<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A
AMENDMENT NO. 4
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JUNE 3, 1997
----------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13232 84-1259577
- -------------------------------- ------------ -------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1873 SOUTH BELLAIRE STREET, SUITE 1700, DENVER, CO 80222-4348
- -------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 757-8101
--------------------
NOT APPLICABLE
--------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of NHP Real Estate Companies
On June 3, 1997, Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" and, together with its subsidiaries and other
controlled entities, the "Company"), acquired all of the issued and outstanding
capital stock of NHP Partners, Inc., a Delaware corporation ("NHP Partners,
Inc."), and the Company acquired all of the outstanding partnership interests in
NHP Partners Two Limited Partnership, a Delaware limited partnership ("NHP
Partners Two LP" and, together with NHP Partners, Inc. and their subsidiaries,
the "NHP Real Estate Companies").
The Company acquired the NHP Partners, Inc. capital stock from NHP
Partners Limited Partnership, a Delaware limited partnership which is owned
by Demeter Holdings Corporation, a Massachusetts corporation ("Demeter"),
Capricorn Investors, L.P., a Delaware limited partnership ("Capricorn"), and
J. Roderick Heller, III. The Company acquired the interests in NHP Partners
Two LP from Phemus Corporation, a Massachusetts corporation ("Phemus"),
Capricorn, Mr. Heller and NHP Partners Two LLC, a Delaware limited liability
company ("NHP Partners Two LLC") which is owned by Phemus, Capricorn and Mr.
Heller. As consideration, the Company paid $54.8 million in cash and issued
warrants to purchase 399,999 shares of AIMCO's Class A Common Stock, par
value $.01 per share, at an exercise price of $36 per share. The Company
financed the cash consideration with borrowings under its revolving credit
facility (the "Credit Facility") with Bank of America National Trust and Savings
Association.
The acquisition of the NHP Real Estate Companies was made pursuant
to a Real Estate Acquisition Agreement, dated as of May 22, 1997 (the "Real
Estate Agreement"), by and among AIMCO, AIMCO Properties, L.P., a Delaware
limited partnership (the "Operating Partnership"), Demeter, Phemus,
Capricorn, Mr. Heller and NHP Partners Two LLC. The purchase price and other
terms of the Real Estate Agreement were determined based on negotiations
among AIMCO, Demeter, Phemus, Capricorn and Mr. Heller. A copy of the Real
Estate Agreement is filed herewith as Exhibit 2.1 and incorporated herein by
this reference.
NHP Partners, Inc. owns the National Corporation for Housing
Partnerships, a District of Columbia corporation ("NCHP"), and NHP Partners,
Inc. and NHP Partners Two LP own The National Housing Partnership, a District
of Columbia limited partnership (the "NHP Partnership"). NCHP and the NHP
Partnership were organized by Congress in 1970 as private, for-profit
entities pursuant to Title IX of the Housing and Urban Development Act of
1968, to promote private investment in the production of low and moderate
income (affordable) housing. NCHP acts as the general partner of the NHP
Partnership. Through NCHP, the NHP Partnership and other subsidiar-
1
<PAGE>
ies, the NHP Real Estate Companies hold interests in partnerships that own
approximately 534 conventional and affordable multifamily apartment
properties, which contain approximately 87,659 apartment units, as well as a
captive insurance subsidiary and other related assets.
A majority of the properties in which the NHP Real Estate Companies
own interests are managed by NHP Incorporated, a Delaware corporation
("NHP"). On May 5, 1997, AIMCO/NHP Holdings, Inc., a Delaware corporation and
a subsidiary of AIMCO, acquired approximately 51% of the outstanding common
stock of NHP from Demeter, Capricorn and certain Capricorn partners. AIMCO
and NHP have previously announced an agreement pursuant to which a wholly
owned subsidiary of AIMCO would be merged with and into NHP. The merger is
subject to the approval of shareholders of NHP and AIMCO, as well as certain
other conditions. Mr. Heller is the Chairman of the Board, President and
Chief Executive Officer of NHP, and three executive officers of AIMCO
currently serve as directors of NHP. The Company's acquisition of the NHP
Real Estate Companies was approved by a committee of independent directors of
NHP.
On June 6, 1997, AIMCO issued a press release describing the terms
of the acquisition of the NHP Real Estate Companies. The press release is
filed herewith as Exhibit 99.1 and incorporated herein by this reference.
Acquisition of Apartment Properties
On June 6, 1997, the Company acquired The Vinings at the Waterways, a
180-unit apartment community located in Aventura, Florida, for $16.4 million
(including $0.4 million for closing costs and initial capital expenditures at
the property). The Company financed a portion of the purchase price with a
short term loan of $8 million from Amresco, Inc., and the remainder with
additional borrowings under the Credit Facility.
On June 12, 1997, the Company acquired two apartment communities
located in Tustin, California for $9.3 million in cash (including $1.9
million for closing costs and initial capital expenditures at the property)
and 315,419 units ("OP Units") of limited partnership interest in the
Operating Partnership. The Californian Apartments contains 92 apartment
units and Tustin East Village contains 200 apartment units. The two
apartment communities are operated as one complex, together with the
Brookside Apartments which the Company acquired in April 1996. The Company
financed the cash portion of the purchase price with borrowings under its
Credit Facility. On the same date, the Company also acquired from the same
sellers a 45,000 sq. ft. retail shopping center, which is adjacent to the two
acquired apartment communities, for 182,375 OP Units.
2
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
1. Combined Balance Sheets of NHP Real Estate Companies, as of
December 31, 1996 and 1995, and March 31, 1997 (unaudited), and the related
combined statements of operations, changes in shareholders' equity (deficit) and
partners' capital (deficit), net and cash flows for each of the three years in
the period ended December 31, 1996, and for the three months ended March 31,
1997 (unaudited) and 1996 (unaudited), together with the Report of Independent
Public Accountants (included as Exhibit 99.5 to this Report and incorporated
herein by this reference).
2. Balance Sheets of NHP Southwest Partners, L.P. (a Delaware
Limited Partnership), as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners' capital and cash flows for the
year ended December 31, 1996 and for the period from January 20, 1995 (date of
inception) through December 31, 1995, together with the Report of Independent
Public Accountants (included as Exhibit 99.6 to this Report and incorporated
herein by this reference).
3. Combined Balance Sheets of NHP New LP Entities as of December 31,
1996 and 1995, and the related combined statements of operations, changes in
partners' capital, and cash flows for the year ended December 31, 1996 and for
the period from January 20, 1995 (date of inception) through December 31, 1995,
together with the Report of Independent Public Accountants (included as Exhibit
99.7 to this Report and incorporated herein by this reference).
4. Combined Balance Sheets of NHP Borrower Entities as of December
31, 1996 and 1995, and the related combined statements of operations, changes in
partners' capital, and cash flows for the year ended December 31, 1996 and for
the period from January 20, 1995 (date of inception) through December 31, 1995,
together with the Report of Independent Public Accountants (included as Exhibit
99.8 to this Report and incorporated herein by this reference).
5. Historical Summary of Gross Income and Certain Expenses (Summary)
of The Bay Club at Aventura for the year ended December 31, 1996 and the three
months ended March 31, 1997 (unaudited), together with the Report of Independent
Auditors (included as Exhibit 99.9 to this Report and incorporated herein by
this reference).
(b) Pro Forma Financial Information
The required pro forma financial information is included as Exhibit
99.10 to this Report and incorporated herein by this reference.
(c) Exhibits
3
<PAGE>
The following exhibits are filed with this report:
Exhibit
Number Description
- ------- -----------
2.1 Real Estate Acquisition Agreement, dated as of May 22, 1997, by and
among Apartment Investment and Management Company, AIMCO Properties,
L.P., Demeter Holdings Corporation, Phemus Corporation, Capricorn
Investors, L.P., J. Roderick Heller, III, and NHP Partners Two LLC*
23.1 Consent of Arthur Andersen LLP dated June 23, 1997*
23.2 Consents of Deloitte & Touche LLP dated September 2, 1997*
23.3 Consent of Anders, Minkler & Diehl LLP dated September 2, 1997*
23.4 Consent of Dauby O'Connor & Zaleski, LLC dated September 2, 1997*
23.5 Consent of Edwards Leap & Sauer dated September 2, 1997*
23.6 Consent of Fishbein & Company, P.C. dated September 2, 1997*
23.7 Consents of Freeman and Vessillo dated September 2, 1997*
23.8 Consents of Friduss, Lukee, Schiff & Co., PC dated September 2, 1997*
23.9 Consent of George A. Hieronymous & Company, LLC dated September 2,
1997*
23.10 Consent of Goldenberg Rosenthal Friedlander, LLP dated September 2,
1997*
23.11 Consent of Hansen, Hunter & Kibbee, P.C. dated September 2, 1997*
23.12 Consent of J.H. Cohn LLP dated September 2, 1997*
23.13 Consent of J.A. Plumer & Co., P.A. dated September 2, 1997*
23.14 Consent of Marks Shron & Company, LLP dated September 2, 1997*
23.15 Consent of Prague & Company, P.C. dated September 2, 1997*
23.16 Consent of Reznick Fedder & Silverman dated September 2, 1997*
23.17 Consents of Robert Ercolini & Company dated September 2, 1997*
4
<PAGE>
23.18 Consent of Russell Thompson Butler & Houston dated September 2, 1997*
23.19 Consent of Sciarabba Walker & Co., LLP dated September 2, 1997*
23.20 Consent of Wallace Sanders & Company dated September 2, 1997*
23.21 Consent of Warady and Davis dated September 2, 1997*
23.22 Consent of Ziner and Company, PC dated September 2, 1997*
23.23 Consent of Zinner & Co. dated September 2, 1997*
23.24 Consent of Ernst & Young LLP dated June 23, 1997*
23.25 Consent of Arthur Andersen LLP dated September 2, 1997*
23.26 Consent of Arthur Andersen LLP dated October 3, 1997
99.1 Press Release of Apartment Investment and Management Company, dated
June 6, 1997*
99.2 1994 Reports of Independent Auditors*
99.3 1995 Reports of Independent Auditors*
99.4 1996 Reports of Independent Auditors*
99.5 Financial Statements of NHP Real Estate Companies and Report of
Independent Accountants*
99.6 Financial Statements of NHP Southwest Partners, L.P. (a Delaware
Limited Partnership) and Report of Independent Accountants
99.7 Financial Statements of NHP New LP Entities and Report of Independent
Accountants*
99.8 Financial Statements of NHP Borrower Entities and Report of
Independent Accountants*
99.9 Financial Statements of The Bay Club at Aventura and Report of
Independent Auditors*
99.10 Pro Forma Financial Information of Apartment Investment and
Management Company*
__________________
* Previously filed
5
<PAGE>
SIGNATURE
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.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: October 3, 1997 By: /s/ Leeann Morein
---------------------------------
Leeann Morein
Senior Vice President, Chief
Financial Officer and Secretary
6
<PAGE>
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
Exhibit
Number Description
- ------- -----------
2.1 Real Estate Acquisition Agreement, dated as of May 22, 1997,
by and among Apartment Investment and Management Company,
AIMCO Properties, L.P., Demeter Holdings Corporation, Phemus
Corporation, Capricorn Investors, L.P., J. Roderick Heller,
III, and NHP Partners Two LLC*
23.1 Consent of Arthur Andersen LLP dated June 23, 1997*
23.2 Consents of Deloitte & Touche LLP dated September 2, 1997*
23.3 Consent of Anders, Minkler & Diehl LLP dated September 2, 1997*
23.4 Consent of Dauby O'Connor & Zaleski, LLC dated September 2, 1997*
23.5 Consent of Edwards Leap & Sauer dated September 2, 1997*
23.6 Consent of Fishbein & Company, P.C. dated September 2, 1997*
23.7 Consents of Freeman and Vessillo dated September 2, 1997*
23.8 Consents of Friduss, Lukee, Schiff & Co., PC dated September 2,
1997*
23.9 Consent of George A. Hieronymous & Company, LLC dated September 2,
1997*
23.10 Consent of Goldenberg Rosenthal Friedlander, LLP dated September 2,
1997*
23.11 Consent of Hansen, Hunter & Kibbee, P.C. dated September 2, 1997*
23.12 Consent of J.H. Cohn LLP dated September 2, 1997*
23.13 Consent of J.A. Plumer & Co., P.A. dated September 2, 1997*
<PAGE>
23.14 Consent of Marks Shron & Company, LLP dated September 2, 1997*
23.15 Consent of Prague & Company, P.C. dated September 2, 1997*
23.16 Consent of Reznick Fedder & Silverman dated September 2, 1997*
23.17 Consents of Robert Ercolini & Company dated September 2, 1997*
23.18 Consent of Russell Thompson Butler & Houston dated September 2, 1997*
23.19 Consent of Sciarabba Walker & Co., LLP dated September 2, 1997*
23.20 Consent of Wallace Sanders & Company dated September 2, 1997*
23.21 Consent of Warady and Davis dated September 2, 1997*
23.22 Consent of Ziner and Company, PC dated September 2, 1997*
23.23 Consent of Zinner & Co. dated September 2, 1997*
23.24 Consent of Ernst & Young LLP dated June 23, 1997*
23.25 Consent of Arthur Andersen LLP dated September 2, 1997*
23.26 Consent of Arthur Andersen LLP dated October 3, 1997
99.1 Press Release of Apartment Investment and Management Company,
dated June 6, 1997*
99.2 1994 Reports of Independent Auditors*
99.3 1995 Reports of Independent Auditors*
99.4 1996 Reports of Independent Auditors*
99.5 Financial Statements of NHP Real Estate Companies and Report
of Independent Accountants*
99.6 Financial Statements of NHP Southwest Partners, L.P. (a
Delaware Limited Partnership) and Report of Independent
Accountants
99.7 Financial Statements of NHP New LP Entities and Report of
Independent Accountants*
99.8 Financial Statements of NHP Borrower Entities and Report of
Independent Accountants*
99.9 Financial Statements of The Bay Club at Aventura and Report
of Independent Auditors*
99.10 Pro Forma Financial Information of Apartment Investment and
Management Company*
__________________
* Previously filed
<PAGE>
EXHIBIT 23.26
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 11, 1997 (except with respect to the matters discussed in Note 7,
as to which the date is June 3, 1997) in this Current Report on Form 8-K/A,
filed with the Securities and Exchange Commission by Apartment Investment and
Management Company ("AIMCO"). We further consent to the incorporation by
reference of our report into AIMCO's Registration Statement on Form S-3 (No.
333-26415), AIMCO's Registration Statement on Form S-3 (No. 33-98338),
AIMCO's Registration Statement on Form S-3 (No. 333-828), AIMCO's
Registration Statement on Form S-3 (No. 333-4542), AIMCO's Registration
Statement on Form S-3 (No. 333-4546), AIMCO's Registration Statement on Form
S-3 (No. 333-8997), AIMCO's Registration Statement on Form S-3 (No.
333-17431), AIMCO's Registration Statement on Form S-8 (No. 333-4550),
AIMCO's Registration Statement on Form S-8 (No. 333-4548), AIMCO's
Registration Statement on Form S-8 (No. 333-14481), AIMCO's Registration
Statement on Form S-3 (No. 333-20755), AIMCO's Registration Statement on Form
S-3 (No. 333-36531), AIMCO's Registration Statement on Form S-3 (No.
333-36537), and AIMCO's Registration Statement on Form S-8 (No. 333-36803),
all previously filed with the Securities and Exchange Commission.
/s/ Arthur Andersen LLP
Washington, D.C.
October 3, 1997
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
NHP Southwest Partners, L.P.:
We have audited the accompanying balance sheets of NHP Southwest Partners, L.P.
(a Delaware Limited Partnership) as of December 31, 1996 and 1995, and the
related statements of operations, changes in partners' capital, and cash flows
for the year ended December 31, 1996, and for the period from January 20, 1995
(date of inception) through December 31, 1995. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NHP Southwest Partners, L.P. as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the year ended December 31, 1996, and for the period from January 20,
1995 (date of inception), through December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Washington, D.C.,
April 11, 1997 (except with
respect to the matter discussed in
Note 7, as to which the date is
June 3, 1997)
<PAGE>
NHP SOUTHWEST PARTNERS, L.P.
BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents........................................ $ 75,891 $ 495,968
Due from New LPs................................................. 826,741 272,862
Investment in real estate limited partnerships................... 11,094,132 21,069,246
----------- -----------
Total assets................................................. $11,996,764 $21,838,076
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Related-Party Note, net of discount of $3,423,603 and $4,297,715. $ 8,320,453 $ 7,446,341
Accounts payable and accrued interest............................ 970,645 124,107
Partners' capital................................................ 2,705,666 14,267,628
----------- -----------
Total liabilities and partners' capital...................... $11,996,764 $21,838,076
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
NHP SOUTHWEST PARTNERS, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM JANUARY 20, 1995 (DATE OF INCEPTION),
THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
Equity in losses of real estate limited partnerships............. $ (9,601,377) $ (5,238,365)
Interest income from New LPs..................................... 69,696 15,772
-------------- -------------
(9,531,681) (5,222,593)
-------------- -------------
Expenses:
Interest on Related-Party Note............................... 1,936,545 1,425,999
Other........................................................ 21,716 98,248
-------------- -------------
1,958,261 1,524,247
-------------- -------------
Net loss................................................... $ (11,489,942) $ (6,746,840)
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NHP SOUTHWEST PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM JANUARY 20, 1995 (DATE OF INCEPTION),
THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
ALBUQUERQUE ALBUQUERQUE
NHP-HG WHALER 95- NHP-HG WHALER 95-
TEN, INC. EJV CORP. TEN, L.P. HJV L.P.
(.5% GP) (.5% GP) (49.5% LP) (49.5% LP) TOTAL
---------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Initial capital contribution............. $ 108,402 $ 108,402 $ 10,731,799 $ 10,731,799 $ 21,680,402
Net loss............................. (33,734) (33,734) (3,339,686) (3,339,686) (6,746,840)
Distributions........................ (8,980) (8,980) (323,987) (323,987) (665,934)
---------- ------------ ------------- ------------- -------------
Balance, December 31, 1995............... 65,688 65,688 7,068,126 7,068,126 14,267,628
Net loss............................. (57,450) (57,450) (5,687,521) (5,687,521) (11,489,942)
Distributions........................ (1,801) (1,801) (68,418) -- (72,020)
---------- ------------ ------------- ------------- -------------
Balance, December 31, 1996............... $ 6,437 $ 6,437 $ 1,312,187 $ 1,380,605 $ 2,705,666
---------- ------------ ------------- ------------- -------------
---------- ------------ ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NHP SOUTHWEST PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996, AND
FOR THE PERIOD FROM JANUARY 20, 1995 (DATE OF INCEPTION),
THROUGH DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss..................................................... $ (11,489,942) $ (6,746,840)
Adjustments to reconcile net loss to net cash used in
operating activities--
Amortization of discount on Hall note...................... 874,112 801,269
Equity in losses of real estate limited partnerships....... 9,601,377 5,238,365
Change in accounts payable and accrued interest............ 846,538 124,107
------------ ------------
Net cash used in operating activities.................... (167,915) (583,099)
------------ ------------
Cash flows from investing activities:
Initial investment in real estate limited partnerships....... -- (21,680,402)
Change in due from New LPs................................... (553,879) (272,862)
Distributions received from real estate limited
partnerships............................................... 373,737 2,017,863
------------ ------------
Net cash used in investing activities.................... (180,142) (19,935,401)
------------ ------------
Cash flows from financing activities:
Capital contributions........................................ -- 21,680,402
Distributions to partners.................................... (72,020) (665,934)
------------ ------------
Net cash (used in) provided by financing activities...... (72,020) 21,014,468
------------ ------------
Net (decrease) increase in cash and cash equivalents........... (420,077) 495,968
Cash and cash equivalents, beginning of period................. 495,968 --
------------ ------------
Cash and cash equivalents, end of period....................... $ 75,891 $ 495,968
------------ ------------
------------ ------------
Supplemental information:
Cash paid for interest....................................... $ 212,955 $ 577,274
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NHP SOUTHWEST PARTNERS , L.P.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
1. ORGANIZATION:
NHP Southwest Partners, L.P. (the "Partnership") was organized on January 20,
1995 (date of inception), pursuant to the laws of the state of Delaware, for
the sole purpose of investing in real estate by acquiring and holding a
limited partnership interest in various limited partnerships. The Partnership
was organized in conjunction with the formation of 32 other limited
partnerships (collectively, the "New LPs"). The Partnership is a 79 percent
limited partner in each New LP (Note 3). The Limited Partnership Agreement of
NHP Southwest Partners, L.P., (the "Partnership Agreement") stipulates that
the term of the Partnership will continue until December 31, 2044, unless
terminated at an earlier date, in accordance with the provisions of the
Partnership Agreement.
Albuquerque Whaler 95-EJV Corporation and NHP-HG Ten, Inc., are the general
partners of the Partnership. The general partners have equal and exclusive
authority to make partnership decisions. At inception, the general partners
each made capital contributions of $108,402, which represents a 0.5 percent
interest, respectively, in the Partnership. The Partnership's limited
partners are Albuquerque Whaler 95-HJV Limited Partnership and NHP-HG Ten,
L.P., who contributed $10,731,799 each for a 49.5 percent ownership interest,
respectively, in the Partnership. NHP-HG Ten, Inc. and NHP-HG Ten L.P. are
wholly owned subsidiaries of NHP Partners, Inc.
The Partnership derives all of its cash flow from distributions made by the
New LPs, who in turn receive distributions from their real estate
investments. As more fully described in Note 3, such investments incurred
significant losses in 1995 and 1996. Furthermore, as discussed in Note 4, in
March 1996, the Partnership failed to make the interest payment required under
the terms of the Related-Party Note. This failure constitutes a non-major
interest payment default, as defined. The ability of the Partnership to
continue as a going concern and meet its obligations will be impacted by the
ability of the New LPs to continue making cash distributions to the
Partnership. Management believes that cash flows from New LP distributions
will be sufficient to allow the Partnership to continue to fulfill its
obligations and continue as a going concern.
2. SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<PAGE>
BASIS OF ACCOUNTING
The Partnership maintains its books on an accrual basis for financial
statement and Federal income tax purposes.
INVESTMENT IN REAL ESTATE LIMITED PARTNERSHIPS
The Partnerships' investments in the New LPs are accounted for using the
equity method of accounting.
INCOME TAXES
The Partnership is not a tax paying entity and, accordingly, no provision
has been recorded for Federal or state income tax purposes. The partners are
individually responsible for reporting their share of the Partnership's taxable
income on their income tax returns. In the event of an examination of the
Partnership's tax return by the Internal Revenue Service, the tax liability of
the partners could be changed if an adjustment in the Partnership's income is
ultimately sustained by the tax authorities.
Certain transactions of the Partnership may be subject to accounting methods
for income tax purposes that differ from the accounting methods used in
preparing these financial statements in accordance with generally accepted
accounting principles. Accordingly, the net income or loss of the Partnership
and the resulting balances in the partners' capital accounts reported for income
tax purposes may differ from the balances reported for those same items in these
financial statements.
REVIEW FOR ASSET IMPAIRMENT
Management periodically assesses the carrying value of its equity
investments in real estate limited partnerships. Whenever there are recognized
events or changes in circumstances that could affect the carrying amount of the
real estate, management reviews the assets for possible impairment.
In accordance with generally accepted accounting principles, management uses
estimated expected future net cash flows (undiscounted, including expected
sales price and excluding interest costs) to measure the recoverability of
investments in real estate limited partnerships. The estimation of expected
future net cash flows is inherently uncertain and relies to a considerable
extent on assumptions regarding current and future economic and market
conditions, the expected property improvements, and the ability to attract
and retain new tenants.
RECLASSIFICATIONS
Certain 1995 amounts have been reclassified to conform with the 1996
presentation.
<PAGE>
3. INVESTMENT IN REAL ESTATE LIMITED PARTNERSHIPS:
The Partnership has a 79 percent limited partnership interest in the New
LPs, which were organized effective January 20, 1995, for the sole purpose of
investing in real estate.
The New LPs' general partners are NHP-HG Eleven, Inc. (an affiliate of NHP,
Partners, Inc.) and Albuquerque Whaler 95-NLP Corporation, each with a 0.5
percent interest in each New LP. The New LPs' limited partners are NHP
Southwest Partners, L.P., Albuquerque Whaler 95-PLP Limited Partnership, and
a third limited partner affiliated with Hall Financial Group, which is unique
to each New LP, with 79, 0 and 20 percent ownership interests in each New LP,
respectively.
The New LPs were organized for the purpose of investing in real estate
through holdings in other affiliated limited partnerships (collectively, the
"Borrowers") that own real estate.
Each New LP has a 99 percent limited partnership interest in one of the
Borrowers, and each Borrower owns a multifamily apartment complex. The New
LPs' initial investments in the Borrowers were recorded at an amount equal to
their capital contributions to the Borrowers. In addition, investment in real
estate limited partnerships also includes the cost incurred by the
Partnership to purchase the management contracts in place at the date of
acquisition and secure the right to appoint the property manager for the real
estate owned by the Borrowers. The Partnership believed that control over the
appointment of property manager was required in order to enhance the
properties' profitability and maximize the Partnership's return on its
investment. The investment was recorded at an amount equal to the discounted
value of the Related-Party Note (Note 4), issued as consideration for the
purchase of the contracts of $6,645,072. The additional investment was not
pushed down to the New LPs or Borrowers and is being amortized by the
Partnership over 70 months, which is the expected holding period of the
investments. For the year ended December 31, 1996, and for the period ended
December 31, 1995, the Partnership amortized $1,139,155 and $1,044,226,
respectively, of the additional investment, which has been included in
equity in losses of real estate limited partnerships in the accompanying
statements of operations. The New LPs' investments in the Borrowers are
accounted for using the equity method.
Summarized combined condensed financial information for the New LPs and the
Borrowers as of December 31, 1996 and 1995, and for the year ended December 31,
1996, and for the period from January 20, 1995 (date of inception), through
December 31, 1995, is as follows:
<PAGE>
NEW LPS
SUMMARIZED COMBINED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31,
--------------------------
1996 1995
----------- -----------
Investments in real estate partnerships........ $60,326,268 $71,290,336
Other assets................................... 202,927 257,928
----------- -----------
Total assets............................... $60,529,195 $71,548,264
----------- -----------
----------- -----------
Note payable................................... $17,951,495 $17,289,778
Other liabilities.............................. 1,109,362 555,068
----------- -----------
Total liabilities.......................... 19,060,857 17,844,846
Partners' capital.............................. 41,468,338 53,703,418
----------- -----------
Total liabilities and partners' capital.... $60,529,195 $71,548,264
----------- -----------
----------- -----------
NEW LPS
SUMMARIZED COMBINED CONDENSED STATEMENTS OF OPERATIONS
1996 1995
------------- -------------
Equity in loss of limited partnerships...... $ (7,601,933) $ (2,689,889)
------------- -------------
Total revenue......................... (7,601,933) (2,689,889)
------------- -------------
Interest expense............................ 2,716,150 2,375,474
Other expenses.............................. 418,227 218,564
------------- -------------
3,134,377 2,594,038
------------- -------------
Net loss.............................. $ (10,736,310) $ (5,283,927)
------------- -------------
------------- -------------
BORROWERS
SUMMARIZED COMBINED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31,
------------------------------
1996 1995
-------------- --------------
Rental property, net....................... $ 218,955,941 $ 228,027,812
Other assets............................... 15,364,441 17,922,065
-------------- --------------
Total assets......................... $ 234,320,382 $ 245,949,877
-------------- --------------
-------------- --------------
Mortgage note payable...................... $ 166,997,173 $ 166,714,244
Other liabilities.......................... 6,603,428 7,218,365
-------------- --------------
Total liabilities.................... 173,600,601 173,932,609
Partners' capital.......................... 60,719,781 72,017,268
-------------- --------------
Total liabilities and
partners' capital................. $ 234,320,382 $ 245,949,877
-------------- --------------
-------------- --------------
<PAGE>
BORROWERS
SUMMARIZED COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
Net rental revenue............................................. $ 42,927,992 $ 37,482,063
Other revenue.................................................. 2,179,437 1,998,493
-------------- -------------
Total revenue............................................ 45,107,429 39,480,556
-------------- -------------
General and administrative expenses............................ 7,001,487 5,792,360
Utilities expense.............................................. 4,627,719 3,676,905
Operating and maintenance expenses............................. 9,088,323 7,990,090
Taxes and insurance............................................ 5,652,374 4,581,205
Interest on mortgage notes payable............................. 16,733,178 15,290,414
Depreciation and amortization.................................. 9,905,741 4,866,639
-------------- -------------
Total expenses........................................... 53,008,822 42,197,613
-------------- -------------
Net loss....................................................... $ (7,901,393) $ (2,717,057)
-------------- -------------
-------------- -------------
</TABLE>
A summary of the Partnership's investments in the New LPs is as follows:
1996 1995
------------- -------------
Beginning balance........................... $ 21,069,246 $ --
Initial investment in New LPs............. -- 28,325,474
Distributions from New LPs................ (373,737) (2,017,863)
Equity in loss of New LPs................. (9,601,377) (5,238,365)
------------- ------------
Ending balance.............................. $ 11,094,132 $ 21,069,246
------------- ------------
------------- ------------
4. RELATED-PARTY NOTE:
The Related-Party Note represents a note payable to Hall Financial Group,
Inc. (the "Payee"), which is affiliated with one of the Partnership's limited
partners, Albuquerque Whaler 95-HJV Limited Partnership. Payments of interest
only are payable monthly at an interest rate of 6 percent per annum,
compounded monthly. In the event of a non-major interest payment default, as
defined, interest accrues at a rate of 9 percent per annum. Interest payments
made by the Partnership amounted to $212,955 and $577,274 for the year ended
December 31, 1996, and for the period from January 20, 1995, (date of debt
origination) through December 31,1995, respectively. No principal payments
are required on the Related-Party Note until its maturity date on December
10, 2000.
In March 1996, the Partnership failed to make the interest payment required
under the terms of the Related-Party Note. This failure constitutes a
non-major interest payment default, as defined. Accordingly, interest on the
Related-Party Note began accruing at the rate of 9 percent per annum as of
the date of the default. The Payee has no other rights or remedies as a
result of this non-major interest payment default.
<PAGE>
The Related-Party Note has been discounted for financial reporting purposes
because the contractual interest rate of 6 percent per annum is below a
market interest rate. The face value of the Related-Party Note is
$11,744,056. The book value of the Related-Party Note at its origination date
was $6,645,072, using an estimated market rate of 15 percent per annum at the
origination date of the Related-Party Note. To account for this difference in
interest rates, a discount of $5,098,984 was recorded. The discount is being
amortized into interest expense over the life of the loan using the effective
interest method. Amortization of the discount was $874,112 and $801,269 for
the year ended December 31, 1996, and for the period ended December 31, 1995,
respectively.
The Related-Party Note is secured by the Partnership's interest in the New
LPs and the interests of the general partners in the New LPs, in accordance with
the Pledge and Security Agreement dated February 8, 1995. Under separate
agreements, the Partnership's interest and the interests of the general partners
in the New LPs have been pledged to secure the New LPs' obligations to make
interest payments to their preferred A limited partner and distributions to
their preferred B limited partner.
5. RELATED-PARTY TRANSACTIONS AND COMPENSATION TO PARTNERS:
GENERAL AND ADMINISTRATIVE SERVICES
NHPMC is the project management agent for the Borrowers. The management
agreement has a primary term which expires November 7, 2000, and thereafter can
be extended on an annual basis under certain conditions. As of December 31, 1996
certain stockholders owning approximately 60 percent of the voting common stock
of NHP Incorporated also own the entities which are general and limited partners
of the Partnership.
During 1996 and 1995, personnel working at the Properties were employees of
NHP Incorporated, and therefore the Property reimbursed NHP Incorporated for the
actual salaries and related benefits totaling $4,245,949 and $3,458,934 in 1996
and 1995, respectively, as reflected in the Borrowers' combined financial
statements. At December 31, 1996 and 1995, trade payables include $231,348 and
$40,382, respectively, due to NHP Incorporated.
During 1996 and 1995, NHPMC received aggregate fees of $1,762,457 and
$1,399,190, respectively, for its services as management agent equal to 4
percent of the Properties rental collections. In addition, NHPMC and other
affiliates of NHP Incorporated received $331,484 and $453,872, respectively, as
of December 31, 1996 and 1995, for other services provided to the Properties.
During 1996 and 1995, NHP Partners, Inc., which wholly owns NHP-HG Ten, Inc.
received $8,482 and $0, respectively, relating to direct administrative
costs, financial and tax reporting and loans and partnership agreement
compliance.
DISTRIBUTIONS TO PARTNERS
Distributions of Partnership Receipts, as defined in the Partnership
Agreement, are made to the partners in proportion to their respective
ownership interests in the Partnership, monthly (if available), subject to a
certain order of priorities, as defined in the Partnership Agreement. Net
income is allocated among all partners first, to the extent of any current or
prior period loss allocations or distributions in excess of current or prior
period net profit allocations and second, in proportion to each Partner's
ownership interest. Net losses are allocated to the Partners in proportion to
their ownership interests.
<PAGE>
SPECIAL DISTRIBUTION
Upon mutual consent of the Partnership's partners, a distribution in the
amount of approximately $676,965 was made to the Partnership in June 1995
outside of the distribution method required under the New LPs' partnership
agreements. The funds for this distribution originated from the sale of a hedge
instrument by the Borrowers. Each Borrower distributed funds received related to
this sale to their respective New LPs, who in turn distributed the funds to the
Partnership. The Partnership in turn distributed approximately $646,000 of these
funds to its limited partners.
DUE FROM NEW LPS
Due from New LPs represents various advances to New LPs. These advances arise
when cash is needed to fund operating deficits and certain distributions
required by the New LPs. Principal and interest payments on these advances
are due monthly at an interest rate of 10 percent per annum, compounded
monthly. Of these amounts, $50,176 advanced in 1996 represents NPF Priority
Funds (as defined in the Partnership Agreement) which have certain repayment
priorities over other advances and over other distributions. Interest
payments received by the Partnership amounted to $21,403 and $7,038 for the
year ended December 31, 1996, and for the period from January 20, 1995 (date
of inception), through December 31, 1995, respectively.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with the requirements of SFAS No. 107, "Disclosure About Fair
Value of Financial Instruments," the Partnership must disclose the fair value of
its financial instruments as of December 31, 1996 and 1995. In the opinion of
management, with the exception of the Hall Note, the fair value of the
Partnership's financial instruments is not materially different from the
carrying amounts shown in the accompanying financial statements. Due to the
occurrence of a non-major default on the Related-Party Note, it is not
practicable to estimate the fair value of the Related-Party Note.
7. SUBSEQUENT EVENT:
On June 3, 1997, NHP Partners, Inc. was acquired by Apartment Investment and
Management Company ("AIMCO"), a real estate investment trust whose shares are
traded on the New York Stock Exchange.
