FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________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, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 6,165
Receivables and deposits 2,109
Other assets 859
Investment property:
Land $ 6,357
Buildings and related personal property 71,425
77,782
Less accumulated depreciation (38,729) 39,053
$ 48,186
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 95
Tenant security deposit liabilities 227
Accrued property taxes 402
Other liabilities 228
Mortgage note payable 51,000
Partners' Deficit:
General partner $(1,246)
Limited partners (566 units issued and outstanding) (2,520) (3,766)
$ 48,186
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 3,001 $ 2,704 $ 5,953 $ 5,358
Other income 529 249 908 475
Total revenues 3,530 2,953 6,861 5,833
Expenses:
Operating 1,257 983 2,449 2,025
General and administrative 130 106 213 185
Depreciation 804 687 1,590 1,374
Interest expense 1,004 957 2,103 1,974
Property taxes 200 198 408 397
Total expenses 3,395 2,931 6,763 5,955
Income (loss) before extraordinary item 135 22 98 (122)
Extraordinary loss on early
extinguishment of debt (453) -- (453) --
Net (loss) income $ (318) $ 22 $ (355) $ (122)
Net (loss) income allocated to general
partner (3%) $ (10) $ 1 $ (11) $ (4)
Net (loss) income allocated to
limited partners (97%) (308) 21 (344) (118)
$ (318) $ 22 $ (355) $ (122)
Per limited partnership unit:
Income (loss) before extraordinary
item 231.55 37.10 167.95 (208.48)
Extraordinary loss on early
extinguishment of debt (775.72) -- (775.72) --
Net (loss) income $(544.17) $ 37.10 $(607.77) $(208.48)
Distribution per limited partnership unit $ -- $ -- $1,353.36 $ --
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 566 $ -- $47,533 $47,533
Partners' deficit at
December 31, 1999 566 $(1,211) $(1,410) $(2,621)
Distribution to partners -- (24) (766) (790)
Net loss for the six months
ended June 30, 2000 -- (11) (344) (355)
Partners' deficit at
June 30, 2000 566 $(1,246) $(2,520) $(3,766)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (355) $ (122)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 1,590 1,374
Amortization of loan costs 172 172
Extraordinary loss on early extinguishment of debt 453 --
Change in accounts:
Receivables and deposits (1,749) (347)
Other assets (10) (77)
Accounts payable (43) (105)
Tenant security deposit liabilities (4) 4
Accrued property taxes 402 397
Other liabilities (250) (187)
Net cash provided by operating activities 206 1,109
Cash flows from investing activities:
Property improvements and replacements (1,130) (485)
Net withdrawals from restricted escrows 92 580
Net cash (used in) provided by investing activities (1,038) 95
Cash flows from financing activities:
Payments on mortgage note payable (381) (337)
Repayment of mortgage note payable (44,442) --
Proceeds from mortgage note payable 51,000 --
Loan costs paid (782) --
Prepayment penalties paid (612) --
Distribution to partners (790) --
Net cash provided by (used in) financing activities 3,993 (337)
Net increase in cash and cash equivalents 3,161 867
Cash and cash equivalents at beginning of period 3,004 2,078
Cash and cash equivalents at end of period $ 6,165 $ 2,945
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,885 $ 1,802
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
e)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Riverside Park Associates
Limited Partnership (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Winthrop Financial Associates, A Limited
Partnership (the "General Partner"), the general partner of the Partnership, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
month periods ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2000. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1999.
Certain reclassifications have been made to the 1999 information to conform to
the 2000 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
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 the 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,
the associate general partner has the right to cause the General Partner to take
such action as it deems necessary in connection with the operation of the
Partnership. The General Partner does not believe that this transaction has had
or will have a material effect on the affairs and operations of the Partnership.
On February 26, 1999, the interest of the associate general partner was
transferred to NHP Management Company ("NHP"), an affiliate of AIMCO.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on NHP 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. The following transactions with NHP
and/or its affiliates were incurred during each of the six months ended June 30,
2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $272 $234
Reimbursement for services of affiliates and investor
service fees (included in general and administrative
expenses and investment properties) 235 161
<PAGE>
During the six months ended June 30, 2000 and 1999, affiliates of NHP were
entitled to receive 4% of gross receipts from the Partnership's investment
property for providing property management services. The Partnership paid to
such affiliates approximately $272,000 and $234,000 for the six months ended
June 30, 2000 and 1999, respectively.
An affiliate of NHP received reimbursements of accountable administrative
expenses amounting to approximately $235,000 and $161,000 for the six months
ended June 30, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 291.3301 limited partnership units in the
Partnership representing approximately 51.47% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its or
the General Partner's affiliates. It is possible that AIMCO or its affiliates
will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. As a result of its ownership of approximately 51.47% of the
outstanding units, AIMCO is in a position to influence all voting decisions with
respect to the Registrant. 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 their affiliation with the General Partner.
Note D - Extraordinary Loss on Early Extinguishment of Debt
On June 29, 2000, the Partnership refinanced its mortgage note payable with
Reilly Mortgage Group, Inc. The refinancing replaced mortgage indebtedness of
approximately $44,442,000 with a new mortgage of $51,000,000. The mortgage was
refinanced at a rate of 7.64% compared to the prior rate of 30 day LIBOR plus
2.75% (9.44% at June 30, 2000). Payments of approximately $415,000 are due on
the first day of each month until the loan matures on July 1, 2020 at which time
the loan will be fully amortized. Capitalized loan costs incurred for the
refinancing were approximately $782,000. Under the terms of the loan agreement,
the Partnership was going to be required to pay a repayment fee to the lender of
$470,000 upon maturity, prepayment or after acceleration, and as such, the
Partnership was accruing this amount over the life of the loan. At the time the
loan was repaid the Partnership had accrued approximately $345,000. The
difference between the accrual and the fee paid of approximately $125,000,
additional prepayment penalties of approximately $142,000 and the write-off of
unamortized loan costs of approximately $186,000 resulted in an extraordinary
loss on early extinguishment of debt of approximately $453,000.
Note E - Distributions
During the six months ended June 30, 2000 the Partnership declared and paid a
distribution from operations of approximately $790,000 (approximately $766,000
to the limited partners or $1,353.36 per limited partnership unit). No
distributions were declared or paid during the six months ended June 30, 1999.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
residential properties. The Partnership's residential property segment consists
of one apartment complex located in Fairfax County, Virginia. The Partnership
rents apartment units to tenants for terms that are typically twelve months or
less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segment are the same as those of the Partnership as described in
the Partnership's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
Segment information for the three and six months ended June 30, 2000 and 1999,
is shown in the following tables. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
Three months ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 3,001 $ -- $ 3,001
Other income 529 -- 529
Interest expense 1,004 -- 1,004
Depreciation 804 -- 804
General and administrative expense -- 130 130
Extraordinary loss on early extinguishment
of debt (453) -- (453)
Segment loss (188) (130) (318)
Six months ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 5,953 $ -- $ 5,953
Other income 908 -- 908
Interest expense 2,103 -- 2,103
Depreciation 1,590 -- 1,590
General and administrative expense -- 213 213
Extraordinary loss on early extinguishment
of debt (453) -- (453)
Segment loss (142) (213) (355)
Total assets 48,186 -- 48,186
Capital expenditures for investment
property 1,130 -- 1,130
Three months ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 2,704 $ -- $ 2,704
Other income 249 -- 249
Interest expense 957 -- 957
Depreciation 687 -- 687
General and administrative expense -- 106 106
Segment profit (loss) 128 (106) 22
Six months ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 5,358 $ -- $ 5,358
Other income 463 12 475
Interest expense 1,974 -- 1,974
Depreciation 1,374 -- 1,374
General and administrative expense -- 185 185
Segment profit (loss) 51 (173) (122)
Total assets 41,914 2,029 43,943
Capital expenditures for investment
property 485 -- 485
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership'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 Partnership'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.
The Partnership's sole asset is a 1,229 unit apartment complex known as
Riverside Park located in Fairfax County, Virginia. The property is leased to
tenants subject to leases of up to one year. Average occupancy for the first six
months of 2000 was 99% compared to 96% for the corresponding period in 1999.
Occupancy increased primarily due to a more aggressive marketing program and a
stronger local economy.
Results of Operations
The Partnership's net loss for the six months ended June 30, 2000 totaled
approximately $355,000 as compared to a net loss of approximately $122,000 for
the corresponding period of 1999. The Partnership realized a net loss for the
three months ended June 30, 2000 of approximately $318,000 compared to net
income of approximately $22,000 for the three months ended June 30, 1999. The
increase in net loss for the three and six month periods ended June 30, 2000 was
primarily due to an extraordinary loss on early extinguishment of debt as
discussed below. Income before the extraordinary loss on early extinguishment of
debt for the three and six months ended June 30, 2000 was approximately $135,000
and $98,000, respectively, as compared to a net income of approximately $22,000
and a net loss of approximately $122,000 for the three and six months ended June
30, 1999.
The increase in net income before the extraordinary loss for the three and six
months ended June 30, 2000 is attributable to an increase in total revenues,
partially offset by an increase in total expenses. Total revenues increased due
to increases in rental income and other income. The increase in rental income is
primarily the result of an increase in occupancy and average rental rates at the
property. Other income increased primarily due to an increase in utility income
and reimbursements, corporate housing income, which is a new program at the
property, and an increase in interest income due to higher cash balances in
interest bearing accounts, partially offset by a decrease in laundry income.
The increase in total expenses is due to increases in operating, depreciation,
interest and general and administrative expenses. The increase in operating
expense is due to an increase in employee bonuses, utility expenses, corporate
housing expenses, and property management fees due to the increase in rental
revenue. The increase in depreciation expense is primarily attributable to fixed
assets placed in service during the last twelve months. The increase in interest
expense is due to an increase in the variable interest rate charged on the
Partnership's variable rate mortgage loan during the six months ended June 30,
2000. The increase in general and administrative expenses is due to an increase
in general partner reimbursements and an increase in professional services
necessary to operate the Partnership. Included in general and administrative
expense for the six months ended June 30, 2000 and 1999 are reimbursements to
the associate 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.
<PAGE>
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 expenses. 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 June 30, 2000, the Partnership held cash and cash equivalents of
approximately $6,165,000, compared to approximately $2,945,000 at June 30, 1999.
Cash and cash equivalents increased approximately $3,161,000 for the six months
ended June 30, 2000 from the Partnership's year ended December 31, 1999. This
net increase was due to approximately $3,993,000 of net cash provided by
financing activities, and approximately $206,000 of cash provided by operating
activities, partially offset by approximately $1,038,000 of cash used in
investing activities. Cash provided by financing activities consisted of the
proceeds from the new loan on the Partnership's investment property, partially
offset by the repayment of the mortgage encumbering the Partnership's investment
property, distributions to the partners, loan costs and prepayment penalties
paid and payments of principle made on the mortgage encumbering the
Partnership's investment property. Cash used in investing activities consisted
primarily of property improvements and replacements, which was partially offset
by net withdrawals from restricted escrows. The Partnership invests its working
capital reserves in money market accounts.
On June 29, 2000, the Partnership refinanced its mortgage note payable with
Reilly Mortgage Group, Inc. The refinancing replaced mortgage indebtedness of
approximately $44,442,000 with a new mortgage of $51,000,000. The mortgage was
refinanced at a rate of 7.64% compared to the prior rate of 30 day LIBOR plus
2.75% (9.44% at June 30, 2000). Payments of approximately $415,000 are due on
the first day of each month until the loan matures on July 1, 2020 at which time
the loan will be fully amortized. Capitalized loan costs incurred for the
refinancing were approximately $782,000. Under the terms of the loan agreement,
the Partnership was going to be required to pay a repayment fee to the lender of
$470,000 upon maturity, prepayment or after acceleration, and as such, the
Partnership was accruing this amount over the life of the loan. At the time the
loan was repaid the Partnership had accrued approximately $345,000. The
difference between the accrual and the fee paid of approximately $125,000,
additional prepayment penalties of approximately $142,000 and the write-off of
unamortized loan costs of approximately $186,000 resulted in an extraordinary
loss on early extinguishment of debt of approximately $453,000.
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. Capital improvements planned for
the Partnership's investment property are as follows.
During the six months ended June 30, 2000, the Partnership expended
approximately $1,130,000 for capital improvements and replacements at its
investment property, consisting primarily of structural improvements, appliance
replacements, carpet and vinyl replacements, air conditioning upgrades, interior
decoration improvements, and parking area improvements. These improvements were
funded from operating cash flow. The Partnership has budgeted, but is not
limited to, capital improvements of approximately $3,587,000 for 2000 at the
property which consist of structural improvements, interior decoration
improvements, exterior building painting, parking lot improvements, carpet and
vinyl replacements, air conditioning upgrades, and ground lighting improvements.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such 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 $51,000,000 bears interest at a rate of
7.64% and is due to mature on July 1, 2020.
During the six months ended June 30, 2000 the Partnership declared and paid a
distribution from operations of approximately $790,000 (approximately $766,000
to the limited partners or $1,353.36 per limited partnership unit). No
distributions were declared or paid during the six months ended June 30, 1999.
The Partnership's distribution policy is reviewed on an annual basis. Future
cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and timing of the debt maturity,
refinancing and/or sale of the property. 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
during the remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10(e), Multifamily Note dated June 29, 2000, between
Riverside Park Associates Limited Partnership, a Delaware
limited partnership, and Reilly Mortgage Group, Inc., a
District of Columbia corporation.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant 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: NHP Management Company,
Associate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
<PAGE>
Exhibit 10 (e)
FHLMC Loan No. 002684780
MULTIFAMILY NOTE
(MULTISTATE)
US $51,000,000.00 As of June 29, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of REILLY MORTGAGE GROUP, INC., a
District of Columbia corporation, the principal sum of Fifty-One Million and
00/100 Dollars (US $51,000,000.00), with interest on the unpaid principal
balance at the annual rate of seven and six hundred forty thousandths percent
(7.640%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at
2000 Corporate Ridge, Suite 925, McLean, Virginia 22102, or such other place as
may be designated by written notice to Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Four Hundred Fifteen Thousand Two Hundred Twenty-Nine and 41/100
Dollars (US $415,229.41), shall be payable on the first day of each month
beginning on August 1, 2000, until the entire unpaid principal balance evidenced
by this Note is fully paid. Any accrued interest remaining past due for 30 days
or more shall be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on July 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
AIMCO RIVERSIDE PARK, L.L.C., a Delaware
limited liability company
By: NHP Management Company, a District of
Columbia corporation, its Manager
By:
Patti K. Fielding
Vice President
Borrower's Social Security/Employer ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS 29TH DAY OF JUNE, 2000.
REILLY MORTGAGE GROUP, INC., a District
of Columbia corporation
By:
Brenda R. Dutrow
Assistant Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in any other case, the date on which
Lender accelerates the unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of
the date 5 Business Days before the Prepayment Date, on the 9.250%
U.S. Treasury Security due February 1, 2016, as reported in The Wall
Street Journal, expressed as a decimal calculated to five digits. In
the event that no yield is published on the applicable date for the
Treasury Security used to determine the Assumed Reinvestment Rate,
Lender, in its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of
the applicable date. If the publication of such yield rates in The
Wall Street Journal is discontinued for any reason, Lender shall
select a security with a comparable rate and term to the Treasury
Security used to determine the Assumed Reinvestment Rate. The
selection of an alternate security pursuant to this Paragraph shall be
made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates during
the months remaining in the Yield Maintenance Period, using the
Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents in accordance with the terms of the Security Instrument.
