SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-No.3
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________ to ________________
Commission File No. 0-13556
Cluster Housing Properties
(A California Limited Partnership)
(Exact name of registrant as specified in its charter)
California 04-2817478
(State or other jurisdiction of (I.R.S.
Employer incorporation or organization)
Identification No.)
5110 Langdale Way, Colorado Springs CO 80906
(Address of principal executive offices) (Zip Code)
(719) 527-0544
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities 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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of voting securities held by non-affiliates: Not
applicable, since securities are not actively traded on any exchange.
Documents incorporated by reference: None
The Exhibit Index is located on page ______
EXPLANATORY NOTE: This Amendment is being filed to include a signed
Report of Independent Accountants.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1,2 See Page F-2
3 See Exhibit Index contained herein
(b) Reports on Form 8-K
The Partnership has not filed and was not required to file any reports
on Form 8-K during the last quarter of 1996.
(c) See Exhibit Index contained herein
(d) See Page F-2.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CLUSTER HOUSING PROPERTIES
By: GP L'Auberge Communities, L.P., a California
Limited Partnership, General Partner
By: L'Auberge Communities, Inc., its General Partner
By: __/s/ Earl C. Robertson_________________________________
Earl C. Robertson, Executive Vice President
and Chief Financial Officer
Date: October 20, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
__/s/ Stephen B. Boyle Director, President and October 20, 1997
--------------------
STEPHEN B. BOYLE Principal Executive
Officer of L'Auberge Communities, Inc.
__/s/ Earl C. Roberston Executive Vice President and October 20, 1997
---------------------
EARL C. ROBERTSON Principal Financial Officer of
L'Auberge Communities, Inc.
APPENDIX A
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
---------
CONSOLIDATED FINANCIAL STATEMENTS
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1996
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
---------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants F-3
Consolidated Balance Sheets at December 31, 1996 and 1995 F-4
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Partners' Equity (Deficit)
for the years ended December 31, 1996, 1995 and 1994 F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994 F-7 -- F-8
Notes to Consolidated Financial Statements F-9 -- F-16
All Schedules are omitted as they are not applicable, not required, or the
information is provided in the financial statements or the notes thereto.
Report of Independent Accountants
To the Partners of
Cluster Housing Properties
(a California Limited Partnership):
We have audited the accompanying consolidated balance sheets of Cluster
Housing Properties (a California Limited Partnership) and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, partners' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the General Partners of the Partnership. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
General Partners of the Partnership, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Cluster
Housing Properties (a California Limited Partnership) and subsidiaries as of
December 31, 1996 and 1995 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1996 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Denver , Colorado
February 28, 1997
CLUSTER HOUSING PROPERTIES
(A California Limited Partnership)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
F-18
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
---------------
ASSETS
1996 1995
---- ----
Property, at cost:
Land $3,677,028 $3,677,028
Buildings and improvements 14,067,757 14,067,756
Equipment, furnishings and 1,576,836 1,295,545
fixtures
--------------- --------------
19,321,621 19,040,329
Less accumulated depreciation (4,810,314) (4,418,093)
--------------- --------------
14,511,307 14,622,236
Cash and cash equivalents 1,065,855 480,389
Short-term investments 1,067,446
-
Real estate tax escrows 41,632 44,055
Deposits 3,818 1,693
Accounts receivable 2,605 631
Deferred expenses, net ofaccumulated
amortization of $175,041 and 19,450 58,351
$136,140 --------------- --------------
Total assets $15,644,667 $16,274,801
=============== ==============
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $8,559,930 $8,695,278
Accounts payable 115,410 42,245
Accrued expenses 195,794 164,298
Due to affiliates 8,975 23,173
(Note 8)
Rents received in advance 4,538 10,495
Tenant security 55,320 57,306
deposits
--------------- --------------
8,939,967 8,992,795
liabilities
Minority interest (8,895)
-
Partners' equity 6,704,700 7,290,901
--------------- --------------
Total liabilities and partners' equity $15,644,667 $16,274,801
============= ==============
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1996, 1995 and 1994
-------------
1996 1995 1994
---- ---- ----
Revenue:
Rental income $2,615,350 $2,725,119 $2,572,947
Interest Income 56,391 83,222 58,128
----------------------------------------------
Total Revenue 2,671,741 2,808,341 2,631,075
Expenses:
Operations 1,237,828 1,084,870 991,569
Interest expense 787,301 799,167 809,974
Depreciation and amortization 431,117 410,300 401,875
General and administrative 383,273 204,889 166,681
----------------------------------------------
Total Expenses 2,839,519 2,499,226 2,370,099
----------------------------------------------
Net income (loss) ($167,778) $309,115 $260,976
==============================================
Net income (loss) allocated to:
General Partners ($1,678) $15,456 $13,049
Per unit Net income (loss) allocated to
Investor Limited Partner
interest:
32,421 units ($5.12) $9.06 $7.65
issued
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
for the years ended December 31, 1996, 1995 and 1994
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
Balance at December 31, 1993 ($141,908) $7,997,454 $7,855,546
Cash distributions (30,288) (575,474) (605,762)
Net income 13,049 247,927 260,976
-------------- --------------- --------------
Balance at December 31, 1994 (159,147) 7,669,907 7,510,760
Cash distributions (26,449) (502,525) (528,974)
Net income 15,456 293,659 309,115
-------------- --------------- --------------
Balance at December 31, 1995 (170,140) 7,461,041 7,290,901
Minority interest absorbed - (8,895) (8,895)
Cash distributions (20,476) (389,052) (409,528)
Net income (1,678) (166,100) (167,778)
-------------- --------------- --------------
Balance at December 31, 1996 ($192,294) $6,896,994 $6,704,700
============== =============== ==============
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995, 1994
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Interest received $80,257 $82,408 $55,610
Cash received from rental income 2,607,383 2,716,163 2,569,838
General and administrative (370,245) (201,143) (159,895)
expenses
Operations expense (1,179,822) (1,039,036) (968,373)
Interest paid (787,816) (799,636) (810,404)
--------------
-------------- ---------------
Net cash provided by operating activities 349,757 758,756 686,776
Cash flows from investing activities:
Purchase of fixed assets (281,346) (148,127) (6,392)
Cash received from short-term investments 1,043,580 327,298 32,545
-------------- --------------- --------------
Net cash provided by investing activities 762,234 179,171 26,153
Cash flows from financing activities:
Distributions to partners (389,052) (528,974) (605,762)
Deposits (2,125) (358) (95)
Principal payments on mortgage notes payable (135,348) (123,613) (112,822)
-------------- --------------- --------------
Net cash used by financing (526,525) (652,945) (718,679)
activities
-------------- --------------- --------------
Net increase (decrease) in cash and cash 585,466 284,982 (5,750)
equivalents
Cash and cash equivalents at beginning of the period 480,389 195,407 201,157
-------------- --------------- --------------
Cash and cash equivalents at end of the period $1,065,855 $480,389 $195,407
============== =============== ==============
Non cash financing activities:
Accrual of distributions to $20,476
partners
CLUSTER HOUSING PROPERTIES
(a California Limited Partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995, 1994
-------------
Reconciliation of net income (loss) to net cash provided by operating
activities:
1996 1995 1994
---- ---- ----
Net income (loss) ($167,778) $309,115 $260,976
Adjustments to reconcile net income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 431,117 410,300 401,875
Change in assets and liabilities net of effects
of investing and financing
activities:
Decrease in real estate tax 2,423 7,750 14,568
escrows
(Increase) decrease in accounts and interest receivable 21,951 (1,445) (1,153)
(Increase) decrease in deposits and prepaid expenses - 2,033 (2,033)
Increase in accounts payable and accrued expenses 84,185 35,871 8,679
Increase (decrease) in due to affiliates (14,198) 4,088 6,973
Increase (decrease) in rent received in (5,957) (3,526) 4,446
advance
Decrease in tenant security (1,986) (5,430) (7,555)
deposits
-------------- --------------- --------------
Net cash provided by operating activities $349,757 $758,756 $686,776
============== =============== ==============
1. Organization of Partnership:
Cluster Housing Properties (a California Limited Partnership) (the
"Partnership"), formerly Berry and Boyle Cluster Housing Properties, was formed
on August 8, 1983. The Partnership issued all of the General Partnership
Interests to three General Partners in exchange for capital contributions
aggregating $2,000. Stephen B. Boyle and GP L'Auberge Communities, L.P., (a
California Limited Partnership), formerly Berry and Boyle Management, are the
General Partners. In September, 1995, with the consent of Limited Partners
holding a majority of the outstanding Units, as well as the consent of the
mortgage lenders for the Partnership's three properties, Richard G. Berry
resigned as a general partner of the Partnership.
A total of 2,000 individual Limited Partners owning 32,421 units have
contributed $16,210,500 of capital to the Partnership. At December 31, 1996, the
total number of Limited Partners was 1,967. Except under certain limited
circumstances, as defined in the Partnership Agreement, the General Partners are
not required to make any additional capital contributions. The General Partners
or their affiliates will receive various fees for services and reimbursement for
various organizational and selling costs incurred on behalf of the Partnership.
The Partnership will continue until December 31, 2010, unless terminated earlier
by the sale of all, or substantially all, of the assets of the Partnership, or
otherwise in accordance with the provisions of Section 16 of the Partnership
Agreement.
2. Significant Accounting Policies:
A. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiaries: Sin Vacas Joint Venture (Sin Vacas),
Autumn Ridge Joint Venture (Autumn Ridge) and Villa Antigua Joint
Venture (Villa Antigua). All intercompany accounts and transactions
have been eliminated in consolidation. The Partnership follows the
accrual basis of accounting. Refer to Note 5 regarding the termination
of the Joint Ventures.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying value of cash and cash equivalents approximates fair value. It
is the Partnership's policy to invest cash in income-producing
temporary cash investments. The Partnership mitigates any potential
risk from such concentration of credit by placing investments with high
quality financial institutions.
C. Short-term Investments
At December 31, 1995, short term investments consisted solely of
various forms of U. S. Government backed securities, with an aggregate
par value of $1,075,000, which matured in February, 1996. As of
December 31, 1996, there were no short term investments. Investments
are recorded at amortized cost, which approximates market value.
D. Significant Risks and Uncertainties
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.
E. Depreciation
Depreciation is provided for by the use of the straight-line method
over estimated useful lives as follows:
Buildings and improvements 39-40 years
Equipment, furnishings and fixtures 5-15 years
F. Deferred Expenses
Costs of obtaining mortgages on the properties are being amortized over
the mortgage term using the straight-line method, which approximates
the effective interest method. Fees paid to certain of the property
developers were amortized over the term of the services provided using
the straight-line method. Any unamortized costs remaining at the date
of a refinancing are expensed in the year of refinancing.
G. Income Taxes
The Partnership is not liable for Federal or state income taxes because
Partnership income or loss is allocated to the Partners for income tax
purposes. If the Partnership's tax returns are examined by the Internal
Revenue Service or state taxing authority and such an examination
results in a change in Partnership taxable income (loss), such change
will be reported to the Partners.
H. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
I. Long-Lived Assets
The Partnership's long-lived assets include property and equipment. On
a quarterly basis, the partnership evaluates the recoverability of the
rental properties using undiscounted cash flows from operations.
J. Reclassification
Certain items in the financial statements for the years ended December
31, 1995 and 1994 have been reclassified to conform to the 1996
presentation.
3. Property, at Cost
Property, at cost, consisted of the following at December 31, 1996:
Initial Cost Costs Capitalized Gross Amount At Which Carried
to Subsequent to at Close of Period
Partnership Acquisition
----------------------------------------- ------------------------------------ ------------------------------
Buildings Equipment Buildings Equipment Buildings Equipment
Property and Furniture and Furniture and Furniture
Description Land Improvements & Fixtures Land Improvements & Fixtures Land Improvements & Fixtures Total
- ------------------------------------------------------------ ------------------------------------ ----------------------------------
Villas at Sin Vacas,
a 72-unit
residential
rental complex
located
in Tucson, Arizona $799,913 $3,948,060 $344,615 $22,146 $75,678 $190,059 $822,059 $4,023,738 $534,674 $5,380,471
Pinecliff, a 96-unit
residential rental
located in
Colorado Springs,
Colorado 1,242,061 5,981,166 380,288 - 81,889 169,811 1,242,061 6,063,055 550,099 7,855,215
Villa Antigua, an
88-unit
residential rental
complex located in
Scottsdale, Arizona 1,610,646 3,942,388 376,709 2,262 38,576 115,354 1,612,908 3,980,964 492,063 6,085,935
-------------------------------------- ------------------------------ ------------------------------------
$3,652,620 $13,871,614 $1,101,612 $24,408 $196,143 $475,224 $3,677,028 $14,067,757 $1,576,836 $19,321,621
===================================== ========================================================================
Depreciation expense for the years ended December 31, 1996, 1995 and 1994 and accumulated
depreciation
at December 31, 1996 and 1995 consisted of the following:
Accumulated Depreciation
Depreciation December 31,
Expense
1996 1995 1994 1996 1995
----------- ------- ---- ---------- ---- ----
Buildings and improvements $351,694 $351,694 $351,695 $3,639,807 $3,288,113
Equipment, furnishings and 40,527 19,709 11,283 1,170,507 1,129,980
fixtures
------------------------------------------- ---------------------------
$392,221 $371,403 $362,978 $4,810,314 $4,418,093
=========================================== ===========================
Each of the properties is encumbered by a nonrecourse mortgage note payable (see
Note 6).
4. Cash and Cash Equivalents:
Cash and cash equivalents at December 31, 1996 and 1995 consisted of the
following:
1996 1995
---- ----
Cash on hand $ 854,769 $ 30,848
Certificate of depo 211,086 100,000
Money market accoun ________ 349,541
$1,065,855 $480,389
5. Joint Venture and Property Acquisitions:
The Partnership has invested in three properties located in Scottsdale and
Tucson, Arizona and Colorado Springs, Colorado. The success of the Partnership
will depend upon factors which are difficult to predict including general
economic and real estate market conditions, both on a national basis and in the
areas where the Partnership's investments are located.
Sin Vacas
On October 25, 1985, the Partnership acquired a majority interest in the Sin
Vacas Joint Venture, which owns and operates the Villas at Sin Vacas, a 72-unit
residential property located in Tucson, Arizona. Since the Partnership owns a
majority interest in the Sin Vacas Joint Venture, the accounts and operations of
the Sin Vacas Joint Venture have been consolidated into the Partnership.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI is
also the developer of the Villa Sin Vacas property.
The Partnership made initial cash payments in the form of capital contributions
totaling $2,458,507 and funded $398,949 of property acquisition costs which were
treated as a capital contribution to the joint venture. Since completion of
construction, the Partnership has made additional contributions totaling
$275,167. At December 31, 1996, the total capital contributions and acquisition
costs incurred were $2,713,937 and $418,686, respectively.
For the years ended December 31, 1996, 1995 and 1994 the Sin Vacas Joint Venture
had net loss of $67,846 and net income of $49,277, and $65,081, respectively
JANUARY 1, 1996 THROUGH MAY 13, 1996
Net cash from operations (as defined in the joint venture agreement) was to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 8.75% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's capital investment, as
defined in the joint venture agreement;
Second, the balance 70% to the Partnership and 30% to the co-venturer.
All losses from operations and depreciation for the Sin Vacas Joint Venture were
allocated 99% to the Partnership and 1% to the co-venturer.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 70% to the Partnership and 30%
to the co-venturer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
Villa Antigua
On June 11, 1987, the Partnership acquired a majority interest in the Villa
Antigua Joint Venture, which owns and operates Villa Antigua, an 88-unit
residential property located in Scottsdale, Arizona. Since the Partnership owns
a majority interest in the Villa Antigua Joint Venture, the accounts and
operations of the Villa Antigua Joint Venture have been consolidated into the
Partnership.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI is
also the developer of the Villa Antigua property.
The Partnership made initial cash payments in the form of capital contributions
totaling $2,494,677 and funded $381,729 of property acquisition costs which were
treated as a capital contribution to the Villa Antigua Joint Venture. Since
completion of construction, the Partnership has made additional contributions
totaling $85,440. At December 31, 1996, the total capital contributions and
acquisition costs were $2,580,117 and $381,729, respectively.
The Villa Antigua Joint Venture had net income of $137,799, $212,408, and
$130,002 for the years ended December 31,1996, 1995 and 1994.
JANUARY 1, 1996 THROUGH MAY 13, 1996
Net cash from operations (as defined in the joint venture agreement) was to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 10% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's adjusted capital
investment, as defined in the joint venture agreement;
Second, the balance 70% to the Partnership and 30% to the co-venturer.
All losses from operations and depreciation for the Villa Antigua Joint Venture
were allocated 99% to the Partnership and 1% to the co-venturer.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distributions; however, if for any taxable year there are no cash distributions,
profits are allocated 99% to the Partnership and 1% to the co-venturer.
In the case of certain capital transactions and distributions as defined in the
joint venture agreement, the allocation of related profits, losses and cash
distributions, if any, would be different than as described above and would be
effected by the relative balances in the individual partners' capital accounts.
Sin Vacas and Villa Antigua
MAY 14, 1996 THROUGH DECEMBER 31, 1996
On May 14, 1996, the Partnership and certain affiliates consummated an agreement
with Evans Withycombe Management, Inc. and certain of its affiliates ("EWI")
which separated the interests of EWI and the Partnership, thus affording the
Partnership greater flexibility in the operation and disposition of the
properties. In consideration of a payment by the Partnership to EWI of $73,775
and delivery of certain mutual releases, EWI (i) relinquished its contract to
manage Sin Vacas and Villa Antigua and its option to exercise its rights of
first refusal with regard to the sale of those properties and (ii) assigned all
of its interest in the Sin Vacas Joint Venture and the Villa Antigua Joint
Venture to the Partnership (while preserving the economic interests of the
venturer in these Joint Ventures), which resulted in the dissolution of the Sin
Vacas Joint Venture and the Villa Antigua Joint Venture. EWI may still share in
the cash flow distributions or proceeds from sale of the properties if certain
performance levels are met.
Pinecliff
On July 16, 1986, the Partnership acquired Pinecliff (formerly Autumn Ridge), a
96-unit residential property located in Colorado Springs, Colorado and
simultaneously contributed the property to the Autumn Ridge Joint Venture
comprised of the Partnership and an affiliate of the property developer. Since
the Partnership owns a majority interest in the Autumn Ridge Joint Venture, the
accounts and operations of the Autumn Ridge Joint Venture have been consolidated
into the Partnership.
The co-venture partner was Highland Properties, Inc. ("Highland") a Colorado
based residential development, construction and management firm. Highland
developed the property known as L'Auberge Pinecliff
The Partnership made initial cash payments in the form of capital contributions
totaling $3,819,397 and funded $546,576 of property acquisition costs which were
treated as a capital contribution to the Autumn Ridge Joint Venture. Since
completion of construction, the Partnership has made additional contributions
totaling $318,811. At December 31, 1996 the total capital contributions and
acquisition costs incurred were $4,187,309 and $497,475, respectively.
For the years ended December 31, 1996, 1995 and 1994 the Autumn Ridge Joint
Venture had net income of $116,520, $149,652, and $153,418, respectively.
JANUARY 1, 1996 THROUGH JULY 2, 1996:
Net cash from operations (as defined in the joint venture agreement) was to be
distributed as available to each joint venture partner quarterly as follows:
First, to the Partnership, an amount equal to 8% per annum,
noncumulative (computed daily on a simple noncompounded basis from the
date of completion funding) of the Partnership's capital investment, as
defined in the joint venture agreement;
Second, the balance 82% to the Partnership and 18% to the co-venturer.
All losses from operations and depreciation for the Autumn Ridge Joint Venture
were allocated 100% to the Partnership.
All profits from operations, to the extent of cash distributions, shall first be
allocated to the Partnership and co-venturer in the same proportion as the cash
distribution. Any remaining profits are allocated 82% to the Partnership and 18%
to the co-venturer. In the case of certain capital transactions and
distributions as defined in the joint venture agreement, the allocation of
related profits, losses and cash distributions, if any, would be different than
as described above and would be effected by the relative balances in the
individual partners' capital accounts.
JULY 3, 1996 THROUGH DECEMBER 31, 1996
On July 3, 1996, the Partnership and certain affiliates consummated an agreement
with Highland Properties, Inc. ("Highland") which separated the interests of
Highland and the Partnership, thus affording the Partnership greater flexibility
in the operation and disposition of the property. In consideration of a payment
by the Partnership, to Highland totaling $7,718, and delivery of certain mutual
releases, Highland (i) relinquished its option to exercise its rights of first
refusal with regard to the sale of the property and (ii) assigned all of its
interest in the L'Auberge Pinecliff Joint Venture to the Partnership, (while
preserving the economic interests of the venturer in these Joint Ventures),
which resulted in the dissolution of the L'Auberge Pinecliff Joint Venture.
Highland may still share in the cash flow distributions or proceeds from sale of
the properties if certain performance levels are met.
The Sin Vacas Joint Venture, the Autumn Ridge Joint Venture and the Villa
Antigua Joint Venture are sometimes collectively referred to as the "Joint
Ventures". These joint ventures were effectively terminated on December 31,
1996. The Partnership has eliminated various minority interests related to these
joint ventures, as such, the Partnership owns 100% of the underlying assets at
December 31, 1996.
6. Mortgage Notes Payable:
All of the property owned by the Partnership is pledged as collateral for the
nonrecourse mortgage notes payable outstanding at December 31, 1996 and 1995
which consisted of the following:
1996 1995
---- ----
Villas at Sin Vacas $2,428,851 $2,467,255
Pinecliff 3,112,702 3,161,919
Villa Antigua 3,018,377 3,066,104
--------- ---------
$8,559,930 $8,695,278
========= =========
Sin Vacas
Under the terms of the note, monthly principal and interest payments of $21,830,
based on a fixed interest rate of 9.125%, are required over the term of the
loan. The balance of the note will be due on July 15, 1997.
Pinecliff
Under the terms of the note, monthly principal and interest payments of $27,976
are required over the term of the loan, based on a fixed interest rate of
9.125%. The balance of the note will be due on July 15, 1997.
Villa Antigua
Under the terms of the note, monthly principal and interest payments of $27,128,
based on a fixed interest rate of 9.125%, are required over the term of the
loan. The balance of the note will be due on July 15, 1997.
As these mortgage notes payable are due in fiscal 1997, the Partnership will
seek to renegotiate these mortgage notes with its existing lenders or seek new
sources of financing for these properties on a long term basis. The General
Partners believe that existing cash flows from the properties will be sufficient
to support a level of borrowing that is at least equal to amounts outstanding as
of December 31, 1996. If the general economic climate for real estate in these
respective locations were to deteriorate resulting in an increase in interest
rates for mortgage financing or a reduction in the availability of real estate
mortgage financing or a decline in the market values of real estate it may
affect the Partnership's ability to complete these refinancings.
Interest included in Accrued expenses in the Consolidated Balance Sheets at
December 31, 1996 and 1995 consisted of the following:
1996 1995
---- ----
Villas at Sin Vacas $9,235 $ 9,381
Pinecliff 11,835 12,022
Villa Antigua 11,476 11,658
------ ---------
$ 32,546 $ 33,061
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The principal balance of the mortgage notes payable appearing on the
consolidated balance sheets at December 31, 1996 and 1995 approximates the fair
value of such notes.
7. Partners' Equity:
Under the terms of the Partnership Agreement profits are allocated 95% to the
Limited Partners and 5% to the General Partners; losses are allocated 99% to the
Limited Partners and 1% to the General Partners.
Cash distributions to the partners are governed by the Partnership Agreement and
are made, to the extent available, 95% to the Limited Partners and 5% to the
General Partners.
The allocation of the related profits, losses, and distributions, if any, would
be different than described above in the case of certain events as defined in
the Partnership Agreement, such as the sale of an investment property or an
interest in a joint venture partnership.
8. Related-Party Transactions:
Due to affiliates at December 31, 1996 and 1995 consisted of reimbursable costs
payable to L'Auberge Communities, Inc., an affiliate of the General Partners, in
the amounts of $8,975, and $14,278, respectively. In 1995 distributions payable
to the Villa Antigua co-venturer totaled $8,895. There was no distribution
payable to the co-venturer in 1996.
For the years ended December 31, 1996, 1995 and 1994, general and administrative
expenses included $82,881, $84,643, and $68,625, respectively, of salary
reimbursements paid to the General Partners for certain administrative and
accounting personnel who perform services for the Partnership.
The officers and principal shareholders of Evans Withycombe, Inc., the developer
of the Villas at Sin Vacas and Villa Antigua properties and an affiliate of the
co-venturers of those joint ventures, together hold a two and one half percent
cumulative profit or partnership voting interest in LP L'Auberge Communities, a
California Limited Partnership, formerly Berry and Boyle, which is the principal
limited partner of GP L'Auberge Communities, L.P.
During the years ended December 31, 1996, 1995 and 1994, Evans Withycombe
received property management fees of $32,475, $84,187, and $79,692,
respectively. These fees were 5% of rental revenue in each time period. In
addition, for the years ended December 31, 1996, 1995 and 1994, $64,954,
$51,715, and $49,083, respectively, of property management fees were paid or
accrued to Residential Services - L'Auberge, an affiliate of the General
Partners. These fees were 4% of rental revenue in 1996, and 5% of rental revenue
in 1995 and 1994.
Villa Antigua reimbursed $35,885, $34,707 and $34,878, respectively for its
proportionate share of the 1996, 1995 and 1994 real estate taxes to Villa
Antigua Phase II, which is an affiliate of the General Partners.