<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number: 0-20638
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
- - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3519080
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Seaport Plaza, New York, New York 10292-0116
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
Securities registered pursuant to Section 12(b) of the Act:
None
- - --------------------------------------------------------------------------------
Securities registered pursuant to section 12(g) of the Act:
Beneficial Unit Certificates
- - --------------------------------------------------------------------------------
(Title of class)
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 _CK_ No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Pre-Effective Amendment No. 1 to Registration Statement on Form S-11 (File
No. 33-28571)
Pre-Effective Amendment No. 2 to Registration Statement on Form S-11 (File
No. 33-28571)
Annual Report to Limited Partners for the year ended March 31, 1996 is
incorporated by reference into Parts I, II and IV of this Annual Report on Form
10-K
Index to exhibits can be found on page 10.
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business..................................................... 3
Item 2 Properties................................................... 5
Item 3 Legal Proceedings............................................ 6
Item 4 Submission of Matters to a Vote of Limited Partners.......... 6
PART II
Item 5 Market for Registrant's BUC$ and Related Limited Partner
Matters.................................................... 6
Item 6 Selected Financial Data...................................... 7
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 7
Item 8 Financial Statements and Supplementary Data.................. 7
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 7
PART III
Item 10 Directors and Executive Officers of the Registrant........... 7
Item 11 Executive Compensation....................................... 9
Item 12 Security Ownership of Certain Beneficial Owners and
Management................................................. 9
Item 13 Certain Relationships and Related Transactions............... 9
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form
8-K
Financial Statements and Financial Statement Schedules....... 10
Exhibits..................................................... 10
Reports on Form 8-K.......................................... 10
SIGNATURES............................................................... 15
</TABLE>
2
<PAGE>
PART I
Item 1. Business
General
Prudential-Bache Tax Credit Properties L.P. (the ``Registrant''), a Delaware
limited partnership, was formed on May 3, 1989 and will terminate on December
31, 2029 unless terminated sooner under the provisions of the Amended and
Restated Agreement of Limited Partnership (the ``Partnership Agreement''). The
Registrant was formed to invest in low-income, multi-family residential
complexes (``Apartment Complexes'' or ``Properties'') and, to a lesser extent,
in historic apartment complexes undergoing rehabilitation (``Historic
Complexes'' or ``Properties'') through the acquisition of interests (the ``Local
Partnership Interests'') in local partnerships (the ``Local Partnerships'') that
are the owners of the Property. These investments were made with proceeds from
the initial sale of 38,125 Beneficial Unit Certificates (``BUC$''). The
Registrant's fiscal year for tax and financial reporting purposes ends on
December 31 and March 31, respectively.
The primary objectives of the Registrant are to provide the limited partners
with low-income housing tax credits allowed under Section 42 of the Internal
Revenue Code of 1986, as amended (``Housing Tax Credits'') over the credit
period for each Property in which the Registrant has invested and to a lesser
extent, historic rehabilitation tax credits allowed under Section 48(g) of the
Internal Revenue Code of 1986, as amended. The Registrant invested only in Local
Partnerships that owned Properties which qualified for Housing Tax Credits. No
properties were acquired from any entity in which Prudential-Bache Properties,
Inc. or any affiliate had an interest. The Registrant's investments are composed
of limited partnership interests in Local Partnerships owning then newly
constructed or existing structures that have undergone substantial
rehabilitation. The Local Partnerships in which the Registrant has invested must
be operated in accordance with the low-income housing rules and regulations to
protect the related tax credits. It is not expected that any of the Local
Partnerships in which the Registrant has invested will generate any significant
cash flow to provide distributions to the limited partners.
The Registrant expects that in order to avoid recapture of Housing Tax
Credits, its holding period with respect to each Local Partnership Interest will
be at least as long as the 15-year compliance period and may be substantially
longer.
Each Property in which the Registrant invested is substantially mortgaged.
However, the aggregate indebtedness did not exceed 85% of the appraised fair
market value of any Property at the time of acquisition. The first mortgage
financing encumbering the Properties was arranged by the general partner of the
Local Partnership (the ``Local General Partner'') owning the Properties prior to
the time the Registrant became a limited partner therein.
The Registrant acquired its Local Partnership Interest in each Local
Partnership by purchasing it directly from the existing limited and/or general
partner of the Local Partnership. In each of the Registrant's investments, the
Local General Partner of the Local Partnership owning the complex was required
to provide personal guarantees and/or establish cash escrows, financial bonds
and/or letters of credit to protect the Registrant against, among other things,
the failure to meet certain operating criteria.
The Registrant is engaged solely in the business of investing in Local
Partnerships that own Properties; therefore, presentation of industry segment
information is not applicable. For more information regarding the Properties,
see Item 2 Properties. For more information regarding the Registrant's
operations, see Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
One Property had rental income which exceeded 15% of the Registrant's total
revenue. Rental income from Palm Beach Apartments Ltd. (``Summer Creek Villas'')
as a percentage of the Registrant's total revenue was 47.5%, 47.9% and 46.2%
during the years ended March 31, 1996, 1995 and 1994, respectively.
No single tenant accounted for 10% or more of the Registrant's total revenue
for any of the three years in the period ended March 31, 1996.
3
<PAGE>
General Partner
The general partner of the Registrant is Prudential-Bache Properties, Inc.
(the ``General Partner'' or ``PBP''). P.B. Tax Credit S.L.P. (``PBSLP''), an
affiliate of the General Partner, acts as Special Limited Partner of each Local
Partnership, entitling it to certain rights with respect to the operation and
management of each Local Partnership.
Competition
The General Partner has formed various entities to engage in businesses which
may be competitive with the Registrant.
The Registrant's business is affected by competition to the extent that the
underlying Properties from which it derives tax credits may be subject to
competition relating to rental rates and amenities from comparable neighboring
properties.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partner and its affiliates pursuant
to the Partnership Agreement. See Notes C and F to the consolidated financial
statements in the Registrant's Annual Report to Limited Partners for the year
ended March 31, 1996 (``Registrant's Annual Report'') which is filed as an
exhibit hereto.
Pending Legislation
The United States Department of Housing and Urban Development (``HUD'')
recently released a proposal entitled the American Community Partnerships Act
(the ``ACPA''). The ACPA is HUD's blueprint for providing for the nation's
housing needs in an era of static or decreasing budget authority.
Two key proposals in the ACPA are a discontinuation of project based Section
8 subsidy payments and an attendant reduction in debt on properties that were
supported by the Section 8 payments.
The ACPA calls for a transition during which the project based Section 8
would be converted to a tenant based voucher system. Any Federal Housing
Administration insured debt would then be ``marked-to-market'', that is revalued
in light of the reduced income stream, if any.
Several industry sources have already commented to HUD and Congress that in
the event the ACPA was fully enacted in its present form, the reduction in
mortgage indebtedness would be considered taxable income to limited partners.
Legislative relief has been proposed to exempt ``mark-to-market'' debt from
cancellation of indebtedness income treatment. Though HUD initially backed away
from the ``marked-to-market'' proposal, it has now been re-introduced as
``Portfolio Restructuring''.
The Registrant currently holds interests in two Local Partnerships which
operate under Section 8 regulations (Diamond Street Venture and Brookland Park
Plaza L.P.). The ultimate effect of these proposals on the Registrant cannot be
determined at this time.
4
<PAGE>
Item 2. Properties
As of March 31, 1996, the Registrant holds interests in Local Partnerships
which own the following Properties which continue to be operated in a manner to
qualify for tax credits:
<TABLE>
<CAPTION>
REGISTRANT'S
LOW-INCOME
HOUSING
TAX CREDIT
RENTS OCCUPANCY RATE FOR THE
NUMBER AS OF AS OF YEAR ENDED
PROPERTY (a) OF UNITS JUNE 2, 1996 JUNE 2, 1996 DECEMBER 31, 1995
- - -------------------------------- --------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
RMB Limited Partnership
(Hubbard's Ridge)
Garland, TX 196 $385-$549 92% $ 395,768
Cutler Canal II Associates, Ltd.
Miami, FL 216 347-604 92 896,701
Diamond Street Venture
Philadelphia, PA 48 461-529 90 282,288
Papillion Heights Apartments
L.P.
Papillion, NE 48 365-425 100 173,661
Hill Top Homes Apartments
Limited Partnership
Arlington, TX 171 445-630 94 616,546
Palm Beach Apartments, Ltd.
(Summer Creek Villas)
West Palm Beach, FL 770 498-679 89 2,241,161
Brookland Park Plaza
Limited Partnership
Richmond, VA 77 511 100 429,237
Compton Townhouses
Limited Partnership
Cincinnati, OH 39 616 100 205,620
-----------------
$ 5,240,982
-----------------
-----------------
(a) The Registrant holds a 66.5% interest in Summer Creek Villas, a 98% interest in Hubbard's Ridge,
Hill Top Homes and Compton Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street,
Papillion Heights and Brookland Park Plaza.
- - --------------------------------------------------------------------------------------------------------
</TABLE>
Hubbard's Ridge is comprised of seven separate three-story buildings on
approximately 6.5 acres. The buildings are wood-framed structures on
post-tensioned flat slab on grade foundations and have white stucco exteriors
with asphalt shingles on sloped roofs. Each building contains an average of 28
units. The unit mix consists of 164 one-bedroom units ranging in size from 657
square feet to 783 square feet and 32 two-bedroom units ranging in size from
1,145 square feet to 1,167 square feet.
The Cutler Canal II property is comprised of 216 units in 13 two-story
garden-style residential buildings on approximately 9.4 acres. It borders on a
Metro-Dade Water Management District Canal on the east with approximately 1,200
square feet of frontage giving certain units waterfront views. Each building has
a laundry room and two storage rooms. There are three basic floor plans with
sizes ranging from 700 square feet for a one-bedroom apartment to 1,100 square
feet for a three-bedroom unit.
5
<PAGE>
The Diamond Street property consists of 48 units in 16 buildings. The
buildings are three-story brownstone row houses with historic features and
similar layouts. Of the 48 apartment units, 46 are two-bedroom apartment units
and two are efficiency apartment units.
The Papillion Heights property consists of two buildings, each containing 24
units. The buildings are 2 1/2 stories of wood frame and brick exterior with
pitched roofs. Of the total 48 apartment units, two are one-bedroom units and 46
are two-bedroom units.
The Hill Top Homes property is comprised of a two-story building surrounded
by 13 one-story fourplexes which are brick with wood siding and pitched roofs.
The buildings are surrounded by a security gate of brick columns and wrought
iron fencing with a guard house at the entrance. The unit distribution mix
includes 171 apartment units of which 18 are three-bedroom/one bath apartment
units each containing approximately 925 square feet, 52 two-bedroom/two bath
apartment units each containing approximately 1,100 square feet, 98
two-bedroom/one bath apartment units each containing approximately 936 square
feet and three one-bedroom/one bath apartment units each containing
approximately 1,000 square feet.
Summer Creek Villas consists of 61 concrete block and stucco buildings
housing 770 apartment units situated on approximately 60 acres of
residential-planned unit development zoned land. 182 of the units are
one-bedroom/one-bath apartments, each containing 570 square feet; 372 are
two-bedroom/one-bath apartments, each containing 773 square feet; 144 are
three-bedroom/two-bath apartments, each containing 980 square feet; and 72 are
three-bedroom/two-bath villa units, each containing 1,050 square feet.
The Brookland Park Plaza property is an existing three-level brick building
and is a registered historic landmark. The building is comprised of stucco and
brick exterior and a sloped red glazed tile roof. It is a 77-unit development
with 68,564 net rentable square feet. All 77 units are one-bedroom apartment
units each of which contains approximately 890 square feet. Each unit contains a
refrigerator, range, carpeting and air-conditioning. Brookland Park Plaza also
maintains a community room for tenants.
The Compton Townhouses consist of six two-story buildings containing a total
of 39 townhouse units. Four of the buildings contain six units; one building has
seven units; and one has eight units. All units have three bedrooms and
two-and-one-half baths. Total gross building area is 52,595 square feet; net
rentable area is 47,814 square feet. The average net area of the subject units
is 1,226 square feet.
For additional information describing the Registrant's properties, see Item 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Schedule III--Real Estate and Accumulated Depreciation.
Item 3. Legal Proceedings
This information is incorporated by reference to Note I to the consolidated
financial statements in the Registrant's Annual Report which is filed as an
exhibit hereto.
Item 4. Submission of Matters to a Vote of Limited Partners
None
PART II
Item 5. Market for Registrant's BUC$ and Related Limited Partner Matters
As of June 3, 1996, there were 2,269 holders of record owning 38,125 BUC$.
Additionally, the General Partner holds one BUC$. A significant secondary market
for BUC$ has not developed, and it is not expected that one will develop in the
future. There are also certain restrictions set forth in the Partnership
Agreement limiting the ability of a limited partner to transfer BUC$.
Consequently, holders of BUC$ may not be able to liquidate their investments in
the event of an emergency or for any other reason.
There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement; however, the Registrant has paid no distributions from
operations or otherwise since inception. No distributions are anticipated in the
foreseeable future.
6
<PAGE>
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the consolidated financial statements of
the Registrant and the notes thereto on pages 2 through 24 of the Registrant's
Annual Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Year ended March 31,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Rental and other income $ 9,745,864 $ 9,011,441 $ 9,212,457 $ 8,938,787 $ 5,329,039
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Interest income $ 49,257 $ 47,693 $ 75,242 $ 93,419 $ 415,864
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Interest expense $ 4,448,986 $ 4,474,229 $ 4,462,589 $ 4,236,927 $ 4,112,788
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Depreciation and
amortization expense $ 2,549,449 $ 2,640,262 $ 2,615,469 $ 2,692,891 $ 2,335,064
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Provision for loss on
impairment of assets $ -- $ 2,700,000 $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Loss before minority
interest $(2,587,393) $(6,271,864) $(3,341,362) $(3,415,486) $(5,037,973)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Minority interest in loss
of local partnerships $ 421,144 $ 608,088 $ 496,042 $ 476,756 $ 877,814
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net loss $(2,166,249) $(5,663,776) $(2,845,320) $(2,938,730) $(4,160,159)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net loss per limited
partner BUC $ (56.25) $ (147.07) $ (73.89) $ (76.31) $ (108.03)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets $72,944,919 $76,174,392 $81,370,985 $90,042,295 $86,455,040
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Construction loans payable $ -- $ -- $ -- $ -- $25,328,207
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Mortgage notes payable $46,378,992 $46,529,512 $46,661,471 $46,797,027 $13,790,870
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 25 through 27 of the
Registrant's Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements are incorporated by reference to pages
2 through 24 of the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partner.
The Registrant, the Registrant's General Partner and its directors and
executive officers, and any persons holding more than ten percent of the
Registrant's BUC$ are required to report their initial ownership of such BUC$
and any subsequent changes in that ownership to the Securities and Exchange
Commission on
7
<PAGE>
<PAGE>
Forms 3, 4 and 5. Such executive officers, directors and persons who own greater
than ten percent of the Registrant's BUC$ are required by Securities and
Exchange Commission regulations to furnish the Registrant with copies of all
Forms 3, 4 and 5 they file. All of these filing requirements were satisfied on a
timely basis. In making these disclosures, the Registrant has relied solely on
written representations of the General Partner, directors and executive officers
and persons who own greater than ten percent of the Registrant's BUC$, if any,
or copies of the reports they have filed with the Securities and Exchange
Commission during and with respect to its most recent fiscal year.
Prudential-Bache Properties, Inc.
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
<TABLE>
<CAPTION>
Name Position
<S> <C>
Thomas F. Lynch, III President, Chief Executive Officer,
Chairman of the Board of Directors and Director
Barbara J. Brooks Vice President--Finance and Chief Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Vice President
Piskorowski
Frank W. Giordano Director
Nathalie P. Maio Director
</TABLE>
THOMAS F. LYNCH, III, age 37, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
BARBARA J. BROOKS, age 47, is the Vice President-Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 51, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 53, is a Vice President of PBP. He is a Senior
Vice President of PSI and is the Senior Manager of the Specialty Finance Asset
Management area. Mr. Piskorowski has held several positions within PSI since
April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 54, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc., an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
NATHALIE P. MAIO, age 45, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently she also serves
in various capacities for other affiliated companies.
James M. Kelso ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director effective June 30, 1995.
Effective June 30, 1995, Thomas F. Lynch, III was elected President, Chief
Executive Officer, Chairman of the Board of Directors and Director. Robert J.
Alexander ceased to serve as Vice President effective August 25, 1995. Eugene D.
Burak was elected Vice President effective October 9, 1995.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
8
<PAGE>
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partner for its services.
Certain executive officers and directors of the General Partner receive
compensation from affiliates of the General Partner, not from the Registrant,
for services performed for various affiliated entities, which may include
services performed for the Registrant; however, the General Partner believes
that any compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding compensation to the General Partner.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of June 3, 1996, no director or executive officer of PBP owns directly or
beneficially any interest in the voting securities of PBP.
As of June 3, 1996, no director or executive officer of PBP owns directly or
beneficially any of the BUC$ issued by the Registrant.
As of June 3, 1996, no limited partner beneficially owns more than five
percent (5%) of the BUC$ issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or executive officers of
the General Partner.
Reference is made to Notes A, C, F and G to the consolidated financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto, which identify the related parties and discuss the services provided by
these parties and the amounts paid or payable for their services.
9
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page
in Annual
Report
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Independent Auditors'
Report--Incorporated by reference to Registrant's
Annual Report which is filed as an exhibit hereto
Financial Statements:
Independent Auditors' Report 2
Consolidated Statements of Financial Condition--March
31, 1996 and 1995 16
Consolidated Statements of Operations--Three years
ended March 31, 1996 17
Consolidated Statements of Changes in Partners'
Capital--Three years ended March 31, 1996 17
Consolidated Statements of Cash Flows--Three years
ended March 31, 1996 18
Notes to Consolidated Financial Statements 19
2. Financial Statement Schedules and Independent Auditors'
Report on Schedules
Independent Auditors' Report on Schedules
Schedules:
III--Real Estate and Accumulated Depreciation at March
31, 1996
All other schedules have been omitted because they are
not applicable or the required information is included
in the consolidated financial statements or the notes
thereto.
3. Exhibits
Description:
Agreement of Limited Partnership as adopted on May 3,
1989 and Amendments thereto dated May 25, 1989 and June
21, 1989*
Form of Amended and Restated Agreement of Limited
Partnership (included in Prospectus as Exhibit A)**
Certificate of Limited Partnership as filed on May 3,
1989 and Amendments thereto dated May 25, 1989 and June
21, 1989*
Form of Purchase and Sale Agreement pertaining to the
Partnership's Acquisition of Local Partnership
Interests**
Form of Amended and Restated Agreement of Local Limited
Partnership of Local Partnerships**
Annual Report to Limited Partners for the year ended
March 31, 1996 (with the exception of the information
and data incorporated by reference to Items 3, 7 and 8
of this Annual Report on Form 10-K, no other
information or data appearing in the Registrant's
Annual Report is deemed to be filed as part of this
report) (filed herewith)
Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
</TABLE>
10
<PAGE>
<PAGE>
- - -------------
* Filed as an exhibit to Pre-Effective Amendment No. 1 to Form S-11
Registration Statement (No. 33-28571) and incorporated herein by reference.
** Filed as an exhibit to Pre-Effective Amendment No. 2 to Form S-11
Registration Statement (No. 33-28571) and incorporated herein by reference.
11
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
To the Partners of
Prudential-Bache Tax Credit Properties L.P.
(A Delaware Limited Partnership):
In connection with our audit of the consolidated financial statements of
Prudential-Bache Tax Credit Properties L.P. and Subsidiaries included in this
Form 10-K, we have also audited supporting Schedule III for the year ended March
31, 1996. In our opinion, based on our audit and the reports of the other
auditors, the consolidated schedule presents fairly, when read in conjunction
with the related consolidated financial statements, the financial data required
to be set forth therein.
ANCHIN, BLOCK & ANCHIN LLP
Certified Public Accountants
New York, New York
June 3, 1996
12
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Schedule III--Real Estate and Accumulated Depreciation
March 31, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- - -------------------------------------------------------------------------------------------------------------------------
Gross
Amounts At
Which
Carried At
Close Of
Initial Cost Period(5)
--------------------------- Costs Capitalized ----------
Buildings Subsequent to Acquisition(7)
- - ------------------------- ------------ and -------------------------------
Description (4)(6) Encumbrances Land Improvements Improvements Carrying Costs Land
- - ------------------------- ------------ ---------- ------------ ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Apartment Complexes:
RMB Limited
Partnership(1)
(Hubbard's Ridge)
Garland, TX $ 1,950,493 $ 107,237 $ 965,136 $ 3,732,973 $ 185,180 $ 107,237
Cutler Canal II
Associates, Ltd.(2)
Miami, FL 6,008,536 807,071 1,388,350 8,861,278 67,728 807,071
Diamond Street Venture(3)
Philadelphia, PA 3,031,298 9,729 234,465 2,352,712 273,218 9,729
Papillion Heights
Apartments L.P.(1)
Papillion, NE 1,032,976 63,329 1,816,598 255,218 66,552 63,329
Hill Top Homes
Apartments L.P.(1)
Arlington, TX 3,695,985 553,841 3,690,150 3,542,729 316,368 553,841
Palm Beach Apartments,
Ltd.(1)
(Summer Creek Villas)
West Palm Beach, FL 26,750,000 2,396,876 10,578,563 25,557,883 1,876,795 2,396,876
Brookland Park Plaza
L.P.(1)
Richmond, VA 2,519,227 50,000 109,850 5,907,565 376,165 50,000
Compton Townhouses
L.P.(1)
Cincinnati, OH 1,390,477 17,550 476,708 1,923,171 28,203 17,550
------------ ---------- ------------ ------------ -------------- ----------
$46,378,992 $4,005,633 $19,259,820 $52,133,529 $ 3,190,209 $4,005,633
------------ ---------- ------------ ------------ -------------- ----------
------------ ---------- ------------ ------------ -------------- ----------
<CAPTION>
Life on which
Depreciation in
Buildings ----------- Date Latest Consolidated
- - ------------------------- and Accumulated Construction Date Statement of Operations
Description (4)(6) Improvements Total Depreciation Completed Acquired is computed
- - ------------------------- ------------ ----------- ----------- ------------- ---------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Apartment Complexes:
RMB Limited
Partnership(1)
(Hubbard's Ridge)
Garland, TX $ 4,883,289 $ 4,990,526 $1,015,121 5/90 12/89 30
Cutler Canal II
Associates, Ltd.(2)
Miami, FL 10,317,356 11,124,427 1,291,020 1/91 1/90 40
Diamond Street Venture(3)
Philadelphia, PA 2,860,395 2,870,124 677,118 12/90 1/90 40
Papillion Heights
Apartments L.P.(1)
Papillion, NE 2,138,318 2,201,647 345,122 12/90 4/90 27.5
Hill Top Homes
Apartments L.P.(1)
Arlington, TX 7,549,247 8,103,088 1,047,158 12/90 6/90 30
Palm Beach Apartments,
Ltd.(1)
(Summer Creek Villas)
West Palm Beach, FL 38,013,241 40,410,117 4,911,444 8/91 6/90 40
Brookland Park Plaza
L.P.(1)
Richmond, VA 6,393,630 6,443,630 1,255,670 12/90 7/90 27.5
Compton Townhouses
L.P.(1)
Cincinnati, OH 2,428,082 2,445,632 530,628 6/92 1/92 40
------------ ----------- -----------
$74,583,558 $78,589,191 $11,073,281
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
(1) First mortgage
(2) Includes first and second mortgages
(3) Includes first, second and third mortgages
(4) The Registrant holds a 66.5% interest in the Local Partnership of Summer
Creek Villas, a 98% interest in Hubbard's Ridge, Hill Top Homes and Compton
Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street,
Papillion Heights and Brookland Park Plaza.
(5) The cost basis of Land and Buildings and Improvements for federal income
tax purposes as of December 31, 1995 is $80,488,202.
(6) The General Partner believes the properties are adequately insured.
(7) Costs Capitalized Subsequent to Acquisition include a write-down of
$2,700,000 for Diamond Street Venture recorded as of March 31, 1995.
13
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
SCHEDULE III--Real Estate and Accumulated Depreciation
(Continued)
<TABLE>
<CAPTION>
Year ended March 31
---------------------------------------------
1996 1995 1994
----------- ----------- ---------------
<S> <C> <C> <C>
NOTE A--RECONCILIATIONS
AMOUNT AT WHICH REAL ESTATE IS CARRIED:
Balance at beginning of period......................... $78,589,191 $81,195,661 $81,190,649
Additions (deductions) during the period
Improvements...................................... -- 93,530 5,012
Write-downs during year (1)....................... -- (2,700,000) --
----------- ----------- ---------------
Balance at end of period............................... $78,589,191 $78,589,191 $81,195,661
----------- ----------- ---------------
----------- ----------- ---------------
ACCUMULATED DEPRECIATION:
Balance at beginning of period......................... $ 8,863,867 $ 6,594,015 $ 4,376,635
Depreciation...................................... 2,209,414 2,269,852 2,217,380
----------- ----------- ---------------
Balance at end of period............................... $11,073,281 $ 8,863,867 $ 6,594,015
----------- ----------- ---------------
----------- ----------- ---------------
</TABLE>
- - ---------------
(1) Refer to Notes B and D to the consolidated financial statements for
additional information.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Prudential-Bache Tax Credit Properties L.P.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: June 28, 1996
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Thomas F. Lynch, III Date: June 28, 1996
----------------------------------------
Thomas F. Lynch, III
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: June 28, 1996
----------------------------------------
Barbara J. Brooks
Vice President-Finance and Chief
Financial Officer
By: /s/ Eugene D. Burak Date: June 28, 1996
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: June 28, 1996
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: June 28, 1996
----------------------------------------
Nathalie P. Maio
Director
15
<PAGE>
1996 ANNUAL REPORT
<PAGE>
1996
- - ---------------------------------------------------------------
Prudential-Bache Annual
Tax Credit Properties L.P. Report
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
LETTER TO THE LIMITED PARTNERS
FOR THE YEAR ENDED MARCH 31, 1996
1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Partners of
Prudential-Bache Tax Credit Properties L.P.
(A Delaware Limited Partnership)
We have audited the accompanying consolidated statements of financial condition
of Prudential-Bache Tax Credit Properties L.P. and Subsidiaries as of March 31,
1996 and 1995 and the related consolidated statements of operations, changes in
partners' capital and cash flows for the years ended March 31, 1996, 1995 and
1994. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of the consolidated subsidiaries, which statements reflect total
assets of $72,647,170 and $75,706,683 as of March 31, 1996 and 1995,
respectively, and total revenues of $9,783,912, $9,042,136 and $9,269,607 for
the years ended March 31, 1996, 1995 and 1994, respectively. These statements
were audited by other auditors whose reports thereon have been furnished to us,
and our opinion, insofar as it relates to the amounts included for the
consolidated subsidiaries, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits and
the reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Prudential-Bache Tax Credit
Properties L.P. and Subsidiaries at March 31, 1996 and 1995, and the results of
their operations and their cash flows for the years ended March 31, 1996, 1995
and 1994, in conformity with generally accepted accounting principles.
ANCHIN, BLOCK & ANCHIN LLP
Certified Public Accountants
New York, New York
June 3, 1996
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Partners
RMB Limited Partnership
We have audited the accompanying balance sheets of RMB LIMITED PARTNERSHIP (a
Texas Limited Partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partner's equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RMB LIMITED PARTNERSHIP as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 21, 1996
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Cutler Canal II Associates, Ltd.
We have audited the accompanying balance sheets of Cutler Canal II Associates,
Ltd as of December 31, 1995 and 1994, and the related statements of operations,
partners' capital and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cutler Canal II Associates,
Ltd. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 19, 1996
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Diamond Street Venture (a Limited Partnership)
Philadelphia, Pennsylvania
We have audited the accompanying balance sheets of Diamond Street Venture (a
Limited Partnership) as of December 31, 1995 and 1994 and the related statements
of income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partners and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general partners and contracted management agent, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Diamond Street Venture (a
Limited Partnership) at December 31, 1995 and 1994, and the results of its
operations, changes in partners' equity and cash flows for the years then ended
in conformity with generally accepted accounting principles.
J. H. WILLIAMS & CO., LLP
Kingston, Pennsylvania
February 8, 1996
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Diamond Street Venture (a Limited Partnership)
Philadelphia, Pennsylvania
We have audited the accompanying balance sheets of Diamond Street Venture (a
Limited Partnership) as of December 31, 1994 and 1993 and the related statements
of income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's general
partners and contracted management agent. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general partners and contracted management agent, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Diamond Street Venture (a
Limited Partnership) at December 31, 1994 and 1993, and the results of its
operations, changes in partners' equity and cash flows for the years then ended
in conformity with generally accepted accounting principles.
J. H. WILLIAMS & CO.
Kingston, Pennsylvania
February 8, 1995
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
February 9, 1996
To the Partners
Papillion Heights Apartments, L.P.
(A Limited Partnership)
We have audited the balance sheet of Papillion Heights Apartments, L.P. (a
limited partnership) as of December 31, 1995, and the related statements of
operations, partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Papillion Heights Apartments, L.P. as of
December 31, 1994, were audited by other auditors whose report dated March 13,
1995 expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Papillion Heights Apartments,
L.P. (a limited partnership) as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
COHEN, COVEY AND SCHULTZ, P.C.
7
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT
To the Partners of
Papillion Apartments L.P.
We have audited the accompanying balance sheet of Papillion Apartments L.P., a
limited partnership, as of December 31, 1994, and the related statements of
operations, changes in partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Papillion Apartments, L.P. as
of December 31, 1994, and the result of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
SANDRA K. CLAXTON
Certified Public Accountant
March 13, 1995
8
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT
To the Partners of
Papillion Apartments L.P.
We have audited the accompanying balance sheet of Papillion Apartments L.P., a
limited partnership, as of December 31, 1993, and the related statements of
operations, changes in partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Papillion Apartments, L.P. as
of December 31, 1993, and the result of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
SANDRA K. CLAXTON
Certified Public Accountant
March 11, 1994
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Partners
Hill Top Homes Apartments Limited Partnership
We have audited the accompanying balance sheets of HILL TOP HOMES APARTMENTS
LIMITED PARTNERSHIP, (a Texas Limited Partnership) as of December 31, 1995 and
1994, and the related statement of operations, partners' equity and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HILL TOP HOMES APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
DICKEY & WOLF, LLC
Certified Public Accountants
Harrisonville, MO
January 21, 1996
10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Palm Beach Apartments, Ltd.
We have audited the accompanying balance sheets of Palm Beach Apartments, Ltd.
as of December 31, 1995 and 1994, and the related statements of operations,
partners' capital and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Palm Beach Apartments, Ltd. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 19, 1996
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Brookland Park Plaza
Limited Partnership
We have audited the accompanying balance sheet of Brookland Park Plaza Limited
Partnership as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookland Park Plaza Limited
Partnership as of December 31, 1995, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 19 through 24
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued reports
dated February 8, 1996 on our consideration of Brookland Park Plaza Limited
Partnership's internal control structure and on its compliance with specific
requirements applicable to major HUD programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.
REZNICK FEDDER & SILVERMAN
Federal Employer
Identification Number: 52-1088612
Bethesda, Maryland
February 8, 1996
Audit Principal: Renee G. Scruggs
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Brookland Park Plaza
Limited Partnership
We have audited the accompanying balance sheet of Brookland Park Plaza Limited
Partnership as of December 31, 1994, and the related statements of profit and
loss (on HUD Form No. 92410), partners' equity and cash flows for the year then
ended. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookland Park Plaza Limited
Partnership as of December 31, 1994, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 18 through 23
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
REZNICK FEDDER & SILVERMAN
Federal Employer
Identification Number: 52-1088612
Bethesda, Maryland
February 17, 1995
Audit Principal: Renee G. Scruggs
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Brookland Park Plaza
Limited Partnership
We have audited the accompanying balance sheet of Brookland Park Plaza Limited
Partnership (a Maryland limited partnership) as of December 31, 1993, and the
related statements of profit and loss (on HUD Form No. 92410), partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookland Park Plaza Limited
Partnership as of December 31, 1993, and the results of its operations, the
changes in partners' equity and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 17 through 22
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
REZNICK FEDDER & SILVERMAN
Federal Employer
Identification Number: 52-1088612
Bethesda, Maryland
February 11, 1994
Audit Principal: Renee G. Scruggs
14
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Compton Townhouses
Limited Partnership
(An Ohio Limited Partnership)
We have audited the accompanying balance sheet of Compton Townhouses Limited
Partnership (An Ohio Limited Partnership), as of December 31, 1995 and 1994, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the years in the three-year period ended December 31, 1995.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Compton Townhouses Limited
Partnership (An Ohio Limited Partnership), as of December 31, 1995 and 1994, and
the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
SPAETH & BATTERBERRY, LTD.
January 24, 1996
15
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31,
----------------------------
1996 1995
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 74,583,558 74,583,558
Accumulated depreciation (11,073,281) (8,863,867)
------------ -----------
Net investment in property 67,515,910 69,725,324
Cash and cash equivalents 1,012,131 1,201,654
Cash and cash equivalents held in escrow 613,065 1,275,569
Deferred financing costs, net 3,386,089 3,686,401
Organizational costs, net 69,056 108,779
Other assets 348,668 176,665
------------ -----------
Total assets $ 72,944,919 $76,174,392
------------ -----------
------------ -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Mortgage notes payable $ 46,378,992 $46,529,512
Accrued interest payable 1,044,112 990,041
Other accrued expenses and liabilities 1,355,458 1,923,881
Due to general partners and affiliates of local partnerships 1,539,945 1,554,451
Development fees payable 1,579,709 1,579,709
Construction costs payable 605,358 605,358
Real estate taxes payable 87,289 466,118
Due to General Partner and its affiliates 368,849 122,722
------------ -----------
Total liabilities 52,959,712 53,771,792
------------ -----------
Minority interest in local partnerships 3,712,217 3,963,361
------------ -----------
Contingencies
Partners' capital (deficit)
Limited partners (38,125 BUC$ issued and outstanding) 16,451,859 18,596,446
General partner (1 BUC issued and outstanding) (178,869) (157,207)
------------ -----------
Total partners' capital 16,272,990 18,439,239
------------ -----------
Total liabilities and partners' capital $ 72,944,919 $76,174,392
------------ -----------
------------ -----------
- - ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
16
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended March 31,
-----------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 8,968,292 $ 8,605,901 $ 8,002,696
Other income 777,572 405,540 1,209,761
Interest income 49,257 47,693 75,242
----------- ----------- -----------
9,795,121 9,059,134 9,287,699
----------- ----------- -----------
EXPENSES
Interest 4,448,986 4,474,229 4,462,589
Depreciation and amortization 2,549,449 2,640,262 2,615,469
Operating and other 1,849,902 1,786,474 2,152,955
Taxes and insurance 1,180,035 1,165,434 1,034,157
Repairs and maintenance 1,299,154 1,396,627 1,241,018
General and administrative 349,069 398,312 290,054
Property management fees 445,054 426,984 490,143
Partnership management fees 260,865 342,676 342,676
Provision for loss on impairment of assets -- 2,700,000 --
----------- ----------- -----------
12,382,514 15,330,998 12,629,061
----------- ----------- -----------
Loss before minority interest (2,587,393) (6,271,864) (3,341,362)
Minority interest in loss of local partnerships 421,144 608,088 496,042
----------- ----------- -----------
Net loss $(2,166,249) $(5,663,776) $(2,845,320)
----------- ----------- -----------
----------- ----------- -----------
ALLOCATION OF NET LOSS
Limited partners $(2,144,587) $(5,607,138) $(2,816,867)
----------- ----------- -----------
----------- ----------- -----------
General partner $ (21,662) $ (56,638) $ (28,453)
----------- ----------- -----------
----------- ----------- -----------
Net loss per limited partner BUC $ (56.25) $ (147.07) $ (73.89)
----------- ----------- -----------
----------- ----------- -----------
- - ----------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
LIMITED GENERAL
BUC$ PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
Partners' capital (deficit)--March 31, 1993 38,126 $27,020,451 $(72,116 ) $26,948,335
Net loss -- (2,816,867 ) (28,453 ) (2,845,320)
------ ------------ --------- -----------
Partner's capital (deficit)--March 31, 1994 38,126 24,203,584 (100,569 ) 24,103,015
Net loss -- (5,607,138 ) (56,638 ) (5,663,776)
------ ------------ --------- -----------
Partner's capital (deficit)--March 31, 1995 38,126 18,596,446 (157,207 ) 18,439,239
Net loss -- (2,144,587 ) (21,662 ) (2,166,249)
------ ------------ --------- -----------
Partners' capital (deficit)--March 31, 1996 38,126 $16,451,859 $(178,869) $16,272,990
------ ------------ --------- -----------
------ ------------ --------- -----------
- - -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
17
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended March 31,
-------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,166,249) $ (5,663,776) $ (2,845,320)
----------- ------------ ------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for loss on impairment of assets -- 2,700,000 --
Depreciation and amortization 2,549,449 2,640,262 2,615,469
Minority interest in loss of local partnerships (421,144) (608,088) (496,042)
Forgiveness of debt (154,500) -- --
Decrease (increase) in cash held in escrow 662,504 (147,951) 265,436
Increase (decrease) in real estate taxes payable (378,829) 305,023 (243,121)
Increase in accrued interest payable 54,071 236,961 207,385
Decrease (increase) in other assets (172,003) 63,660 27,011
Increase (decrease) in other liabilities (112,302) 37,881 184,331
----------- ------------ ------------
Total adjustments 2,027,246 5,227,748 2,560,469
----------- ------------ ------------
Net cash used in operating activities (139,003) (436,028) (284,851)
----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in contributed capital held in escrow -- -- 495,213
Investments in property -- (93,530) (5,012)
Payments of development fees payable -- -- (39,553)
Decrease in cash restricted for reconstruction -- -- 4,740,226
Payment for reconstruction from insurance proceeds -- -- (4,740,226)
----------- ------------ ------------
Net cash provided by (used in) investing activities -- (93,530) 450,648
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgage notes (150,520) (131,959) (135,556)
Advances from local general partners 100,000 733,132 36,296
Payments for loans from local general partners -- (105,767) (599,504)
----------- ------------ ------------
Net cash provided by (used in) financing activities (50,520) 495,406 (698,764)
----------- ------------ ------------
Net decrease in cash and cash equivalents (189,523) (34,152) (532,967)
Cash and cash equivalents at beginning of year 1,201,654 1,235,806 1,768,773
----------- ------------ ------------
Cash and cash equivalents at end of year $ 1,012,131 $ 1,201,654 $ 1,235,806
----------- ------------ ------------
----------- ------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 4,325,996 $ 4,170,797 $ 4,129,461
----------- ------------ ------------
----------- ------------ ------------
- - ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
18
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General
Prudential-Bache Tax Credit Properties L.P., a Delaware limited partnership
(the ``Partnership''), was formed on May 3, 1989, and will terminate on December
31, 2029, unless terminated sooner under the provisions of the Amended and
Restated Agreement of Limited Partnership (the ``Partnership Agreement''). The
Partnership was formed to invest as a limited partner in other partnerships
(``Local Partnerships'' or ``Subsidiaries'') owning apartment complexes
(``Apartment Complexes'' or ``Properties'') that are eligible for the low-income
housing tax credit or the historic rehabilitation tax credit. The general
partner of the Partnership, Prudential-Bache Properties, Inc. (the ``General
Partner'' or ``PBP''), is not affiliated with a general partner of any Local
Partnership (``Local General Partner''). P.B. Tax Credit S.L.P. (``PBSLP''), an
affiliate of the General Partner, acts as special limited partner of each Local
Partnership entitling it to certain rights with respect to the operation and
management of each Local Partnership. At March 31, 1996, the Partnership has
investments in eight Local Partnerships.
B. Summary of Significant Accounting Policies
Basis of accounting and principles of consolidation
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partner to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The financial statements of the Local Partnerships consolidated herein are
for the twelve month periods ended December 31. Intercompany transactions with
Local Partnerships are eliminated.
Minority interest in local partnerships represents the minority partners'
share of the net assets of the Local Partnerships.
Certain balances for prior years have been reclassified to conform with the
current year's financial statement presentation.
Investment in property
Effective March 31, 1995, the Partnership adopted Statement of Financial
Accounting Standards (``SFAS'') No. 121, ``Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of.'' Under SFAS No.
121, impairment of properties to be held and used is determined to exist when
estimated amounts recoverable through future operations on an undiscounted basis
are below the properties' carrying value. If a property is determined to be
impaired, it should be recorded at the lower of its carrying value or its
estimated fair value. The implementation of SFAS No. 121 resulted in a
$2,700,000 provision for loss on impairment of assets for the year ended March
31, 1995. No additional provision was required for the year ended March 31,
1996.
The determination of estimated fair value is based, not only upon future cash
flows, which rely upon estimates and assumptions including expense growth,
occupancy and rental rates, but also upon market capitalization and discount
rates as well as other market indicators. The General Partner believes that the
estimates and assumptions used are appropriate in evaluating the carrying amount
of the Partnership's properties. However, changes in market conditions and
circumstances may occur in the near term which would cause these estimates and
assumptions to change, which, in turn, could cause the amounts ultimately
realized upon the sale or other disposition of the properties to differ
materially from their estimated fair value. Such changes may also require
write-downs in future years.
The cost of buildings and improvements is depreciated using the straight-line
method over their estimated useful lives which range from 27.5 to 40 years.
19
<PAGE>
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less which are carried at market value.
Cash and cash equivalents held in escrow
Cash and cash equivalents held in escrow include restricted funds held for
payment of taxes and insurance, tenant security deposits and replacement
reserves.
Taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the partners. The Partnership may be subject to other state and
local taxes in jurisdictions in which it operates. For income tax purposes, the
Partnership's year ends on December 31.
Profit and loss allocations/distributions
Net income or loss is allocated 99% to the limited partners and 1% to the
General Partner.
Distributions of cash may be made in accordance with the Partnership
Agreement and, if made, are allocated 99% to the limited partners and 1% to the
General Partner. As of March 31, 1996, no distributions have been paid.
Operating deficit guaranties
Pursuant to certain operating deficit guaranty agreements, Local General
Partners are required to fund operating deficits, as defined in the Local
Partnership agreements, incurred during the period commencing with the
break-even date, as defined in the Local Partnership agreements, and ending on
the third anniversary of the break-even date. These advances are non-interest
bearing.
Development deficit guaranties
Pursuant to certain development deficit guaranty agreements, Local General
Partners were required to fund development deficits, as defined in the Local
Partnership Agreements, until the break-even date. These payments are not
repayable to the Local General Partner. During the year ended March 31, 1994,
approximately $484,000 was received under one such agreement and recorded as
other income. All of these agreements had terminated as of March 31, 1995.
C. Costs, Fees and Expenses
Deferred financing costs
Deferred financing costs include amounts paid for services rendered in
arranging the financing for the Local Partnerships. These costs were capitalized
and are being amortized over the lives of the related debt. The accumulated
amortization as of March 31, 1996 and 1995 is $1,844,694 and $1,544,382,
respectively.
Organizational costs
Costs incurred to organize the Partnership, including but not limited to
legal and accounting, are considered organizational costs. These costs have been
capitalized and are being amortized on a straight-line basis over a 60-month
period. The accumulated amortization as of March 31, 1996 and 1995 is $456,851
and $417,128, respectively.
Management fees
The Partnership pays a management fee to the property managers and the
General Partner.
Each individual property has a managing agent who performs the necessary
functions in operating the property. The property management fee is equal to a
percentage of the annual gross revenues of a property paid in consideration of
the property management services provided (See Note G).
The General Partner is entitled to receive a management fee, payable from
operations and reserves, in an amount not to exceed the difference between .5%
per annum of Invested Assets (as defined in the Partnership Agreement) and the
local administrative fee payable to PBSLP. This management fee is for
20
<PAGE>
administering the affairs of the Partnership (See Note F). Unpaid portions of
the management fee for any year accrue without interest.
General and administrative
The Partnership reimburses the General Partner and its affiliates for actual
Partnership operating expenses payable by or allocable to the Partnership (See
Note F). The Partnership also pays amounts directly to unrelated third parties
for certain operating expenses.
D. Investment in Property
The Partnership's Properties and related debt at March 31 were:
<TABLE>
<CAPTION>
Net investment in property Mortgage notes payable
-------------------------- --------------------------
Description (a) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
- - ----------------------------------- ----------- ----------- ----------- -----------
Apartment Complexes:
RMB Limited Partnership
(Hubbard's Ridge)
Garland, TX $ 3,975,405 $ 4,152,669 $ 1,950,493 $ 1,964,824
Cutler Canal II Associates, Ltd.
Miami, FL 9,833,407 10,116,010 6,008,536 6,033,845
Diamond Street Venture
Philadelphia, PA 2,193,006 2,278,785 3,031,298 3,043,845
Papillion Heights Apartments L.P.
Papillion, NE 1,856,525 1,914,708 1,032,976 1,050,035
Hill Top Homes Apartments L.P.
Arlington, TX 7,055,930 7,262,847 3,695,985 3,743,825
Palm Beach Apartments, Ltd.
(Summer Creek Villas)
West Palm Beach, FL 35,498,673 36,521,852 26,750,000 26,750,000
Brookland Park Plaza L.P.
Richmond, VA 5,187,960 5,434,248 2,519,227 2,536,505
Compton Townhouses L.P.
Cincinnati, OH 1,915,004 2,044,205 1,390,477 1,406,633
----------- ----------- ----------- -----------
$67,515,910 $69,725,324 $46,378,992 $46,529,512
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
(a) The Partnership holds a 66.5% interest in Summer Creek Villas, a 98%
interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a
98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and
Brookland Park Plaza.
The investment in property relating to the Diamond Street Venture was reduced
by $2,700,000 as of March 31, 1995 representing a provision for loss on
impairment of the asset.
E. Mortgage Notes Payable
Mortgage notes are collateralized (on a recourse basis) by land, buildings
and improvements and leases related thereto. Annual principal payment
requirements for each of the next five years ending December 31, the date at
which the Local Partnerships are consolidated, and thereafter are as follows:
<TABLE>
<S> <C>
1996 $ 290,817
1997 461,764
1998 508,232
1999 559,335
2000 616,491
Thereafter 43,942,353
-----------
$46,378,992
-----------
-----------
</TABLE>
Mortgage notes consist of both first mortgages and support loans (second and
third mortgages). First mortgages amounting to $41,438,992 bear interest at
rates ranging from 6.25% to 10.75% and have final
21
<PAGE>
maturities ranging from September 1, 2006 to May 1, 2031. First mortgages
include $26,750,000 in the form of a guaranteed bond bearing interest at 10.451%
(including a .375% service fee payable to an affiliate of the Local General
Partner) maturing on June 20, 2008. The support loans include two loans
totalling $2,440,000 maturing on May 1, 2016 and December 15, 2029, the latter
of which bears interest at 1%, and the former being non-interest bearing, and a
$2,500,000 loan bearing interest at a maximum rate of 9% and maturing on January
16, 2005. The $2,500,000 loan includes a base interest rate of 3% and an
additional interest rate of 6%. The base interest rate is payable annually from
Project Income, as defined in the loan agreement, and can be deferred if Project
Income is inadequate. The additional interest is payable from Project Income, if
available, and only after payment of a cumulative annual 12% return on capital
to the limited partners of the Local Partnership. Currently, only the base
interest rate is being paid; however, the additional interest of 6% continues to
be accrued in the accompanying consolidated financial statements.
At March 31, 1996, the estimated fair value of the mortgage notes payable was
approximately $53,000,000. These estimates are based upon the present value of
expected cash flows discounted at rates currently available to the Local
Partnerships for similar loans. Fair value estimates are made at a specific
point in time, based on relevant market information and are subjective in nature
and involve uncertainties and matters of significant judgment. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts that
the Local Partnerships would pay upon the maturity or disposition of the loans.
F. Related Parties
The General Partner and its affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management,
registrar, transfer and assignment functions, asset management, investor
communications, printing and other administrative services. The General Partner
and its affiliates receive management fees and reimbursements for general and
administrative costs incurred in connection with these services, the amount of
which is limited by the provisions of the Partnership Agreement. These costs and
expenses were:
<TABLE>
<CAPTION>
Year ended March 31
----------------------------------
1996 1995 1994
<S> <C> <C> <C>
-------- -------- --------
Management fees $260,865 $342,676 $342,676
General and administrative 88,541 75,080 93,422
-------- -------- --------
$349,406 $417,756 $436,098
-------- -------- --------
-------- -------- --------
</TABLE>
A portion of the management fees paid to the General Partner is remitted to
an affiliate of the Local General Partner of five of the Local Partnerships. The
General Partner deferred its management fee as of January 1, 1995; therefore,
$345,360 is included in due to General Partner and affiliates as of March 31,
1996.
PBSLP acts as a special limited partner of each Local Partnership and is
entitled to receive up to $2,750 per year from each Local Partnership as a local
administrative fee. For each of the years ended March 31, 1996, 1995 and 1994,
$15,250 in fees were incurred; however, no fees have been paid to date.
The Partnership maintains an account with the Prudential Tax Free Money Fund,
an affiliate of PBP, for investment of its available cash in short-term
instruments.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owned 56
BUC$ at March 31, 1996.
22
<PAGE>
G. General Partners and Affiliates of Local Partnerships
Certain Local General Partners and their affiliates provided services in
connection with the construction, financing and development of the Apartment
Complexes. Additionally, six of the Local Partnerships are managed by the Local
General Partner or its affiliates. The costs were:
<TABLE>
<CAPTION>
Year ended March 31
----------------------------------
1996 1995 1994
<S> <C> <C> <C>
-------- -------- --------
Interest $ 69,280 $ 78,417 $108,511
Management fees 394,719 374,564 444,217
-------- -------- --------
$463,999 $452,981 $552,728
-------- -------- --------
-------- -------- --------
</TABLE>
Due to general partners and affiliates of local partnerships includes amounts
payable for accrued interest, advances, property management fees and operating
loans made in accordance with operating deficit guaranty agreements. During the
year ended March 31, 1996, Summer Creek Villas received from its Local General
Partner a $255,000 operating deficit guaranty payment as well as a $100,000
working capital advance. The Local General Partner elected to treat the
operating deficit guaranty payment as non-repayable and recorded the amount as
other income. The $100,000 working capital advance was recorded as due to
general partners and affiliates of local partnerships. During the year ended
March 31, 1995, $733,132 was received under these operating deficit guaranty
agreements and recorded as due to general partners and affiliates of local
partnerships. As of March 31, 1996, two properties were still subject to an
operating deficit guaranty.
At March 31, 1996 and 1995, construction costs of $605,358 were payable to an
affiliate of one of the Local General Partners.
At March 31, 1996 and 1995, development fees of $1,579,709 were payable to
various Local General Partners.
H. Damage from Hurricane Andrew
On August 24, 1992, Cutler Canal II (``Cutler''), a property located in
Miami, Florida, suffered substantial damage from Hurricane Andrew which caused
normal rent operations to cease as of that date.
Cutler was rebuilt with insurance proceeds totalling approximately
$5,396,000. These proceeds were placed in an escrow account controlled by the
first mortgage holder and paid to the construction contractor, an affiliate of
the Local General Partner, during reconstruction.
In addition, Cutler was covered by business interruption insurance which
provided for reimbursement of operating costs plus a normal operating profit
margin during the reconstruction period. During the year ended March 31, 1994,
approximately $405,000 was recognized as other income under this coverage.
Reconstruction was completed by August 1993 and occupancies have stabilized.
I. Contingencies
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, a number of purported class actions then pending in various federal
district courts were transferred to a single judge of the United States District
Court for the Southern District of New York and consolidated for pretrial
proceedings under the caption In re Prudential Securities Incorporated Limited
Partnerships Litigation (MDL Docket 1005). On June 8, 1994, plaintiffs in the
transferred cases filed a complaint that consolidated the previously filed
complaints and named as defendants, among others, PSI, certain of its present
and former employees and PBP. The Partnership was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.
On August 9, 1995, PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from
23
<PAGE>
instituting, commencing or prosecuting any settled claim against the released
parties. The full amount due under the settlement agreement has been paid by
PSI.
24
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Prudential-Bache Tax Credit Properties L.P. (the ``Partnership'') invested in
eight Local Partnerships that are owners of low-income multi-family residential
complexes. The Local Partnerships are operated in accordance with the low-income
housing rules and regulations in order to protect the related tax credits. The
Partnership's primary sources of funds are rental revenues (which are fully
utilized at the property level) and, to a lesser extent, interest earned on
working capital reserves. A working capital reserve (approximately $210,000 at
March 31, 1996) is maintained to fund operations and contingencies of the
Partnership. The working capital reserve is invested in a tax-free money fund.
Based on the current level of the Partnership's working capital reserve, the
General Partner has deferred the collection of its management fee commencing
with the three month period ended March 31, 1995.
At the Local Partnership level, some Local General Partners and/or their
affiliates have made guaranties with respect to the Local Partnerships which,
under certain circumstances, require their funding cash flow deficits pursuant
to deficit guaranty agreements, the majority of which are unsecured. The Local
Partnerships have received funds from the Papillion Heights, Hubbard's Ridge,
Hill Top Homes and Summer Creek Villas Local General Partners under these
agreements.
The Local Partnerships have generated net operating income before debt
service of approximately $4,914,000, $4,043,000 and $3,766,000 for each of the
three years ended March 31, 1996, 1995 and 1994, respectively. Debt service
payments (interest and principal) made during the same periods approximated
$4,477,000, $4,303,000 and $4,265,000, respectively. The Local Partnerships
received approximately $255,000, $733,000 and $520,000 from operating deficit
and development deficit guarantees during each respective year.
During the year ended March 31, 1996, Summer Creek Villas received from its
Local General Partner a $255,000 operating deficit guaranty payment as well as a
$100,000 working capital advance. The Local General Partner elected to treat the
operating deficit guaranty payment as non-repayable and recorded the amount as
other income. In addition, Brookland Park Plaza currently has a loan outstanding
for $618,000 with the Virginia Housing Development Authority. This loan is
non-interest bearing and is forgiven at the rate of 25% per year commencing with
the year ended March 31, 1996, assuming that the Local Partnership complies with
all conditions as set forth in the loan agreement. Accordingly, $155,000 was
recorded as other income for the year ended March 31, 1996. Cutler Canal II
fully repaid the advance previously received from the Local General Partner with
a payment of $110,000 during the year ended March 31, 1995 offset by an
additional loan for Papillion Heights for $4,000. For the year ended March 31,
1994, Cutler Canal II and Summer Creek Villas repaid advances and Hill Top Homes
took an additional loan.
Results of Operations
The operating results of the Local Partnerships consolidated herein are for
the twelve month periods ended December 31. Information disclosed below with
respect to each Local Partnership is consistent with this method.
Fiscal 1996 vs. Fiscal 1995
Rental income increased $362,000 for the year ended March 31, 1996 as
compared to the same period in 1995 primarily due to increases of $221,000 and
$33,000 at Summer Creek Villas and Hubbard's Ridge, respectively, as a result of
higher rental rates. Additionally, rental income at Hill Top Homes increased
$69,000 as a result of higher average occupancies.
Other income increased $372,000 for the year ended March 31, 1996 as compared
to the same period in 1995. For an explanation of the variance, see the
Liquidity and Capital Resources section.
Operating expenses increased $63,000 for the year ended March 31, 1996 as
compared to the same period in 1995 primarily due to increases in utilities and
bad debt expense at Hill Top Homes.
25
<PAGE>
Repairs and maintenance expense decreased $97,000 for the year ended March
31, 1996 as compared to the same period in 1995 primarily due to lower property
maintenance and carpet replacement expenses at Summer Creek Villas of $133,000
partially offset by an increase of $42,000 at Hill Top Homes primarily as a
result of carpet replacement costs.
General and administrative expenses decreased $49,000 for the year ended
March 31, 1996 as compared to the same period in 1995 primarily due to lower
professional fees at Summer Creek Villas.
Partnership management fees decreased $82,000 for the year ended March 31,
1996 as compared to the same period in 1995 as a result of a reversal of an
accrual from prior periods.
Fiscal 1995 vs. Fiscal 1994
Rental income increased $603,000 for the year ended March 31, 1995 as
compared to the same period in 1994. This variance was primarily due to an
increase of $469,000 at Cutler Canal II resulting from a full year of rental
activities and an increase of $101,000 at Hubbard's Ridge as a result of higher
occupancies and rental rates. The hurricane damage at Cutler Canal II affected
rental operations through August 1993. See Note H to the consolidated financial
statements for additional information.
Other income decreased $804,000 for the year ended March 31, 1995 as compared
to the same period in 1994. This decrease was primarily due to the $484,000
development deficit guaranty payment from Summer Creek Villas and $405,000 of
business interruption insurance proceeds from Cutler Canal II received during
1994. As previously discussed, Cutler Canal II recorded rental income from a
full year of operations during 1995.
Interest income decreased $28,000 for the year ended March 31, 1995 as
compared to the same period in 1994 due to lower average cash balances and the
non-recurring interest earned on cash for reconstruction at Cutler Canal II in
1994.
Operating expenses decreased $366,000 for the year ended March 31, 1995 as
compared to the same period in 1994 primarily due to the decrease in marketing
and advertising expenses at Summer Creek Villas and Cutler Canal II. A
non-recurring marketing effort was made during the prior year at Summer Creek
Villas to improve occupancies. Additionally, increased marketing costs were
incurred during 1994 at Cutler Canal II to restore occupancies to those before
Hurricane Andrew. Professional fees at Cutler Canal II, Hill Top Homes and
Summer Creek Villas decreased in 1995 as compared to 1994.
Taxes and insurance increased $131,000 for the year ended March 31, 1995 as
compared to the same period in 1994. This variance was due to an insurance rate
increase at Cutler Canal II and Summer Creek Villas and higher taxes at Cutler
Canal II due to resumption of operations. This increase was offset by decreases
at Hubbard's Ridge and Hill Top Homes due to lower insurance rates and lower
real estate taxes resulting from successful appeals of the assessed property
values.
Repairs and maintenance increased $156,000 for the year ended March 31, 1995
as compared to the same period in 1994. This increase was primarily due to
carpet cleaning and general property maintenance at Summer Creek Villas and
Cutler Canal II.
A provision for loss on impairment of assets of $2,700,000 was recorded as of
March 31, 1995 relating to the Partnership's investment in Diamond Street. See
Notes B and D to the consolidated financial statements for additional
information.
26
<PAGE>
Property information
The Partnership currently holds interests in eight Local Partnerships. The
following schedule gives specific details about the related Properties.
<TABLE>
<CAPTION>
PARTNERSHIP'S
GROSS CARRYING LOW-INCOME
VALUE OF RENTS OCCUPANCY HOUSING TAX
PROPERTY AT AS OF RATE AT CREDIT FOR THE
MARCH 31, NUMBER DECEMBER 31, DECEMBER 31, YEAR ENDED
PROPERTY (a) 1996 OF UNITS 1995 1995(b) DECEMBER 31, 1995
- - ------------------------------- ----------------- --------- ------------ ------------ -----------------
<S> <C> <C> <C> <C> <C>
RMB Limited Partnership
(Hubbard's Ridge)
Garland, TX $ 4,990,526 196 $ 370-$534 91% $ 395,768
Cutler Canal II Associates,
Ltd.
Miami, FL 11,124,427 216 347-604 95 896,701
Diamond Street Venture
Philadelphia, PA 2,870,124 48 461-529 100 282,288
Papillion Heights Apartments
L.P.
Papillion, NE 2,201,647 48 365-425 100 173,661
Hill Top Homes Apartments L.P.
Arlington, TX 8,103,088 171 442-590 95 616,546
Palm Beach Apartments, Ltd.
(Summer Creek Villas)
West Palm Beach, FL 40,410,117 770 471-642 94 2,241,161
Brookland Park Plaza L.P.
Richmond, VA 6,443,630 77 511 97 429,237
Compton Townhouses L.P.
Cincinnati, OH 2,445,632 39 585 97 205,620
----------------- -----------------
$78,589,191 $ 5,240,982
----------------- -----------------
----------------- -----------------
</TABLE>
(a) The Partnership holds a 66.5% interest in Summer Creek Villas, a 98%
interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a
98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and
Brookland Park Plaza.
(b) Occupancies are calculated by dividing occupied units by total available
units.
There were no significant changes in occupancies at the above properties as
of June 2, 1996 except for a decrease to 90% at Diamond Street.
Net operating income before debt service and development deficit guaranty
payments of the Local Partnerships for each of the years in the three year
period ended March 31, 1996 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Hubbard's Ridge $ 390,000 $ 260,000 $ 143,000
Cutler Canal II 560,000 630,000 706,000
Diamond Street 102,000 60,000 63,000
Papillion Heights 214,000 106,000 94,000
Hill Top Homes 357,000 381,000 314,000
Summer Creek Villas 2,793,000 2,211,000 2,047,000
Brookland Park Plaza 351,000 242,000 258,000
Compton Townhouses 147,000 153,000 141,000
---------- ---------- ----------
$4,914,000 $4,043,000 $3,766,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
* * * *
27
<PAGE>
Peck Slip Station
BULK RATE
P.O. Box 2016
U.S. POSTAGE
New York, NY 10272
PAID
Automatic Mail
CREDIT1/171801
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Tax Credit Properties, L.P.
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000850184
<NAME> P-B Tax Credit Properties, L.P.
<MULTIPLIER> 1
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-1-1995
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 12-MOS
<CASH> 1,625,196
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,429,009
<PP&E> 78,589,191
<DEPRECIATION> (11,073,281)
<TOTAL-ASSETS> 72,944,919
<CURRENT-LIABILITIES> 52,959,712
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 72,944,919
<SALES> 0
<TOTAL-REVENUES> 9,795,121
<CGS> 0
<TOTAL-COSTS> 12,382,514
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,448,986
<INCOME-PRETAX> (2,166,249)
<INCOME-TAX> (2,166,249)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,166,249)
<EPS-PRIMARY> (56.25)
<EPS-DILUTED> 0
</TABLE>
