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, 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>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Investments in mortgage loans
(Note 2) $21,949,594 $22,031,917
Cash and cash equivalents 913,998 5,491,915
Accrued interest receivable
(net of allowance of $683,194
and $683,194, respectively) 420,876 344,034
Loan origination costs
(net of accumulated
amortization of $144,616
and $139,888, respectively) 689,333 694,061
Total assets $23,973,801 $28,561,927
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and other
liabilities $ 26,227 $ 20,674
Due to general partner and
affiliates (Note 3) 78,796 61,592
Total liabilities 105,023 82,266
Partners' capital (deficit):
Limited Partners (1,836,660 BACs
issued and outstanding) 24,014,546 28,578,664
General Partner (145,768) (99,003)
Total partners' capital 23,868,778 28,479,661
Total liabilities and partners'
capital $23,973,801 $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
March 31,
1999 1998
<S> <C> <C>
Revenues
Interest income:
Mortgage loans (Note 2) $496,924 $666,648
Temporary investments 33,353 1,762
Other income 1,463 363
Total revenues 531,740 668,773
Expenses
General and administrative 23,235 2,747
General and administrative-
related parties (Note 3) 46,881 54,268
Amortization 54,760 70,050
Total expenses 124,876 127,065
Net income $406,864 $541,708
Allocation of Net income:
Limited Partners $398,727 $530,874
General Partner $ 8,137 $ 10,834
Net income per BAC $ .22 $ .29
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 406,864 398,727 8,137
Distributions (5,017,747) (4,962,845) (54,902)
Partners' capital
(deficit) -
March 31, 1999 $23,868,778 $24,014,546 $(145,768)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 406,864 $ 541,708
Adjustments to reconcile net income
to net cash provided
by operating activities:
Amortization expense 54,760 70,050
Amortization of interest rate buydown (363) (363)
(Increase) decrease in accrued interest
receivable (76,842) 46,422
Increase in accounts payable
and other liabilities 5,553 1,513
Increase in due to general partner
and affiliates 17,204 54,279
Net cash provided by operating
activities 407,176 713,609
Cash flows from investing activities:
Receipt of principal on mortgage
loans 32,654 36,053
Cash flows from financing activities:
Distributions to partners (5,017,747) (661,391)
Net (decrease) increase in cash and
cash equivalents (4,577,917) 88,271
Cash and cash equivalents at
beginning of period 5,491,915 217,902
Cash and cash equivalents at
end of period $ 913,998 $306,173
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAPITAL MORTGAGE PLUS L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 1999, the results
of operations and its cash flows for the three months ended March
31, 1999 and 1998. However, the operating results for the three
months ended March 31, 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
MARCH 31, 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 March 31, 1999 is as follows:
<CAPTION>
No. of
Apart Date 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 III 112 8/91 8/31
Apts./
Dothan, AL
Holly Ridge II 144 3/93 3/33
Apts./
Gresham, OR
Total
Amounts Advanced
Total Investments Investments
Property/ Mortgage Amounts in Loans at in Loans at
Location Loans Equity Loans Advanced 3/31/99 (E) 12/31/98 (E)
<S> <C> <C> <C> <C> <C>
Mortenson $ 4,974,090 $ 577,885 $ 5,551,975 $ 4,897,111 $ 4,919,828
Manor
Apts./
Ames, IA
Windemere 8,110,300 736,550 8,846,850 8,089,205 8,116,356
Apts./
Wichita, KS
Fieldcrest III 3,343,700 383,300 3,727,000 3,407,518 3,419,612
Apts./
Dothan, AL
Holly Ridge II 5,310,100 684,400 5,994,500 5,555,760 5,576,121
Apts./
Gresham, OR
Total
$21,738,190 $2,382,135 $24,120,325 $21,949,594 $22,031,917
Interest earned by the Partnership during 1999
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 $ 75,286 $23,364 $0 $0 $ 98,650
Manor 6.45% 1.98% .97% 30.00%
Apts./
Ames, IA
Windemere 156,279 31,452 0 0 187,731
Apts./ 7.95% 1.60% 1.08% 30.00%
Wichita, KS
Fieldcrest III 70,784 11,661 0 0
Apts./ 8.68% .07% 1.36% 30.00% 82,445
Dothan, AL
Holly Ridge II 105,991 22,107 N/A 0 128,098
Apts./ 8.125% 1.00% .64% 30.00%
Gresham, OR
Total
$408,340 $88,584 $0 $0 $496,924
</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.
(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 $21,045,735 and $903,859 at March 31, 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 363
Deductions
Amortization of equity loans (50,032)
Collection of principal - Mortenson (10,678)
- Windemere (11,807)
- Fieldcrest III (4,067)
- Holly Ridge (6,102)
(82,686)
Investments in loans March 31, 1999 $21,949,594
</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 March 31, 1999, all of the loans due to the Partnership are cur-
rent 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 March 31, 1999 and December 31,
1998.
Note 3 - Related Parties
<TABLE>
The costs incurred to related parties for the three months ended
March 31, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended
March 31,
1999 1998
<S> <C> <C>
Partnership management fees (a) $ 31,592 $ 38,266
Expense reimbursement (b) 15,289 16,002
Total general and administrative-
related parties $ 46,881 $ 54,268
</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 March 31, 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 May 1999, a distribution of approxi-
mately $397,000 and $8,000 will be paid to BACs holders and the
General Partner, respectively, representing the 1999 first 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 three months ended March 31, 1999, cash and cash
equivalents of the Partnership decreased by approximately
$4,578,000. Cash provided by operating activities and receipt of
principal payments on mortgage loans were approximately
$440,000, and distributions paid to partners approximated
$5,018,000. Included in the adjustments to reconcile the net in-
come to cash provided by operating activities is amortization of
approximately $54,000.
Distributions for 1999 are anticipated to be at a level equal to 5%
per annum based on the original BAC price of $20 less the $2.45
per BAC (the special distribution from disposition proceeds
deemed a return of capital). Subject to the future performance of
the Partnership's investments and results of operation, the General
Partner anticipates that there will be sufficient cash from opera-
tions generated to cover expenses in 1999 and to fund future dis-
tributions at this reduced level.
A distribution of approximately $4,963,000 was made to the lim-
ited partners or BACs holders during the three months ended
March 31, 1999, primarily from the Willow Trace repayment pro-
ceeds ($2.45 per BAC) which is considered to be a return of capital.
A distribution of approximately $648,000 was made to the limited
partners or BACs holders for the three months ended March 31,
1998, from adjusted cash flow from operations and, to a lesser
extent, from working capital reserves, (which is also considered to
be a return of capital). A total of approximately $55,000 and
$13,000 was distributed to the General Partner during the three
months ended March 31, 1999 and 1998, respectively.
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 months ended March 31, 1999 compared with three months
ended March 31, 1998
Results of operations for the three months ended March 31, 1999
and 1998 consisted primarily of interest income earned from in-
vestment in mortgage loans of approximately $497,000 and
$667,000 respectively.
Interest income from mortgage loans decreased approximately
$170,000 for the three months ended March 31, 1999, as compared
to the same period in 1998 primarily due to the decrease in interest
received from the Willow Trace mortgage which was repaid De-
cember 1998.
Interest income from temporary investments increased approxi-
mately $32,000 for the three months ended March 31, 1999 as
compared to the same period in 1998 primarily due to higher cash
and cash equivalents balances in the first quarter 1999 from the
repayment of the Willow Trace mortgage. Such balances were
reduced significantly for the distribution on February 15th.
General and administrative increased approximately $20,000 for
the three months ended March 31, 1999, as compared to the same
period in 1998 primarily due to increase in legal and printing ex-
penses.
General and administrative-related parties decreased approxi-
mately $7,000 for the three months ended March 31, 1999, as com-
pared to the same period in 1998 primarily due to a decrease in
Partnership management fees payable to the General Partner due
to the Willow Trace Loan repayment in 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 and
beyond. The Year 2000 compliance issue concerns the inability of
a computerized system to accurately record dates after 1999. The
affiliate of the General Partner recently underwent a conversion of
its financial systems applications and upgraded all of its non-
compliant in-house software and hardware inventory. The work
stations that experienced problems from the testing process were
corrected with an upgrade patch. The costs incurred by the Part-
nership are not being charged to the Partnership. 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 at January
1, 2000. The Partnership contingency plan is to have a complete
backup done on December 31, 1999 and 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 its third parties 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 correspondence. The Part-
nership relies heavily on third parties and is vulnerable 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 issues.
<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) Current report on Form 8-K dated December 17, 1998
was filed on January 4, 1999 relating to the Willow Trace Mort-
gage and Equity Loan repayment.
<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 6, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes
Senior Vice President
(Principal Financial Officer)
Date: May 6, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 913,998
<SECURITIES> 0
<RECEIVABLES> 22,370,470
<ALLOWANCES> 683,194
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,973,801
<CURRENT-LIABILITIES> 105,023
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,868,778
<TOTAL-LIABILITY-AND-EQUITY> 23,973,801
<SALES> 0
<TOTAL-REVENUES> 531,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 124,876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 406,864
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 406,864
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
</TABLE>
