<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission File Number
0-17669
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NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
I.R.S. Employer Identification No. 04-2981989
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2335 North Bank Drive, Columbus, OH 43220
Registrant's Telephone Number, Including Area Code: (614) 451-9929
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.(X)
The Exhibit Index is located on page 28 of this Report.
This Report contains 38 pages.
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Page
Item 1. Business.......................................................... 3
Item 2. Properties........................................................ 4
Item 3. Legal proceedings................................................. 5
Item 4. Submission of matters to a vote of security holders............... 5
PART II
Item 5. Market for the registrant's partnership
interests and related partnership matters......................... 5
Item 6. Selected financial data........................................... 6
Item 7. Management's discussion and analysis of
financial condition and results of operations..................... 7
Item 8. Financial statements and supplementary data....................... 11
PART III
Item 9. Changes in and disagreements with accountants on
accounting and financial disclosure............................... 27
Item 10. Directors and executive officers of the registrant................ 27
Item 11. Executive compensation............................................ 27
Item 12. Security ownership of certain beneficial owners
and management.................................................... 28
Item 13. Certain relationships and related transactions.................... 28
PART IV
Item 14. Exhibits, financial statement schedules and reports
on Form 8-K....................................................... 28
FORM 10-K AVAILABLE
A copy of the National Housing Trust Limited Partnership 1997 Form 10-K, Annual
Report to the Securities and Exchange Commission, is available free of charge to
any partner by writing to:
Charles R. Santer
President
NHT, Inc.
2335 North Bank Drive
Columbus, OH 43220
2
<PAGE>
Part I
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ITEM 1 BUSINESS
National Housing Trust Limited Partnership (NHTLP), a Delaware limited
partnership (the "Investment Partnership"), was formed on July 9, 1987 to invest
in low-income housing developments throughout the United States through
acquisition of a 98.9% limited partnership interest in project specific
Operating Partnerships. NHT, Inc. (The "General Partner" or "NHT") serves as a
General Partner of the Investment Partnership and holds a .1% - 1.1% General
Partner interest in each of the Operating Partnerships. The Investment
Partnership and the Operating Partnerships are referred to collectively as the
"Partnerships".
NHT, Inc., the sole General Partner of the Investment Partnership, is a Delaware
nonprofit corporation which holds a 1% General Partner's interest in the
Investment Partnership. Shearson Lehman Hutton Low-Income Housing, Inc., a
Delaware corporation, was a Special Limited Partner in the Investment
Partnership with a .01% limited partnership interest. Effective December 1,
1997, Shearson Lehman Hutton Low-Income Housing, Inc. sold its .01% limited
partnership interest to NHT, Inc.
National Affordable Housing Trust, Inc. (the "Trust"), a Maryland nonprofit
corporation, is the sole member of the General Partner. The Trust in turn has
three members: National Church Residences, an Ohio nonprofit corporation formed
in 1961, Retirement Housing Foundation, a California nonprofit corporation also
formed in 1961, and as of March 15, 1996 Volunteers of America, Inc., a New York
nonprofit corporation formed in 1896 (the "Trust Members").
The purpose of the Investment Partnership is to acquire, hold, dispose of and
otherwise deal with limited partnership interests in Operating Partnerships
which will acquire, maintain, operate and dispose of low-income housing
developments (the "Properties"). Additionally, the purpose is to engage in any
other activities related and incidental to providing current tax benefits to
Unit holders, particularly the Low Income Housing Credit, to preserve and
protect Investment Partnership capital, and to cause the Properties to be sold
to the highest bidder who intends to preserve the Properties as affordable
housing for persons of low income.
On October 7, 1988, the Investment Partnership completed a public offering of
1,014,668 units of limited partnership interest at $20.00 per unit, from which
the Investment Partnership received gross proceeds of approximately $20,293,000.
After paying Shearson Lehman Hutton, Inc. $2,079,000 for costs related to the
offering and paying the Trust $965,000 for organizational and offering expenses,
the net proceeds of the offering available to invest in Operating Partnerships
amounted to $17,249,000.
After completion of the public offering, the Investment Partnership acquired a
98.9% limited partnership interest in 31 operating partnerships "The Operating
Partnerships". The Operating Partnerships acquire, maintain and operate the
Properties, each of which qualifies for an allocation of the low-income housing
tax credit established by the Tax Reform Act of 1986. Each Property is financed
and/or operated with one or more forms of rental or financial assistance from
the U.S. Department of Housing and Urban Development (HUD), the Rural
Development Authority (RDA), or various state and local housing finance
agencies.
The Investment Partnership does not have any employees. The General Partner
and/or its affiliates perform services for the Investment Partnership.
The principal executive offices of the Investment Partnership and NHT, Inc. are
located at 2335 North Bank Drive, Columbus, Ohio 43220, and their telephone
number is (614) 451-9929.
3
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ITEM 2 PROPERTIES
The Investment Partnership acquired a 98.9% interest in 31 Operating
Partnerships since the completion of the public offering in 1988. These
Operating Partnerships, and the states in which their respective properties are
located, the number of units and occupied units as of December 31, 1997, are
listed below:
<TABLE>
<CAPTION>
Number of Occupancy of
Partnership Name State Units Units
- ------------------------------------------------------------------- ------------ --------- ------------
<S> <C> <C> <C>
Aspen NHT Apartments Company Limited Partnership Michigan 48 46
Birch Lake NHT Apartments Company Limited Partnership Michigan 48 43
Century Place NHT Apartments Company Limited Partnership Michigan 96 90
Glendale NHT Apartments Company Limited Partnership Michigan 28 27
Lakeside NHT Apartments Company Limited Partnership Michigan 64 61
Park Terrace NHT Apartments Company Limited Partnership Michigan 48 45
Traverse Woods NHT Apartments Company Limited Partnership Michigan 48 47
Traverse Woods II NHT Apartments Company Limited Partnership Michigan 80 80
RP Limited Dividend Housing Association Limited Partnership Michigan 245 228
YM Limited Dividend Housing Association Limited Partnership Michigan 153 143
Bingham Terrace Limited Partnership Ohio 56 54
Griggs Village Limited Partnership Ohio 44 42
Hebron Village Limited Partnership Ohio 40 39
Melrose Village I Limited Partnership Ohio 56 55
Stygler Village Limited Partnership Ohio 150 145
Summit Square Limited Partnership Ohio 152 144
Washington Court House I Limited Partnership Ohio 60 60
Wildwood Village I Limited Partnership Ohio 94 91
Wildwood Village II Limited Partnership Ohio 86 81
Wildwood Village III Limited Partnership Ohio 92 86
W-C Apartments Limited Partnership Oklahoma 64 59
W-G Apartments Limited Partnership Oklahoma 47 43
W-P Apartments Limited Partnership Oklahoma 76 68
W-R Apartments Limited Partnership Oklahoma 76 76
Coal Township Limited Partnership Pennsylvania 101 98
Hazelwood Limited Partnership Pennsylvania 100 99
Mahanoy Limited Partnership Pennsylvania 125 124
West Allegheny Partners Limited Partnership Pennsylvania 45 42
Springchase Apartments Limited Partnership Texas 164 *
Trinidad Apartments Limited Partnership Texas 124 *
St. Martins Associates Washington 53 53
</TABLE>
*These two Operating Partnerships lost their Properties in a December
foreclosure sale, therefore, the year-end occupancy is listed as -0-. These
Operating Partnerships are in bankruptcy with a hearing date set for March 26,
1998 for the final resolution of cash and unsecured liabilities. It is
anticipated that these Operating Partnerships will be dissolved in 1998. (See
MD&A Properties and Note 5 to the Combined Financial Statements for more
details.)
4
<PAGE>
ITEM 3 LEGAL PROCEEDINGS
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
PART II
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ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP
INTERESTS AND RELATED PARTNERSHIP MATTERS
At December 31, 1997 there were approximately 1,100 registered holders of units
of limited partnership interest in NHTLP ("Units"). The Units were sold through
a public offering underwritten by Shearson Lehman Hutton, Inc. The Units may be
transferred only if certain requirements are satisfied; a public market for the
purchase and sale of the Units has not developed to date, and no such market is
expected to develop. The General Partner does not anticipate that the Investment
Partnership will distribute cash to holders of Units in circumstances other than
refinancing or disposition of the Investment Partnership's investments in the
Operating Partnerships.
5
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ITEM 6 SELECTED FINANCIAL DATA
The following information has been derived from the combined financial
statements of the Investment Partnership and its substantially wholly-owned
Operating Partnerships.
<TABLE>
<CAPTION>
(In thousands, except per Unit data)
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Combined Statement of Operations Data:
<S> <C> <C> <C> <C> <C>
Revenues $ 12,797 $ 12,689 $ 12,723 $ 12,566 $ 13,132
Expenses (9,911) (11,960) (9,475) (9,425) (8,970)
Depreciation and amortization (2,967) (2,995) (3,073) (3,025) (2,975)
-------- -------- -------- -------- --------
Income (loss) from rental operations (81) (2,266) 175 116 1,187
-------- -------- -------- -------- --------
Other revenues and expenses
Interest income 270 252 265 260 267
Interest expense (3,341) (3,490) (3,627) (3,639) (3,622)
-------- -------- -------- -------- --------
Net loss before extraordinary gain $ (3,152) $ (5,504) $ (3,187) $ (3,263) $ (2,168)
Extraordinary gain 2,196 - - - -
-------- -------- -------- -------- --------
Net loss $ (956) $ (5,504) $ (3,187) $ (3,263) $ (2,168)
======== ======== ======== ======== ========
Net loss per unit before extraordinary gain $ (3.10) $ (5.42) $ (3.14) $ (3.22) $ (2.14)
Extraordinary gain per unit 2.16 - - - -
-------- -------- -------- -------- --------
Net loss per Unit $ (.94) $ (5.42) $ (3.14) $ (3.22) $ (214)
======== ======== ======== ======== ========
Combined Balance Sheet Data:
Total assets $ 67,361 $ 70,340 $ 74,039 $ 76.430 $ 78,989
======== ======== ======== ======== ========
Term debt (1) $ 69,146 $ 70,824 $ 69,526 $ 68,761 $ 68,119
======== ======== ======== ======== ========
Partners' capital $ (4,649) $ (3,693) $ 1,797 $ 4,986 $ 8,367
======== ======== ======== ======== ========
Cash dividends declared per Unit $ None $ None $ None $ None $ None
======== ======== ======== ======== ========
</TABLE>
(1) Includes current maturities of term debt.
6
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
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In 1988, the Investment Partnership raised $20,293,000 in gross proceeds through
a public offering. After paying the selling, offering and organization expenses
of the offering the Investment Partnership had $17,249,000 in net proceeds. Of
the net proceeds, $260,000 was deposited in the Investment Partnership reserve
and $16,989,000 was invested in 31 Operating Partnerships. The 31 Operating
Partnerships that were acquired own low-income housing developments (the
"Properties") eligible for the low-income housing tax credit. One of the
Properties was also eligible for the historic rehabilitation tax credit. The 31
acquisitions occurred from October 1988 through March 1990. Two Operating
Partnerships (see Properties below) are anticipated to be dissolved in 1998.
Each Operating Partnership's Property qualifies for the low-income housing tax
credit (LIHTC). The LIHTC was created by the 1986 Tax Reform Act and is governed
by Section 42 of the Internal Revenue Code. The Investment Partnership serves as
a conduit of the Operating Partnerships' tax credits, passive losses, portfolio
income and other tax information to the holders of Units of limited partnership
interest in the Investment Partnership (the "Unit holders"). The tax credits are
allocated to the Unit holders for 10 years after a property has been placed in
service and rented up. The tax credits were first allocated to Unit holders in
1988 and are anticipated to continue until 2001. An analysis of future tax
credits anticipated based upon current information and assuming no changes in
the Operating and Investment Partnership indicates an estimate of future tax
credits for the Qualifying Unit holders who received the 1990 acceleration to be
as follows: approximately $2.65 of credit per unit in 1998; approximately $2.12
of credit per unit in 1999; approximately $ .36 of credit per unit in 2000; and
approximately $ .20 of credit per unit in 2001. In addition, in order for a
Property to qualify for the tax credits, the Property must be utilized as a low-
income property for 15 years before it can be sold. The General Partner
anticipates the Properties will be sold in the years 2003 through 2008.
The Investment Partnership elected a special option available in 1990 to
accelerate the LIHTC for individuals who had an interest in the Investment
Partnership before October 26, 1990. Qualifying Unit holders received a tax
credit of 150% of the credit otherwise allowable for the first tax year ending
December 31, 1990. The remaining tax credit available for 1991 and subsequent
tax years is being reduced on a pro rata basis by the amount of the 1990
increased credit. Non-qualifying Unit holders will receive the original
unaccelerated tax credit for the remaining qualifying tax years of their
investment.
In the year 2000, many existing computer programs that use only two digits
(rather than four) to identify a year in the date field could fail or create
erroneous results if not corrected. This computer program flaw is expected to
affect virtually all companies and organizations, including governmental
agencies with which the Operating Partnerships have substantial activities. The
Partnership plans to communicate with all of its significant suppliers to
determine the extent to which the Partnership's interface systems are vulnerable
to those third parties' failure to remediate their own year 2000 issues. There
can be no guarantee that the systems of other companies on which the
Partnership's systems rely will be timely converted and would not have an
adverse effect on the Partnership's systems. The Partnership cannot quantify the
potential costs and uncertainties associated with this computer program flaw at
this time and the impact, if any. The Partnership is currently implementing
updated accounting software to accommodate year 2000 issues and anticipates
completing the year 2000 project before year 2000.
Properties
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As of December 31, 1997, average occupancy of the Properties was 96%.
7
<PAGE>
Two properties located in Ft. Worth, Texas had experienced cash flow
difficulties and had experienced a decline in value (See Notes 1 and 5 of the
Combined Financial Statements). During 1993, the General Partner resolved a
dispute with a former Managing General Partner who had not made mortgage
payments on one of the properties and failed to comply with its Operating
Deficit Guarantee. Per an agreement completed in May 1993, the former Managing
General Partner paid $60,000.
Due to the nonpayment of the two properties' mortgages by the former Managing
General Partner, the mortgages were assigned to the U.S. Department of Housing
and Urban Development (HUD). In September 1995, HUD auctioned off the mortgage
loans for these properties. The General Partner bid on the mortgage loans, but a
Texas bank was the successful bidder. The General Partner attempted to negotiate
with the bank seeking a consensual agreement to restructure the debt. The bank
responded with a notice dated March 12, 1996 that the bank accelerated the
maturity of the indebtedness under the Notes, demanded payment in full and gave
notice that if the indebtedness is not paid in full, the bank would cause the
trustee under the deeds of trust securing the Notes to conduct a foreclosure
sale on April 2, 1996.
The General Partner, after evaluating the consequences of foreclosure and as
part of a strategy to minimize the effect to the investors, filed on March 26,
1996 with respect to Trinidad Apartments Limited Partnership and on March 28,
1996 with respect to Springchase Apartments Limited Partnership in the Northern
District of Texas, Fort Worth Division, Case #496-41284 and Case #496-4136
respectfully, petitions for relief under Chapter 11 to enable the Operating
Partnerships to reorganize. A hearing was commenced on June 5, 1997 and was
continued on July 21, 1997 and August 20, 1997. On October 22, 1997, the Court
entered an order denying confirmation of the plans of reorganization and granted
the bank relief from the automatic stay of foreclosure. On December 2, 1997, a
foreclosure sale was held and the Properties were transferred to the bank.
Each investor's tax situation is different, and the consequences of foreclosure
will be different based upon each investor's previous use of tax credits and
passive losses, and its individual tax situation. However, in general, a
foreclosure will cause: a recapture of a portion of the tax credits previously
received by the investors; the reduction of tax credits in future years; an
interest charge under the Internal Revenue Code on tax credits recaptured; and a
tax gain on disposition of the property as a result of the foreclosure. The
December 31, 1997 Schedule K-1 includes a 48 cents per unit recapture of tax
credits with a corresponding estimated interest charge of 23 cents per unit. In
addition, the passive gain relating to the disposition of the property as a
result of foreclosure is less than the 1997 passive losses passed through from
the remaining 29 Operating Partnerships. Future tax credits will be reduced in
each of 1998, 1999, 2000, and 2001 by the loss of the two properties' credits.
This reduction is estimated to be approximately 19 cents per unit. (For an
estimate of future credits after this reduction see General above in the MD&A).
Currently, these Texas Operating Partnerships are in the process of attempting
to dismiss the bankruptcy. A hearing has been set for March 26, 1998 that to
address resolution of the cash held by the Operating Partnerships and any
unsecured liabilities. It is anticipated these Texas Operating Partnerships will
be dissolved in 1998 with no distributions expected to the unit holders.
Liquidity and Capital Resources
- -------------------------------
Liquidity is defined as an Operating Partnership's ability to meet its current
and long-term financial obligations. If a Property were to lose its governmental
rent, interest subsidy or mortgage insurance, the Operating Partnership holding
such Property might be unable to fund expenses on an ongoing basis.
Liquidity shortfalls might be covered by new federal governmental subsidy
programs, by state and local agencies, by funds from the Investment Partnership
reserve, or general partner operating deficit guarantees, although there is no
assurance that such sources would be available or, if available, sufficient to
cover any liquidity shortfall. A liquidity shortfall, for whatever reason, might
result in a sale, refinancing, or foreclosure of the Property, any one of which
could have material adverse tax consequences to a Unit holder, including a
partial recapture of previously allocated low-income housing tax credits.
8
<PAGE>
Material changes have been made and additional changes have been proposed by
various Members of Congress and the Clinton Administration in the programs of
the U.S. Department of Housing and Urban Development. The Multifamily Assisted
Housing Reform and Affordability Act of 1997, Public Law 105-65, effective
October 1, 1997, continued for fiscal year 1998 (October 1, 1997 through
September 30, 1998) a debt restructuring demonstration first enacted for fiscal
year 1997. Under the demonstration program, HUD provides short-term renewals for
Section 8 assistance contracts so long as the subsidized rents on the properties
do not exceed 120% of HUD-published Fair Market Rents (FMRs) for the market
areas in which the properties are located. With respect to most properties with
rents in excess of 120% of FMRs and Section 8 contracts that expire in fiscal
year 1998, Public Law 105-65 provides that subsided rent levels may be reduced
to market levels and the debt may be restructured into two mortgages. The first
mortgage is set at a level supportable by the lower subsidized rents, and the
second mortgage is payable only out of cash flow after other approved expenses
and sale or refinancing proceeds. In many cases, the rent subsidies will become
tenant-based, meaning that the subsidies may move with the tenants. However, for
certain projects, such as those that predominately serve elderly or disabled
families or are located in markets with an inadequate supply of affordable
housing, the rent subsidies may continue to be project-based.
Participation in the restructuring program is voluntary, in that the owner may
decline to extend the Section 8 assistance contract. Owners who have engaged in
adverse financial or managerial actions are barred from participating in the
restructuring program.
The demonstration program becomes a permanent program in fiscal year 1999.
Whereas the demonstration program is limited to properties with rents in excess
of 120% or FMRs, the permanent program will be applicable to all projects with
rents above those of comparable properties in local markets. HUD will enter into
contracts to carry out the restructuring with state housing finance agencies and
others who will have authority to set rents above the comparable rents for 20%
of their inventory each year. These rents would be based on approved project
budgets, and would be capped at 120% of FMRs, except for up to 5% of the
inventory, which could have budget-based rents above 120% of FMRs based on a
showing of special need.
The Operating Partnerships own twelve Properties whose Section 8 contracts will
expire in fiscal year 1998, of which four have rents in excess of 120% of FMRs.
The Section 8 contracts for these twelve Properties have been or are expected to
be renewed with HUD until at least the end of fiscal year 1999. In addition, one
other Property owned by an Operating Partnership has a Section 8 contract with
rents in excess of 120% of FMRs that expire after fiscal year 1999. In a number
of other Properties, rents may be above comparable rents as determined by HUD
and therefore could be subject to HUD restructuring. The General Partner will
seek to renew all expiring Section 8 contracts, and if required or appropriate,
the General Partner will participate in the program to restructure loans and
rent subsidies.
These changes could affect demand for and cash flow of many of the Properties,
as well as potentially create debt forgiveness taxable income. Moreover, a shift
to tenant-based subsidies could lead over time to lower occupancies and lower
rents, adversely affecting cash flow. The General Partner is preparing for the
potential impact of the restructuring of HUD programs and is monitoring the
development of HUD policy guidance and legislation. The General Partner is
unable to predict with certainty the impact of HUD program restructuring on the
Operating Partnerships, but it is possible that a restructuring could have a
material adverse effect on one or more of the Operating Partnerships, which in
turn could have a material adverse effect on the Investment Partnership.
At December 31, 1997 assets limited as to use were $5,388,000. The assets were
composed of the Investment Partnership reserve of $317,000 and Operating
Partnership reserves of $5,071,000. The Investment Partnership reserves are
available to fund repairs and maintenance as well as operational expenses, while
the reserves maintained by an Operating Partnership are typically available only
for the Property owned by such Operating Partnership. Historically, the
Investment Partnership reserve has been available to fund obligations of the
Investment Partnership, including the management fee payable by the Investment
Partnership to the General Partner. As of December 31, 1997 the General Partner
has voluntarily deferred payment of $378,000 of its Management Fee due to a
reduced level of the Investment Partnership reserve. The General Partner is
again considering voluntarily deferring payment of a portion of its fee in 1998.
There can be no assurance, however, that the Investment Partnership reserve will
be
9
<PAGE>
sufficient to satisfy the liquidity requirements of any given Operating
Partnership in the event that the reserves of such Operating Partnership are
insufficient for this purpose. The deposits and withdrawals from the Operating
Partnership reserves are generally regulated by a governing federal, state or
local agency.
Low-income housing projects frequently generate limited cash flow and,
therefore, the potential for cash flow deficits exists. The General Partner does
not anticipate that the Investment Partnership will distribute cash to Unit
holders in circumstances other than refinancing or disposition of its
investments in the Operating Partnerships.
Results of Operations
- ---------------------
The 1997 net loss of $956,000 decreased 83% from the 1996 net loss of
$5,504,000, while the 1996 net loss increased 73% from the 1995 net loss of
$3,187,000. The operational reasons for the differences are discussed below.
An extraordinary gain of $2,196,000 was recorded in 1997 as a result of the
foreclosure and debt extinguishment on the two Fort Worth, Texas properties (see
Note 5).
An impairment loss of $2,300,000 was recorded in 1996 for the two Fort Worth,
Texas properties. (see Note 1).
During 1997, 1996 and 1995, total revenue was $12,797,000, $12,689,000 and
$12,723,000, respectively. Rental income increased $108,000 (.8%) in 1997
compared to 1996 and decreased $34,000 (.3%) in 1996 compared to 1995.
Total expenses exclusive of depreciation, interest and impairment loss for 1997,
1996, and 1995 were $9,911,000, $9,660,000 and $9,475,000, respectively. The
$251,000 (2.6%) increase in expenses between 1997 and 1996 was primarily due to
a $143,000 (7.9%) increase in administrative expenses, and a $88,000 (3.1%)
increase in operating and maintenance expense. The $185,000 (2.0%) increase in
expenses between 1996 and 1995 was primarily due to a $80,000 (4.7%) increase in
administrative expenses, and a $96,000 (5.7%) increase in utility expenses.
The administrative expense increases in 1997 are primarily attributable to an
increase in site staff to provide more services at several of the properties and
an increase in legal expense. The operating and maintenance increases in 1997
primarily relate to an increase in maintenance and repairs on many of the
properties to improve the facilities. The administrative expense increases in
1996 are primarily attributable to the increased cost of social services and of
salary expenses relating to repairs and maintenance. The utility expense
increases in 1996 primarily relate to the hot, dry summer in Oklahoma and
increased water bills at the Michigan properties.
During the past three year period, rental income, after the HUD rent
adjustments, has been increasing an average of (.6%) an increase which has not
been sufficient to cover increases in expenses (excluding depreciation, interest
and impairment loss) of (1.7%). The primary expense categories that have been
steadily increasing are administration (4.1%) and utilities (2.5%). To date,
inflation has not had a significant impact on the Partnerships' combined
operations. However, rent levels of the Properties are generally limited by the
requirements of the low-income housing tax credit and are subject to strict
governmental regulation. In the event of significant inflation, the Operating
Partnerships may be unable to increase rents sufficiently to compensate for
increases in expenses. Due to the changes in HUD programs, future increases in
subsidy income may be limited. Overall, the Properties are in good physical
condition after taking into account the planned repairs and maintenance
discussed above and are producing positive cash flow. The managing general
partners and management companies are consistently seeking means to improve
operational results.
10
<PAGE>
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The combined financial statements of National Housing Trust Limited Partnership
and its substantially wholly-owned Operating Partnerships as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 are listed below and included on pages 12 through 26 of this report.
<TABLE>
<CAPTION>
Audited Combined Financial Statements
<S> <C>
Report of Independent Auditors - Ernst & Young LLP............................................. 12
Combined Balance Sheets........................................................................ 13
Combined Statements of Operations.............................................................. 15
Combined Statements of Partners' Deficit....................................................... 16
Combined Statements of Cash Flows.............................................................. 17
Notes to Combined Financial Statements......................................................... 19
Financial Statements Schedules -- Schedule I................................................... 32
Financial Statements Schedules -- Schedule III................................................. 34
</TABLE>
11
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
National Housing Trust Limited Partnership
We have audited the accompanying combined balance sheets of National Housing
Trust Limited Partnership and its substantially wholly-owned Operating
Partnerships (the Partnership) as of December 31, 1997 and 1996, and the related
combined statements of operations, partners' deficit, and cash flows for each of
the three years in the period ended December 31, 1997 and the financial
statement schedules listed in the accompanying index. These combined financial
statements and schedules are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these combined financial
statements and schedules based on our audits. We did not audit the financial
statements of 12 substantially wholly-owned Operating Partnerships, which
statements reflect total assets of $26,689,518 and $29,222,434 at December 31,
1997 and 1996, respectively, and total revenues of $5,623,499, $5,752,895 and
$5,716,433 for the years ended December 31, 1997, 1996 and 1995, respectively.
Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to data included for
those substantially wholly-owned Operating Partnerships, is based solely on the
reports of the other auditors.
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 and schedules. 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 and the reports of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the combined financial position of National Housing Trust Limited Partnership
and its substantially wholly-owned Operating Partnerships at December 31, 1997
and 1996, and the combined results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles. Further, in our opinion, based
on our audits and the reports of other auditors, the financial statement
schedules referred to above, when considered in relation to the combined
financial statements taken as a whole, present fairly in all material respects
the information set for therein.
ERNST & YOUNG LLP
Columbus, Ohio
March 19, 1998
12
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED BALANCE SHEETS, DECEMBER 31, 1997 AND 1996
(In Thousands)
<TABLE>
<CAPTION>
ASSETS December 31
- --------------------------------------------------- -------------------------------------
1997 1996
--------- ---------
Current assets:
<S> <C> <C>
Cash and cash equivalents (Note 5) $ 968 $ 1,313
Tenants' security deposits 429 446
Mortgage escrow deposits 648 620
Prepaid expenses and other assets 765 731
--------- ---------
Total current assets 2,810 3,110
--------- ---------
Assets limited as to use 5,388 5,146
--------- ---------
Rental property (Notes 3 and 5):
Buildings and improvements 75,962 75,900
Furniture and equipment 2,521 2,523
--------- ---------
78,483 78,423
Less accumulated depreciation (23,086) (20,379)
--------- ---------
55,397 58,044
Land 3,719 3,968
--------- ---------
59,116 62,012
Prepaid land leases, affiliates, less current
maturities (Note 2) 47 72
--------- ---------
Total assets $ 67,361 $ 70,340
========= =========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements.
13
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED BALANCE SHEETS, CONTINUED
(In Thousands, except Investment Units)
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT December 31
- --------------------------------------------------- -----------------------------------
1997 1996
-------- --------
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 2,190 $ 1,944
Rents received in advance 35 36
Deposits held 438 461
Accrued interest, mortgage notes payable 201 255
Current maturities of term debt (Note 3) 1,008 933
-------- --------
Total current liabilities 3,872 3,629
-------- --------
Term debt, less current maturities (Note 3):
Mortgage notes payable 40,938 41,903
Promissory notes, including accrued
interest payable of $9,559 and
$8,004 in 1997 and 1996, respectively 27,200 24,893
-------- --------
68,138 66,796
-------- --------
Liabilities subject to compromise (Note 5): - 3,608
-------- --------
Partners' deficit:
General Partners:
NHT, Inc. (9) (8)
Other operating General Partners 5 14
Limited partners:
Issued and outstanding 1,014,668
investment units (4,645) (3,699)
-------- --------
(4,649) (3,693)
-------- --------
Total liabilities and partners' deficit $ 67,361 $ 70,340
======== ========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements.
14
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In Thousands, except per Unit Amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------
1997 1996 1995
-------- ------------- --------
<S> <C> <C> <C>
Revenues (Notes 4 and 5):
Rental revenues $ 12,456 $ 12,434 $ 12,365
Other income 341 255 358
-------- ------------- --------
Total revenues 12,797 12,689 12,723
-------- ------------- --------
Expenses:
Administration 1,942 1,799 1,719
Operating and maintenance 2,961 2,873 2,905
Management fees, including $814, $756 and $814 to
affiliates (Note 2) 1,071 1,026 1,027
Partnership asset management fees, affiliates (Note 2) 318 315 307
Utilities 1,754 1,777 1,681
Taxes and insurance 1,865 1,870 1,836
Depreciation and amortization 2,967 2,995 3,073
Impairment loss (Note 1) - 2,300 -
-------- ------------- --------
Total expenses 12,878 14,955 12,548
-------- ------------- --------
Income (loss) from rental operations (81) (2,266) 175
-------- ------------- --------
Other revenues and (expenses):
Interest income 270 252 265
Interest expense (3,341) (3,490) (3,627)
-------- ------------- --------
Net loss before extraordinary gain (3,152) (5,504) (3,187)
Extraordinary gain (Note 5) 2,196 - -
-------- ------------- --------
Net loss $ (956) $ (5,504) $ (3,187)
======== ============= ========
Net loss per limited partnership unit before extraordinary
gain $ (3.10) $ (5.42) $ (3.14)
Extraordinary gain per limited partnership unit 2.16 - -
-------- ------------- --------
Net loss per limited partnership unit $ (.94) $ (5.42) $ (3.14)
======== ============= ========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements
15
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF PARTNERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
GENERAL
PARTNERS' INTEREST LIMITED PARTNERS' INTEREST TOTAL
------------------------------- ------------------------------------------- -----------
Other General Investment Operating Partners'
NHT, Inc. Partners Partnership Partnerships Total Deficit
----------- ---------- ------------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances as of January $ 2 $ 87 $ 859 $ 4,038 $ 4,897 $ 4,986
1, 1995
Allocation of net loss (3) (32) (35) (3,117) (3,152) (3,187)
General Partner
distributions (1) (1) (2)
----------- ---------- ------------- -------------- -------- -----------
Balances as of December
31, 1995 (2) 54 824 921 1,745 1,797
Allocation of net loss (5) (55) (60) (5,384) (5,444) (5,504)
General Partner
contributions 16 16
General Partner
distributions (1) (1) (2)
----------- ---------- ------------- -------------- -------- -----------
Balances as of December
31, 1996 (8) 14 764 (4,463) (3,699) (3,693)
Allocation of net loss (1) (9) (10) (936) (946) (956)
----------- ---------- ------------- -------------- -------- -----------
Balances as of December
31, 1997 $ (9) $ 5 $ 754 $ (5,399) $ (4,645) $ (4,649)
=========== ========== ============= ============== ======== ===========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements.
16
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (956) $ (5,504) $ (3,187)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 2,967 2,995 3,073
Impairment loss - 2,300 -
Extraordinary gain (2,196) - -
Bankruptcy related reserves (216) - -
Accrued interest on promissory notes 1,555 1,379 1,376
Changes in operating assets and liabilities:
Increase in deposits,
prepaids and other assets (76) (16) (59)
Increase in accounts payable and
accrued expenses 114 285 130
Increase (decrease) in other current liabilities (78) 208 (97)
-------- -------- --------
Net cash provided by operating activities 1,114 1,647 1,236
-------- -------- --------
Investing activities:
Additions to buildings, furniture and
equipment (1,079) (1,217) (1,286)
(Deposits) withdrawals to assets
limited as to use, net (242) (180) 587
-------- -------- --------
Net cash used for investing activities (1,321) (1,397) (699)
-------- -------- --------
Financing Activities:
General Partners cash (distributions) contributions, net - 14 (2)
Additions to term debt 779 676 139
Payments of term debt (917) (757) (750)
-------- -------- --------
Net cash used for financing activities (138) (67) (613)
-------- -------- --------
Increase (decrease) in cash and cash equivalents (345) 183 (76)
Cash and cash equivalents, beginning of year 1,313 1,130 1,206
-------- -------- --------
Cash and cash equivalents, end of year $ 968 $ 1,313 $ 1,130
======== ======== ========
</TABLE>
(CONTINUED)
17
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Supplemental disclosure of cashflow information:
Cash paid during the year for interest $ 1,750 $ 1,890 $ 2,243
========= ========= =========
Supplemental Schedule of non-cash investing and
financing activities:
Assets transferred to lender in satisfaction of
indebtedness:
Liabilities cancelled $ 3,476 $ - $ -
Carrying amount of assets transferred 1,280 - -
--------- --------- ---------
$ 2,196 $ - $ -
========= ========= =========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements
18
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. Summary of the Organization and Its Significant Accounting Policies:
--------------------------------------------------------------------
National Housing Trust Limited Partnership, a Delaware limited partnership
(the "Investment Partnership" or the "Partnership") was formed on July 9,
1987 to invest in low-income housing developments throughout the United
States through the acquisition of a 98.9% limited partnership interest in
project specific Operating Partnerships. NHT, Inc. (The "General Partner" or
"NHT") serves as a General Partner of the Investment Partnership and holds a
.1% - 1.1% General Partner interest in each of the Operating Partnerships.
The Investment Partnership and the Operating Partnerships are referred to
collectively as the "Partnerships".
NHT, Inc., the sole General Partner of the Investment Partnership is a
Delaware nonprofit corporation which holds a 1% General Partner's interest
in the Investment Partnership. Shearson Lehman Hutton Low-Income Housing,
Inc., a Delaware corporation, was a Special Limited Partner in the
Investment Partnership with a .01% limited partnership interest. Effective
December 1, 1997, Shearson Lehman Hutton Low-Income Housing, Inc. sold its
.1% limited partnership interest to NHT, Inc.
The Operating Partnerships acquire, maintain and operate low-income housing
developments that are eligible for and have been allocated the low-income
housing tax credit established by the Tax Reform Act of 1986. Each housing
project is financed and/or operated with one or more forms of rental or
financial assistance from the U.S. Department of Housing and Urban
Development (HUD), the Rural Development Authority (RDA), or various
state/local housing finance agencies. Under the terms of the regulatory
agreements executed in connection with obtaining the mortgage loans, the
Operating Partnerships are regulated as to rental charges, operating methods
and cash distributions to partners.
National Affordable Housing Trust, Inc. (the "Trust") nonprofit corporation,
is the sole member of the General Partner. The Trust in turn has three
members: National Church Residences, an Ohio nonprofit corporation formed in
1961, Retirement Housing Foundation, a California nonprofit corporation also
formed in 1961, and as of March 15, 1996 Volunteers of America, Inc., a New
York nonprofit corporation formed in 1896 (the "Trust Members").
On October 7, 1988, the Investment Partnership completed a public offering
of 1,014,668 units of limited partnership interests at $20.00 per unit, from
which the Investment Partnership received gross proceeds of approximately
$20,293,000. After paying Shearson Lehman Hutton, Inc. $2,079,000 for costs
related to the offering and paying the Trust $965,000 for organizational and
offering expenses, the net proceeds of the offering were $17,249,000.
After completion of the public offering, the Partnership acquired a 98.9%
limited partnership interest in 31 Operating Partnerships. No acquisitions
occurred during 1997, 1996 or 1995. The two Texas Operating Partnerships are
anticipated to be dissolved in 1998 (see Note 5).
Annual distributions, if any, from the Operating Partnerships are limited
under the terms of various agreements with governmental agencies. Any cash
available for distribution from the Operating Partnerships will be
distributed 98.9% to the Investment Partnership and 1.1% to the General
Partners. Any Investment Partnership net income (loss), or cash available
for distribution prior to December 1, 1997 will be distributed 98.99% to
unit holders, .01% to the Special Limited Partner and 1% to NHT, Inc.
Subsequent to December 1, 1997, any Investment Partnership net income
(loss), or cash available for distribution will be distributed 98.99% to
unit holders and 1.1% to NHT, Inc. Cash distributions to Partners, if any,
shall be made at such time or times as the General Partner may determine.
Net loss per limited partnership unit is based on the average number of
limited partnership units outstanding during the period of operating
activity.
19
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Principles of Combination:
--------------------------
The combined financial statements include the accounts of the Investment
Partnership and Operating Partnerships in which it has acquired 98.9% limited
partnership interests. The Investment Partnership does not have any
significant liability to the Operating Partnerships beyond its original
investment, but does have control over certain aspects of the Operating
Partnerships either through the operation of the various partnership agreements
or through NHT, which is a general partner in both the Investment Partnership
and Operating Partnerships. Combined financial statements have been presented
because of the Investment Partnership's more than significant influence over
the Operating Partnerships. All related intercompany accounts and transactions
have been eliminated. Each of the Operating Partnerships has no significant
assets other than an apartment complex encumbered by mortgage debt, and related
cash reserves and mortgage escrow deposits. The assets of any Operating
Partnership are not available for the benefit of any other Operating
Partnership or for the benefit of the Investment Partnership.
The Operating Partnerships that are included in the combined financial
statements are the following:
<TABLE>
<CAPTION>
Date
Partnership Name State Acquired
- ---------------- ----- --------
<S> <C> <C>
Stygler Village Limited Partnership Ohio 10/07/88
St. Martins Associates Washington 01/31/89
W-C Apartments Limited Partnership Oklahoma 03/02/89
W-G Apartments Limited Partnership Oklahoma 03/02/89
W-P Apartments Limited Partnership Oklahoma 03/02/89
W-R Apartments Limited Partnership Oklahoma 03/02/89
Springchase Apartments Limited Partnership (Note 5) Texas 10/31/89
Trinidad Apartments Limited Partnership (Note 5) Texas 10/31/89
Wildwood Village I Limited Partnership Ohio 12/01/89
Wildwood Village II Limited Partnership Ohio 12/01/89
Wildwood Village III Limited Partnership Ohio 12/01/89
Melrose Village I Limited Partnership Ohio 12/01/89
Summit Square Limited Partnership Ohio 12/01/89
Washington Court House I Limited Partnership Ohio 12/01/89
Griggs Village Limited Partnership Ohio 12/01/89
Hebron Village Limited Partnership Ohio 12/01/89
Aspen NHT Apartments Company Limited Partnership Michigan 12/28/89
Birch Lake NHT Apartments Company Limited Partnership Michigan 12/28/89
Century Place NHT Apartments Company Limited Partnership Michigan 12/28/89
Glendale NHT Apartments Company Limited Partnership Michigan 12/28/89
Lakeside NHT Apartments Company Limited Partnership Michigan 12/28/89
Park Terrace NHT Apartments Company Limited Partnership Michigan 12/28/89
Traverse Woods NHT Apartments Company Limited Partnership Michigan 12/28/89
Traverse Woods II NHT Apartments Company Limited Partnership Michigan 12/28/89
Bingham Terrace Limited Partnership Ohio 12/28/89
Coal Township Limited Partnership Pennsylvania 12/29/89
Hazelwood Limited Partnership Pennsylvania 12/29/89
Mahanoy Limited Partnership Pennsylvania 12/29/89
RP Limited Dividend Housing Association Limited Partnership Michigan 12/31/89
YM Limited Dividend Housing Association Limited Partnership Michigan 12/31/89
West Allegheny Partners Limited Partnership Pennsylvania 03/27/90
</TABLE>
20
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Cash Equivalents:
-----------------
For purposes of the combined statement of cash flows, the Investment
Partnership and its Operating Partnerships define cash equivalents as short-
term, highly liquid investments with original maturities of three months or
less when purchased.
Assets Limited as to Use:
-------------------------
Assets limited as to use consisted of Operating Partnerships' property reserves
of $5,071,000 and $4,867,000 in 1997 and 1996, respectively and Investment
Partnership reserves of $ 317,000 and $279,000 in 1997 and 1996, respectively.
Property reserves represent amounts required by HUD or other governmental
agencies to be maintained with respect to each of the individual properties
acquired by the Operating Partnerships. Withdrawals are subject to written
permission of the governmental agency. Under the applicable governmental
regulations, the property reserves maintained with respect to each individual
property are not available as supplementary capital for any other property or
for the Investment Partnership. The purpose of these reserves is to ensure
funding is available for repairs and other expenditures which may be needed for
the designated property. At December 31, 1997 and 1996, these assets were
maintained in demand deposit accounts with various financial institutions.
Investment Partnership reserves represent the amount that is available to
supplement the Operating Partnerships' property reserves, or to pay certain
operating expenses of the Investment Partnership. At December 31, 1997 and 1996
these assets were invested in certificates of deposits, U.S. government
obligations, commercial paper, demand deposit and money market accounts.
The carrying amount of reserves approximated market value at December 31, 1997
and 1996.
Reclassifications:
------------------
Certain 1996 and 1995 amounts have been reclassified to conform to the 1997
presentation.
Rental Property:
----------------
Rental property is held for investment and is recorded at cost, net of any
provisions for value impairment. Upon the sale, retirement or disposition of
assets the carrying value and related accumulated depreciation are eliminated
from the accounts and any resulting gain or loss is recorded.
Depreciation is computed on the straight-line and accelerated methods using
estimated useful lives of 27.5 years in general for buildings, 25 years for
improvements, and 5 to 10 years for furniture and equipment.
Income Taxes:
-------------
The Partnership is not taxed on its income. The partners are taxed in their
individual capacities upon their share of the Partnership's taxable loss.
During 1997, 1996, and 1995, the following items related to low-income housing
tax credits were generated by the Partnership:
(In Thousands) 1997 1996 1995
---- ---- ----
Low-income housing tax credits $2,769 $2,957 $2,952
Recapture credits and related interest $ (722) - -
21
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Income Taxes (continued):
-------------------------
The Revenue Reconciliation Act of 1990 permitted the Partnership to accelerate
low-income housing tax credits to individual taxpayers who held interests on
October 26, 1990. Consequently, the Partnership has passed the accelerated
credit through to all qualifying partners of record on October 26, 1990. During
1990, the accelerated low-income housing tax credit was $4,104,000. The housing
credit for subsequent tax years must be reduced on a pro rata basis by the
amount of the increased credit. Non-qualifying unit holders will receive the
original unaccelerated low-income housing tax credit for the remaining
qualifying tax years of their investment.
Use of Estimates:
-----------------
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments:
------------------------------------
The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Financial Accounting Standards
Board Statement No. 107, Disclosure About Fair Value of Financial Instruments.
Deposits and Assets Limited As To Use are invested in short-term liquid
investments, generally less than one year; accordingly, the fair values of
these assets approximate their carrying values.
The other financial instruments in which the Partnerships have an interest are
the various term debt related to the properties owned by the Operating
Partnerships. The debt consists of (1) mortgage debt provided by and or
insured by agencies such as Rural Development Authority (RDA), The Department
of Housing and Urban Development (HUD), and various state housing authorities,
and (2) promissory notes. The promissory notes, a substantial portion of which
are collateralized by second mortgages, generally provide for repayment only
from cash flow or refinancing of the related properties. In addition, the debt
agreements contain various restrictions including limiting annual distributions
to partners and requiring the rental of units to low-income individuals and/or
families. Accordingly, management has determined that there is not a
meaningful market for debt with the provisions as described above, and given
the unique aspects of the debt, believes that determining a reasonable estimate
of fair value would not be practicable without incurring excessive costs.
Impairment of Long-lived Assets:
--------------------------------
During 1996, an impairment loss in the amount of $2,300,000 was recorded for
two apartment projects which were eventually transferred to the mortgage holder
during 1997. The loss was recorded under the requirements of Financial
Accounting Standards Board Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". FAS No. 121
requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the assets' carrying amount. Indicators
present during 1996 included the Operating Partnerships' inability to re-
negotiate the terms of the mortgage debt, which was delinquent, the subsequent
sale of the mortgages to a third party who demanded immediate payment, and
the filing of bankruptcy protection by the Operating Partnerships. These
indicators created uncertainty regarding the extent to which the Operating
Partnerships would realize future cash flows from the projects and,
accordingly, an impairment loss in the amount of $2,300,000 was recorded.
22
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2. Related Party Transactions:
---------------------------
Administrative Services:
------------------------
The Trust provides certain administrative services for the Investment
Partnership, for which, if charged, the Partnerships are required to
reimburse the Trust. No such charges by the Trust were made in any year
presented.
Management Fees, including Affiliates:
--------------------------------------
General partners or affiliates of general partners of the Investment and the
Operating Partnerships provide certain management, investing, and accounting
services to various Operating Partnerships for which a management fee is
charged; the amount of such fees, including incentive management fees, was
$814,000, $756,000 and $814,000 in 1997, 1996 and 1995, respectively,
including $178,000, $176,000 and $170,000 in 1997, 1996 and 1995,
respectively to an affiliate of NHT, Inc.
Partnership Management Fees, Affiliates:
----------------------------------------
The Partnership is also obligated to pay NHT, Inc. a supervisory management
fee equal to .5% of the annual gross revenues of the Operating Partnerships
in which an affiliate of a Trust member is not the property manager. This
fee amounted to $50,000, $51,000 and $51,000 in 1997, 1996 and 1995,
respectively. Additionally, the Partnership has an obligation to pay an
annual program management fee to NHT, Inc. equal to the lesser of
approximately $268,000, $264,000 and $256,000 in 1997, 1996 and 1995,
respectively or .5% of the aggregate cost of all properties acquired by the
Operating Partnerships as of December 31, 1997, 1996 and 1995. The
supervisory management fees and program management fees totaled $318,000,
$315,000 and $307,000 in 1997, 1996 and 1995, respectively. The fees paid in
1997, 1996 and 1995 were $135,000, $185,000 and $269,000, respectively. The
balance accrued for these fees was $378,000, $195,000 and $65,000 as of
December 31, 1997, 1996 and 1995, respectively.
Land Leases:
------------
Two Operating Partnerships have entered into operating land leases of 51
years and 99 years with affiliates of the general partners. The Operating
Partnerships prepaid the first ten to fifteen years of the leases at a cost
of approximately $330,000 and account for the prepaid leases using the
interest method.
3. Term Debt:
----------
Concurrent with the Investment Partnership's investment in the Operating
Partnerships, the Operating Partnerships assumed the outstanding mortgage
loans payable from the sellers and also issued promissory notes payable to
the sellers. The mortgage loans were originally issued under various
provisions of the National Housing Act from HUD, RDA, or various state/local
housing agencies. The mortgage loan agreements generally require the
Operating Partnerships to comply with the terms of regulatory agreements
with governmental agencies. These agreements govern, among other things, the
funding of replacement reserves and escrows for taxes and insurance, annual
distribution to partners and rental of units to low-income individuals and
or/families. These loans are collateralized by the Operating Partnerships'
land, buildings, and rental income. They have maturity dates ranging from
January 1999 to November 2028 and bear interest at rates varying from 7% to
11.25%.
Substantially all of the promissory notes are collateralized by second
mortgages on the rental properties owned by the Operating Partnerships, and
are primarily nonamortizing until the properties are refinanced or sold. The
notes bear interest at rates ranging from non-interest bearing to 11.25%
with principal and interest due at various dates, some of which are not
determinable as they are contingent upon certain events, such as sale or
refinancing of a property. Included in promissory notes is a note and
related accrued interest in the amount of $2,310,000 and $2,131,000 at
December 31, 1997 and 1996, which is due to an affiliate of the General
Partner.
23
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Term Debt (continued);
----------------------
Estimated principal requirements on these loans during the next five years
are (in thousands):
1998 $1,008
1999 1,008
2000 1,089
2001 1,168
2002 1,262
As a result of the defaults of mortgages on two properties as described in
Note 5, the related term debt in the amount of $2,742,000 has been
classified in liabilities subject to compromise at December 31, 1996. These
mortgages were cancelled as part of the 1997 foreclosure proceedings of the
two Texas Operating Partnerships (See Note 5).
4. Uncertainties:
--------------
HUD Housing Assistance Payments (HAP) Contracts:
------------------------------------------------
Many of the Operating Partnerships receive their revenues from HUD under the
terms of Housing Assistance Payments Contracts ("HAP Contracts"), which
provide for rental assistance payments to the Operating Partnerships on
behalf of low-income tenants who meet certain qualifications. The
Multifamily Assisted Housing Reform and Affordability Act of 1997 has
substantially modified key HUD subsidy programs. Under certain
circumstances, HUD and its agents may modify or reduce subsidy contracts and
may replace project-based subsidies with tenant vouchers. This would allow
residents to use the vouchers to pay rent at any project of their choice. At
the present time, it is not possible to determine in detail how changes in
the subsidy programs will be implemented or the impact of recent changes
upon the future operations of the Operating Partnerships and, as a result,
the Investment Partnership. The Operating Partnerships received
approximately $6,205,000, $6,273,000 and $6,100,000 of rental assistance
payments from HUD for the years ended December 31, 1997 and 1996 and 1995,
respectively, which represents 48.5%, 49.4% and 47.9% of their total
revenues for the years ended December 31, 1997, 1996 and 1995, respectively.
The Operating Partnerships own twelve Properties whose HAP contracts expire
during 1998. Management is seeking to renew all HAP contracts as they come
due.
Liquidity:
----------
Low-income housing projects, such as those owned by the Operating
Partnerships, frequently generate limited cash flow and, therefore, the
potential for cash flow deficits exist. Because of limitations imposed by
HUD and other lenders, the various reserves maintained by an Operating
Partnership are typically available only for the property owned by such
Operating Partnership. Further, the general partners of the Operating
Partnerships and Investment Partnerships have limited resources to fund
deficits which may be generated by one or more Operating Partnerships.
At December 31, 1997, three Operating Partnerships have experienced
operating deficits and with respect to one of these Operating Partnerships,
the lender agreed to defer principal payments for approximately a 12 month
period which ended in 1997 and to fund a loan for the rehabilitation of the
project.
24
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Uncertainties (continued):
--------------------------
Promissory Notes:
-----------------
As indicated in Note 3, substantially all of the promissory notes are
primarily non-amortizing until the related properties are refinanced or
sold. Most all of the notes are payable to the first mortgage lender or a
non-profit community development agency. In addition, the notes generally
provide that the payment of interest is deferred until maturity or, in
certain cases, payable from excess revenues. Fifteen of the loans are due in
the years 2004 - 2006 (principal and accrued interest of $24,341,118 at
December 31, 1997); the remaining two loans are due during the years 2028-
2032 (principal and accrued interest of $1,964,702 at December 31, 1997).
All of the loans which are due during the years 2004 - 2006 are due prior to
the maturity of the first mortgages on the properties, which generally
mature during the years 2011 -2019. The General Partner anticipates that the
Properties will be sold generally as the promissory notes comes due. If the
sales do not occur as anticipated, it is not possible to determine at the
present time whether there will be sufficient financing available to
refinance these loans.
5. Bankruptcy - Operating Partnerships:
------------------------------------
During March 1996, two Operating Partnerships which had purchased apartment
projects in Fort Worth, Texas filed for bankruptcy. The bankruptcy filing
followed unsuccessful negotiations with the lender (HUD) and the foreclosure
actions by a Texas bank which purchased the loans from HUD. During 1997,
attempts to reorganize the Operating Partnerships were unsuccessful and the
Texas bank was permitted to complete its foreclosure actions and purchase
the apartment projects at the foreclosure sales. In connection with the
foreclosure action, the Operating Partnerships were relieved of any
obligation related to the nonrecourse mortgage debt. The cash ($216,000)
that was accumulated by the Operating Partnerships is in contention and,
accordingly, has been charged against the extraordinary gain pending the
resolution of the bankruptcy hearing scheduled for March 26, 1998 to
determine the ownership of the cash.
Extraordinary Gain
------------------
For the year ended December 31, 1997, an extraordinary gain of $2,196,000
was recorded to reflect the transfer of these properties from the Operating
Partnerships and consists of the following:
Liabilities cancelled:
Mortgage notes payable $2,742,000
Accrued interest 381,000
Promissory notes 353,000
----------
3,476,000
----------
Carrying amount of assets:
Apartment projects transferred 1,037,000*
Other-net 243,000
----------
1,280,000
----------
Extraordinary gain resulting from foreclosure $2,196,000
==========
*The carrying amount approximates estimated fair value at the date of
transfer.
25
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Bankruptcy - Operating Partnerships (continued):
------------------------------------------------
Condensed Financial Information
-------------------------------
The Operating Partnerships ceased operations after the foreclosure sales and
are anticipated to be dissolved during 1998 with any remaining assets
transferred to their partners. A summary of the condensed financial
information included in the combined financial statements for the years ended
December 31, 1997, 1996 and 1995 is as follows:
YEARS ENDED DECEMBER 31
-----------------------------------------
1997 1996 1995
----------- ------------ -----------
Total Assets $ - $ 1,390,000 $ N/A
Total Liabilities $ - $ 3,791,000 $ N/A
Total Revenues $ 1,057,000 $ 1,159,000 $ 1,180,000
Net Income (Loss) $ 2,236,000 $ (2,311,000) $ (319,000)
Liabilities Subject to Compromise - December 31, 1996:
------------------------------------------------------
Under Chapter 11, certain claims (including the mortgage notes payable) against
each of the Operating Partnerships in existence prior to the filing were
automatically stayed while the Operating Partnerships continued business
operations as a debtor-in-possession. The claims have been reflected in the
combined balance sheet as "liabilities subject to compromise" and consist of
the following:
Mortgage notes payable $2,742,000
Accrued interest mortgage notes payable 381,000
Promissory notes 353,000
Accounts payable and accrued expenses 132,000
----------
$3,608,000
==========
The Operating Partnerships anticipate no additional claims resulting from
previous operations or from the bankruptcy proceedings.
26
<PAGE>
PART III
--------
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no officers and directors. Officers and trustees of the
General Partner are as follows:
<TABLE>
<CAPTION>
Name Age Office Term Expires
- ---- --- ------ ------------
<S> <C> <C> <C>
Charles R. Santer 42 President, Chief Executive Officer and Trustee 1999
Robert M. Snow 45 Vice President, Secretary and Trustee 1999
Joseph R. Kasberg 45 Assistant Treasurer and Trustee 1999
Susan E. Basting 36 Chief Financial Officer and Treasurer 1999
</TABLE>
Charles R. Santer is president and chief executive officer of the National
Affordable Housing Trust and NHT, Inc.. Previously he served as chief executive
officer of the Ohio Real Estate Commission and as president of a Columbus, Ohio
real estate company. Mr. Santer graduated from Ohio University.
Robert M. Snow is vice president of National Affordable Housing Trust, Inc. and
NHT, Inc. Mr. Snow is in charge of asset management for NHTLP and has been an
officer since 1992. Mr. Snow received a Bachelor's Degree from Lafayette
University.
Joseph R. Kasberg is vice president and chief financial officer for National
Church Residences. Mr. Kasberg, a certified public accountant, has been a
financial officer of National Affordable Housing Trust, Inc. since July 1988.
Mr. Kasberg received a Bachelor's Degree in Accounting from The Ohio State
University in 1974 and an MBA from Xavier University in 1985.
Susan E. Basting is Treasurer and Chief Financial Officer of the National
Affordable Housing Trust, Inc. and NHT, Inc. Ms. Basting, a certified public
accountant and certified management accountant, worked in public accounting and
accounting management prior to joining the staff. Ms. Basting is a graduate
of Wright State University.
ITEM 11 EXECUTIVE COMPENSATION
National Housing Trust Limited Partnership has no officers or directors.
However, as outlined in the offering, various fees and reimbursements are paid
to the General Partners and affiliates. The following is a summary of such fees
paid or accrued for the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
Fee or (In thousands)
Reimbursement Type Payee 1997 1996 1995
- ------------------ ----- ---- ---- ----
<S> <C> <C> <C> <C>
Property management fees General Partners of Operating
Partnerships $ 814 $ 756 $ 814
Partnership management NHT, Inc.
fees $ 318 $ 315 $ 307
</TABLE>
27
<PAGE>
ITEM 12 SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
None.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Partnership has not had material transactions or business relationships with
NHT, Inc. or its affiliates, except as described in Items 8, 9 and 10.
Part IV
-------
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report:
1. Financial Statements
--------------------
The combined financial statements, related notes, and accountant's
report listed below are included herein:
Page
Report of Independent Auditors - Ernst &
Young LLP 12
Combined balance sheets as of December 31,
1997 and 1996 13
Combined statements of operations for the
years ended December 31, 1997, 1996 and 1995 15
Combined statements of partners' deficit
for the years ended December 31, 1997,
1996 and 1995 16
Combined statements of cash flows for the
years ended December 31, 1997, 1996 and 1995 17
Notes to combined financial statements 19
2. Financial Statement Schedules
Schedule I 32
Schedule III 34
All other schedules have been omitted. The required information is not
present or is not present in amounts sufficient to require submission of
the schedules.
(b) Reports on 8-K:
None.
28
<PAGE>
3. Exhibits
-------------
(a) Exhibits
<TABLE>
Exhibit No. Description
----------- -----------
<S> <C>
* 3.1 Form of Amended and Restated Agreement of Limited Partnership of
the Registrant (attached to the Prospectus as Exhibit A)
* 3.2 Certificate of Limited Partnership of the Registrant.
* 10.1 Escrow Agreement between FirsTier Bank, N.A. and Registrant.
* 10.2 Form of Purchase and Sale Agreement (including form of Purchase
Money Note).
* 10.3 Form of Operating Partnership Agreement.
** 10.4 Guarantee Agreement between the Trust and the Partnership.
** 10.5 Letter Agreement between the Trust and the Selling Agent relating
to capitalization of the General Partner.
** 10.6 Letter Agreement between the Trust and the General Partner relating
to capitalization of the General Partner.
** 10.7 Letter Agreement between National Church Residences and the Selling
Agent relating to withdrawal from the Trust or from Operating
Partnerships by Retirement Housing Foundation or its affiliates.
** 10.8 Letter Agreement between Retirement Housing Foundation and the
Selling Agent relating to withdrawal from the Trust or from
Operating Partnerships by Retirement Housing Foundation or its
affiliates.
** 10.9 Letter Agreement between the Trust and the Selling Agent relating
to the repayment or refinancing of Purchase Money Notes.
** 10.10 Letter Agreement between National Church Residences that the
Selling Agent relating to the repayment or refinancing of Purchase
Money Notes.
** 10.11 Letter Agreement between Retirement Housing Foundation and the
Selling Agent relating to the repayment or refinancing of Purchase
Money Notes
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
*** 10.12(a) Purchase and Sale Agreement, with amendments, by and among Willow
Creek Apartments, Ltd., Willow Park Apartments, Ltd., Willow Garden
Apartments, Ltd. and Willow Rock Apartments, Ltd., and the March
Company dated May 6, 1988.
*** 10.13(a) Operating Partnership Agreement for W-R Apartments, L.P., dated
March 2, 1989.
*** 10.12(b) Purchase and Sale Agreement with amendments, by and among Trinidad
Apartments, and Springchase Apartments.
*** 10.13(b) Operating Partnership Agreement for Trinidad Apartments and
Springchase Apartments.
*** 10.12(c) Purchase and Sale Agreement with amendments, by and among Melrose
Village.
*** 10.13(c) Operating Partnership Agreement for Melrose Village, Limited
Partnership, dated December 1, 1989.
*** 10.12(d) Purchase and Sale Agreement with amendments, by and among Aspen
Apartments.
*** 10.13(d) Operating Partnership Agreement for Aspen NHT Apartments Limited
Partnership, dated December 28, 1989.
*** 10.12(e) Purchase and Sale Agreement with amendments, by and among Bingham
Terrace Apartments.
*** 10.13(e) Operating Partnership Agreement for Bingham Terrace Limited
Partnership, dated December 29, 1989.
*** 10.12(f) Purchase and Sale Agreement with amendments, by and among Coal
Township Elderly, Hazelwood Apartments, and Mahanoy Elderly.
*** 10.13(f) Operating Partnership Agreement for Coal Township Elderly,
Hazelwood Apartments, and Mahanoy Elderly dated December 29, 1989.
*** 10.12(g) Purchase and Sale Agreement with amendments, by and among Research
Park and Young Manor.
*** 10.13(g) Operating Partnership Agreement for RP Limited Dividend Housing
Association Limited Partnership and YM Limited Dividend Housing
Association Limited Partnership, dated December 31, 1989.
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
**** 10.12(h) Purchase and Sale Agreement with amendments, by and among West
Allegheny Partnership, L.P.
**** 10.13(h) Operating Partnership Agreement for West Allegheny Partnership,
L.P., dated March 27, 1990.
99.1 Reports of other Independent Auditors
</TABLE>
* Filed under the identical Exhibit Number in Amendment No. 2 to the
Registrant's Registration Statement on Form S-11 (Commission File
No. 33-15285) and incorporated herein by reference.
** Filed under the identical Exhibit Number on Form 10-K for the
fiscal year ended December 31, 1987 and incorporated herein by
reference.
*** Filed under the identical Exhibit Number on Form 8-Ks filed for
the 1989 Operating Partnership acquisitions identified in note #1
to the Combined Financial Statements and incorporated herein by
reference.
**** Filed under the identical Exhibit Number on Form 8-K filed for the
1990 Operating Partnership acquisition identified in note #1 to
the Combined Financial Statements and incorporated herein by
reference.
31
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT-NATIONAL HOUSING TRUST
LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Condensed Balance Sheets December 31,
------------
1997 1996
---- ----
Assets (In Thousands)
<S> <C> <C>
Current assets:
Cash $ 317 $ 279
Accounts receivable, Operating Partnerships,
net of allowance of $121 in 1997 319 548
------- -------
Total current assets 636 827
Notes receivable, Operating Partnership,
net of allowance of $283 in 1997 - 283
------- -------
$ 636 $ 1,110
======= =======
Liabilities and Partners' Capital
Current liabilities:
Accounts payable, primarily general partner $ 382 $ 200
Deficit in Operating Partnerships 4,908 4,617
Partners' Deficit (4,654) (3,707)
------- -------
$ 636 $ 1,110
======= =======
<CAPTION>
Condensed Statements of Operations Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
Revenues: (In Thousands)
<S> <C> <C> <C>
Program management fees from Operating
Partnerships $ 157 $ 157 $ 157
Interest 18 15 15
------- ------- -------
175 172 172
------- ------- -------
Expenses:
Program management fees, general partner 318 315 307
Administrative 635 58 70
------- ------- -------
953 373 377
------- ------- -------
Loss before equity in loss of Operating Partnerships
and extraordinary gain (778) (201) (205)
Equity in loss of Operating Partnerships (2,341) (5,248) (2,950)
------- ------- -------
Loss from operations before extraordinary gain (3,119) (5,449) (3,155)
Extraordinary gain 2,172 - -
------- ------- -------
Net loss $( 947) $(5,449) $(3,155)
======= ======= =======
</TABLE>
32
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT-NATIONAL HOUSING TRUST
LIMITED PARTNERSHIP (CONTINUED)
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows Years Ended December 31
--------------------------
1997 1996 1995
-------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Cash used in operating activities $ (84) $( 92) $(207)
Financing activities, distributions from Operating
Partnerships, net 122 118 99
----- ----- -----
Increase (decrease) in cash $ 38 $ 26 $(108)
===== ===== =====
</TABLE>
Notes to Condensed Financial Statements
Note A - Basis of Presentation:
In the financial statements of National Housing Trust Limited Partnership
(NHTLP), its investment in substantially wholly-owned Operating Partnerships is
stated at cost plus equity in undistributed earnings and less losses of the
Operating Partnerships since the date of acquisition.
Note B - Notes Receivable, Operating Partnership:
The notes receivable from an Operating Partnership bear interest at varying
rates, are repayable out of distributable cash flow and are due through 2006.
33
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR YEAR ENDED DECEMBER 31, 1997
( 1 OF 4)
(In Thousands)
<TABLE>
<CAPTION>
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO
PARTNERSHIP ACQUISITION
-------------------------- ---------------------- -------
PARTNERSHIP BUILDINGS &
NAME DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS LAND
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stygler Village Low income housing project $5,452 $4,717 $90
Located in Gahanna, Ohio
St. Martins Low-income housing project 1,482 2,094 95
Located in Seattle, Washington
Willow Creek Low-income housing project 1,054 $123 1,373 107 $123
Located in Bartlesville, OK
Willow Gardens Low-income housing project 1,297 94 1,630 73 94
Located in Bartlesville, OK
Willow Park Low-income housing project 1,175 157 1,513 120 157
Located in Bartlesville, OK
Willow Rock Low-income housing project 1,259 148 1,508 152 148
Located in Bartlesville, OK
Wildwood I Low-income housing project 1,118 123 1,783 78 123
Located in Columbus, OH
Wildwood II Low-income housing project 913 117 1,526 1 117
Located in Columbus, OH
Wildwood III Low-income housing project 1,045 178 1,725 15 178
Located in Columbus, OH
<CAPTION>
GROSS
AMOUNT AT WHICH CARRIED LIFE ON WHICH
AT CLOSE OF PERIOD DEPRECIATION IN LATEST
-------------------------------- INCOME
PARTNERSHIP BUILDINGS & ACCUMULATED DATE STATEMENTS
NAME DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION ACQUIRED IS COMPUTED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stygler Village Low income housing project $4,807 $4,807 $1,572 10/07/88 27 1/2 years
Located in Gahanna, Ohio
St. Martins Low-income housing project 2,189 2,189 724 1/31/89 27 1/2 years
Located in Seattle, Washington
Willow Creek Low-income housing project 1,480 1,603 475 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Gardens Low-income housing project 1,703 1,797 549 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Park Low-income housing project 1,633 1,790 523 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Rock Low-income housing project 1,660 1,808 531 3/02/89 27 1/2 years
Located in Bartlesville, OK
Wildwood I Low-income housing project 1,861 1,984 537 12/01/89 27 1/2 years
Located in Columbus, OH
Wildwood II Low-income housing project 1,527 1,644 438 12/01/89 27 1/2 years
Located in Columbus, OH
Wildwood III Low-income housing project 1,740 1,918 500 12/01/89 27 1/2 years
Located in Columbus, OH
</TABLE>
CONTINUED
34
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR YEAR ENDED DECEMBER 31, 1997
(2 OF 4)
(In Thousands)
<TABLE>
<CAPTION>
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO
PARTNERSHIP ACQUISITION
----------------------------------------------------------
PARTNERSHIP BUILDING &
NAME DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS LAND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Melrose Village Low income housing project 599 89 983 89
Located in Findlay, OH
Summit Square Low-income housing project 1,752 105 3,327 7 105
Located in Dayton, OH
Washington Court Low-income housing project 545 81 932 9 81
House Located in Washington CH, OH
Griggs Village Low-income housing project 305 36 610 (9) 36
Located in Columbus, OH
Hebron Village Low-income housing project 359 45 603 45
Located in Hebron, OH
Aspen I Low-income housing project 942 70 997 19 70
Located in Gaylord, MI
Birch Lake Low-income housing project 801 56 805 58 56
Located in Ludington, MI
Century Place Low-income housing project 1,786 138 1,990 561 138
Located in Greenville, MI
Glendale Low-income housing project 390 27 414 3 27
Located in Scottville, MI
Lakeside Low-income housing project 1,263 76 1,023 249 76
Located in Cadillac, MI
<CAPTION>
GROSS
AMOUNT AT WHICH CARRIED LIFE ON WHICH
AT CLOSE OF PERIOD DEPRECIATION IN
---------------------------- LATEST INCOME
PARTNERSHIP BUILDINGS & ACCUMULATED DATE STATEMENTS IS
NAME DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION ACQUIRED COMPUTED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Melrose Village Low income housing project 983 1,072 289 12/01/89 27 1/2 years
Located in Findlay, OH
Summit Square Low-income housing project 3,334 3,439 981 12/01/89 27 1/2 years
Located in Dayton, OH
Washington Court Low-income housing project 941 1,022 271 12/01/89 27 1/2 years
House Located in Washington CH, OH
Griggs Village Low-income housing project 601 637 176 12/01/89 27 1/2 years
Located in Columbus, OH
Hebron Village Low-income housing project 603 648 177 12/01/89 27 1/2 years
Located in Hebron, OH
Aspen I Low-income housing project 1,016 1,086 298 12/28/89 27 1/2 years
Located in Gaylord, MI
Birch Lake Low-income housing project 863 919 247 12/28/89 27 1/2 years
Located in Ludington, MI
Century Place Low-income housing project 2,551 2,689 619 12/28/89 27 1/2 years
Located in Greenville, MI
Glendale Low-income housing project 417 444 123 12/28/89 27 1/2 years
Located in Scottville, MI
Lakeside Low-income housing project 1,272 1,348 339 12/28/89 27 1/2 years
Located in Cadillac, MI
</TABLE>
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR YEAR ENDED DECEMBER 31, 1997
(3 OF 4)
(In Thousands)
<TABLE>
<CAPTION>
COST
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO
PARTNERSHIP ACQUISITION
---------------------------------------------------------------
PARTNERSHIP BUILDING &
NAME DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS LAND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Park Terrace Low income housing project 928 73 1,065 19 73
Located in Williamston, MI
Traverse Woods Low-income housing project 940 71 1,054 47 71
Located in Petoskey, MI
Traverse Woods II Low-income housing project 1,571 117 1,733 701 117
Located in Petoskey, MI
Bingham Terrace Low-income housing project 1,272 16 1,092 381 20
Located in Cadiz, OH
Coal Township Low-income housing project 4,518 150 4,511 647 150
Located in Coal Township, PA
Hazelwood Low-income housing project 4,793 200 4,379 291 200
Located in Luzerne County, PA
Mahanoy Low-income housing project 5,465 125 5,915 819 125
Located in Mahanoy City, PA
Reserch Park Low-income housing project 10,896 850 9,678 923 850
Located in Detroit, MI
Young Manor Low-income housing project 6,731 400 6,512 134 400
Located in Detroit, MI
West Allegheny Low-income housing project 2,973 50 836 4,044 50
Located in Philadelphia, PA
-----------------------------------------------------------------------------------
TOTALS
$63,624 $3,715 $66,328 $9,634 $3,719
===================================================================================
<CAPTION>
GROSS
AMOUNT AT WHICH CARRIED LIFE ON WHICH
AT CLOSE OF PERIOD DEPRECIATION IN
---------------------------------- LATEST INCOME
PARTNERSHIP BUILDINGS & ACCUMULATED DATE STATEMENTS IS
NAME DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION ACQUIRED COMPUTED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Park Terrace Low income housing project 1,084 1,157 319 12/28/89 27 1/2 years
Located in Williamston, MI
Traverse Woods Low-income housing project 1,101 1,172 324 12/28/89 27 1/2 years
Located in Petoskey, MI
Traverse Woods II Low-income housing project 2,434 2,551 594 12/28/89 27 1/2 years
Located in Petoskey, MI
Bingham Terrace Low-income housing project 1,473 1,493 274 12/29/89 40 years
Located in Cadiz, OH
Coal Township Low-income housing project 5,158 5,308 1,431 12/29/89 27 1/2 years
Located in Coal Township, PA
Hazelwood Low-income housing project 4,670 4,870 1,313 12/29/89 27 1/2 years
Located in Luzerne County, PA
Mahanoy Low-income housing project 6,734 6,859 1,880 12/29/89 27 1/2 years
Located in Mahanoy City, PA
Reserch Park Low-income housing project 10,601 11,451 2,940 12/31/89 27 1/2 years
Located in Detroit, MI
Young Manor Low-income housing project 6,646 7,046 1,960 12/31/89 27 1/2 years
Located in Detroit, MI
West Allegheny Low-income housing project 4,880 4,930 843 3/27/90 40 Years
Located in Philadelphia, PA
------------------------------------------------------------------------------------
TOTALS
$75,962 $79,681 $21,247
=================================================
</TABLE>
36
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR YEAR ENDED DECEMBER 31, 1997
(4 OF 4)
(In Thousands)
<TABLE>
<CAPTION>
December 31
--------------------------------
Real Estate: 1997 1996 1995
- ------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Balance at beginning of period: $ 79,868 $ 81,868 $ 80,788
Additions during period:
Improvements 898 1,120 1,080
Deductions during period**: (1,085) (3,120) None
-------- -------- --------
Balance at end of period*: $ 79,681 $ 79,868 $ 81,868
======== ======== ========
Accumulated Depreciation:
- -------------------------------------------
Balance at beginning of period:*** $ 18,572 $ 16,744 $ 13,981
Additions during period:
Depreciation expense*** 2,700 2,648 2,763
Deductions during period: (25) (820) None
-------- -------- --------
Balance at end of period:*** $ 21,247 $ 18,572 $ 16,744
======== ======== ========
</TABLE>
* Aggregate costs for federal income tax purposes were $79,681,000, $79,868,000
and $81,868,000 at December 31, 1997, 1996, and 1995 respectively.
** Includes deductions for impairment loss and write off of fully depreciated
assets in 1996 and primarily assets transferred to lender in 1997.
*** Amounts for 1996 represent corrected balances. Corrections had no impact on
net income or partners' capital (deficit).
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) or the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
National Housing Trust Limited Partnership
By: NHT, Inc. General Partner
Date: March 20, 1998 /s/ Charles R. Santer
-------------- ------------------------------------------
Charles R. Santer, President
and Chief Executive Officer, NHT, Inc.
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.
* * * * *
Date: March 20, 1998 By /s/ Charles R. Santer
-------------- ------------------------------------------
Charles R. Santer, Trustee
President and CEO, NHT, Inc.
* * * * *
Date: March 20, 1998 By /s/ Robert M. Snow
-------------- ------------------------------------------
Robert M. Snow, Trustee,
Vice President and Secretary, NHT, Inc.
* * * * *
Date: March 20, 1998 By /s/ Susan E. Basting
-------------- ------------------------------------------
Susan E. Basting, Trustee
Chief Financial Officer and
Treasurer, NHT, Inc.
38
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 968,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,810,000
<PP&E> 78,483,000
<DEPRECIATION> 23,086,000
<TOTAL-ASSETS> 67,361,000
<CURRENT-LIABILITIES> 3,872,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (4,649,000)
<TOTAL-LIABILITY-AND-EQUITY> 67,361,000
<SALES> 12,456,000
<TOTAL-REVENUES> 12,797,000
<CGS> 0
<TOTAL-COSTS> 12,878,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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</TABLE>
