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 September 30, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-18491
CAPITAL MORTGAGE PLUS L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3502020
- - ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
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 ___
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
============ ============
September 30, December 31,
1997 1996
------------ ------------
ASSETS
Investments in loans (Note 2) $ 27,186,540 $ 27,485,450
Cash and cash equivalents 343,265 567,460
Accrued interest receivable
(net of allowance of $442,138
and $442,138, respectively) 446,802 365,663
Loan origination costs
(net of accumulated
amortization of $136,037
and $118,499, respectively) 856,701 874,239
------------ ------------
Total assets $ 28,833,308 $ 29,292,812
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and other
liabilities $ 14,978 $ 27,704
Due to general partner and
affiliates (Note 3) 354,548 297,828
------------ ------------
Total liabilities 369,526 325,532
------------ ------------
Partners' capital (deficit):
Limited Partners (1,836,660 BACs
issued and outstanding) 28,563,102 29,056,531
General Partner (99,320) (89,251)
------------ ------------
Total partners' capital 28,463,782 28,967,280
------------ ------------
Total liabilities and partners' capital $ 28,833,308 $ 29,292,812
============ ============
See Accompanying Notes to Financial Statements
2
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF INCOME
(Unaudited)
==================== ========================
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------------
1997 1996 1997 1996
-------------------- ------------------------
Revenues
Interest income:
Mortgage
loans $620,941 $598,113 $1,877,264 $1,825,737
Temporary
investments 3,152 8,441 12,368 31,767
Other income 363 563 1,889 1,689
-------- -------- ---------- ----------
Total revenues 624,456 607,117 1,891,521 1,859,193
-------- -------- ---------- ----------
Expenses
General and
administrative 12,828 10,815 52,002 49,556
General and
administrative-
related parties
(Note 3) 60,094 63,247 170,458 173,757
Amortization 70,045 70,045 210,135 210,135
-------- -------- ---------- ----------
Total expenses 142,967 144,107 432,595 433,448
-------- -------- ---------- ----------
Net income $481,489 $463,010 $1,458,926 $1,425,745
======== ======== ========== ==========
Allocation of
Net income:
Limited
Partners $471,859 $453,750 $1,429,747 $1,397,230
======== ======== ========== ==========
General
Partner $ 9,630 $ 9,260 $ 29,179 $ 28,515
======== ======== ========== ==========
Net income per
BAC $ .26 $ .25 $ .78 $ .76
======== ======== ========== ==========
See Accompanying Notes to Financial Statements
3
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
==============================================
Limited General
Total Partners Partner
----------------------------------------------
Partners' capital
(deficit) -
January 1, 1997 $ 28,967,280 $ 29,056,531 $(89,251)
Net income 1,458,926 1,429,747 29,179
Distributions (1,962,424) (1,923,176) (39,248)
------------ ------------ --------
Partners' capital
(deficit) -
September 30, 1997 $ 28,463,782 $ 28,563,102 $(99,320)
============ ============ ========
See Accompanying Notes to Financial Statements
4
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
=========================
Nine Months Ended
September 30,
-------------------------
1997 1996
-------------------------
Cash flows from operating activities:
Net income $1,458,926 $1,425,745
Adjustments to reconcile net income
to net cash provided
by operating activities:
Amortization expense 210,135 210,135
Amortization of interest rate
buydown (1,089) (1,089)
Increase in accrued interest
receivable (81,139) (160,909)
Decrease in accounts payable
and other liabilities (12,726) (29,930)
Increase (decrease) in due to
general partner and affiliates 56,720 (172,005)
---------- ----------
Net cash provided by operating
activities 1,630,827 1,271,947
---------- ----------
Cash flows from investing activities:
Receipt of principal on mortgage
loans 107,402 99,394
---------- ----------
Cash flows from financing activities:
Distributions to partners (1,962,424) (1,962,424)
---------- ----------
Net decrease in cash and
cash equivalents (224,195) (591,083)
Cash and cash equivalents at
beginning of period 567,460 1,218,363
---------- ----------
Cash and cash equivalents at
end of period $ 343,265 $ 627,280
========== ==========
See Accompanying Notes to Financial Statements
5
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
Note 1 - General
The unaudited financial statements have been prepared on the same basis as the
audited financial statements included in the Partnership's Form 10-K for the
year ended December 31, 1996. In the opinion of the General Partner, the
accompanying unaudited financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the financial
position of the Partnership as of September 30, 1997, the results of operations
for the three and nine months ended September 30, 1997 and 1996 and cash flows
for the nine months ended September 30, 1997 and 1996. However, the operating
results for the nine months ended September 30, 1997 may not be indicative of
the results for the year.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996.
6
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
Note 2 - Investments in Loans
The Partnership has funded five mortgage loans and originated five noninterest
bearing equity loans in the aggregate amount of $29,220,325.
Information relating to investments in mortgage loans and equity loans as of
September 30, 1997 is as follows:
<TABLE>
<CAPTION>
Amounts Advanced
------------------------------------------------------------------
Number of Date of Final Total Investments Investments
Apartment Invest- Maturity Mortgage Amounts in Loans at In Loans at
Property/Location Units ment Date Loans Equity Loans Advanced 9/30/97(E) 12/31/96(E)
--------- ------- -------- ----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortenson Manor Apts/ 104 8/90 8/30 $ 4,974,090 $ 577,885 $ 5,551,975 $ 5,030,912 $ 5,095,655
Ames, IA
Windemere Apts./ 204 9/90 9/30 8,110,300 736,550 8,846,850 8,248,701 8,325,535
Wichita, KS
Fieldcrest III Apts./ 112 8/91 8/31 3,343,700 383,300 3,727,000 3,478,804 3,513,361
Dothan, AL
Holly Ridge II Apts/ 144 3/93 3/33 5,310,100 684,400 5,994,500 5,676,108 5,734,738
Gresham, OR
Willow Trace Apts./ 152 6/93 6/28 4,420,000 680,000 5,100,000 4,752,015 4,816,161
Tuscaloosa, AL
----------- ---------- ----------- ----------- -----------
Total $26,158,190 $3,062,135 $29,220,325 $27,186,540 $27,485,450
=========== ========== =========== =========== ===========
Interest earned by the Partnership during 1997
----------------------------------------------------------------
Non-contingent Contingent
----------------------- -------------------------
Default Annual Cash Flow
Base Interest Interest Yield Participation Total
Amount/ Amount/ Amount/ Amount/ Interest
Property/Location Rate (A) Rate (B) Rate (C) Rate (D) Earned
------------- -------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Mortenson Manor Apts./ $ 229,246 $ 71,935 $ 0 $ 0 $ 301,181
Ames, IA 6.45% 1.98% 0.97% 30.00%
Windemere Apts./ 473,447 96,343 0 0 569,790
Wichita, KS 7.95% 1.60% 1.09% 30.00%
Fieldcrest III Apts./ 214,074 1,746 45,630 6,690 268,140
Dothan, AL 8.68% 0.07% 1.36% 30.00%
Holly Ridge II Apts./ 320,401 65,390 N/A 11,704 397,495
Gresham, OR 8.125% 1.64% 25.00%
Willow Trace Apts./ 269,227 42,216 N/A 29,215 340,658
Tuscaloosa, AL 8.37% 1.287% 30.00%
---------- -------- ------- ------- ----------
Total $1,506,395 $277,630 $45,630 $47,609 $1,877,264
========== ======== ======= ======= ==========
</TABLE>
(A) Base interest on the mortgages is that amount that is insured/co-insured by
HUD and is being shown net of service fee.
(B) Default Interest is the minimum amount due over the base rate, and is not
contingent upon cash flow. This interest is secured by Partnership
interests. Fieldcrest's default rate was reduced during 11/95, as per the
Additional Interest documents, to 0.07% over the Base Rate.
(C) Annual Yield is the amount over the default rate and is contingent upon
property cash flow.
(D) Cash Flow Participation is the percent of cash flow due to the Partnership
after payment of the Annual Yield and is contingent upon property cash
flow.
(E) The Investments in Loans amount reflects the unpaid balance of the
Mortgages and the unamortized balance of the equity loans in the amounts of
$25,545,680 and $1,640,860, respectively, at September 30, 1997 and
$25,651, 993 and $1,833,457, respectively, at December 31, 1996.
7
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
Investments in loans January 1, 1996 $27,874,623
Additions:
Fieldcrest III discount amortization 1,452
Deductions:
Amortization of equity loans (256,796)
Collection of principal - Mortenson (36,080)
- Windemere (38,298)
- Fieldcrest III (12,944)
- Holly Ridge (19,674)
- Willow Trace (26,833)
-----------
Investments in loans December 31, 1996 27,485,450
Additions:
Fieldcrest III discount amortization 1,089
Deductions:
Amortization of equity loans (192,597)
Collection of principal - Mortenson (28,625)
- Windemere (30,801)
- Fieldcrest III (10,476)
- Holly Ridge (15,854)
- Willow Trace (21,646)
-----------
Investments in loans September 30, 1997 $27,186,540
===========
The Mortenson and Windemere mortgage loans are co-insured by HUD and Related
Mortgage Corporation ("RMC"), an affiliate of the General Partner. The
Fieldcrest III, Holly Ridge and Willow Trace mortgage loans are insured by HUD.
The equity loans are non-interest bearing and are secured by the assignment of
the owner/developers' interests in the projects. The equity loans are not
insured by HUD or any other party and, for financial statement reporting
purposes, are considered to be premiums paid to obtain the mortgage loans. These
premiums are being amortized over the average expected lives of the respective
mortgages.
8
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
All loans have call provisions effective ten years following final endorsement
and a grace period. The Partnership presently expects to dispose of such loans
within 10 to 15 years after acquisition.
At September 30, 1997, all of the loans due to the Partnership are current (when
taking into account the Mortenson modification agreement effective January 1,
1995). Mortenson has not paid approximately $442,000 of $525,000 default
interest due for the years ended December 31, 1993 to December 31, 1996
resulting in an allowance for uncollectability relating to the default interest
amounting to approximately $442,000 at both September 30, 1997 and December 31,
1996.
Note 3 - Related Parties
The costs incurred to related parties for the three and nine months ended
September 30, 1997 and 1996 were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ---------------------
1997 1996 1997 1996
----------------------- ---------------------
Partnership
management
fees (a) $38,266 $38,266 $114,799 $114,799
Expense
reimburse-
ment (b) 21,828 24,981 55,659 58,958
------- ------- -------- --------
$60,094 $63,247 $170,458 $173,757
======= ======= ======== ========
(a) A Partnership management fee for managing the affairs of the Partnership
equal to .5% per annum of invested assets is payable out of cash flow to the
General Partner. Partnership management fees owed to the General Partner
amounting to approximately $268,000 were accrued and unpaid as of September 30,
1997 and December 31, 1996.
(b) The General Partner and its affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management,
register, transfer and assignment functions, asset management, investor
communications, printing services
9
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
and other administrative services. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. An
affiliate of the General Partner performs asset monitoring for the Partnership.
These services include site visits and evaluations of the performance of the
properties securing the loans.
RMC is a co-insurer on the Mortenson and Windemere mortgage loans in which the
Partnership has invested. RMC receives a mortgage insurance premium which is
paid by the mortgagors.
Note 4 - Subsequent Event
It is anticipated that during November 1997, a distribution of $648,164 and
$13,228 will to be paid to BACs holders and the General Partner, respectively,
representing the 1997 third quarter distribution.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Capital Resources and Liquidity
- - -------------------------------
The Partnership received $36,733,200 in gross proceeds for BACs during the
period July 28, 1989 through May 23, 1991. No further issuance of BACs is
anticipated.
Other sources of Partnership funds included interest earned on investments in
mortgage loans and the working capital reserve.
During the nine months ended September 30, 1997, cash and cash equivalents of
the Partnership decreased by approximately $224,000. Cash provided by operating
activities and collections of principal on mortgage loans were approximately
$1,631,000 and $107,000, respectively, and distributions paid to partners
approximated $1,962,000. Included in the adjustments to reconcile the net income
to cash provided by operating activities is amortization of approximately
$209,000.
In addition, the General Partner has allowed the accrual without payment of the
partnership management fee through 1992 in an aggregate amount equal to
approximately $268,000. Since 1992, substantially all partnership management
fees and expense reimbursements have been paid. In future years, a portion of
the working capital reserve may be used to pay accrued and unpaid fees and/or
distributions in the event that cash generated from operations is not sufficient
to maintain current distribution levels and repay such fees. Distributions in
1997 and prior years have been supplemented by a portion of working capital
reserves.
The Partnership anticipates that cash generated from operations and invested in
temporary investments, including the working capital reserve, will be sufficient
to cover anticipated expenses in 1997.
Distributions of approximately $1,923,000 made to the limited partners or BACs
holders for each of the nine months ended September 30, 1997 and 1996 were made
from adjusted cash flow from operations and, to a lesser extent, from working
capital reserves, which is considered to be a return of capital. A total of
approximately $39,000 was distributed to the General Partner during each of the
nine months ended September 30, 1997 and 1996.
The level of future distributions will depend on results of operations.
Furthermore, the expiration of the Guaranteed Rate Guaranty Periods, two of
which expired in 1993, one of which expired
11
<PAGE>
in 1995, one of which expired in 1996 and one of which expired in 1997 may have
an adverse affect on future distributions if contingent interest is not realized
on the mortgage loans.
Management is not aware of any trends or events, commitments or uncertainties
that will impact liquidity in a material way. Management believes the only
impact would be from laws that have not yet been adopted. All base interest and
the principal of the Partnership's investments in mortgage loans are insured or
co-insured by HUD and a private mortgage lender (which is an affiliate of the
General Partner). The Partnership's investments in uninsured non-interest
bearing equity loans (which represent approximately 10% of the Partnership's
portfolio) are secured by a Partnership interest in properties which are
diversified by location so that if one area of the country is experiencing
downturns in the economy, the remaining properties may be experiencing upswings.
However, the geographic diversification of the portfolio may not protect against
a general downturn in the national economy.
Results of Operations
- - ---------------------
Three and Nine Months Ended September 30, 1997 Compared with Three and Nine
- - ---------------------------------------------------------------------------
Months Ended September 30, 1996
- - -------------------------------
Results of operations for the three and nine months ended September 30, 1997 and
1996 consisted primarily of interest income earned from investment in mortgage
loans of approximately $621,000 and $598,000 and $1,877,000 and $1,826,000,
respectively.
Interest income from mortgage loans increased approximately $23,000 and $52,000
for the three and nine months ended September 30, 1997, respectively, as
compared to 1996. The increase during the three months was primarily due to cash
flow participation payments from Holly Ridge and Willow Trace in the third
quarter of 1997. The increase during the nine months was primarily due to the
receipt of an annual yield payment from Fieldcrest III in the second quarter of
1997 as well as the cash flow participation payment from Holly Ridge in the
third quarter.
Interest income from temporary investments decreased approximately $5,000 and
$19,000 for the three and nine months ended September 30, 1997, respectively, as
compared to 1996 primarily due to lower cash and cash equivalents balances.
Total expenses remained fairly consistent with decreases of approximately 1% and
less than 1% for the three and nine months ended September 30, 1997,
respectively, as compared to 1996.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings pending against or involving the
Partnership.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
13
<PAGE>
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.
CAPITAL MORTGAGE PLUS L.P.
By: CIP ASSOCIATES, INC.
General Partner
Date: November 13, 1997
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President
(Principal Financial Officer)
Date: November 13, 1997
By: /s/ Richard A. Palermo
----------------------
Richard A. Palermo
Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information
extracted from the financial statements for Capital
Mortgage Plus L.P. and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<CIK> 0000845875
<NAME> Capital Mortgage Plus L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 343,265
<SECURITIES> 0
<RECEIVABLES> 28,075,480
<ALLOWANCES> 442,138
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,833,308
<CURRENT-LIABILITIES> 369,526
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,463,782
<TOTAL-LIABILITY-AND-EQUITY> 28,833,308
<SALES> 0
<TOTAL-REVENUES> 1,891,521
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 432,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,458,926
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,458,926
<EPS-PRIMARY> .78
<EPS-DILUTED> 0
</TABLE>
