FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-15740
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP (Exact name of
small business issuer as specified in its charter)
Delaware 04-2924048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
Assets
Cash and cash equivalents $ 928
Receivables and deposits 1,162
Due from affiliates 510
Other assets 1,377
Investment property:
Land $ 6,357
Buildings and related personal property 71,839
78,196
Less accumulated depreciation (39,562) 38,634
$ 42,611
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 269
Tenant security deposit liabilities 223
Accrued property taxes 195
Other liabilities 491
Mortgage note payable 50,818
Partners' Deficit:
General partner $(1,265)
Limited partners (566 units issued and outstanding) (8,120) (9,385)
$ 42,611
See Accompanying Notes to Financial Statements
b)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
Rental income $ 3,131 $ 2,811 $ 9,084 $ 8,169
Other income 702 253 1,610 728
Total revenues 3,833 3,064 10,694 8,897
Expenses:
Operating 1,391 1,067 3,840 3,092
General and administrative 221 95 434 280
Depreciation 833 754 2,423 2,128
Interest expense 981 987 3,224 2,961
Property taxes 195 199 603 596
Total expenses 3,621 3,102 10,524 9,057
Income (loss) before extraordinary item 212 (38) 170 (160)
Extraordinary loss on early
extinguishment of debt -- -- (313) --
Net income (loss) $ 212 $ (38) $ (143) $ (160)
Net income (loss) allocated to general
partner (3%) $ 6 $ (1) $ (4) $ (5)
Net income (loss) allocated to
limited partners (97%) 206 (37) (139) (155)
$ 212 $ (38) $ (143) $ (160)
Per limited partnership unit:
Income (loss) before extraordinary
item $ 363.96 $ (65.37) $ 291.52 $ (273.85)
Extraordinary loss on early
extinguishment of debt -- -- (537.10) --
Net income (loss) $ 363.96 $ (65.37) $ (245.58) $ (273.85)
Distribution per limited partnership
unit $10,256.18 $ -- $11,609.54 $ --
See Accompanying Notes to Financial Statements
c)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 566 $ -- $47,533 $47,533
Partners' deficit at
December 31, 1999 566 $(1,211) $(1,410) $(2,621)
Distribution to partners -- (50) (6,571) (6,621)
Net loss for the nine months
ended September 30, 2000 -- (4) (139) (143)
Partners' deficit at
September 30, 2000 566 $(1,265) $(8,120) $(9,385)
See Accompanying Notes to Financial Statements
d)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
Net loss $ (143) $ (160)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 2,423 2,128
Amortization of loan costs 181 258
Extraordinary loss on early extinguishment of debt 313 --
Change in accounts:
Receivables and deposits (802) (188)
Other assets (492) (95)
Accounts payable 131 (37)
Tenant security deposit liabilities (8) 21
Accrued property taxes 195 206
Other liabilities 13 (202)
Net cash provided by operating activities 1,811 1,931
Cash flows from investing activities:
Property improvements and replacements (1,544) (1,122)
Net withdrawals from restricted escrows 92 641
Net cash used in investing activities (1,452) (481)
Cash flows from financing activities:
Due from affiliate (510) --
Payments on mortgage note payable (563) (496)
Repayment of mortgage note payable (44,442) --
Proceeds from mortgage note payable 51,000 --
Loan costs paid (827) --
Prepayment penalties paid (472) --
Distribution to partners (6,621) --
Net cash used in financing activities (2,435) (496)
Net (decrease) increase in cash and cash equivalents (2,076) 954
Cash and cash equivalents at beginning of period 3,004 2,078
Cash and cash equivalents at end of period $ 928 $ 3,032
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,998 $ 2,704
See Accompanying Notes to Financial Statements
e)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Riverside Park Associates
Limited Partnership (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Winthrop Financial Associates, A Limited
Partnership (the "General Partner"), the general partner of the Partnership, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
month periods ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2000. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
Certain reclassifications have been made to the 1999 information to conform to
the 2000 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired control of the associate
general partner of the General Partner. Pursuant to the terms of the Second
Amended and Restated Agreement of Limited Partnership of the General Partner,
the associate general partner has the right to cause the General Partner to take
such action as it deems necessary in connection with the operation of the
Partnership. The General Partner does not believe that this transaction has had
or will have a material effect on the affairs and operations of the Partnership.
On February 26, 1999, the interest of the associate general partner was
transferred to NHP Management Company ("NHP"), an affiliate of AIMCO.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on NHP and its affiliates for
the management and administration of all Partnership activities. The Partnership
Agreement provides for certain payments to affiliates for services based on a
percentage of revenue and an annual partnership and investor service fee of
$110,000 subject to a 6% annual increase. The following transactions with NHP
and/or its affiliates were incurred during each of the nine months ended
September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $418 $354
Reimbursement for services of affiliates and investor
service fees (included in general and administrative
expenses and investment properties) 391 248
Refinance fee (included in loan costs) 510 --
Due from affiliates 510 --
Loan costs 45 --
During the nine months ended September 30, 2000 and 1999, affiliates of NHP were
entitled to receive 4% of gross receipts from the Partnership's investment
property for providing property management services. The Partnership paid to
such affiliates approximately $418,000 and $354,000 for the nine months ended
September 30, 2000 and 1999, respectively.
An affiliate of NHP received reimbursements of accountable administrative
expenses amounting to approximately $391,000 and $248,000 for the nine months
ended September 30, 2000 and 1999, respectively.
For acting as agent in connection with the refinancing of the property, the
General Partner was paid a commission of approximately $510,000 during the nine
months ended September 30, 2000. This amount is included in capitalized loan
costs which are included in "Other Assets" on the balance sheet at September 30,
2000.
At September 30, 2000, the Partnership was owed $510,000 from affiliates of the
General Partner. This amount was received from the affiliates of the General
Partner subsequent to September 30, 2000.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 342.98 limited partnership
units in the Partnership representing approximately 60.60% of the outstanding
units. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Under the Partnership Agreement, unitholders holding a
majority of the units are entitled to take action with respect to a variety of
matters, which would include without limitation, voting on certain amendments to
the Partnership Agreement and voting to remove the General Partner. As a result
of its ownership of approximately 60.60% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the General Partner because of their
affiliation with the General Partner.
Note D - Extraordinary Loss on Early Extinguishment of Debt
On June 29, 2000, the Partnership refinanced its mortgage note payable with
Reilly Mortgage Group, Inc. The refinancing replaced mortgage indebtedness of
approximately $44,442,000 with a new mortgage of $51,000,000. The mortgage was
refinanced at a rate of 7.64% compared to the prior rate of 30 day LIBOR plus
2.75% (9.44% at June 30, 2000). Payments of approximately $415,000 are due on
the first day of each month until the loan matures on July 1, 2020 at which time
the loan will be fully amortized. Capitalized loan costs incurred for the
refinancing were approximately $827,000. Under the terms of the previous loan
agreement, the Partnership was going to be required to pay a repayment fee to
the lender of $470,000 upon maturity, prepayment or after acceleration, and as
such, the Partnership was accruing this amount over the life of the loan. At the
time the loan was repaid the Partnership had accrued approximately $345,000. The
difference between the accrual and the fee paid of $470,000 or approximately
$125,000, additional prepayment penalties of approximately $2,000 and the
write-off of unamortized loan costs of approximately $186,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $313,000.
Note E - Distributions
During the nine months ended September 30, 2000 the Partnership paid
distributions of approximately $6,621,000 (approximately $6,571,000 to the
limited partners or $11,609.54 per limited partnership unit) consisting of cash
from operations of approximately $1,654,000 (approximately $1,604,000 to the
limited partners or $2,833.92 per limited partnership unit) and cash from
refinance proceeds all paid to the limited partners of approximately $4,967,000
(approximately $8,775.62 per limited partnership unit). No distributions were
declared or paid during the nine months ended September 30, 1999.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of one apartment complex
located in Fairfax County, Virginia. The Partnership rents apartment units to
tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999.
Segment information for the three and nine months ended September 30, 2000 and
1999, is shown in the following tables. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
Three Months ended September 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 3,131 $ -- $ 3,131
Other income 702 -- 702
Interest expense 981 -- 981
Depreciation 833 -- 833
General and administrative expense -- 221 221
Segment profit (loss) 433 (221) 212
Nine Months ended September 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 9,084 $ -- $ 9,084
Other income 1,610 -- 1,610
Interest expense 3,224 -- 3,224
Depreciation 2,423 -- 2,423
General and administrative expense -- 434 434
Extraordinary loss on early extinguishment
of debt (313) -- (313)
Segment profit (loss) 291 (434) (143)
Total assets 42,611 -- 42,611
Capital expenditures for investment
property 1,544 -- 1,544
Three Months ended September 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 2,811 $ -- $ 2,811
Other income 253 -- 253
Interest expense 987 -- 987
Depreciation 754 -- 754
General and administrative expense -- 95 95
Segment profit (loss) 44 (82) (38)
Nine Months ended September 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 8,169 $ -- $ 8,169
Other income 703 25 728
Interest expense 2,961 -- 2,961
Depreciation 2,128 -- 2,128
General and administrative expense -- 280 280
Segment profit (loss) 95 (255) (160)
Total assets 43,625 -- 43,625
Capital expenditures for investment
property 1,122 -- 1,122
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's sole asset is a 1,229 unit apartment complex known as
Riverside Park located in Fairfax County, Virginia. The property is leased to
tenants subject to leases of up to one year. Average occupancy for the nine
months ended September 30, 2000 was 99% compared to 97% for the nine months
ended September 30, 1999. Occupancy increased primarily due to a more aggressive
marketing program and a stronger local economy.
Results of Operations
The Partnership's net loss for the nine months ended September 30, 2000, totaled
approximately $143,000 as compared to a net loss of approximately $160,000 for
the nine months ended September 30, 1999. The Partnership realized net income
for the three months ended September 30, 2000, of approximately $212,000
compared to a net loss of approximately $38,000 for the three months ended
September 30, 1999. The increase in net income and the decrease in net loss for
the three and nine months ended September 30, 2000 is primarily attributable to
an increase in total revenue which more than offset an increase in total
expenses and an extraordinary loss on early extinguishment of debt as discussed
below during the nine month period ended September 30, 2000. Income before the
extraordinary loss on early extinguishment of debt for the three and nine months
ended September 30, 2000 was approximately $212,000 and $170,000, respectively,
as compared to a net loss of approximately $38,000 and $160,000 for the three
and nine months ended September 30, 1999.
The increase in net income before the extraordinary loss for the three and nine
months ended September 30, 2000 is attributable to an increase in total
revenues, partially offset by an increase in total expenses. Total revenues
increased due to increases in rental income and other income. The increase in
rental income is primarily the result of an increase in occupancy and average
rental rates at the property. Other income increased primarily due to an
increase in corporate housing income, which is a new program at the property,
utility income and reimbursements, and interest income due to higher cash
balances in interest bearing accounts, partially offset by a decrease in laundry
income.
The increase in total expenses is primarily due to an increase in operating,
depreciation, interest and general and administrative expenses. The increase in
operating expense is due to an increase in corporate housing expenses, employee
bonuses, utility expenses, and property management fees due to the increase in
rental revenue. The increase in depreciation expense is primarily attributable
to fixed assets placed in service during the last twelve months. The increase in
interest expense for the nine months ended September 30, 2000 is due to an
increase in the variable interest rate charged on the Partnership's variable
rate mortgage loan prior to the refinance on June 29, 2000 as discussed below.
The increase in general and administrative expenses is due to an increase in the
cost of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement and an increase in
professional services necessary to operate the Partnership. Included in general
and administrative expense for the nine months ended September 30, 2000 and 1999
are reimbursements to the associate general partner allowed under the
Partnership Agreement associated with its management of the Partnership. In
addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership from increases in expenses. As part of this plan, the
General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
Liquidity and Capital Resources
At September 30, 2000, the Partnership held cash and cash equivalents of
approximately $928,000, compared to approximately $3,032,000 at September 30,
1999. Cash and cash equivalents decreased approximately $2,076,000 for the nine
months ended September 30, 2000 from the Partnership's year ended December 31,
1999. This net decrease was comprised of approximately $2,435,000 of net cash
used in financing activities, and approximately $1,452,000 of cash used in
investing activities, partially offset by approximately $1,811,000 of cash
provided by operating activities. Cash used in financing activities consisted
primarily of the repayment of the mortgage encumbering the Partnership's
investment property, distributions to the partners, loan costs and prepayment
penalties paid and payments of principle made on the mortgage encumbering the
Partnership's investment property, partially offset by the proceeds from the new
loan on the Partnership's investment property. Cash used in investing activities
consisted primarily of property improvements and replacements, which was
partially offset by net withdrawals from restricted escrows. The partnership
invests its working capital reserves in money market accounts.
On June 29, 2000, the Partnership refinanced its mortgage note payable with
Reilly Mortgage Group, Inc. The refinancing replaced mortgage indebtedness of
approximately $44,442,000 with a new mortgage of $51,000,000. The mortgage was
refinanced at a rate of 7.64% compared to the prior rate of 30 day LIBOR plus
2.75% (9.44% at June 30, 2000). Payments of approximately $415,000 are due on
the first day of each month until the loan matures on July 1, 2020 at which time
the loan will be fully amortized. Capitalized loan costs incurred for the
refinancing were approximately $827,000. Under the terms of the previous loan
agreement, the Partnership was going to be required to pay a repayment fee to
the lender of $470,000 upon maturity, prepayment or after acceleration, and as
such, the Partnership was accruing this amount over the life of the loan. At the
time the loan was repaid the Partnership had accrued approximately $345,000. The
difference between the accrual and the fee paid of $470,000 or approximately
$125,000, additional prepayment penalties of approximately $2,000 and the
write-off of unamortized loan costs of approximately $186,000 resulted in an
extraordinary loss on early extinguishment of debt of approximately $313,000.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership and to comply with Federal, state
and local legal and regulatory requirements. Capital improvements planned for
the Partnership's investment property are as follows.
During the nine months ended September 30, 2000, the Partnership expended
approximately $1,544,000 for capital improvements and replacements at its
investment property, consisting primarily of structural improvements, appliance
replacements, floor covering replacements, air conditioning upgrades, interior
decoration improvements, and parking area improvements. These improvements were
funded from Partnership reserves and operating cash flow. The Partnership has
budgeted, but is not limited to, capital improvements of approximately
$3,587,000 for 2000 at the property which consist of structural improvements,
interior decoration improvements, exterior building painting, parking lot
improvements, carpet and vinyl replacements, air conditioning upgrades, and
ground lighting improvements.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such capital
improvements are completed, the Partnership's distributable cash flow, if any,
may be adversely affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness of approximately $50,818,000 bears interest at a rate of
7.64% and is due to mature on July 1, 2020 at which time it is scheduled to be
fully amortized.
During the nine months ended September 30, 2000 the Partnership paid
distributions of approximately $6,621,000 (approximately $6,571,000 to the
limited partners or $11,609.54 per limited partnership unit) consisting of cash
from operations of approximately $1,654,000 (approximately $1,604,000 to the
limited partners or $2,833.92 per limited partnership unit) and cash from
refinance proceeds all paid to the limited partners of approximately $4,967,000
(approximately $8,775.62 per limited partnership unit). No distributions were
declared or paid during the nine months ended September 30, 1999. The
Partnership's distribution policy is reviewed on a quarterly basis. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and timing of the debt maturity, refinancing
and/or sale of the property. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit further distributions to its partners during the
remainder of 2000 or subsequent periods.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
By: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP
General Partner
By: NHP Management Company,
Associate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: November 13, 2000