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, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-20638
PATRIOT 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.)
625 Madison Avenue, New York, New York 10022
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
N/A
-------------------------------
Former name, former address and
former fiscal year, if changed since last report
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 _X_ No ___
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
=========== ===========
June 30, March 31,
1998 1998
----------- -----------
<S> <C> <C>
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 75,042,917 75,041,752
Accumulated depreciation (15,992,687) (15,450,304)
----------- -----------
Net investment in property 63,055,863 63,597,081
Cash and cash equivalents 548,171 573,775
Cash and cash equivalents
held in escrow 1,384,963 1,550,131
Deferred financing costs, net 2,792,962 2,861,272
Other assets 237,005 253,554
----------- -----------
Total Assets $68,018,964 $68,835,813
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $45,514,547 $45,632,851
Accrued interest payable 1,516,281 1,492,961
Other accrued expenses
and liabilities 1,890,275 1,411,705
Due to general partners and
affiliates of local partnerships 2,558,522 2,558,522
Development fees payable 1,579,709 1,579,709
Construction costs payable 605,358 605,358
Real estate taxes payable 285,619 498,390
Due to general partner and
its affiliates 89,028 59,930
----------- -----------
Total liabilities 54,039,339 53,839,426
----------- -----------
Minority interest in local
partnerships 2,669,007 2,872,312
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(continued)
(Unaudited)
<TABLE>
<CAPTION>
=========== ===========
June 30, March 31,
1998 1998
----------- -----------
<S> <C> <C>
PARTNERS' CAPITAL (DEFICIT)
Limited partners (38,125 BUC$
issued and outstanding) 10,505,343 11,314,733
General partner (1 BUC
issued and outstanding) 805,275 809,342
----------- -----------
Total Partners' Capital 11,310,618 12,124,075
----------- -----------
Total Liabilities and Partners'
Capital $68,018,964 $68,835,813
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
==============================
Three Months Ended
June 30,
------------------------------
1998 1997
------------------------------
<S> <C> <C>
Revenues
Rental income $ 1,969,065 $ 2,074,423
Other income 149,373 138,028
Interest income 4,625 5,663
----------- -----------
2,123,063 2,218,114
----------- -----------
Expenses
Interest 1,051,189 1,087,768
Depreciation and amortization 610,693 623,628
Operating and other 219,197 214,845
Taxes and insurance 290,744 299,453
Repairs and maintenance 364,791 369,366
General and administrative 459,035 419,504
Partnership management fees 58,310 80,372
Property management fees 85,508 88,243
----------- -----------
3,139,467 3,183,179
----------- -----------
Loss before minority
interest (1,016,404) (965,065)
Minority interest in loss of
local partnerships 202,947 170,054
----------- -----------
Net loss $ (813,457) $ (795,011)
=========== ===========
Allocation of Net Loss
Limited partners $ (809,390) $ (787,061)
=========== ===========
General partner $ (4,067) $ (7,950)
=========== ===========
Net loss per limited
partner BUC $ (21.23) $ (20.64)
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
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, 1998 38,126 $11,314,733 $809,342 $12,124,075
Net loss 0 (809,390) (4,067) (813,457)
------ ----------- -------- -----------
Partners' capital-
June 30, 1998 38,126 $10,505,343 $805,275 $11,310,618
====== =========== ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
========================
Three Months Ended
June 30,
------------------------
1998 1997
------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(813,457) $(795,011)
--------- ---------
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 610,693 623,628
Minority interest in loss of
local partnerships (202,947) (170,054)
Decrease (increase) in cash
held in escrow 165,168 (417,781)
(Decrease) increase in real estate
taxes payable (212,771) 168,683
Increase in accrued interest payable 23,320 215,125
Decrease (increase) in other assets 16,549 (53,289)
Increase (decrease) in other liabilities 478,570 (73,026)
Increase in due to General Partner
and its affiliates 29,098 0
--------- ---------
Total adjustments 907,680 293,286
--------- ---------
Net cash provided by (used in)
operating activities 94,223 (501,725)
--------- ---------
Cash flows from investing activities:
Investment in property (1,165) 0
--------- ---------
Cash flows from financing activities:
Payments of mortgage notes (118,304) (113,242)
Advances pursuant to operating
deficit guaranties 0 365,160
Distribution to minority interest (358) 0
--------- ---------
Net cash (used in) provided by
financing activities (118,662) 251,918
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(continued)
(Unaudited)
<TABLE>
<CAPTION>
=======================
Three Months Ended
June 30,
-----------------------
1998 1997
-----------------------
<S> <C> <C>
Net decrease in cash and cash
equivalents (25,604) (249,807)
Cash and cash equivalents at
beginning of period 573,775 839,134
---------- --------
Cash and cash equivalents at
end of period $ 548,171 $589,327
========== ========
Supplemental disclosure of cash flow information:
Interest paid $1,027,869 $855,323
========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1998
(Unaudited)
Note 1 - 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 Patriot Tax Credit Properties L.P. (the
"Partnership") as of June 30, 1998 and the results of operations and cash flows
for the three months ended June 30, 1998 and 1997. 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, 1998.
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 period ended March 31, and occupancy rates are as
of March 31.
8
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1998
(Unaudited)
Note 2 - Related Parties
During their respective ownership periods, the General Partners and their
affiliates have performed 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 Partners and their 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. In order to assist in the transition
from Prudential-Bache Properties, Inc. ("PBP") to RCC Partners 96 L.L.C. (the
"New GP" or "General Partner") as General Partner, the New GP has engaged PBP to
perform certain of the forgoing services and paid PBP from amounts which would
otherwise be payable to the New GP pursuant to the terms of the Partnership
Agreement. These services terminated March 31, 1998. The costs and expenses
incurred to the General Partner (prior to October 1, 1997 PBP and thereafter the
New GP ) were:
<TABLE>
<CAPTION>
========================
Three Months Ended
June 30,
------------------------
1998 1997
------------------------
<S> <C> <C>
Management fees $58,310 $80,372
Local administrative fees 5,062 5,062
General and administrative 18,247 8,552
------- -------
$81,619 $93,986
======= =======
</TABLE>
At June 30, 1998, the properties owned by four of the Local Partnerships are
managed by a Local General Partner or its affiliates. Five of the Local
Partnerships are owned by affiliates of the General Partner.
The Partnership maintained an account with the Prudential Tax Free Money Fund,
an affiliate of PBP, for investment of its available cash in short-term
instruments through October 31, 1997.
Prudential Securities Incorporated, an affiliate of PBP, owns 56 BUC$ at June
30, 1998.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Partnership invested in eight Local Partnerships that are owners of
affordable multi-family residential complexes. The Local Partnerships are
operated in accordance with the rules and regulations under Section 42 of the
Internal Revenue Code 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. The Partnership is dependent upon the support of
the General Partner and certain of its affiliates in order to meet its
obligations at the Partnership level. The General Partner and these affiliates
have agreed to continue such support for the foreseeable future.
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 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, 1998, there is still an
operating deficit guaranty agreement in effect at Papillion Heights.
The Summer Creek Villas Local Partnership continues to experience severe cash
flow deficits. The maximum funding obligation of the Local General Partner for
the initial guaranty period under the Summer Creek Villas operating deficit
guaranty agreement (which expired on December 31, 1996) was $3,392,000, of which
$2,742,000 was funded. Of the total funded, the Local General Partner has
elected to treat $1,933,000 as non-repayable advances. The Local General Partner
is also obligated to fund operating deficits during a second guaranty period
which commenced August 1996 and expires July 1999. The maximum funding
obligation during this second guaranty period is $924,000. Through June 30,
1998, the entire obligation has been funded pursuant to this second guaranty
period. As of June 30, 1998, the financial statements of the Partnership include
approximately $809,000 as "Due to general partners and affiliates of local
partnerships" for the two guaranty periods 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 Local General Partner is
currently reviewing different alternatives to improve
10
<PAGE>
property cash flow and reduce operating deficits. Also the management agent has
been replaced so as to implement a new strategy for increasing property
performance.
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, 1998 also reflect payables of
$150,000 under operating deficit guaranty agreements at Hubbard's Ridge and Hill
Top Homes, which have expired.
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.
Net operating income before debt service and depreciation of the Local
Partnerships was as follows:
<TABLE>
<CAPTION>
===========================
Three Months Ended
June 30,
---------------------------
1998 1997
---------------------------
Property
<S> <C> <C>
Hubbard's Ridge $ 64,000 $ 18,000
Cutler Canal II 127,000 99,000
Diamond Street 28,000 8,000
Papillion Heights 29,000 52,000
Hill Top Homes 48,000 99,000
Summer Creek Villas 381,000 488,000
Brookland Park Plaza 52,000 57,000
Compton Townhouses 35,000 46,000
-------- --------
$764,000 $867,000
======== ========
</TABLE>
Rental income decreased $105,000 for the three months ended June 30, 1998 as
compared to 1997 mainly as a result of decreases at Summer Creek Villas and
Papillion due to lower occupancies.
Partnership management fees decreased approximately $22,000 for the three months
ended June 30, 1998 as compared to 1997 primarily due to a reduction of the fee
for participating interest of the invested assets from 0.5% to 0.375% annually.
11
<PAGE>
Property Information
Occupancies at the Local Partnerships were as follows:
<TABLE>
<CAPTION>
=====================
March 31,
---------------------
1998 1997
---------------------
<S> <C> <C>
Property
Hubbard's Ridge 91% 83%
Cutler Canal II 92 94
Diamond Street 94 92
Papillion Heights 94 100
Hill Top Homes 90 95
Summer Creek Villas 89 86
Brookland Park Plaza 97 97
Compton Townhouses 95 100
</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
June 28, 1998, except for a decrease in the occupancy rate to 82% at Hill Top
Homes.
12
<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 (1)
Form of Amended and Restated Agreement of Limited Partnership
(included in Prospectus as Exhibit A)(2)
Form of Purchase and Sale Agreement pertaining to the
Partnership's Acquisition of Local Partnership Interests (2)
Form of Amended and Restated Agreement of Local Limited
Partnership of Local Partnerships (2)
Amendment to Certificate of Limited Partnership dated October
1, 1997 (3)
Amendment Number 1 to Prudential-Bache Tax Credit Properties
L.P. Amended and Restated Agreement of Limited Partnership, dated October 1,
1997 (3)
Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - None
(1) Filed as a exhibit to Pre-Effective Amendment No. 1 to
Form S-11 Registration Statement (No. 33-28571) (the "Registration Statement")
and incorporated herein by reference.
13
<PAGE>
(2) Filed as an exhibit to Pre-Effective Amendment No. 2 to
Form S-11 Registration Statement and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Current Report on
Form 8-K dated October 1, 1997 and incorporated herein by reference.
14
<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.
PATRIOT TAX CREDIT PROPERTIES L.P.
(Registrant)
By: RCC PARTNERS 96, L.L.C.,
General Partner
Date: August 11, 1998
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President and
Chief Financial Officer
Date: August 11, 1998
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps
Treasurer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule contains summary financial
information extracted from the financial
statements for Patriot Tax Credit
Properties L.P. and is qualified in its
entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000850184
<NAME> Patriot Tax Credit Properties L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,933,134
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 237,005
<PP&E> 79,048,550
<DEPRECIATION> 15,992,687
<TOTAL-ASSETS> 68,018,964
<CURRENT-LIABILITIES> 8,524,792
<BONDS> 45,514,547
0
0
<COMMON> 0
<OTHER-SE> 11,310,618
<TOTAL-LIABILITY-AND-EQUITY> 68,018,964
<SALES> 0
<TOTAL-REVENUES> 2,123,063
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,088,278
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,051,189
<INCOME-PRETAX> (813,457)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (813,457)
<EPS-PRIMARY> (21.23)
<EPS-DILUTED> 0
</TABLE>
