United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 2002
[] TRANSITION REPORT UNDER 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)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2002
Assets
Cash and cash equivalents $ 1,223
Receivables and deposits 184
Other assets 969
Investment property:
Land $ 6,357
Buildings and related personal property 76,188
82,545
Less accumulated depreciation (45,180) 37,365
$ 39,741
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 131
Tenant security deposit liabilities 235
Accrued property taxes 421
Other liabilities 914
Mortgage note payable 48,765
Partners' Deficit:
General partner $ (1,354)
Limited partners (566 units issued and outstanding) (9,371) (10,725)
$ 39,741
See Accompanying Notes to Financial Statements
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,
2002 2001 2002 2001
Revenues:
Rental income $ 3,222 $ 3,315 $ 6,467 $ 6,553
Other income 323 328 811 981
Total revenues 3,545 3,643 7,278 7,534
Expenses:
Operating 1,030 1,037 2,205 2,541
General and administrative 120 115 250 265
Depreciation 893 797 1,770 1,583
Interest 950 968 1,902 1,942
Property taxes 210 210 421 471
Total expenses 3,203 3,127 6,548 6,802
Net income $ 342 $ 516 $ 730 $ 732
Net income allocated to general
partner (3%) $ 10 $ 15 $ 22 $ 22
Net income allocated to
limited partners (97%) 332 501 708 710
$ 342 $ 516 $ 730 $ 732
Net income per limited partnership unit $ 586.57 $ 885.16 $1,250.88 $1,254.42
Distribution per limited partnership
unit $ -- $ 962.90 $ -- $ 962.90
See Accompanying Notes to Financial Statements
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, 2001 566 $(1,376) $(10,079) $(11,455)
Net income for the six months
ended June 30, 2002 -- 22 708 730
Partners' deficit at
June 30, 2002 566 $(1,354) $ (9,371) $(10,725)
See Accompanying Notes to Financial Statements
RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2002 2001
Cash flows from operating activities:
Net income $ 730 $ 732
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,770 1,583
Amortization of loan costs 21 21
Change in accounts:
Receivables and deposits (42) 162
Other assets (159) (23)
Accounts payable (74) 7
Tenant security deposit liabilities (59) 76
Accrued property taxes 421 470
Other liabilities 253 185
Net cash provided by operating activities 2,861 3,213
Cash flows used in investing activities:
Property improvements and replacements (1,272) (1,492)
Cash flows from financing activities:
Payments on mortgage note payable (615) (570)
Advances from NHP 156 --
Payments on advances from NHP (156) --
Distributions to partners -- (2,642)
Net cash used in financing activities (615) (3,212)
Net increase (decrease) in cash and cash equivalents 974 (1,491)
Cash and cash equivalents at beginning of period 249 2,988
Cash and cash equivalents at end of period $ 1,223 $ 1,497
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,880 $ 1,922
At December 31, 2001, property improvements and replacements and accounts
payable were adjusted by approximately $1,078,000 for non cash activity.
Distributions of approximately $2,080,000 were accrued at December 31, 2000 and
paid during the six months ended June 30, 2001.
See Accompanying Notes to Financial Statements
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"), a publicly traded real estate investment trust, 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, 2002 are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 2002. 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,
2001.
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.
During the six months ended June 30, 2002 and 2001, 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 $287,000 and $299,000 for the six months ended
June 30, 2002 and 2001, respectively, which are included in operating expenses.
Affiliates of NHP were eligible to receive reimbursement of accountable
administrative expenses amounting to approximately $411,000 and $420,000 for the
six months ended June 30, 2002 and 2001, respectively, which are included in
general and administrative expenses, investment properties and other
liabilities. Included in these amounts are fees related to construction
management services provided by an affiliate of NHP of approximately $187,000
and $178,000 for the six months ended June 30, 2002 and 2001, respectively. The
construction management service fees are calculated based on a percentage of
current additions to investment property. At June 30, 2002 approximately $36,000
was owed to affiliates for unpaid reimbursements.
In accordance with the Partnership Agreement, NHP loaned the Partnership
approximately $156,000 during the three months ended June 30, 2002 to cover
capital improvements. Interest is charged at the prime rate plus 2%. Interest
expense was approximately $1,000 for the three months ended June 30, 2002. The
Partnership repaid the entire loan and accrued interest by June 30, 2002.
Subsequent to June 30, 2002 NHP loaned an additional $1,708,000 to the
Partnership to cover property improvements required by the holder of the first
mortgage encumbering the Partnership's property to be made to the property in
2002. Subsequent to June 30, 2002, this loan was repaid from proceeds from the
financing of a second mortgage, which closed August 2, 2002 (see Note D).
Beginning in 2001, the Partnership began insuring its property up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its property above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the six months ended June 30, 2002
and 2001, the Partnership was charged by AIMCO and its affiliates approximately
$138,000 and $127,000, respectively, for insurance coverage and fees associated
with policy claims administration.
Note C - 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.
Note D - Subsequent Event
On August 2, 2002, the Partnership obtained additional financing on its
investment property in the amount of $9,500,000. The second mortgage carries a
stated interest rate of 6.50%. Principal and interest payments on the second
mortgage of approximately $75,000 will be due monthly beginning October 1, 2002
until the loan matures in July 2020, at which time the loan will be fully
amortized.
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 operation. 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 Apartments located in Fairfax County, Virginia. Average occupancy
for both the six months ended June 30, 2002 and 2001 was 96%.
Results of Operations
The Partnership's net income for the six months ended June 30, 2002 was
approximately $730,000 as compared to net income of approximately $732,000 for
the six months ended June 30, 2001. The Partnership's net income for the three
months ended June 30, 2002 was approximately $342,000 compared to net income of
approximately $516,000 for the three months ended June 30, 2001. Net income for
the six months ended June 30, 2002 remained relatively constant as a decrease in
total revenues was offset by a decrease in total expenses. Net income for the
three months ended June 30, 2002 decreased due to a decrease in total revenues
and, to a lesser extent, an increase in total expenses.
Total revenues decreased for the three and six months ended June 30, 2002 due to
decreases in rental income and other income. Rental income decreased primarily
due to an increase in bad debt expense. The decrease in other income for the six
months ended June 30, 2002 is primarily due to a decrease in corporate housing
income, which is no longer offered at the property, and a decrease in interest
income, partially offset by an increase in utility reimbursements and an
increase in insurance proceeds.
Total expenses increased slightly for the three months ended June 30, 2002, due
to an increase in depreciation expense, partially offset by decreases in both
operating and interest expense. Property tax and general and administrative
expenses remained relatively constant for the three months ended June 30, 2002.
Total expenses decreased for the six months ended June 30, 2002 due primarily to
a decrease in operating expense and, to a lesser extent, decreases in interest,
property tax, and general and administrative expenses. The decrease in total
expenses for the six months ended June 30, 2002 was partially offset by an
increase in depreciation expense. The decrease in operating expense for both the
three and six months ended June 30, 2002 is primarily due to decreases in
corporate housing expenses, which are no longer being offered at the property,
utility expenses, maintenance expense, payroll related expenses, and advertising
expense as a result of decreased referral fees. The decrease in operating
expense was partially offset by an increase in insurance expense as a result of
increased premiums. The decrease in interest expense for both the three and six
months ended June 30, 2002 is due to scheduled principal payments resulting in a
lower carrying balance of the mortgage encumbering the property. Property tax
expense decreased for the six months ended June 30, 2002 due to the timing and
receipt of property tax bills which affected the Partnership's property tax
accrual during the first quarter of the prior year. Depreciation expense
increased for both the three and six months ended June 30, 2002 due to property
improvements and replacements placed into service during the past twelve months.
General and administrative expense decreased for the six months ended June 30,
2002 due to a decrease in management reimbursements to NHP and its affiliates as
allowed under the Partnership Agreement. 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 in
general and administrative expense at both June 30, 2002 and 2001.
As part of the ongoing business plan of the Partnership, NHP 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, NHP 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 NHP will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 2002, the Partnership had cash and cash equivalents of approximately
$1,223,000, compared to approximately $1,497,000 at June 30, 2001. The increase
in cash and cash equivalents of approximately $974,000 for the six months ended
June 30, 2002, from the Partnership's calendar year end, is due to approximately
$2,861,000 of cash provided by operating activities, partially offset by
approximately $1,272,000 of cash used in investing activities and approximately
$615,000 of cash used in financing activities. Cash used in financing activities
consisted of payments of principal made on the mortgage encumbering the
Partnership's investment property and the repayment of an advance from NHP
partially offset by the receipt of an advance from NHP. Cash used in investing
activities consisted of property improvements and replacements. The Partnership
invests its working capital reserves in interest bearing accounts.
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.
The Partnership has budgeted, but is not limited to, approximately $1,433,000 of
capital improvements at the property for 2002 which consist primarily of
structural improvements, interior improvements, garage and carport upgrades,
patio and balcony upgrades, energy conservation improvements, maintenance
equipment, cabinet replacement, air conditioning and heating upgrades, and floor
covering replacement. As of June 30, 2002, the Partnership expended
approximately $194,000 for capital improvements at its investment property
consisting primarily of clubhouse renovations, air conditioning upgrades,
elevator and structural improvements, patio and balcony upgrades, interior
improvements, major landscaping, water heaters, and floor covering replacement.
These improvements were funded from operations. The mortgage company is
requiring that certain improvements be made to the property within the remainder
of 2002. Most of these improvements have been included in the 2002 budget.
Subsequent to June 30, 2002, NHP loaned approximately $1,078,000 to the
Partnership to cover the anticipated cost of these improvements. Subsequent to
June 30, 2002, this loan was repaid from proceeds from the financing of a second
mortgage, which closed August 2, 2002 (see discussion below).
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The first mortgage
indebtedness of approximately $48,765,000 is being amortized over 240 months
until the loan matures on July 1, 2020 at which time the loan will be fully
amortized. On August 2, 2002, the Partnership obtained additional financing on
its investment property in the amount of $9,500,000. The second mortgage carries
a stated interest rate of 6.50%. Principal and interest payments on the second
mortgage of approximately $75,000 will be due monthly beginning October 1, 2002
until the loan matures in July 2020, at which time the loan will be fully
amortized.
The Partnership distributed the following amounts during the six months ended
June 30, 2002 and 2001 (in thousands, except per unit data):
Six Months Per Limited Six Months Per Limited
Ended Partnership Ended Partnership
June 30, 2002 Unit June 30, 2001 Unit
Operations $ -- $ -- $ 562 $962.90
During the six months ended June 30, 2001, the Partnership paid approximately
$2,080,000 in distributions from cash from operations that the Partnership had
declared at December 31, 2000. The Partnership's cash available for distribution
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 the timing of the debt maturity, refinancing and/or property sale. There can
be no assurance, however, that the Partnership will generate sufficient funds
from operations after required capital expenditures to permit distributions to
its partners during the remainder of 2002 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 382.48 limited partnership units
(the "Units") in the Partnership representing 67.58% of the outstanding Units at
June 30, 2002. 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 units of limited partnership interest in the Partnership
in exchange for cash or a combination of cash and 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
voting on certain amendments to the Partnership Agreement and voting to remove
the General Partner. As a result of its ownership of 67.58% of the outstanding
Units, AIMCO is in a position to control all voting decisions with respect to
the Registrant. Although the associate general partner of the General Partner
owes fiduciary duties to the limited partners of the Partnership, the associate
general partner of the General Partner also owes fiduciary duties to AIMCO, as
its sole stockholder. As a result, the duties of the Associate General Partner,
as managing general partner, to the Partnership and its limited partners may
come into conflict with the duties of the Associate General Partner to AIMCO, as
its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment property is recorded at cost, less accumulated depreciation, unless
considered impaired. If events or circumstances indicate that the carrying
amount of a property may be impaired, the Partnership will make an assessment of
its recoverability by estimating the undiscounted future cash flows, excluding
interest charges, of the property. If the carrying amount exceeds the aggregate
future cash flows, the Partnership would recognize an impairment loss to the
extent the carrying amount exceeds the fair value of the property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include changes in the
national, regional and local economic climate; local conditions, such as an
oversupply of multifamily properties; competition from other available
multifamily property owners and changes in market rental rates. Any adverse
changes in these factors could cause an impairment in the Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area.
Concessions are charged to income as incurred.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3.1 Riverside Park Associates Limited Partnership Amended
and Restated Limited Partnership Agreement, dated July 15, 1986;
incorporated by reference to the Exhibits to the Registrant's
Registration Statement on Form 10, filed on April 29, 1987.
(Commission Partnership file number 0-15740).
Exhibit 3.2 Certificate of Limited Partnership of Riverside Park
Associates Limited Partnership, filed with the Secretary of State of
Delaware May 14, 1986; incorporated by reference to the exhibits to
the Registrant's Annual Report filed on Form 10-K on March 30, 1988.
Exhibit 3.3 Amendment to Amended and Restated Partnership
Agreement of Riverside Park Associates Limited Partnership dated
August 23, 1995; incorporated by reference to the Exhibits to the
Registrant's Annual Report filed on Form 10KSB, filed on March 31,
1998.
Exhibit 10(f) Multifamily Note dated August 2, 2002, by and
between Riverside Park Associates Limited Partnership and Reilly
Mortgage Group, Inc., a District of Columbia corporation.
Exhibit 99 Certification of Chief Executive Officer and Chief
Financial Officer
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 2002.
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/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President and
Chief Accounting Officer
Date: August 14, 2002
Exhibit 99
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Riverside Park
Associates (the "Partnership"), for the quarterly period ended June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Patrick J. Foye, as the equivalent of the Chief Executive Officer of
the Partnership, and Paul J. McAuliffe, as the equivalent of the Chief Financial
Officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: August 14, 2002
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: August 14, 2002
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10(f)
FHLMC Loan No. 002698242
Riverside Park Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $9,500,000.00 As of August 2, 2002
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of REILLY MORTGAGE GROUP, INC., a
District of Columbia corporation, the principal sum of Nine Million Five Hundred
Thousand and 00/100 Dollars (US $9,500,000.00), with interest on the unpaid
principal balance at the annual rate of Six and Five Hundred Thousandths percent
(6.500%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, and any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at
2010 Corporate Ridge, Suite 1000, McLean, Virginia 22102, or such other place as
may be designated by written notice to Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Seventy Four Thousand Nine Hundred Six and 76/100 Dollars (US
$74,906.76), shall be payable on the first day of each month beginning on
October 1, 2002, until the entire unpaid principal balance evidenced by this
Note is fully paid.
(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion, be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on July 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(d) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for thirty (30) days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of four (4) percentage points
above the rate stated in the first paragraph of this Note and the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30)
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than thirty (30) days
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on a Business Day designated as the date for such prepayment in a written
notice from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Paragraph 10(c). For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Any prepayment premium payable under this Note shall be computed as follows:
(1) If the prepayment is made between the date of this Note and the
date that is [SEE EXHIBIT A] months after the first day of the first calendar
month following the date of this Note (the "Yield Maintenance Period"), the
prepayment premium shall be whichever is the greater of subparagraphs (i) and
(ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
8.750% U.S. Treasury Security due May 1, 2017, as reported in The
Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
2. If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including fees and out-of-pocket
expenses of attorneys (including Lender's in-house attorneys) and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household or agricultural
purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modifications to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
AIMCO RIVERSIDE PARK, L.L.C., a Delaware
limited liability company
By: NHP Management Company, a District of
Columbia corporation, its Manager
By:
Patti K. Fielding
Senior Vice President
57-1102091
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS THE ___ DAY OF AUGUST, 2002.
REILLY MORTGAGE GROUP, INC., a District
of Columbia corporation
By:_________________________________
Mark E. Gordon
Assistant Vice President
PAGE A-2
EXHIBIT A
Modifications to Multifamily Note
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other Event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Subparagraph 10(c) (1) is deleted to the colon and replaced with
the following text. The text after the colon shall remain
unchanged.
(1)If prepayment is made between the date of this Note and July
1, 2015 (the "Yield Maintenance Period"), the prepayment
premium shall be whichever is the greater of subparagraphs (i)
and (ii) below:
4. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.