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 Quarterly Period Ended June 30, 2001. Commission file num-
ber 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______________
PART I
ITEM 1. FINANCIAL STATEMENTS
APT HOUSING PARTNERS LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
June 30, December 31,
2001 2000
(Unaudited) (audited)
Investment in Local $ -0- $ -0-
Limited Partnerships
Cash and Cash Equivalents $299,589 $252,224
Total Assets $299,589 $252,224
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 8,547
Professional Fees $11,500 $11,500
Total Liabilities $20,850 $20,047
Commitments and Contingencies
Partners' Capital (Deficit):
General Partners (33,750) (34,681)
Limited Partners,
3,700 partnership units
authorized, issued
and outstanding 312,489 266,858
Total Partners'Capital (Deficit)
278,739 232,177
Total Liabilities and Partners'
Capital (Deficiency) $299,589 $252,224
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
6 Months 6 Months 3 Months 3 Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2001 2000 2001 2000
Interest Income
$ 3,968 $ 4,824 $1,041 $2,522
Operating Expenses:
Management fees-
affiliate 18,700 18,700 9,350 9,350
Administrative 13,217 10,679 8,832 5,679
Total Operating
Expenses 31,917 29,379 18,182 15,029
Loss Before
Share of Losses
of and Distributions
from Local Limited
Partnerships (27,949) (24,555) (17,141) (12,507)
Distribution from
Local Limited
Partnerships 74,511 87,903 74,511 87,903
Share of Losses
of Local Limited
Partnerships - - - -
Net Income
(Loss) $46,562 $63,348 $57,370 $75,396
Limited Partners'
Interest in
Net Income
(Loss) $45,631 $62,081 $56,223 $73,888
ITEM 1
FINANCIAL STATEMENTS (continued)
Weighted
Average
Number of
Outstanding
Limited
Partnership
Units 3,700 3,700 3,700 3,700
Net Income
(Loss)
Per Limited
Partnership
Unit $12.33 $16.78 $15.20 $19.97
PART I
ITEM 1. FINANCIAL STATEMENTS (Continued)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended Six Months Ended
June 30, 2001 June 30, 2000
Cash Flows From
Operating Activities:
Net Income (Loss) $46,562 $63,348
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 803 2,070
Net Cash provided by
(used by) operating
activities: 47,365 65,418
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 47,365 65,418
Cash and Cash
Equivalents,
Beginning of Period 252,224 203,385
Cash and Cash
Equivalents,
End of Period $ 299,589 $268,803
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 June 30, 2001, the
statements of operations for the six-month and three-month
periods ended June 30, 2001 and June 30, 2000, and the
statements of cash flows for the six-month periods then ended
have been prepared by the Partnership without audit. In the
opinion of management, alladjustments (which include only normal
recurring adjustments) necessary 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 six-month and three-month
periods ended June 30, 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
accounting principles generally accepted in the United States
of America 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 financialstatements, 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 accompany-
ing financial statements because these taxes, if any, are the
responsibility of the individual Partners.
Statement of cash flows:
For the 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 money market funds and U.S. Treasury Bills
with carrying values of $198,786 and $198,162 at June 30, 2001 and
December 31, 2000, respectively.
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 Commons 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 six-month periods ended June 30, 2001 and 2000, the
aggregate share of losses of the Local Limited Partnerships
attributable to the Partnership amounted to $115,506 and $68,011,
respectively. For the three-months ended June 30, 2001 and 2000,
the aggregate share of losses of the Local Limited Partnerships
attributable to the Partnership amounted to $44,267 and $34,527,
respectively. The Partnership's cumulative share of losses of
the Local Limited Partnerships exceeded its investments by
$1,118,521 at June 30, 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 June 30,2001 and December 31,
2000 was as follows:
June 30, 2001 December 31, 2000
(Unaudited) (audited)
Rental property $7,597,934 $7,597,934
Accumulated depreciation (4,971,409) (4,838,312)
Cash and cash equivalents 206,838 297,070
Restricted assets and deposits 565,575 618,298
Other assets 169,592 103,888
Total assets 3,568,530 3,778,878
Mortgage loans payable 5,731,621 5,766,301
Other liabilities 165,953 176,014
Total liabilities 5,897,574 5,942,315
Partners' capital (deficiency) ($2,329,044) ($2,163,437)
Composition of partners'
capital (deficiency):
General partners ($ 161,328) ($ 154,227)
Limited partners (2,167,716) ( 2,009,210)
Partners' capital (deficiency) ($2,329,044) ($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
six-month and three-month periods ended June 30, 2001 and
2000 were as follows:
Six Months Ended June 30, Three Months Ended June 30,
2001 2000 2001 2000
Revenues $880,992 $871,163 $444,538 $439,734
Net income
(loss) ($120,579) ($70,511) ($46,209) ($35,812)
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 Partner-
ship's cash and cash equivalents were fully insured. As well,
at June 30, 2001 cash and cash equivalents includes a U.S.
Treasury Bill and the Partnership's uninsured cash balances
totaled $3,241.
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 each of the six-month and three-month periods
$18,700 and $9,350, respectively. The Partnership has
liabilities to the affiliate of $9,350 and $8,547 at June
30, 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 June 30, 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 June 30, 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 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.
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.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued):
Cash distributions received from a Local Limited Partnership
amounted to $74,511 and $87,903 during the quarters
ended June 30, 2001 and 2000, respectively. 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 unti
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 Partner-
ship'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 six
- -month periods ended June 30, 2001 and 2000, the aggregate
share of losses of the Local Limited Partnerships
attributable to the Partnership amounted to $115,506 and
$68,011, respectively. For the three-months ended June 30,
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 $44,267
and $34,527, 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.
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued):
The Partnership's net income for the six-month and three-
month periods ended June 30, 2001 and 2000 was due
primarily to the receipt of a cash distribution from
its investment in a Local Limited Partnership.
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 per quarter for the periods
ended June 30, 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
Disclosure not applicable.
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
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 June 30, 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
Bruno/1APT/10Q601.word
1