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, 1998
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)
<TABLE>
<CAPTION>
=========== ===========
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Investments in mortgage loans (Note 2) $26,985,604 $27,085,493
Cash and cash equivalents 306,173 217,902
Accrued interest receivable
(net of allowance of $538,217
and $538,217, respectively) 396,845 443,267
Loan origination costs
(net of accumulated
amortization of $147,734
and $141,883, respectively) 845,004 850,855
----------- -----------
Total assets $28,533,626 $28,597,517
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and other
liabilities $ 47,959 $ 46,446
Due to general partner and
affiliates (Note 3) 454,577 400,298
----------- -----------
Total liabilities 502,536 446,744
----------- -----------
Partners' capital (deficit):
Limited Partners (1,836,660 BACs
issued and outstanding) 28,139,065 28,256,354
General Partner (107,975) (105,581)
----------- -----------
Total partners' capital 28,031,090 28,150,773
----------- -----------
Total liabilities and partners' capital $28,533,626 $28,597,517
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
==========================
Three Months Ended
March 31,
--------------------------
1998 1997
--------------------------
<S> <C> <C>
Revenues
Interest income:
Mortgage loans (Note 2) $666,648 $594,482
Temporary investments 1,762 5,088
Other income 363 613
-------- --------
Total revenues 668,773 600,183
-------- --------
Expenses
General and administrative 2,747 11,276
General and administrative-
related parties (Note 3) 54,268 48,463
Amortization 70,050 70,045
-------- --------
Total expenses 127,065 129,784
-------- --------
Net income $541,708 $470,399
======== ========
Allocation of Net income:
Limited Partners $530,874 $460,991
======== ========
General Partner $ 10,834 $ 9,408
======== ========
Net income per BAC $ .29 $ .25
======== ========
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
=================================================
Limited General
Total Partners Partner
-------------------------------------------------
<S> <C> <C> <C>
Partners' capital
(deficit) -
January 1, 1998 $ 28,150,773 $ 28,256,354 $(105,581)
Net income 541,708 530,874 10,834
Distributions (661,391) (648,163) (13,228)
Partners' capital
(deficit) - ------------ ------------ ---------
March 31, 1998 $ 28,031,090 $ 28,139,065 $(107,975)
============ ============ =========
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
========================
Three Months Ended
March 31,
------------------------
1998 1997
------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 541,708 $ 470,399
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization expense 70,050 70,045
Amortization of interest rate buydown (363) (363)
Decrease (increase) in accrued interest
receivable 46,422 (66,853)
Increase (decrease) in accounts payable
and other liabilities 1,513 (703)
Increase in due to general partner
and affiliates 54,279 11,045
--------- ---------
Net cash provided by operating
activities 713,609 483,570
--------- ---------
Cash flows from investing activities:
Receipt of principal on mortgage
loans 36,053 35,109
--------- ---------
Cash flows from financing activities:
Distributions to partners (661,391) (661,391)
--------- ---------
Net increase (decrease) in cash and
cash equivalents 88,271 (142,712)
Cash and cash equivalents at
beginning of period 217,902 567,460
--------- ---------
Cash and cash equivalents at
end of period $ 306,173 $ 424,748
========= =========
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(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, 1997. 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 March 31, 1998, the results of operations and
its cash flows for the three months ended March 31, 1998 and 1997. However, the
operating results for the three months ended March 31, 1998 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, 1997.
6
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(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
March 31, 1998 is as follows:
<TABLE>
<CAPTION>
Amounts Advanced
-------------------------------------------------------------------
No. of
Apart- Date of Final Total Investments in Investments
Property/ ment Invest- Maturity Mortgage Amounts Loans at in Loans at
Location Units ment Date Loans Equity Loans Advanced 3/31/98 (E) 12/31/97 (E)
- - -------- ------ ------- -------- ---------- ------------ -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortenson 104 8/90 8/30 $ 4,974,090 $ 577,885 $ 5,551,975 $ 4,986,968 $ 5,009,020
Manor
Apts./
Ames, IA
Windemere 204 9/90 9/30 8,110,300 736,550 8,846,850 8,196,427 8,222,672
Apts./
Wichita, KS
Fieldcrest III 112 8/91 8/31 3,343,700 383,300 3,727,000 3,455,376 3,467,130
Apts./
Dothan, AL
Holly Ridge II 144 3/93 3/33 5,310,100 684,400 5,994,500 5,638,352 5,656,344
Apts./
Gresham, OR
Willow Trace 152 6/93 6/28 4,420,000 680,000 5,100,000 4,708,481 4,730,327
Apts./
Tuscaloosa, AL
----------- ----------- ----------- ------------- -----------
Total $26,158,190 $3,062,135 $29,220,325 $26,985,604 $27,085,493
=========== =========== =========== ============= ===========
<CAPTION>
Interest earned by the Partnership during 1998
---------------------------------------------------------
Non-contingent Contingent
----------------------- -------------------------------
Cash Flow
Default Annual Partici-
Base Interest Interest Yield pation Total
Property/ Amount/ Amount/ Amount/ Amount/ Interest
Location Rate (A) Rate (B) Rate (C) Rate (D) Earned
- - -------- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Mortenson $ 75,947 $ 23,525 $ 0 $ 0 $ 99,472
Manor 6.45% 1.98% 0.97% 30.00%
Apts./
Ames, IA
Windemere 157,184 31,635 0 0 188,819
Apts./ 7.95% 1.60% 1.09% 30.00%
Wichita, KS
Fieldcrest III 71,123 11,695 47,651 11,490 141,959
Apts./ 8.68% 0.07% 1.36% 30.00%
Dothan, AL
Holly Ridge II 106,468 21,490 N/A 0 127,958
Apts./ 8.125% 1.64% 25.00%
Gresham, OR
Willow Trace 89,278 13,844 N/A 5,318 108,440
Apts./ 8.37% 1.287% 30.00%
Tuscaloosa, AL
-------- -------- ------- ------- --------
Total $500,000 $102,189 $47,651 $16,808 $666,648
======== ======== ======= ======= ========
</TABLE>
7
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
(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 III'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.
Fieldcrest III and Willow Trace provided sufficient cash flow in 1997 to pay the
Partnership a participation during 1998.
(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 $25,473,142
and $1,512,462 at March 31, 1998 and $25,508,832 and $1,576,661, respectively,
at December 31, 1997.
<TABLE>
<S> <C>
Investments in loans January 1, 1997 $27,485,450
Additions:
Fieldcrest III discount amortization 1,452
Deductions:
Amortization of equity loans (256,796)
Collection of principal - Mortenson (38,478)
- Windemere (41,485)
- Fieldcrest III (14,123)
- Holly Ridge (21,360)
- Willow Trace (29,167)
----------
Investments in loans December 31, 1997 27,085,493
----------
</TABLE>
8
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Additions:
<S> <C>
Fieldcrest III discount amortization 363
Deductions:
Amortization of equity loans (64,199)
Collection of principal - Mortenson (10,012)
- Windemere (10,900)
- Fieldcrest III (3,727)
- Holly Ridge (3,734)
- Willow Trace (7,680)
-----------
Investments in loans March 31, 1998 $26,985,604
===========
</TABLE>
The Mortenson and Windemere Mortgages are co-insured by HUD and Related Mortgage
Corporation ("RMC"), an affiliate of the General Partner. The Fieldcrest III,
Holly Ridge and Willow Trace mortgages 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 Mortgages. These
premiums are being amortized over the average expected lives of the respective
Mortgages.
All loans have call provisions effective ten years following final endorsement
and a grace period.
At March 31, 1998, 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 $498,000 of $621,000 default
interest due for the years ended December 31, 1993 to December 31, 1997
resulting in an allowance for uncollectability relating to the default interest
amounting to approximately $538,000 at both March 31, 1998 and December 31,
1997.
9
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
Note 3 - Related Parties
The costs incurred to related parties for the three months ended March 31, 1998
and 1997 were as follows:
<TABLE>
<CAPTION>
========================
Three Months Ended
March 31,
------------------------
1998 1997
------------------------
<S> <C> <C>
Partnership management fees (a) 38,266 $38,266
Expense reimbursement (b) 16,002 10,197
------- -------
$54,268 $48,463
======= =======
</TABLE>
(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 $344,088 and $305,822 were accrued and unpaid as of
March 31, 1998 and December 31, 1997.
(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 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.
10
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
Note 4 - Subsequent Event
It is anticipated that during May 1998, a distribution of $452,922 and $9,243
will be paid to BACs holders and the General Partner, respectively, representing
the 1998 first quarter distribution.
11
<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.
Sources of Partnership funds included interest earned on (1) investments in
mortgage loans and (2) the working capital reserve.
During the three months ended March 31, 1998, cash and cash equivalents of the
Partnership increased by approximately $88,000. Cash provided by operating
activities and receipt of principal on mortgage loans were approximately
$750,000, and distributions paid to partners approximated $661,000. Included in
the adjustments to reconcile the net income to cash provided by operating
activities is amortization of approximately $70,000.
In addition, the General Partner has allowed the accrual without payment of the
partnership management fee through 1992 and for the quarters ended March 31,
1998 and December 31, 1997 in aggregate amounts equal to approximately $268,000
and $76,000 respectively. See Note 3 - Related Parties. Since 1992, all
partnership management fees except the quarter ended March 31, 1998 and December
31, 1997 and substantially all expense reimbursements have been paid. As the
Partnership's portfolio has not performed as anticipated, distributions in
previous quarters have been augmented with funds made available by the General
Partner deferring its management fees and reimbursements and by utilizing
Partnership working capital reserves. The distribution for the quarter ended
March 31, 1998, which will be paid on May 15, 1998, has been reduced to a level
equal to 5% per annum, based on the original BAC price. This reflects the actual
cash receipts of interest payments and scheduled amortization for the quarter.
This and future quarterly distributions will no longer be augmented by working
capital or the deferral of fees. Subject to the performance of the Partnership's
investments and results of operations, at this time it is anticipated that there
will be sufficient cash from operations generated to cover anticipated expenses
in 1998 and to fund future distributions, at least at the reduced level.
A distribution of approximately $648,000 was made to the limited partners or
BACs holders for the three months ended March 31,
12
<PAGE>
1997 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 $13,000 was distributed to the General Partner during the three
months ended March 31, 1997.
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 months Ended March 31, 1998 Compared with Three months Ended March 31,
1997
Results of operations for the three months ended March 31, 1998 and 1997
consisted primarily of interest income earned from investment in mortgage loans
of approximately $667,000 and $594,000, respectively.
Interest income on mortgage loans increased approximately $72,000 for the three
months ended March 31, 1998, as compared to 1997 primarily due to cash flow
participation and annual yield payments from Fieldcrest III as well as a cash
flow participation payment from Willow Trace.
Interest income from temporary investments decreased approximately $3,000 for
the three months ended March 31, 1998, as compared to 1997 primarily due to
lower cash and cash equivalents balances in 1998.
Total expenses remained fairly consistent with a decrease of approximately 2%
for the three months ended March 31, 1998 as compared to 1997.
13
<PAGE>
General and administrative decreased approximately $9,000 for the three months
ended March 31, 1998, as compared to 1997 primarily due to a decrease in legal
and printing expenses in 1998.
General and administrative-related parties increased approximately $6,000 for
the three months ended March 31, 1998, as compared to 1997 primarily due to the
timing of certain expenses paid and a decrease in legal expenses.
Year 2000 Compliance
- - --------------------
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The General Partner is in the process of working with the
Partnership's service providers to prepare for the year 2000. Based on
information currently available, the Partnership does not expect that it will
incur significant operating expenses or be required to incur material costs to
be year 2000 compliant.
14
<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.
15
<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: May 13, 1998
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President
(Principal Financial Officer)
Date: May 13, 1998
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 306,173
<SECURITIES> 0
<RECEIVABLES> 27,382,449
<ALLOWANCES> 538,217
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,533,626
<CURRENT-LIABILITIES> 502,536
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,031,090
<TOTAL-LIABILITY-AND-EQUITY> 28,533,626
<SALES> 0
<TOTAL-REVENUES> 668,773
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 127,065
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 541,708
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 541,708
<EPS-PRIMARY> .29
<EPS-DILUTED> 0
</TABLE>
