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, 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>
September 30, December 31,
1999 1998
<S> <C> <C>
ASSETS
Investments in mortgage loans
(Note 2) $21,783,054 $22,031,917
Cash and cash equivalents 1,015,221 5,491,915
Accrued interest receivable
(net of allowance of $683,194
and $683,194, respectively) 442,995 344,034
Loan origination costs
(net of accumulated
amortization of $154,072
and $139,888, respectively) 679,877 694,061
Total assets $23,921,147 $28,561,927
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and other
liabilities $ 1,402 $ 20,674
Due to general partner and
affiliates (Note 3) 74,593 61,592
Total liabilities 75,995 82,266
Partners' capital (deficit):
Limited Partners (1,836,660 BACs
issued and outstanding) 23,991,393 28,578,664
General Partner (146,241) (99,003)
Total partners' capital 23,845,152 28,479,661
Total liabilities and partners' capital $23,921,147 $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 Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues
Interest income:
Mortgage loans
(Note 2) $496,609 $ 603,647 $1,491,819 $1,872,832
Temporary
investments 9,154 3,310 51,445 8,311
Other income 2,258 563 4,784 1,389
Total revenues 508,021 607,520 1,548,048 1,882,532
Expenses
General and
administrative 12,472 1,323 39,959 32,000
General and
administrative-
related parties
(Note 3) 46,592 74,058 144,943 177,593
Amortization 54,761 70,050 164,281 210,150
Total expenses 113,825 145,431 349,183 419,743
Net income $394,196 $ 462,089 $1,198,865 $1,462,789
Allocation of Net
income:
Limited
Partners $386,312 $ 452,847 $1,174,888 $1,433,533
General
Partner $ 7,884 $ 9,242 $ 23,977 $ 29,256
Net income
per BAC $ .21 $ .25 $ .64 $ .78
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 1,198,865 1,174,888 23,977
Distributions (5,833,374) (5,762,159) (71,215)
Partners' capital
(deficit) -
September 30,
1999 $23,845,152 $23,991,393 $ (146,241)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $1,198,865 $1,462,789
Adjustments to reconcile net income
to net cash provided
by operating activities:
Amortization expense 164,281 210,150
Amortization of interest rate buydown (1,089) (1,089)
Increase in accrued interest
receivable (98,961) (18,142)
Decrease in accounts payable
and other liabilities (19,272) (25,370)
Increase in due to general partner
and affiliates 13,001 101,123
Net cash provided by operating
activities 1,256,825 1,729,161
Cash flows from investing activities:
Receipt of principal on mortgage
loans 99,855 116,062
Cash flows from financing activities:
Distributions to partners (5,833,374) (1,590,787)
Net (decrease) increase in cash and
cash equivalents (4,476,694) 254,736
Cash and cash equivalents at
beginning of period 5,491,915 217,902
Cash and cash equivalents at
end of period $1,015,221 $ 472,638
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 1999, the
results of operations for the three and nine months ended Septem-
ber 30, 1999 and 1998 and cash flows for the nine months ended
September 30, 1999 and 1998. However, the operating results for
the nine months ended September 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
SEPTEMBER 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 September 30, 1999 is as
follows:
<CAPTION>
No. of Date
Apart- of Final
Property/ ment 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 112 8/91 8/31
III Apts./
Dothan, AL
Holly Ridge 144 3/93 3/33
II Apts./
Gresham, OR
Total
<CAPTION>
Amounts Advanced
Total Investments Investments
Property/ Mortgage Equity Amounts in Loans at in Loans at
Location Loans Loans Advanced 9/30/99 (E) 12/31/98(E)
<S> <C> <C> <C> <C> <C>
Mortenson $ 4,974,090 $ 577,885 $ 5,551,975 $ 4,851,155 $ 4,919,828
Manor
Apts./
Ames, IA
Windemere 8,110,300 736,550 8,846,850 8,034,182 8,116,356
Apts./
Wichita, KS
Fieldcrest 3,343,700 383,300 3,727,000 3,383,059 3,419,612
III Apts./
Dothan, AL
Holly Ridge 5,310,100 684,400 5,994,500 5,514,658 5,576,121
II Apts./
Gresham, OR
Total $21,738,190 $2,382,135 $24,120,325 $21,783,054 $22,031,917
<CAPTION>
Interest earned by the Partnership during 1999
Non-contingent Contingent
Cash Flow
Base Default Annual Partici-
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 $ 225,337 $ 70,708 $0 $0 $ 296,045
Manor 6.45% 1.98% .97% 30.00%
Apts./
Ames, IA
Windemere 468,119 95,259 0 0 563,378
Apts./ 7.95% 1.60% 1.08% 30.00%
Wichita, KS
Fieldcrest 212,080 35,327 0 1,868 249,275
III Apts./ 8.68% .07% 1.36% 30.00%
Dothan, AL
Holly Ridge 317,591 65,530 N/A 0 383,121
II Apts./ 8.125% 1.00% .64% 30.00%
Gresham, OR
Total $1,223,127 $266,824 $0 $1,868 $1,491,819
</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 1999.
(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 $20,984,961 and $798,093 at September 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 1,089
Deductions
Amortization of equity loans (150,097)
Collection of principal - Mortenson (32,555)
- Windemere (36,140)
- Fieldcrest III (12,472)
- Holly Ridge (18,688)
(249,952)
Investments in loans September 30, 1999 $21,783,054
</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 September 30, 1999, all of the loans due to the Partnership are
current with respect to their FHA Mortgage obligations. Morten-
son has not paid approximately $553,000 of default interest due
for the years ended December 31, 1993 to December 31, 1998, and
Windemere 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 approximately $683,000 at both September 30, 1999
and December 31, 1998.
Note 3 - Related Parties
<TABLE>
The costs incurred to related parties for the three and nine months
ended September 30, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $ 31,592 $ 38,266 $ 94,776 $ 114,799
Expense reimburse-
ment (b) 15,000 35,792 50,167 62,794
Total general and
administrative-
related parties $ 46,592 $ 74,058 $ 144,943 $ 177,593
</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 at both September 30, 1999 and December
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 November 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 third quar-
ter 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 nine months ended September 30, 1999, cash and cash
equivalents of the Partnership decreased by approximately
$4,477,000. Cash provided by operating activities and receipt of
principal payments on mortgage loans were approximately
$1,356,000, and distributions paid to partners were approximately
$5,833,000 (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 $163,000.
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 level.
A distribution of approximately $5,762,000 was made to the lim-
ited partners or BACs holders during the nine months ended Sep-
tember 30, 1999, primarily from the Willow Trace repayment pro-
ceeds ($2.45 per BAC) which is considered to be a return of capital.
A total of approximately $71,000 was distributed to the General
Partner during the nine months ended September 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 nine months ended September 30, 1999 compared with
three and nine months ended September 30, 1998
Results of operations for the three and nine months ended Sep-
tember 30, 1999 and 1998 consisted primarily of interest income
earned from investment in mortgage loans of approximately
$496,609 and $603,647 and $1,491,819 and $1,872,832, respectively.
Interest income from mortgage loans decreased approximately
$107,000 and $381,000 for the three and nine months ended Sep-
tember 30, 1999, as compared to the same periods in 1998 primar-
ily due to the decrease in interest income received from the Willow
Trace mortgage which was repaid in December 1998.
Interest income from temporary investments increased approxi-
mately $6,000 and $43,000 for the three and nine months ended
September 30, 1999 as compared to the same periods in 1998 pri-
marily due to higher cash and cash equivalents from the repay-
ment of the Willow Trace mortgage. The amount of interest in-
come from temporary investments was reduced significantly
during the nine months ended September 30, 1999, to provide the
necessary funds for the distribution on February 15th.
General and administrative expenses increased approximately
$11,000 and $8,000 for the three and nine months ended Septem-
ber 30, 1999, as compared to the same periods in 1998 primarily
due to an increase in printing expenses.
General and administrative-related parties decreased approxi-
mately $27,000 and $33,000 for the three and nine months ended
September 30, 1999 as compared to the same periods in 1998 pri-
marily due to a decrease in expense reimbursements due to the
General Partner and a decrease in partnership management fees in
1999 due to the repayment of the Willow Trace mortgage.
Amortization expense decreased approximately $15,000 and
$46,000 for the three and nine months ended September 30, 1999
as compared to the corresponding periods in 1998 primarily due
to the repayment of the Willow Trace mortgage.
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 electronic 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 has been filed during
the quarter ended September 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: October 21, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes
Senior Vice President
(Principal Financial Officer)
Date: October 21, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,015,221
<SECURITIES> 0
<RECEIVABLES> 442,995
<ALLOWANCES> 683,194
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,921,147
<CURRENT-LIABILITIES> 75,995
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,845,152
<TOTAL-LIABILITY-AND-EQUITY> 23,921,147
<SALES> 0
<TOTAL-REVENUES> 1,548,048
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 349,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,198,865
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,198,865
<EPS-BASIC> .64
<EPS-DILUTED> 0
</TABLE>
