SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________________
Form 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934.
_______________________________________________
For the Three Months Ended March 31, 2001 commission file
number 2-84474
APT Housing Partners Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2791736
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
500 West Cummings Park, Suite 6050,Woburn,Massachusetts 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781)935-4200
N/A
Former name, former address and former fiscal year, if change
since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities and Exchange Act of 1934 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______________
This document contains 13 pages.
PART I
ITEM 1. FINANCIAL STATEMENTS
APT HOUSING PARTNERS LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
2001 2000
(unaudited) (audited)
Investment in Local
Limited Partnerships $ -0- $ -0-
Cash and Cash Equivalents 245,094 252,224
Total Assets $245,094 $ 252,224
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 8,547
Professional Fees 14,375 11,500
Total Liabilities 23,725 20,047
Commitments and Contingencies
Partner's Capital (Deficit):
General Partners ( 34,897) ( 34,681)
Limited Partners,
3,700 partnership units
authorized, issued and
outstanding 256,266 266,858
Total Partners'
Capital (Deficit) 221,369 232,177
Total Liabilities and
Partners' Capital (Deficiency) $245,094 $252,224
See accompanying notes to financial statements
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2001 March 31, 2000
Interest Income $ 2,927 $ 2,302
Operating Expenses:
Management fees-affiliate 9,350 9,350
Administrative 4,385 5,000
Total Operating Expenses 13,735 14,350
Loss Before Share of Losses of
and Distributions from Local
Limited Partnerships (10,808) (12,048)
Distribution from Local
Limited Partnership - -
Share of Losses of Local
Limited Partnerships - -
Net Income (Loss) ($10,808) ($12,048)
Limited Partners' Interest in
Net Income (Loss) ($10,592) ($11,807)
Weighted Average Number of Outstanding
Limited Partnership Units 3,700 3,700
Net Income (Loss) Per
Limited Partnership Unit ($ 2.86) ($ 3.19)
See accompanying notes to financial statements
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2001 2000
Cash Flows From Operating Activities:
Net Income (Loss) ($ 10,808) ($12,048)
Adjustments to reconcile net income (loss)
to net cash provided by (used by) operating activities:
Change in operating assets and liabilities:
Increase (decrease) in accrued
expenses 3,678 14,350
Net Cash provided by (used by)
operating activities: ( 7,130) 2,302
Cash Flows From Financing Activities:
Distributions to limited partners - -
Distributions to general partner - -
Net cash used in financing activities - -
Net Increase (Decrease) in cash and
cash equivalents ( 7,130) 2,302
Cash and Cash Equivalents,
Beginning of Period 252,224 203,385
Cash and Cash Equivalents,
End of Period $245,094 $205,687
See accompanying notes to financial statements
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
APT Housing Partners Limited Partnership (the Partnership),
organized as a Massachusetts Limited Partnership on June 8, 1983
was formed to invest in other Local Limited Partnerships ("the
Local Limited Partnerships") which own and operate existing
residential rental housing developments that are financed or
operated with assistance from Federal, State and/or local
governmental agencies. The Partnership has limited partnership
interests in two Local Limited Partnerships, with a total of 156
residential apartment units, located within the Commonwealth of
Massachusetts.
The general partner of the Partnership is APT Asset Management,
Inc. The Partnership Agreement, as amended, authorized the
issuance of 3,700 limited partnership units, all of which were
issued and are outstanding.
Financial Statements:
The accompanying balance sheet as of March 31, 2001, the
statements of operations for the three-month periods ended
March 31, 2001 and March 31, 2000, and the statements of cash
flows for the three-month periods then ended have been prepared
by the Partnership without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necesssary to present fairly the financial position, results of
operations, and cash flows for the interim periods have been made.
The accompanying balance sheet as of December 31, 2000 has been
taken from the audited financial statements at that date.
The results of operations for the periods ended March 31, 2001
and 2000 are not necessarily indicative of operating results for
a full year.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Investment in Local Limited Partnerships:
The Partnership accounts for its investments in the Local Limited
Partnerships by the equity method. Accordingly, the investments
are carried at cost, adjusted for the Partnership's proportionate
share of earnings or losses. The Partnership's share of losses
on an investment is recognized only to the extent of the
investment. Distributions received are reflected as reductions
of the investments. Once an investment balance has been reduced
to zero, subsequent distributions received by the Partnership are
recognized as income.
Income taxes:
Federal and state income taxes are not included in the
accompanying financial statements because these taxes, if any,
are the responsibility of the individual Partners.
Statement of cash flows:
For purposes of the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. Cash
equivalents consist of a U.S. Treasury Bill at March 31, 2001 and
a U.S. Government Agency security at March 31, 2000.
Net income per limited partnership unit:
Net income per limited partnership unit is computed by dividing
net income available to limited partnership units by the weighted
average number of outstanding limited partnership units during
the period.
2. ALLOCATION OF BENEFITS
In accordance with the Partnership Agreement, income, losses,
credits and distributions are allocated 2% to the General Partner
and 98% to the Limited Partners.
3. INVESTMENT IN LOCAL LIMITED PARTNERSHIPS
The Partnership has investments in two Local Limited Partnerships,
Ashland Common Associates ("Ashland") and Rockledge Apartments
Associates ("Rockledge"). The Partnership's investments consist
of $1,143,695 for a 95.5% limited partnership interest in Ashland
which owns an apartment complex of 96 units located in Ashland,
Massachusetts and $543,900 for a 97% limited partnership interest
in Rockledge which owns an apartment complex of 60 units located
in Wakefield, Massachusetts.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
The Local Limited Partnerships receive governmental assistance
under programs which restrict the payment of annual cash
distributions to the owners to specified maximum distributable
amounts and to available surplus cash, as defined in the
applicable Regulatory Agreement between the governmental agency
and the Local Limited Partnership. Undistributed amounts are
cumulative and may be distributed in subsequent years if there is
available surplus cash. Based upon the Partnership's ownership
interest in each of the Local Limited Partnerships, the maximum
annual distributable amounts that can be made to the Partnership
from Ashland and Rockledge are $87,903 and $9,552, respectively.
For the quarters ended March 31, 2001 and 2000, the aggregate
share of losses of the Local Limited Partnerships attributable to
the Partnership amounted to $71,239 and $33,484, respectively.
The Partnership's cumulative share of losses of the Local Limited
Partnerships exceeded its investments by $1,074,254 at March 31,
2001 and $1,003,015 at December 31, 2000. Accordingly, the
investments have been reduced to zero and have not been reflected
in the accompanying financial statements, and the Partnership has
discontinued the application of the equity method. The
Partnership will resume applying the equity method only after its
allocable share of the net income of the Local Limited Partnerships
equals the share of net losses not previously recognized during
the period the equity method was suspended.
Summarized balance sheet information on a combined basis for the
Local Limited Partnerships as of March 31, 2001 and
December 31, 2000 was as follows:
March 31, 2001 December 31, 2000
(unaudited) (audited)
Rental property $ 7,597,934 $7,597,934
Accumulated depreciation ( 4,904,859) ( 4,838,312)
Cash and cash equivalents 302,540 297,070
Restricted assets and deposits 538,940 618,298
Other assets 57,483 103,888
Total assets 3,592,038 3,778,878
Mortgage loans payable 5,749,367 5,766,301
Other liabilities 161,344 176,014
Total liabilities 5,910,711 5,942,315
Partners' capital (deficiency) ($ 2,318,673) ($2,163,437)
Composition of partners' capital (deficiency)
General partners ($ 164,626) ($ 154,227)
Limited partners ( 2,154,047) ( 2,009,210)
Partners' capital
(deficiency) ($ 2,318,673) ($2,163,437)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Summarized unaudited income statement information on a combined
basis for the Local Limited Partnerships for the quarters ended
March 31, 2001 and 2000 was as follows:
March 31, 2001 March 31, 2000
Revenues $ 436,454 $ 431,429
Net income (loss) ($ 74,370) ($ 34,699)
4. CASH AND CASH EQUIVALENTS
The Partnership maintains cash and cash equivalent balances in a
financial institution located in the Commonwealth of
Massachusetts. Accounts in the institution are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $100,000. At
December 31, 2000, cash and cash equivalents included a three
month U.S. Treasury Bill which is backed by the full faith and
credit of the U.S. Government and the remainder of the
Partnership's cash and cash equivalents were fully insured. As
well, at March 31, 2001 cash and cash equivalents includes a U.S.
Treasury Bill and the remainder of the Partnership's cash was
fully insured.
5. TRANSACTIONS WITH RELATED PARTIES
American Securities Team, Inc., an affiliate of the General
Partner of the Partnership, receives an annual program
management fee. This fee is for managing the affairs of the
Partnership and for providing investor services to the Limited
Partners. The fee is equal to .5% of invested assets plus the
Local Limited Partnerships' annualized outstanding nonrecourse
mortgage debt. Program management fees charged to operations for
the quarters ended March 31, 2001 and 2000 amounted to $9,350 and
$9,350, respectively. The Partnership has liabilities to the
affiliate of $9,350 and $8,547 at March 31, 2001 and December 31,
2000, respectively.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Partnership's financial instruments have
been determined at a specific point in time, based on relevant
market information and information about the financial instrument.
Estimates of fair value are subjective in nature and involve
uncertainties and matters of significant judgment and therefore
cannot be determined with precision. Changes in assumptions
could affect the estimates.
The carrying amounts of cash and cash equivalents and accrued
expenses at March 31, 2001 and December 31, 2000 approximate
their fair values because of the short-term maturity of these
instruments.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
Liquidity and Capital Resources
The Partnership's primary source of funds were the proceeds of
its public offering. Other sources of liquidity include interest
earned on funds and cash distributions from operations of the
Local Limited Partnerships in which the Partnership has invested.
These sources of liquidity are available to meet obligations of
the Partnership.
The Partnership received $3,700,000 in gross proceeds from the
sale of partnership interests pursuant to the public offering,
resulting in net proceeds available for investment, after volume
discounts, establishment of working capital reserves, payment of
sales commissions, acquisition fees and offering expenses, of
$3,071,000.
As of March 31, 2001, the Partnership has invested all of the net
proceeds available for investment.
The Partnership's commitment to investments requiring initial
capital contributions has been paid. The Partnership has no
other significant capital commitments.
Pursuant to HUD's efforts to provide for the nation's housing
needs, the Multifamily Assisted Housing Reform and Affordability
Act (MAHRAA) of 1997, as amended, was enacted. In this Act,
Congress set forth the legislation for a permanent "mark-to-
market" program and provided for permanent authority for the
renewal of Section 8 Contracts. Owners with Section 8 contracts
expiring after September 30 ,1998 are subject to the provisions
of MAHRAA. On September 11, 1998, HUD issued an interim rule
to provide clarification of the implementation of the mark-to-
market program. Since then, revised guidance has been provided
through various HUD housing notices, most recently HUD housing
notice 99-36, which addresses project-based Section 8 contracts
expiring in fiscal year 2000.
Under this notice, project owners have several options for
Section 8 contract renewals, depending on the type of project and
rent level. Options include marking rents up to market, renewing
other contracts with rents at or below market, referring projects
to the Office of Multifamily Housing Assistance Restructuring
(OMHAR) for mark-to market or "OMHAR lite" renewals, renewing
contracts that are exempted from referral to OMHAR, renewing
contracts for portfolio re-engineering demonstration and
preservation projects, and opting out of the Section 8 program.
Owners must submit their option to HUD at least 120 days before
expiration of their contract. Each option contains specific
rules and procedures that must be followed to comply with the
requirements of housing notice 99-36.
As such, each Local Limited Partnership may choose to either opt
out of the Section 8 program, request mortgage restructuring and
renewal of the Section 8 contract, or request renewal of the
Section 8 contract without mortgage restructuring. Each option
contains a specific set of rules and procedures that must be
followed in order to comply with the requirements of MAHRAA.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued):
The Partnership cannot reasonably predict legislative initiatives
and governmental budget negotiations, the outcome of which could
result in a reduction in funds available for the various federal
and state administered housing programs including the Section 8
program. Such changes could adversely affect the future net
operating income and debt structure of certain Local Limited
Partnerships currently receiving such subsidy or similar subsidies.
No cash distributions were received from the Local Limited
Partnerships during the quarters ended March 31, 2001 and 2000.
However, distributions of $87,903 have been received from one of
the Local Limited Partnerships in each of the three years in the
period ended December 31, 2000. These distributions are used to
meet the Partnership's obligations. The Partnership has invested
in Local Limited Partnerships owning housing developments which
receive governmental assistance under programs which restrict the
cash return available to the housing development owners. The
Partnership believes that it will continue to receive cash
distributions from a Local Limited Partnership in an amount
sufficient to meet its operating expenses. However, there can
be no assurance that cash distributions received will be adequate
to allow the Partnership to make any further cash distributions
to its partners.
Management is not aware of any trends or events, commitments or
uncertainties that will impact liquidity in a material way.
Management believes the only impact would be for laws that have
not yet been adopted.
Results of Operations
The Partnership was formed to provide various benefits to its
Limited Partners. It is anticipated that the Local Limited
Partnerships in which the Partnership has invested will primarily
produce tax losses of approximately $17,000 per $5,000 investment
in approximately 14 to 17 full years of Partnership operations,
with approximately $11,000 of such tax losses occurring during
the first 5 years of Partnership operations (assuming the
applicability of current laws, regulations and court decisions).
The benefits received in the form of tax savings may be reduced
due to the enactment of the Tax Reform Act of 1986, depending on
the individual circumstances of each Limited Partner. There can
be no assurance that the Partnership will be able to attain its
investment objectives. The Partnership will not seek to sell its
interest in any housing development or Local Limited Partnership
until proceeds of such sale would supply sufficient cash to
enable its Limited Partners to pay applicable taxes. Proceeds of
such sales will not be reinvested. It is not expected that any
of the Local Limited Partnerships in which the Partnership has
invested will generate cash flow sufficient to provide for
distributions to Limited Partners in any material amount.
Except for the operating balance of cash, the Partnership's
assets consist primarily of limited partnership interests in
Local Limited Partnerships owning government-assisted housing
developments. The Partnership accounts for its investments in
the Local Limited Partnerships using the equity method of
accounting. Under the equity method of accounting, the
investment cost is subsequently adjusted for the
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued):
Partnership's share of each Local Limited Partnership's results
of operations and cash distributions. The Partnership's share in
the loss of each Local Limited Partnership is not recognized to
the extent that the investment balance would become negative.
For the quarters ended March 31, 2001 and 2000, the aggregate
share of losses of the Local Limited Partnerships attributable
to the Partnership and not included in the statements of income
amounted to $71,239 and $33,484, respectively. The Partnership's
cumulative share of losses of the Local Limited Partnerships
exceed its investments, and, accordingly, its share of losses of
the Local Limited Partnerships have not been reflected in the
financial statements in accordance with the equity method of
accounting because the investment balances have been reduced to
zero.
The Partnership's net losses for the quarters ended March 31, 2001
and 2000 were due primarily to the accrual of first quarter
program management fees. The distribution received from a Local
Limited Partnership in calendar 2000 (for 1999) was not approved
by the governmental agency regulating the Local Limited
Partnership as of March 31, 2000, and, accordingly was not
received until a subsequent quarter in the year. A distribution
for 2000 to be received in 2001 has not been approved as of March
31, 2001 by the governmental regulatory agency. Management
believes that a distribution will be approved. The Partnership
incurs an annual program management fee payable to American
Securities Team, Inc. ("AST"), an affiliate of the General
Partner, for managing the affairs of the Partnership and for
providing investor services to the Limited Partners. The fee to
AST is equal to .5% of invested assets plus the Local Limited
Partnerships' annualized outstanding nonrecourse debt. The fee
amounted to $9,350 for the quarters ended March 31, 2001 and 2000.
Administrative expenses consist of professional fees.
Other
The Partnership's investment as a Limited Partner in the Local
Limited Partnerships is subject to the risks incident to the
potential losses arising from management and ownership of improved
real estate. The Partnership's investments also could be
adversely affected by poor economic conditions, generally, which
could increase vacancy levels, increase rental payments defaults,
or increase operating expenses. Any or all of these circumstances
could threaten the financial viability of one or both of the
local Limited Partnerships.
There are also substantial risks associated with the operations
of Apartment Complexes receiving governmental assistance. These
include: governmental regulations concerning tenant eligibility
which may make it more difficult to rent apartments in the
complexes; difficulties in obtaining government approval for
rent increases; limitations on the percentage of income which
low and moderate income tenants may pay as rent; the possibility
that Congress may not appropriate funds to enable the U.S.
Department of Housing and Urban Development to make the rental
assistance payments it has contracted to make; and that when the
rental assistance contracts expire, there may not be market
demand for apartments at full market rents in a Local Limited
Partnership's Apartment Complex.
PART I
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Partnership maintains cash and cash equivalents in a financial
institution which is insured by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. The Partnership also has a
short-term U.S. Treasury Bill which is backed by the full faith
and credit of the U.S. Government. The Partnership does not
believe these financial instruments are subject to significant
market risk.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Articles of Incorporation and By-laws: The Registrant is
not incorporated. The Partnership Agreement was filed
with the Registrant's Registration Statement on Form S-11
(#2-84474) and is incorporated herein by reference.
Purchase and Sale Agreement, dated as of March 30, 1984,
relating to Ashland Commons Associates filed with
Registrant's Form 8-K dated March 30, 1984 and is
incorporated herein by reference.
Purchase and Sale Agreement, dated as of April 30, 1984,
relating to Historic Cohoes, II filed with Registrant's
Form 8-K dated April 30, 1984 and is incorporated herein
by reference.
Purchase and Sale Agreement, dated as of June 22, 1984,
relating to Rockledge Apartments Associates filed with
Registrant's Form 8-K dated June 22, 1984 and is
incorporated herein by reference.
Withdrawal of APT Housing Partners Limited Partnership as
a Limited Partner in a Local Limited Partnership, dated as
of December 18, 1986, relating to Historic Cohoes II,
filed with Registrant's Form 8-K dated March 30, 1987 and
is incorporated herein by reference.
b. No reports on Form 8-K have been filed for the quarter
ended March 31, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
APT HOUSING PARTNERS LIMITED PARTNERSHIP
By: APT Asset Management, Inc.
General Partner
Date:_____________________ ________________________________
Jeff Ewing, President