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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________
Commission file number 0-18226
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NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 13-3487910
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 576-7300
--------------
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 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
--- ---
Yes X No
--- ---
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
Part I - Financial Information (Unaudited)
Balance Sheets as of March 31, 1996
and December 31, 1995 3
Statement of Operations for the Three
Months Ended March 31, 1996 and 1995 4
Statement of Partners' Capital for the
Three Months Ended March 31, 1996 and
for the Year Ended December 31, 1995 5
Statement of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 6
Notes to Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Part II - Other Information 13
Signatures 14
</TABLE>
2
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NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 DECEMBER 31
ASSETS (UNAUDITED) 1995
- ------ ----------- -----------
<S> <C> <C>
Cash and cash equivalents $13,937,222 $ 867,686
Interest receivable 138,249 208,392
Investments in Participating Insured Mortgages 16,764,965 29,765,800
Deferred acquisition fees and expenses - net 873,295 875,965
Investments in Participating Guaranteed Loans 400,100 400,100
----------- -----------
Total assets $32,113,831 $32,117,943
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Due to affiliates $ 25,000 $ 21,729
Accrued liabilities 60,965 79,423
----------- -----------
Total liabilities 85,965 101,152
----------- -----------
Commitments and Contingencies
Partners' capital:
Capital contributions
net of public offering expenses 36,028,557 36,028,557
Accumulated earnings 17,931,236 17,372,364
Cumulative distributions (21,931,927) (21,384,130)
----------- -----------
Total partners' capital 32,027,866 32,016,791
----------- -----------
Total liabilities and partners' capital $32,113,831 $32,117,943
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME 1996 1995
- ------ ------------ ------------
<S> <C> <C>
Interest - cash and cash equivalents $ 65,709 $ 23,952
Interest - Mortgages
(net of write-off and amortization of deferred
acquisition costs) 503,651 1,084,653
Other income 57,098 324,000
------------ ------------
Total income 626,458 1,432,605
------------ ------------
Expenses
- --------
General and administrative 45,856 44,330
Asset management fees 21,729 27,667
------------ ------------
Total expenses 67,585 71,997
------------ ------------
Net income $ 558,873 $ 1,360,608
------------ ------------
------------ ------------
Net income allocated
- --------------------
General Partner $ 10,619 $ 11,806
Corporate Limited Partner 13 33
Unitholders 548,241 1,348,769
------------ ------------
$ 558,873 $1,360,608
------------ ------------
------------ ------------
Net income per Unit $ .07 $ .17
------------ ------------
------------ ------------
Number of Units 8,168,457.7 8,168,457.7
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NYLIFE Government Mortgage Plus Limited Partnership
Statement of Partners' Capital
for the Three Months Ended March 31, 1996 (Unaudited)
and for the Year Ended December 31, 1995
<TABLE>
<CAPTION>
CORPORATE TOTAL
LIMITED GENERAL PARTNERS'
UNITHOLDERS PARTNER PARTNER CAPITAL
----------- --------- -------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $33,921,431 $ 915 $(39,821) $33,882,525
Net income 2,909,307 71 43,654 2,953,032
Distributions (4,771,535) (117) (47,114) (4,818,766)
----------- ----- -------- -----------
Balance at December 31, 1995 32,059,203 869 (43,281) 32,016,791
Net income 548,241 13 10,619 558,873
Distributions (536,829) (13) (10,956) (547,798)
----------- ----- -------- -----------
Balance at March 31, 1996 $32,070,615 $ 869 $(43,618) $32,027,866
----------- ----- -------- -----------
----------- ----- -------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NYLIFE Government Mortgage Plus Limited Partnership
Statement of Cash Flows
for the Three Months Ended
March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 558,873 $1,360,608
----------- ----------
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Amortization of acquisition costs 2,670 567,642
Changes in assets and liabilities:
Decrease in interest receivable 70,143 59,250
Increase (decrease) in due to affiliates 3,271 (47,333)
Decrease in accrued liabilities (18,458) (6,875)
----------- ----------
Total adjustments 57,626 572,684
----------- ----------
Net cash provided by operating activities 616,499 1,933,292
----------- ----------
Cash flows from investing activities:
Repayment of Participating Insured Mortgages 24,023 29,244
Repayment of GNMA Certificate 12,976,812 0
Repayment of Participating Guaranteed Loans 0 1,095,800
----------- ----------
Net cash provided by investing activities 13,000,835 1,125,044
----------- ----------
Cash flows from financing activities:
Distributions to partners (547,798) (602,634)
----------- ----------
Net cash used in financing activities (547,798) (602,634)
----------- ----------
----------- ----------
Net increase in cash and cash equivalents 13,069,536 2,455,702
Cash and cash equivalents at beginning of period 867,686 950,967
----------- ----------
Cash and cash equivalents at end of period $13,937,222 $3,406,669
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 1 - GENERAL
The accompanying financial statements and related notes should be read in
conjunction with the Partnership's 1995 Annual Report on Form 10-K. The
Partnership terminates on December 31, 2028, unless terminated earlier by the
occurrence of certain events as set forth in the Partnership Agreement.
The summarized financial information contained herein is unaudited; however, in
the opinion of management, all adjustments (which include normal recurring
adjustments) necessary for a fair presentation of financial information have
been included.
All capitalized terms used in these Notes to Financial Statements, unless
otherwise defined herein, shall have the meanings set forth in the Partnership
Agreement.
NOTE 2 - INVESTMENTS IN MORTGAGES
The Partnership's net proceeds of $33,580,000 were committed for investment in
Participating Insured Mortgages ("PIMs") and Participating Guaranteed Loans
("PGLs"). Of this total amount committed, $1,946,594 had been included in the
Partnership's working capital reserve and subsequently distributed to its
Partners on November 15, 1994.
PARTICIPATING INSURED MORTGAGES
Investment in PIMs on the balance sheets as of March 31, 1996 and December 31,
1995 is comprised of the following:
<TABLE>
<CAPTION>
MARCH 31, 1996:
CROSS CREEK SIGNATURE PLACE TOTAL
----------- --------------- -----
<S> <C> <C> <C> <C>
Investment in PIM $7,226,406 $ 9,756,900 $16,983,306
Principal repayments (7,644) (9,981) (17,625)
Acquisition fees and expenses net of
accumulated amortization 292,057 581,238 873,295
---------- ----------- -----------
$7,510,819 $10,328,157 $17,838,976
---------- ----------- -----------
---------- ----------- -----------
DECEMBER 31, 1995:
CROSS CREEK THE HIGHLANDS SIGNATURE PLACE TOTAL
----------- ------------- --------------- -----
Investment in PIM $7,226,406 $13,037,676 $ 9,756,900 $30,020,982
Principal repayments (100,837) (170,991) (99,879) (371,707)
Acquisition fees and expenses net of
accumulated amortization 293,276 0 582,689 875,965
---------- ----------- ----------- -----------
$7,418,845 $12,866,685 $10,239,710 $30,525,240
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>
PARTICIPATING GUARANTEED LOANS
Investment in PGLs on the balance sheets as of March 31, 1996 and December 31,
1995 is comprised of the following:
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MARCH 31, 1996:
CROSS CREEK SIGNATURE PLACE TOTAL
----------- --------------- -----
Investment in PGL $400,000 $100 $400,100
-------- ---- --------
-------- ---- --------
DECEMBER 31, 1995:
CROSS CREEK SIGNATURE PLACE TOTAL
----------- --------------- -----
Investment in PGL $400,000 $100 $400,100
-------- ---- --------
-------- ---- --------
As the Earn-out periods for each of the Properties expired during 1994, the
Partnership has no further commitments to fund amounts under the PGLs.
RECENT DEVELOPMENTS
On February 27, 1996, the Partnership sold the Highlands GNMA for cash in the
amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl Capital
Partners, an unaffiliated broker dealer, pursuant to which the Highlands
Borrower agreed to pay a portion of any additional taxes determined by the
State of Florida to be due in connection with the recording of the original
loan documents. The State of Florida claimed that $136,800 in additional
recording taxes were due. On March 12, 1996, the Partnership settled the
recording tax claim of the State of Florida through a payment made on behalf
of the Partnership in the amount of $64,000 ($53,850 of which was funded by
the General Partner and $10,150 of which was funded by the Original Highlands
Borrower). The Partnership has recently received the signed Closing Agreement
settling the claim from the State of Florida and the letters of credit will be
returned to the Original Highland Borrower. The sales price represents
principal in the amount of $12,976,812.45, accrued interest in the amount of
$71,462.59 and a premium of $57,097.97. The Partnership was not charged any
separate fees or commissions in connection with the sale. The General Partner
of the Partnership decided to sell the Highlands GNMA to take advantage of what
it perceived to be a favorable market in which the Highlands GNMA could be sold
at a premium. The Partnership intends to distribute such proceeds to its
partners on May 15, 1996, the next scheduled distribution date.
The sale of the Highlands GNMA, together with the 1995 sale of the Highlands
and the related modification of the Highlands Mortgage, terminated the
Partnership's beneficial interest in the Highlands Mortgage and the Highlands.
CLASS ACTION LAWSUIT
Two class action lawsuits were filed against certain affiliates of the
General Partner in the District Court of Harris County, Texas on January 11,
1996, styled Grimshawe v. New York Life Insurance Co., et al (No. 96-001188)
and Shea v. New York Life Insurance Co., et al (No. 96-001189) alleging
misconduct in connection with the original sale of investment units in
various partnerships, including violation of various laws and regulations
and claims of continuing fraudulent conduct. The plaintiffs have asked
for compensatory damages for their lost original investment, plus
interest, costs (including attorneys fees), punitive damages, disgorgement of
any earnings, compensation and benefits received by the defendants as a
result of the alleged actions and other unspecified relief to which
plaintiffs may be entitled. These suits were amended and refiled in a
consolidated action in the United States District Court for the Southern
District of Florida (the "Court") on March 18, 1996. In the federal action,
the plaintiffs added the General Partner as a defendant and included
allegations concerning the Partnership. The plaintiffs purport to represent
a class of all persons (the "Class") who purchased or otherwise assumed
rights and title to interests in certain limited
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<PAGE>
partnerships, including the Partnership, and other programs created, sponsored,
marketed, sold, operated or managed by the defendants (the "Proprietary
Partnerships"). The Partnership is not a defendant in the litigation.
The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units
or the structure of the Proprietary Partnerships. Nevertheless, to reduce
the burden of protracted litigation, the defendants have entered into a
Stipulation of Settlement ("Settlement Agreement") with the plaintiffs
because in their opinion such Settlement would (i) provide substantial
benefits to the Class in a manner consistent with New York Life's position
that it had previously determined to wind up most of the Proprietary
Partnerships through orderly liquidation as the continuation of the business
no longer serves the intended objectives of either the owners of interest in
such Proprietary Partnerships or the defendants and to offer investors an
enhancement to the liquidating distribution they would otherwise receive and
(ii) provide an opportunity to wind up such partnerships on a schedule
favorable to the Class and resolve the issues raised by the lawsuit.
In connection with the proposed settlement (the "Settlement"), the General
Partner will solicit consents of the Unitholders for the dissolution of the
Partnership.
Under the terms of the Settlement Agreement, any settling Unitholder will
receive at least a complete return of their original investment, less
distributions received prior to the final settlement date, in exchange for a
release of any and all claims a Unitholder may have against the defendants in
connection with the Proprietary Partnerships, including the Partnership, and
all activities related to the dissolution and liquidation of such
partnerships.
Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Unitholders.
If the necessary consents of Unitholders for dissolution are obtained, the
Partnership will be dissolved even if all necessary approvals for the
Settlement Agreement are not obtained or the Settlement Agreement is otherwise
terminated. In general, upon the dissolution of the Partnership, tax
consequences will accrue to the partners. If the necessary consents of the
Unitholders for dissolution are not obtained, the Partnership will continue to
own the Mortgages and will continue to receive payments thereon.
The financial statements do not include any adjustments that might result
should the Unitholders vote to liquidate the Partnership.
NOTE 3 - TRANSACTIONS WITH THE GENERAL PARTNER
The following is a summary of the fees earned and reimbursable expenses incurred
by the General Partner for the three months ended March 31, 1996 and 1995:
9
<PAGE>
<TABLE>
<CAPTION>
TOTAL EARNED FOR THE TOTAL EARNED FOR THE
UNPAID AT THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1996 MARCH 31, 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Asset management fees $21,729 $21,729 $27,667
Reimbursement of general and
administrative expenses to the
General Partner
25,000 25,000 25,000
------- ------- -------
$46,729 $46,729 $52,667
------- ------- -------
------- ------- -------
</TABLE>
NOTE 4 - SUBSEQUENT EVENTS
Surplus Cash - Signature Place
A review of the borrower's audited financial statements for the year ended
December 31, 1995 indicated that the sum of $79,840.20 is due the Partnership
representing surplus cash. The Partnership filed an application for a
distribution of surplus cash with the co-insurer for approval. On May 7,
1996 the Partnership received the co-insurer's approval and therefore expects
to receive payment during the second quarter of 1996.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's cash and cash equivalents balance at March 31, 1996 consists
of $426,269 of working capital reserves, $13,105,373 of proceeds from the sale
of the Highlands GNMA and cash generated from operations net of accrued
interest. The Partnership's working capital reserves are invested in
short-term obligations of the United States government and other cash
equivalents. As a result of the sale of the Highlands GNMA and the
distribution of the proceeds from the sale to Unitholders on May 15, 1996,
the Partnership's net cash provided by operating activities is expected to
decline significantly. The Partnership will, however, still generate
sufficient cash from operating activities to pay its operating expenses as
well as continue to make quarterly distributions to the Unitholders.
The Partnership currently derives its income primarily from its investments
in mortgage backed securities ("MBSs"), which are long-term, fixed interest rate
Government National Mortgage Association ("GNMA") securities, guaranteed as to
the timely payment of principal and interest by GNMA and backed by the full
faith and credit of the United States Government. The Partnership's only
operating expenses are general and administrative expenses which include audit
and tax return preparation fees, printing and postage costs for quarterly and
annual reports, and reimbursement to the General Partner for reimbursable
expenses incurred in accordance with the Partnership Agreement. In addition,
the Partnership pays an asset management fee to the General Partner of .5%
annually of the average aggregate amount invested in the Cross Creek and
Signature Place Mortgages. In connection with the 1995 sale of the
Highlands, the Highlands PIM (the "Highlands Mortgage") was modified and the
Partnership is no longer entitled to any participation in net cash flow or net
appreciation of the Highlands. Accordingly, effective January 31, 1995, the
General Partner decided to forego an asset management fee with respect to the
Highlands Mortgage. After payment of general and administrative expenses, the
Partnership, distributes all of its income plus principal repayments on the
MBSs to the partners on a quarterly basis.
The Cross Creek and Signature Place PIMs and PGLs entitle the Partnership to
participate in the net cash flow of the properties above certain levels and
in any net appreciation in value upon refinancing. To date the Partnership
has not received any such participations from these properties.
Net cash provided by operating activities for the three months ended March
31, 1996 was $616,499 compared to $1,933,292 for the comparable 1995 period.
This decrease is primarily a result of the sale of the Highlands property in
January 1995 as discussed in the Partnerships Annual Report on Form 10-K.
RESULTS OF OPERATIONS
The decrease in the Partnership's net income for the three months ended
March 31, 1996 as compared to the corresponding period in 1995 is primarily a
result of the sale of the Highlands property in January 1995 as discussed in
the Partnership's Annual Report on Form 10-K.
The increase in interest income in cash and cash equivalents is due to the
shift of funds from Investments in PIMs to short-term investments as a result
of the sale of the Highland GNMA in the first quarter. In addition, as a result
of the sale of the Highlands GNMA the Partnership recognized a gain of $57,098.
As previously discussed, the distribution of the proceeds from the sale of
the Highlands GNMA to Unitholders on May 15, 1996 will result in approximately
a 33% decrease in net
11
<PAGE>
income in the second quarter and remain at that level until such time, if
any, that the Partnership receives participations on the Cross Creek and
Signature Place Mortgages.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated by reference to Item 3 of Form 10-K
For the fiscal year ended December 31, 1995
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
Incorporated by reference to Form 8-K dated March 29, 1996
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Partnership filed a report on Form 8-K
dated March 29,1996, which is incorporated
herein by reference. The contents of the report
are as follows:
Solicitation of Consents to Dissolve, Terminate
and wind up the Partnership
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SIGNATURES
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 on May 13, 1996.
NYLIFE Government Mortgage Plus
Limited Partnership
By: NYLIFE Realty Inc.
General Partner
By: /s/ Kevin M. Micucci
-------------------------------------
Kevin M. Micucci
President and Controller
(Principal Executive, Financial
and Accounting Officer)
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