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HAMILTON PARK TOWERS LLC
HAMILTON ON MAIN APARTMENTS LLC
Combined Financial Statements—Unconsolidated Significant Joint Ventures
As of December 31, 2011 and 2010
and for the years ended December 31, 2011, 2010 and 2009
Together With Report of Independent
Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Joint Venture Members of
Hamilton Park Towers LLC and Hamilton on Main Apartments LLC.
We have audited the accompanying combined balance sheets of Hamilton Park Towers LLC and Hamilton on Main Apartments LLC (the "Joint Ventures") as of December 31, 2011 and 2010, and the related combined statements of income, changes in members' capital and cash flows for each of the years in the three-year period ended December 31, 2011. The combined financial statements are the responsibility of the Joint Ventures' management. Our responsibility is to express an opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). 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 audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Hamilton Park Towers LLC and Hamilton on Main Apartments LLC at December 31, 2011 and 2010 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
/s/ MILLER WACHMAN LLP Boston, Massachusetts March 12, 2012 |
1
Hamilton Park Towers LLC
Hamilton on Main Apartments LLC
(Unconsolidated Significant Joint Ventures)
Combined Balance Sheets
| December 31, | ||||||
---|---|---|---|---|---|---|---|
| 2011 | 2010 | |||||
ASSETS | |||||||
Rental Properties | $ | 134,861,736 | $ | 141,291,032 | |||
Cash and Cash Equivalents | 927,287 | 773,390 | |||||
Rents Receivable | 95,315 | 136,162 | |||||
Real Estate Tax Escrows | 686,534 | 582,603 | |||||
Prepaid Expenses and Other Assets | 1,397,113 | 1,508,187 | |||||
Financing and Leasing Fees | 480,437 | 546,699 | |||||
Total Assets | $ | 138,448,422 | $ | 144,838,073 | |||
LIABILITIES AND MEMBERS' CAPITAL | |||||||
Mortgage Notes Payable | $ | 105,620,395 | $ | 106,065,526 | |||
Accounts Payable and Accrued Expenses | 1,032,827 | 994,582 | |||||
Advance Rental Payments and Security Deposits | 2,057,893 | 1,911,533 | |||||
Total Liabilities | 108,711,115 | 108,971,641 | |||||
Commitments and Contingent Liabilities (Note7) | |||||||
Members' Capital | 29,737,307 | 35,866,432 | |||||
Total Liabilities and Members' Capital | $ | 138,448,422 | $ | 144,838,073 | |||
See notes to accompany the combined financial statements.
2
Hamilton Park Towers, LLC
Hamilton on Main Apartments, LLC
(Unconsolidated Significant Joint Ventures)
Combined Statements of Income
Years Ended December 31, 2011, 2010 and 2009
| Year Ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2009 | |||||||
Revenues | ||||||||||
Rental Income | $ | 14,051,371 | $ | 13,475,084 | $ | 4,327,579 | ||||
Laundry and Sundry Income | 117,875 | 117,681 | 37,664 | |||||||
14,169,246 | 13,592,765 | 4,365,243 | ||||||||
Expenses | ||||||||||
Administrative | 199,666 | 187,387 | 160,121 | |||||||
Depreciation and Amortization | 6,663,981 | 10,410,164 | 3,190,117 | |||||||
Management Fees | 351,652 | 341,417 | 153,555 | |||||||
Operating | 1,301,230 | 1,319,155 | 525,032 | |||||||
Renting | 159,289 | 296,906 | 27,562 | |||||||
Repairs and Maintenance | 1,306,948 | 1,201,399 | 391,069 | |||||||
Taxes and Insurance | 1,626,863 | 1,769,166 | 494,529 | |||||||
11,609,629 | 15,525,593 | 4,941,984 | ||||||||
Income (Loss) Before Other Income | 2,559,617 | (1,932,829 | ) | (576,741 | ) | |||||
Other Income (Loss) | ||||||||||
Interest Income | 3,219 | 13 | 9,459 | |||||||
Interest Expense | (5,962,309 | ) | (5,977,098 | ) | (1,778,115 | ) | ||||
Other Expenses | (4,652 | ) | (15,552 | ) | (309 | ) | ||||
(5,963,742 | ) | (5,992,636 | ) | (1,768,965 | ) | |||||
Net (Loss) | $ | (3,404,125 | ) | $ | (7,925,465 | ) | $ | (2,345,707 | ) | |
See notes to accompany the combined financial statements.
3
Hamilton Park Towers LLC and Hamilton on Main Apartments LLC
(Unconsolidated Significant Joint Ventures)
Combined Statements of Changes in Members' Capital
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance, January 1, 2009 | — | 8,937,603 | 8,937,603 | |||||||
Investment by members | 39,814,000 | — | 39,814,000 | |||||||
Distribution to members | — | (377,000 | ) | (377,000 | ) | |||||
Net Loss | (1,295,695 | ) | (1,050,012 | ) | (2,345,707 | ) | ||||
Balance, December 31, 2009 | 38,518,305 | 7,510,591 | 46,028,896 | |||||||
Distribution to members | (2,075,000 | ) | (162,000 | ) | (2,237,000 | ) | ||||
Net Loss | (7,389,086 | ) | (536,378 | ) | (7,925,465 | ) | ||||
Balance, December 31, 2010 | $ | 29,054,219 | $ | 6,812,213 | $ | 35,866,432 | ||||
Distribution to members | (2,425,000 | ) | (300,000 | ) | (2,725,000 | ) | ||||
Net Loss | (2,880,880 | ) | (523,245 | ) | (3,404,125 | ) | ||||
Balance, December 31, 2011 | $ | 23,748,339 | $ | 5,988,968 | $ | 29,737,307 | ||||
Allocation to New England Realty Associations Limited Partnership for 2011: | ||||||||||
Percentage Ownership | 40 | % | 50 | % | Total | |||||
Distributions Received | 970,000 | 150,000 | 1,120,000 | |||||||
Net Loss | (1,152,352 | ) | (261,623 | ) | (1,413,975 | ) | ||||
Member Capital | 9,499,336 | 2,994,484 | 12,493,820 | |||||||
See notes to accompany the combined financial statements.
4
HAMILTON PARK TOWERS LLC
HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
Combined Statements of Cash Flow
| Year Ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2009 | |||||||
Cash Flows from Operating Activites | ||||||||||
Net (Loss) | (3,404,125 | ) | (7,925,465 | ) | (2,345,707 | ) | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activites: | ||||||||||
Depreciation and amortization | 6,663,981 | 10,410,165 | 3,190,117 | |||||||
Amortization of above market lease | — | 301,729 | 60,346 | |||||||
Changes in operating assets and liabilities: | ||||||||||
(Increase) Decrease in rents receivable | 40,846 | (47,694 | ) | (86,943 | ) | |||||
Increase in accounts payable and accrued exp | 38,246 | 4,837 | 817,961 | |||||||
(Increase) in real estate tax escrow | (103,931 | ) | (146,628 | ) | (341,037 | ) | ||||
Decrease in due from joint venture | — | — | 230,000 | |||||||
(Increase) Decrease in prepaid expsenses and other assets | 111,073 | (170,680 | ) | (1,045,424 | ) | |||||
Increase in advance rental payments and security deposit | 146,361 | 107,511 | 1,613,399 | |||||||
Total adjustments | 6,896,576 | 10,459,240 | 4,438,419 | |||||||
Net cash provided by operating activites | 3,492,451 | 2,533,775 | 2,092,712 | |||||||
Cash flows from investing activites | ||||||||||
Purchase and improvement of rental properties | (168,424 | ) | (391,741 | ) | (129,504,313 | ) | ||||
Net cash from (used in) investing activites | (168,424 | ) | (391,741 | ) | (129,504,313 | ) | ||||
Cash flows from financing activites | ||||||||||
Payment of financing cost | — | (5,000 | ) | (583,166 | ) | |||||
Proceeds of mortgage payable | — | — | 89,914,000 | |||||||
Principal payments of mortgage payable | (445,131 | ) | (250,827 | ) | (238,022 | ) | ||||
(Distributions to) members | (2,725,000 | ) | (2,237,000 | ) | 39,437,000 | |||||
Net cash from (used in) financing activities | (3,170,131 | ) | (2,492,827 | ) | 128,529,812 | |||||
Net increase (decrease) in cash and cash equivalents | 153,896 | (350,793 | ) | 1,118,211 | ||||||
Cash and cash equivalents, at beginning of year | 773,391 | 1,124,184 | 5,972 | |||||||
Cash and cash equivalents, at end of year | 927,287 | 773,391 | 1,124,183 | |||||||
Supplementary cash flow statement information: | ||||||||||
Cash paid for interest | 5,919,142 | 5,933,103 | 1,772,400 | |||||||
Cash paid for state income taxes | 6,146 | 4,458 | 3,626 | |||||||
See notes to accompany the combined financial statements.
5
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination: The combined financial statements include the accounts of Hamilton Park Towers LLC ("Dexter Park" or "Hamilton Park") and Hamilton on Main Apartments LLC ("Hamilton Place Apartments") collectively (the "Joint Ventures"). Hamilton Place Apartments is owned 50% and Hamilton Park is owned 40% by New England Realty Associates, Limited Partnership ("NERA") and are "significant unconsolidated subsidiaries" under Rule 3-09 of Regulation S-X requiring separate financial statements. All significant intercompany accounts and transactions are eliminated in the combined statements between these two entities.
Line of Business: The Joint Ventures own and operate various residential apartment buildings located in Greater Boston.
Basis of Preparation: The preparation of the financial statements, in conformity with accounting principles generally accepted in the United State of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.
Revenue Recognition: Rental income from residential properties is recognized over the term of the related lease. For residential tenants, amounts 60 days in arrears are charged against income. Concessions made on residential leases are accounted for on the straight-line basis.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the differences between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.
Rental Properties: Rental properties are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred; improvements and additions, which improve or extend the life of assets, are capitalized. When assets are retired or otherwise disposed of, the cost of the asset and related accumulated depreciation is eliminated from the accounts, and any gain or loss on such disposition is included in income. Fully depreciated assets are removed from the accounts. Rental properties are depreciated by both straight-line and accelerated methods over their estimated useful lives. Significant acquisitions with long term leases are evaluated to determine if a portion of the purchase price is allocable to intangibles such as non market rate rents.
Upon acquisition of rental property, the Joint Ventures estimate the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Joint Ventures allocated the purchase price to the assets acquired
6
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
and liabilities assumed based on their fair values. The Joint Ventures record goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Joint Ventures consider information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management's evaluation of the specific characteristics of each tenant's lease and the Joint Ventures' overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Joint Ventures' existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.
In the event that facts and circumstances indicate that the carrying value of a rental property may be impaired, an analysis of the value is prepared. The estimated future undiscounted cash flows are compared to the asset's carrying value to determine if a write-down to fair value is required.
Financing and Leasing Fees: Financing fees are capitalized and amortized, using the interest method, over the life of the related mortgages. Leasing fees are capitalized and amortized on a straight-line basis over the life of the related lease. Unamortized balances are expensed when the corresponding fee is no longer applicable.
Income Taxes: The financial statements have been prepared on the basis that the joint ventures are entitled to tax treatment as partnerships. Accordingly, no provision for income taxes has been recorded. See note 11.
Cash Equivalents: The Joint Ventures considers cash equivalents to be all highly liquid instruments purchased with a maturity of three months or less.
Comprehensive Income: Comprehensive income is defined as changes in members' equity, exclusive of transactions with owners (such as capital contributions and dividends). The Joint Ventures did not have any comprehensive income items in 2011, 2010, or 2009 other than net income as reported.
7
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risks and Financial Instruments: The Joint Venture's properties are located in Greater Boston, and are subject to the general economic risks related thereto. No single tenant accounted for more than 5% of the revenues in 2011, 2010 or 2009. The Joint Ventures make their temporary cash investments with high-credit-quality financial institutions. At December 31, 2011 and December 31, 2010, respectively approximately $1,430,000 and $1,326,000 of cash and cash equivalents, and security deposits included in prepaid expenses and other assets exceeded federally insured amounts.
Advertising Expense: Advertising is expensed as incurred. Advertising expense was $32,000 in 2011, $59,000 in 2010 and was insignificant in 2009.
Interest Capitalized: The Joint Ventures follow the policy of capitalizing interest as a component of the cost of rental property when the time of construction exceeds one year. During the years ended December 31, 2011, 2010 and 2009 there was no capitalized interest.
Reclassifications: Certain reclassifications have been made to prior period amounts in order to conform to current period presentation.
Subsequent Events: The Joint Ventures have evaluated subsequent events through March 12, 2012, the date the financial statements were issued.
NOTE 2. RENTAL PROPERTIES
Rental Properties Consist of the Following:
| Year Ended December 31, | | ||||||
---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | Useful Life | |||||
Land, Improvements and Parking Lots | $ | 35,246,904 | $ | 35,235,809 | 15–40 years | |||
Buildings and Improvements | 95,814,901 | 95,814,901 | 15–40 years | |||||
Kitchen Cabinets | 259,617 | 295,473 | 5–10 years | |||||
Carpets | 1,665,573 | 1,663,422 | 5–10 years | |||||
Air Conditioning | 34,231 | 24,089 | 7–10 years | |||||
Elevators | 1,705,708 | 1,705,708 | 20 years | |||||
Equipment | 7,237,647 | 7,205,351 | 5–7 years | |||||
Furniture and Fixtures | 11,697,856 | 11,750,244 | 5–7 years | |||||
Smoke Alarms | 943 | 2,423 | 5–7 years | |||||
153,663,381 | 153,697,421 | |||||||
Less Accumulated Depreciation | (18,801,644 | ) | (12,406,389 | ) | ||||
$ | 134,861,736 | $ | 141,291,032 | |||||
8
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 2. RENTAL PROPERTIES (Continued)
| Hamilton Park Towers LLC | Hamilton on Main Apts LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Rental Properties at Cost: | ||||||||||
Balance, January 1, 2009 | — | 31,631,108 | 31,631,108 | |||||||
Purchase of and addition to Property | 124,628,719 | 48,086 | 124,676,805 | |||||||
Balance, December 31, 2009 | 124,628,719 | 31,679,194 | 156,307,913 | |||||||
Purchase of and addition to Property | 363,261 | 28,480 | 391,741 | |||||||
Fully Depreciated Properties | — | (3,002,233 | ) | (3,002,233 | ) | |||||
Balance, December 31, 2010 | 124,991,980 | 28,705,441 | 153,697,421 | |||||||
Purchase of and addition to Property | 92,950 | 75,474 | 168,424 | |||||||
Fully Depreciated Properties | — | (202,464 | ) | (202,464 | ) | |||||
Balance, December 31, 2011 | 125,084,930 | 28,578,451 | 153,663,381 | |||||||
Accumulated Depreciation: | ||||||||||
Balance, January 1, 2009 | — | 6,418,836 | 6,418,836 | |||||||
Depreciation for year | 926,330 | 1,491,034 | 2,417,364 | |||||||
Balance, December 31, 2009 | 926,330 | 7,909,870 | 8,836,200 | |||||||
Depreciation for year | 5,597,403 | 975,019 | 6,572,422 | |||||||
Fully Deprciation written off | — | (3,002,233 | ) | (3,002,233 | ) | |||||
Balance, December 31, 2010 | 6,523,733 | 5,882,656 | 12,406,389 | |||||||
Depreciation for year | 5,639,257 | 958,463 | 6,597,720 | |||||||
Fully Deprciation written off | — | (202,464 | ) | (202,464 | ) | |||||
Balance, December 31, 2011 | 12,162,990 | 6,638,655 | 18,801,644 | |||||||
Book Value | $ | 112,921,940 | $ | 21,939,796 | $ | 134,861,736 | ||||
NOTE 3. RELATED PARTY TRANSACTIONS
The Joint Ventures' properties are managed by an entity that is owned by the majority shareholder of the General Partner. The management fee is equal to 4% at Hamilton Place Apartments and 2% at Hamilton Park Towers of rental revenue and laundry income. Total fees paid were approximately $352,000, $341,000 and $154,000 in 2011, 2010 and 2009, respectively.
In 2011, the Management Company also received approximately $1,000 for construction supervision and architectural fees, $24,000 for maintenance service and $31,000 for administrative services.
In 2010, the Management Company also received approximately $4,000 for construction supervision and architectural fees, $28,000 for maintenance services and $17,000 for administrative services.
In 2009, the Management Company also received approximately $10,000 for maintenance services and $8,000 for administrative services.
9
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 4. OTHER ASSETS
Financing and leasing fees of approximately $480,000 and $547,000 are net of accumulated amortization of approximately $176,000 and $110,000 at December 31, 2011 and 2010, respectively.
NOTE 5. MORTGAGE NOTES PAYABLE
At December 31, 2011 and 2010, the mortgages payable consisted of various loans, all of which were secured by first mortgages on properties referred to in Note 2. At December 31, 2011, the interest rates on these loans ranged from 5.18% to 5.57%, payable in monthly installments aggregating approximately $607,000, including interest, to various dates through 2019. The majority of the mortgages are subject to prepayment penalties. At December 31, 2011, the weighted average interest rate on the above mortgages was 5.51%.
The Joint Ventures have pledged tenant leases as additional collateral for certain of these loans.
Approximate annual maturities at December 31, 2011 are as follows:
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
2012 Current Maturities | 1,220,766 | 275,988 | $ | 1,496,754 | ||||||
2013 | 1,275,835 | 293,392 | 1,569,227 | |||||||
2014 | 1,348,741 | 309,178 | 1,657,919 | |||||||
2015 | 1,425,814 | 15,008,646 | 16,434,460 | |||||||
2016 | 1,507,291 | — | 1,507,291 | |||||||
Thereafter | 82,954,745 | — | 82,954,745 | |||||||
$ | 89,733,192 | $ | 15,887,203 | $ | 105,620,395 | |||||
NOTE 6. ADVANCE RENTAL PAYMENTS AND SECURITY DEPOSITS
The Joint Ventures' residential lease agreements may require tenants to maintain a one-month advance rental payment and/or a security deposit. At December 31, 2011, security deposits of approximately $891,000 are included with other assets and it is restricted cash.
NOTE 7. COMMITMENTS AND CONTINGENCIES
From time to time, the Joint Ventures may be involved in various ordinary routine litigation incidental to their business. The Joint Ventures either have insurance coverage or provide for any uninsured claims when appropriate. The Joint Ventures are not involved in any material pending legal proceedings.
NOTE 8. RENTAL INCOME
Substantially all rental income was related to residential apartments and condominium units with leases of one year of less.
10
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 8. RENTAL INCOME (Continued)
Rents receivable are approximately $92,000, $136,000 and $88,000 net of allowances for doubtful accounts at December 31, 2011, 2010 and 2009, respectively.
NOTE 9. CASH FLOW INFORMATION
During the years ended December 31, 2011, 2010 and 2009, cash paid for interest was approximately $5,919,000, $5,933,000 and $1,722,000 respectively.
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Measurements on a Recurring Basis
At December 31, 2011 and 2010, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements.
Financial Assets and Liabilities not Measured at Fair Value
At December 31, 2011 and 2010 the carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and note payable, accounts payable and accrued expenses were representative of their fair values due to the short-term nature of these instruments or, the recent acquisition of these items.
At December 31, 2011 and 2010, we estimated the fair value of our mortgages payable and other notes based upon quoted market prices for the same (Level 1) or similar (Level 2) issues when current quoted market prices are available. We estimated the fair value of our secured mortgage debt that does not have current quoted market prices available by discounting the future cash flows using rates currently available to us for debt with similar terms and maturities (Level 3). The differences in the fair value of our debt from the carrying value are the result of differences in interest rates and/or borrowing spreads that were available to us at December 31, 2011 and 2010, as compared with those in effect when the debt was issued or acquired. The secured mortgage debt contain pre-payment penalties or yield maintenance provisions that could make the cost of refinancing the debt at lower rates exceed the benefit that would be derived from doing so.
The following table reflects the carrying amounts and estimated fair value of our debt.
| Carrying Amount | Estimated Fair Value | |||||
---|---|---|---|---|---|---|---|
Mortgage Notes Payable | |||||||
At December 31, 2011 | $ | 105,620,395 | $ | 121,777,340 | |||
At December 31, 2010 | $ | 106,065,526 | $ | 107,107,052 |
Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2011 and 2010. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2011 and current estimates of fair value may differ significantly from the amounts presented herein.
11
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 11. TAXABLE INCOME AND TAX BASIS
The Joint Ventures are not subject to income taxes as they file partnership tax returns whereby their income or loss is reportable by the members.
Taxable income or loss is different than financial statement income because of intangible assets, accelerated depreciation, different tax lives, and timing differences related to prepaid rents and allowances. The partnerships share of the taxable loss is approximately $300,000 less than statement loss for the year ended December 31, 2011. The cumulative tax basis of the Joint Ventures real estate allocated to the partnership at December 31, 2011 is approximately $1,000,000 less than the statement basis primarily due to the purchase price allocation to intangible assets at Hamilton Park Towers.
The Joint Ventures adopted the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes. As a result of the implementation of the guidance, the Joint Ventures recognized no material adjustments regarding its tax accounting treatment. The Joint Ventures expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which would be included in general and administrative expense.
In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of December 31, 2011, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2004 forward.
NOTE 12. INTANGIBLE ASSETS
The Joint Ventures estimate the fair value of intangible assets acquired at significant acquisitions as described in Note 1 including above market leases, in place leases and tenant relationships as though the acquisition is acquired "as if vacant". Hamilton Park Towers, a 409 unit residential complex, was acquired on October 28, 2009. Substantially all of the property's leases are for one year and there is substantial "turnover" of the existing tenants each year. The analysis of the above mentioned factors resulted in approximately $4,900,000 of the $129,500,000 purchase price allocated to intangible assets amortizable over a twelve month period as follows:
| Fair Value at Acquisition | Monthly Amortization | |||||
---|---|---|---|---|---|---|---|
In-place leases | $ | 4,100,000 | $ | 340,000 | |||
Tenant relationships | 450,000 | 37,500 | |||||
4,550,000 | 377,500 | ||||||
Over-market leases | 350,000 | 30,000 | |||||
$ | 4,900,000 | $ | 407,500 | ||||
12
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 12. INTANGIBLE ASSETS (Continued)
Approximate in-place leases and tenant relationships are amortized in operating expenses and amortization of over-market leases are a reduction of rental income as follows:
| At Acquisition October 28, 2009 | 2009 Amortization | 2010 Amortization | 2011 Amortization | Book Value December 31, 2011 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
In-place leases and tenant relationships | $ | 4,550,000 | $ | 755,000 | $ | 3,795,000 | $ | — | $ | — | ||||||
Over-market leases | 350,000 | 60,000 | 290,000 | — | — | |||||||||||
$ | 4,900,000 | $ | 815,000 | $ | 4,085,000 | $ | — | $ | — | |||||||
These deferred charges were fully amortized in 2010.
13
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES
Combining Balance Sheet
December 31, 2011
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
Rental Properties | 112,921,940 | 21,939,796 | 134,861,736 | |||||||
Cash & Cash Equivalents | 836,347 | 90,940 | 927,287 | |||||||
Rent Receivable | 86,722 | 8,593 | 95,315 | |||||||
Real Estate Tax Escrow | 582,028 | 104,505 | 686,534 | |||||||
Prepaid Expenses & Other Assets | 1,216,214 | 180,899 | 1,397,113 | |||||||
Financing & Leasing Fees | 458,995 | 21,442 | 480,437 | |||||||
Total Assets | 116,102,247 | 22,346,175 | 138,448,422 | |||||||
LIABILITIES AND MEMBERS' CAPITAL | ||||||||||
Mortgage Notes Payable | 89,733,192 | 15,887,203 | 105,620,395 | |||||||
Accounts Payable& Accrued Expense | 820,603 | 212,224 | 1,032,827 | |||||||
Advance Rental Payments&Security Deposits | 1,800,113 | 257,780 | 2,057,893 | |||||||
Total Liabilities | 92,353,908 | 16,357,207 | 108,711,115 | |||||||
Members' Capital | 23,748,339 | 5,988,968 | 29,737,307 | |||||||
Total Liabilities and Members' Capital | 116,102,247 | 22,346,175 | 138,448,422 | |||||||
Members' Capital—NERA 50% | — | 2,994,484 | 2,994,484 | |||||||
Members' Capital—NERA 40% | 9,499,335 | — | 9,499,335 | |||||||
9,499,335 | 2,994,484 | 12,493,820 | ||||||||
14
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Statement of Income
Year Ended December 31, 2011
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Revenues | ||||||||||
Rental Income | 11,559,414 | 2,491,957 | 14,051,371 | |||||||
Laundry and Sundry Income | 97,275 | 20,599 | 117,875 | |||||||
11,656,690 | 2,512,556 | 14,169,246 | ||||||||
Expenses | ||||||||||
Administrative | 163,511 | 36,155 | 199,666 | |||||||
Depreciation and Amortization | 5,698,657 | 965,324 | 6,663,981 | |||||||
Management Fees | 251,071 | 100,581 | 351,652 | |||||||
Operating | 929,543 | 371,687 | 1,301,230 | |||||||
Renting | 144,149 | 15,140 | 159,289 | |||||||
Repairs and Maintenance | 935,839 | 371,109 | 1,306,948 | |||||||
Taxes and Insurance | 1,300,995 | 325,868 | 1,626,863 | |||||||
9,423,765 | 2,185,864 | 11,609,629 | ||||||||
Income (Loss) Before Other Income | 2,232,924 | 326,693 | 2,559,617 | |||||||
Other Income (Loss) | ||||||||||
Interest Income | 3,219 | — | 3,219 | |||||||
Interest Expense | (5,113,523 | ) | (848,786 | ) | (5,962,309 | ) | ||||
Other Income (Expenses) | (3,500 | ) | (1,152 | ) | (4,652 | ) | ||||
(5,113,804 | ) | (849,938 | ) | (5,963,742 | ) | |||||
Net (Loss) | (2,880,880 | ) | (523,245 | ) | (3,404,125 | ) | ||||
NERA 50% | — | (261,622 | ) | (261,622 | ) | |||||
NERA 40% | (1,152,352 | ) | — | (1,152,352 | ) | |||||
(1,152,352 | ) | (261,622 | ) | (1,413,975 | ) | |||||
15
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Statement of Cash Flow
Year Ended December 31, 2011
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Cash Flows from Operating Activites | ||||||||||
Net (Loss) | (2,880,880 | ) | (523,245 | ) | (3,404,125 | ) | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activites: | ||||||||||
Depreciation and amortization | 5,698,657 | 965,324 | 6,663,981 | |||||||
Changes in operating assets and liabilities: | ||||||||||
Decrease in rent receivable | 38,753 | 2,093 | 40,846 | |||||||
Increase in accounts payable and accrued exp | 33,019 | 5,227 | 38,246 | |||||||
(Increase) in real estate tax escrow | (97,462 | ) | (6,469 | ) | (103,931 | ) | ||||
(Increase)Decrease in prepaid expsenses and other assets | (126,318 | ) | 237,391 | 111,073 | ||||||
Increase in advance rental payments and security deposits | 115,270 | 31,091 | 146,361 | |||||||
Total adjustments | 5,661,919 | 1,234,657 | 6,896,576 | |||||||
Net cash provided by operating activites | 2,781,039 | 711,412 | 3,492,451 | |||||||
Cash flows from investing activites | ||||||||||
Purchase and improvement of rental properties | (92,950 | ) | (75,474 | ) | (168,424 | ) | ||||
Net cash used in investing activites | (92,950 | ) | (75,474 | ) | (168,424 | ) | ||||
Cash flows from financing activites | ||||||||||
Payment of financing cost | — | — | — | |||||||
Principal payments of mortgage & notes payable | (180,808 | ) | (264,323 | ) | (445,131 | ) | ||||
Distributions to members | (2,425,000 | ) | (300,000 | ) | (2,725,000 | ) | ||||
Net cash used in financing activities | (2,605,808 | ) | (564,323 | ) | (3,170,131 | ) | ||||
Net increase in cash and cash equivalents | 82,281 | 71,615 | 153,896 | |||||||
Cash and cash equivalents, at beginning of year | 754,066 | 19,325 | 773,391 | |||||||
Cash and cash equivalents, at end of year | 836,347 | 90,940 | 927,287 | |||||||
Supplementary cash flow statement information: | ||||||||||
Cash paid for interest | 5,077,302 | 841,839 | 5,919,142 | |||||||
Cash paid for state income taxes | 2,751 | 3,395 | 6,146 | |||||||
16
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Balance Sheet
December 31, 2010
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||||
Rental Properties | $ | 118,468,247 | $ | 22,822,785 | $ | 141,291,032 | ||||
Cash and Cash Equivalents | 754,066 | 19,325 | 773,390 | |||||||
Rent Receivable | 125,475 | 10,686 | 136,162 | |||||||
Real Estate Tax Escrow | 484,566 | 98,036 | 582,603 | |||||||
Prepaid Expenses and Other Assets | 1,089,897 | 418,289 | 1,508,187 | |||||||
Financing and Leasing Fees | 518,395 | 28,304 | 546,699 | |||||||
Total Assets | $ | 121,440,647 | $ | 23,397,425 | $ | 144,838,072 | ||||
LIABILITIES AND MEMBERS' CAPITAL | ||||||||||
Mortgage Notes Payable | $ | 89,914,000 | $ | 16,151,526 | $ | 106.065,526 | ||||
Accounts Payable and Accrued Expense | 787,584 | 206,997 | 994,582 | |||||||
Advance Rental Payments and Security Deposits | 1,684,843 | 226,689 | 1,911,533 | |||||||
Total Liabilities | 92,386,428 | 16,585,212 | 108,971,640 | |||||||
Members' Capital | 29,054,219 | 6,812,213 | 35,866,432 | |||||||
Total Liabilities and Members' Capital | $ | 121,440,647 | $ | 23,397,425 | $ | 144,838,072 | ||||
Members' Capital—NERA 50% | — | 3,406,107 | 3,406,107 | |||||||
Members' Capital—NERA 40% | 11,621,688 | — | 11,621,688 | |||||||
$ | 11,621,688 | $ | 3,406,107 | $ | 15,027,794 | |||||
17
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combine Statement of Income
Year Ended December 31, 2010
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Revenues | ||||||||||
Rental Income | $ | 11,019,862 | $ | 2,455,222 | $ | 13,475,084 | ||||
Laundry and Sundry Income | 97,902 | 19,780 | 117,681 | |||||||
11,117,763 | 2,475,001 | 13,592,765 | ||||||||
Expenses | ||||||||||
Administrative | 148,097 | 39,289 | 187,387 | |||||||
Depreciation and Amortization | 9,428,284 | 981,881 | 10,410,164 | |||||||
Management Fees | 244,178 | 97,239 | 341,417 | |||||||
Operating | 960,328 | 358,827 | 1,319,155 | |||||||
Renting | 281,545 | 15,361 | 296,906 | |||||||
Repairs and Maintenance | 859,088 | 342,310 | 1,201,399 | |||||||
Taxes and Insurance | 1,451,016 | 318,150 | 1,769,166 | |||||||
13,372,537 | 2,153,057 | 15,525,593 | ||||||||
Income Before Other Income | (2,254,773 | ) | 321,944 | (1,932,829 | ) | |||||
Other Income (Loss) | ||||||||||
Interest Income | 5 | 8 | 13 | |||||||
Interest Expense | (5,116,598 | ) | (860,500 | ) | (5,977,098 | ) | ||||
Other Income (Expenses) | (17,720 | ) | 2,168 | (15,552 | ) | |||||
(5,134,313 | ) | (858,323 | ) | (5,992,636 | ) | |||||
Net Income (Loss) | $ | (7,389,086 | ) | $ | (536,379 | ) | $ | (7,925,465 | ) | |
NERA 50% | — | (268,189 | ) | (268,189 | ) | |||||
NERA 40% | (2,955,635 | ) | — | (2,955,635 | ) | |||||
$ | (2,955,635 | ) | $ | (268,189 | ) | $ | (3,223,824 | ) | ||
18
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Statement of Cash Flow
Year Ended December 31, 2010
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Cash Flows from Operating Activities | ||||||||||
Net Income (loss) | $ | (7,389,086 | ) | $ | (536,379 | ) | $ | (7,925,465 | ) | |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||||||||||
Depreciation and amortization | 9,428,284 | 981,881 | 10,410,165 | |||||||
Amortization of above market lease | 301,729 | — | 301,729 | |||||||
Changes in operating assets and liabilities: | ||||||||||
(Increase) Decrease in rents receivable | (42,525 | ) | (5,169 | ) | (47,694 | ) | ||||
(Decrease) Increase in accounts payable and accrued exp | 33,916 | (29,079 | ) | 4,837 | ||||||
(Increase) Decrease in real estate tax escrow | (146,176 | ) | (452 | ) | (146,628 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | (81,863 | ) | (88,817 | ) | (170,680 | ) | ||||
(Decrease) increase in advance rental payments and security deposits | 107,206 | 305 | 107,511 | |||||||
Total adjustments | 9,600,571 | 858,669 | 10,459,240 | |||||||
Net cash provided by (used in)operating activities | 2,211,485 | 322,290 | 2,533,775 | |||||||
Cash flows provided by (used in) investing activities | ||||||||||
Purchase and improvement of rental properties | (363,261 | ) | (28,480 | ) | (391,741 | ) | ||||
Net cash provided by (used in) investing activities | (363,261 | ) | (28,480 | ) | (391,741 | ) | ||||
Cash flows provided by (used in) investing activities | ||||||||||
Payment of financing cost | (5,000 | ) | — | (5,000 | ) | |||||
Proceeds of mortgage payable | — | — | — | |||||||
Principal payments of mortgage payable | — | (250,827 | ) | (250,827 | ) | |||||
(Distributions) to/investment by members | (2,075,000 | ) | (162,000 | ) | (2,237,000 | ) | ||||
Net cash provided by (used in) financing activities | (2,080,000 | ) | (412,827 | ) | (2,492,827 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (231,776 | ) | (119,017 | ) | (350,793 | ) | ||||
Cash and cash equivalents, at beginning of year | 985,842 | 138,342 | 1,124,184 | |||||||
Cash and cash equivalents, at end of year | $ | 754,066 | $ | 19,325 | $ | 773,391 | ||||
Supplementary cash flow statement information: | ||||||||||
Cash paid for interest | $ | 5,077,768 | $ | 855,334 | $ | 5,933,103 | ||||
Cash paid for state income taxes | $ | 3,350 | $ | 1,108 | $ | 4,458 | ||||
19
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Statement of Income
Year Ended December 31, 2009
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Revenues | ||||||||||
Rental Income | $ | 1,912,267 | $ | 2,415,312 | $ | 4,327,579 | ||||
Laundry and Sundry Income | 15,846 | 21,818 | 37,664 | |||||||
1,928,113 | 2,437,130 | 4,365,243 | ||||||||
Expenses | ||||||||||
Administrative | 122,516 | 37,605 | 160,121 | |||||||
Depreciation and Amortization | 1,690,998 | 1,499,119 | 3,190,117 | |||||||
Management Fees | 54,257 | 99,298 | 153,555 | |||||||
Operating | 173,464 | 351,567 | 525,032 | |||||||
Renting | 13,458 | 14,104 | 27,562 | |||||||
Repairs and Maintenance | 81,615 | 309,454 | 391,069 | |||||||
Taxes and Insurance | 192,386 | 302,142 | 494,529 | |||||||
2,328,694 | 2,613,290 | 4,941,984 | ||||||||
Income Before Other Income | (400,582 | ) | (176,160 | ) | (576,741 | ) | ||||
Other Income (Loss) | ||||||||||
Interest Income | 9,455 | 3 | 9,459 | |||||||
Interest Expense | (904,260 | ) | (873,855 | ) | (1,778,115 | ) | ||||
Other Income (Expenses) | (309 | ) | — | (309 | ) | |||||
(895,113 | ) | (873,852 | ) | (1,768,965 | ) | |||||
Net (Loss) | $ | (1,295,695 | ) | $ | (1,050,012 | ) | $ | (2,345,707 | ) | |
NERA 50% | — | (525,006 | ) | (525,006 | ) | |||||
NERA 40% | (518,278 | ) | — | (518,278 | ) | |||||
$ | (518,278 | ) | $ | (525,006 | ) | $ | (1,043,284 | ) | ||
20
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 13. COMBINING FINANCIAL STATEMENT SCHEDULES (Continued)
Combining Statement of Cash Flow
Year Ended December 31, 2009
| Hamilton Park Towers LLC | Hamilton on Main Apartments LLC | Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Cash Flows from Operating Activities | ||||||||||
Net Income (loss) | $ | (1,295,695 | ) | $ | (1,050,012 | ) | $ | (2,345,707 | ) | |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||||||||||
Depreciation and amortization | 1,690,998 | 1,499,119 | 3,190,117 | |||||||
Amortization of above market lease | 60,346 | — | 60,346 | |||||||
Changes in operating assets and liabilities: | 0 | |||||||||
(Increase) Decrease in rents receivable | (82,950 | ) | (3,993 | ) | (86,943 | ) | ||||
(Decrease) Increase in accounts payable and accrued exp | 753,668 | 64,293 | 817,961 | |||||||
(Increase) Decrease in real estate tax escrow | (338,390 | ) | (2,647 | ) | (341,037 | ) | ||||
(Increase) Decrease in due from joint venture | — | 230,000 | 230,000 | |||||||
(Increase) decrease in prepaid expenses and other assets | (1,068,381 | ) | 22,957 | (1,045,424 | ) | |||||
(Decrease) increase in advance rental payments and security deposits | 1,577,637 | 35,762 | 1,613,399 | |||||||
Total adjustments | 2,592,928 | 1,845,491 | 4,438,419 | |||||||
Net cash provided by (used in) operating activities | 1,297,233 | 795,479 | 2,092,712 | |||||||
Cash flows provided by (used in) investing activities | ||||||||||
Purchase and improvement of rental properties* | (129,456,226 | ) | (48,087 | ) | (129,504,313 | ) | ||||
Net cash provided by (used in) investing activities | (129,456,226 | ) | (48,087 | ) | (129,504,313 | ) | ||||
Cash flows provided by (used in) investing activities | ||||||||||
Payment of financing cost | (583,166 | ) | — | (583,166 | ) | |||||
Proceeds of mortgage payable | 89,914,000 | — | 89,914,000 | |||||||
Principal payments of mortgage payable | — | (238,022 | ) | (238,022 | ) | |||||
(Distributions) to/investment by members | 39,814,000 | (377,000 | ) | 39,437,000 | ||||||
Net cash provided by (used in) financing activities | 129,144,834 | (615,022 | ) | 128,529,812 | ||||||
Net increase (decrease) in cash and cash equivalents | 985,841 | 132,370 | 1,118,211 | |||||||
Cash and cash equivalents, at beginning of year | — | 5,972 | 5,972 | |||||||
Cash and cash equivalents, at end of year | $ | 985,841 | $ | 138,342 | $ | 1,124,183 | ||||
Supplementary cash flow statement information: | ||||||||||
Cash paid for interest | $ | 904,260 | $ | 868,140 | $ | 1,772,400 | ||||
Cash paid for state income taxes | — | $ | 3,626 | $ | 3,626 | |||||
21
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC
(Unconsolidated Significant Joint Ventures)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2011
NOTE 14. NEW ACCOUNTING PRONOUNCEMENT
In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs"("ASU 2011-04). The objective of ASU 2011-04 is to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the amendments do not result in a change in the application of the requirements in ASC Topic 820 "Fair Value Measurement". ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. The Joint Ventures are currently evaluating the impact of this guidance, however it is not expected to have a material impact on the Joint Ventures' consolidated financial statements.
22
HAMILTON PARK TOWERS LLC HAMILTON ON MAIN APARTMENTS LLC Combined Financial Statements—Unconsolidated Significant Joint Ventures As of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009 Together With Report of Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Hamilton Park Towers LLC Hamilton on Main Apartments LLC (Unconsolidated Significant Joint Ventures) Combined Balance Sheets
Hamilton Park Towers, LLC Hamilton on Main Apartments, LLC (Unconsolidated Significant Joint Ventures) Combined Statements of Income Years Ended December 31, 2011, 2010 and 2009
Hamilton Park Towers LLC and Hamilton on Main Apartments LLC (Unconsolidated Significant Joint Ventures) Combined Statements of Changes in Members' Capital
HAMILTON PARK TOWERS LLC HAMILTON ON MAIN APARTMENTS LLC (Unconsolidated Significant Joint Ventures) Combined Statements of Cash Flow
HAMILTON PARK TOWERS LLC AND HAMILTON ON MAIN APARTMENTS LLC (Unconsolidated Significant Joint Ventures) NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2011
Combining Balance Sheet December 31, 2011
Combining Statement of Income Year Ended December 31, 2011
Combining Statement of Cash Flow Year Ended December 31, 2011