<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 June 30, 1997
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 (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, New York 10292-0128
- --------------------------------------------------------------------------------
(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>
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>
June 30, March 31,
1997 1997
<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 (13,842,203 ) (13,283,832)
------------- ------------
Net investment in property 64,746,988 65,305,359
Cash and cash equivalents 589,327 839,134
Cash and cash equivalents held in escrow 1,321,267 903,486
Deferred financing costs, net 3,074,889 3,136,727
Organizational costs, net 8,003 11,422
Other assets 359,536 306,247
------------- ------------
Total assets $ 70,100,010 $ 70,502,375
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Mortgage notes payable $ 45,985,786 $ 46,099,028
Accrued interest payable 1,482,068 1,266,943
Other accrued expenses and liabilities 1,045,764 1,265,302
Due to general partners and affiliates of local partnerships 2,077,915 1,654,598
Development fees payable 1,579,709 1,579,709
Construction costs payable 605,358 605,358
Real estate taxes payable 286,878 118,195
Due to General Partner and its affiliates 936,898 848,543
------------- ------------
Total liabilities 54,000,376 53,437,676
------------- ------------
Minority interest in local partnerships 3,132,170 3,302,224
------------- ------------
Partners' capital (deficit)
Limited partners (38,125 BUC$ issued and outstanding) 13,179,388 13,966,449
General Partner (1 BUC issued and outstanding) (211,924 ) (203,974)
------------- ------------
Total partners' capital 12,967,464 13,762,475
------------- ------------
Total liabilities and partners' capital $ 70,100,010 $ 70,502,375
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
-------------------------
1997 1996
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
REVENUES
Rental income $2,074,423 $2,168,324
Other income 138,028 111,695
Interest income 5,663 5,761
---------- ----------
2,218,114 2,285,780
---------- ----------
EXPENSES
Interest 1,087,768 1,072,456
Depreciation and amortization 623,628 628,289
Operating and other 533,269 438,662
Taxes and insurance 299,453 293,636
Repairs and maintenance 369,366 326,902
General and administrative 101,080 93,063
Partnership management fees 80,372 80,372
Property management fees 88,243 94,838
---------- ----------
3,183,179 3,028,218
---------- ----------
Loss before minority interest (965,065) (742,438)
Minority interest in loss of local
partnerships 170,054 121,027
---------- ----------
Net loss $ (795,011) $ (621,411)
---------- ----------
---------- ----------
ALLOCATION OF NET LOSS
Limited partners $ (787,061) $ (615,197)
---------- ----------
---------- ----------
General Partner $ (7,950) $ (6,214)
---------- ----------
---------- ----------
Net loss per limited partner BUC $ (20.64) $ (16.14)
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
</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, 1997 38,126 $13,966,449 $(203,974) $13,762,475
Net loss -- (787,061) (7,950) (795,011)
------ ----------- --------- -----------
Partners' capital (deficit)--June 30, 1997 38,126 $13,179,388 $(211,924) $12,967,464
------ ----------- --------- -----------
------ ----------- --------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
--------------------------
1997 1996
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (795,011) $ (621,411)
----------- ----------
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 623,628 628,289
Minority interest in loss of local partnerships (170,054) (121,027)
Increase in cash held in escrow (417,781) (334,338)
Increase in real estate taxes payable 168,683 215,873
Increase in accrued interest payable 215,125 253,351
(Increase) decrease in other assets (53,289) 80,945
Increase (decrease) in other liabilities (73,026) 4,111
----------- ----------
Total adjustments 293,286 727,204
----------- ----------
Net cash provided by (used in) operating activities (501,725) 105,793
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgage notes (113,242) (29,027)
Advances pursuant to operating deficit guaranties 365,160 --
----------- ----------
Net cash provided by (used in) financing activities 251,918 (29,027)
----------- ----------
Net increase (decrease) in cash and cash equivalents (249,807) 76,766
Cash and cash equivalents at beginning of period 839,134 1,012,131
----------- ----------
Cash and cash equivalents at end of period $ 589,327 $1,088,897
----------- ----------
----------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 855,323 $ 801,425
----------- ----------
----------- ----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated statements
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(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 June 30, 1997 and the results of its operations
and its cash flows for the three months ended June 30, 1997 and 1996. 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, 1997. Also, certain balances from prior periods have been reclassified to
conform with the current financial statement presentation.
The Partnership invests in partnerships (the 'Local Partnerships') which own
the properties. The financial statements of the Local Partnerships consolidated
herein are for the three-month periods ended March 31, and occupancy rates are
as of March 31.
On December 19, 1996, Prudential-Bache Properties, Inc. (the 'General
Partner' or 'PBP') and Related Capital Company ('RCC') entered into an agreement
for the purchase by RCC or its affiliates of PBP's general partner interests in
the Partnership and certain other associated interests. The agreement is subject
to numerous conditions including the settlement of the class action litigation
(In re Prudential Securities Inc. Limited Partnerships Litigation, MDL No. 1005)
(the 'Class Action') against affiliates of RCC and the approval of the sale and
withdrawal of PBP as the sole general partner of the Partnership by the court
overseeing the Class Action. Following consummation of the transaction, RCC or
its affiliate will become the general partner of the Partnership. On December
31, 1996, the court overseeing the Class Action issued a preliminary approval
order with respect to the settlement of the Class Action, which provides, in
part, that pending final approval of the settlement of the Class Action, class
members (including the limited partners and unitholders (collectively, the
'Limited Partners') of the Partnership) are prohibited from, among other things,
transferring their partnership interests unless the transferee agrees to be
bound by the terms of the settlement of the Class Action. There can be no
assurance that the conditions to the closing of the proposed transaction will be
satisfied nor as to the time frame in which a closing may occur.
In June 1997, an Information Statement was mailed to Limited Partners of
record as of December 24, 1996 advising them of these proposed changes together
with a Notice of the Class Action and the terms of the settlement with RCC in
the Class Action. A hearing will be held on August 28, 1997 in the U.S.
Courthouse, 40 Centre Street, New York, New York, 10007, to determine the
reasonableness and fairness of the settlement.
5
<PAGE>
B. 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. The costs and
expenses incurred were:
<TABLE>
<CAPTION>
Three Months
Ended June 30,
---------------------
1997 1996
<S> <C> <C>
- --------------------------------------------------------------
Management fees $ 80,372 $ 80,372
Local administrative fees 5,062 5,062
General and administrative 8,552 20,605
-------- --------
$ 93,986 $106,039
-------- --------
-------- --------
</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 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 (excluding printing costs) incurred on behalf of the
Partnership since April 1, 1996. As of June 30, 1997, Due to General Partner and
its affiliates includes $718,307 relating to management fees payable and $78,800
relating to reimbursement of general and administrative costs.
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 June 30, 1997, $139,791 in fees have been incurred, of which $5,062 were
incurred for the three months ended June 30, 1997; however, no fees have been
paid to date.
Pursuant to the agreement entered into by PBP and RCC on December 19, 1996
and subject to the conditions to the closing of the proposed transaction being
satisfied, all amounts due to the General Partner as noted in the preceding two
paragraphs (excluding printing costs of $7,084 as of June 30, 1997) will be
forgiven by PBP. (See Note A)
The Partnership maintains an account with the Prudential Tax Free Money Fund,
an affiliate of PBP, for investment of its available cash in short-term
instruments.
Prudential Securities Incorporated ('PSI'), an affiliate of PBP, owns 56 BUC$
at June 30, 1997.
6
<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 source of funds is rental revenues which are fully
utilized at the property level. A working capital reserve ($56,700 at June 30,
1997) is maintained to fund Partnership level expenses. The working capital
reserve is invested in a tax-free money 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 (excluding printing costs) incurred on behalf
of the Partnership since April 1, 1996. (See Note B to the consolidated
financial statements.)
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 June 30, 1997, 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 severe cash
flow deficits. The maximum funding obligation of the Local General Partner under
the Summer Creek Villas operating deficit guaranty agreement which expired on
December 31, 1996 was $3,392,000, of which $1,818,000 was funded. Of the total
funded, the Local General Partner has elected to treat $933,000 as non-repayable
advances. 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 during this second guaranty period is $924,000.
Through August 13, 1997, the entire obligation has been funded pursuant to this
second guaranty period. As of June 30, 1997, the financial statements of the
Partnership include $1,085,000 as 'Due to general partners and affiliates of
local partnerships' under the Summer Creek Villas operating deficit guaranty
agreement due to the three-month lag in recording the financial information of
the Local Partnerships.
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, $40,000 has been funded to date. In addition, the
Partnership's financial statements as of June 30, 1997 also reflect payables of
$150,000 under certain operating deficit guaranty agreements which have expired.
The Local Partnerships have generated net operating income before debt
service and depreciation of $867,000 and $1,090,000 during the three-month
periods ended June 30, 1997 and 1996, respectively. Debt service payments
(interest and principal) made during the same periods were $969,000 and
$830,000, respectively.
Results of Operations
The operating results of the Local Partnerships consolidated herein are for
the three-month periods ended March 31. Information disclosed below with respect
to each Local Partnership is consistent with this method of presentation.
7
<PAGE>
Net operating income before debt service and depreciation of the Local
Partnerships was as follows:
<TABLE>
<CAPTION>
Three Months
Ended June 30,
-------------------------
Property 1997 1996
<S> <C> <C>
- ------------------------------------------------------------------------
Hubbard's Ridge $ 18,000 $ 48,000
Cutler Canal II 99,000 136,000
Diamond Street 8,000 22,000
Papillion Heights 52,000 33,000
Hill Top Homes 99,000 103,000
Summer Creek Villas 488,000 650,000
Brookland Park Plaza 57,000 61,000
Compton Townhouses 46,000 37,000
---------- ----------
$ 867,000 $1,090,000
---------- ----------
---------- ----------
</TABLE>
Rental income decreased $94,000 for the three months ended June 30, 1997 as
compared to 1996 mainly as a result of decreases of $89,000, $20,000 and
$15,000, respectively, at Summer Creek Villas, Cutler Canal II and Hubbard's
Ridge due to lower average occupancies, partially offset by increases at
Papillion Heights and Compton Townhouses of $20,000 and $11,000, respectively,
due to higher rental rates.
Other income (consisting primarily of application fees and forfeited security
deposits) increased $26,000 for the three months ended June 30, 1997 as compared
to 1996 primarily due to an increase of $32,000 at Summer Creek Villas due to
higher collections of application fees, late fees and damage charges.
Operating and other expense increased $95,000 for the three months ended June
30, 1997 as compared to 1996. The primary reason for the variance was an
increase at Summer Creek Villas of $75,000 as a result of increased marketing,
utilities and bad debt expenses.
Repairs and maintenance expense increased $42,000 for the three months ended
June 30, 1997 as compared to 1996 mainly due to an increase of $34,000 at Summer
Creek Villas resulting from higher maintenance salaries and general maintenance
costs.
Property Information
Occupancies at the Local Partnerships were as follows:
<TABLE>
<CAPTION>
March 31,
-------------
Property 1997 1996
<S> <C> <C>
- ------------------------------------------------------------
Hubbard's Ridge 83 % 93 %
Cutler Canal II 94 94
Diamond Street 92 83
Papillion Heights 100 100
Hill Top Homes 95 96
Summer Creek Villas 86 90
Brookland Park Plaza 97 100
Compton Townhouses 100 95
</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
July 27, 1997, except for a continuing decrease in the occupancy rate to 79% at
Summer Creek Villas.
* * * *
8
<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.**
Financial Data Schedule (filed herewith)
(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.
9
<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: August 14, 1997
----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the Registrant
10
<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-31-1998
<PERIOD-START> Apr-1-1997
<PERIOD-END> Jun-30-1997
<PERIOD-TYPE> 3-Mos
<CASH> 589,327
<SECURITIES> 0
<RECEIVABLES> 359,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,353,022
<PP&E> 78,589,191
<DEPRECIATION> 13,842,203
<TOTAL-ASSETS> 70,100,010
<CURRENT-LIABILITIES> 8,014,590
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,967,464
<TOTAL-LIABILITY-AND-EQUITY> 70,100,010
<SALES> 2,218,114
<TOTAL-REVENUES> 2,218,114
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,095,411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,087,768
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (795,011)
<EPS-PRIMARY> (20.64)
<EPS-DILUTED> 0
</TABLE>
