SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2002
Commission File Number 33-19316
Qualified Housing Partners Limited Partnership
(Exact name of registrant as specified in its charter)
North Carolina 56-1589469
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 220
4700 Homewood Court
Raleigh, North Carolina 27609
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(919)787-4243
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 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
FINANCIAL INFORMATION
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
Item 1: Financial Statements
- Unaudited Consolidated Balance Sheets
- Unaudited Consolidated Statements of Income and
Expenses
- Unaudited Consolidated Statements of Cash Flows
- Unaudited Cash Available for Distribution and
Reserves
- Unaudited Notes to Financial Statements
Item 2: Management's Discussion
- Liquidity and Capital Resources
- Results of Operations
- Tax Credits
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
March 31, 2002 and December 31, 2001
03/31/02
(Unaudited) 12/31/01
ASSETS
Rental Properties
Land $1,326,402 $1,326,402
Buildings 34,375,951 34,375,952
Furniture & Fixtures 2,055,957 2,054,878
Construction in Progress 209,471 209,471
37,967,781 37,966,703
Accumulated Depreciation (11,961,640) (11,740,067)
26,006,141 26,226,636
Cash 311,679 327,416
Other Assets 2,255,357 2,301,299
TOTAL ASSETS $28,573,177 $28,855,351
LIABILITIES AND PARTNERS' CAPITAL
Liabilities Applicable to Rental
Properties $24,927,063 $25,038,280
Other Liabilities 1,167,323 1,211,279
Total Liabilities 26,094,386 26,249,559
Minority Interests in Subsidiary
Operating Partnerships 1,704,679 1,705,615
Partners' Capital 774,112 900,177
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $28,573,177 $28,855,351
See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
Three Months Ended March 31, 2002 and 2001
(Unaudited)
01/01/02- 01/01/01-
03/31/02 03/31/01
Revenue
Rent $959,680 $935,889
Other 30,650 28,900
990,330 964,789
Rental Expense
Interest 158,615 169,027
Depreciation 221,572 226,945
Repairs and Maintenance 247,203 219,544
Utilities 91,889 97,504
Real Estate Taxes 94,262 36,582
Management Fees 116,604 116,060
Advertising 2,661 1,014
Other 144,255 185,152
1,077,061 1,051,828
Loss from Rental Activities (86,731) (87,039)
Other Income (Expenses)
Interest Income 91 239
Management Fees (21,141) (21,141)
Administrative Costs (19,160) (20,357)
Loss Before Deducting Minority
Interests in Subsidiary Operating
Partnerships (126,941) (128,298)
Minority Interests in Losses of
Subsidiary Operating Partnerships 876 878
Net Loss ($126,065) ($127,420)
Net Loss Allocated to General Partners ($1,261) ($1,274)
Net Loss Allocated to Limited Partners (124,804) (126,146)
Net Loss ($126,065) ($127,420)
Net Loss per Limited Partnership Unit ($14.39) ($14.54)
Average Number of Limited Partnership
Units Outstanding 8,673 8,673
See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2002 and 2001
(Unaudited)
01/01/02- 01/01/01-
03/31/02 03/31/01
Cash Flows from Operating Activities
Net Loss ($126,065) ($127,420)
Adjustments to Reconcile Net Loss
To Net Cash Provided by Operating
Activities:
Depreciation 221,572 226,945
Minority Interest in Losses of
Subsidiary Operating Partnerships (876) (878)
Other 1,986 (26,941)
Net Cash Provided by Operating Activities 96,617 71,706
Cash Flows from Investing Activities
Purchases of Buildings and Equipment (1,077) (5,704)
Net Cash Used by Investing Activities (1,077) (5,704)
Cash Flows from Financing Activities
Principal Payments on Borrowings (111,217) (99,771)
Return of Equity to Minority Investors (60) (50,030)
Net Cash Used by Financing Activities (111,277) (149,801)
Net Decrease in Cash (15,737) (83,799)
Cash Beginning 327,416 360,620
Cash Ending $311,679 $276,821
See accompanying notes.
CASH AVAILABLE FOR DISTRIBUTION AND RESERVES
Quarter Ended March 31, 2002 (Unaudited)
Cash Receipts from Operating Partnerships $31,191
Cash Receipts (Disbursements) from Operations
Interest 86
Expenses (4,359)
Additions to Reserves $26,918
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Note A - Basis of Presentation
The unaudited consolidated financial statements included
herein have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission. In
the opinion of the Partnership, all adjustments which are
considered necessary for a fair statement of the results for
the interim periods have been made; all such adjustments are
of a normal recurring nature.
These financial statements, which do not include all
disclosures included in the annual financial statements,
should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
The results of operations for the three months ended
March 31, 2002 are not necessarily indicative of the
results to be achieved for the year.
Note B - Net Loss Per Limited Partnership Unit
Net loss per limited partnership Unit is based upon the net
loss allocated to the limited partners and is computed using
the number of Units outstanding of 8,673.
Note C - Liabilities Applicable to Rental Properties
Liabilities applicable to rental properties at March 31,
2002 consist of $24,927,063 of permanent mortgage loans to
Subsidiary Operating Partnerships.
Note D - Related Party Transactions
The accompanying consolidated financial statements reflect
transactions between Qualified Housing Partners Limited
Partnership ("QHP") and its general partners or affiliates
and between the various Subsidiary Operating Partnerships
and their general partners or affiliates.
Frederick Investment Corporation, the Managing General
Partner of QHP, is a general or special limited partner in
each of the Operating Partnerships. Each Operating
Partnership also has one or more other general partners (the
"Local General Partners"). Following is a summary of
related party transactions for the three months ended
March 31, 2002.
QHP General Local General
Items Paid or Payable Partners Partners
Management Fees $21,000 $105,000
Reimbursable Operating Expenses $4,300 $0
MANAGEMENT'S DISCUSSION
Liquidity and Capital Resources
Net of the Subsidiary Operating Partnerships, QHP held
approximately $32,000 in cash and liquid investments at
March 31, 2002. These assets will be held as working
capital.
At March 31, 2002, there were 641 holders of limited
partnership Units.
Results of Operations
Occupancy averaged 90%, with 845 out of a total of 934
apartment units owned by the Subsidiary Operating
Partnerships occupied as of March 31, 2002. This is
down slightly from the same period in 2001.
The Partnership's loss from rental activities, including
depreciation, during the first quarter of 2002 is $86,731 as
compared with a loss of $87,039 for the same period in 2001.
Revenue increased primarily as a result of many properties
receiving rent increases in the first quarter. Maintenance
and repairs continue to increase as the properties age.
Property tax accruals exceed the accruals made from the previous
year but are not expected to vary greatly at year-end. Other
variances were a result of normal business fluctuations.
Dimmitt, a 24-unit property located in Texas, continues to have
vacancy problems as the supply of subsidized housing in the
area exceeds demand. As reported at year-end, the general
partners continue to work with Rural Development to find a
solution.
Tax Credits
One of the Partnership's primary investment objectives has
been to generate tax benefits through Low Income Housing Tax
Credits. The Tax Credits were available over a ten-year
period beginning in the year the properties were placed in
service, or at the option of QHP, one year later. The
ten-year credit period for all properties expired by early
2000. However, pursuant to IRS Code Section 42, a small number
of apartment units are generating tax credits over a
fifteen-year period rather than ten years. This will
produce an insignificant amount of tax credits through 2003.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 The Partnership Agreement is Exhibit A
to the Prospectus that is part of the
Registration Statement on Form S-11,
Number 33-19316 and effective May 20,
1988, the final form of which was filed
on May 20, 1988 pursuant to Rule 424(b),
and is incorporated herein b reference.
(b) Reports
No reports on Form 8-K were filed for the
quarter ended March 31, 2002.