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 June 30, 2001
[ ] 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)
June 30, 2001
Assets
Cash and cash equivalents $ 1,497
Receivables and deposits 30
Other assets 921
Investment property:
Land $ 6,357
Buildings and related personal property 73,816
80,173
Less accumulated depreciation (41,735) 38,438
$ 40,886
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 177
Tenant security deposit liabilities 310
Accrued property taxes 470
Other liabilities 700
Mortgage note payable 49,972
Partners' Deficit:
General partner $ (1,355)
Limited partners (566 units issued and outstanding) (9,388) (10,743)
$ 40,886
See Accompanying Notes to Financial Statements
b)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Rental income $ 3,315 $ 3,001 $ 6,553 $ 5,953
Other income 328 529 981 908
Total revenues 3,643 3,530 7,534 6,861
Expenses:
Operating 1,037 1,257 2,541 2,449
General and administrative 115 130 265 213
Depreciation 797 804 1,583 1,590
Interest 968 1,004 1,942 2,103
Property taxes 210 200 471 408
Total expenses 3,127 3,395 6,712 6,763
Income before extraordinary item 516 135 732 98
Extraordinary loss on early
extinguishment of debt -- (453) -- (453)
Net income (loss) $ 516 $ (318) $ 732 $ (355)
Net income (loss) allocated to general
partner (3%) $ 15 $ (10) $ 22 $ (11)
Net income (loss) allocated to
limited partners (97%) 501 (308) 710 (344)
$ 516 $ (318) $ 732 $ (355)
Per limited partnership unit:
Income before extraordinary item $ 885.16 $ 231.55 $1,254.42 $ 167.95
Extraordinary loss on early
extinguishment of debt -- (775.72) -- (775.72)
Net income (loss) $ 885.16 $(544.17) $1,254.42 $ (607.77)
Distribution per limited partnership
unit $ 962.90 $ -- $ 962.90 $1,353.36
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, 2000 566 $(1,360) $(9,553) $(10,913)
Distribution to partners -- (17) (545) (562)
Net income for the six months
ended June 30, 2001 -- 22 710 732
Partners' deficit at
June 30, 2001 566 $(1,355) $(9,388) $(10,743)
See Accompanying Notes to Financial Statements
d)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2001 2000
Cash flows from operating activities:
Net income (loss) $ 732 $ (355)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 1,583 1,590
Amortization of loan costs 21 172
Extraordinary loss on early extinguishment of debt -- 453
Change in accounts:
Receivables and deposits 162 (1,749)
Other assets (23) (10)
Accounts payable 7 (43)
Tenant security deposit liabilities 76 (4)
Accrued property taxes 470 402
Other liabilities 185 (250)
Net cash provided by operating activities 3,213 206
Cash flows from investing activities:
Property improvements and replacements (1,492) (1,130)
Net withdrawals from restricted escrows -- 92
Net cash used in investing activities (1,492) (1,038)
Cash flows from financing activities:
Payments on mortgage note payable (570) (381)
Repayment of mortgage note payable -- (44,442)
Proceeds from mortgage note payable -- 51,000
Loan costs paid -- (782)
Prepayment penalties paid -- (612)
Distribution to partners (2,642) (790)
Net cash (used in) provided by financing activities (3,212) 3,993
Net (decrease) increase in cash and cash equivalents (1,491) 3,161
Cash and cash equivalents at beginning of period 2,988 3,004
Cash and cash equivalents at end of period $ 1,497 $ 6,165
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,922 $ 1,885
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. The general partner of the Partnership is Winthrop
Financial Associates, A Limited Partnership (the "General Partner" or "WFA").
NHP Management Company ("NHP"), the associate general partner of the General
Partner and an affiliate of Apartment Investment and Management Company
("AIMCO"), has the right to cause the General Partner to take such action as it
deems advisable with respect to the Partnership. In the opinion of the General
Partner, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six month periods ended June 30, 2001 are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2001. 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, 2000.
Segment Reporting:
Statement of Financial Standards ("SFAS") No. 131, "Disclosure about Segments of
an Enterprise and Related Information" established standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
established standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. Moreover, due to the very nature of
the Partnership's operations, the General Partner believes that segment-based
disclosures will not result in a more meaningful presentation than the financial
statements as presently presented.
Note B - 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 six months ended June 30,
2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $299 $272
Reimbursement for services of affiliates and investor
service fees (included in general and administrative
expenses, operating expenses and investment properties) 420 235
During the six months ended June 30, 2001 and 2000, 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 $299,000 and $272,000 for the six months ended
June 30, 2001 and 2000, respectively.
An affiliate of NHP received reimbursement of accountable administrative
expenses amounting to approximately $420,000 and $235,000 for the six months
ended June 30, 2001 and 2000, respectively.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 367.16 limited partnership units in
the Partnership representing approximately 64.87% of the outstanding units at
June 30, 2001. 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 acquire additional limited partnership interests in the Partnership for
cash or in exchange for units in the operating partnership of AIMCO either
through private purchases or tender offers. 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 64.87% 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 its affiliation with the General Partner.
Note C - Extraordinary Loss on Early Extinguishment of Debt
On June 29, 2000, the Partnership refinanced its mortgage note payable. 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 as of June 30, 2000 for the refinancing were
approximately $782,000. 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 approximately $125,000,
additional prepayment penalties of approximately $142,000 and the write-off of
unamortized loan costs of approximately $186,000 resulted in an extraordinary
loss on early extinguishment of debt of approximately $453,000.
Note D - Distributions
The Partnership paid approximately $2,080,000 in distributions from cash from
operations that the Partnership had declared at December 31, 2000 during the six
months ended June 30, 2001. During the six months ended June 30, 2001, the
Partnership declared and paid a distribution of approximately $562,000
(approximately $545,000 to the limited partners, or $962.90 per limited
partnership unit) from cash from operations. During the six months ended June
30, 2000, the Partnership declared and paid a distribution from operations of
approximately $790,000 (approximately $766,000 to the limited partners or
$1,353.36 per limited partnership unit). Subsequent to June 30, 2001, the
Partnership distributed approximately $1,040,000 (approximately $1,009,000 to
the limited partners or $1,782.69 per limited partnership unit) from cash from
operations.
Note E - Contingencies
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
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 first six
months of 2001 was 96% compared to 99% for the corresponding period in 2000.
This decrease in occupancy is attributable to tenants purchasing new homes in
the area as a result of lower interest rates.
Results of Operations
The Partnership's net income for the six months ended June 30, 2001, totaled
approximately $732,000 as compared to a net loss of approximately $355,000 for
the six months ended June 30, 2000. The Partnership realized net income for the
three months ended June 30, 2001, of approximately $516,000 compared to a net
loss of approximately $318,000 for the three months ended June 30, 2000. The
increase in net income for the three and six months ended June 30, 2001 is
attributable to an increase in total revenues and a decrease in total expenses.
Net income also increased for the comparable periods due to the recognition of
an extraordinary loss on early extinguishment of debt for the three and six
months ended June 30, 2000 which was not applicable during the three and six
months ended June 30, 2001 as discussed below. Income for the three and six
months ended June 30, 2001 was approximately $616,000 and $832,000,
respectively, as compared to income before the extraordinary loss on early
extinguishment of debt of approximately $135,000 and $98,000 for the three and
six months ended June 30, 2000, respectively.
The increase in income before the extraordinary loss for the three months ended
June 30, 2001 is attributable to an increase in total revenues and a decrease in
total expenses. Total revenues increased primarily due to an increase in rental
income, partially offset by a decrease in other income. The increase in rental
income is primarily the result of an increase in average rental rates at the
investment property which more than offset the decrease in occupancy at the
property as discussed above. Other income decreased primarily due to a decrease
in corporate housing income, which is no longer being charged at the property.
Other income also decreased due to a decrease in utility income and interest
income due to lower cash balances in interest bearing accounts. The decrease in
total expenses is primarily due to a decrease in operating expenses and interest
expense. The decrease in operating expenses is due to a decrease in corporate
housing expenses, which is no longer being charged at the property. The decrease
in interest expense is primarily due to the refinancing of the Partnership's
mortgage loan on the property in 2000 as discussed below.
The increase in income before the extraordinary loss for the six months ended
June 30, 2001 is attributable to an increase in total revenues while total
expenses remained constant. Total revenues increased primarily due to an
increase in rental income and an increase in other income. The increase in
rental income is primarily the result of an increase in average rental rates at
the investment property which more than offset the decrease in occupancy at the
property. Other income increased primarily due to a net increase in utility
reimbursements. The decrease in interest expense was offset by an increase in
operating expense, general and administrative expenses and property tax expense.
The decrease in interest expense is primarily due to the refinancing of the
Partnership's mortgage loan on the property in 2000 as discussed below. The
increase in operating expense is primarily due to increases in utility expense,
employee bonuses and business permits. The increase in general and
administrative expenses is due to an increase in reimbursements to the associate
general partner allowed under the Partnership Agreement. Also included in
general and administrative expense for the three and six months ended June 30,
2001 and 2000 are 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. Property tax increased due to an
increase in the assessed value of the property as established by the taxing
authorities.
As part of the ongoing business plan of the Partnership, the associate 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 associate 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
associate general partner will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 2001, the Partnership held cash and cash equivalents of
approximately $1,497,000, compared to approximately $6,165,000 at June 30, 2000.
Cash and cash equivalents decreased approximately $1,491,000 for the six months
ended June 30, 2001 from the Partnership's year ended December 31, 2000. This
decrease was due to approximately $3,212,000 of cash used in financing
activities and approximately $1,492,000 of cash used in investing activities,
partially offset by approximately $3,213,000 of cash provided by operating
activities. Cash used in financing activities consisted of distributions to the
partners, and payments of principle made on the mortgage encumbering the
Partnership's investment property. Cash used in investing activities consisted
of property improvements and replacements. The Partnership invests its working
capital reserves in interest bearing accounts.
On June 29, 2000, the Partnership refinanced its mortgage note payable. 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 as of June 30, 2000 for the refinancing were
approximately $782,000. 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 approximately $125,000,
additional prepayment penalties of approximately $142,000 and the write-off of
unamortized loan costs of approximately $186,000 resulted in an extraordinary
loss on early extinguishment of debt of approximately $453,000.
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 six months ended June 30, 2001, the Partnership expended
approximately $1,492,000 for capital improvements and replacements at its
investment property, consisting primarily of structural improvements, elevator
upgrades, floor covering and appliance replacements, air conditioning upgrades,
interior decoration improvements, and lighting improvement. These improvements
were funded from operating cash flow. The Partnership has budgeted, but is not
limited to, capital improvements of approximately $4,192,000 for 2001 at the
property which consist of structural improvements, interior decoration
improvements, garage and carport enhancements, parking lot improvements, floor
covering replacements, air conditioning upgrades, and elevator upgrades.
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 $49,972,000 is being amortized over 240
months until the loan matures on July 1, 2020 at which time the loan will be
fully amortized. The General Partner will attempt to refinance and/or sell the
property prior to such maturity date. If the property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure.
The Partnership paid approximately $2,080,000 in distributions from cash from
operations that the Partnership had declared at December 31, 2000 during the six
months ended June 30, 2001. During the six months ended June 30, 2001, the
Partnership declared and paid a distribution of approximately $562,000
(approximately $545,000 to the limited partners, or $962.90 per limited
partnership unit) from cash from operations. During the six months ended June
30, 2000, the Partnership declared and paid a distribution from operations of
approximately $790,000 (approximately $766,000 to the limited partners or
$1,353.36 per limited partnership unit). Subsequent to June 30, 2001, the
Partnership distributed approximately $1,040,000 (approximately $1,009,000 to
the limited partners or $1,782.69 per limited partnership unit) from cash from
operations. The Partnership's distribution policy is reviewed on a monthly
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 2001 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 367.16 limited partnership units in
the Partnership representing approximately 64.87% of the outstanding units at
June 30, 2001. 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 acquire additional limited partnership interests in the Partnership for
cash or in exchange for units in the operating partnership of AIMCO either
through private purchases or tender offers. 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 64.87% 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 its affiliation with the General Partner.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
Current Report on Form 8-K dated July 6, 2001 and filed on
July 13, 2001, disclosing the dismissal of Arthur Andersen LLP
as the Registrant's certifying accountant and the appointment
of Ernst & Young LLP as the certifying accountants for the
year ended December 31, 2001.
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: July 31, 2001