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, 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)
September 30, 2001
Assets
Cash and cash equivalents $ 472
Receivables and deposits 41
Other assets 922
Investment property:
Land $ 6,357
Buildings and related personal property 74,394
80,751
Less accumulated depreciation (42,571) 38,180
$ 39,615
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 307
Tenant security deposit liabilities 301
Accrued property taxes 270
Other liabilities 492
Mortgage note payable 49,679
Partners' Deficit:
General partner $ (1,376)
Limited partners (566 units issued and outstanding) (10,058) (11,434)
$ 39,615
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 Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 3,314 $ 3,131 $ 9,867 $ 9,084
Other income 300 702 1,281 1,610
Total revenues 3,614 3,833 11,148 10,694
Expenses:
Operating 1,134 1,391 3,675 3,840
General and administrative 123 221 388 434
Depreciation 836 833 2,419 2,423
Interest 963 981 2,905 3,224
Property taxes 209 195 680 603
Total expenses 3,265 3,621 10,067 10,524
Income before extraordinary item 349 212 1,081 170
Loss on early extinguishment of debt -- -- -- (313)
Net income (loss) $ 349 $ 212 $ 1,081 $ (143)
Net income (loss) allocated to general
partner (3%) $ 10 $ 6 $ 32 $ (4)
Net income (loss) allocated to
limited partners (97%) 339 206 1,049 (139)
$ 349 $ 212 $ 1,081 $ (143)
Per limited partnership unit:
Income before extraordinary item $ 598.94 $ 363.96 $ 1,853.36 $ 291.52
Loss on early extinguishment of debt -- -- -- (537.10)
Net income (loss) $ 598.94 $ 363.96 $ 1,853.36 $ (245.58)
Distribution per limited partnership
unit $ 1,782.68 $10,256.18 $ 2,745.58 $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, 2000 566 $(1,360) $ (9,553) $(10,913)
Distribution to partners -- (48) (1,554) (1,602)
Net income for the nine months
ended September 30, 2001 -- 32 1,049 1,081
Partners' deficit at
September 30, 2001 566 $(1,376) $(10,058) $(11,434)
See Accompanying Notes to Financial Statements
d)
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2001 2000
Cash flows from operating activities:
Net income (loss) $ 1,081 $ (143)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 2,419 2,423
Amortization of loan costs 31 181
Extraordinary loss on early extinguishment of debt -- 313
Change in accounts:
Receivables and deposits 151 (802)
Other assets (34) (492)
Accounts payable 137 131
Tenant security deposit liabilities 67 (8)
Accrued property taxes 270 195
Other liabilities (23) 13
Net cash provided by operating activities 4,099 1,811
Cash flows from investing activities:
Property improvements and replacements (2,070) (1,544)
Net withdrawals from restricted escrows -- 92
Net cash used in investing activities (2,070) (1,452)
Cash flows from financing activities:
Due from affiliate -- (510)
Payments on mortgage note payable (863) (563)
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 (3,682) (6,621)
Net cash used in financing activities (4,545) (2,435)
Net decrease in cash and cash equivalents (2,516) (2,076)
Cash and cash equivalents at beginning of period 2,988 3,004
Cash and cash equivalents at end of period $ 472 $ 928
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,874 $ 2,998
Distributions of approximately $2,080,000 were accrued at December 31, 2000 and
paid during the first quarter of 2001.
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 nine month periods ended September 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 nine months ended
September 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $442 $418
Reimbursement for services of affiliates and investor
service fees (included in general and administrative
expenses, and investment properties) 630 391
During the nine months ended September 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 $442,000 and $418,000 for the nine months ended
September 30, 2001 and 2000, respectively.
An affiliate of NHP received reimbursement of accountable administrative
expenses amounting to approximately $630,000 and $391,000 for the nine months
ended September 30, 2001 and 2000, respectively. Included in these amounts are
approximately $284,000 and $63,000 of construction service reimbursements at
September 30, 2001 and 2000, respectively.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 377.69 limited partnership units in
the Partnership representing approximately 66.73% of the outstanding units at
September 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. In this regard, on
August 29, 2001, AIMCO Properties, LP, commenced a tender offer to acquire any
and all of the units not owned by affiliates of AIMCO for a purchase price of
$44,439 per unit. Pursuant to this offer, AIMCO acquired 10.53 units during the
quarter ended September 30, 2001. 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 voting on certain amendments to the
Partnership Agreement and voting to remove the General Partner. As a result of
its ownership of approximately 66.73% of the outstanding units, AIMCO is in a
position to control all such 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 for the refinancing were approximately $827,000.
Under the terms of the previous loan agreement, the Partnership was 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 $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 D - Distributions
During the nine months ended September 30, 2001, the Partnership paid
approximately $2,080,000 (approximately $2,018,000 to the limited partners or
$3,565.37 per limited partnership unit) in distributions from cash from
operations that the Partnership had declared at December 31, 2000. During the
nine months ended September 30, 2001, the Partnership declared and paid
distributions of approximately $1,602,000 (approximately $1,554,000 to the
limited partners, or $2,745.58 per limited partnership unit) from cash from
operations. 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).
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
nine months of 2001 was 96% compared to 99% for the first nine months of 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 nine months ended September 30, 2001,
totaled approximately $1,081,000 as compared to a net loss of approximately
$143,000 for the nine months ended September 30, 2000. The Partnership realized
net income for the three months ended September 30, 2001, of approximately
$349,000 compared to net income of approximately $212,000 for the three months
ended September 30, 2000. The increase in net income for the nine months ended
September 30, 2001 is attributable to an increase in total revenues and a
decrease in total expenses. Net income also increased for the nine months ended
September 30, 2001 due to the recognition of an extraordinary loss on early
extinguishment of debt which was not applicable during the three and nine months
ended September 30, 2001, as discussed below. Income for the nine months ended
September 30, 2001 was approximately $1,081,000 as compared to income before the
extraordinary loss on early extinguishment of debt of approximately $170,000 for
the nine months ended September 30, 2000. The increase in net income for the
three months ended September 30, 2001 is attributable to a decrease in total
expenses which was offset by a decrease in total revenues.
Total expenses for the three and nine months ended September 30, 2001 decreased
primarily due to a decrease in operating expenses and, to a lesser extent,
general and administrative expenses and interest expense which was partially
offset by an increase in property tax expense. The decrease in operating
expenses is due to a decrease in corporate housing expenses, which is no longer
being charged at the property. Operating expense also decreased due to a
decrease in property expense. Property expense decreased due to a reduction in
employee salaries and related benefits at the investment property. The decrease
in property expense was partially offset by an increase in utility costs paid by
the property relating to vacant apartment units. The decrease in operating
expense was partially offset by an increase in insurance premiums. The decrease
in interest expense is primarily due to the refinance of the Partnership's
mortgage loan on the property in 2000 at a lower interest rate. The increase in
property tax expense is primarily attributable to an increase in the assessed
value of the property and the timing and receipt of tax bills received from the
taxing authorities which affected the Partnership's property tax accrual.
General and administrative expenses decreased due to a decrease in
reimbursements to the associate general partner and a decrease in professional
services necessary to operate the partnership.
Total revenues for the nine months ended September 30, 2001 increased primarily
due to an increase in rental income, which was partially offset by a decrease in
other income. Total revenues for the three months ended September 30, 2001
decreased primarily due to a decrease in other income, which was partially
offset by an increase in rental income. 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 interest income due
to lower cash balances in interest bearing accounts. The increase in rental
income is primarily due to an increase in average rental rates at the investment
property which more than offset the decrease in occupancy at the property as
discussed above.
Also included in general and administrative expense for the three and nine
months ended September 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. 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 September 30, 2001, the Partnership held cash and cash equivalents of
approximately $472,000, compared to approximately $928,000 at September 30,
2000. Cash and cash equivalents decreased approximately $2,516,000 for the nine
months ended September 30, 2001 from the Partnership's year ended December 31,
2000. This decrease was due to approximately $4,545,000 of cash used in
financing activities and approximately $2,070,000 of cash used in investing
activities, partially offset by approximately $4,099,000 of cash provided by
operating activities. Cash used in financing activities consisted of
distributions to the partners and, to a lesser extent, payments of principal
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 for the refinancing were approximately $827,000.
Under the terms of the previous loan agreement, the Partnership was 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 $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, 2001, the Partnership expended
approximately $2,070,000 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, and lighting improvements. These improvements were funded
from operating cash flow. The Partnership has budgeted, but is not limited to,
capital improvements of approximately $5,066,000 for 2001 at the property which
consist of structural improvements, interior decoration, garage and carport
enhancements, lighting improvement, floor covering and appliance 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 $49,679,000 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.
During the nine months ended September 30, 2001, the Partnership paid
approximately $2,080,000 (approximately $2,018,000 to the limited partners or
$3,565.37 per limited partnership unit) in distributions from cash from
operations that the Partnership had declared at December 31, 2000. During the
nine months ended September 30, 2001, the Partnership declared and paid
distributions of approximately $1,602,000 (approximately $1,554,000 to the
limited partners, or $2,745.58 per limited partnership unit) from cash from
operations. 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). 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 377.69 limited partnership units in
the Partnership representing approximately 66.73% of the outstanding units at
September 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. In this regard, on
August 29, 2001, AIMCO Properties, LP, commenced a tender offer to acquire any
and all of the units not owned by affiliates of AIMCO for a purchase price of
$44,439 per unit. Pursuant to this offer, AIMCO acquired 10.53 units during the
quarter ended September 30, 2001. 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 voting on certain amendments to the
Partnership Agreement and voting to remove the General Partner. As a result of
its ownership of approximately 66.73% of the outstanding units, AIMCO is in a
position to control all such 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:
None.
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 6, 2001