FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period.........to.........
Commission file number 33-23463
CLOVER APPRECIATION PROPERTIES I, L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2898428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 West Park Avenue
Merchantville, New Jersey 08109
(Address of principal executive offices)
(609) 662-1116
Issuer's phone number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CLOVER APPRECIATION PROPERTIES I, L.P.
BALANCE SHEET
(Unaudited)
September 30,
1996
ASSETS
CURRENT ASSETS
Cash (including $41,784 of cash held
for security deposits) $ 145,231
Accounts receivable 7,957
Prepaid expenses 14,144
Real estate tax escrow 48,838
Investment property held for sale 7,655,000
Total current assets 7,871,170
OTHER ASSETS
Utilities deposits 770
TOTAL ASSETS $ 7,871,940
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES
Mortgage payable $ 7,343,441
Accounts payable 30,178
Accrued interest 55,076
Accrued expenses 79,311
Tenants' security deposits 43,483
Prepaid and other liabilities 59,460
Total current liabilities 7,610,949
DUE TO AFFILIATES 808,896
Total liabilities 8,419,845
PARTNERS' DEFICIT
General partner (41,937)
Limited partners (3,591 units
outstanding) (505,968)
Total partners' deficit (547,905)
TOTAL LIABILITIES AND PARTNERS' DEFICIT $ 7,871,940
The accompanying notes are an integral part of these financial statements
b) CLOVER APPRECIATION PROPERTIES I, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine Months Ended,
September 30, September 30,
1996 1995
REVENUES
Rental income $ 1,236,524 $ 1,112,396
Interest income 56 353
Total revenues 1,236,580 1,112,749
EXPENSES
Professional services 11,461 14,048
Interest 516,875 502,735
Operating expenses
(Including affiliate transactions of $0
and $9,122 for the nine months ended
9/30/96 and 9/30/95, respectively) 601,017 497,160
Depreciation 204,821 202,041
Impairment loss 572,361 --
Total expenses 1,906,535 1,215,984
NET LOSS $ (669,955) $ (103,235)
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (184.70) $ (28.46)
The accompanying notes are an integral part of these financial statements.
CLOVER APPRECIATION PROPERTIES I, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended,
September 30, September 30,
1996 1995
REVENUES
Rental income $ 427,473 $ 382,312
Interest income 56 --
Total revenues 427,529 382,312
EXPENSES
Professional services 3,923 5,399
Interest 184,723 167,887
Operating expenses
(Including affiliate transactions of
$0 for the three months ended 9/30/96 233,733 190,919
and 9/30/95, respectively)
Depreciation 68,913 67,347
Impairment loss 572,361 --
Total expenses 1,063,653 431,552
NET LOSS $ (636,124) $ (49,240)
NET LOSS PER LIMITED PARTNERSHIP UNIT $ (175.37) $ (13.57)
The accompanying notes are an integral part of these financial statements.
c) CLOVER APPRECIATION PROPERTIES I, L.P.
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
General Limited
Partner Partners Total
Balance, at January 1, 1996 $ (35,237) $ 157,287 $ 122,050
Net loss for the nine months
months ended September 30, 1996 (6,700) (663,255) (669,955)
Balance, September 30, 1996 $ (41,937) $ (505,968) $ (547,905)
The accompanying notes are an integral part of these financial statements
d) CLOVER APPRECIATION PROPERTIES I, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1996
<S> <C> <C>
OPERATING ACTIVITIES
Cash received from rentals $1,243,818 $1,099,294
Cash paid for operating activities (600,146) (496,349)
Interest received 56 353
Interest paid (517,264) (503,091)
Net cash provided by operating activities 126,464 100,207
INVESTING ACTIVITIES
Expenditures for property (71,182) --
FINANCING ACTIVITIES
Repayment of mortgage payable (51,832) (47,387)
Net increase in cash 3,450 52,820
Cash, beginning of period 141,781 118,590
Cash, end of period $ 145,231 $ 171,410
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
NET INCOME LOSS $ (669,955) $ (103,235)
Adjustments
Depreciation 204,821 202,041
Impairment loss 572,361 --
(Increase) in prepaid expenses (4,146) (1,631)
Decrease (increase) in accounts receivable 2,629 (4,447)
(Increase) in real estate tax escrow (35,409) (12,161)
(Decrease) in accounts payable (7,435) (26,196)
Increase in security deposits 3,069 7,159
Increase (decrease) in prepaid and other liabilities 4,666 (8,655)
Increase in accrued expenses 56,252 38,566
Increase in due to affiliate -- 9,122
(Decrease) in accrued interest (389) (356)
Total adjustments 796,419 203,442
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 126,464 $ 100,207
<FN>
The accompanying notes are an integral part of these financial statements
</TABLE>
e) CLOVER APPRECIATION PROPERTIES I, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
Readers of this quarterly report should refer to the audited financial
statements of Clover Appreciation Properties I, L.P. (the "Partnership" or
"Registrant") as of December 31, 1995, as certain footnote disclosures which
would substantially duplicate those contained in such audited financial
statements have been omitted from this report.
1.Investment Property Held for Sale:
On January 25, 1989, the Partnership acquired the Royal Wood Apartments, a 256-
unit residential complex located in Stone Mountain, Georgia.
Subsequent to September 30, 1996, Crown Management Corporation (the "General
Partner") distributed a notice of special meeting and proxy statement to the
Limited Partners to obtain their approval of the sale of the Partnership's sole
asset, the Royal Wood Apartments. The General Partner has estimated the sales
value, net of costs to sell to be $7,655,000. Accordingly, the Partnership
recorded an impairment loss of $572,361 for the three months ended September 30,
1996, to reduce the property's carrying value to its estimated fair value less
cost to sell.
Investment property held for sale at September 30, 1996, consists of:
Land $ 1,108,543
Apartment buildings 7,748,818
Furniture and fixtures 811,514
9,668,875
Less: accumulated depreciation (2,013,875)
$ 7,655,000
2.Transactions with Affiliates:
Effective February 21, 1995, NPI-CL Management, L.P. ("NPI"), which is
unaffiliated with the General Partner, replaced an affiliate of the General
Partner as property manager. Until this time, as compensation for property
management services performed by an affiliate of the General Partner with
respect to the Property, the affiliate was entitled to a management fee in an
amount not to exceed 5% of gross revenues. These fees were accrued as of
September 30, 1996.
Per the loan modification agreement, only approved expenses, which are expenses
that relate to the operation, management or ownership of the property, are
permitted to be paid. Approved expenses do not include management fees and
payments to reimburse the General Partner and its affiliates except for health
insurance costs and computer fees.
2.Transactions with Affiliates (continued) :
The General Partner and its affiliates have made certain advances to enable the
Partnership to avoid incurring late charges on the mortgage payable which is due
on the first day of each month, prior to the receipt of monthly rents from
residents. As of September 30, 1996, advances due to the General Partner and its
affiliates were $321,293. Certain reimbursable costs due to the affiliate have
also been accrued as noted in the following table.
Reimbursable
Management Costs and
Fees Advances Total
Due to affiliates, balance at
January 1, 1996 $ 385,049 $ 423,847 $808,896
Incurred during the nine
months ended September 30, 1996 -- -- --
Paid during the nine months ended
September 30, 1996 -- -- --
Due to affiliates, balance at
September 30, 1996 $ 385,049 $ 423,847 $808,896
3.General:
The financial statements reflect all adjustments which are, in the opinion of
the General Partner, necessary for a fair statement of results for the interim
period presented. Such adjustments are of a normal recurring nature.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Financial Condition; Liquidity and Capital Resources
The Partnership owns one residential apartment complex located in the Stone
Mountain area east of DeKalb County, Georgia. The Partnership acquired the
Royal Woods Apartments on January 25, 1989, from an unaffiliated third party.
The Partnership derives its revenues from rental income from its property and is
responsible for operating expenses, administrative expenses, capital
improvements and debt service payments.
At September 30, 1996, the Partnership had cash on hand of $145,231 including
cash reserves of $103,447 and $41,784 in security deposits. Total cash on hand
at December 31, 1995, was $141,781, including cash reserves of $104,782 and
$36,999 in security deposits. While the Partnership is able to satisfy its
current obligations with cash flows from operations, the General Partner
believes that if there should be a deterioration of the real estate market in
the area where the Royal Wood Apartments are located, then it would be likely
that the Partnership's current funds, together with cash flows from operations,
would not be sufficient to meet the Partnership's liquidity requirements. The
Partnership's working capital was $260,221 on September 30, 1996, compared to a
working capital deficit of $55,448 on December 31, 1995. The increase in the
working capital is primarily attributable to the reclassification of the
partnership's investment property from a long-term asset to a current asset,
partially offset by the reclassification of the mortgage balance to a current
liability due to the July 1, 1997 maturity date of the mortgage. The
reclassification of the investment property was necessary under the provisions
of "FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" once the determination to sell the
property was made. This statement requires that long-lived assets that are held
for disposal be reported at the lower of the assets' carrying amount or fair
value less costs related to the assets' disposition. This reclassification
resulted in an impairment loss of $572,361 (see Part II "Item 4").
The Partnership's net cash flow from operations was $126,464 for the nine
months ended September 30, 1996, compared to $100,207 for the corresponding
period of 1995. The increase in net cash flow from operations during the nine
months ended September 30, 1996, is primarily attributable to an increase in
cash received from rentals, partially offset by an increase in cash paid for
operating activities and interest paid. No distributions to partners were made
during the nine months ended September 30, 1996 or 1995, and it is unlikely that
distributions will be made in the foreseeable future, unless there are proceeds
available from the sale of property and subsequent liquidation of the
Partnership (see Part II "Item 4").
At September 30, 1996, the Partnership owed a total of $808,896 to Allstate
Management Corp. ("Allstate") and Clover Financial Corporation ("Clover"),
including $385,049 in accrued property management fees and $423,847 in
reimbursable costs and advances made to or on behalf of the Partnership. The
amounts owed to Allstate and Clover will be waived and forgiven upon the
occurance of a sale in connection with the proxy solicitation (see Part II "Item
4").
Effective February 21, 1995, the General Partner and certain of its
affiliates entered into an agreement with NPI-CL Management L.P. ("NPI"), an
entity unaffiliated with the Partnership or its General Partner, pursuant to
which NPI began providing day-to-day asset management services for the
Partnership as well as property management services for the Partnership. NPI
is an affiliate of National Property Investors, Inc. On January 19, 1996, the
stockholders of National Property Investors, Inc. sold all of the issued and
outstanding stock to IFGP Corporation, an affiliate of Insignia Financial
Group, Inc.
Results of Operations
Total revenues for the nine and three months ended September 30, 1996, were
$1,236,580 and $427,529, respectively, compared to $1,112,749 and $382,312 for
the corresponding periods of 1995. The increase in total revenues for the nine
and three months ended September 30, 1996, is attributable to rental rate and
occupancy increases at the Partnership's investment property.
The average effective rentals per unit for the nine and three months ended
September 30, 1996, were $5,054 and $1,733, respectively, compared to $4,563 and
$1,584 for the corresponding periods of 1995. The average occupancy for the
nine and three months ended September 30, 1996, was 96%, compared to 95% and 94%
for the corresponding periods of 1995.
Operating expenses for the nine and three months ended September 30, 1996,
were $591,017 and $223,733 respectively, compared to $497,160 and $190,919 for
the corresponding periods of 1995. The increase in operating expenses is
primarily attributable to an increase in repairs and maintenance expenses
incurred in efforts to increase the curb appeal of the Partnership's property.
The Partnership realized net losses for the nine and three months ended
September 30, 1996, of $669,955 and $636,124 respectively, compared to $103,235
and $49,240 for the corresponding periods of 1995. The increase in net loss for
the nine and three months ended September 30, 1996, is primarily due to an
impairment loss to adjust investment property held for sale to its fair market
value less costs to sell and due to the payment of cash flow interest of
$19,618, partially offset by an increase in rental revenue.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 2, 1996, the General Partner distributed a notice of special meeting
and proxy statement to the Limited Partners to solicit their approval of two
proposals relating to the sale of the Partnership's sole asset, the Royal Wood
Apartments. The first proposal is to approve a sale (the "Sale") of the Royal
Wood Apartments to a specific, unaffiliated buyer at a purchase price of
$7,800,000 pursuant to a sale agreement which is expected to be executed on or
about November 15, 1996. The terms of the sale agreement are described in the
proxy statement.
The second proposal would authorize the sale of the Royal Wood Apartments to
another buyer by the General Partner (the "Alternative Sale"). The Alternative
Sale would only be authorized if the Sale is approved, but is not completed for
any reason. In addition, an Alternative Sale would have to be completed prior
to December 31, 1999 for a purchase price not less than the fair market value of
the Royal Wood Apartments (as set forth in an appraisal dated within nine months
of the execution of an Alternative Sale agreement), and the purchaser in such
transaction cannot be an affiliate of the General Partner. Approval of the Sale
proposal and the Alternative Sale proposal will also be a consent to the
termination and dissolution of the Partnership (upon completion of either the
Sale or the Alternative Sale.)
A special meeting of the Limited Partners will be held on November 27, 1996, to
vote upon both proposals. Each proposal must be approved by the holders of more
than 50% of the outstanding units of limited partnership interests in the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLOVER APPRECIATION PROPERTIES I, L.P.
By: CROWN MANAGEMENT CORPORATION,
/s/Donald N. Love
Donald N. Love
President
/s/Stanley Borucki
Stanley Borucki
Treasurer
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Clover
Appreciation Properties I, L.P. 1996 Third Quarter 10-QSB and is qualified in
its entirety be reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000837103
<NAME> CLOVER APPRECIATION PROPERTIES I L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 145,231
<SECURITIES> 0
<RECEIVABLES> 7,957
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,871,170<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,871,940
<CURRENT-LIABILITIES> 7,610,949<F2>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (547,905)
<TOTAL-LIABILITY-AND-EQUITY> 7,871,940
<SALES> 0
<TOTAL-REVENUES> 1,236,580
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,906,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 516,875
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (669,955)
<EPS-PRIMARY> (184.70)
<EPS-DILUTED> 0
<FN>
<F1>Investment property held for sale totalling $7,655,000 is included in current assets.
<F2>Bonds of $7,343,441 mature July of 1997 and are included in current
liabilities.
</FN>
</TABLE>
