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U.S. 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 June 30, 1996
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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
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Winthrop Apartment Investors Limited Partnership
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(Exact name of small business issuer as specified in its charter)
Maryland 04-3129840
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
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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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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
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JUNE 30, 1996
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
June 30, December 31,
Assets 1996 1995
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Real estate, at cost:
Land $ 3,666 $ 3,666
Buildings and improvements, net of accumulated
depreciation of $1,976 (1996) and
$1,706 (1995) 13,090 13,273
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16,756 16,939
Other Assets:
Deferred costs, net of accumulated amortization
of $391 (1996) and $293 (1995) 2,381 1,799
Cash 1,509 3,455
Other assets 914 306
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Total assets $ 21,560 $ 22,499
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Liabilities and Partners' Capital
Liabilities:
Accrued expenses and other liabilities $ 388 $ 336
Security deposits 125 125
Accounts payable 45 45
Mortgage payable 15,966 -
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Total liabilities 16,524 506
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Partners' Capital:
Limited partners' capital (250 units authorized,
issued and outstanding) 5,065 22,013
General partners' (deficit) (29) (20)
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Total partners' capital 5,036 21,993
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Total liabilities and partners' capital $ 21,560 $ 22,499
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See notes to financial statements.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
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JUNE 30, 1996
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Statements of Operations (Unaudited)
(In Thousands, Except Unit Data) For the Six Months Ended
June 30, 1996 June 30, 1995
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Income:
Rental $ 2,400 $ 2,305
Other 124 96
Interest 40 106
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Total revenues 2,564 2,507
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Expenses:
Mortgage interest 591 -
Leasing 105 70
General and administrative 221 179
Management fees 124 119
Utilities 191 196
Repairs and maintenance 327 289
Painting and decorating 78 60
Insurance 90 91
Taxes 255 225
Amortization 81 41
Depreciation 270 258
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Total expenses 2,333 1,528
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Net income $ 231 $ 979
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Net income per limited partnership unit $ 916.00 $ 3,800.00
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Distributions per limited partnership unit $ 68,708.00 $ 4,200.00
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See notes to financial statements.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
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JUNE 30, 1996
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Statements of Operations (Unaudited)
(In Thousands, Except Unit Data) For the Three Months Ended
June 30, 1996 June 30, 1995
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Income:
Rental $ 1,233 $ 1,156
Other 66 53
Interest 10 57
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Total revenues 1,309 1,266
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Expenses:
Mortgage interest 299 -
Leasing 53 36
General and administrative 118 96
Management fees 63 59
Utilities 104 103
Repairs and maintenance 173 149
Painting and decorating 44 33
Insurance 44 46
Taxes 116 116
Amortization 60 20
Depreciation 129 130
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Total expenses 1,203 788
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Net income $ 106 $ 478
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Net income per limited partnership unit $ 420.00 $ 1,856.00
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Distributions per limited partnership unit $ 208.00 $ 4,200.00
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See notes to financial statements.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
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JUNE 30, 1996
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Statements of Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited Total
Partnership partner's partners' partners'
Interest (deficit) capital capital
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Balance - January 1, 1996 250 $ (20) $ 22,013 $ 21,993
Net income 2 229 231
Distributions (11) (17,177) (17,188)
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Balance - June 30, 1996 250 $ (29) $ 5,065 $ 5,036
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See notes to financial statements.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10-QSB
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JUNE 30, 1996
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Statements of Cash Flows (Unaudited)
(In Thousands) For the Six Months Ended
June 30, 1996 June 30, 1995
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Cash Flows from Operating Activities:
Net income $ 231 $ 979
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 270 258
Amortization 98 41
Changes in assets and liabilities:
Increase in other assets (608) (21)
Increase in accounts payable - 6
Decrease in security deposits liability - (3)
Increase (decrease) in accrued expenses and
other liabilities 52 (21)
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Net cash provided by operating activities 43 1,239
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Cash Flows from Investing Activities:
Additions to real estate (87) (49)
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Cash used in investing activities (87) (49)
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Cash Flows from Financing Activities:
Proceeds from mortgage financing 16,000 -
Principal payments on mortgage (34) -
Deferred financing costs (680) -
Distributions (17,188) (1,091)
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Net cash used in financing activities (1,902) (1,091)
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Net (Decrease) Increase in Cash (1,946) 99
Cash at Beginning of the Period 3,455 3,581
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Cash at End of the Period $ 1,509 $ 3,680
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Disclosure of Cash Flow Information -
Cash paid for interest $ 513 $ -
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See notes to financial statements.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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NOTES TO FINANCIAL STATEMENTS
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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 June
30, 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 and six months
ended June 30, 1996 and 1995 are not necessarily indicative
of the results to be expected for the full year.
2. Accounting Change
On January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", which requires impairment losses
to be recognized for long-lived assets used in operations
when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the
asset's carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount.
The adoption of the SFAS has no effect on the Partnership's
financial statements.
3. Related Party Transactions
Winthrop Management, an affiliate of the Managing General
Partner, is entitled to receive 5% of gross receipts from all
Partnership properties they manage. For the six months ended
June 30, 1996 and 1995, Winthrop Management earned $124,000
and $119,000, respectively. Winthrop Management was also paid
an $80,000 fee relating to the mortgage financing.
4. 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
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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NOTES TO FINANCIAL STATEMENTS
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4. Mortgage Payable (Continued)
defined), requires monthly principal and interest payments of
approximately $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)
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 5) to the partners.
5. Distributions
The Partnership distributed $68,708 per unit ($17,177,000 in
total) to the holders of limited partnership units during the
six month period ended June 30, 1996. The general partner
received $11,000 of the approximate $173,000 distribution due
them for the six month period ended June 30, 1996. The
remaining $162,000 will be distributed to the general partner
during the second half of 1996.
6. 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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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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Item 2. Management's Discussion and Analysis or Plan of Operation
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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 and financing of properties as its primary sources of
liquidity. For the long term, it is expected that 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
$60,000 per unit represented net proceeds available for distribution
from the January 1996 property financing (see Item 1, Note 4). The
general partner received $11,000 of the approximate $173,000
distribution due them for the six month period ended June 30, 1996.
The remaining $162,000 will be distributed to the general partner
during the second half of 1996. In May 1996, the Registrant paid $208
per unit ($52,000 in total) in state withholding taxes on behalf of
the limited partners. 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
$1,946,000 decrease at June 30, 1996, as compared to December 31,
1995. The decrease was due to $1,902,000 of net cash used in financing
activities and $87,000 used in investing activities, which was
partially offset by $43,000 provided by operating activities.
Financing activities consisted of $16,000,000 of proceeds from the
mortgage financing, which was offset by $17,188,000 of distributions
to partners, $680,000 of deferred financing costs incurred in
connection with the mortgage financing, and $34,000 of notes payable
principal payments. Investing activities consisted of $87,000 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 from 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 relatively stable. The Atlanta market is
becoming more competitive as a result of new apartment complexes that
were completed in 1995. Despite new construction activity the Austin
market continues to remain stable. The Registrant spent $87,000 on
capital improvements during the six months ended June 30, 1996.
Capital improvements included $19,000 of property drainage
improvements at Northside Circle, $6,000 to resurface the pool at Webb
Bridge Crossing and $5,000 for re-striping the parking lot. The
Registrant anticipates it will spend approximately $140,000 for
capital improvements during the balance of 1996. Other than cash, the
Registrant has no other available sources of liquidity.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
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Results of Operations
The Registrant's investment properties consist of four apartment
complexes. The following table sets forth the average occupancy of the
properties for the six months ended June 30, 1996 and 1995:
Average Occupancy
-----------------------------
Property 1996 1995
- ----------------- ----- ----
Chesapeake 93% 98%
Covington Creek 93% 93%
Northside Circle 87% 90%
Webb Bridge 88% 90%
Registrant's net income for the six months ended June 30, 1996, was
approximately $231,000, as compared to net income of approximately
$979,000 for the six months ended June 30, 1995. The net income for
the three months ended June 30, 1996 was approximately $106,000, as
compared to net income of approximately $478,000 for the three months
ended June 30, 1995. These decreases were primarily attributable to
interest expense associated with the loan financing.
Rental revenues increased by $95,000 for the six months ended June 30,
1996, as compared to 1995, primarily due to increases in rental rates
and decreases in concessions which were partially offset by vacancy
losses. The reduction in occupancy at Chesapeake is primarily due to
an upgrade in tenant profile and was effectively offset by an increase
in rental rates. Other income increased by $28,000 primarily due to an
increase in corporate unit income of $24,000 at Webb Bridge Crossing.
Interest income decreased by $66,000 due to a decrease in average
working capital reserves available for investment.
Expenses increased by $805,000 for the six months ended June 30, 1996,
as compared to 1995, due to increases in mortgage interest expense of
$591,000, leasing expense of $35,000, general and administrative
expenses of $42,000, repairs and maintenance expense of $38,000, real
estate taxes of $30,000, amortization expense of $40,000 and
depreciation expense of $12,000. Other expenses remained relatively
constant. Interest expense increased due to the mortgage financing in
January 1996. Leasing expenses increased primarily due to an increase
of $18,000 in corporate unit expenses at Webb Bridge Crossing. General
and administrative expenses increased primarily due to an increase in
professional and other related costs. Real estate taxes increased
primarily due to a $22,000 increase at Covington Creek. Amortization
expense increased by $40,000 due to the additional amortization of the
deferred financing costs associated with the January 1996 refinancing.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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Part II - Other Information
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three
months ended June 30, 1996.
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WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP - FORM 10 - QSB
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JUNE 30, 1996
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SIGNATURES
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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
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LIMITED PARTNERSHIP
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BY: WAI Associates A Limited Partnership
Its General Partner
BY: WAI Properties, Inc.
Its General Partner
BY: /s/ Michael L. Ashner
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Michael L. Ashner
Chief Executive Officer
BY: /s/ Edward V. Williams
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Edward V. Williams
Chief Financial Officer
DATED: August 13, 1996
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<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 to
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,509,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,066,000
<DEPRECIATION> (1,976,000)
<TOTAL-ASSETS> 21,560,000
<CURRENT-LIABILITIES> 0
<BONDS> 15,966,000
0
0
<COMMON> 0
<OTHER-SE> 5,036,000
<TOTAL-LIABILITY-AND-EQUITY> 21,560,000
<SALES> 0
<TOTAL-REVENUES> 2,524,000
<CGS> 0
<TOTAL-COSTS> 1,742,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 591,000
<INCOME-PRETAX> 231,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 231,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,000
<EPS-PRIMARY> 916.00
<EPS-DILUTED> 916.00
</TABLE>
