<PAGE>
UNITED STATES
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, 2000
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>
--------------- ---------------
--------------- ---------------
September 30, March 31,
2000 2000
--------------- ---------------
<S> <C> <C>
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 75,974,200 75,557,527
Accumulated depreciation (20,843,805) (19,762,979)
--------------- ---------------
Net investment in property 59,136,028 59,800,181
--------------- ---------------
Cash and cash equivalents 841,491 956,906
Cash and cash equivalents
held in escrow 1,335,689 1,283,893
Deferred financing costs, net
of accumulation of $3,054,493
and $2,917,228, respectively 2,176,290 2,313,555
Other assets 437,377 307,786
--------------- ---------------
Total assets $ 63,926,875 $ 64,662,321
=============== ===============
</TABLE>
2
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(continued)
<TABLE>
<CAPTION>
--------------- ---------------
--------------- ---------------
September 30, March 31,
2000 2000
--------------- ---------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 44,269,580 $ 44,569,822
Accrued interest payable 1,957,518 1,818,537
Other accrued expenses
and liabilities 1,915,222 2,019,849
Due to General Partners and
affiliates of Local Partnerships 3,816,656 3,057,164
Development fees payable 1,450,709 1,450,709
Real estate taxes payable 200,453 124,014
Due to General Partner and
its affiliates 4,972,576 3,866,475
--------------- ---------------
Total liabilities 58,582,714 56,906,570
--------------- ---------------
Minority interest in local
partnerships 1,138,161 1,737,300
--------------- ---------------
PARTNERS' CAPITAL
Limited partners (38,125 BUC$
issued and outstanding) 3,436,248 5,239,637
General partner (1 BUC$
issued and outstanding) 769,752 778,814
--------------- ---------------
Total partners' capital 4,206,000 6,018,451
--------------- ---------------
Total liabilities and partners'
capital $ 63,926,875 $ 64,662,321
=============== ===============
</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 Six Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
2000 1999* 2000 1999
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 2,072,154 $ 1,851,687 $ 4,068,331 $ 3,825,269
Other income 186,594 113,496 322,843 211,941
Interest income 10,342 2,867 17,811 5,869
--------------- --------------- --------------- ---------------
2,269,090 1,968,050 4,408,985 4,043,079
--------------- --------------- --------------- ---------------
Expenses
Interest 1,092,875 1,050,779 2,186,330 2,097,803
Depreciation and
amortization 602,353 605,380 1,218,091 1,210,756
Operating and other 201,478 200,950 382,468 405,595
Taxes and
insurance 279,885 263,147 558,315 535,905
Repairs and
maintenance 522,950 548,677 1,214,953 965,284
General and
administrative 502,069 398,670 980,735 835,571
Partnership
management fees 59,718 59,718 118,732 118,732
Property
management fees 82,191 81,822 160,549 166,478
--------------- --------------- --------------- ---------------
3,343,519 3,209,143 6,820,173 6,336,124
--------------- --------------- --------------- ---------------
Loss before minority
interest and
extraordinary item (1,074,429) (1,241,093) (2,411,188) (2,293,045)
Minority interest
in loss of
local partnerships 246,360 291,138 598,737 539,839
--------------- --------------- --------------- ---------------
Loss before
extraordinary item (828,069) (949,955) (1,812,451) (1,753,206)
Extraordinary item -
forgiveness of
indebtedness
income (Note 3) 0 0 0 605,358
--------------- --------------- --------------- ---------------
Net loss $ (828,069) $ (949,955) $ (1,812,451) $ (1,147,848)
=============== =============== =============== ===============
Loss before
extraordinary item -
limited partners $ (823,929) $ (945,205) $ (1,803,389) $ (1,744,440)
Extraordinary item -
limited partners 0 0 0 602,331
--------------- --------------- --------------- ---------------
4
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PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(continued)
<CAPTION>
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
2000 1999* 2000 1999
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net loss - limited
partners $ (823,929) $ (945,205) $ (1,803,389) $ (1,142,109)
=============== =============== =============== ===============
Number of
limited partnership
units outstanding 38,125 38,125 38,125 38,125
=============== =============== =============== ===============
Loss before
extraordinary item
per limited
partnership unit $ (21.61) $ (24.79) $ (47.30) $ (45.76)
Extraordinary item
per limited
partnership unit 0 0 0 15.80
--------------- --------------- --------------- ---------------
Net loss per limited
partnership unit $ (21.61) $ (24.79) $ (47.30) $ (29.96)
=============== =============== =============== ===============
</TABLE>
*Reclassified for comparative purposes.
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
Limited General
Total Partners Partner BUC$
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Partners' capital
April 1, 2000 $ 6,018,451 $ 5,239,637 $ 778,814 38,126
Net loss-Six
Months ended
September 30, 2000 (1,812,451) (1,803,389) (9,062) 0
--------------- --------------- --------------- ---------------
Partners' capital-
September 30, 2000 $ 4,206,000 $ 3,436,248 $ 769,752 38,126
=============== =============== =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
6
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PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------
----------------------------------
Six Months Ended
September 30,
----------------------------------
2000 1999*
----------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,812,451) $ (1,147,848)
--------------- ---------------
Adjustments to reconcile net loss
to net cash used in
operating activities:
Forgiveness of debt (Note 3) 0 (605,358)
Depreciation and amortization 1,218,091 1,210,756
Minority interest in loss of
local partnerships (598,737) (539,839)
Increase in cash held in escrow (51,796) (240,637)
Increase in real estate taxes payable 76,439 85,465
Increase (decrease) in accrued
interest payable 138,981 (152,604)
Increase in other assets (129,591) (12,547)
(Decrease) increase in other liabilities (104,627) 390,665
--------------- ---------------
Total adjustments 548,760 135,901
--------------- ---------------
Net cash used in operating activities (1,263,691) (1,011,947)
--------------- ---------------
Cash flows from investing activities:
Investment in property (416,673) (129,396)
--------------- ---------------
Cash flows from financing activities:
Payments of mortgage notes (300,242) (298,849)
Distribution to minority interest (402) (590)
Advances from General Partner 1,106,101 225,691
Advance from local limited partner 700,000 0
Increase in due to Local General
Partners and affiliates of Local
Partnerships, General Partner and
its affiliates 59,492 1,319,513
--------------- ---------------
Net cash provided by
financing activities 1,564,949 1,245,765
--------------- ---------------
7
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PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
<CAPTION>
----------------------------------
----------------------------------
Six Months Ended
September 30,
----------------------------------
2000 1999*
----------------------------------
<S> <C> <C>
Net (decrease) increase in cash and
cash equivalents (115,415) 104,422
Cash and cash equivalents at
beginning of period 956,906 254,539
--------------- ---------------
Cash and cash equivalents at
end of period $ 841,491 $ 358,961
=============== ===============
Supplemental disclosure of cash
flow information:
Non-cash financing activity:
Interest paid $ 2,047,349 $ 2,250,407
=============== ===============
Supplemental disclosures of non-cash
financing activity:
Forgiveness of debt (Note 4)
Decrease in construction
costs payable $ 0 $ 605,358
</TABLE>
*Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
8
<PAGE>
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(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 adjustments) necessary to present fairly
the financial position of Patriot Tax Credit Properties L.P. (the "Partnership")
as of September 30, 2000, the results of operations for the three and six months
ended September 30, 2000 and 1999 and the cash flows for the six months ended
September 30, 2000 and 1999. However, the operating results and cash flows 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, 2000.
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"). 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.
9
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PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
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 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 to the
General Partner were:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
2000 1999 2000 1999
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Partnership Management fees (a) $ 59,718 $ 59,718 $ 118,732 $ 118,732
Property Management fees 21,157 24,093 39,508 53,414
Local administrative fees 5,063 5,062 10,125 10,124
General and administrative 32,013 16,000 56,035 30,909
--------------- --------------- --------------- ---------------
$ 117,951 $ 104,873 $ 224,400 $ 213,179
=============== =============== =============== ===============
</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 management fees owed to the General
Partner amounting to approximately $622,000 and $503,000 were accrued and unpaid
as of September 30, 2000 and March 31, 2000, 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 financial
obligations. The General Partner has continued allowing the accrual without
payment of these amounts but is under no obligation to continue do so.
10
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PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
As of September 30, 2000, the properties owned by five of the Local Partnerships
are managed by a Local General Partner or its affiliates.
During the six months ended September 30, 2000, the General Partner and its
affiliates advanced approximately $1,106,000 to the Partnership and as of
September 30, 2000 and March 31, 2000, total advances outstanding are
approximately $4,973,000 and $3,867,000, respectively. The advances are
unsecured, non-interest bearing and due on demand.
Note 3 - Extraordinary Item-Forgiveness of Indebtedness Income
RMB LIMITED PARTNERSHIP ("HUBBARDS RIDGE")
During the six months ended September 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 on the consolidated statements of operations of the
Partnership.
11
<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. 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 continued allowing the accrual without
payment of these amounts but is under no obligation to continue do so.
SUMMER CREEK VILLAS LOCAL PARTNERSHIP ("SUMMER CREEK VILLAS")
The Summer Creek Villas has experienced significant declining occupancy levels
over the course of the last few years, which has resulted in recurring losses
from operations and has adversely affected the liquidity of Summer Creek Villas.
In addition to the decline in occupancy levels, Summer Creek Villas' operations
are further impeded by the inability to raise rents sufficiently to pay for the
increase in operating costs. Summer Creek Villas has been unable to obtain
maximum rents due to the competitive market and the fact that the rents in the
surrounding area are at market rate, competitive to the Project. This problem is
further compounded by the increased costs in marketing the property to
effectively compete in the sub market. Further, rent levels are restricted based
on county median income levels, which limit the maximum income that a
prospective resident can earn and the maximum rents that the Project is allowed
to charge. The Summer Creek Villas has been obligated, since 1996 to repay
significant amounts of principal on its mortgage.
During the six month period ending September 30, 2000, in an effort to improve
occupancy, the Summer Creek Villas invested approximately $897,000 to improve
the physical condition of the property. Such improvements primarily consisted of
painting and
12
<PAGE>
pressure cleaning of roofs, landscaping, and individual unit upgrades. As of
October 15, 2000, occupancy has increased to 91%.
Effective January 1, 1999, Summer Creek Villas entered into a funding agreement
with its Class C local limited partner which provides for a series of loans to
be made to Summer Creek Villas in each of the years 2000, 2001 and 2002, in
amounts not to exceed $2,000,000 in the aggregate. Although no formal agreements
have been reached with the other partners, additional loans from the Partnership
(the Class A limited partnership) are expected to be obtained in accordance with
the loans to be provided under the funding agreement. Total loans made through
September 30, 2000 to fund operating deficits total $4,816,761 which comprise;
$3,416,761 from the Partnership which was eliminated in consolidation and
$1,400,000 from the Class C local limited partner. Management expects to obtain
additional funding from the partners in the coming two years.
These loans, if obtained, are expected to enable the Summer Creek Villas to
continue operations and make payments on its mortgage while management endeavors
to improve occupancy rates and rental rates to sufficient levels to sustain
operations independent of such funding.
The Local General Partner has been considering restructuring the Summer Creek
Villas' debt. As of September 30, 2000, however no definitive agreements have
been reached. Additionally, the Summer Creek Villas expects that the anticipated
project shortfall in 2001 will be approximately $2,000,000. Loans from the
funding agreement will be used to pay for approved expenditures and shortfalls.
Summer Creek Villas' ability to continue its operations is dependent upon
management achieving the plans described in the foregoing paragraphs. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Any adjustments would be
limited solely to this subsidiary's financial statements included herein.
RESULTS OF OPERATIONS
The operating results of the Local Partnerships consolidated herein are for the
three and six months periods ended September 30, 2000. Information disclosed
below with respect to each Local Partnership is consistent with this method of
presentation.
13
<PAGE>
Rental income increased approximately $220,000 and $243,000 for the three and
six months ended September 30, 2000 as compared to the corresponding periods in
1999, primarily due to an increase in occupancy at Summer Creek Villas and
rental rate increases.
Other income increased approximately $73,000 and $111,000 for the three and six
months ended September 30, 2000 as compared to the corresponding periods in 1999
due to a increase in application fees and termination fees received at Summer
Creek Villas.
Interest income increased approximately $7,000 and $12,000 for the three and six
months ended September 30, 2000 as compared to the corresponding periods in 1999
due to an increase in escrow balances at one Local Partnership.
Repairs and maintenance increased approximately $250,000 for the six months
ended September 30, 2000 as compared to the corresponding period in 1999
primarily due to the rehabilitation of apartments at Summer Creek Villas.
General and administrative increased approximately $103,000 and $145,000 for the
three and six months ended September 30, 2000 as compared to the corresponding
periods in 1999 primarily due to increases in administrative salaries,
advertising, and rent up expenses incurred in 2000 at Summer Creek Villas.
14
<PAGE>
PROPERTY INFORMATION
Occupancies at the Local Partnerships were as follows:
<TABLE>
<CAPTION>
JUNE 30,
----------------------
2000 1999
----------------------
<S> <C> <C>
Property
Hubbard's Ridge 99% 96%
Cutler Canal II 96 99
Diamond Street 93 88
Papillion Heights 88 92
Hill Top Homes 95 94
Summer Creek Villas 90 58
Brookland Park Plaza 96 99
Compton Townhouses 97 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.
Summer Creek Villas experienced a 32% increase in occupancy rate for the six
month period ended September 30, 2000 as compared with the corresponding period
in 1999. This increase was primarily due to management's effort to improve the
physical condition of the property. Other than Summer Creek Villas, none of the
above properties experienced significant changes in occupancy rates.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None
15
<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).
(1) 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.
16
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(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.
17
<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 31, 2000
By: /s/ Alan P. Hirmes
-------------------
Alan P. Hirmes
Member, President and Chief
Executive and Financial Officer
Date: October 31, 2000
By: /s/ Glenn F. Hopps
-------------------
Glenn F. Hopps
Treasurer and
Chief Accounting Officer
