry, competition for apartments is local. In addition, various limited
partnerships have been formed by the General Partner and/or affiliates to engage
in business which may be competitive with the Partnership.
Both the income and expenses of operating the property owned by the Partnership
are subject to factors outside of the Partnership's control, such as an
oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the property
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
Transfer of Control
On October 28, 1997, IPT I 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 I has the right to
cause the General Partner to take such action as it deems necessary in
connection with the activities of the Partnership. On October 28, 1997, the
Partnership terminated Winthrop Management as the managing agent and appointed
an affiliate of IPT I to assume management of the property. In addition,
Insignia Financial Group, Inc. ("Insignia") acquired from an affiliate of the
General Partner the 200.66 Units (the "Acquired Units") which such affiliate
owned.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust ("IPT"), the sole
shareholder of IPT I, merged into Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the
surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired
control of IPT I and, therefore, the Partnership and the Acquired Units. The
General Partner does not believe that this transaction will have a material
effect on the affairs and operations of the Partnership.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Partnership's investment in the Property:
Date of Type of
Property Purchase Ownership Use
Riverside Park 05/86 Fee ownership subject Apartment
Fairfax County, Virginia to first mortgage 1,222 units
SCHEDULE OF PROPERTIES:
Set forth below is the gross carrying value, accumulated depreciation,
depreciable life, method of depreciation and Federal tax basis for the Property:
Gross
Carrying Accumulated Federal
Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
Riverside Park $74,747 $34,325 5-27.5 yrs. S/L $29,256
SCHEDULE OF PROPERTY INDEBTEDNESS:
The following table sets forth certain information relating to the loan
encumbering the Partnership's investment property:
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1998 Rate Amortized Date Maturity (3)
(in thousands) (in thousands)
Riverside Park
1st mortgage $45,517 8.3125%(2) (1) 09/27/01 $43,220
(1)The principal balance is amortized over 25 years with a balloon payment due
September 27, 2001.
(2)Interest rate is based on the 30 day LIBOR + 2.75%.
(3)See "Item 7 - Financial Statements - Note C" for information with respect to
the Partnership's ability to prepay this loan and other specific information
about the loan terms.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average annual rental rates and occupancy for 1998 and 1997:
Average Annual Average Annual
Rental Rates Occupancy
Property 1998 1997 1998 1997
Riverside Park $8,775/unit $8,440/unit 96% 95%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The Property is subject to competition from other
residential apartment complexes in the area. The General Partner believes that
the Property is adequately insured and is in good physical condition, subject to
normal depreciation and deterioration as is typical for assets of this type and
age. The property is an apartment complex which leases units for lease terms of
one year or less. No tenant leases 10% or more of the available rental space.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
Real estate taxes and rates for 1998:
1998 1998
Billing Rate
(in thousands)
Riverside Park $757 1.23%
CAPITAL IMPROVEMENTS:
During 1998, the Partnership completed approximately $1,734,000 of capital
improvements at Riverside Park, consisting primarily of carpet and other floor
covering, building improvements, heating and water heater replacement, roof
replacement, major sewer replacement, and balcony and pool repairs. These
improvements were funded from operating cash flow. Based on a report received
from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $4,875,000 of capital
improvements over the near term. Having been determined that extensive capital
improvements are needed over the next two to three years, the General Partner is
still in the process of determining what the 1999 capital improvements will be.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of security holders during the quarter ended
December 31, 1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
PARTNER MATTERS
As of December 31, 1998, there were 666 holders of record of the 566 Units. No
public trading market has developed for the Units, and it is not anticipated
that such a market will develop in the future. As of December 31, 1998,
Insignia, an affiliate of AIMCO, owned approximately 200.66 Units of limited
partnership interest or 35.31%.
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). No distributions were
declared or paid in 1998. In 1997, the Partnership made cash distributions from
operations of approximately $1,459,000 ($2,500 per limited partnership unit).
Future cash distributions will depend on the levels of net cash generated from
operations, property sales, refinancings, and the availability of cash reserves.
The Partnership's distribution policy will be reviewed on a quarterly basis.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations after required capital expenditures to permit
further distributions to its partners in 1999 or subsequent periods.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussions
of the Registrant's business and results of operations, including forward-
looking statements pertaining to such matters, does not take into account the
effects of any changes to the Registrant's business and results of operations.
Accordingly, actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership had a net loss for the year ended December 31, 1998 of
approximately $1,128,000 as compared to a net loss of approximately $1,034,000
for the corresponding period in 1997. The increase in net loss for 1998 was
primarily due to an increase in total expenses partially offset by an increase
in total revenues. The increase in total expenses is primarily attributable to
an increase in operating expenses, primarily due to increased property and
maintenance expenses. Certain salaries and maintenance costs increased as a
result of deferred maintenance performed at the property in 1998. Also
contributing to the increase in total expenses is an increase in property tax
expense primarily related to an increase in personal property taxes in 1998, and
an increase in interest expense related to amortization of mortgage-related
costs. These increases in expenses are partially offset by a decrease in
general and administrative expense. Included in general and administrative
expense for the years ended December 31, 1998 and 1997 are reimbursements to the
General Partner allowed under the Partnership Agreement associated with its
management of the Partnership. In addition, costs associated with the quarterly
and annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included. Revenues
increased due to an increase in rental income partially offset by a decrease in
other income. The increase in rental income is primarily attributable to an
increase in the average rental and occupancy rates at the property combined with
a decrease in concessions. Other income decreased due to lower average cash
balances maintained by the Partnership in interest bearing accounts in 1998.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expense. As part of this plan, the
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
Liquidity and Capital Resources
At December 31, 1998, the Partnership had cash and cash equivalents of
approximately $2,078,000 as compared to approximately $2,478,000 at December 31,
1997. The net decrease in cash and cash equivalents for the year ended December
31, 1998 is approximately $400,000. The decrease in cash and cash equivalents
is due to approximately $2,296,000 of cash provided by operating activities
offset by cash used in investing and financing activities of approximately
$2,056,000 and $640,000, respectively. Cash used in investing activities
primarily consisted of capital improvements and net deposits to escrow accounts
maintained by the mortgage lender. Cash used in financing activities consisted
of payments of principal made on the mortgage encumbering the Partnership's
property. The Partnership invests its working capital reserves in money market
accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership, and to comply with Federal, state,
and local legal and regulatory requirements. Having been determined that
extensive capital improvements are needed over the next two to three years, the
General Partner is still in the process of determining what the 1999 capital
improvements will be. The capital expenditures will be incurred only if cash is
available from operations or from Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Partnership's distributable
cash flow, if any, may be adversely affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any near-
term needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $45,517,000 is being amortized over 25 years with
a balloon payment of approximately $43,220,000 due at maturity in September
2001. The General Partner will attempt to refinance and/or sell the property
prior to such maturity date. If the property cannot be refinanced or sold for a
sufficient amount, the Partnership will risk losing such property through
foreclosure.
There were no cash distributions declared or paid during the year ended December
31, 1998. During 1997, the Partnership declared and paid distributions from
operations in the amount of approximately $1,459,000. The Partnership's
distribution policy is reviewed on a quarterly basis. There can be no
assurance, however, that the Partnership will generate sufficient funds from
operations after required capital expenditures to permit further distributions
to its partners in 1999 or subsequent periods.
Year 2000 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7. FINANCIAL STATEMENTS
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Reports
Balance Sheet - December 31, 1998
Statements of Operations - Years ended December 31, 1998 and 1997
Statements of Changes in Partners' Capital (Deficit) - Years ended December 31,
1998 and 1997
Statements of Cash Flows - Years ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements
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 (a Delaware limited partnership) as of December 31, 1998,
and the related statements of operations, changes in partners' capital (deficit)
and cash flows for the year then ended. 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 audit. The
accompanying financial statements of Riverside Park Associates Limited
Partnership as of December 31, 1997, were audited by other auditors whose report
thereon dated January 21, 1998, expressed an unqualified opinion on those
statements.
We conducted our audit 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 audit provides 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, 1998, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/KPMG Peat Marwick LLP
Greenville, South Carolina
March 15, 1999
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 statement of
operations, changes in partners' capital (deficit) and cash flows for the year
then ended. 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 the year then ended, in conformity with generally
accepted accounting principles.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 21, 1998
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
(in thousands, except unit data)
December 31, 1998
Assets
Cash and cash equivalents $ 2,078
Receivables and deposits 306
Restricted escrows 794
Other assets 693
Investment properties (Notes C and D):
Land $ 6,357
Buildings and related personal property 68,390
74,747
Less accumulated depreciation (34,325) 40,422
$ 44,293
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable $ 416
Tenant security deposit liabilities 205
Other liabilities 699
Mortgage note payable (Note C) 45,517
Partners' Deficit:
General partner's $ (1,209)
Limited partners' (566 units issued
and outstanding) (1,335) (2,544)
$ 44,293
See Accompanying Notes to Financial Statements
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997
Revenues:
Rental income $10,245 $ 9,764
Other income 959 1,175
Total revenues 11,204 10,939
Expenses:
Operating 4,219 3,841
General and administrative 318 371
Depreciation 2,745 2,767
Interest 4,291 4,266
Property taxes 759 728
Total expenses 12,332 11,973
Net loss $(1,128) $(1,034)
Net loss allocated to general partner (3%) $ (34) $ (31)
Net loss allocated to limited partners (97%) (1,094) (1,003)
$(1,128) $(1,034)
Net loss per limited partnership unit $(1,933) $(1,772)
Distributions per limited partnership unit $ -- $ 2,500
See Accompanying Notes to Financial Statements
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS 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, 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)
Net loss for the year ended
December 31, 1998 (34) (1,094) (1,128)
Partners' deficit at
December 31, 1998 566 $(1,209) $(1,335) $(2,544)
See Accompanying Notes to Financial Statements
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997
Cash flows from operating activities
Net loss $(1,128) $(1,034)
Adjustments to reconcile net loss to net cash
Provided by operating activities:
Depreciation 2,745 2,767
Amortization of loan costs 394 333
Casualty loss 61 --
Change in accounts:
Receivables and deposits 31 214
Other assets (85) 476
Accounts payable 175 73
Tenant security deposit liabilities 35 16
Other liabilities 68 120
Net cash provided by operating
activities 2,296 2,965
Cash flows from investing activities
Property improvements and replacements (1,734) (715)
Net deposits to restricted escrows (366) (367)
Insurance proceeds 44 --
Net cash used in investing activities (2,056) (1,082)
Cash flows from financing activities
Payments on mortgage note payable (640) (580)
Distributions to partners -- (1,459)
Payment of loan costs -- (2)
Net cash used in financing activities (640) (2,041)
Net decrease in cash and cash equivalents (400) (158)
Cash and cash equivalents at beginning of year 2,478 2,636
Cash and cash equivalents at end of year $ 2,078 $ 2,478
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 3,896 $ 3,936
See Accompanying Notes to Financial Statements
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
Notes to Financial Statements
December 31, 1998
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 operate and hold for
investment 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 unless
terminated prior to such date. The general partner of the Partnership is
Winthrop Financial Associates, A Limited Partnership, a Maryland Limited
Partnership (the "General Partner" or "WFA"). IPT I LLC ("IPT I"), an associate
general partner of the General Partner, has the right to cause the General
Partner to take such action as it deems advisable with respect to the
Partnership (See "Note B - Transfer of Control"). The directors and officers of
IPT I also serve as executive officers of AIMCO.
The Partnership Agreement provides that the Partnership may sell additional
limited partnership interests to raise additional equity, if the General Partner
determines that additional funds are required.
Allocations to Partners:
Profits, losses and cash flow from normal operations are allocated 3% to the
General Partner and 97% to the limited partners. After distribution of certain
priority items, partnership residuals will be distributed 25% to the General
Partner and 75% to the limited partners.
Investment Properties:
The Partnership's investment property consists of one apartment complex, which
is 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. No adjustments for
impairment of value were recorded in either of the years ended December 31, 1998
or 1997.
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 and Other Mortgage-Related Costs:
Loan and other mortgage-related costs of approximately $1,406,000 net of
accumulated amortization of approximately $749,000, are included in other assets
and are being amortized on a straight-line basis over various periods ranging
from 36 to 60 months. Amortization of these costs are included in interest
expense.
Leases:
The Partnership generally leases its apartment units for terms of twelve months
or less. The Partnership recognizes income as earned on its leases. In
addition, the General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
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.
The Partnership has an interest rate CAP agreement to manage exposure to
fluctuations in the LIBOR rate through September 1999. Costs paid associated
with this agreement are amortized to interest expense over the term of the
agreement.
Cash and Cash Equivalents:
Cash and cash equivalents include cash on hand and in banks, demand deposits,
money market funds, and certificates of deposit with original maturities less
than 90 days. 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 the apartment and is current on rental payments.
Restricted Escrows
As a result of the 1996 refinancing, the Property makes monthly deposits of
approximately $31,000 to a replacement reserve account held by the lender, with
amounts disbursed back to the Partnership for repairs and replacements at the
property. At December 31, 1998, this reserve totaled approximately $794,000.
Advertising Costs:
The Partnership expenses the costs of advertising as incurred. Advertising
expense, included in operating expenses, was approximately $206,000 and $185,000
for the years ended December 31, 1998 and 1997, respectively.
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.
Segment Reporting:
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information", which is
effective for years beginning after December 15, 1997. SFAS No. 131 established
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers (See "Note I" for
required disclosures).
Reclassifications:
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation. The reclassifications had no impact on the net loss or
partners' deficit as previously reported.
NOTE B - TRANSFER OF CONTROL
On October 28, 1997, IPT I 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 I has the right to
cause the General Partner to take such action as it deems necessary in
connection with the activities of the Partnership. On October 28, 1997, the
Partnership terminated Winthrop Management as the managing agent and appointed
an affiliate of IPT I to assume management of the property. In addition,
Insignia Financial Group, Inc. ("Insignia") acquired from an affiliate of the
General Partner the 200.66 Units (the "Acquired Units") which such affiliate
owned.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust ("IPT"), the
shareholder of IPT I, merged into Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the
surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired
control of IPT I and, therefore, the Partnership and the Acquired Units. The
General Partner does not believe that this transaction will have a material
effect on the affairs and operations of the Partnership.
NOTE C - MORTGAGE NOTE PAYABLE
The principle terms of the mortgage note payable are as follows:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1998 Interest Rate Date Maturity
(in thousands) (in thousands)
Riverside Park
1st mortgage $45,517 $ 382 8.3125% 09/27/01 $43,220
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 the 30-day LIBOR plus 2.75%
(8.3125% at December 31, 1998). 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 30-day LIBOR 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 $382,000 with a balloon
payment of approximately $43,220,000 due at maturity. The Partnership is
required to pay GE Capital a repayment fee in the amount of $470,000 upon
maturity, prepayment or after acceleration. In addition, the Partnership is
required to pay a prepayment premium equal to 1% of the outstanding balance of
the loan if prepaid prior to September 30, 1999. Thereafter, the Partnership
may prepay the loan without a prepayment premium.
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. The
investment property may not be sold subject to the existing indebtedness.
Exposure to market risk on the interest rate CAP agreement results from
fluctuations in the LIBOR rate during the term of the agreement. The
Partnership is exposed to credit risk to the extent of nonperformance by the
third party.
Scheduled principal payments of the mortgage note payable subsequent to December
31, 1998, are as follows (in thousands):
1999 $ 776
2000 833
2001 43,908
$45,517
NOTE D - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Riverside Park $45,517 $ 6,357 $52,768 $15,622
Gross Amount At Which Carried
At December 31, 1998
(in thousands)
Buildings
and
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
Riverside Park $6,357 $68,390 $74,747 $34,325 05/15/86 5-27.5
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1998 1997
(in thousands)
Real Estate
Balance at beginning of year $73,235 $72,520
Property improvements 1,734 715
Property dispositions (222) --
Balance at end of year $74,747 $73,235
Accumulated Depreciation
Balance at beginning of year $31,697 $28,930
Additions charged to expense 2,745 2,767
Property dispositions (117) --
Balance at end of year $34,325 $31,697
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997 is approximately $74,747,000 and $66,878,000,
respectively. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1998 and 1997, is approximately $45,491,000 and
$42,877,000, respectively.
NOTE E - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reportable in
the income tax returns of its partners.
The following is a reconciliation of reported net loss and Federal taxable loss
(in thousands, except per unit data):
Years Ended December 31,
1998 1997
Net loss as reported $ (1,128) $ (1,034)
Depreciation differences 8 (9)
Deferred revenue 140 152
Other (74) (26)
Federal taxable loss $ (1,054) $ (917)
Federal taxable loss per
limited partnership unit $(1,806.33) $(1,570.67)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 1998 (in thousands):
Partners' deficit for financial
statement purposes $ (2,544)
Accumulated depreciation (11,164)
Deferred revenue 154
Other 5,696
Partners' deficit for Federal income
tax purposes $ (7,858)
NOTE F - 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 provides for certain payments to affiliates
for 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. The following transactions with the General Partner and/or its
affiliates were incurred during 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in
Operating expenses) $445 $423
Reimbursements for services of affiliates
and investor service fees (included in
Operating, general and administrative
Expenses, and investment properties) (1) 272 186
(1) Included in "Reimbursements for services of affiliates" for the year ended
December 31, 1998 is approximately $5,000 in reimbursements for
construction oversight costs. There were no reimbursements for
construction oversight costs in 1997.
For the period from January 1, 1997 until October 28, 1997, Winthrop Management,
an affiliate of the General Partner, was entitled to receive 4% of gross
receipts from the Partnership's investment property as compensation for
providing property management services, or approximately $353,000.
Additionally, Winthrop Management was paid approximately $162,000 of investor
service fees for the same period of 1997. Commencing October 28, 1997, Insignia
Residential Group, Inc. began providing such property management and investor
services for the Partnership, for which they received payments of approximately
$70,000 and $24,000, respectively, for the period from October 28 through
December 31, 1997.
For the nine month period ended September 30, 1998, Insignia Residential Group,
Inc. received approximately $332,000 for property management fees and
approximately $204,000 of reimbursements for investor services fees and
accountable administrative expenses. For the three month period ended December
31, 1998, AIMCO Management received approximately $113,000 for property
management services. For this same period of 1998, an affiliate of AIMCO
received reimbursements for investor services fees and accountable
administrative expenses of approximately $68,000.
AIMCO currently owns, through an affiliate, 200.66 limited partnership units or
35.31% and 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, AIMCO 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.
NOTE G - DISTRIBUTIONS
There were no cash distributions paid or declared by the Partnership during
1998. During the year ended December 31, 1997, the Partnership paid
distributions from operations totaling approximately $1,459,000 to the partners.
NOTE H - CONTINGENCIES
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature in the ordinary course of business.
NOTE I - SEGMENT INFORMATION
Description of the Types of Products and Services from which the Reportable
Segment Derives its Revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", the Partnership has one
reportable segment: residential properties. The Partnership's residential
property segment consists of one apartment complex located in the southeastern
part of the United States. The Partnership rents apartment units to people for
terms that are typically twelve months or less.
Measurement of Segment Profit or Loss: The Partnership evaluates performance
based on net income. The accounting policies of the reportable segment are the
same as those described in the summary of significant accounting policies.
Segment information for the years 1998 and 1997 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related
items and income and expense not allocated to the reportable segment.
1998
Residential Other Totals
Rental income $10,245 $ -- $10,245
Other income 959 -- 959
Interest expense 4,434 -- 4,434
Depreciation 2,745 -- 2,745
General and administrative expense -- 318 318
Segment loss (810) (318) (1,128)
Total assets 42,763 1,530 44,293
Capital expenditures for investment
Property 1,734 -- 1,734
1997
Residential Other Totals
Rental income $ 9,764 $ -- $ 9,764
Other income 1,175 -- 1,175
Interest expense 4,266 -- 4,266
Depreciation 2,767 -- 2,767
General and administrative expense -- 371 371
Segment loss (663) (371) (1,034)
Total assets 44,007 1,776 45,783
Capital expenditures for investment
Property 715 -- 715
Item 8.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Effective October 20, 1998, the Registrant dismissed its prior Independent
Auditors, Reznick, Fedder & Silverman ("Reznick"), and retained as its new
Independent Auditors, KPMG Peat Marwick LLP. Reznick's Independent Auditors'
Report on the Registrant's financial statements for the calendar year ended
December 31, 1997 did not contain an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles. The decision to change Independent Auditors was approved by the
General Partner's directors. During the calendar year ended 1997 and through
October 20, 1998, there were no disagreements between the Registrant and Reznick
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure which disagreements if not resolved
to the satisfaction of Reznick, would have caused it to make reference to the
subject matter of the disagreements in connection with its reports.
Effective October 20, 1998, the Registrant engaged KPMG Peat Marwick LLP as its
Independent Auditors. During the last two calendar years and through October
20, 1998, the Registrant did not consult KPMG Peat Marwick LLP regarding any of
the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.
PART III
Item 9.Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
Riverside Park Associates Limited Partnership (the "Partnership" or the
"Registrant") has no officers or directors. Winthrop Financial Associates, A
Limited Partnership (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 I") 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 I 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 December 31, 1998, the names of the directors and executive officers of
IPT I and the position held by each of them, are as follows:
Name Age Position
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of IPT I since
October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since
May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing
Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through
1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and
serves as a member of the New York State Privatization Council. He received a
B.A. from Fordham College and a J.D. from Fordham University Law School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of IPT I since October 1, 1998. Prior to that
date, Mr. Garrick served as Vice President-Accounting Services of Insignia
Financial Group since June of 1997. From 1992 until June of 1997, Mr. Garrick
served as Vice President of Partnership Accounting and from 1990 to 1992 as an
Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr. Garrick
served in various capacities with U.S. Shelter Corporation. From 1979 to 1984,
Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick received
his B.S. Degree from the University of South Carolina and is a Certified Public
Accountant.
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 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.
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 or entity which 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 General Partner as
a group as of December 31, 1998.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Owner % of Class
Insignia Financial Group Inc. ("Insignia") (1) 200.66 Units 35.31%
55 Beattie Place, Greenville, SC 29601
(1) Insignia is indirectly ultimately owned by AIMCO.
(b) Security Ownership of Management.
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 October 28, 1997, IPT I 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 I has the right to
cause the General Partner to take such action as it deems necessary in
connection with the activities of the Partnership. On October 28, 1997, the
Partnership terminated Winthrop Management as the managing agent and appointed
an affiliate of IPT I to assume management of the property. In addition,
Insignia acquired from an affiliate of the General Partner the 200.66 Units (the
"Acquired Units") which such affiliate owned.
As a result of the Insignia Merger, AIMCO and AIMCO Properties, L.P., a Delaware
limited partnership and the operating partnership of AIMCO ("AIMCO OP") acquired
control of IPT I and therefore, indirect control of the General Partner. AIMCO
and its affiliates currently own 35.31% of the limited partnership interests in
the Partnership. AIMCO is presently considering whether it will engage in an
exchange offer for additional limited partnership interests in the Partnership.
There is a substantial likelihood that, within a short period of time, AIMCO OP
will offer to acquire limited partnership interests in the Partnership for cash
or preferred units or common units of limited partnership interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-KSB shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
Item 12. Certain Relationships and Related Transactions.
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 Partnership Agreement provides for certain payments to affiliates for
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. The following transactions with the General Partner and its affiliates
were incurred during 1998 and 1997:
1998 1997
Property management fees $445 $423
Reimbursements for services of affiliates
and investor service fees (1) 272 186
(1) Included in "Reimbursements for services of affiliates" for the year ended
December 31, 1998 is approximately $5,000 in reimbursements for
construction oversight costs. There were no reimbursements for
construction oversight costs in 1997.
For the period from January 1, 1997 until October 28, 1997, Winthrop Management,
an affiliate of the General Partner, was entitled to receive 4% of gross
receipts from the Partnership's investment property as compensation for
providing property management services, or approximately $353,000.
Additionally, Winthrop Management was paid approximately $162,000 of investor
service fees for the same period of 1997. Commencing October 28, 1997, Insignia
Residential Group, Inc. began providing such property management and investor
services for the Partnership, for which they received payments of approximately
$70,000 and $24,000, respectively, for the period from October 28 through
December 31, 1997.
For the nine month period ended September 30, 1998, Insignia Residential Group,
Inc. received approximately $332,000 for property management fees and
approximately $204,000 of reimbursements for investor services fees and
accountable administrative expenses. For the three month period ended December
31, 1998, AIMCO Management received approximately $113,000 for property
management services. For this same period of 1998, an affiliate of AIMCO
received reimbursements for investor services fees and accountable
administrative expenses of approximately $68,000.
AIMCO currently owns, through an affiliate, 200.66 limited partnership units or
35.31% and 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, AIMCO 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.
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 the Annual Report as set forth in
said Index.
(b) Reports on Form 8-K filed during the quarter ended December 31, 1998:
Current Report on Form 8-K dated October 1, 1998 and filed October 16,
1998, disclosing change in control of Registrant from Insignia Financial
Group, Inc. to AIMCO.
Current Report on Form 8-K filed on October 20, 1998, disclosing change in
Registrant's certifying accountant from Reznick, Fedder and Silverman to
KPMG Peat Marwick LLP.
Current Report on Form 8-K/A filed October 28, 1998 disclosing former
auditor's concurrence with revised reporting dates.
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: IPT I LLC,
Associate General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 31, 1999
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.
/s/ Patrick J. Foye Executive Vice President Date: March 31, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999
Timothy R. Garrick and Director
Index to Exhibits
Exhibit
Number Document
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT; incorporated by reference to the Registrant's
Current Report on Form 8-K dated October 1, 1998.
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
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)
16 Letter dated October 22, 1998 from the Registrant's former
independent accountants regarding its concurrence with the
statements made by the Registrant; incorporated by reference to the
Registrant's Current Report on Form 8-K dated October.
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Riverside
Park Associates Limited Partnership 1998 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000813812
<NAME> RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,078
<SECURITIES> 0
<RECEIVABLES> 306
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 74,747
<DEPRECIATION> (34,325)
<TOTAL-ASSETS> 44,293
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 45,517
0
0
<COMMON> 0
<OTHER-SE> (2,544)
<TOTAL-LIABILITY-AND-EQUITY> 44,293
<SALES> 0
<TOTAL-REVENUES> 11,204
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,291
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,128)
<EPS-PRIMARY> (1,933)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
