SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
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 33-42663
Winthrop Apartment Investors Limited Partnership
------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 04-3129840
----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
----------------------------------- ------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
--------------
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 / /
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<PAGE>
WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
March 31, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1996 1995
<S> <C> <C>
Real estate, at cost:
Land $ 3,666,000 $ 3,666,000
Buildings and improvements, net of accumulated
depreciation of $1,847,000 and $1,706,000 as of
March 31, 1996 and December 31, 1995, respectively. 13,167,000 13,273,000
------------ ------------
16,833,000 16,939,000
Other Assets:
Deferred costs, net of accumulated amortization of
$338,000 and $293,000 as of March 31, 1996 and
December 31, 1995, respectively. 2,433,000 1,799,000
Cash 1,413,000 3,455,000
Other assets 714,000 306,000
------------ ------------
Total assets $ 21,393,000 $ 22,499,000
============ ============
Liabilities and Partners' Capital
Liabilities:
Accrued expenses and other liabilities $ 225,000 $ 336,000
Security deposits 122,000 125,000
Accounts payable 76,000 45,000
Mortgage payable 15,988,000 --
------------ ------------
Total liabilities 16,411,000 506,000
------------ ------------
Partners' Capital:
Limited partners' capital (250 units outstanding
at March 31, 1996 and December 31, 1995) 5,012,000 22,013,000
General partner's (deficit) (30,000) (20,000)
------------ ------------
Total partners' capital 4,982,000 21,993,000
------------ ------------
Total liabilities and partners' capital $ 21,393,000 $ 22,499,000
============ ============
</TABLE>
See notes to financial statements.
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<PAGE>
WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
Statements of Operations (Unaudited)
For the Three Months Ended
March 31, March 31,
1996 1995
Income:
Rental $1,167,000 $1,150,000
Other 58,000 43,000
Interest 30,000 49,000
---------- ----------
Total revenues 1,255,000 1,242,000
---------- ----------
Expenses:
Mortgage interest 292,000 --
Leasing 52,000 35,000
General and administrative 103,000 66,000
Management fees 61,000 59,000
Utilities 87,000 93,000
Repairs and maintenance 154,000 142,000
Painting and decorating 34,000 26,000
Insurance 46,000 45,000
Taxes 139,000 126,000
Amortization 21,000 21,000
Depreciation 141,000 128,000
---------- ----------
Total expenses 1,130,000 741,000
---------- ----------
Net income $ 125,000 $ 501,000
========== ==========
Net income per limited partnership unit $ 496.00 $ 1,944.00
========== ==========
Distributions per limited partnership unit $68,500.00 $ --
========== ==========
See notes to financial statements.
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<PAGE>
WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
March 31, 1996
Statements of Partners' Capital (Unaudited)
General Limited Total
partner's partners' partners'
(deficit) capital capital
Balance - January 1, 1996 $ (20,000) $ 22,013,000 $ 21,993,000
Net income 1,000 124,000 125,000
Distributions (11,000) (17,125,000) (17,136,000)
------------ ------------ ------------
Balance - March 31, 1996 $ (30,000) $ 5,012,000 $ 4,982,000
============ ============ ============
See notes to financial statements.
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<PAGE>
WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, March 31,
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 125,000 $ 501,000
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Depreciation 141,000 128,000
Amortization 45,000 21,000
Changes in assets and liabilities:
(Increase) in other assets (408,000) (15,000)
Increase in accounts payable 31,000 10,000
(Decrease) in security deposits liability (3,000) (1,000)
Decrease in accrued expenses and other liabilities (111,000) (135,000)
------------ ------------
Net cash (used) provided by operating activities (180,000) 509,000
------------ ------------
Cash Flows from Investing Activities:
Additions to real estate (35,000) (12,000)
------------ ------------
Cash used in investing activities (35,000) (12,000)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from mortgage financing 16,000,000 --
Principal payments on mortgage (12,000) --
Deferred financing costs (679,000) --
Distributions (17,136,000) --
------------ ------------
Net cash used in financing activities (1,827,000) --
------------ ------------
Net (Decrease) Increase in Cash (2,042,000) 497,000
Cash at Beginning of the Period 3,455,000 3,581,000
------------ ------------
Cash at End of the Period $ 1,413,000 $ 4,078,000
============ ============
Disclosure of Cash Flow Information -
Cash paid for interest $ 219,000 --
============ ============
</TABLE>
See notes to financial statements.
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<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
NOTES TO FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's Annual Report for the year
ended December 31, 1995.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
March 31, 1996 presentation. The balance sheet at December 31, 1995 was
derived from audited financial statements at such date.
The results of operations for the three months ended March 31, 1996 and
1995 are not necessarily indicative of the results to be expected for the
full year.
2. Related Party Transactions
Management fees paid by the Partnership to Winthrop Management, an
affiliate of the General Partner, totaled $61,000 and $59,000 during the
three months ended March 31, 1996 and 1995, respectively. Winthrop
Management was also paid an $80,000 fee relating to the mortgage
financing.
3. Mortgage Payable
On January 5, 1996, the Partnership closed a new first mortgage loan in
the amount of $16,000,000 secured by all of the properties. The loan
amount was allocated $2,080,000, $4,320,000, $5,120,000 and $4,480,000 to
Chesapeake Apartments, Covington Creek Apartments, Northside Circle
Apartments and Webb Crossing Apartments, respectively. The mortgage loan
bears interest at an initial rate of 7.27% (until the "Optional Prepayment
Date", as defined herein), requires monthly principal and interest
payments of $109,000 and matures in February 2026. The Partnership has the
option to prepay the mortgage loan without penalty on, or three months
before, February 1, 2003 (the "Optional Prepayment Date"). If the
Partnership does not elect to prepay the loan, the interest rate will be
adjusted to the greater of 12.27% or a "Treasury Rate" (as defined in the
loan documents) plus 7.75 percentage points. The Partnership was required
to fund approximately $278,000 in reserves at closing to complete certain
required capital improvements to the properties, and establish tax and
insurance escrows. The Partnership is also required to fund an ongoing
replacement reserve. In connection with the closing, Two Winthrop was
replaced as the Managing General Partner of the Partnership with WAI
Associates Limited Partnership. The lender required the transfer of the
general partnership interest as a condition to making the loan, to assure
that the Partnership and its general partner are single purpose entities,
formed solely for the purpose of owning and operating the properties.
Approximately $14,923,000 of the proceeds from the financing were
distributed (see Note 4) to the partners.
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<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
NOTES TO FINANCIAL STATEMENTS
4. Distributions
The Partnership distributed $68,500 per unit ($17,125,000 in total) to the
holders of limited partnership units during the three month period ended
March 31, 1996. The general partner received cash distributions of $11,000
during three month period ended March 31, 1996.
5. Allocation of Income, Losses and Cash Flow
In accordance with the partnership agreement, cash flow shall be allocated
99% to the investor limited partners and 1% to the general partner, until
the investor limited partners have received a 6% noncumulative,
noncompounded annual rate of return on their invested capital, at which
point the remainder shall be distributed 90% to the investor limited
partners and 10% to the general partner. Income shall be allocated to the
partners in proportion to the cash available for distribution
distributable to the partners; losses shall be allocated 90% to the
investor limited partners and 10% to the general partner. If there is no
such cash available for distribution, income will be allocated 90% to the
investor limited partner and 10% to the general partner.
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<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
All of the Registrant's real estate properties are residential properties with
apartments leased to tenants subject to leases of up to one year. The Registrant
receives rental income from its apartments and is responsible for operating
expenses, administrative expenses, capital improvements and debt service
payments. The Registrant uses working capital reserves provided from any
undistributed cash flow from operations as its primary source of liquidity. For
the long term cash from operations will remain the Registrant's primary source
of liquidity. In January 1996, the Registrant distributed to the holders of
limited partnership units $68,500 per unit ($17,125,000 in total) of which
approximately $59,692 per unit represented net proceeds available for
distribution from the January 1996 property financing (see Item 1, Note 3). The
general partner received distributions of $11,000. Future distributions from
operations will be reduced due to the 1996 property financing which will require
annual debt service payments of approximately $1,300,000, until the anticipated
optional prepayment date of the loan in February 2003.
The level of liquidity based upon the Registrant's cash experienced a $2,042,000
decrease at March 31, 1996 as compared to December 31, 1995. The decrease was
due to $1,827,000 used in financing activities, $180,000 used in operating
activities and $35,000 used in investing activities. Financing activities
consisted of $16,000,000 of proceeds from the mortgage financing, which was
offset by $17,136,000 of distributions to partners and $679,000 of deferred
financing costs incurred in connection with the mortgage financing. The $180,000
of cash used in operating activities included $278,000 used to fund capital
reserves required to complete certain capital improvements and $219,000 of
interest on the mortgage payable. Investing activities consisted of $35,000 of
improvements to real estate. All other increases (decreases) in certain assets
and liabilities are the result of the timing of receipt and payment of various
operating activities.
Working capital reserves are currently being invested in short term money market
funds. The General Partner believes that, if market conditions remain relatively
stable, cash flow form operations when combined with working capital reserves,
will be sufficient to fund required capital improvements and debt service
payments in 1996 and the foreseeable future. The Registrant has no available
lines of credit.
The markets in which the Registrant's properties are located (Atlanta, Dallas
and Austin) remain stable, but the Atlanta market is becoming more competitive
as a result of new apartment complexes that were completed in 1995. The
Registrant spent $35,000 on capital improvements during the first quarter of
1996 compared to $12,000 in the first quarter of 1995. Capital improvements
included $6,000 to resurface the pool at Webb Bridge Crossing and $5,000 for
restriping of the parking lot.
The Registrant originally established capital improvement reserves totaling
$1,500,000 for the purpose of making capital improvements to the properties. The
Registrant plans to spend approximately $310,000 for capital improvements in
1996. Other than cash, the Registrant has no other unused sources of liquidity.
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<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (continued)
As discussed in Item, 1, Note 3, on January 5, 1996, the Registrant closed a new
first mortgage loan in the amount of $16,000,000 secured by all of the
properties. The mortgage loan bears interest at an initial rate of 7.27% (until
the "Optional Prepayment Date"), requires monthly principal and interest
payment of $109,000 and matures in February 2026. The Registrant has the option
to prepay the mortgage loan without penalty on, or three months before, February
1, 2003 (the "Optional Prepayment Date"). If the Registrant does not elect to
prepay the loan, the interest rate will be adjusted to the greater of 12.27% or
a "Treasury Rate" (as defined in the loan documents) plus 7.75 percentage
points.
Results of Operations
Three Months Ended March 31, 1996 Vs. March 31, 1995
Operating results declined by $376,000 for the three months ended March 31,
1996, as compared 1995 as expenses increased more than income.
Revenues increased by $13,000 (approximately 1%) for the three months ended
March 31, 1996, as compared to 1995, due to increases in rental income of
$17,000 and other income of $15,000, which was partially offset by a decline in
interest income of $19,000.
The increase in rental income was due to an increase in rental rates which was
partially offset by a decrease in occupancy. Average rental rates increased at
the Registrant's properties by about 7% while average occupancy declined from
92.4%, for the three months ended March 31, 1995, to 87.2% for the three months
ended March 31, 1996. Occupancy declined at all of the Registrants properties as
follows: Chesapeake (from 97% to 92%) Webb Bridge (from 91% to 81%) Covington
Creek (from 94% to 93%) and Northside Circle (from 90% to 84%). Interest income
declined due to a decrease in average working capital reserves available for
investment.
Expenses increased by $389,000 for the three months ended March 31, 1996, as
compared to 1995, primarily due to increases in interest expense of $292,000,
taxes of $13,000, general and administrative expenses of $37,000, leasing
expenses of $17,000, depreciation expense of $13,000 and repairs and maintenance
of $12,000. Interest expense increased due to the mortgage financing in January
1996.
9 of 11
<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Loan Agreement dated as of January 5, 1996 between the Registrant, as
Borrower, and Nomura Asset Capital Corporation, as Lender,
incorporated by reference to Exhibit 10(e) to the Partnership's Annual
Report on Form 10K for the year ended December 31, 1995.
10.2 Promissory Note dated as of January 5, 1996 issued by the Registrant
to Nomura Asset Capital Corporation incorporated by reference to
Exhibit 10(f) to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1995.
10.3 Deed of Trust, Assignment of Leases and Rents and Security Agreement
between Registrant and Nomura Asset Capital Corporation incorporated
by reference to Exhibit 10(e) to the Partnership's Annual Report on
Form 10K for the year ended December 31, 1995.
27 Financial Data Schedule is filed as an exhibit to this report.
(b) Reports on Form 8-K
No report on Form 8-K was filed during the period.
10 of 11
<PAGE>
WINTHROP APARTMENT LIMITED PARTNERSHIP - FORM 10 - QSB
MARCH 31, 1996
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP APARTMENT INVESTORS
LIMITED PARTNERSHIP
BY: WAI Associates, L.P.
BY: WAI Properties, Inc.
Its General Partner
Date: May 14, 1996 BY: ____________________________
Richard J. McCready
Chief Operating Officer
Date: May 14, 1996 BY: ____________________________
Edward V. Williams
Chief Financial Officer
11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Apartment Investors Limited Partnership and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,413,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 18,680,000
<DEPRECIATION> (1,847,000)
<TOTAL-ASSETS> 21,393,000
<CURRENT-LIABILITIES> 0
<BONDS> 15,988,000
0
0
<COMMON> 0
<OTHER-SE> 4,982,000
<TOTAL-LIABILITY-AND-EQUITY> 21,393,000
<SALES> 0
<TOTAL-REVENUES> 1,225,000
<CGS> 0
<TOTAL-COSTS> 735,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,000
<INCOME-PRETAX> 125,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 125,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,000
<EPS-PRIMARY> 496.00
<EPS-DILUTED> 496.00
</TABLE>
