<PAGE> 1
Exhibit 99.4
COMBINED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
OXFORD REALTY
FINANCIAL GROUP PROPERTIES
(OXFORD PROPERTIES)
DECEMBER 31, 1999 AND
AUGUST 31, 2000 AND 1999
99.4-1
<PAGE> 2
Oxford Realty Financial Group Properties
(Oxford Properties)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 99.4-3
COMBINED FINANCIAL STATEMENTS
COMBINED BALANCE SHEETS 99.4-4
COMBINED STATEMENTS OF OPERATIONS 99.4-5
COMBINED STATEMENTS OF CHANGES IN PARTNERS'/MEMBERS'
EQUITY (DEFICIT) 99.4-6
COMBINED STATEMENTS OF CASH FLOWS 99.4-7
NOTES TO COMBINED FINANCIAL STATEMENTS 99.4-8
</TABLE>
99.4-2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Management
Oxford Realty Financial Group Properties
We have audited the accompanying combined balance sheet of Oxford
Realty Financial Group Properties (Oxford Properties) as of December 31, 1999,
and the related combined statements of operations, changes in partners'/members'
equity (deficit) and cash flows for the year then ended. These combined
financial statements are the responsibility of the Entities' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of Oxford
Realty Financial Group Properties as of December 31, 1999, and the results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
/s/ REZNICK FEDDER AND SILVERMAN
Bethesda, Maryland
November 10, 2000
99.4-3
<PAGE> 4
Oxford Realty Financial Group Properties
(Oxford Properties)
COMBINED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
--------------- ---------------
(Unaudited)
<S> <C> <C>
Real estate, net of accumulated depreciation $ 926,252,574 $ 907,903,126
Cash and cash equivalents 32,436,669 28,846,157
Restricted cash 5,882,331 6,326,209
Mortgage escrow deposits 11,151,431 16,999,333
Funded reserves 55,592,138 56,884,035
Other assets 32,296,823 27,383,199
--------------- ---------------
$ 1,063,611,966 $ 1,044,342,059
=============== ===============
LIABILITIES AND PARTNERS'/MEMBERS' EQUITY (DEFICIT)
Secured notes payable $ 1,462,375,695 $ 1,453,230,733
Notes and loans payable to affiliates 90,939,199 90,600,532
--------------- ---------------
Total indebtedness 1,553,314,894 1,543,831,265
Accounts payable, accrued and other liabilities 79,604,444 80,912,843
Accrued interest-secured notes payable 10,752,830 8,741,962
Accrued interest-notes and loans payable to affiliates 76,838,799 84,040,770
Resident security deposits and deferred rental income 7,337,167 7,719,737
--------------- ---------------
Total liabilities 174,533,240 181,415,312
Commitments and contingencies -- --
Partners'/members' equity (deficit) (664,236,168) (680,904,518)
--------------- ---------------
Total liabilities and partners'/members' equity (deficit) $ 1,063,611,966 $ 1,044,342,059
=============== ===============
</TABLE>
See notes to combined financial statements
99.4-4
<PAGE> 5
Oxford Realty Financial Group Properties
(Oxford Properties)
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Eight months ended
Year ended August 31,
December 31, ---------------------------------
1999 2000 1999
------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Rental property operations:
Rental and other property revenues $ 331,788,069 $ 231,379,898 $ 218,897,900
Property and operating expenses (179,778,224) (120,553,992) (116,673,180)
Property management fees (14,898,568) (10,426,936) (9,421,543)
Depreciation (33,246,889) (22,594,771) (22,001,801)
------------- ------------- -------------
Income from property operations 103,864,388 77,804,199 70,801,376
------------- ------------- -------------
Interest expense - secured notes payable (107,861,833) (69,522,581) (68,155,276)
Interest expense - affiliates (13,787,772) (10,067,356) (8,466,189)
------------- ------------- -------------
(121,649,605) (79,589,937) (76,621,465)
------------- ------------- -------------
Loss from operations before
extraordinary item (17,785,217) (1,785,738) (5,820,089)
------------- ------------- -------------
Extraordinary item (7,883,150) -- --
------------- ------------- -------------
Net loss $ (25,668,367) $ (1,785,738) $ (5,820,089)
============= ============= =============
</TABLE>
See notes to combined financial statements
99.4-5
<PAGE> 6
Oxford Realty Financial Group Properties
(Oxford Properties)
COMBINED STATEMENTS OF CHANGES IN
PARTNERS'/MEMBERS' EQUITY (DEFICIT)
<TABLE>
<S> <C>
Balance, December 31, 1998 $(619,933,565)
Net loss (25,668,367)
Partner distributions (18,634,236)
-------------
Balance, December 31, 1999 (664,236,168)
Net loss (1,785,738)
Partner distributions (14,882,612)
-------------
Balance, August 31, 2000 (unaudited) $(680,904,518)
=============
Balance, December 31, 1998 $(619,933,565)
Net loss (5,820,089)
Partner distributions (15,798,464)
-------------
Balance, August 31, 1999 (unaudited) $(641,552,118)
=============
</TABLE>
See notes to combined financial statements
99.4-6
<PAGE> 7
Oxford Realty Financial Group Properties
(Oxford Properties)
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Eight months ended August 31,
Year ended ---------------------------------
December 31,
1999 2000 1999
------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (25,668,367) $ (1,785,738) $ (5,820,089)
Adjustments to reconcile net loss to net cash provided by
operating activities
Extraordinary item 7,883,150 -- --
Depreciation 33,246,889 22,594,771 22,001,801
Amortization 2,696,294 1,390,500 1,759,928
Mortgage interest converted to demand note 950,427 -- --
Changes in asset and liability accounts
(Increase) decrease in assets
Restricted cash (204,549) (443,878) (784,362)
Mortgage escrow deposits 2,844,746 (5,847,902) (1,374,634)
Funded reserves (5,043,315) (1,291,897) (5,654,249)
Other assets (6,908,861) 3,523,124 (4,262,152)
Increase (decrease) in liabilities
Accounts payable, accrued and other liabilities 11,100,066 1,308,399 4,420,941
Accrued interest payable - secured notes payable 321,009 (2,010,868) (1,668,271)
Accrued interest - notes and loans payable to affiliates 9,334,754 7,201,971 3,236,167
Resident security deposits and deferred rental income 676,658 382,570 880,881
------------- ------------- -------------
Net cash provided by operating activities 31,228,901 25,021,052 12,735,961
------------- ------------- -------------
Cash flows from investing activities
Purchase of real estate (42,693,237) -- (42,693,237)
Additions to real estate (6,605,799) (4,245,323) (384,010)
------------- ------------- -------------
Net cash used in investing activities (49,299,036) (4,245,323) (43,077,247)
------------- ------------- -------------
Cash flows from financing activities
Principal payments on notes and loans payable to affiliates (9,661,561) (338,667) (1,813,313)
Principal repayments on secured notes payable (34,423,056) (9,144,962) (28,023,542)
Proceeds from secured notes payable 85,621,815 -- 75,721,815
Distributions to partners and members (18,634,236) (14,882,612) (15,798,464)
------------- ------------- -------------
Net cash provided by (used in) financing activities 22,902,962 (24,366,241) 30,086,496
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH 4,832,827 (3,590,512) (254,790)
EQUIVALENTS
Cash and cash equivalents, beginning 27,603,842 32,436,669 27,603,842
------------- ------------- -------------
Cash and cash equivalents, end $ 32,436,669 $ 28,846,157 $ 27,349,052
============= ============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 108,379,985 $ 80,147,884 $ 72,462,366
============= ============= =============
Non cash transactions:
Conversion of prior years' and current year's
contingent and deferred interest to demand notes:
Prior years' contingent interest $ 7,883,150
Current year's contingent interest 950,427
Deferred interest 5,181,076
-------------
$ 14,014,653
=============
</TABLE>
See notes to combined financial statements
99.4-7
<PAGE> 8
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
On June 28, 2000, Apartment Investment and Management Company ("AIMCO")
and AIMCO Properties, L.P. ("AIMCO OP") and the principals of Oxford
Realty Financial Group, Inc. (ORFG) entered into definitive agreements
pursuant to which AIMCO acquired, on September 20, 2000, all of the
stock and interest held by officers and directors in the entities which
own and control Oxford Properties for $328 million. The Oxford
Properties are 167 apartment communities including 36,949 units,
located in 18 states. The properties are owned by 165 separate
partnerships or limited liability companies.
The combined financial statements include all the accounts of the
following operating partnerships and companies (Operating
Partnerships), all of which are under common management. All
intercompany balances and transactions have been eliminated.
The acquired ownership percentages are as follows:
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Abington II-Oxford Associates, LP 4.4167%
Abington-Oxford Associates, LP 6.4975%
Akron Nursing-Oxford LP 54.9467%
Akron One Retirement-Oxford, LP 66.5022%
Allentown-Oxford Associates 35.8137%
Allview-Oxford LP 62.8204%
Apollo-Oxford Associates LP 62.7909%
Augusta-Oxford Associates LP 15.8550%
Bayhead Village Associates LP 1.9290%
Beach-Oxford Associates LP 5.7292%
Bent Tree III-Oxford Associates, LP 95.0952%
</TABLE>
99.4-8
<PAGE> 9
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Bent Tree II-Oxford Associates, LP 5.4047%
Bent Tree-Oxford Associates, LP 2.1137%
Bethel Columbus-Oxford Associates, LP 7.1720%
Beville-Oxford LP 28.3292%
Blue Ash - Oxford Associates LP 7.2421%
Boynton Overlook-Oxford Associates 0.4836%
Brandermill-Oxford Limited Partnership 17.6893%
Brandon-Oxford Associates LP 29.7837%
Briarcliffe-Oxford Associates LP 14.5545%
Burke II-Oxford Associates 1.2492%
Burke-Oxford Associates 1.4635%
Butternut Creek Associates LDHA 4.6313%
Cameron-Oxford Associates II, LP 0.3866%
Cameron-Oxford Associates, LP 1.0000%
Carpenter-Oxford Associates II LP 12.3084%
Carrollwood Lakeside North Partners, Ltd. 100.0000%
Casselberry-Oxford Associates LP 15.4031%
Chantilly Partners LP 86.9331%
Charleston-Oxford Associates LP 6.0590%
Chesapeake-Oxford County Associates 1.1611%
Cheswick-Oxford Associates, LP 2.2994%
Chickasaw-Oxford Associates LP 41.6120%
Chimneytop-Oxford Associates 6.6980%
Cincinnati-Oxford Associates, LP 5.4047%
Cloverlane Four - Oxford LP 64.4000%
Cloverlane III-Oxford Associates 25.1239%
Colonel I-Oxford LP 75.8705%
Columbus III-Oxford Associates, LP 12.7739%
Couch-Oxford Associates LP 6.7698%
</TABLE>
99.4-9
<PAGE> 10
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Countrybrook-Oxford Associates 1.3528%
Dallas-Oxford Associates LP 12.7224%
Dayton III-Oxford Associates, LP 7.2420%
Dayton IV-Oxford, LP 50.4272%
Deercross-Oxford Associates, LP 22.3325%
Delta Square-Oxford, LP 31.0007%
Doyle Associates Limited Dividend Housing Association 13.0550%
Dutton Partners 35.6363%
Eden-Oxford Associates LP 1.3546%
Fairfield One-Oxford LP 50.2672%
Farmingdale-Oxford Associates 2.8739%
Fayette-Oxford Associates, LP 10.1546%
Fisherman's Village-Oxford Associates, LP 4.2532%
Florida House-Oxford Associates 1.6063%
Forest Gardens Associates 1.2492%
Fountain Place-Oxford Associates, LP 2.6975%
Fox Valley Two-Oxford LP 50.1612%
Fox Valley-Oxford LP 62.7909%
Foxfire LDHA 1.3456%
Fredericksburg-Oxford Associates 20.9092%
Gardenview-Oxford Associates 20.5398%
Gateway-Oxford Associates LP 1.3555%
Glenwood-Oxford Housing Association 11.4500%
Greenbriar-Oxford Associates, LP 1.4650%
Greensboro-Oxford Associates LP 27.9296%
Greenspring-Oxford Associates 1.2090%
Greenville-Oxford Associates LP 6.2344%
Gwyned Partners LP 91.2678%
Henrietta-Oxford Associates 1.2492%
Hillsborough-Oxford Associates LP 62.8136%
</TABLE>
99.4-10
<PAGE> 11
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Home-Oxford Associates LP 5.7940%
Hunt Club Partners, L.L.C 80.5930%
Jacaranda-Oxford LP 100.0000%
James-Oxford LP 62.8209%
Kenton-Oxford Associates 24.5000%
Kettering -Oxford Associates 7.1518%
Kings-Oxford Associates 14.5531%
Kinsey-Oxford Associates 1.9900%
Kirkman-Oxford Associates LP 14.5531%
Lake Ridge-Oxford Associates LP 12.3179%
Lakeridge Associates, a California Limited Partnership 41.3975%
Lansing-Oxford, LP 28.3618%
Lantana-Oxford Associates LP 41.6120%
Largo Partners L.L.C 81.7804%
Laurel-Oxford Associates LP 5.0556%
Lexington-Oxford Associates, LP 8.3815%
Lima-Oxford Associates 5.3751%
Long Creek-Oxford Associates LP 13.5059%
Longwood-Oxford Associates L.P. 79.4394%
Lynn-Oxford Associates LP 1.3555%
Massanutten Manor-Oxford Associates LP 1.3090%
Melbourne-Oxford Associates L.P. 6.0679%
Meridian Meadows-Oxford LP 49.9000%
Middletown-Oxford LP 62.8204%
Monroe-Oxford Associates LP 7.1343%
Mount Clare-Oxford Associates 1.2492%
Naples-Oxford LP 100.0000%
Nashua-Oxford Bay Associates 8.5447%
New Castle-Oxford Associates 5.3751%
Newington-Oxford Associates LP 1.2090%
</TABLE>
99.4-11
<PAGE> 12
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Newport-Oxford Associates 12.2972%
North Point-Oxford Associates LP 1.3528%
North Woods-Oxford Associates, LP 8.3815%
Oak Park - Oxford Associates LP 9.1163%
Ocala-Oxford LP 66.2522%
Okemos Station - Oxford Associates 1.3320%
Olde Towne Associates, LP 11.3976%
Oliver Associates 0.7790%
ORP Four, LP 16.1000%
ORP One, LLC 16.1000%
ORP Three, LLC 16.1000%
ORP Two, LLC 16.1000%
Oxford-Columbia Associates 1.7486%
Oxford-Kirkwood Associates 1.9168%
Palm Aire-Oxford LP 28.4220%
Palm Beach-Oxford LP 31.0739%
Parc Chateau Section I Associates 1.9900%
Parc Chateau Section II Associates 1.9900%
Parham-Oxford Associates 4.4757%
Park-North Oxford Associates 1.7819%
Pebble Point-Oxford Associates, LP 2.6975%
Peppermill Village-Oxford Associates 1.2400%
Pine Bluff Associates 1.1585%
Pinellas-Oxford Associates LP 12.4375%
Reddman-Oxford Associates LP 1.4892%
Renaissance-Oxford Associates LP 5.3370%
River's Edge Associates LDHA 1.5252%
Riverwood Associates 0.8009%
Roswell-Oxford Limited Partnership 62.8209%
Runaway Bay II-Oxford Associates 10.1541%
</TABLE>
99.4-12
<PAGE> 13
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Runaway Bay-Oxford Associates 8.3815%
Salem-Oxford Associates LP 7.8051%
San Bruno-Oxford LP 62.5682%
Scandia 13.4167%
Schaumburg-Oxford Limited Partnership 62.7910%
Schumaker Glen Associates 1.2492%
Seminole-Oxford Associates LP 23.7591%
Sharp-Leadenhall Associates 1.2492%
Singleton-Oxford Associates LP 22.0348%
Somerset-Oxford Associates 1.5398%
Southridge-Oxford LP 62.7596%
Spartanburg-Oxford LP 5.0550%
Spyglass-Oxford Associates, LP 2.6975%
St. Mary's-Oxford Associates LP 7.8051%
Sugar Bush-Oxford Associates 1.2400%
Summerwalk Properties, L.L.C 100.0000%
Sunnycrest Manor Associates 2.7313%
Suntree-Oxford Associates Limited Dividend
Housing Association 13.0440%
The Chimneys-Oxford Associates 1.3320%
The Courtyard-Oxford Associates 1.3330%
The Terraces Associates 1.2365%
Tidewater-Oxford LP 62.7004%
Travis One-Oxford LP 73.1209%
Trinity-Oxford Associates, LP 1.3577%
Underwood Associates LP 9.3980%
Village Oaks-Oxford Associates 1.1159%
Waters Landing Partners 84.1060%
Westchester-Oxford LP 25.9880%
Westridge-Oxford L.P. 62.7004%
Wickford Associates 3.9534%
</TABLE>
99.4-13
<PAGE> 14
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
<TABLE>
<CAPTION>
Ownership
Partnership percentage
----------- ----------
<S> <C>
Williamsburg-Oxford L.P. 66.4237%
Wind Drift-Oxford Associates, LP 1.2500%
Windridge-Oxford Associates Limited Partnership 7.1496%
Woodland Hills-Oxford Associates 2.7313%
Woods Edge-Oxford Associates, LP 1.2500%
</TABLE>
99.4-14
<PAGE> 15
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate
Real estate is carried at cost. Additions are recorded at cost and include
all major renewals and betterments. Maintenance, repairs and minor
replacements are expensed as incurred. Depreciation of buildings is computed
using principally the straight-line method, assuming varying useful lives
from 27.5 to 50 years. Depreciation of furniture and equipment is computed
using straight-line and accelerated methods over estimated useful lives of
three to ten years.
Cash Equivalents
The Operating Partnerships consider highly liquid investments with original
maturities of three months or less when acquired to be cash equivalents.
Restricted Cash
Restricted cash consists of tenant security deposits trust accounts.
Mortgage Escrow Deposits
Mortgage escrow deposits consist of tax and insurance impound accounts held
by lenders.
Funded Reserves
Funded reserves consist of replacements reserves, residual receipts deposits
and debt service escrows and reserves held by the lenders.
Deferred Financing Costs
Deferred financing costs are being amortized over the term of the underlying
debt using the straight-line method. The amortization expense is included in
interest expense - secured notes payable on the combined statements of
operations. The unamortized portion is included in other assets on the
accompanying combined balance sheets.
99.4-15
<PAGE> 16
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Syndication and Organization Costs
Costs attributed to the marketing and issuing of limited partnership
interests have been charged as a direct reduction of capital in accordance
with prevalent industry practice. Organization costs are expensed as
incurred.
Rental Revenues
Rental revenue is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the Operating
Partnerships and tenants of the properties are operating leases.
Income Taxes
No provision or benefit for income taxes has been included in these combined
financial statements since taxable income or loss passes through to, and is
reportable by, the partners/members on their respective income tax returns.
Use of Estimates
The preparation of combined financial statements in conformity with the
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 combined financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Interim Financial Information (Unaudited)
The unaudited combined balance sheet as of August 31, 2000 and the unaudited
combined statements of operations, changes in partners'/members' equity
(deficit) and cash flows for the eight months ended August 31, 2000 and
August 31, 1999 have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments of a normal recurring nature considered
necessary for a fair presentation have been included. Operating results for
the eight months ended August 31, 2000 are not necessarily indicative of
future operating results.
99.4-16
<PAGE> 17
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 3 - REAL ESTATE
Land, buildings and furniture, fixtures and equipment represent the
residential real estate properties, located throughout the United States,
and are collateral for the mortgages payable described in note 4.
Real estate consists of the following:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
---------------- ----------------
(Unaudited)
<S> <C> <C>
Land and land improvements $ 171,538,525 $ 172,037,557
Apartment buildings 1,232,468,574 1,229,894,684
Furniture and equipment 188,448,559 194,768,740
---------------- ----------------
1,592,455,658 1,596,700,981
Less accumulated depreciation (666,203,084) (688,797,855)
---------------- ----------------
$ 926,252,574 $ 907,903,126
================ ================
</TABLE>
NOTE 4 - SECURED NOTES PAYABLE
A summary of the mortgages made to the Operating Partnerships as of December
31, 1999 and August 31, 2000 is as follows, all of which are nonrecourse to
the Operating Partnerships:
<TABLE>
<CAPTION>
August 31,
December 31, 1999 2000
----------------- ----------------
(Unaudited)
<S> <C> <C>
Mortgages payable bearing interest at 6.1% to 8.7%, payable in monthly
installments of principal and interest with maturities beginning February
2008 through April 2026. The liability of the Operating Partnerships
under the notes is limited to the property and equipment collateralizing
the notes, lender assignment of rents and leases and other amounts
deposited with the lenders. $ 123,143,739 $ 122,387,548
</TABLE>
99.4-17
<PAGE> 18
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
------------ ------------
(Unaudited)
<S> <C> <C>
Mortgages payable financed by tax-exempt bonds issued by various local
Industrial Development Authorities with interest at floating rates (5.6%
at December 31, 1999 and 4.53% at August 31, 2000) payable interest only
with maturities ranging from February 2004 through December 2009. These
Operating Partnerships are subject to second mortgage agreements with
Continental Casualty Company (CNA), the surety of the bonds. The
Operating Partnerships are required to compute and remit to CNA annually
from 48% to 60% of net cash flow (as defined) as a bond maintenance fee
The agreements with the surety expire February 2004. The liability of the
Operating Partnerships under the notes is limited to the property and
equipment collateralizing the notes, lender assignment of rents and
leases and other amounts deposited with the lenders $182,055,000 $182,055,000
Mortgages payable (A-notes) financed by tax-exempt bonds issued by
various local Industrial Development Authorities, with interest at
floating rates not to exceed 5.6% (4% to 5.12% at December 31, 1999 and
4.87% to 5.54% at August 31, 2000), monthly payments of interest,
quarterly payments of principal commencing April 15, 2000, interest rates
adjusted each of the anniversary dates of the bonds. These Operating
Partnerships are also subject to second mortgages (B notes) which provide
for payment of interest to the extent of available cash flow (as
defined), interest rates
</TABLE>
99.4-18
<PAGE> 19
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
----------------- ---------------
(Unaudited)
<S> <C> <C>
that are determined as the differences between the combined rates (4.61%
- 8.38% at December 31, 1999 and 5.11% to 8.38% at August 31, 2000) on
the A and B notes. These notes mature at dates ranging from November 2006
to March 2007. The liability of the Operating Partnerships under the
notes is limited to the property and equipment collateralizing the notes,
lender assignment of rents and leases and other amounts deposited with
the lenders.
Through February 14, 1998, the bonds issued to finance the A and B notes
in the aggregate amounts of $64,116,450 and $50,514,521, respectively,
were held by Oxford Tax Exempt Fund II Limited Partnership (OTEF II), an
Oxford affiliate and owner of the bonds. On February 14, 1998, OTEF II,
in a transaction with three of the Operating Partnerships, securitized
the A note and retained interest in the B note. Pursuant to the
securitization, the interest on the A note was reset to the interest at
the Public Securities Association (PSA) weekly floating bond rate plus 90
basis points (4.52% at December 31, 1999 and 4.23% at August 31, 2000).
Because the combined rate is still in effect for the A and B notes, the B
notes' interest expense is adjusted for the effect of any rate change on
the A note. The effective rates of interest on the B notes ranged from
8.15% - 12.5% through December 31, 1999 and 6.95% - 10.6% through August
31, 2000. All other terms of the mortgage notes remain the same. $ 243,924,176 $ 242,980,792
</TABLE>
99.4-19
<PAGE> 20
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
-------------- --------------
(Unaudited)
<S> <C> <C>
Mortgages payable in the aggregate original amount of $34,770,000,
financed though tax-exempt bonds issued by various municipalities and
housing agencies and held by OTEF II, with rates of 8.25%, contingent
interest from cash flow up to 7.75% and maturing in November 2009. In
November 1999, the bonds were remarketed, resulting in changes in the
base mortgage interest rates to rates ranging from 7.49% - 9% and the
prospective elimination of the contingent interest provisions. The
mortgages are collateralized by a first mortgage lien on the property and
an assignment of rents and leases.
As a result of the remarketing of the bonds, all of the prior
years' contingent and deferred interest as of December 31, 1999 became
immediately due. The Operating Partnerships executed demand notes to OTEF
II in the aggregate amount of $14,014,653. The demand notes provide for
interest to be computed at the short-term Applicable Federal Rate (AFR)
in effect each month and monthly payments on the demand notes from
available cash flow after payment of the base mortgage interest. The
demand notes payable are included in notes payable to affiliates
in the accompanying combined balance sheets. $ 34,770,000 $ 34,770,000
</TABLE>
99.4-20
<PAGE> 21
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
---------------- ---------------
(Unaudited)
<S> <C> <C>
Mortgages payable bearing interest from 1% to 12% are payable in
monthly installments of principal and interest in varying amounts due in
full beginning in January 2007 through February 2032. These mortgages are
insured by the U.S. Department of Housing and Urban Development (HUD) or
by various state housing agencies. The liability of the Operating
Partnerships under the notes is limited to the property and equipment
collateralizing the notes, lender assignment of rents and leases and
other amounts deposited
with the lenders. $ 263,352,754 $ 260,136,774
Mortgages payable, financed by tax-exempt bonds issued by various local
Industrial Development Authorities with interest at varying floating or
fixed rates (3.85% to 9% at December 31, 1999 and 4.34% to 9% at August
31, 2000). Accrued interest and principal due in full beginning January
2003 through February 2017. Certain mortgages require payments of
principal and interest in varying amounts commencing at various points
during the terms of the mortgages and continuing until maturity, at which
time all principal and accrued interest is due. The liability of the
Operating Partnerships under the notes is limited to the property and
equipment collateralizing the notes, lender assignment of rents and
leases and other amounts
deposited with the lenders. 238,613,295 237,424,793
</TABLE>
99.4-21
<PAGE> 22
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
---------------- ---------------
(Unaudited)
<S> <C> <C>
Mortgages payable bearing interest from 6.58% to 10% with accrued
interest and principal due in full beginning August 2001 through December
2027. Certain mortgages require payments of principal and interest in
varying amounts commencing at various points during the terms of the
mortgages and continuing until maturity, at which time all principal and
accrued interest is due. The liability of the Operating Partnerships
under the notes is limited to the property and equipment collateralizing
the notes, lender assignment of rents and leases and other amounts
deposited with the lenders. $ 350,626,961 $ 347,319,761
In connection with acquisitions and refinancing of certain properties,
OTEF II provided second mortgages to the Operating Partnerships. The
mortgages provide for monthly payments of interest only to the extent of
available cash flow (as defined), interest rates ranging from 9.3% to 12%
and maturities ranging from October 2005 through December 2015. The
liability of the Operating Partnerships under the notes is limited to the
property and equipment collateralizing the notes, lender assignment of
rents and leases and other amounts deposited with the lender. 25,889,770 26,156,065
---------------- ---------------
$ 1,462,375,695 $ 1,453,230,733
================ ===============
</TABLE>
99.4-22
<PAGE> 23
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 4 - SECURED NOTES PAYABLE (Continued)
The scheduled principal amortization and balloon payments of the secured
notes payable for the five years following December 31, 1999 are as follows:
Year ended December 31, 2000 $ 23,290,000
2001 29,422,000
2002 36,663,000
2003 33,717,000
2004 120,069,000
Under various agreements with the above lenders, the properties are required
to make monthly escrow deposits for taxes, insurance and replacement of
project assets, and are subject to restrictions as to operating policies,
rental charges, operating expenditures and distributions to
partners/members.
Management believes it is not practicable to estimate the fair value of
mortgages since similar financing is not currently available to the
Operating Partnerships.
99.4-23
<PAGE> 24
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 5 - NOTES AND LOANS PAYABLE TO AFFILIATES
The following is a summary of notes and loans made to the Operating
Partnerships by the general partner or its affiliates.
<TABLE>
<CAPTION>
December 31, 1999 August 31, 2000
------------------- -------------------
(Unaudited)
<S> <C> <C>
Working capital advances and loans $ 28,490,384 $ 28,296,989
Operating expense loans 37,819,194 37,689,708
Senior notes 5,260,426 5,244,640
Residual receipts and construction completion notes 1,626,048 1,626,048
OTEF II loans 14,976,627 14,976,627
Other notes and loans 2,766,520 2,766,520
------------------ -----------------
$ 90,939,199 $ 90,600,532
================== =================
</TABLE>
Working Capital Advances and Loans
Various affiliates of Oxford Properties (Oxford) have provided working
capital advances and loans which are repayable from surplus cash (as
defined). Some of the advances and loans bear interest at a range of the
prime rate to 2% above the prime rate (prime was 8.5% at December 31, 1999
and 9.5% at August 31, 2000). Other advances and loans are noninterest
bearing.
Operating Expense Loans
Pursuant to operating deficit guarantee agreements between Oxford Management
Company, Inc. (OMC) and various Operating Partnerships, OMC has provided
operating expense loans. The loans, which range from noninterest bearing to
rates from 6% to prime rates and 2% over prime (prime was 8.5% at December
31, 1999 and 9.5% at August 31, 2000), are payable from distributable net
cash flow (as defined in the partnership agreements). OMC is not required to
fund future operating deficits under these obligations as the terms of these
agreements have expired.
99.4-24
<PAGE> 25
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 5 - NOTES AND LOANS PAYABLE TO AFFILIATES (Continued)
Senior Notes
Various affiliates of Oxford Properties have provided loans (the "senior
notes") to various Operating Partnerships (which had mortgages insured by
HUD) at final endorsements of these mortgages. Interest at varying rates per
annum and principal are repayable in level monthly payments over terms equal
to the terms of the respective permanent loans and prior to any
distributions to partners, subject to applicable HUD regulations. The senior
notes provide that no payments shall be made thereon, either to principal or
interest, during any period when payments of principal and/or interest on
the respective permanent loans or the HUD mortgage insurance premium are not
current. Unpaid principal and interest are payable from surplus cash in the
next year in which funds are available.
Residual Receipts and Construction Completion Notes
As provided in certain partnership agreements, Oxford advanced funds to some
of the partnerships to pay excess development and construction costs. The
residual receipts loans are noninterest bearing and are repayable from
available cash upon refinancing or sale of the respective project.
OTEF II Loans
OTEF II has provided unsecured demand loans to certain Operating
Partnerships. The loans provide for monthly payments of interest only to the
extent of available cash flow and floating interest rates ranging from 5% to
6% at December 31, 1999 and 5.13% to 6.29% at August 31, 2000.
Other Notes and Loans
The general partners or their affiliates have advanced other funds to
certain Operating Partnerships. The loans bear interest at the prime rate of
interest plus 1% (prime was 8.5% and 9.5% at December 31, 1999 and August
31, 2000, respectively). These loans are repayable from distributable net
cash flow of the partnerships or from proceeds from sale of the rental
property or refinancing of the related debt.
99.4-25
<PAGE> 26
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 5 - NOTES AND LOANS PAYABLE TO AFFILIATES (Continued)
Management believes it is not practicable to estimate the fair value of the
notes and loans payable since similar financing is not currently available
to the Operating Partnerships.
NOTE 6 - FEES PAYABLE TO DEVELOPER AND AFFILIATES
Certain of the Operating Partnerships have amounts due the developer and
affiliates. These amounts represent earned but unpaid fees and interest
payable to various affiliates of the Oxford Properties in accordance with
the respective partnership agreements and construction contracts. These
amounts were originally payable from capital contributions. Oxford and its
affiliates have deferred payment of these fees to be paid from distributable
net cash flow or the proceeds of the sale or refinancing of the properties,
after the investor limited partners receive certain priority distributions.
Interest ranges from noninterest bearing to 8% per annum. Fees payable to
developer and affiliates are included in accounts payable, accrued and other
liabilities in the accompanying combined balance sheets. The balances of
fees payable and accrued interest at December 31, 1999 and August 31, 2000
are as follows:
<TABLE>
<CAPTION>
1999 2000
------------- -------------
(Unaudited)
<S> <C> <C>
Balances
Principal $ 16,969,678 $ 16,969,678
Accrued interest 11,424,553 13,330,722
------------- -------------
$ 28,394,231 $ 30,300,400
============= =============
</TABLE>
99.4-26
<PAGE> 27
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 7 - RELATED PARTY TRANSACTIONS
The general partners of the Operating Partnerships are officers and/or
affiliates of the Oxford Properties and/or AIMCO. For the year ending
December 31, 1999 and for the eight months ending August 31, 2000 and 1999
the Operating Partnerships incurred the following amounts to the general
partners and/or affiliates in connection with services provided as follows:
<TABLE>
<CAPTION>
Year Ended For the Eight Months Ended
December 31, ---------------------------------
1999 August 31, 2000 August 31, 1999
----------------- --------------- ---------------
(Unaudited)
<S> <C> <C> <C>
NHP Fees
Property management fees $ 12,365,958 $ 8,551,734 $ 8,285,192
Accounting and data
processing fees 763,795 508,469 511,697
Cicoa fees 881,229 333,604 590,421
Incentive management fees 588,506 3,080 394,501
Other nhp fees 313,817 218,076 210,258
Oxford Fees
Asset management fees 2,830,623 1,892,498 1,896,519
Supplemental asset management
fees/ plan administration fee 3,026,778 2,086,856 2,017,852
Investor services fees/
partnership management fees 542,847 387,178 361,898
Participation fee 842,892 872,629 564,738
Additional asset management fees 272,200 118,426 182,374
</TABLE>
The NHP property management fees and the portion of the asset management
fees relating to property management services are included in property
management fees expense on the combined statements of operations. The
balance of the above fees are included in property and operating expenses on
the combined statements of operations.
99.4-27
<PAGE> 28
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 7 - RELATED PARTY TRANSACTIONS (Continued)
Property Management Contract
The Operating Partnerships have entered into agreements with NHP Management
Company (NHP), an affiliate of Aimco, to provide property management
services to the Operating Partnerships. The fees for such services are based
either on 2.61% to 9% of gross collections or on a flat monthly rate. In
addition, NHP Management Company earns monthly accounting and data
processing fees of $2.00 to $4.50 per unit per month. The property
management agreements expire December 31, 2000, at which time they can be
automatically renewed for one-year periods, subject to certain limitations.
Incentive Management Fee
For certain Operating Partnerships, NHP Management Company earns an
incentive management fee based on the respective property's performance. The
fee is equal to a specified percentage of distributable net cash flow (as
defined) after certain priorities.
Capital Improvement Consulting, Oversight and Administration (CICOA)
Fee
NHP Management Company receives a fee for its services in special planning
and oversight in connection with capital improvements made to the rental
properties. The fee is equal to 7.46% to 10% of the actual cost of certain
capital improvements and is payable from operations or, where restricted by
governmental agencies, from surplus cash.
Other NHP Management Company Fees
For certain Operating Partnerships, NHP Management Company earns annual
audit preparation fees of $895 to $1,500 per property. In addition, for
certain properties, NHP receives a cash management fee equal to 1.12% of the
average monthly investment portfolio (computed on an annual basis) managed
by NHP.
99.4-28
<PAGE> 29
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 7 - RELATED PARTY TRANSACTIONS (Continued)
Asset Management Fees
Certain Operating Partnerships have entered into asset management Agreements
with Oxford Realty Financial Group, Inc. (ORFG) to provide certain
supervisory and asset management services to the partnerships which
previously had been provided by the former property management agent, Oxford
Management Company, Inc. (OMC), but are not provided by NHP Management
Company, including overseeing the property manager. The fees for such
services consist of an amount equal to 34.1% of all fees payable to NHP and
payable as operating expenses.
For certain Operating Partnerships, ORFG provides these services pursuant to
contractual arrangements between NHP Management Company and ORFG. Under
these agreements, NHP Management Company pays to ORFG, from its own funds,
fees based on a percentage of the fee revenues paid by the partnership to
NHP Management Company. Those partnerships have no responsibility for
payments to ORFG for these services.
Supplemental Asset Management Fees
The Operating Partnerships pay ORFG supplemental asset management fees for
consultation and asset management services. The fee is equal to 1% of the
gross receipts of the project and is deferred and payable from distributable
net cash flow (as defined). Any unpaid fee is subject to interest charges
ranging from the prime rate to 2% above the prime rate.
Investor Services Fees/Partnership Management Fees
Certain of the Operating Partnerships pay to ORFG an investor services fee
or partnership management fee for its services in preparing necessary
reports for the limited partners and in communicating with them concerning
the partnerships' affairs. The fee is either a specified amount or may be
increased by the same percentage as the average percentage increase in the
property's rent.
99.4-29
<PAGE> 30
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 7 - RELATED PARTY TRANSACTIONS (Continued)
Participation Fee
For certain Operating Partnerships, in lieu of a refinancing fee for ORFG's
services in a refinancing transaction, an Oxparc L.L.C. entity, an affiliate
of ORFG, receives a participation fee equal to a specified percentage of
distributable net cash flow from operations after certain priorities. The
fee earned is determined at the time at which the cash distributions to the
partners are made.
Additional Asset Management Fees
For certain Operating Partnerships, pursuant to partnership's refinancing,
for its services rendered in arranging and closing the refinancing, ORFG
earns an additional asset management fee equal to a percentage of the new
mortgage amount. The fee is payable (usually over a period of time) from
distributable net cash flow, as defined.
NOTE 8 - EXTRAORDINARY ITEMS
The extraordinary item of $7,883,150 for the year ended December 31, 1999
consists of San Bruno-Oxford LP's (San Bruno) prior years' contingent
interest expense payable to OTEF II under the terms of the original mortgage
debt. San Bruno had not recorded any contingent interest expense in prior
years due to the respective payment not being probable. Upon remarketing of
the underlying bonds, all of the prior year's contingent and deferred
interest became immediately due. San Bruno executed a demand note to OTEF II
in the amount of $8,833,577, which represents the current year's and all
prior years' unpaid contingent and deferred interest. Management projects
the partnership to have sufficient cash flow available to repay the demand
note. As a result of these new events, San Bruno has recognized a change in
accounting estimate and has recorded the entire $8,833,577 in the current
year. $7,883,150 represents the portion of contingent interest applicable to
prior years.
99.4-30
<PAGE> 31
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Housing Assistant Payment Contract Agreements
The rents of the Operating Partnerships are subject to specific laws,
regulations and agreements with federal and state agencies. As of December
31, 1999, certain Operating Partnerships receive project based rental
subsidy payments pursuant to a subsidy agreement under Section 8 of Title II
of the Housing and Community Development Act of 1974 ("Section 8") which
provides assistance payments to the Operating Partnerships on behalf of
qualified tenants. Since October 1997, HUD has issued a series of directives
related to project based Section 8 contracts that define owners'
notification responsibilities, advise owners of project based Section 8
properties of what their options are regarding the renewal of Section 8
contracts, provide guidance and procedures to owners, management agents,
contract administrators and HUD staff concerning renewal of Section 8
contracts, provide policies and procedures on setting renewal rents and
handling renewal rent adjustments and provide the requirements and
procedures for opting-out of a Section 8 project based contract. The
Operating Partnerships cannot reasonably predict legislative initiatives and
government budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could
adversely affect the future net operating income and debt structure of the
Operating Partnerships currently receiving such subsidies.
Lender Restrictions and Requirements
The Operating Partnerships have various financing structures which include:
1) Mortgages insured by the Federal Housing Administration (FHA) or
HUD generally under Sections 223(f), 221(d)(4) and 236 of the
National Housing Act;
2) Regulatory agreements with FHA and HUD which provide monthly
interest reduction subsidies as described above; and
3) Land use restriction agreements with local Industrial Development
Authorities and lenders as described in Note 4.
99.4-31
<PAGE> 32
Oxford Realty Financial Group Properties
(Oxford Properties)
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 2000 and 1999
and for the eight months then ended are unaudited)
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
Lender Restrictions and Requirements (Continued)
These financing structures subject the Operating Partnerships to various
requirements and restrictions including:
1) The rental of not less than 20% of the dwelling units to
individuals or families who qualify as low- or moderate-income
tenants;
2) Establishing maximum basic rental rates based on tenant income,
and requiring amounts in excess of basic rents to be remitted to
HUD, after offsetting for partial vacancies and uncollectible
rents;
3) Restrictions on the amount of cash flow which may be distributed
to partners; and
4) Restrictions of the sale of the apartment complex.
NOTE 10 - CONCENTRATION OF CREDIT RISK
Certain Operating Partnerships maintain their operating account balances in
various accounts at various banks. The balances in the accounts are insured
by the Federal Deposit Insurance Corporation (FDIC) up to a maximum of
$100,000. Management does not believe there is any risk of losses in these
accounts.
99.4-32
