<PAGE> 1
EXHIBIT 99.1
COMBINED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
OXFORD HOLDING CORPORATION AND
SUBSIDIARIES, OXFORD REALTY FINANCIAL
GROUP, INC. AND SUBSIDIARIES, ZIMCO ENTITIES
AND OXFORD EQUITIES CORPORATION III
DECEMBER 31, 1999 AND
AUGUST 31, 2000 AND AUGUST 31, 1999
99.1-1
<PAGE> 2
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 99.1-3
COMBINED FINANCIAL STATEMENTS
COMBINED BALANCE SHEETS 99.1-4
COMBINED STATEMENTS OF OPERATIONS 99.1-5
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS'
AND PARTNERS' EQUITY (DEFICIT) 99.1-6
COMBINED STATEMENTS OF CASH FLOWS 99.1-7
NOTES TO COMBINED FINANCIAL STATEMENTS 99.1-9
</TABLE>
99.1-2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
Oxford Holding Corporation and Subsidiaries,
Oxford Realty Financial Group, Inc. and Subsidiaries, ZIMCO
Entities and Oxford Equities Corporation III
We have audited the accompanying combined balance sheet of Oxford
Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc. and
Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III as of December
31, 1999, and the related combined statements of operations, changes in
stockholders' and partners' equity (deficit) and cash flows for the year then
ended. These combined financial statements are the responsibility of the
Companies' 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 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
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
Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc. and
Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III as of December
31, 1999, and the result of their operations, changes in stockholders' and
partners' equity (deficit) 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
99.1-3
<PAGE> 4
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
-------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate, net of accumulated depreciation $ 223,890,954 $ 219,768,924
Investments in unconsolidated subsidiaries 20,849 20,849
Notes receivable from unconsolidated real estate partnerships 18,968,181 17,721,066
Notes receivable from and advances to unconsolidated subsidiaries 176,372 162,632
Cash and cash equivalents 20,593,341 23,115,939
Restricted cash 1,531,188 1,739,092
Mortgage escrow deposits 2,594,992 3,835,347
Debt service reserves and replacement reserves 9,628,909 10,501,953
Deferred tax asset 6,765,000 5,189,000
Other assets 16,696,033 14,498,140
-------------- --------------
Total assets $ 300,865,819 $ 296,552,942
============== ==============
LIABILITIES AND STOCKHOLDERS' AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Secured notes payable $ 380,136,449 $ 378,873,955
Unsecured short-term financing 373,461 373,461
Notes payable to affiliates 74,036,961 74,100,823
-------------- --------------
Total indebtedness 454,546,871 453,348,239
Losses in excess on investments in unconsolidated real estate partnerships 38,418,111 37,594,861
Accounts payable, accrued and other liabilities 18,519,312 22,061,288
Accrued interest - notes payable to affiliates 51,216,057 60,147,931
Accrued interest - secured notes payable 3,182,214 2,046,822
Resident security deposits and deferred rental income 1,214,641 1,318,985
-------------- --------------
Total liabilities 567,097,206 576,518,126
-------------- --------------
Commitments and contingencies -- --
Stockholders' and partners' equity (deficit):
Common stock 172 172
Additional paid in capital 12,269,869 12,269,869
Notes receivable on common stock purchases (80,358) (80,358)
Accumulated deficit (278,421,070) (292,154,867)
-------------- --------------
Total stockholders' and partners' equity (deficit) (266,231,387) (279,965,184)
-------------- --------------
Total liabilities and stockholders' and partners' equity (deficit) $ 300,865,819 $ 296,552,942
============== ==============
</TABLE>
See notes to combined financial statements
99.1-4
<PAGE> 5
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Eight months Eight months
Year ended ended ended
December 31, August 31, August 31,
1999 2000 1999
------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Rental property operations:
Rental and other property revenues $ 76,087,095 $ 52,667,384 $ 49,826,356
Property and operating expenses (39,932,183) (25,777,134) (23,453,854)
Property management fees (3,536,502) (2,422,873) (2,309,177)
Depreciation (7,223,051) (4,901,459) (5,012,560)
------------- ------------- -------------
Income from property operations 25,395,359 19,565,918 19,050,765
------------- ------------- -------------
Service company business:
Management fees and other income 9,499,546 5,899,873 5,753,301
Management and other expenses (13,106,796) (9,581,023) (6,339,713)
------------- ------------- -------------
Loss from service company business (3,607,250) (3,681,150) (586,412)
------------- ------------- -------------
General and administrative expenses (1,415,337) (1,136,494) (1,095,068)
Interest expense - secured notes payable (38,503,564) (24,518,829) (22,710,370)
Interest expense - notes payable to affiliates (1,997,095) (1,386,123) (1,030,809)
Interest income 912,838 602,910 555,515
Equity in earnings (losses) of unconsolidated real estate
partnerships and subsidiaries (295,372) 180,671 (241,862)
------------- ------------- -------------
(41,298,530) (26,257,865) (24,522,594)
------------- ------------- -------------
Loss from operations (19,510,421) (10,373,097) (6,058,241)
Gain on forgiveness of debt 1,378,187 312,546 248,650
Loss on disposition of properties (599,660) (844,773) --
------------- ------------- -------------
Loss before extraordinary item and
(provision) benefit for taxes (18,731,894) (10,905,324) (5,809,591)
Extraordinary item (7,883,150) -- --
------------- ------------- -------------
Loss before (provision) benefit for taxes (26,615,044) (10,905,324) (5,809,591)
(Provision) benefit for taxes 119,524 (1,575,681) 89,643
------------- ------------- -------------
Net loss $ (26,495,520) $ (12,481,005) $ (5,719,948)
============= ============= =============
</TABLE>
See notes to combined financial statements
99.1-5
<PAGE> 6
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' AND PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Notes
receivable
Common Additional on common Accumulated
stock paid in capital stock purchases deficit Total
------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 (unaudited) $ 172 $ 12,269,869 $ (80,358) $ (246,617,556) $(234,427,873)
Net loss -- -- -- (26,495,520) (26,495,520)
Dividends and distributions -- -- -- (5,307,994) (5,307,994)
------------- --------------- --------------- --------------- -------------
Balance December 31, 1999 172 12,269,869 (80,358) (278,421,070) (266,231,387)
Net loss -- -- -- (12,481,005) (12,481,005)
Dividends and distributions -- -- -- (1,252,792) (1,252,792)
------------- --------------- --------------- --------------- -------------
Balance August 31, 2000 (unaudited) $ 172 $ 12,269,869 $ (80,358) $ (292,154,867) $(279,965,184)
============= =============== =============== =============== =============
Balance December 31, 1998 (unaudited) $ 172 $ 12,269,869 $ (80,358) $ (246,617,556) $(234,427,873)
Net loss -- -- -- (5,719,948) (5,719,948)
Dividends and distributions -- -- -- (4,222,071) (4,222,071)
------------- --------------- --------------- --------------- -------------
Balance August 31, 1999 (unaudited) $ 172 $ 12,269,869 $ (80,358) $ (256,559,575) $(244,369,892)
============= =============== =============== =============== =============
</TABLE>
See notes to combined financial statements
99.1-6
<PAGE> 7
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Eight months Eight months
Year ended ended ended
December 31, August 31, August 31,
1999 2000 1999
--------------- --------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (26,495,520) $ (12,481,005) $ (5,719,948)
--------------- --------------- ---------------
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities
Extraordinary item 7,883,150 -- --
Depreciation and amortization 7,856,105 5,134,347 5,318,071
Mortgage interest converted to demand note 950,427 -- --
Changes in fair value of notes receivable (1,310,761) (1,247,115) (1,453,542)
Loss on disposition of properties 599,660 844,773 --
Equity in losses of unconsolidated real estate
partnerships and subsidiaries 295,372 (180,671) 241,862
Gain on early extinguishment of debt (1,378,187) (312,546) (248,650)
Changes in operating assets and operating liabilities 7,055,280 12,815,588 10,542,238
--------------- --------------- ---------------
Total adjustments 21,951,046 17,054,376 14,399,979
--------------- --------------- ---------------
Net cash provided by (used in) operating activities (4,544,474) 4,573,371 8,680,031
--------------- --------------- ---------------
Cash flows from investing activities
Purchases of real estate (742,906) (1,685,349) (78,248)
Purchase of common stock, notes receivable, general
and limited partnership interests and other assets (928) -- (928)
Proceeds from repayment of notes receivable 2,116,419 13,740 2,118,306
Distributions received from investments in real estate
partnerships 3,831,085 1,702,122 1,007,545
--------------- --------------- ---------------
Net cash provided by (used in) investing activities 5,203,670 30,513 3,046,675
--------------- --------------- ---------------
</TABLE>
See notes to combined financial statements
99.1-7
<PAGE> 8
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial Group, Inc.
and Subsidiaries, ZIMCO Entities and Oxford Equities Corporation III
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Eight months Eight months
Year ended ended ended
December 31, August 31, August 31,
1999 2000 1999
-------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from financing activities
Proceeds from secured notes payable $ 26,990,000 $ -- $ 20,090,000
Principal repayments on secured notes payable (18,830,596) (1,262,494) (20,661,179)
Proceeds from notes payable to affiliates 100,000 531,887 1,087,179
Principal repayments on notes payable to affiliates (596,858) (42,498) (596,858)
Payoff of unsecured short-term financing (168,125) (55,389) (170,906)
Payment of loan costs (143,576) -- (143,576)
Payment of distributions to members and partners (5,009,466) (1,252,792) (4,222,071)
Dividend paid (235,178) -- --
-------------- -------------- --------------
Net cash provided by (used in) financing activities 2,106,201 (2,081,286) (4,617,411)
-------------- -------------- --------------
Net increase in cash and cash equivalents 2,765,397 2,522,598 7,109,295
Cash and cash equivalents at beginning of year 17,827,944 20,593,341 17,827,944
-------------- -------------- --------------
Cash and cash equivalents at end of year $ 20,593,341 $ 23,115,939 $ 24,937,239
============== ============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 25,789,350 $ 17,732,624 $ 17,192,900
============== ============== ==============
Taxes paid $ 190,392 $ -- $ --
============== ============== ==============
Non-cash financing activities:
Dividends declared but unpaid (included in accounts
payable, accrued and other liabilities) $ 298,528 $ -- $ --
============== ============== ==============
Conversion of prior and current years' 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
99.1-8
<PAGE> 9
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The combined financial statements include the accounts of Oxford Holding
Corporation and Subsidiaries ("OHC"), Oxford Realty Financial Group, Inc.
and Subsidiaries ("ORFG"), ZIMCO Entities and Oxford Equities Corporation
III ("OEC III") (collectively, the "Oxford Group"). Combined financial
statements have been presented as these entities have been under common
control for all periods presented. All significant intercompany
transactions and accounts have been eliminated.
Oxford Holding Corporation and Subsidiaries
OHC was created in connection with a restructuring of Oxford Corporation
and its subsidiaries (collectively, "Oxford"), effective December 10, 1993
(the "Restructuring"). All significant intercompany transactions and
accounts have been eliminated.
OHC's principal lines of business include the following:
INVESTMENT IN PROPERTIES: OHC holds all of the common stock of certain
subsidiaries that serve as general partners ("GP Subsidiaries") of
approximately 120 limited partnerships that own apartment and senior living
communities in 17 states, with approximately 20,000 dwelling units
("Affiliated Partnerships"). In addition, OHC subsidiaries hold limited
partner interests in these and other real estate partnerships. As general
partners of the Affiliated Partnerships, these entities receive partnership
cash distributions and an allocation of the taxable income (loss) generated
by the Affiliated Partnerships in which they hold interests. Through its
subsidiaries, OHC also owns a number of receivable interests, including
working capital and operating deficit loans previously advanced to certain
Affiliated Partnerships, and various subordinated and/or deferred fees
payable by certain Affiliated Partnerships.
99.1-9
<PAGE> 10
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (Continued)
Oxford Holding Corporation and Subsidiaries (Continued)
REAL ESTATE SERVICES: Through the effective date of the Restructuring, an
Oxford affiliate provided property management services to the Affiliated
Partnerships. In connection with the Restructuring, Oxford and certain
affiliates sold Oxford's property management operation to affiliates of
National Housing Partnership ("NHP"). Since the effective date of the
Restructuring, NHP affiliates have been providing property management
services to the Affiliated Partnerships. Through the effective date of the
Restructuring, an Oxford affiliate provided asset management services to
many of the Affiliated Partnerships. The transfer of all real
estate-related services and personnel was completed by June 1994.
Subsequent to June 1994, neither OHC nor any of its subsidiaries had any
employees.
Oxford Realty Financial Group, Inc. and Subsidiaries
ORFG was formed under the Maryland General Corporation Law on March 24,
1993 to own interests in real property and to provide investment management
services to owners and managers of real property. ORFG began operations on
December 10, 1993.
ORFG has acquired ownership interests in a series of limited liability
companies ("LLCs"), limited partnerships and corporations. The purpose of
these entities is to act as general or limited partners in current and
future real estate partnerships sponsored by ORFG, and its affiliates. All
significant intercompany transactions and accounts have been eliminated.
ZIMCO Entities
The ZIMCO entities consist of approximately 68 entities organized to hold
interests in varying operating partnerships that own and operate rental
real estate.
Oxford Equities Corporation III
OEC III was formed to invest in various operating partnerships that own and
operate rental real estate.
99.1-10
<PAGE> 11
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate
Land, buildings and furniture, fixtures and equipment relate to those
Partnerships in which the Oxford Group has a majority interest and are
carried at cost. All major renewals and betterments are capitalized.
Maintenance, repairs and minor replacements are expensed as incurred.
Depreciation of buildings is computed using the straight-line method,
assuming varying useful lives ranging from 27.5 to 50 years. Furniture,
fixtures and equipment are depreciated using an accelerated method,
assuming estimated useful lives of three to ten years.
Investments in Unconsolidated Real Estate Partnerships and Subsidiaries
The Oxford Group accounts for its investment in unconsolidated real estate
partnerships and subsidiaries using the equity method of accounting due to
its lack of significant control over major decisions of the unconsolidated
real estate partnerships and subsidiaries. Under the equity method, the
initial investment is recorded at cost, increased or decreased by the
Oxford Group's share of income or losses, and decreased by distributions
and syndication costs. Since the Oxford Group holds a general partner
interest in the Affiliated Partnerships and subsidiaries, the investment
balance has been reduced below zero.
Notes Receivable from Unconsolidated Real Estate Partnerships
Notes receivable are recorded at their fair value using estimated
discounted cash flows.
Cash and Cash Equivalents
The Oxford Group considers all highly liquid investments with initial
maturities of 90 days or less when acquired to be cash equivalents.
99.1-11
<PAGE> 12
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Financing Costs
Certain costs of obtaining the financing arrangements of the Affiliated
Partnerships have been capitalized and are amortized to interest expense
using the straight-line method, which approximates the effective interest
method, over the appropriate term of the related debt. Deferred financing
costs are included in other assets in the accompanying combined balance
sheets.
Revenue Recognition
Management fees and other income are recognized when earned. Property owned
by the Affiliated Partnerships is subject to numerous tenant leasing
arrangements having initial terms of one year or less. Rental revenue is
recognized as rentals become due. Rental payments received in advance are
deferred until earned. All leases between the Affiliated Partnerships and
the tenants are operating leases. Interest income on notes receivable is
recognized when earned.
Income Taxes
Income taxes are recognized differently for certain entities within the
Oxford Group. The entities structured as partnerships, S corporations and
Limited Liability Companies are not subject to income tax and, accordingly,
no provision has been recorded for Federal or state income tax purposes.
The partners and shareholders are individually responsible for reporting
their share of taxable income on their income tax returns.
The entities structured as corporations account for income taxes in
accordance with the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." Deferred taxes
are provided on an asset and liability method whereby deferred tax assets
and liabilities are recognized for temporary differences, operating losses
and tax credit carryforwards. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
99.1-12
<PAGE> 13
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 reported amounts of revenues 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 stockholders' and
partners' 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.
NOTE 3 - REAL ESTATE
Land, buildings and furniture, fixtures and equipment represent the
residential real estate owned by the 22 Affiliated Partnerships, located
throughout the United States, and are collateral for the mortgages payable
described in note 5.
99.1-13
<PAGE> 14
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 3 - REAL ESTATE (Continued)
Land, buildings and furniture, fixtures and equipment consist of the
following:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
--------------- ---------------
(unaudited)
<S> <C> <C>
Land $ 41,660,910 $ 41,660,910
Buildings 265,269,466 266,046,498
Furniture, fixtures and equipment 42,733,073 42,735,470
--------------- ---------------
349,663,449 350,442,878
Accumulated depreciation (125,772,495) (130,673,954)
--------------- ---------------
$ 223,890,954 $ 219,768,924
=============== ===============
</TABLE>
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS
The Oxford Group has ownership interests (generally one to five percent) in
numerous partnerships (collectively, the "Partnerships," and individually,
the "Partnership") which own multi-family apartment properties located
throughout the United States. As of December 31, 1999, the Oxford Group
also owns majority interests in 22 real estate partnerships (primarily
multi-family housing developments) which are consolidated for financial
reporting purposes (collectively, the "Affiliated Partnerships"). The
Oxford Group is the general partner in the majority of the entities in
which the Oxford Group holds partnership interests. However, the terms of
the related partnership agreements specify that the limited partners are
required to vote on major decisions regarding the disposal of real estate
owned by the partnership. The limited partners also have the right to
remove the general partner as manager of the partnership. Therefore, since
the Oxford Group does not control some major operating decisions,
investments in partnerships where the Oxford Group is the general partner
and owns 50 percent or less are accounted for using the equity method.
Accordingly, the Oxford Group reflects as income or expense its percentage
ownership share in earnings or losses of each Partnership. Distributions
received from the Partnerships are recorded as returns or reduction of
investment. Contributions and loans are recorded as an increase in
investment.
99.1-14
<PAGE> 15
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
The general partnership interests and the ownership percentages are as
follows:
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Abington II-Oxford Associates LP 1.0100000%
Abington-Oxford Associates LP 1.0100000%
1Akron One Retirement - Oxford LP 91.6500000%
2Allview - Oxford LP 91.6500000%
2Apollo - Oxford LP 91.6500000%
Bayhead Village Associates LP 0.0100000%
Beach - Oxford Associates LP 0.0100000%
Bent Tree - Oxford Associates LP 0.0010000%
Bent Tree II - Oxford Associates LP 4.4649000%
Bent Tree III - Oxford Associates LP 86.0000000%
Bethel Columbus - Oxford Associates LP 4.0100000%
Beville - Oxford Associates LP 0.5000000%
Blue Ash - Oxford Associates LP 4.0100000%
*Boynton Overlook - Oxford Associates 0.0900000%
*Brandermill - Oxford Associates LP 0.0100000%
Brandon - Oxford Associates LP 1.0000000%
Briarcliffe - Oxford Associates LP 0.0100000%
Burke - Oxford Associates 0.0100000%
Burke II - Oxford Associates 0.0100000%
Butternut Creek Associates LDHA 0.1000000%
Cameron Oxford Associates 1.0000000%
Cameron II - Oxford Associates LP 0.1019000%
Carpenter - Oxford Associates LP 4.5100000%
</TABLE>
99.1-15
<PAGE> 16
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Carrollwood Lakeside North Partners, Ltd. 1.0000000%
Casselberry - Oxford Associates LP 0.0100000%
*Chantilly Partners 1.2500000%
Charleston - Oxford Associates LP 1.0000000%
Chesapeake - Oxford County Associates LP 0.0100000%
*Cheswick - Oxford Associates LP
Cincinnati - Oxford Associates LP 4.4649000%
Cloverlane III - Oxford Associates LP 1.0000000%
Cloverlane IV - Oxford Associates LP 9.2000000%
3Colonel I - Oxford LP 91.6500000%
Couch - Oxford Associates L.P. 4.5100000%
Countrybrook - Oxford Associates 0.0100000%
Dallas - Oxford Associates LP 4.0100000%
Dayton III - Oxford Associates LP 4.0100000%
Dayton IV - Oxford Associates LP 50.0000000%
Deercross - Oxford Associates LP 14.3000000%
Delta Square - Oxford Associates LP 3.7500000%
Doyle Associates LDHA 0.1000000%
Eden - Oxford Associates LP 0.0100000%
Fayette - Oxford Associates LP 5.0100000%
Fisherman's Village - Oxford Associates LP 1.0100000%
Fountain Place - Oxford Associates LP 0.0100000%
Foxfire LDHA 0.0000100%
2Fox Valley - Oxford LP 91.6500000%
Fredericksburg - Oxford Associates LP 5.0100000%
</TABLE>
99.1-16
<PAGE> 17
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Fairfield One - Oxford LP 0.0100000%
Florida House - Oxford Associates 0.1000000%
Forest Gardens Associates LP 0.0100000%
Fox Valley Two - Oxford LP 0.0100000%
Garden View - Oxford Associates 0.1000000%
Gateway - Oxford Associates LP 0.0100000%
*Glenwood - Oxford Housing Association
Greenbriar - Oxford Associates LP 0.0100000%
Greenspring - Oxford Associates LP 0.0100000%
Greenville - Oxford Associates LP 1.0000000%
*Gwyned Partners, LP 1.2500000%
Henrietta - Oxford Associates LP 0.0100000%
Hillsborough - Oxford Associates LP 25.7575000%
Home - Oxford Associates LP 2.5100000%
*Hunt Club Partners, LLC 1.0000000%
Jacaranda - Oxford LP 1.0000000%
James - Oxford Associates LP 25.0037500%
Kettering - Oxford Associates LP 0.0100000%
Kenton - Oxford Associates 1.0000000%
Kinsey - Oxford Associates 1.9900000%
Lynn - Oxford Associates LP 0.0100000%
Lakeridge Associates, a California LP 1.0000000%
Lansing - Oxford Associates LP 0.0100000%
*Largo Partners, LLC 1.0000000%
Laurel - Oxford Associates LP 0.0010000%
</TABLE>
99.1-17
<PAGE> 18
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Lee - Oxford Associates LP 0.0010000%
Lexington - Oxford Associates 0.0100000%
Lima - Oxford Associates 0.0010000%
Long Creek - Oxford Associates LP 0.0100000%
Longwood - Oxford Associates LP 45.6250000%
Massanutten - Oxford Associates LP 0.0100000%
Melbourne - Oxford 5.0100000%
Meridian Meadows - Oxford LP 0.4990000%
2Middletown - Oxford LP 91.6500000%
Monroe - Oxford Associates LP 5.0100000%
Mount Clare - Oxford Associates 0.0100000%
Naples - Oxford LP 1.0000000%
Nashua - Oxford Associates LP 1.0000000%
New Castle - Oxford Associates 0.0010000%
Newington - Oxford Associates LP 0.0100000%
North Point - Oxford Associates LP 1.0100000%
North Woods - Oxford Associates LP 0.0100000%
Oak Park - Oxford Associates LP 0.0100000%
1Ocala - Oxford, LP 91.6500000%
Olde Towne Associates LP 0.0001611%
*ORP One LLC
*ORP Two LLC
*ORP Three LLC
*ORP Four LLC
Okemos Station - Oxford Associates 0.1000000%
</TABLE>
99.1-18
<PAGE> 19
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Oliver Associates 0.0200000%
Oxford - Columbia Associates LP 0.0100000%
Oxford - Kirkwood Associates 0.0002000%
Parc Chateau Section I Associates 1.9900000%
Parc Chateau Section II Associates 1.9900000%
*Peppermill Village - Oxford Associates
Pine Bluff Associates LP 0.0100000%
*ORP I LP 1.1796500%
*Oxford Associates '76 0.0010000%
*Oxford Associates '77 0.0010000%
*Oxford Associates '78 0.1000000%
*Oxford Associates '80 0.1000000%
*Oxford Associates '81 0.0010000%
*Oxford Associates '85 0.0100000%
Oxford Bethesda I 50.0000000%
*Oxford Managers IIIA 90.0000000%
*Oxford Partners V LP 1.0000000%
OTEF II 0.0100000%
Palm Aire - Oxford LP 0.5000000%
Parham - Oxford Associates 0.0100000%
Park North - Oxford Associates 0.0000033%
Pebble Point - Oxford Associates LP 1.0100000%
Reddman - Oxford Associates LP 1.0099000%
Roswell - Oxford Associates LP 25.7575000%
Runaway Bay - Oxford Associates LP 0.0100000%
</TABLE>
99.1-19
<PAGE> 20
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Runaway Bay II - Oxford Associates LP 5.0100000%
Riverwood Associates 0.0100000%
River's Edge Associates LDHA 0.0100000%
Schumaker Glen Associates, LP 0.0100000%
Somerset - Oxford Associates 0.1000000%
*Sugar-Bush - Oxford Associates LP
Sunnycrest Manor Associates 0.1000000%
4San Bruno - Oxford LP 91.6500000%
Scandia Associates LP 11.6667000%
5Schaumburg - Oxford LP 91.6500000%
Seminole Oxford Associates LP 2.2374000%
Sharp-Leadenhall - Oxford Associates LP 0.0100000%
Singleton - Oxford Associates LP 2.2374000%
4Southridge - Oxford LP 91.6500000%
Spartanburg - Oxford Associates LP 1.0000000%
Spyglass - Oxford Associates LP 0.0100000%
St. Mary's - Oxford Associates LP 0.0100000%
2Tidewater - Oxford LP 91.6500000%
4Travis One - Oxford LP 91.6500000%
The Chimneys - Oxford Associates 0.1000000%
The Courtyard - Oxford Associates 0.1000000%
The Terraces Associates 0.1000000%
Trinity - Oxford Associates 1.0100000%
Underwood - Oxford Associates LP 0.0100000%
Village Oaks - Oxford Associates LP 0.0100000%
</TABLE>
99.1-20
<PAGE> 21
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
*Waters Landing LLC 1.0000000%
Westchester - Oxford LLC 0.0200000%
4Westridge - Oxford LP 91.6500000%
1Williamsburg 91.6500000%
Wind Drift - Oxford Associates LP 1.0100000%
Windridge - Oxford Associates LP 2.0100000%
Woods Edge - Oxford Associates LP 1.0000000%
Woodland Hills - Oxford Associates 0.1000000%
</TABLE>
The limited partnership interests and the ownership percentages are as
follows:
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Abington - Oxford Associates LP 3.8000000%
Akron Nursing - Oxford Associates LP 0.0001000%
Allentown - Oxford Associates LP 8.5500000%
Augusta - Oxford Associates LP 6.3000000%
Bent Tree II - Oxford Associates LP 0.2970000%
Bent Tree III - Oxford Associates LP 8.1000000%
Bethel Columbus - Oxford Associates LP 0.9000000%
Blue Ash - Oxford Associates LP 0.9000000%
Brandermill - Oxford Associates LP 0.9000000%
Brandon - Oxford Associates LP 9.9000000%
Briarcliffe - Oxford Associates LP 12.2142860%
</TABLE>
99.1-21
<PAGE> 22
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Carpenter - Oxford Associates II, LP 7.0875000%
Casselberry - Oxford Associates LP 0.0776933%
*Chantilly Partners LP 1.0000000%
Charleston - Oxford Associates LP 1.0631250%
Chickasaw - Oxford Associates LP 4.9200000%
Chimneytop - Oxford Associates LP 4.0714290%
Cincinnati - Oxford Associates LP 0.2970000%
Cloverlane Four - Oxford Associates LP 54.6480000%
Columbus III - Oxford Associates LP 6.0100000%
Couch - Oxford Associates LP 0.9000000%
Dallas - Oxford Associates LP 6.6937500%
Dayton III - Oxford Associates LP 0.9000000%
*Dutton Partners
Delta Square - Oxford Associates LP 10.1250000%
Farmingdale - Oxford Associates LP 1.3680560%
Fayette - Oxford Associates LP 5.0625000%
Fredericksburg - Oxford Associates LP 4.3902440%
Greensboro - Oxford Associates LP 11.0526320%
Greenville - Oxford Associates LP 1.0676250%
*Gwyned Partners LP
Home - Oxford Associates LP 3.1666670%
*Hunt Club Partners, LLC
Kettering - Oxford Associates LP 1.1875000%
Kings - Oxford Associates LP 0.9500000%
Kirkman - Oxford Associates LP 0.9500000%
</TABLE>
99.1-22
<PAGE> 23
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Lake Ridge - Oxford Associates LP 7.0875000%
Lakeridge Associates, a California LP 4.9200000%
Lantana - Oxford Associates LP 4.9200000%
*Largo Parnters, LLC
Lexington - Oxford Associates LP 0.1033980%
Lima - Oxford Associates LP 3.2270740%
Long Creek - Oxford Associates LP 12.2142860%
Longwood - Oxford Associates LP 33.7500000%
Melbourne - Oxford Associates LP 0.7758620%
Meridian Meadows - Oxford Associates LP 49.4010000%
Nashua - Oxford Associates LP 5.5601000%
New Castle - Oxford Associates LP 3.2270740%
Newport - Oxford Associates LP 7.0875000%
North Woods - Oxford Associates LP 0.1033980%
ORP 0.0050000%
OMEGA 0.0947000%
Oxford Managers I 7.3051580%
Oxford Managers II 16.5679090%
Oxford Partners IV 19.8000000%
Oxford Partners V 58.4160000%
Palm Beach - Oxford Associates LP 10.1250000%
Pinellas - Oxford Associates LP 7.0875000%
Renaissance - Oxford Associates LP 2.7142860%
Runaway Bay - Oxford Associates LP 0.1033980%
Runaway Bay II - Oxford Associates LP 5.0625000%
</TABLE>
99.1-23
<PAGE> 24
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - INVESTMENT IN REAL ESTATE PARTNERSHIPS (Continued)
<TABLE>
<CAPTION>
Partnership Ownership percentage
----------- --------------------
<S> <C>
Salem - Oxford Associates LP 2.7000000%
Seminole - Oxford Associates LP 8.3077500%
Singleton - Oxford Associates LP 6.5834500%
St. Mary's - Oxford Associates LP 2.7000000%
Suntree - Oxford Associates LP 7.2000000%
Travis One - Oxford LP 1.4000000%
*Waters Landing Partners LLC
Wickford - Oxford Associates LP 2.7142860%
Windridge - Oxford Associates LP 1.1875000%
*Certain mid-tier entities have interests in this entity.
11999 ownership percentages. Ownership percentage changed to 32.5% in 2000.
21999 ownership percentages. Ownership percentage changed to 25.7575% in 2000.
31999 ownership percentages. Ownership percentage changed to 41.875% in 2000.
41999 ownership percentages. Ownership percentage changed to 25.75075% in 2000.
51999 ownership percentages. Ownership percentage changed to 25.75755% in 2000.
</TABLE>
99.1-24
<PAGE> 25
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 4 - Investment in Real Estate Partnerships (continued)
Summarized financial information related to the Partnerships which the
Oxford Group accounts for under the equity method is as follows:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
--------------- ---------------
(unaudited)
<S> <C> <C>
Real estate $ 674,769,527 $ 660,632,126
Other assets 108,433,723 106,170,551
--------------- ---------------
Total assets $ 783,203,250 $ 766,802,677
=============== ===============
Mortgage and other debt $ 1,105,509,824 $ 1,097,653,032
Other liabilities 112,247,580 116,811,996
--------------- ---------------
1,217,757,404 1,214,465,028
Partners' deficit (434,554,154) (447,662,351)
--------------- ---------------
Total liabilities and partners' deficit $ 783,203,250 $ 766,802,677
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
Period ended
Year ended August 31,
December 31, ---------------------------------
1999 2000 1999
--------------- --------------- ---------------
(unaudited)
<S> <C> <C> <C>
Revenues $ 245,816,016 $ 171,407,154 $ 137,480,853
Expenses 253,544,388 171,249,558 138,598,563
--------------- --------------- ---------------
Net income (loss) $ (7,728,372) $ 157,596 $ (1,117,710)
=============== =============== ===============
Oxford Group's share of net
income (loss) $ (295,372) $ 180,671 $ (241,862)
=============== =============== ===============
</TABLE>
99.1-25
<PAGE> 26
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 5 - SECURED NOTES PAYABLE
The Affiliated Partnerships have entered into various mortgage agreements.
These are obligations of the Partnerships and are nonrecourse to the
general partner unless otherwise disclosed. The mortgages are as follows:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
------------- -------------
(unaudited)
<S> <C> <C>
Mortgages payable in the aggregate original amount of $16,300,000, payable
to various financial institutions. The notes provide for monthly payments
of principal and interest, including interest at rates ranging from 8.45% -
10% and maturing at various dates from January 2004 through June 2005. Two
of the notes include balloon payments at maturity in the aggregate amount
of $9,502,000. The liability of the partnership under the mortgages is
limited to the property and equipment collateralizing the notes, lender
assignment of rents and leases and other amounts deposited with the
lenders. $ 15,068,206 $ 14,885,182
Mortgages payable in the aggregate amounts of $116,717,600 (A notes) and
$127,206,576 (B notes), payable to a financial institution, as trustee, and
financed through tax-exempt bonds issued by various municipalities. The A
notes provide for monthly payments of interest, quarterly payments of
principal commencing April 15, 2000, interest rates adjusted each January,
March, November and December, the anniversary dates of the bonds (4.0% -
5.12% and 4.87% - 5.54% at December 31, 1999 and August 31, 2000,
respectively) with a maximum annual rate of 5.6%, and maturity on November
1, 2026. The B notes provide for monthly payments of interest only to the
extent the partnerships have available cash flow (as defined), interest
rates that are determined as
</TABLE>
99.1-26
<PAGE> 27
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 5 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
------------- -------------
(unaudited)
<S> <C> <C>
the differences between the combined rates (4.61% - 8.38% and 5.11% - 8.38%
at December 31, 1999 and August 31, 2000, respectively) on the A and B
notes and the interest expense on the A notes, interest rate adjusted
annually, any accrued and unpaid interest is noninterest bearing and
various maturity dates from November 2006 through March 2007. The mortgages
are collateralized by a first mortgage lien on the property and an
assignment of rents and leases.
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 ("OTEF II"), an affiliate. On February
14, 1998, OTEF II, in a transaction with three of the Operating
Partnerships, securitized the A notes and retained interest in the B notes.
Pursuant to the securitization, the interest on the A notes was reset to
the interest at the Public Securities Association ("PSA") weekly floating
bond rate plus 90 basis points (4.52% and 4.23% at December 31, 1999 and
August 31, 2000, respectively). 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 rate change on the A notes. The effective rates of interest
on the B notes ranged from 8.15% - 12.5% and 6.95% - 10.6% through December
31, 1999 and August 31, 2000, respectively. All other terms of the mortgage
notes remain the same. $ 243,924,176 $ 242,980,792
</TABLE>
99.1-27
<PAGE> 28
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 5 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
------------- -------------
(unaudited)
<S> <C> <C>
First mortgages in the aggregate amount of $59,440,000, financed by
tax-exempt bonds issued by various housing agencies, with rates ranging
from 5.6% - 7.71% and various maturity dates from December 2009 through
February 2011. Two of the operating partnerships are also subject to second
mortgages which are subject to surety bonds. $ 59,440,000 $ 59,440,000
------------- -------------
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. 34,770,000 34,770,000
</TABLE>
99.1-28
<PAGE> 29
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 5 - SECURED NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
------------- -------------
(unaudited)
<S> <C> <C>
Mortgages payable which were refinanced during 1999 in the aggregate
original amounts of $26,990,000 payable to various financial institutions.
The new notes provide for monthly payments of principal and interest at
interest rates ranging from 7.87% - 7.92% and maturing at various dates
from August 2009 through October 2009. The liability of the partnerships
under the mortgages is limited to the underlying value of the property and
equipment collateralizing the loans and the assignment of leases, rents and
security deposits. One such mortgage payable requires a deposit into an
operating deficit escrow in the amount of $300,035 which will be released
when the respective property achieves certain debt service coverage ratios. $ 26,934,067 $ 26,797,981
------------- -------------
$ 380,136,449 $ 378,873,955
============= =============
</TABLE>
The mortgage payable principal repayment schedule for the five years following
December 31, 1999 is as follows:
<TABLE>
<S> <C> <C>
Year ending December 31, 2000 $ 1,910,200
2001 2,526,500
2002 2,686,400
2003 2,856,569
2004 12,414,766
</TABLE>
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.
99.1-29
<PAGE> 30
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 6 - UNSECURED SHORT-TERM FINANCING
Obligations to unsecured creditors at December 31, 1999 and August 31, 2000
totaled $373,461. Unsecured obligations are evidenced by promissory notes,
are noninterest bearing and payable in annual, quarterly or monthly
installments.
NOTE 7 - NOTES PAYABLE TO AFFILIATES
Notes payable to affiliates include the following:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
--------------- ---------------
(unaudited)
<S> <C> <C>
Corporate debt $ 42,214,478 $ 42,296,542
Subordinated notes payable to the shareholders 15,358,671 14,908,672
Working capital loans 2,766,520 2,766,520
Demand notes payable to OTEF 13,676,627 14,108,424
Other notes payable 20,665 20,665
--------------- ---------------
$ 74,036,961 $ 74,100,823
=============== ===============
</TABLE>
OHC has corporate debt payable from OHC's cash flow after certain priority
payments were made. In connection with the Restructuring, the debt was
restructured into several tranches held by affiliates of Merrill Lynch,
AIMCO/NHP, and a trust for the benefit of certain officers and directors of
ORFG ("Trust"). On October 1, 1999, $450,000 was paid to the Trust. ORFG
acts as the collateral agent pursuant to an intercreditor agreement.
Interest accrues at base rates ranging from 6% to 10% per annum, with
contingent interest due on a portion of the debt. At December 31, 1999 and
August 31, 2000, the remaining principal balance is $42,214,478 and
$42,296,542, respectively. Accrued interest at December 31, 1999 and August
31, 2000 is $28,438,526 and $35,498,603, respectively. On December 10,
2008, $1,500,000 of the principal balance matures and the remaining balance
matures on December 10, 2013.
99.1-30
<PAGE> 31
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 7 - NOTES PAYABLE TO AFFILIATES (Continued)
The subordinated notes payable to the shareholder consist of the following:
<TABLE>
<CAPTION>
December 31, August 31,
1999 2000
--------------- ---------------
(unaudited)
<S> <C> <C>
Pre December 31, 1987 $ 6,950,600 $ 6,950,600
Post December 31, 1987 3,033,071 3,033,072
Noninterest bearing advance 5,375,000 4,925,000
--------------- ---------------
$ 15,358,671 $ 14,908,672
=============== ===============
</TABLE>
The pre-December 31, 1987 subordinated notes payable represent amounts that
were advanced to Oxford in order to fund general business requirements. The
payment of principal and interest on these notes is subordinated to
payments required with respect to Oxford's corporate debt. This note is
pledged by the holder as collateral for a portion of the corporate debt.
The post-December 31, 1987 subordinated notes payable represent amounts
advanced to Oxford for the primary purpose of paying principal and interest
on Oxford's corporate debt. The payment of principal and interest is
subordinated to the payments due under the corporate debt. This note is
pledged by the holder as collateral for a portion of the corporate debt.
In connection with the corporate debt restructuring on October 13, 1989,
$5,825,000 of non-interest bearing advances were made by Oxford's sole
common stockholder. As part of the Restructuring, this subordinated note
has a priority of payment concurrent with the note payments due under
Oxford's corporate debt.
Accrued interest at December 31, 1999 and August 31, 2000 is $20,011,011
and $21,882,808, respectively.
99.1-31
<PAGE> 32
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 7 - NOTES PAYABLE TO AFFILIATES (Continued)
An affiliate of the Oxford Group has made working capital loans and
advances and operating deficit loans to several of the Affiliated
Partnerships. The balance of these loans and advances at December 31, 1999
and August 31, 2000 is $2,766,520 and $2,766,520, respectively. The loans
and advances bear interest at the prime rate of interest plus 1% (9.5% and
10.5% at December 31, 1999 and August 31, 2000, respectively). These
balances are repayable from distributable net cash flow of the Affiliated
Partnerships or from proceeds from sale of the rental property or
refinancing of the related debt.
As a result of the remarketing of bonds on two of the Affiliated
Partnerships, all of the prior years' contingent and deferred interest as
of December 31, 1999 became immediately due. The Affiliated Partnerships
executed a demand note to OTEF II in the amount of $14,014,653, which
represents the current year's and all prior years' unpaid contingent and
deferred interest. The provisions of the demand note provide for: (a)
interest to be computed at the short-term Applicable Federal Rate ("AFR")
in effect for each month, and (b) monthly payments on the note from
available property cash flow after payment of debt service on the first
mortgage note. The balance of the demand note at December 31, 1999 and
August 31, 2000 is $13,676,627 and $14,108,424, respectively.
A note is payable to an affiliate, the proceeds of which were used to
acquire a general partner interest in a partnership that owns interest in
another affiliate which, in turn, owns four apartment communities. The note
bears interest at a rate of one percent over the prime rate published in
the Wall Street Journal (9.5% and 10.5% at December 31, 1999 and August 31,
2000, respectively), to be adjusted semi-annually beginning June 30, 1995.
Payments will be made semi-annually by the subsidiary to the extent of its
available cash flow. The total note balance at December 31, 1999 and August
31, 2000 is $20,665.
99.1-32
<PAGE> 33
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 8 - COMMON STOCK
Common stock both at December 31, 1999 and August 31, 2000 consisted of the
following:
<TABLE>
<CAPTION>
<S> <C> <C>
Oxford Holding Corporation
Common stock, $.01 par value per share, 1,000 shares authorized,
issued and outstanding $ 10
Oxford Equities Corporation III
Common stock, $1 par value per share, 1,000 shares authorized, 100
shares issued and outstanding 100
Oxford Realty Financial Group, Inc.
Common stock:
Class A voting, $.01 par value per share, 1,000 shares
authorized, issued and outstanding $ 10
Class B non-voting, $.01 par value per share, 750 shares
authorized, issued and outstanding 8
Class C non-voting, $.01 par value per share, 1,000 shares
authorized, issued and outstanding 10 28
-----------
Various Subchapter S corporations
Common stock, $.01 par value per share, 34,000 shares authorized,
3,400 shares issued and outstanding 34
--------
$ 172
========
</TABLE>
NOTE 9 - NOTES RECEIVABLE ON COMMON STOCK PURCHASES
Promissory notes totaling $80,358 were executed with various shareholders
in exchange for the issuance of shares of common stock. The notes were
noninterest bearing and were due and payable on December 31, 2001. In
connection with the disposition of assets (see note 17), the notes were
cancelled.
99.1-33
<PAGE> 34
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 10 - INCOME TAXES
The components of the provision for income taxes (benefit) for the year
ended December 31, 1999 and the eight months ended August 31, 2000 and 1999
are summarized as follows:
<TABLE>
<CAPTION>
Year ended Period ended Period ended
December 31, August 31, August 31,
1999 2000 1999
--------------- --------------- ---------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Deferred taxes (benefit)
Federal $ (98,072) $ 1,292,866 $ (73,554)
State (21,452) 282,815 (16,089)
--------------- --------------- ---------------
Provision for income taxes (benefit) $ (119,524) $ 1,575,681 $ (89,643)
=============== =============== ===============
</TABLE>
The following table summarizes the deferred tax assets and liabilities
related to the Oxford Group's net operating loss carryforwards (NOLs) and
temporary book-tax differences. The NOLs expire through 2019.
<TABLE>
<CAPTION>
December 31, 1999 August 31, 2000
----------------- ---------------
(unaudited)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 27,974,000 $ 27,974,000
Write down of notes and accounts receivable 32,177,000 32,662,000
Other temporary differences between book and tax 22,000 22,000
--------------- ---------------
Total deferred tax assets 60,173,000 60,658,000
--------------- ---------------
Deferred tax liabilities:
Investments in real estate partnerships 44,580,000 47,203,000
Accrued interest 8,828,000 8,266,000
--------------- ---------------
Total deferred tax liabilities 53,408,000 55,469,000
--------------- ---------------
Net deferred tax asset $ 6,765,000 $ 5,189,000
=============== ===============
</TABLE>
99.1-34
<PAGE> 35
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 11 - GOVERNMENT CONTRACTS
Several properties owned by the Affiliated Partnerships and a substantial
portion of the properties and units of the Partnerships as of December 31,
1999, are affordable properties and units. A substantial portion of the
affordable properties were built or acquired with the assistance of
programs administered by the United States Department of Housing and Urban
Development ("HUD") that provide mortgage insurance, favorable financing
terms, or rental assistance payments to the owners. As a condition to the
receipt of assistance, rents on these properties are limited to amounts
approved by HUD. For the past several years, various proposals have been
advanced by HUD, the Congress and others proposing the restructuring of
Section 8 of the United States Housing Act of 1937 ("Section 8"). These
proposals generally seek to lower subsidized rents to market levels and to
lower the required debt service costs as needed to ensure financial
viability at the reduced rents, but vary greatly as to how that result is
to be achieved. Some proposals include a phase-out of project-based
subsidies on a property-by-property basis upon expiration of a property's
Housing Assistance Payments Contract ("HAP Contract"), with a conversion to
a tenant-based subsidy. Under a tenant-based system, rent vouchers would be
issued to qualified tenants who then could elect financial viability to pay
the difference between the selected property's monthly rent and the value
of the voucher, which would be established based on HUD's regulated fair
market rent for that geographic area.
Congress has not yet accepted any of the restructuring proposals and
instead has elected to renew expiring Section 8 HAP Contracts for one year
terms, generally at existing rents. While the Oxford Group does not believe
that the proposed changes would result in a significant number of tenants
relocating, there can be no assurance that the proposed changes would not
significantly affect the Oxford Group or the Partnerships. Furthermore,
there can be no assurance that changes in Federal subsidies will not be
more restrictive than currently proposed or that other changes in policy
could occur. Any such changes could have an adverse effect on the Oxford
Group's occupancy rates and revenues of the Oxford Group's Affiliated
Properties and/or properties in which the Oxford Group has an ownership
interest.
99.1-35
<PAGE> 36
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 12 - EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1999 consists of
prior years' contingent interest expense payable to OTEF II under the terms
of the original mortgage debt with an Affiliated Property. The Affiliated
Property had not recorded any contingent interest expense in prior years
due to the respective payment not being probable. Upon remarketing of the
underlying bonds in November 1999, all of the prior year's contingent and
deferred interest became immediately due. In November 1999, the Affiliated
Property 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 believes the partnership will have
sufficient cash flow available to repay the demand note. As a result of the
remarketing of the bonds, the Affiliated Property recorded the entire
$8,833,577 in the current year. $7,883,150 represents the portion of
contingent interest applicable to prior years.
NOTE 13 - CONCENTRATION OF CREDIT RISKS
The Oxford Group has cash balances at various financial institutions and
financial advisors. These deposits are insured by the Federal Deposit
Insurance Corporation up to $100,000 and Securities Investor Protection
Corporation for $500,000. Management does not believe there is any risk of
losses in these accounts.
NOTE 14 - RELATED PARTY TRANSACTIONS
Management and Consulting Service Fees
ORFG has a service agreement with NHP Management Company and certain
affiliates. In exchange for providing certain services, the Corporation
earns servicing fees in an amount equal to 25.41% of all fees earned by NHP
Management Company, with respect to certain properties. The fees collected
by NHP Management Company are primarily based on a percentage of rents
collected and are paid on a current basis.
99.1-36
<PAGE> 37
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 14 - RELATED PARTY TRANSACTIONS (Continued)
Servicing Agreement
ORFG has entered into a Servicing Agreement with ORFG Operations, L.L.C.
("ORFG OPS") whereby ORFG OPS subcontracts employee and other services to
ORFG to perform asset management services to operating partnerships in
which affiliates of OHC and/or ORFG are limited or general partners. Under
this agreement, ORFG OPS receives reimbursement of all costs incurred and
an incentive fee, as determined by the Board of Directors of ORFG.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Guarantees and Indemnifications
Commitments and contingencies include the following obligations and rights
of OHC with respect to its investment in the Affiliated Partnerships:
a) Obligations to fund certain operating deficit and working capital
requirements to Affiliated Partnerships. These obligations vary widely
with respect to the terms of the obligations, limitation of amounts
and provision for recovery.
b) Obligation of OHC Affiliates to fund certain collateral security
accounts required by the lenders in connection with debt
restructuring.
In addition to the liabilities reflected on the combined balance sheets,
the Oxford Group is guarantor of, or has agreed to indemnify others with
respect to, losses relating to certain activities and transactions.
ORFG has guaranteed certain obligations totaling $19,040,154 and
$18,907,328 at December 31, 1999 and August 31, 2000, respectively, of two
affiliated limited partnerships under applicable mortgage documents entered
into with the Federal National Mortgage Association. The Corporation does
not believe that it has a material risk of liability under these
guarantees.
Obligation of OHC Affiliates exists to fund certain collateral security
accounts required by the lenders in connection with debt restructuring.
99.1-37
<PAGE> 38
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued)
Litigation
In the normal course of business, the Oxford Group is a party to various
legal actions and claims. In the opinion of management, based on advice of
counsel, the resolution of these actions and claims will not have a
material adverse effect on the financial position or results of operations.
OHC and certain of its affiliates are parties to litigation which,
adversely resolved either individually or in the aggregate, could have a
material impact on OHC's financial position or its results of operations.
This litigation includes investor litigation, former employee litigation
and insurance litigation. Management does not believe there is any
litigation of such types which will have a material effect on the financial
statements.
Leases
ORFG exercised an option to extend its lease for an additional 7-1/2 year
term at an annual base rent of $858,336 effective January 1, 2001, with
annual increases of 3% per year. Rent expense for the year ended December
31, 1999 and the eight months ended August 31, 2000 and 1999 was $468,644,
$358,641 and $308,745, respectively.
Minimum lease payments for the next five years and thereafter are as
follows:
<TABLE>
<S> <C>
2000 $ 568,945
2001 858,336
2002 884,086
2003 910,609
2004 937,927
2005 through 2008 3,513,832
---------------
Total $ 7,673,735
===============
</TABLE>
99.1-38
<PAGE> 39
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued)
Real Estate, General Partner and Liquidity Risks
Real property investments are subject to varying degrees of risk. The
yields available from equity investments in real estate depend on the
amount of income generated and expenses incurred. The Oxford Group's income
and cash flows from the Affiliated Partnerships and its real estate equity
investments may be adversely affected by the general economic climate,
local conditions such as oversupply of apartments or a reduction in demand
for apartments in the area, the attractiveness of the properties to
tenants, competition from other available apartments, the ability of the
properties' managers to provide adequate maintenance and insurance, and
increases in operating costs (including real estate taxes). The Oxford
Group's income and cash flows from the Affiliated Partnerships and its real
estate investments would also be adversely affected if a significant number
of tenants were unable to pay rent or apartments could not be rented on
favorable terms. Certain significant expenditures associated with real
property investments (such as debt service, real estate taxes and
maintenance costs) generally are not reduced when circumstances cause a
reduction in income from the investments. In addition, income and cash
flows from properties and real estate values are also affected by such
factors as applicable laws, including tax laws and interest rates. Under
the general principles of partnership law, a general partner in a limited
partnership may, under certain circumstances, have liabilities beyond its
original investment to third parties affiliated and doing business with the
partnership.
Aside from cash flow generated by the Affiliated Partnerships, the Oxford
Group's liquidity is dependent primarily on partnership distributions and
proceeds from sales and refinancings of real estate owned by partnerships
in which the Oxford Group has an equity investment.
99.1-39
<PAGE> 40
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued)
Accrued Incentive Compensation
Oxford has a number of employee incentive compensation agreements; however,
the payment of incentives is subject to numerous contingencies and
conditions. OHC has not fully measured the amount of allowable reductions
or forfeitures, nor has it determined the extent to which any reductions or
forfeitures would be applied. Under the terms of these plans and certain
agreements, the holders of all claims have been economically subordinated
to the repayment in full by OHC and its subsidiaries of, among other
things, all principal and accrued but unpaid interest on OHC's long-term
debt. As a result, Oxford has not recorded any liabilities related to these
employee incentive compensation agreements.
NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Oxford Group adopted SFAS No. 107, "Disclosures About Fair Value of
Financial Instruments," as of December 31, 1995. SFAS No. 107 requires
disclosure of the fair value of financial instruments when fair value is
estimable. The estimated fair value of the financial instruments has been
determined based on pertinent information available to management and
appropriate valuation methodologies. The carrying amounts of cash and cash
equivalents, receivables, deposits, accounts payable and accrued expenses
approximate fair value because of the short-term maturities of those items.
In addition, notes receivable have been recorded at fair value using
estimated discounted cash flows in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." The carrying amount of the Oxford Group's several notes
payable and notes payable to affiliates are considered to approximate fair
value as the related interest rates are variable and change with market
interest rates, or are fixed rates but have been issued in connection with
affordable housing authorities and therefore their fair value is not
considered practicable to estimate. In the opinion of management, the fair
value of the Oxford Group's financial instruments is not materially
different from the carrying value shown in the accompanying combined
financial statements.
99.1-40
<PAGE> 41
Oxford Holding Corporation and Subsidiaries, Oxford Realty Financial
Group, Inc. and Subsidiaries, ZIMCO Entities and Oxford Equities
Corporation III
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
(Amounts and disclosures as of August 31, 1999 and 2000
and for the eight months then ended are unaudited)
NOTE 17 - DISPOSITION OF ASSETS
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. 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 the Oxford
properties, including the Oxford Group, 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.
99.1-41
