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 June 30, 1999
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 Securi-
ties 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>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<CAPTION>
June 30, December 31,
1999 1998
<S> <C> <C>
ASSETS
Investments in mortgage loans
(Note 2) $21,866,645 $22,031,917
Cash and cash equivalents 986,520 5,491,915
Accrued interest receivable
(net of allowance of $683,194
and $683,194, respectively) 397,490 344,034
Loan origination costs
(net of accumulated
amortization of $149,344
and $139,888, respectively) 684,605 694,061
Total assets $23,935,260 $28,561,927
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and other
liabilities $ 6,666 $ 20,674
Due to general partner and
affiliates (Note 3) 67,575 61,592
Total liabilities 74,241 82,266
Partners' capital (deficit):
Limited Partners (1,836,660 BACs
issued and outstanding) 24,006,942 28,578,664
General Partner (145,923) (99,003)
Total partners' capital 23,861,019 28,479,661
Total liabilities and
partners' capital $23,935,260 $28,561,927
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues
Interest income:
Mortgage loans
(Note 2) $498,286 $602,537 $ 995,210 $1,269,185
Temporary
investments 8,938 3,239 42,291 5,001
Other income 1,063 463 2,526 826
Total revenues 508,287 606,239 1,040,027 1,275,012
Expenses
General and
administrative 4,251 27,931 27,487 30,677
General and
administrative-
related parties
(Note 3) 51,470 49,267 98,351 103,535
Amortization 54,761 70,049 109,520 140,100
Total expenses 110,482 147,247 235,358 274,312
Net income $397,805 $458,992 $ 804,669 $1,000,700
Allocation of Net
income:
Limited Partners $389,849 $449,812 $ 788,576 $ 980,686
General Partner $ 7,956 $ 9,180 $ 16,093 $ 20,014
Net income per BAC $ 0.21 $ 0.24 $ 0.43 $ .53
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<CAPTION>
Limited General
Total Partners Partner
<S> <C> <C> <C>
Partners' capital
(deficit) -
January 1, 1999 $28,479,661 $28,578,664 $ (99,003)
Net income 804,669 788,576 16,093
Distributions (5,423,311) (5,360,298) (63,013)
Partners' capital
(deficit) -
June 30, 1999 $23,861,019 $24,006,942 $(145,923)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 804,669 $ 1,000,700
Adjustments to reconcile net income
to net cash provided
by operating activities:
Amortization expense 109,520 140,100
Amortization of interest rate buydown (726) (726)
Increase in accrued interest
receivable (53,456) (56,716)
(Decrease) increase in accounts payable
and other liabilities (14,008) 7,857
Increase in due to general partner
and affiliates 5,983 65,295
Net cash provided by operating
activities 851,982 1,156,510
Cash flows from investing activities:
Receipt of principal on mortgage
loans 65,934 74,696
Cash flows from financing activities:
Distributions to partners (5,423,311) (1,123,556)
Net (decrease) increase in cash and
cash equivalents (4,505,395) 107,650
Cash and cash equivalents at
beginning of period 5,491,915 217,902
Cash and cash equivalents at
end of period $ 986,520 $ 325,552
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(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, 1998. 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 fi-
nancial position of the Partnership as of June 30, 1999, the results
of operations for the three and six months ended June 30, 1999 and
1998 and cash flows for the six months ended June 30, 1999 and
1998. However, the operating results for the six months ended
June 30, 1999 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 ac-
cepted 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 Partner-
ship's Annual Report on Form 10-K for the year ended December
31, 1998.
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(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, one of which
was repaid on December 16, 1998.
Information relating to investments in mortgage loans and equity loans as of
June 30, 1999 is as follows:
<CAPTION>
No. of Date Final
Property/ Apartment of Invest- Maturity
Location Units ment Date
<S> <C> <C> <C>
Mortenson 104 8/90 8/30
Manor
Apts./
Ames, IA
Windemere 204 9/90 9/30
Apts./
Wichita, KS
Fieldcrest III 112 8/91 8/31
Apts./
Dothan, AL
Holly Ridge II 144 3/93 3/33
Apts./
Gresham, OR
Total
<CAPTION>
Amounts Advanced
Total Investments Investments
Property/ Mortgage Equity Amounts in Loans at in Loans at
Location Loans Loans Advanced 6/30/99 (E) 12/31/98(E)
<S> <C> <C> <C> <C> <C>
Mortenson $ 4,974,090 $ 577,885 $ 5,551,975 $ 4,874,221 $ 4,919,828
Manor
Apts./
Ames, IA
Windemere 8,110,300 736,550 8,846,850 8,061,815 8,116,356
Apts./
Wichita, KS
Fieldcrest III 3,343,700 383,300 3,727,000 3,395,335 3,419,612
Apts./
Dothan, AL
Holly Ridge II 5,310,100 684,400 5,994,500 5,535,274 5,576,121
Apts./
Gresham, OR
Total
$21,738,190 $2,382,135 $24,120,325 $21,866,645 $22,031,917
<CAPTION>
Interest earned by the Partnership during 1999
Non-contingent Contingent
Base Default Annual Cash Flow
Interest Interest Yield Participation Total
Property/ Amount/ Amount/ Amount/ Amount/ Interest
Location Rate (A) Rate (B) Rate (C) Rate (D) Earned
<S> <C> <C> <C> <C> <C>
Mortenson $150,399 $ 46,935 $0 $0 $197,334
Manor 6.45% 1.98% .97% 30.00%
Apts./
Ames, IA
Windemere 312,321 63,205 0 0 375,526
Apts./ 7.95% 1.60% 1.08% 30.00%
Wichita, KS
Fieldcrest III 141,477 23,437 0 1,868 166,782
Apts./ 8.68% .07% 1.36% 30.00%
Dothan, AL
Holly Ridge II 211,855 43,713 N/A 0 255,568
Apts./ 8.125% 1.00% .64% 30.00%
Gresham, OR
Total
$816,052 $177,290 $0 $1,868 $995,210
</TABLE>
(A) Base interest on the Mortgages is that amount that is in-
sured/co-insured by HUD and is being shown net of servicing
fees.
(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 interest 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 provided sufficient cash
flow in 1998 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 $21,012,817 and $853,828 at June 30, 1999 and
$21,078,025 and $953,892, respectively, at December 31, 1998.
<TABLE>
<S> <C>
Investments in loans
January 1, 1998 $27,085,493
Additions:
Fieldcrest III discount amortization 1,452
Deductions:
Amortization of equity loans (254,511)
Collection of principal - Mortenson (41,034)
- Windemere (44,937)
- Fieldcrest III (15,410)
- Holly Ridge (23,190)
- Willow Trace (4,307,688)
Collection of principal - Equity loan
- Willow Trace (368,258)
(5,055,028)
Investments in loans
December 31, 1998: 22,031,917
Additions:
Fieldcrest III discount amortization 726
Deductions
Amortization of equity loans (100,064)
Collection of principal - Mortenson (21,528)
- Windemere (23,852)
- Fieldcrest III (8,224)
- Holly Ridge (12,330)
(165,998)
Investments in loans June 30, 1999 $21,866,645
</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 and Holly Ridge are in-
sured 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 June 30, 1999, all of the loans due to the Partnership are current
with respect to their FHA Mortgage obligations. Mortenson has
not paid approximately $553,000 of default interest due for the
years ended December 31, 1993 to December 31, 1998, and Win-
demere has not paid its default interest of approximately $130,000
for the year ended December 31, 1996 resulting in an allowance for
uncollectability relating to the default interest amounting to ap-
proximately $683,000 at both June 30, 1999 and December 31,
1998.
Note 3 - Related Parties
<TABLE>
The costs incurred to related parties for the three and six months
ended June 30, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $31,592 $38,267 $63,184 $ 76,533
Expense reimburse-
ment (b) 19,878 11,000 35,167 27,002
Total general and
administrative-
related parties $51,470 $49,267 $98,351 $103,535
</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
$32,000 were accrued and unpaid at both June 30, 1999 and De-
cember 31, 1998.
(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 Partner-
ship 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 August 1999, a distribution of ap-
proximately $397,000 and $8,000 will be paid to BACs holders and
the General Partner, respectively, representing the 1999 second
quarter distribution.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations.
Capital Resources and Liquidity
Sources of Partnership funds included interest earned on (1) in-
vestments in mortgage loans and (2) the working capital reserve.
During the six months ended June 30, 1999, cash and cash
equivalents of the Partnership decreased by approximately
$4,505,000. Cash provided by operating activities and receipt of
principal payments on mortgage loans were approximately
$918,000, and distributions paid to partners were approximately
$5,423,000 (of which $4,545,000 was a special distribution from
disposition proceeds). Included in the adjustments to reconcile the
net income to cash provided by operating activities is amortization
of approximately $109,000.
Distributions for 1999 are anticipated to be at a level equal to 5%
per annum based on the original BAC price of $20 less $2.45 per
BAC (the special distribution from disposition proceeds deemed a
return of capital). Subject to the future performance of the Part-
nership's investments and results of operation, the General Partner
anticipates that there will be sufficient cash from operations gen-
erated to cover expenses in 1999 and to fund future distributions
at this reduced level.
A distribution of approximately $5,360,000 was made to the lim-
ited partners or BACs holders during the six months ended June
30, 1999, primarily from the Willow Trace repayment proceeds
($2.45 per BAC) which is considered to be a return of capital. A
total of approximately $63,000 was distributed to the General
Partner during the six months ended June 30, 1999.
Management is not aware of any trends or events, commitments
or uncertainties that will impact liquidity in a material way. Man-
agement 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 affili-
ate of the General Partner). The Partnership's investments in un-
insured non-interest bearing equity loans (which represent ap-
proximately 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 up-
swings. However, the geographic diversification of the portfolio
may not protect against a general downturn in the national econ-
omy.
Results of Operations
Three and six months ended June 30, 1999 compared with three
and six months ended June 30, 1998
Results of operations for the three and six months ended June 30,
1999 and 1998 consisted primarily of interest income earned from
investment in mortgage loans of approximately $498,000 and
$603,000 and $995,000 and $1,269,000 respectively.
Interest income from mortgage loans decreased approximately
$104,000 and $274,000 for the three and six months ended June 30,
1999, as compared to the same periods in 1998 primarily due to
the decrease in interest received from the Willow Trace mortgage
which was repaid December 1998.
Interest income from temporary investments increased approxi-
mately $6,000 and $37,000 for the three and six months ended June
30, 1999 as compared to the same periods in 1998 primarily due to
higher cash and cash equivalents from the repayment of the Wil-
low Trace mortgage. The amount of interest income from tempo-
rary investments was reduced significantly during the six months
ended June 30, 1999, to provide the necessary funds for the distri-
bution on February 15th.
General and administrative expenses decreased approximately
$24,000 and $3,000 for the three and six months ended June 30,
1999, as compared to the same periods in 1998 primarily due to an
overaccrual of accounting expenses in the first quarter of 1998
which was corrected in the third quarter of 1998.
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the
General Partner. The affiliate of the General Partner has upgraded
its computer information systems to be year 2000 compliant. The
most likely worst case scenario that the General Partner faces is
that computer operations will be suspended for a few days to a
week commencing on January 1, 2000. The Partnership contin-
gency plan is to have (i) a complete backup done on December 31,
1999 and (ii) both electronic and printed reports generated for all
critical data up to and including December 31, 1999.
In regard to third parties, the General Partner is in the process of
evaluating the potential adverse impact that could result from the
failure of material service providers to be year 2000 compliant. A
detailed survey and assessment was sent to material third parties
in the fourth quarter of 1998. The Partnership has received assur-
ances from a majority of the material service providers with which
it interacts that they have addressed the year 2000 issues and is
evaluating these assurances for their adequacy and accuracy. In
cases where the Partnership has not received assurances from
third parties, it is initiating further mail and/or phone correspon-
dence. The Partnership relies heavily on third parties and is vul-
nerable to the failures of third parties to address their year 2000
issues. There can be no assurance given that the third parties will
adequately address their year 2000 issues.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
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) Current report on Form 8-K -
No current report on form 8-K have been filed during
the quarter ended June 30, 1999.
<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: July 28, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes
Senior Vice President
(Principal Financial Officer)
Date: July 28, 1999
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 986,520
<SECURITIES> 0
<RECEIVABLES> 22,264,135
<ALLOWANCES> 683,194
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,935,260
<CURRENT-LIABILITIES> 74,241
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,861,019
<TOTAL-LIABILITY-AND-EQUITY> 23,935,260
<SALES> 0
<TOTAL-REVENUES> 1,040,027
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 235,358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 804,669
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 804,669
<EPS-BASIC> .43
<EPS-DILUTED> 0
</TABLE>
