SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________________
Form 10Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934.
_______________________________________________
For the Three Months Ended March 31, 2002 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
incorporation or organization) Identification No.)
500 West Cummings Park, Suite 6050,Woburn, MA 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,
2002 2001
(unaudited) (audited)
Investment in Local Limited
Partnerships $ -0- $ -0-
Cash and Cash Equivalents $268,944 $ 282,041
Total Assets $268,944 $ 282,041
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Liabilities:
Accrued Expenses -
Affiliate $ 9,350 $ 7,696
Professional Fees 14,506 11,706
Total Liabilities 23,856 19,402
Commitments and Contingencies
Partner's Capital (Deficit):
General Partners ( 34,423) ( 34,072)
Limited Partners, 3,700
partnership units
authorized, issued and
outstanding 279,511 296,711
Total Partners' Capital
(Deficit) 245,088 262,639
Total Liabilities and
Partners' Capital
(Deficiency) $268,944 $282,041
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, 2002 March 31, 2001
Interest Income $ 1,242 $ 2,927
Operating Expenses:
Management fees - 9,350 9,350
affiliate
Administrative 9,443 4,385
Total Operating Expenses 18,793 13,735
Loss Before Share of
Losses of and Distri-
butions from Local
Limited Partnerships ( 17,551) ( 10,808)
Distribution from Local - -
Limited Partnership
Share of Losses of Local
Limited Partnerships - -
Net Income (Loss) ($ 17,551) ($10,808)
Limited Partners'
Interest in
Net Income (Loss) ($ 17,200) ($10,592)
Weighted Average Number
of Outstanding
Limited Partnership Units 3,700 3,700
Net Income (Loss) Per
Limited Partnership
Unit ($ 4.65) ($ 2.86)
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,
2002 2001
Cash Flows From
Operating Activities:
Net Income (Loss) ($ 17,551) ($10,808)
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 4,454 3,678
Net Cash provided by (used by)
operating activities: ( 13,097) (7,130)
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 ( 13,097) ( 7,130)
Cash and Cash Equivalents,
Beginning of Period 282,041 252,224
Cash and Cash Equivalents,
End of Period $268,944 $245,094
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, 2002, the
statements of operations for the three-month periods ended
March 31, 2002 and March 31, 2001, and the statements of cash
flows for the three-month periods then ended have been pre-
pared 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, 2001 has
been taken from the audited financial statements at that date.
The results of operations for the periods ended March 31, 2002
and 2001 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 liabili-
ties 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 Partner-
ship'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. No
cash equivalents were held at March 31, 2002 and December 31,
2001.
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 Partner-
ships, 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
3. INVESTMENT IN LOCAL LIMITED PARTNERSHIPS (continued)
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, 2002 and 2001, the aggregate
share of losses of the Local Limited Partnerships attributable
to the Partnership amounted to ($9,158) and ($71,239),
respectively. The Partnership's cumulative share of losses
of the Local Limited Partnerships exceeded its investments
by $1,141,131 at March 31, 2002 and $1,131,973 at December 31,
2001. 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, 2002
and December 31, 2001 was as follows:
March 31, December 31,
2002 2001
(unaudited) (audited)
Rental property $ 7,597,934 $7,597,934
Accumulated depreciation ( 5,172,281) ( 5,104,501)
Cash and cash equivalents 211,917 245,196
Restricted assets and deposits 714,963 625,242
Other assets 82,260 99,602
Total assets 3,434,794 3,463,473
Mortgage loans payable 5,681,401 5,695,219
Other liabilities 139,641 144,635
Total liabilities 5,821,042 5,839,854
Partners' capital
(deficiency) ($ 2,386,248) ($2,376,381)
Composition of partners'
capital (deficiency)
General partners ($ 164,411) ($ 163,702)
Limited partners ( 2,221,837) ( 2,212,679)
Partners' capital
(deficiency) ($ 2,386,248) ( $2,376,381)
APT HOUSING PARTNERS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT IN LOCAL LIMITED PARTNERSHIPS (continued)
Summarized unaudited income statement information on a com-
bined basis for the Local Limited Partnerships for the
quarters ended March 31, 2002 and 2001 was as follows:
March 31, 2002 March 31, 2001
Revenues $ 439,749 $ 436,454
Net income (loss) ($ 9,869) ($ 74,370)
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 March 31, 2002 and December 31, 2001 uninsured cash and
cash equivalents balances totaled $168,944 and $187,619,
repsectively.
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, 2002 and 2001
amounted to $9,350 and $9,350, respectively. The Partnership
has liabilities to the affiliate of $9,350 and $7,696
at March 31, 2002 and December 31, 2001, 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, 2002 and December 31, 2001 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 opera-
tions 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, 2002, 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 Afforda-
bility 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 "Section 8 Renewal Policy Guide"
which addresses project-based Section 8 contracts expiring
in fiscal year 2001.
Under this notice, project owners have several options for
Section 8 contract renewals, depending on the type of projec
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 the Section 8 Renewal Policy Guide.
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.
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 Local Limited
Partnerships during the quarters ended March 31, 2002 and
2001. However, a cash distribution was received in calendar
year 2001. This distribution was 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 will not receive a cash distribution in 2002.
Management believes there is sufficient cash balances to fund
operations. Accordingly, there can be no assurance that
future cash distributions will be adequate to allow the
Partnership to make 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 Partnership's share of each Local Limited Partner-
ship'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, 2002 and 2001, the aggregate share of net
income (losses) of the Local Limited Partnerships attributable
to the Partnership and not included in the statement of
operations amounted to ($9,158) and ($71,239), respectively.
The Partnership's cumulative share of losses of the Local
Limited Partnerships exceed its investments, and, accordingly,
its share of income/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 loss for the quarters ended March 31,
2002 and 2001 were due primarily to the accrual of first
quarter program management fees and administration expenses.
Management does not expect to receive cash distributions from
Local Limited Partnerships for calendar 2002 as the partner-
ships did not meet surplus cash as defined by HUD in Calendar
2001. Management believes existing cash balances are
sufficient to meet future operating expenses.
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, 2002 and 2001.
Administrative expenses for the three months ended March 31,
2002 and 2001 were $9,443 and $4,385, respectively and consist
of professional fees and legal fees related to Limited
Partnership operations. The increase from 2001 to 2002 was
the result of additional legal fees.
Interest income for the three months ended March 31, 2002
was $1,242 as compared to $2,927 for the first quarter of
2001. The decrease was due to the interest rates on the cash
and cash equivalents.
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 Partner-
ship'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 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, 2002.
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