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, 1999
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 Securi-
ties Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ____
<PAGE>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Unaudited)
<CAPTION>
September 30, March 31,
1999 1999
<S> <C> <C>
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 75,484,987 75,355,591
Accumulated depreciation (18,678,786) (17,604,303)
Net investment in property 60,811,834 61,756,921
Cash and cash equivalents 358,961 254,539
Cash and cash equivalents
held in escrow 1,248,556 1,007,919
Deferred financing costs, net 2,451,811 2,587,637
Other assets 290,793 278,693
Total assets $ 65,161,955 $ 65,885,709
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 44,828,348 $ 45,127,197
Accrued interest payable 1,437,640 1,590,244
Other accrued expenses
and liabilities 2,151,589 1,760,924
Due to general partners and
affiliates of local partnerships 4,411,208 3,091,695
Development fees payable 1,450,709 1,450,709
Construction costs payable 0 605,358
Real estate taxes payable 190,783 105,318
Due to general partner and
its affiliates 845,228 619,537
Total liabilities 55,315,505 54,350,982
Minority interest in local
partnerships 1,834,662 2,375,091
PARTNERS' CAPITAL
Limited partners (38,125 BUC$
issued and outstanding) 7,223,007 8,365,116
General partner (1 BUC
issued and outstanding) 788,781 794,520
Total Partners' Capital 8,011,788 9,159,636
Total Liabilities and Partners'
Capital $ 65,161,955 $ 65,885,709
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998* 1999 1998
<S> <C> <C> <C> <C>
Revenues
Rental income $ 1,851,687 $ 2,124,828 $ 3,825,269 $ 4,093,893
Other income 113,496 147,068 211,941 296,441
Interest income 2,867 4,098 5,869 8,723
1,968,050 2,275,994 4,043,079 4,399,057
Expenses
Interest 1,050,779 1,124,453 2,097,803 2,175,642
Depreciation and
amortization 605,380 606,870 1,210,756 1,217,563
Operating and other 200,950 188,361 405,595 379,061
Taxes and
insurance 263,147 280,295 535,905 571,039
Repairs and
maintenance 503,884 537,758 965,284 931,046
General and
administrative 443,463 492,281 835,571 951,316
Partnership
management fees 59,718 60,422 118,732 118,732
Property
management fees 81,822 88,270 166,478 173,778
3,209,143 3,378,710 6,336,124 6,518,177
Loss before minority
interest and
extraordinary
item (1,241,093) (1,102,716) (2,293,045) (2,119,120)
Minority interest
in loss of
local partnerships 291,138 193,015 539,839 395,962
Loss before
extraordinary
item (949,955) (909,701) (1,753,206) (1,723,158)
Extraordinary item -
forgiveness of
indebtedness
income (Note 3) 0 0 605,358 0
Net loss $ (949,955) $ (909,701) $(1,147,848) $(1,723,158)
Loss before
extraordinary item -
limited partners $ (945,205) $ (905,152) $(1,744,440) $(1,714,542)
Extraordinary item -
limited partners 0 0 602,331 0
Net loss - limited
partners $ (945,205) $ (905,152) $(1,142,109) $(1,714,542)
Number of
limited partnership
units outstanding 38,125 38,125 38,125 38,125
Loss before
extraordinary item
per limited
partnership unit $ (24.79) $ (23.74) $ (45.76) $ (44.97)
Extraordinary item
per limited
partnership unit 0 0 15.80 0
Net loss per limited
partnership unit $ (24.79) $ (23.74) $ (29.96) $ (44.97)
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Unaudited)
<CAPTION>
Limited General
Total Partners Partner BUC$
<S> <C> <C> <C> <C>
Partners' capital
March 31, 1999 $9,159,636 $8,365,116 $794,520 38,126
Net loss - Six
Months ended
Septermber 30,
1999 (1,147,848) (1,142,109) (5,739) 0
Partners' capital-
September 30,
1999 $8,011,788 $7,223,007 $788,781 $38,126
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,147,848) $(1,723,158)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Extraordinary item - forgiveness
of indebtedness income (Note 3) (605,358) 0
Depreciation and amortization 1,210,756 1,217,563
Minority interest in loss of
local partnerships (539,839) (395,962)
Increase in cash held
in escrow (240,637) (175,711)
Increase (decrease) in real estate
taxes payable 85,465 (56,649)
(Decrease) increase in accrued
interest payable (152,604) 127,649
Increase in other assets (12,547) (8,529)
Increase in other liabilities 390,665 796,267
Increase in due to General Partner
and its affiliates 225,691 225,299
Increase in due to general
partners and affiliates
of local partnerships 1,319,513 0
Total adjustments 1,681,105 1,729,927
Net cash provided by operating
activities 533,257 6,769
Cash flows from investing activities:
Investment in property (129,396) (1,073)
Cash flows from financing activities:
Payments of mortgage notes (298,849) (241,637)
Distribution to minority interest (590) (358)
Net cash used in financing activities (299,439) (241,995)
Net increase (decrease) in cash and
cash equivalents 104,422 (236,299)
Cash and cash equivalents at
beginning of period 254,539 573,775
Cash and cash equivalents at
end of period $ 358,961 $ 337,476
Supplemental disclosure of
cash flow information:
Non-cash Financing activity:
Forgiveness of indebtedness
income (Note 3)
Decrease in construction
costs payable $ 605,358 $ 0
Interest paid $2,250,407 $2,047,993
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1999
(Unaudited)
Note 1 - General
These consolidated financial statements have not been audited. In
the opinion of management, the consolidated financial statements
contain all adjustments (consisting of only normal recurring ad-
justments) necessary to present fairly the financial position of Pa-
triot Tax Credit Properties L.P. (the "Partnership") as of September
30, 1999, the results of operations for the three and six months
ended September 30, 1999 and 1998 and cash flows for the six
months ended September 30, 1999 and 1998. However, the oper-
ating 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, 1999.
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 period
ended June 30, and occupancy rates are as of June 30.
Prior to October 1, 1997, the general partner of the Partnership
was Prudential Bache Properties, Inc. ("PBP") and since October 1,
1997, the general partner has been RCC Partners 96, L.L.C. (the
"New GP"). PBP and the New GP are sometimes referred to as the
"General Partner" or "General Partners" as the context requires.
Note 2 - Related Parties
The General Partner and its affiliates have performed and will
continue to 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 serv-
ices. 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 to the General Partner were:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Management fees (a) $ 59,718 $ 60,422 $118,732 $118,732
Local administra-
tive fees 5,062 5,062 10,124 10,124
General and
administrative 16,000 30,036 30,909 48,283
$ 80,780 $ 95,520 $159,765 $177,139
</TABLE>
(a) A management fee for managing the affairs of the Partnership
equal to 0.375% of invested assets is payable from operations and
reserves to the General Partner and its affiliates. Partnership man-
agement fees owed to the General Partner amounting to approxi-
mately $385,000 and $266,000 were accrued and unpaid as of Sep-
tember 30, 1999 and March 31, 1999, respectively. Without the
General Partner's continued accrual without payment of certain
fees and expense reimbursements, the Partnership will not be in a
position to meet its obligations. The General Partner has contin-
ued allowing the accrual without payment of these amounts but is
under no obligation to continue do so.
At September 30, 1999, the properties owned by six of the Local
Partnerships are managed by a Local General Partner or its affili-
ates. Five of the Local Partnerships general partners are owned by
affiliates of the New GP.
Note 3 - Extraordinary Item-Forgiveness of Indebtedness Income
RMB Limited Partnership ("Hubbards Ridge")
During the six months ended September 30, 1999 it was deter-
mined that construction costs payable in the amount of $605,358
would not be paid and such amounts were subsequently written
off and recorded as forgiveness of indebtedness income on the
consolidated statements of operations of the Partnership.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership invested in eight Local Partnerships which 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 or-
der 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. Without the General Partner's continued accrual without
payment of certain fees and expense reimbursements, the Partner-
ship will not be in a position to meet its obligations. The General
Partner has continued allowing the accrual without payment of
these amounts but is under no obligation to continue do so.
At the Local Partnership level, the Local General Partner at Papil-
lion Heights has made a guarantee with respect to the Local Part-
nership which, under certain circumstances, requires the Local
General Partner to fund cash flow deficits pursuant to the deficit
guaranty agreement. These operating deficit advances do not bear
interest and are repayable by the Local Partnership in accordance
with the respective Local Partnership 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 in the
partnership agreement. Of the $170,000 maximum funding obli-
gation, $40,000 has been funded to date.
The Summer Creek Villas Local Partnership continues to experi-
ence severe cash flow deficits. The Local General Partner has met
its funding obligation having advanced $2,742,000 through Sep-
tember 30, 1999. The Local General Partner has elected to treat
this entire amount as non-repayable advances. The General Part-
ner has advanced $1,470,000 through September 30, 1999. The
General Partner will determine whether these funds are repayable
at December 31, 1999. The General Partner is not required to for-
give such advances and if they are not forgiven the repayment will
be from cash flow.
The Local General Partner is currently reviewing different alterna-
tives to improve property cash flow and reduce operating deficits.
Also, the management agent was replaced in the summer of 1997
so as to implement a new strategy for increasing property per-
formance.
The Local Partnerships have generated net operating income be-
fore debt service and depreciation of $1,249,000 and $1,531,000 for
the six months ended September 30, 1999 and 1998, respectively.
Debt service payments (principal and interest) made during the
same periods were $2,549,000 and $2,289,000, respectively.
Results of Operations
The operating results of the Local Partnerships consolidated
herein are for the three and six month periods ended June 30.
Information disclosed below with respect to each Local Partner-
ship is consistent with this method of presentation.
Rental income decreased approximately $273,000 and $269,000 for
the three and six months ended September 30, 1999 as compared
to the corresponding periods in 1998, primarily due to a decrease
in occupancy at Summer Creek Villas due to an increase in evic-
tions to stabilize the tenant profile.
Other income decreased approximately $34,000 and $85,000 for
the three and six months ended September 30, 1999 as compared
to the corresponding periods in 1998 due to a decrease in applica-
tion fees, termination fees and tenant damage fees received at
Summer Creek Villas.
General and administrative decreased approximately $49,000 and
$116,000 for the three and six months ended September 30, 1999 as
compared to the corresponding periods in 1998 primarily due to
decreases in administrative salaries, advertising, legal fees and
management fees incurred in 1999 at Summer Creek Villas.
<TABLE>
Property Information
Occupancies at the Local Partnerships were as follows:
<CAPTION>
June 30,
1999 1998
<S> <C> <C>
Property
Hubbard's Ridge 96% 87%
Cutler Canal II 99 95
Diamond Street 88 92
Papillion Heights 92 98
Hill Top Homes 94 82
Summer Creek Villas 58 96
Brookland Park Plaza 99 96
Compton Townhouses 97 92
</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
October 1, 1999.
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the
General Partner. The affiliate of the General Partner has upgraded
its computer information systems to be year 2000 compliant. The
most likely worst-case scenario that the General Partner faces is
that computer operations will be suspended for a few days to a
week commencing on January 1, 2000. The Partnership contin-
gency plan is to have (i) a complete backup done on December 31,
1999 and (ii) both electronic and printed reports generated for all
critical data up to and including December 31, 1999.
In regard to third parties, the General Partner is in the process of
evaluating the potential adverse impact that could result from the
failure of material service providers to be year 2000 compliant. A
detailed survey and assessment was sent to material third parties
in the fourth quarter of 1998. The Partnership has received assur-
ances from a majority of the material service providers with which
it interacts that they have addressed the year 2000 issues and is
evaluating these assurances for their adequacy and accuracy. In
cases where the Partnership has not received assurances from
third parties, it is initiating further mail and/or phone correspon-
dence. The Partnership relies heavily on third parties and is vul-
nerable to the failures of third parties to address their year 2000
issues. There can be no assurance given that the third parties will
adequately address their year 2000 issues.
<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 Lim-
ited 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 Lim-
ited Partnership, dated October 1, 1997 (3)
Financial Data Schedule (filed herewith).
(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.
(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.
(b) Reports on Form 8-K - No reports on form 8-K were
filed during the quarter.
<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: October 26, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes
Senior Vice President and
Chief Financial Officer
Date: October 26, 1999
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 state-
ments
</LEGEND>
<CIK> 0000850184
<NAME> Patriot Tax Credit Properties L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,607,517
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 290,793
<PP&E> 79,490,620
<DEPRECIATION> (18,678,786)
<TOTAL-ASSETS> 65,161,955
<CURRENT-LIABILITIES> 10,478,157
<BONDS> 44,828,348
0
0
<COMMON> 0
<OTHER-SE> 9,846,450
<TOTAL-LIABILITY-AND-EQUITY> 65,161,955
<SALES> 0
<TOTAL-REVENUES> 4,043,079
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,238,321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,097,803
<INCOME-PRETAX> (1,687,687)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 605,358
<CHANGES> 0
<NET-INCOME> (1,147,848)
<EPS-BASIC> (29.96)
<EPS-DILUTED> 0
</TABLE>
