<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 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
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check CK 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 __
<PAGE>
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
<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 (12,183,278) (11,073,281)
------------- -----------
Net investment in property 66,405,913 67,515,910
Cash and cash equivalents 861,508 1,012,131
Cash and cash equivalents held in escrow 1,014,773 613,065
Deferred financing costs, net 3,236,753 3,386,089
Organizational costs, net 52,879 69,056
Other assets 476,936 348,668
------------- -----------
Total assets $ 72,048,762 $72,944,919
------------- -----------
------------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Mortgage notes payable $ 46,311,541 $46,378,992
Accrued interest payable 1,304,410 1,044,112
Other accrued expenses and liabilities 1,273,727 1,355,458
Due to general partners and affiliates of local partnerships 1,678,773 1,539,945
Development fees payable 1,579,709 1,579,709
Construction costs payable 605,358 605,358
Real estate taxes payable 379,533 87,289
Due to General Partner and its affiliates 531,936 368,849
------------- -----------
Total liabilities 53,664,987 52,959,712
------------- -----------
Minority interest in local partnerships 3,450,717 3,712,217
------------- -----------
Contingencies
Partners' capital (deficit)
Limited partners (38,125 BUC$ issued and outstanding) 15,125,326 16,451,859
General Partner (1 BUC issued and outstanding) (192,268) (178,869)
------------- -----------
Total partners' capital 14,933,058 16,272,990
------------- -----------
Total liabilities and partners' capital $ 72,048,762 $72,944,919
------------- -----------
------------- -----------
- ---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements
2
<PAGE>
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months For the Three Months
Ended September 30, Ended September 30,
--------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
REVENUES
Rental income $ 4,303,925 $ 4,365,677 $2,129,908 $2,191,319
Other income 225,265 245,414 113,570 128,530
Interest income 13,545 12,899 7,784 6,583
----------- ----------- ---------- ----------
4,542,735 4,623,990 2,251,262 2,326,432
----------- ----------- ---------- ----------
EXPENSES
Interest 2,150,564 2,153,108 1,078,108 1,083,196
Depreciation and amortization 1,275,510 1,274,119 647,221 634,393
Operating and other 954,770 901,193 516,459 493,215
Taxes and insurance 586,048 576,559 292,412 293,584
Repairs and maintenance 642,461 557,444 309,515 300,268
General and administrative 189,655 211,849 96,592 118,852
Partnership management fees 131,620 171,808 46,186 86,374
Property management fees 213,539 180,835 123,763 89,321
----------- ----------- ---------- ----------
6,144,167 6,026,915 3,110,256 3,099,203
----------- ----------- ---------- ----------
Loss before minority interest (1,601,432) (1,402,925) (858,994) (772,771)
Minority interest in loss of local
partnerships 261,500 218,318 140,473 116,673
----------- ----------- ---------- ----------
Net loss $(1,339,932) $(1,184,607) $ (718,521) $ (656,098)
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
ALLOCATION OF NET LOSS
Limited partners $(1,326,533) $(1,172,761) $ (711,336) $ (649,537)
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
General Partner $ (13,399) $ (11,846) $ (7,185) $ (6,561)
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Net loss per limited partner BUC $ (34.79) $ (30.76) $ (18.65) $ (17.04)
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
- ------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
BUC$ PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Partners' capital (deficit)--March 31, 1996 38,126 $16,451,859 $(178,869) $16,272,990
Net loss -- (1,326,533) (13,399) (1,339,932)
------ ----------- --------- -----------
Partners' capital (deficit)--September 30,
1996 38,126 $15,125,326 $(192,268) $14,933,058
------ ----------- --------- -----------
------ ----------- --------- -----------
- -----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements
3
<PAGE>
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended September 30,
---------------------------
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,339,932) $(1,184,607)
----------- -----------
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,275,510 1,274,119
Minority interest in loss of local partnerships (261,500) (218,318)
(Increase) decrease in cash held in escrow (401,708) 8,121
Increase (decrease) in real estate taxes payable 292,244 (103,586)
Increase (decrease) in accrued interest payable 260,298 (99,928)
Increase in other assets (128,268) (23,056)
Increase in other liabilities 140,184 60,766
----------- -----------
Total adjustments 1,176,760 898,118
----------- -----------
Net cash used in operating activities (163,172) (286,489)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgage notes (67,451) (68,450)
Advances pursuant to operating deficit guaranties 180,000 60,000
Payment on working capital advance from local general partner (100,000) --
----------- -----------
Net cash provided by (used in) financing activities 12,549 (8,450)
----------- -----------
Net decrease in cash and cash equivalents (150,623) (294,939)
Cash and cash equivalents at beginning of period 1,012,131 1,201,654
----------- -----------
Cash and cash equivalents at end of period $ 861,508 $ 906,715
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 1,855,625 $ 2,210,854
----------- -----------
----------- -----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements
4
<PAGE>
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
A. General
These consolidated financial statements have been prepared without audit. In
the opinion of management, the consolidated financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position of Prudential-Bache Tax Credit Properties
L.P. (the ``Partnership'') as of September 30, 1996, the results of its
operations for the six and three months ended September 30, 1996 and 1995 and
its cash flows for the six months ended September 30, 1996 and 1995. However,
the operating results for the interim periods may not be indicative of the
results expected for a full year.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K filed with the Securities and Exchange Commission for the year ended March
31, 1996.
The Partnership invests in partnerships (the ``Local Partnerships'') which
own the properties. The financial statements of the Local Partnerships
consolidated herein are for the six-month periods ended June 30, and occupancy
rates are as of June 30.
Certain balances from prior periods have been reclassified to conform with
the current financial statement presentation.
B. Related Parties
Prudential-Bache Properties, Inc. (the ``General Partner'' or ``PBP'') 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. The costs and expenses incurred were:
<TABLE>
<CAPTION>
Six Months Three Months
Ended September 30, Ended September 30,
--------------------- ---------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Management fees $131,620 $171,808 $ 46,186 $ 86,374
General and administrative 55,185 61,644 34,580 41,808
-------- -------- -------- --------
$186,805 $233,452 $ 80,766 $128,182
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
As of September 30, 1996, Due to General Partner and its affiliates includes
$476,980 relating to management fees payable and $54,956 relating to
reimbursement of general and administrative costs.
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 has deferred the receipt of its management fees since January 1,
1995 and has deferred the receipt of the reimbursement of general and
administrative costs incurred on behalf of the Partnership since April 1, 1996.
P.B. Tax Credit S.L.P. (``PBSLP''), an affiliate of the General Partner, acts
as 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.
As of September 30, 1996, $122,938 in fees have been incurred, of which $40,188
were incurred for the six months ended September 30, 1996; however, no fees have
been paid to date.
5
<PAGE>
<PAGE>
The Partnership maintains an account with the Prudential Tax Free Money
Market Fund, an affiliate of PBP, for investment of its available cash in
short-term instruments.
Prudential Securities Incorporated (``PSI''), an affiliate of PBP, owns 56
BUC$ at September 30, 1996.
6
<PAGE>
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
ITEM 2. 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 ($139,000 at September 30,
1996) is maintained to fund operations and contingencies of the Partnership. The
working capital reserve is invested in a tax-free money market fund. Based on
the reduced level of the Partnership's working capital reserve, the General
Partner has deferred the receipt of its management fee since January 1, 1995 and
the reimbursement of general and administrative costs incurred on behalf of the
Partnership since April 1, 1996.
At the Local Partnership level, certain Local General Partners and/or their
affiliates have made guarantees with respect to the Local Partnerships which,
under certain circumstances, require their funding cash flow deficits pursuant
to operating deficit guaranty agreements. These operating deficit advances do
not bear interest and are repayable by the Local Partnership in accordance with
the respective Local Partnership agreement. As of September 30, 1996, there are
still operating deficit guaranty agreements in effect at Summer Creek Villas
and Papillion Heights.
The Summer Creek Villas Local Partnership continues to experience cash flow
deficits. The maximum funding obligation of the Local General Partner under the
Summer Creek Villas operating deficit guaranty agreement which expires on
December 31, 1996 is $3,392,000, of which $1,055,000 has been funded through
September 30, 1996. The Local General Partner is also obligated to fund
operating deficits during a second guaranty period commencing August 1996 and
expiring July 1999. The maximum funding obligation under this second guaranty
period is $924,000. In November 1996, an additional $300,000 was funded under
the operating deficit guaranty agreement. As of September 30, 1996, the
financial statements of the Partnership reflect $800,000 as ``due to general
partners and affiliates of Local Partnerships'' under the Summer Creek Villas
operating deficit guaranty agreement.
The Papillion Heights operating deficit guaranty agreement is in effect until
such date that the net operating income is sufficient to cover 115% of the debt
service for twelve consecutive months, as defined. Of the $170,000 maximum
funding obligation, approximately $40,000 has been funded to date and such
amount is reflected in the financial statements as ``due to general partners and
affiliates of Local Partnerships'' as of September 30, 1996.
In addition, the Partnership's financial statements as of September 30, 1996
also reflect payables of approximately $150,000 under certain operating deficit
guaranty agreements which have expired.
The Local Partnerships generated net operating income before debt service of
$2,067,000 and $2,311,000 during the six-month periods ended September 30, 1996
and 1995, respectively. Debt service payments (interest and principal) made
during the same periods were $1,923,000 and $2,279,000, respectively. The Local
Partnerships received $180,000 from operating deficit guarantees during the six
months ended September 30, 1996 and an additional $300,000 in November 1996
as noted above.
Results of Operations
The operating results of the Local Partnerships consolidated herein are for
the six-month periods ended June 30. Information disclosed below with respect to
each Local Partnership is consistent with this method of presentation.
7
<PAGE>
<PAGE>
Net operating income before debt service of the Local Partnerships was as
follows:
<TABLE>
<CAPTION>
Six Months
Ended September 30,
-------------------------
Property 1996 1995
<S> <C> <C>
- ------------------------------------------------------------------------
Hubbard's Ridge $ 117,000 $ 129,000
Cutler Canal II 255,000 286,000
Diamond Street 35,000 57,000
Papillion Heights 67,000 70,000
Hill Top Homes 172,000 221,000
Summer Creek Villas 1,236,000 1,371,000
Brookland Park Plaza 112,000 104,000
Compton Townhouses 73,000 73,000
---------- ----------
$2,067,000 $2,311,000
---------- ----------
---------- ----------
</TABLE>
Rental income decreased $62,000 for the six months ended September 30, 1996
as compared to 1995 mainly as a result of decreases of $59,000, $17,000 and
$12,000, respectively, at Summer Creek Villas, Diamond Street and Cutler Canal
II due to lower occupancies, partially offset by a $22,000 increase at Hubbard's
Ridge due to higher rental rates.
Other income (consisting primarily of application fees and forfeited security
deposits) decreased $20,000 for the six months ended September 30, 1996 as
compared to 1995. The main reasons for the variance was a decrease of $18,000 at
Summer Creek Villas due to lower collections of application fees and a decrease
of $10,000 at Hill Top Homes due to lower collections of late charges and
forfeited security deposits, partially offset by an increase of $10,000 at
Cutler Canal II due to higher collections of forfeited security deposits.
Operating and other expense increased $54,000 for the six months ended
September 30, 1996 as compared to 1995. The reasons for the variance was an
increase at Hubbard's Ridge of $15,000 as a result of increased bad debt and
utilities expenses; an increase of $12,000 at Brookland Park Plaza as a result
of higher superintendent fees; and an increase of $9,000 at Hill Top Homes due
to higher cable costs.
Repairs and maintenance expense increased $85,000 for the six months ended
September 30, 1996 as compared to 1995 mainly due to increases of $34,000,
$25,000 and $19,000 at Summer Creek Villas, Hill Top Homes and Hubbard's Ridge,
respectively. The increase at Summer Creek Villas was the result of higher
carpet cleaning and replacement and general maintenance costs; at Hill Top Homes
due to increased ground maintenance and carpet replacement costs; and at
Hubbard's Ridge due to damage caused by wind storms, partially offset by the
receipt of insurance proceeds.
General and administrative expense decreased $22,000 for the six months ended
September 30, 1996 as compared to 1995 primarily due to lower costs to
administer the Partnership.
Partnership management fees expense decreased $40,000 and Property management
fees expense increased $33,000 for the six months ended September 30, 1996 as
compared to 1995 primarily due to a reclassification between the two categories.
Comparative second quarter 1996 and 1995 operating results generally reflect
the trends discussed for the comparative six month periods.
8
<PAGE>
<PAGE>
Property Information
Occupancies at the Local Partnerships were as follows:
<TABLE>
<CAPTION>
June 30,
-------------
Property 1996 1995
<S> <C> <C>
- ------------------------------------------------------------
Hubbard's Ridge 90% 98%
Cutler Canal II 91 96
Diamond Street 92 96
Papillion Heights 100 100
Hill Top Homes 93 95
Summer Creek Villas 90 95
Brookland Park Plaza 100 100
Compton Townhouses 95 97
</TABLE>
(Occupancies are calculated by dividing occupied units by total
available units.)
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.
There were no significant changes in occupancies at the above properties as of
November 3, 1996, except for decreases at Hubbard's Ridge to 80% and at Summer
Creek Villas to 84%.
* * * *
9
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--None
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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)**
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.**
(b) Reports on Form 8-K--None
- ------------
* Filed as an exhibit to Pre-Effective Amendment No. 1 to Form S-11
Registration Statement (No. 33-28571) (the ``Registration Statement'') and
incorporated herein by reference.
** Filed as an exhibit to Pre-Effective Amendment No. 2 to Form S-11
Registration Statement and incorporated herein by reference.
10
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Prudential-Bache Tax Credit Properties L.P.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: November 14, 1996
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
11
<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-31-1997
<PERIOD-START> Apr-1-1996
<PERIOD-END> Sep-30-1996
<PERIOD-TYPE> 6-Mos
<CASH> 861,508
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,642,849
<PP&E> 78,589,191
<DEPRECIATION> 12,183,278
<TOTAL-ASSETS> 72,048,762
<CURRENT-LIABILITIES> 10,804,163
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,933,058
<TOTAL-LIABILITY-AND-EQUITY> 72,048,762
<SALES> 4,542,735
<TOTAL-REVENUES> 4,542,735
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,732,103
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,150,564
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,339,932)
<EPS-PRIMARY> (34.79)
<EPS-DILUTED> 0
</TABLE>
