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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, 1999
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 30 of this Report.
This Report contains 40 pages.
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NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
1999 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 7A. Quantitative and qualitative disclosures about market risk..13
Item 8. Financial statements and supplementary data.................13
PART III
Item 9. Changes in and disagreements with accountants on
accounting and financial disclosure.........................29
Item 10. Directors and executive officers of the registrant..........29
Item 11. Executive compensation......................................29
Item 12. Security ownership of certain beneficial owners
and management..............................................29
Item 13. Certain relationships and related transactions..............29
PART IV
Item 14. Exhibits, financial statement schedules and reports
on Form 8-K..................................................30
FORM 10-K AVAILABLE
A copy of the National Housing Trust Limited Partnership 1999 Form 10-K, Annual
Report to the Securities and Exchange Commission, is available free of charge to
any partner by writing to:
James A. Bowman
President
NHT, Inc.
2335 North Bank Drive
Columbus, OH 43220
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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 (the "Properties") throughout the United
States through acquisition of a 98.9% limited partnership interest in project
specific operating Partnerships ("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. 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 tax 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 ("Units") 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 fees and
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 acquire, maintain and operate the Properties, each of which
qualifies for an allocation of the low-income housing tax credit ("LIHTC")
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 (RD), 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.
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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, 1999, are
listed below:
<TABLE>
<CAPTION>
Number Occupancy
Partnership Name State of Units of Units
- ---------------------------------------------------------------- --------- -------- ---------
<S> <C> <C> <C>
Aspen NHT Apartments Company Limited Partnership Michigan 48 43
Birch Lake NHT Apartments Company Limited Partnership Michigan 48 46
Century Place NHT Apartments Company Limited Partnership Michigan 96 86
Glendale NHT Apartments Company Limited Partnership Michigan 28 23
Lakeside NHT Apartments Company Limited Partnership Michigan 64 61
Park Terrace NHT Apartments Company Limited Partnership Michigan 48 48
Traverse Woods NHT Apartments Company Limited Partnership Michigan 48 45
Traverse Woods II NHT Apartments Company Limited Partnership Michigan 80 72
RP Limited Dividend Housing Association Limited Partnership Michigan 245 192
YM Limited Dividend Housing Association Limited Partnership Michigan 153 148
Bingham Terrace Limited Partnership Ohio 56 51
Griggs Village Limited Partnership Ohio 44 42
Hebron Village Limited Partnership Ohio 40 32
Melrose Village I Limited Partnership Ohio 56 54
Stygler Village Limited Partnership Ohio 150 147
Summit Square Limited Partnership Ohio 152 145
Washington Court House I Limited Partnership Ohio 60 60
Wildwood Village I Limited Partnership Ohio 94 94
Wildwood Village II Limited Partnership Ohio 86 86
Wildwood Village III Limited Partnership Ohio 92 92
W-C Apartments Limited Partnership Oklahoma 64 55
W-G Apartments Limited Partnership Oklahoma 47 43
W-P Apartments Limited Partnership Oklahoma 76 69
W-R Apartments Limited Partnership Oklahoma 76 75
Coal Township Limited Partnership Pennsylvania 101 99
Hazelwood Limited Partnership Pennsylvania 100 100
Mahanoy Limited Partnership Pennsylvania 125 125
West Allegheny Partners Limited Partnership Pennsylvania 45 40
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 1997
foreclosure sale; therefore, the year-end occupancy is listed as -0-. These
Operating Partnerships were liquidated in 1998, having paid remaining Operating
Partnership liabilities out of available Operating Partnership cash. Any cash
in excess of liabilities was distributed to the Partnership. No distributions
will be made to Unit holders. The Springchase Apartments Limited Partnership
has been dissolved. The Trinidad Apartments Limited Partnership is expected to
be dissolved once all legal suits are resolved (See MD&A Properties and Note 5
to the Combined Financial Statements for more details.)
Note the above Properties are encumbered by substantial debt (See MD&A, Notes 3
and 4, and Schedule III for more details).
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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, 1999, 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, and there can be no assurance of any
distributions in the event of refinancing or disposition.
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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)
1999 1998 1997 1996 1995
Restated (2) Restated (2) Restated (2)
----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Combined Statement of Operations Data:
Revenues $ 12,172 12,174 $ 12,900 $ 12,699 $ 12,723
Expenses (3) (12,546) (13,176) (9,921) (11,970) (9,475)
Depreciation and amortization (2,833) (2,993) (2,967) (2,995) (3,073)
----------- ---------- ----------- ------------- -------------
Income (loss) from rental operations (3,207) (3,995) 12 (2,266) 175
----------- ---------- ----------- ------------- -------------
Other revenues and expenses
Interest income 232 273 270 252 265
Interest expense (3,542) (3,514) (3,434) (3,490) (3,627)
----------- ---------- ----------- ------------- -------------
Net loss before extraordinary gain $ (6,517) (7,236) $ (3,152) $ (5,504) $ (3,187)
Extraordinary gain - 200 2,196 - -
----------- ---------- ----------- ------------- -------------
Net loss $ (6,517) (7,036) $ (956) $ (5,504) $ (3,187)
=========== ========== =========== ============= =============
Net loss per unit before extraordinary gain $ (6.42) (7.13) $ (3.10) $ (5.42) $ (3.14)
Extraordinary gain per unit - .20 2.16 - -
----------- ---------- ----------- ------------- -------------
Net loss per Unit $ (6.42) (6.93) $ (.94) $ (5.42) $ (3.14)
=========== ========== =========== ============= =============
Combined Balance Sheet Data:
Total assets (3) $ 56,442 61,509 $ 67,437 $ 70,416 $ 74,115
=========== ========== =========== ============= =============
Term debt (1) $ 71,104 70,041 $ 69,146 $ 70,824 $ 69,526
=========== ========== =========== ============= =============
Partners' capital $ (17,922) (11,404) $ (4,353) $ (3,397) $ 2,093
=========== ========== =========== ============= =============
Cash dividends declared per Unit $ None None $ None $ None $ None
=========== ========== =========== ============= =============
</TABLE>
(1) Includes current maturities of term debt.
(2) Partners' capital at the beginning of 1995 has been restated by three of the
Operating Partnerships by a total increase of $296,000 to reflect adjustments
relating to an increase in prepaid real estate taxes of $76,000, a decrease in
real estate tax payable of $163,000, and a decrease in fee distribution payable
of $57,000. There was no impact to the Combined Statement of Operations.
(3) Expenses in 1999, 1998, and 1996 include impairment losses of $3,111,000,
$4,100,000 and 2,300,000, respectively, which also reduced Total Assets.
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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 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 were liquidated in
1998, having paid remaining Operating Partnership liabilities out of available
Operating Partnership cash. Any cash in excess of liabilities was distributed to
the Partnership. No distribution will be made to Unit holders. The Springchase
Apartments Limited Partnership has been dissolved. The Trinidad Apartments
Limited Partnership is expected to be dissolved once all legal suits are
resolved.
Each Operating Partnership's Property qualifies for the LIHTC. The LIHTC was
created by the 1986 Tax Reform Act and is governed by Section 42 of the Internal
Revenue Code. In order for a Property to qualify for the LIHTC, 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 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 LIHTCs 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. 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 LIHTC 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.
An analysis of future tax credits anticipated based upon current information and
assuming no changes in the Operating Partnerships indicates an estimate of
future tax credits for the qualifying Unit holders who received the 1990
acceleration to be as follows: approximately $ .35 of credit per unit in 2000;
and approximately $ .19 of credit per unit in 2001.
In certain respects government-assisted housing complexes differ from
conventional housing complexes. These include (a) greater financing leverage
than is usual in conventional complexes, (b) review of compliance with
construction and other standards and (c) various contingency reserves required
in connection with such government assistance programs. Government-assisted
housing is also subject to special conditions and risks including, but not
limited to, (a) general surveillance by the appropriate governmental assistance
agency, which may include the application of rental and other guidelines
affecting tenant eligibility, operating costs and rental levels, (b) maintenance
of a reserve fund for replacements in an amount paid concurrently with
amortization of the mortgage and in addition to payments of principal and
interest, restricted such that withdrawals from the fund are subject to the
prior approval of the appropriate governmental assistance agency, (c) compliance
with the HUD regulations regarding management of the premises, (d) limitations
on salability, as contained in regulatory agreements with the appropriate
governmental assistance agency, (e) limitations on rent increases, and (f) the
uncertain effects of changes in complex rules and regulations governing such
government-assisted programs, or changes in the manner in which those
regulations are interpreted.
Government assistance payments may be reduced in the event that a project rents
less than 100% of its units eligible for rental subsidies to qualified low
income tenants. HUD generally elects to reduce subsidies only in the event that
occupancy levels for qualified tenants drop below 95% for a period of two years.
Finally, HUD commitments are subject to HUD's appropriation of federal funds
sufficient to meet its obligations in any given year. At the present time,
certain legislative initiatives and governmental budget negotiations could
result in a reduction of funds
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available for the various HUD-administered housing programs and could also
result in new limitations on subsidized rent levels. This in turn could
adversely impact the net operating income generated by the Properties.
Real property investments are subject to varying degrees of risk. Revenues and
property values may be adversely affected by the general economic climate, the
local economic climate and local real estate conditions, including (i) the
perceptions of prospective tenants of the attractiveness of the property; (ii)
the ability to retain qualified individuals to provide adequate management and
maintenance of the property; (iii) the inability to collect rent due to
bankruptcy or insolvency of tenants or otherwise; and (iv) increased operating
costs. Real estate values may also be adversely affected by such factors as
applicable laws, including tax laws, interest rate levels and the availability
of financing.
The availability of a pool of qualified and interested buyers for the Investment
Partnership's remaining assets is critical to the Investment Partnership's
ability to realize the fair market values of such properties at the time of
their final dispositions. Demand by buyers of multi-family apartment properties
is affected by many factors, including the size, quality, age, condition and
location of the subject property, potential environmental liability concerns,
the existing debt structure, the liquidity in the debt and equity markets for
asset acquisitions, the general level of market interest rates and the general
and local economic climates. In addition, because of the government restrictions
on rental revenues and the related capital expenditure reserve requirements and
cash flow distribution limitations, there are a limited number of potential
buyers in the market for government subsidized, low-income housing properties
such as the Investment Partnership has invested in. Furthermore, the current
uncertainty regarding potential future reductions in the level of federal
government assistance for these programs may further restrict the Properties'
marketability.
The Properties are subject to substantial debt, in many cases including seller
financing on which interest has accrued since the Investment Partnership
invested in the Properties. Most of the Properties are dependent upon continuing
government subsidies. In addition, many of the Properties are located in market
areas that would not support current rents. Finally, most of the Properties are
subject to use restrictions that limit their use to low- income housing beyond
the end of the tax credit compliance period.
The ownership structure of the Investment Partnership's investments through
Operating Partnerships could adversely impact the timing of the Investment
Partnership's planned dispositions of its remaining assets and the amount of
proceeds received from such dispositions. It is possible that the general
partners of the Operating Partnerships could have economic or business
interests, which are inconsistent with those of the Investment Partnership.
Given the limited rights which the Investment Partnership has under the terms of
the Operating Partnership agreements, any conflict between the partners could
result in delays in completing a sale of the related operating property and
could lead to an impairment in the marketability of the property to third
parties for purposes of achieving the highest possible sale price.
For these and other reasons, in Management's judgement, upon sale of many of the
Properties, it is likely that sale proceeds will not be in excess of the debt
financing, liabilities of the Operating Partnership, the expenses of sale and
liabilities of the Investment Partnership, therefore, it is likely that the sale
proceeds will not be sufficient to make any distribution to the Unit holders
and, depending on the Unit holders tax situation, the Unit holder may incur tax
liability without cash distributions to pay the taxes resulting from those
sales.
Properties
- ----------
As of December 31, 1999, average occupancy of the Properties was 94%.
The financial performance of the Operating Partnerships will be impacted by the
competition from comparable properties in their local market areas. The
occupancy levels achievable at the Properties and the rental rates at the non-
subsidized Properties are largely a function of supply and demand in the
markets. In many markets across the country, development of new multi-family
properties has increased significantly over the past two years. Existing
apartment properties in such markets could be expected to experience increased
vacancy levels, declines in effective rental rates and, in some cases, declines
in estimated market values as a result of the increased competition. There are
no assurances that these competitive pressures will not adversely affect the
operations and/or market values of the
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Operating Partnerships in the future and, in particular, subsequent to the
expiration of any existing subsidy agreements.
Two Fort Worth Texas Properties
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Two properties located in Ft. Worth, Texas had experienced cash flow
difficulties and 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. 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 accelerating the maturity of the
indebtedness under the Notes, demanding payment in full and giving notice that
if the indebtedness was 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 United
States District Court for the Northern District of Texas, Fort Worth Division
(the"Court"), Case #496-41284 and Case #496-4136 respectively, petitions for
relief under Chapter 11 to enable the Operating Partnerships to reorganize. 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.
Because each investor's tax situation is different, the consequences of the
foreclosure was different based upon each investor's previous use of tax credits
and passive losses. However, in general, the foreclosure caused a recapture of a
portion of the LIHTCs previously received by the investors, the reduction of
LIHTCs in future years, an interest charge under the Internal Revenue Code on
LIHTCs recaptured, and a tax gain on disposition of the property as a result of
the foreclosure. The Schedule K-1 for the year ended December 31, 1997 included
a $.48 per Unit recapture of tax credits with a corresponding estimated interest
charge of $.23 per unit. The passive gain relating to the disposition of the two
Properties as a result of foreclosure was less than the 1997 passive losses
passed through from the remaining 29 Operating Partnerships. In addition, tax
credits have been 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 per Unit.
A hearing to dismiss the bankruptcy was held on March 26, 1998. The Court
entered an order denying the bank's motion for payment of cash collateral and
granted motions to dismiss the bankruptcy. The bank filed an appeal to preserve
its rights to file an appeal. The Court has dismissed the bank's appeal with
respect to Springchase Operating Partnership. The bank also filed suit against
Springchase Operating Partnership in the State District Court in Dallas County
Texas and sought an injunction against Springchase Operating Partnership. The
injunction was denied and the suit dismissed by the State District Court. An
appeal with respect to the Trinidad Operating Partnership is still in process.
There can be no assurance as to how these matters will be resolved. These
partnerships were liquidated in 1998, having paid remaining Operating
Partnership liabilities out of available Operating Partnership cash. Any cash in
excess of liabilities was distributed to the Investment Partnership. No
distributions will be made to Unit holders.
A Detroit, Michigan Property
- ----------------------------
During 1998, an impairment loss in the amount of $4,100,000 was recorded with
respect to the Research Park project in Detroit, Michigan, which is owned by one
of the Operating Partnerships. 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 1998 for this Operating Partnership include
cash flow from operations that was less than the debt service on the property;
however, debt
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service was paid by allowing trade payables to become larger and more
delinquent. Therefore, an assessment was done to evaluate the undiscounted cash
flows, which were not sufficient to recover the assets' carrying amount. Based
on this assessment, an impairment loss of $4,100,000 was recognized to reduce
the carrying amount of the property to its estimated fair value of $4,300,000.
During 1999, the property continued to have cash flow problems relating to
higher than desired vacancy and high maintenance costs. Effective June 1, 1999,
a new management company was hired for the property. In addition, the Managing
General Partner continues to negotiate with the Michigan State Housing
Development Authority to work out a solution to enable the property to generate
positive cash flow. At this time, there is no assurance as to how these matters
will be resolved.
A Greenville, Michigan Property
- -------------------------------
A Greenville, Michigan Property has experienced continuing cash flow deficits.
The property has not funded reserves for taxes, insurance and replacement
reserves adequately and is deficient in the payment of real estate taxes. The
managing general partner has been working with the RD to resolve the cash flow
problems; however, there can be no assurance as to how these matters will be
resolved.
A Gaylord, Michigan Property
- ----------------------------
A Gaylord, Michigan Property has experienced a need for maintenance and repairs
in excess of the available reserves and operating cash flow. The City of Gaylord
has issued a letter requiring the repairs be performed. The managing general
partner has been working with the RD to attempt to resolve problems; however,
there can be no assurance as to how these matters will be resolved.
A Philadelphia, Pennsylvania Property
- -------------------------------------
During 1999, an impairment loss in the amount of $3,111,000 was recorded with
respect to the West Allegheny project in Philadelphia, Pennsylvania, which is
owned by one of the Operating Partnerships. 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. An assessment was done to evaluate the undiscounted cash flows,
which were not sufficient to recover the assets' carrying amount. Based on this
assessment, an impairment loss of $3,111,000 was recognized to reduce the
carrying amount of the property to its estimated fair value of $746,000.
Four Oklahoma Properties
- ------------------------
The four Oklahoma Properties potentially could become part of the HUD
Restructuring Mark to Market Program (See further detail in Liquidity and
Capital Resources). Restructuring could significantly reduce the cash flow of
the Properties, potentially causing the Properties to be unable to cover their
expenses, as well as potentially creating debt forgiveness taxable income.
Other Property Issues
- ---------------------
At December 31, 1999, three other Properties have cash flow difficulties. All
three properties had an increase in operating expenses in 1999, in addition to
lower occupancy.
Liquidity and Capital Resources
- -------------------------------
Liquidity is defined as an entity'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 federal governmental subsidy programs,
by state and local agencies, or by funds from the Investment Partnership
reserves, 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 LIHTCs.
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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. With certain modifications, the demonstration program became a
permanent program in fiscal year 1999, applicable to all projects with rents
above those of comparable properties in local markets. Under the program,
subsided rent levels generally are reduced to market levels and the debt may be
restructured into two or three mortgages. The first mortgage loan is set at a
level supportable by the lower subsidized rents, and the second and third
mortgage loans are payable only out of cash flow after other approved expenses
and sale or refinancing proceeds. In many cases, 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.
HUD has entered into contracts to carry out the restructuring with state housing
finance agencies and others ("Participating Administrative Entities" or "PAEs").
The PAEs have authority to set rents above the comparable rents for only 20% of
their inventory each year. These rents will be based on approved project
budgets, and are capped at 120% of FMRs, except for up to 5% of the inventory,
which can have budget-based rents above 120% of FMRs based on a showing of
special need. Owners who have engaged in adverse financial or managerial actions
are barred from participating in the restructuring program.
The Operating Partnerships own seventeen Properties whose Section 8 contracts
have expired or will expire in fiscal year 2000, and are not subject to optional
renewal by the owner. The General Partner expects that Section 8 contracts for
all of these Properties will be renewed by HUD at current levels until at least
the end of fiscal year 2000, although there can be no assurance that HUD will do
so. Five of these properties have rents in excess of 100% of HUD-established
fair market rents. The rents at some or all of these Properties may also be
above comparable rents as determined by HUD and therefore could be subject to
HUD restructuring. The General Partner will work with the general partners of
the Operating Partnerships to seek to renew all expiring Section 8 contracts,
and if required or appropriate, to participate in the program to restructure
loans and rent subsidies. Of the Investment Partnership's remaining projected
LIHTCs, approximately 4% are attributable to these Operating Partnerships.
Restructuring 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, 1999 restricted cash was $6,042,000. The restricted cash was
composed of the Investment Partnership reserve of $445,000 and Operating
Partnership reserves of $5,597,000. Deposits and withdrawals from Operating
Partnership reserves are generally regulated by a governing federal, state or
local agency. 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, 1999 the General Partner voluntarily deferred payment of
$635,000 of its supervisory and program management fee. The General Partner is
under no obligation to continue to defer this fee, and there can be no assurance
that the Investment Partnership reserve will be 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.
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. Moreover, especially in light of the
reduced availability of subsidies and the consequent reduction in market value
of the
11
<PAGE>
Properties, there can be no assurance of cash distributions in the event of
refinancing or disposition. Unit holders could be faced with an obligation to
pay taxes as a result of disposition of the Properties but no cash distributions
with which to pay those taxes.
Results of Operations
- ---------------------
The 1999 net loss of $6,517,000 decreased 7.38% from the 1998 net loss of
$7,036,000, while the 1998 net loss increased 635.98% from the 1997 net loss of
$956,000. The reasons for the differences are discussed below.
Extraordinary gains of $200,000 and $2,196,000 were recorded in 1998 and 1997,
respectively, as a result of matters related to the foreclosure and debt
extinguishment on the two Texas Properties (see Note 5).
An impairment loss of $3,111,000 was recorded in 1999 for a Philadelphia,
Pennsylvania property, an impairment loss of $4,100,000 was recorded in 1998 for
a Detroit, Michigan property.
During 1999, 1998 and 1997, total revenue was $12,172,000, $12,174,000, and
$12,900,000, respectively. Rental income decreased $2,000 (0%) in 1999 as
compared to 1998 and decreased $726,000 (5.63%) in 1998 compared to 1997. After
removing the 1997 revenue relating to the Fort Worth, Texas Properties which
were disposed of through foreclosure, the other Properties' rental revenue were
unchanged comparing 1999 to 1998 and increased an average of 2.79% comparing
1998 to 1997.
Total expenses exclusive of depreciation, interest and impairment loss for 1999,
1998, and 1997 were $9,435,000, $9,076,000, and $9,921,000, respectively. The
$359,000 (3.96%) increase in expenses between 1999 and 1998 was primarily
related to an increase in administrative and operating and maintenance expenses.
The $845,000 (8.51%) decrease in expenses between 1998 and 1997 was primarily
related to a decrease in expenses related to the loss of operations from the two
Texas properties. After removing this decrease in expenses in 1998 related to
the loss of these two properties, the average increase in expenses is 1.59%. The
expenses with the largest fluctuations between 1999 and 1998 are administrative
with an increase of $82,000 (4.63%) and operating and maintenance expenses with
an increase of $205,000 (7.17%). In addition, the expenses with the largest
fluctuations between 1998 and 1997 are administrative, with an increase of
$185,000 (11.66%), and utilities with a decrease of $74,000 (5.15%).
The administrative expense increase in 1999 is primarily attributable to
increase in salaries and renting expenses. The operating and maintenance
increases in 1999 relate to additional repairs to the properties as they age.
The administrative expense increases in 1998 are primarily attributable to an
increase in site staff salaries, an increase in bad debt expense and an increase
in renting expense. The utility expense decrease in 1998 primarily relates to a
general decrease in utility expenses of the Ohio and Michigan Properties.
In recent years rental income, after the HUD rent adjustments, has not been
increasing at a rate equivalent to increases in expenses (excluding depreciation
and interest). 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.
Other
- -----
The Operating Partnerships carry comprehensive liability, fire, flood, extended
coverage and rental loss insurance with respect to their properties with insured
limits and policy specifications that management believes are customary for
similar properties. There are, however, certain types of losses (generally of a
catastrophic nature such as wars, floods or earthquakes) which may be either
uninsurable, or, in management's judgment, not economically insurable. Should an
uninsured loss occur, the Investment Partnership could lose both its invested
capital in and anticipated profits from the affected property.
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may become
liable for the costs of the investigation, removal and remediation of hazardous
12
<PAGE>
or toxic substances on, under, in or migrating from such property. Such laws
often impose liability without regard to whether the owner or operator knew of,
or was responsible for, the presence of such hazardous or toxic substances. The
Investment Partnership is not aware of any notification by any private party or
governmental authority of any non-compliance, liability or other claim in
connection with environmental conditions at any of its Properties that it
believes will involve any expenditure which would be material to the Investment
Partnership, nor is the Investment Partnership aware of any environmental
condition with respect to any of its Properties that it believes will involve
any such material expenditure. However, there can be no assurance that any non-
compliance, liability, claim or expenditure will not arise in the future.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
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,
1999 and 1998 and for each of the three years in the period ended December 31,
1999 are listed below and included on pages 14 through 28 of this report.
Audited Combined Financial Statements
Report of Independent Auditors - Reznick Fedder & Silverman............... 14
Report of Independent Auditors - Ernst & Young LLP........................ 15
Combined Balance Sheets................................................... 16
Combined Statements of Operations......................................... 18
Combined Statements of Partners' Deficit.................................. 19
Combined Statements of Cash Flows......................................... 20
Notes to Combined Financial Statements.................................... 21
Financial Statements Schedules - Schedule I............................... 34
Financial Statements Schedules - Schedule III............................. 36
13
<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, 1999 and 1998 and the related
combined statements of operations, partners' deficit, and cash flows for each of
the two years in the period ended December 31, 1999 and the financial statement
schedules as of December 31, 1999 and 1998 and for each of the two years in the
period ended December 31, 1999 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 certain substantially wholly-owned Operating
Partnerships, which statements reflect total assets of $25,539,735 and
$28,438,609 at December 31, 1999 and 1998, and total losses of $1,122,898 and
$1,047,479 for each of the two years in the periods ended December 31, 1999 and
1998. 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 audits 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, 1999
and 1998 and the combined results of their operations and their cash flows for
each of the two years in the period ended December 31, 1999 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 as
of December 31, 1999 and 1998 and for each of the two years in the period ended
December 31, 1999 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.
REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
March 14, 2000
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
National Housing Trust Limited Partnership
We have audited the accompanying combined statements of operations, partners'
deficit, and cash flows of National Housing Trust Limited Partnership and its
substantially wholly-owned Operating Partnerships (the Partnership) for the year
ended December 31, 1997, and the related 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 audit. We did not audit the financial statements of 12 substantially
wholly-owned Operating Partnerships, which statements reflect total revenues of
$5,623,499 for the year ended December 31, 1997. 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements 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 audit and the reports of other auditors
provides a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the combined results of operations and cash flows of National Housing Trust
Limited Partnership and its substantially wholly-owned Operating Partnerships
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles. Further, in our opinion, based on our audit 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
15
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED BALANCE SHEETS, DECEMBER 31, 1999 AND 1998
(In Thousands)
ASSETS December 31
- ---------------------------------------- -----------------------------------
1999 1998
--------- ---------
Current assets:
Cash and cash equivalents (Note 1) $ 914 $ 982
Tenants' security deposits 439 412
Mortgage escrow deposits 551 616
Prepaid expenses and other assets 822 823
--------- ---------
Total current assets 2,726 2,833
--------- ---------
Restricted cash 6,042 5,829
--------- ---------
Rental property (Notes 1, 3 and 5):
Buildings and improvements 69,006 71,420
Furniture and equipment 2,512 2,449
--------- ---------
71,518 73,869
Less accumulated depreciation (27,149) (24,327)
--------- ---------
44,369 49,542
Land 3,305 3,305
--------- ---------
47,674 52,847
--------- ---------
Total assets $ 56,442 $ 61,509
========= =========
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 BALANCE SHEETS, CONTINUED
(In Thousands, except Investment Units)
LIABILITIES AND PARTNERS' DEFICIT December 31
- --------------------------------------------- -----------------------------
1999 1998
--------- ---------
Current liabilities:
Accounts payable and accrued expenses $ 2,359 $ 2,122
Rents received in advance 177 43
Deposits held 445 445
Accrued interest, mortgage notes payable 279 262
Current maturities of term debt (Note 3) 1,088 1,000
--------- ---------
Total current liabilities 4,348 3,872
--------- ---------
Term debt, less current maturities (Note 3):
Mortgage notes payable 39,436 40,510
Promissory notes, including accrued
interest payable of $13,005 and
$11,236 in 1999 and 1998, respectively 30,580 28,531
--------- ---------
70,016 69,041
Partners' deficit:
General Partners:
NHT, Inc. (24) (17)
Other operating General Partners (141) (75)
Limited partners:
Issued and outstanding 1,014,668
investment units (17,757) (11,312)
--------- ---------
(17,922) (11,404)
--------- ---------
Total liabilities and partners' deficit $ 56,442 $ 61,509
========= =========
The accompanying notes are an integral
part of the combined financial statements.
17
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(In Thousands, except per Unit Amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------
1999 1998 1997
-------- ------------- --------
<S> <C> <C> <C>
Revenues (Notes 4 and 5):
Rental revenues $ 11,930 $ 11,919 $ 12,540
Other income 242 255 360
-------- ------------- --------
Total revenues 12,172 12,174 12,900
-------- ------------- --------
Expenses:
Administration 1,853 1,771 1,776
Operating and maintenance 3,066 2,861 3,149
Management fees, including $730, $843 and $814 to
affiliates (Note 2) 1,053 1,041 1,060
Partnership asset management fees, affiliates (Note 2) 327 318 318
Utilities 1,408 1,362 1,754
Taxes and insurance 1,728 1,723 1,864
Depreciation and amortization 2,833 2,993 2,967
Impairment loss (Note 1) 3,111 4,100 -
-------- ------------- --------
Total expenses 15,379 16,169 12,888
-------- ------------- --------
Income (loss) from rental operations (3,207) (3,995) 12
-------- ------------- --------
Other revenues and (expenses):
Interest income 232 273 270
Interest expense (3,542) (3,514) (3,434)
-------- ------------- --------
Loss before extraordinary gain (6,517) (7,236) (3,152)
Extraordinary gain (Note 5) - 200 2,196
-------- ------------- --------
Net loss $ (6,517) $ (7,036) $ (956)
======== ============= ========
Loss per limited partnership unit before extraordinary gain $ (6.42) $ (7.13) $ (3.10)
Extraordinary gain per limited partnership unit - .20 2.16
-------- ------------- --------
Net loss per limited partnership unit $ (6.42) $ (6.93) $ (.94)
======== ============= ========
</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
COMBINED STATEMENTS OF PARTNERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(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 1, 1997 $ (8) 18 767 (4,174) (3,407) (3,397)
Allocation of net loss (1) (9) (10) (936) (946) (956)
---------- ----------- ------------- -------------- --------- -----------
Balances as of
December 31, 1997 (9) 9 757 (5,110) (4,353) (4,353)
General Partner distributions (1) (14) (15)
Allocation of net loss (7) (70) (77) (6,882) (6,959) (7,036)
---------- ----------- ------------- -------------- --------- -----------
Balances as of
December 31, 1998 (17) $ (75) $ 680 $ (11,992) $ (11,312) $ (11,404)
Allocation of Net Loss (7) (65) (70) (6,375) (6,445) (6,517)
General Partner distribution (1) (1)
---------- ----------- ------------- -------------- --------- -----------
Balances as of
December 31, 1999 $ (24) (141) 610 (18,367) (17,757) (17,922)
========== =========== ============= ============== ========= ===========
</TABLE>
The accompanying notes are an integral
part of the combined financial statements.
19
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(In Thousands)
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (6,517) $ (7,036) $ (956)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization 2,833 2,993 2,967
Impairment loss 3,111 4,100 -
Extraordinary gain - (200) (2,196)
Bankruptcy related reserves - 200 (216)
Accrued interest on promissory notes 1,769 1,677 1,555
Changes in operating assets and liabilities:
(Increase) decrease in deposits, prepaids and other 28 124 (76)
assets
Increase in accounts payable and accrued expenses 237 152 114
Increase (decrease) in other current liabilities 151 76 (78)
-------- -------- --------
Net cash provided by operating activities 1,612 2,086 1,114
-------- -------- --------
Investing activities:
Additions to buildings, furniture and equipment (760) (834) (1,079)
Withdrawals to restricted cash, net (213) (441) (242)
-------- -------- --------
Net cash used for investing activities (973) (1,275) (1,321)
-------- -------- --------
Financing Activities:
General Partners cash (distributions) contributions, net (1) (15) -
Additions to term debt 305 241 779
Payments of term debt (1,011) (1,023) (917)
-------- -------- --------
Net cash used for financing activities (707) (797) (138)
-------- -------- --------
Increase (decrease) in cash and cash equivalents (68) 14 (345)
Cash and cash equivalents, beginning of year 982 968 1,313
-------- -------- --------
Cash and cash equivalents, end of year $ 914 $ 982 $ 968
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 2,206 $ 2,265 $ 1,750
======== ======== ========
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
20
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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 ("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.
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 (RD), 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 fees and 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 1999, 1998 or 1997. The two Texas Operating Partnerships
lost their Properties in a December 1997 foreclosure sale. These Operating
Partnerships were liquidated in 1998 paying remaining Operating Partnership
liabilities out of available Operating Partnership cash. Any cash in excess
of liabilities was distributed to the Investment Partnership. No
distributions will be made to Unit holders. The Springchase Apartments
Limited Partnership has been dissolved. The Trinidad Apartments Limited
Partnership is expected to be dissolved once all legal suits are resolved
(See MD&A and 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 will be distributed 98.9% 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.
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, 1999, 1998 AND 1997
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>
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, 1999, 1998 AND 1997
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.
Restricted Cash:
----------------
Restricted Cash consisted of Operating Partnerships' property reserves of
$5,597,000 and $5,408,000 in 1999 and 1998, respectively and Investment
Partnership reserves of $445,000 and $421,000 in 1999 and 1998, 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, 1999 and 1998, 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, 1999 and 1998
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, 1999
and 1998.
Reclassifications:
------------------
Certain 1997 amounts have been reclassified to conform to the 1998 and 1999
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 Investment Partnership is not taxed on its income. The partners are taxed
in their individual capacities upon their share of the Investment Partnership's
taxable loss. During 1999, 1998, and 1997, the following items related to low-
income housing tax credits were generated by the Investment Partnership:
(In Thousands) 1999 1998 1997
------ ------ ------
Low-income housing tax credits $2,116 $2,693 $2,769
Recapture credits and related interest - - $(722)
The Revenue Reconciliation Act of 1990 permitted the Investment Partnership to
accelerate low-income housing tax credits to individual taxpayers who held
interests on October 26, 1990. Consequently, the Investment 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
23
<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, 1999, 1998 AND 1997
Income Taxes (continued):
-------------------------
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. Specifically, management reviews the carrying value of
rental property using estimated future cash flows, including estimates from
disposition, whenever an event or change in circumstances might indicate that
the asset value may not be recoverable. Because of the inherent uncertainties
in estimating future cash flows, it is at least reasonably possible that the
estimates used will change within the near term. 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 Restricted Cash 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 (RD), 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 1999, an impairment loss in the amount of $3,111,000 was recorded for an
apartment project in Philadelphia, Pennsylvania. 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. An assessment was done to evaluate the undiscounted
cash flows, which were not sufficient to recover the assets' carrying amount.
Based on this assessment, an impairment loss of $3,111,000 was recognized to
reduce the carrying amount of the property to its estimated fair value of
$746,000.
During 1998, an impairment loss in the amount of $4,100,000 was recorded for an
apartment project in Detroit, Michigan. Indicators present during 1998 for
this Operating Partnership include cash flow from operations that was less than
the debt service on the property, however, debt service was paid by allowing
trade payables to become larger and more delinquent. Therefore, an assessment
was done to evaluate the undiscounted cash flows, which were not sufficient to
recover the assets' carrying amount. Based on this assessment, an impairment
loss of $4,100,000 was recognized to reduce the carrying amount of the property
to its estimated fair value of $4,315,000.
24
<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, 1999, 1998 AND 1997
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
$730,000, $843,000 and $814,000 in 1999, 1998 and 1997, respectively,
including $65,000, $185,000 and $178,000 in 1999, 1998 and 1997, respectively
to an affiliate of NHT, Inc.
Partnership Management Fees, Affiliates:
----------------------------------------
The Investment 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 $47,000, $46,000 and $50,000 in 1999, 1998 and
1997, respectively. Additionally, the Investment Partnership has an
obligation to pay an annual program management fee to NHT, Inc. equal to the
lesser of approximately $280,000, $272,000 and $268,000 in 1999, 1998 and
1997, respectively or .5% of the aggregate cost of all properties acquired by
the Operating Partnerships as of December 31, 1999, 1998 and 1997. The
supervisory management fees and program management fees totaled $327,000,
$318,000 and $318,000 in 1999, 1998 and 1997, respectively. The fees paid in
1999, 1998 and 1997 were $135,000, $253,000 and $135,000, respectively. The
balance accrued for these fees was $635,000, $443,000 and $378,000 as of
December 31, 1999, 1998 and 1997, 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, RD, 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
2011 to 2034 and bear interest at rates varying from 7% to 11.25%.
25
<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, 1999, 1998 AND 1997
Term Debt (continued):
----------------------
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 $2,715,000 and $2,504,000 at December 31,
1999 and 1998, which is due to an affiliate of the General Partner.
Estimated principal requirements on these loans during the next five years
and thereafter (in thousands):
2000 1,088
2001 1,168
2002 1,254
2003 2,450
2004 7,139
Thereafter 58,005
-------
$71,104
=======
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.
Under the Multifamily Assisted Housing and Reform and Affordability Act
(MAHRA) of 1997, as amended, Congress set forth the legislation for a
permanent "mark-to-market" program and provided permanent authority for the
renewal of Section 8 contracts. Owners with Section 8 contracts expiring
after September 30, 1998 are subject to the provisions of MAHRA. On September
11, 1998, HUD issued an interim rule to provide clarification for
implementation of the mark-to-market program. Since then, revised guidance
has been provided through various HUD housing notices, most recently HUD
housing notice 99-36, which addresses project-based Section 8 contracts
expiring in fiscal year 2000.
Under this notice, project owners have several options for Section 8 contract
renewals, depending on the type of project and rent level. Options include
increasing, or marking rents to market, renewing other contracts with rents
at or below market, referring projects to the Office of Multifamily Housing
Assistance Restructuring (OMHAR) for mark-to-market or "OMHAR lite" renewals,
renewing contracts that are exempted from referral to OMHAR, renewing
contracts for portfolio re-engineering demonstration and preservation
projects, and opting out of the Section 8 program. Owners must submit their
option to HUD at least 120 days before expiration of their contract. Each
option contains specific rules and procedures that must be followed to comply
with the requirements of housing notice 99-36.
The Operating Partnerships received approximately $5,951,000, $6,483,000 and
$6,205,000 of rental assistance payments from HUD for the years ended
December 31, 1999 and 1998 and 1997, respectively, which represents, 48.9%,
53.3%and 48.1% of their total revenues for the years ended December 31, 1999,
1998 and 1997, respectively.
There are 20 Properties with HAP contracts, of which seventeen have HAP
contracts which expire during 2000, the majority of which are on annual or 6
month renewals. Management continues to seek to renew all HAP contracts as
they expire.
26
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
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 of the Investment Partnership have limited resources to fund
deficits which may be generated by one or more Operating Partnerships.
Promissory Notes:
-----------------
As indicated in Note 3, substantially all of the promissory notes are
primarily nonamortizing until the related properties are refinanced or sold.
Most 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 $29,151,000 at December 31,
1999); the remaining loan is due during the year 2028 (principal and accrued
interest of $1,429,000 at December 31, 1999). 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 come 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. At December 31, 1997,
the Operating Partnerships had accumulated cash of $216,000, which was in
contention amongst the parties, and, accordingly, a reserve was established
pending the resolution of the bankruptcy hearing scheduled for March 26, 1998
to determine the ownership of the cash.
A hearing to dismiss the bankruptcy and determine the ownership of the cash
was held on March 26, 1998. The Court entered an order denying the bank's
motion for payment of cash collateral and granted the motion to dismiss the
bankruptcy. The bank filed an appeal. The Court has dismissed the bank's
appeal with respect to Springchase Operating Partnership. The bank also filed
suit against Springchase Operating Partnership in the State District Court in
Dallas County Texas and sought an injunction against Springchase Operating
Partnership. The injunction was denied and the suit dismissed by the State
District Court. The appeal with respect to the Trinidad Operating Partnership
is still in process. There can be no assurance as to how these matters will
be resolved, however, in the opinion of management the Operating Partnerships
should prevail and, accordingly, the resultant reserve has been reversed and
recorded as an extraordinary gain in the financial statements. These
partnerships were liquidated in 1998 paying remaining Operating Partnership
liabilities out of available Operating Partnership cash. Any cash in excess
of liabilities was distributed to the Investment Partnership. No
distributions will be made to the Unit holders.
27
<PAGE>
NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
AND ITS SUBSTANTIALLY WHOLLY-OWNED PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Extraordinary Gain:
-------------------
In 1998, an extraordinary gain of $200,000 was recorded as result of the
reversal of the reserve established in 1997 as a result of the transfer of
the properties. The 1997 extraordinary gain of $2,196,000 was recorded to
reflect the transfer of these properties from the Operating Partnerships and
consisted 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.
Condensed Financial Information
-------------------------------
The Operating Partnerships ceased operations after the foreclosure sales and
were liquidated in 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, 1999, 1998 and
1997 is as follows:
YEARS ENDED DECEMBER 31
-----------------------------------------
1999 1998 1997
------------ ------------ ------------
Total Assets $ - $ - $ -
Total Liabilities $ - $ - $ -
Total Revenues $ - $ - $ 1,057,000
Net Income (Loss) $ - $ 55,000 $ 2,236,000
6. Taxable Loss:
-------------
The difference between the 1999 financial statement loss and the tax return
loss consists of an impairment loss of $3,111,000 and tax depreciation in
excess of book depreciation of $1,240,000. These amounts comprise the
difference in the building basis for financial statement and tax return
reporting purposes.
The difference between the 1998 financial statement loss and the tax return
loss consists of an impairment loss of $4,100,000 and tax depreciation in
excess of book depreciation of $67,000. These amounts comprise the difference
in the building basis for financial statement and tax return reporting
purposes.
28
<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>
James A. Bowman 45 President, Chief Executive Officer and Trustee 2001
Robert M. Snow 47 Vice President, Secretary and Trustee 2001
Joseph R. Kasberg 47 Assistant Treasurer 2001
Susan E. Basting 38 Chief Financial Officer, Treasurer and Trustee 2001
</TABLE>
James A. Bowman is president and chief executive officer of the National
Affordable Housing Trust and NHT, Inc.. Previously he served as senior vice
president with National City Investments and as Director of Finance for Franklin
County (Ohio). Mr. Bowman is a graduate of The Ohio State University with a
Bachelor's Degree in Economics and a Master's Degree in Public Administration.
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 of 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 in 1996. Ms. Basting is a
graduate of Wright State University with a Bachelor's Degree in Accounting.
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, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Fee or Reimbursement Type Payee (In thousands) 1999 1998 1997
------------------ ----- ---- ---- ----
<S> <C> <C> <C> <C>
Property management fees General Partners of
Operating Partnerships $ 730 $ 843 $ 814
Partnership management fees NHT, Inc. $ 327 $ 318 $ 318
</TABLE>
ITEM 12 SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
None.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
29
<PAGE>
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 - Reznick
Fedder & Silverman 14
Report of Independent Auditors - Ernst &
Young LLP 15
Combined balance sheets as of December 31,
1999 and 1998 16
Combined statements of operations for the
years ended December 31, 1999, 1998 and 18
1997
Combined statements of partners' deficit
for the years ended December 31, 1999, 19
1998 and 1997
Combined statements of cash flows for the
years ended December 31, 1999, 1998 and 20
1997
Notes to combined financial statements 21
2. Financial Statement Schedules
Schedule I 34
Schedule III 36
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.
30
<PAGE>
3. Exhibits
--------
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
------------ -----------
<S> <C> <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>
31
<PAGE>
<TABLE>
<S> <C> <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.
*** 0.13(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>
32
<PAGE>
**** 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.
Exhibit 27 Financial Data Schedule
* 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.
33
<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
Condensed Balance Sheets December 31,
-------------
1999 1998
---- ----
Assets (In Thousands)
Current assets:
Cash $ 445 $ 421
Accounts receivable, Operating Partnerships,
net of allowance of $297 and $198
in 1999 and 1998 192 285
-------- --------
Total current
assets 637 636
Notes receivable, Operating Partnership,
net of allowance of $283
in 1999 and 1998 -- --
-------- --------
$ 637 $ 706
======== ========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable, primarily general partner $ 641 $ 457
Deficit in Operating Partnerships 17,913 11,649
Partners' Deficit (17,917) (11,400)
-------- --------
$ 637 $ 706
======== ========
Condensed Statements of Operations Years Ended December 31
-----------------------
1999 1998 1997
---- ---- ----
Revenues: (In Thousands)
Program management fees from Operating
Partnerships $ 144 $ 143 $ 157
Interest 22 21 18
------- ------- -------
166 164 175
------- ------- -------
Expenses:
Program management fees, general partner 327 319 318
Administrative 195 21 635
------- ------- -------
522 340 953
------- ------- -------
Loss before equity in loss of Operating
Partnerships and extraordinary gain (356) (176) (778)
Equity in loss of
Operating Partnerships (6,161) (6,861) (2,341)
------- ------- -------
Loss from operations
before extraordinary gain (6,517) (7,037) (3,119)
Extraordinary gain -- -- 2,172
------- ------- -------
Net loss $(6,517) $(7,037) $ (947)
======= ======= =======
34
<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)
Condensed Statements of Cash Flows Years Ended December 31
-----------------------
1999 1998 1997
---- ---- ----
(In Thousands)
Cash used in operating activities $ (79) $ (67) $ (84)
Financing activities, distributions from Operating
Partnerships, net 103 171 122
----- ----- -----
Increase in cash $ 24 $ 104 $ 38
===== ===== =====
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.
35
<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, 1999
(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 $5,727 $4,717 $278
Located in Gahanna, Ohio
St. Martins Low-income housing project 1,429 2,094 110
Located in Seattle, Washington
Willow Creek Low-income housing project 1,008 $123 1,373 113 $123
Located in Bartlesville, OK
Willow Gardens Low-income housing project 1,247 94 1,630 91 94
Located in Bartlesville, OK
Willow Park Low-income housing project 1,121 157 1,513 120 157
Located in Bartlesville, OK
Willow Rock Low-income housing project 1,212 148 1,508 196 148
Located in Bartlesville, OK
Wildwood I Low-income housing project 1,986 123 1,783 78 123
Located in Columbus, OH
Wildwood II Low-income housing project 1,562 117 1,526 1 117
Located in Columbus, OH
Wildwood III Low-income housing project 1,899 178 1,725 59 178
Located in Columbus, OH
</TABLE>
<TABLE>
<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 $4,995 $4,995 $1,962 10/07/88 27 1/2 years
Located in Gahanna, Ohio
St. Martins Low-income housing project 2,184 2,184 886 1/31/89 27 1/2 years
Located in Seattle, Washington
Willow Creek Low-income housing project 1,486 1,609 583 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Gardens Low-income housing project 1,721 1,815 674 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Park Low-income housing project 1,633 1,790 642 3/02/89 27 1/2 years
Located in Bartlesville, OK
Willow Rock Low-income housing project 1,704 1,852 653 3/02/89 27 1/2 years
Located in Bartlesville, OK
Wildwood I Low-income housing project 1,861 1,984 673 12/01/89 27 1/2 years
Located in Columbus, OH
Wildwood II Low-income housing project 1,527 1,644 550 12/01/89 27 1/2 years
Located in Columbus, OH
Wildwood III Low-income housing project 1,784 1,962 629 12/01/89 27 1/2 years
Located in Columbus, OH
</TABLE>
CONTINUED
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, 1999
(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 1,086 89 983 72 89
Located in Findlay, OH
Summit Square Low-income housing project 3,324 105 3,327 54 105
Located in Dayton, OH
Washington Court Low-income housing project 1,007 81 932 9 81
House Located in Washington CH, OH
Griggs Village Low-income housing project 581 36 610 25 36
Located in Columbus, OH
Hebron Village Low-income housing project 659 45 603 9 45
Located in Hebron, OH
Aspen I Low-income housing project 922 70 997 29 70
Located in Gaylord, MI
Birch Lake Low-income housing project 785 56 805 58 56
Located in Ludington, MI
Century Place Low-income housing project 2,266 138 1,990 561 138
Located in Greenville, MI
Glendale Low-income housing project 383 27 414 6 27
Located in Scottville, MI
Lakeside Low-income housing project 1,231 76 1,023 239 76
Located in Cadillac, MI
</TABLE>
<TABLE>
<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 1,055 1,144 361 12/01/89 27 1/2 years
Located in Findlay, OH
Summit Square Low-income housing project 3,381 3,486 1,226 12/01/89 27 1/2 years
Located in Dayton, OH
Washington Court Low-income housing project 941 1,022 339 12/01/89 27 1/2 years
House Located in Washington CH, OH
Griggs Village Low-income housing project 635 671 222 12/01/89 27 1/2 years
Located in Columbus, OH
Hebron Village Low-income housing project 612 657 221 12/01/89 27 1/2 years
Located in Hebron, OH
Aspen I Low-income housing project 1,026 1,096 336 12/28/89 27 1/2 years
Located in Gaylord, MI
Birch Lake Low-income housing project 863 919 312 12/28/89 27 1/2 years
Located in Ludington, MI
Century Place Low-income housing project 2,551 2,689 811 12/28/89 27 1/2 years
Located in Greenville, MI
Glendale Low-income housing project 420 447 155 12/28/89 27 1/2 years
Located in Scottville, MI
Lakeside Low-income housing project 1,262 1,338 433 12/28/89 27 1/2 years
Located in Cadillac, MI
</TABLE>
CONTINUED
37
<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, 1999
( 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 911 73 1,065 19 73
Located in Williamston, MI
Traverse Woods Low-income housing project 921 71 1,054 51 71
Located in Petoskey, MI
Traverse Woods II Low-income housing project 1,540 117 1,733 707 117
Located in Petoskey, MI
Bingham Terrace Low-income housing project 1,336 16 1,092 381 20
Located in Cadiz, OH
Coal Township Low-income housing project 4,642 150 4,511 873 150
Located in Coal Township, PA
Hazelwood Low-income housing project 5,099 200 4,379 504 200
Located in Luzerne County, PA
Mahanoy Low-income housing project 5,541 125 5,915 886 125
Located in Mahanoy City, PA
Reserch Park Low-income housing project 11,914 850 9,678 (4,033) 436
Located in Detroit, MI
Young Manor Low-income housing project 6,975 400 6,512 269 400
Located in Detroit, MI
West Allegheny Low-income housing project 2,791 50 836 933 50
Located in Philadelphia, PA
---------------------------------------------------------
TOTALS
$71,104 $3,715 $66,328 $ 2,698 $3,305
=========================================================
</TABLE>
<TABLE>
<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 1,157 400 12/28/89 27 1/2 years
Located in Williamston, MI
Traverse Woods Low-income housing project 1,105 1,176 409 12/28/89 27 1/2 years
Located in Petoskey, MI
Traverse Woods II Low-income housing project 2,440 2,557 783 12/28/89 27 1/2 years
Located in Petoskey, MI
Bingham Terrace Low-income housing project 1,473 1,493 351 12/29/89 40 years
Located in Cadiz, OH
Coal Township Low-income housing project 5,384 5,534 1,819 12/29/89 27 1/2 years
Located in Coal Township, PA
Hazelwood Low-income housing project 4,883 5,083 1,664 12/29/89 27 1/2 years
Located in Luzerne County, PA
Mahanoy Low-income housing project 6,801 6,926 2,393 12/29/89 27 1/2 years
Located in Mahanoy City, PA
Reserch Park Low-income housing project 5,645 6,081 2,030 12/31/89 27 1/2 years
Located in Detroit, MI
Young Manor Low-income housing project 6,780 7,180 2,470 12/31/89 27 1/2 years
Located in Detroit, MI
West Allegheny Low-income housing project 1,769 1,819 1,089 3/27/90 40 Years
Located in Philadelphia, PA
-------------------------------------------------------------
TOTALS
$69,006 $72,311 $25,116
===================================
</TABLE>
38
<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, 1999
(4 OF 4)
(In Thousands)
December 31
--------------------------------
Real Estate: 1999 1998 1997
- ------------------------------------------- -------- -------- --------
Balance at beginning of period: $ 74,725 $ 79,681 $ 79,868
Additions during period:
Improvements 697 522 898
Deductions during period **: (3,111) (5,478) (1,085)
-------- -------- --------
Balance at end of period *: $ 72,311 $ 74,725 $ 79,681
======== ======== ========
Accumulated Depreciation:
- -------------------------------------------
Balance at beginning of period: $ 22,421 $ 21,247 $ 18,572
Additions during period:
Depreciation expense 2,695 2,812 2,700
Deductions during period: - (1,638) (25)
-------- -------- --------
Balance at end of period: $ 25,116 $ 22,421 $ 21,247
======== ======== ========
* Aggregate costs for federal income tax purposes were $72,311,000, $74,725,000
and $79,681,000 at December 31, 1999, 1998, and 1997 respectively.
** Includes deductions for impairment loss in 1999 & 1998 and primarily assets
transferred to lender in 1997.
39
<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 22, 2000 /s/James A. Bowman
-------------- ---------------------------------------------
James A. Bowman, 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 22, 2000 By /s/James A. Bowman
-------------- ---------------------------------------------
James A. Bowman, Trustee
President and CEO, NHT, Inc.
* * * * *
Date: March 22, 2000 By /s/Robert M. Snow
-------------- ---------------------------------------------
Robert M. Snow, Trustee,
Vice President and Secretary, NHT, Inc.
* * * * *
Date: March 22, 2000 By /s/Susan E. Basting
-------------- ---------------------------------------------
Susan E. Basting, Trustee
Chief Financial Officer and Treasurer, NHT, Inc.
40
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 914
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,726
<PP&E> 71,518
<DEPRECIATION> (27,149)
<TOTAL-ASSETS> 56,442
<CURRENT-LIABILITIES> 4,348
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (17,922)
<TOTAL-LIABILITY-AND-EQUITY> 56,442
<SALES> 11,930
<TOTAL-REVENUES> 12,172
<CGS> 0
<TOTAL-COSTS> 15,379
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,542)
<INCOME-PRETAX> (6,517)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,517)
<EPS-BASIC> (6.42)
<EPS-DILUTED> (6.42)
</TABLE>
