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, 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>
June 30, March 31,
1999 1999
<S> <C> <C>
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 75,392,779 75,355,591
Accumulated depreciation (18,141,544) (17,604,303)
Net investment in property 61,256,868 61,756,921
Cash and cash equivalents 284,056 254,539
Cash and cash equivalents
held in escrow 1,059,798 1,007,919
Deferred financing costs, net 2,519,502 2,587,637
Other assets 228,222 278,693
Total assets $ 65,348,446 $ 65,885,709
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 44,994,430 $ 45,127,197
Accrued interest payable 1,626,324 1,590,244
Other accrued expenses
and liabilities 2,063,155 1,760,924
Due to general partners and
affiliates of local partnerships 3,391,737 3,091,695
Development fees payable 1,450,709 1,450,709
Construction costs payable 0 605,358
Real estate taxes payable 26,708 105,318
Due to general partner and
its affiliates 707,840 619,537
Total liabilities 54,260,903 54,350,982
Minority interest in local
partnerships 2,125,800 2,375,091
PARTNERS' CAPITAL
Limited partners (38,125 BUC$
issued and outstanding) 8,168,212 8,365,116
General partner (1 BUC
issued and outstanding) 793,531 794,520
Total Partners' Capital 8,961,743 9,159,636
Total Liabilities and Partners'
Capital $ 65,348,446 $ 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
June 30,
1999 1998
<S> <C> <C>
Revenues
Rental income $ 1,973,582 $ 1,969,065
Other income 98,445 149,373
Interest income 3,002 4,625
2,075,029 2,123,063
Expenses
Interest 1,047,024 1,051,189
Depreciation and amortization 605,376 610,693
Operating and other 204,645 219,197
Taxes and insurance 272,758 290,744
Repairs and maintenance 431,931 364,791
General and administrative 421,577 459,035
Partnership management fees 59,014 58,310
Property management fees 84,656 85,508
3,126,981 3,139,467
Loss before minority interest and
extraordinary item (1,051,952) (1,016,404)
Minority interest in loss of
local partnerships 248,701 202,947
Loss before extraordinary item (803,251) (813,457)
Extraordinary item - forgiveness of
indebtedness income (Note 3) 605,358 0
Net loss $ (197,893) $ (813,457)
Loss before extraordinary item -
limited partners $ (799,235) $ (809,390)
Extraordinary item - limited partners 602,331 0
Net loss - limited partners $ (196,904) $ (809,390)
Number of limited partnership
units outstanding 38,125 38,125
Loss before extraordinary item
per limited partnership unit $ (20.96) $ (21.23)
Extraordinary item per limited
partnership unit 15.80 0
Net loss per limited
partnership unit $ (5.16) $ (21.23)
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 (197,893) (196,904) (989) 0
Partners' capital-
June 30, 1999 $8,961,743 $8,168,212 $793,531 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>
Three Months Ended
June 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (197,893) $ (813,457)
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 605,376 610,693
Minority interest in loss of
local partnerships (248,701) (202,947)
(Increase) decrease in cash held
in escrow (51,879) 165,168
Decrease in real estate
taxes payable (78,610) (212,771)
Increase in accrued interest payable 36,080 23,320
Decrease in other assets 50,471 16,549
Increase in other liabilities 302,231 478,570
Increase in due to General Partner
and its affiliates 88,303 29,098
Increase in due to general
partners and affiliates
of local partnerships 300,042 0
Total adjustments 397,955 907,680
Net cash provided by operating
activities 200,062 94,223
Cash flows from investing activities:
Investment in property (37,188) (1,165)
Cash flows from financing activities:
Payments of mortgage notes (132,767) (118,304)
Distribution to minority interest (590) (358)
Net cash used in financing activities (133,357) (118,662)
Net increase (decrease) in cash and
cash equivalents 29,517 (25,604)
Cash and cash equivalents at
beginning of period 254,539 573,775
Cash and cash equivalents at
end of period $ 284,056 $ 548,171
Supplemental disclosure of
cash flow information:
Non-cash Financing activity:
Interest paid $1,010,944 $1,027,869
Supplemental disclosures of
non-cash financing activity:
Forgiveness of indebtedness
income (Note 3)
Decrease in construction
costs payable $ 605,358 $ 0
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
June 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 June 30,
1999 and the results of operations and cash flows for the three
months ended June 30, 1999 and 1998. 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, 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 three month period
ended March 31, and occupancy rates are as of March 31.
Prior to October 1, 1997, the general partner of the Partnership
was Prudential Bache Properties, Inc. ("PBP") and commencing on
October 1, 1997, the general partner has been RCC Partners 96,
L.L.C. (the "New GP"). PBP and the New GP are sometimes re-
ferred to as the "General Partner" or "General Partners" as the con-
text 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
June 30,
1999 1998
<S> <C> <C>
Management fees (a) $ 59,014 $ 58,310
Local administrative fees 5,062 5,062
General and administrative 14,909 18,247
$ 78,985 $ 81,619
</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 $325,000 and $266,000 were accrued and unpaid as of June
30, 1999 and March 31, 1999, respectively.
At June 30, 1999, the properties owned by three of the Local Part-
nerships are managed by a Local General Partner or its affiliates.
Five of the Local Partnerships general partners are owned by af-
filiates of the New GP.
Note 3 - Extraordinary Item-Forgiveness of Indebtedness Income
RMB Limited Partnership ("Hubbards Ridge")
During the three months ended June 30, 1999 it was determined
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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership invests 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.
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 $2,742,460 through June
30, 1999. The Local General Partner has elected to treat this entire
amount as non-repayable advances.
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 $694,000 and $764,000 for the
three months ended June 30, 1999 and 1998, respectively. Debt
service payments (principal and interest) made during the same
periods were $1,144,000 and $1,146,000, respectively.
Results of Operations
The operating results of the Local Partnerships consolidated
herein are for the three month periods ended March 31. Informa-
tion disclosed below with respect to each Local Partnership is
consistent with this method of presentation.
Rental income increased approximately $5,000 for the three
months ended June 30, 1999 as compared to the corresponding
period in 1998, primarily due to rental rate increases.
Other income decreased approximately $51,000 for the three
months ended June 30, 1999 as compared to the corresponding
period in 1998 due to a decrease in application fees, termination
fees and tenant damage fees received at Summer Creek Villas.
Repairs and maintenance increased approximately $67,000 for the
three months ended June 30, 1999 as compared to the corre-
sponding period in 1998 primarily due to window and carpet
repairs incurred in 1999 at Summer Creek Villas.
<TABLE>
Property Information
Occupancies at the Local Partnerships were as follows:
<CAPTION>
March 31,
1999 1998
<S> <C> <C>
Property
Hubbard's Ridge 95% 91%
Cutler Canal II 97 92
Diamond Street 94 94
Papillion Heights 94 94
Hill Top Homes 93 90
Summer Creek Villas 70 89
Brookland Park Plaza 99 97
Compton Townhouses 95 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 1, 1999 except for a decrease at Summer Creek Villas to 58%
due to an increase in evictions to stabilize the tenant profile.
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
Current report on form 8-K/A dated April 28, 1999
was filed on May 13, 1999 relating to the change in Registrant's
accountant.
<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: July 29, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes
Senior Vice President and
Chief Financial Officer
Date: July 29, 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> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,343,854
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 228,222
<PP&E> 79,398,412
<DEPRECIATION> 18,141,544
<TOTAL-ASSETS> 65,348,446
<CURRENT-LIABILITIES> 9,266,473
<BONDS> 44,994,430
0
0
<COMMON> 0
<OTHER-SE> 11,087,543
<TOTAL-LIABILITY-AND-EQUITY> 65,348,446
<SALES> 0
<TOTAL-REVENUES> 2,075,029
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,079,957
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,047,024
<INCOME-PRETAX> (197,893)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 605,358
<CHANGES> 0
<NET-INCOME> (197,893)
<EPS-BASIC> (5.16)
<EPS-DILUTED> 0
</TABLE>
