13 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________ Commission file number 0-18226 NYLIFE Government Mortgage Plus Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 13-3487910 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) (Identification No.) 51 Madison Avenue, New York, New York 10010 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 576-7300 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 __ Yes X No __ NYLIFE Government Mortgage Plus Limited Partnership September 30, 1995 INDEX Page No. Part I - Financial Information (Unaudited) Balance Sheets as of September 30, 1995 and December 31, 1994 3 Statement of Operations for the Three and Nine Months Ended September 30, 1995 and 1994 4 Statement of Partners' Capital for the Nine Months Ended September 30, 1995 and for the Year Ended December 31, 1994 5 Statement of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 6 Notes to Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II - Other Information 12 Signatures 13 -2- NYLIFE Government Mortgage Plus Limited Partnership Balance Sheets							 as of September 30, 1995 and December 31, 1994 												 												 	 			1995 1994 Assets 	 	(Unaudited) 							 				 	 			 				 Cash and cash equivalents $ 900,367 $ 950,967 Interest receivable 221,107 280,773 Investments in Participating Insured Mortgages 30,677,598 31,343,138 Investments in Participating Guaranteed Loans 				 400,100 1,495,900 								 Total assets	 		$ 32,199,172 34,070,778 								 Liabilities and Partners' Capital								 Due to affiliates 		 		$ 75,000 	$ 100,000 Accrued liabilities		 		 44,384 88,253 Total liabilities	 119,384 188,253 Partners' capital:								 								 Capital contributions								 net of public offering expenses 	 36,028,557 36,028,557 Accumulated earning	 			 16,859,159 14,419,332 Cumulative distributions			 (20,807,928) (16,565,364) Total partners' capital	 32,079,788 33,882,525 Total liabilities and partners' capital	 		 	$ 32,199,172 $ 34,070,778 The accompanying notes are an integral part of these financial statements -3- 								 								 								 NYLIFE Government Mortgage Plus Limited Partnership 			 Statement of Operations (Unaudited)												 												 												 			 									 	For the Three Months Ended For the Nine Months Ended 				 	 	 September 30, September 30, 	 1994 1995 	1994 	1995 Income	 								 Interest-cash and cash equivalent $ 9,150 	$ 25,911 	$ 55,437 $ 66,738 Interest-Mortgages (net of 				 amortization of acquisition costs) 598,436 651,582 2,282,186 1,969,075 Other income 		 - - 324,000 - Total income		 	 607,586 677,493 2,661,623 2,035,813 												 Expenses												 												 General and administrative 	 	 59,295 87,893 150,671 219,846 Asset management fees	 21,729 39,542 71,125 118,625 												 Total expenses		 81,024 127,435 221,796 338,471 												 Net income		 $ 526,562 $ 550,058 $2,439,827 $1,697,342 												 Net income allocated												 												 General Partner 		$ 10,531 	$ 11,001 	$	 33,390 $ 33,947 Corporate Limited Partner		 	13 			13 			59 		 41 Unitholders 516,018 539,044 2,406,378 1,663,354 		$ 526,562 $ 550,058 $2,439,827 $1,697,342 												 												 Net income per Unit	 	$ .06 $ 	.07	 	$ .29 	$ .20 												 												 Number of Units	 8,168,457.7 8,168,457.7 8,168,457.7 8,168,457.7 												 The accompanying notes are an integral part of these financial statements -4- NYLIFE Government Mortgage Plus Limited Partnership Statement of Partners' Capital for the Nine Months Ended September 30, 1995 (Unaudited) and for the Year Ended December 31, 1994						 				 	Corporate	 		 Total				 			 	 	Limited	 		General	 	Partners' 	 	Unitholders	 	Partner 			Partner 			Capital 															 Balance at January 1, 1994 	$35,994,847 	$	966 	$ 	2,494 	$35,998,307 															 Net income			 2,201,726 55 	 	 44,934 2,246,715 															 Distributions			 (4,275,142) (105)	 	 (87,250) (4,362,497) Balance at December 31, 1994 33,921,431 916 			 (39,822) 33,882,525 												 Net income		 2,406,378 	59 	 33,390 2,439,827 												 Distributions		 (4,206,871) 	(103)	 (35,590) (4,242,564) Balance at September 30, 1995 $32,120,938 $	872 		 $ (42,022) $32,079,788 The accompanying notes are an integral part of these financial statements -5- NYLIFE Government Mortgage Plus Limited Partnership Statement of Cash Flows 								 for the Nine Months Ended September 30, 1995 and 1994 (Unaudited)								 								 	 							 								 			1995 			1994	 Cash flows from operating activities:								 Net income 			$ 2,439,827 $ 1,697,342 " Adjustments to reconcile net income to net cash								 flows from operating activities:								 Amortization of acquisition costs		 570,203 13,371 								 Changes in assets and liabilities:								 Decrease (increase) in interest receivable			 59,666 (43,171) (Decrease) increase in due to affiliates		 (25,000) 75,000 Decrease in accrued liabilities 				 (43,869) (42,641) Total adjustments		 561,000 2,559 Net cash provided by operating activities			 3,000,827 1,699,901 Cash flows from investing activities:								 Repayment of Participating Insured Mortgages		 95,337 80,197 " Repayment of Participating Guaranteed Loans					 1,095,800 - Net cash provided by investing activities				 1,191,137 80,197 Cash flows from financing activities: Distributions to partners				 (4,242,564) (1,791,757) Net cash used in financing activities				 (4,242,564) (1,791,757) 								 Net decrease in cash and cash equivalents			 (50,600) (11,659) 								 Cash and cash equivalents at beginning of period					 950,967 2,919,058 								 Cash and cash equivalents at end of period	 	$ 900,367	 $ 2,907,399 								 								 								 The accompanying notes are an integral part of these financial statement		 -6- 								 								 								 NYLIFE Government Mortgage Plus Limited Partnership Notes to Financial Statements September 30, 1995 (Unaudited) NOTE 1 - GENERAL The accompanying financial statements and related notes should be read in conjunction with the Partnership's 1994 Annual Report on Form 10-K. The Partnership terminates on December 31, 2028, unless terminated earlier by the occurrence of certain events as set forth in the Partnership Agreement. The summarized financial information contained herein is unaudited; however, in the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of financial information have been included. All capitalized terms used in these Notes to Financial Statements, unless otherwise defined herein, shall have the meanings set forth in the Partnership Agreement. Certain amounts in the 1994 financial statements have been reclassified to conform to the 1995 presentation. NOTE 2 - INVESTMENTS IN MORTGAGES Participating Insured Mortgages Investment in Participating Insured Mortgages ("PIMs") on the balance sheets as of September 30, 1995 and December 31, 1994 is comprised of the following: September 30, 1995: Cross Creek The Highlands Signature Place Total Investment in PIMs $7,226,406 $13,154,200 $ 9,756,900 $30,137,506 Principal repayments (93,354) (155,527) (90,101) (338,982) Acquisition fees and expenses net of accumulated amortization 294,478 - 584,596 879,074 $7,427,530 $12,998,673 $10,251,395 $30,677,598 December 31, 1994: Cross Creek The Highlands Signature Place Total Investment in PIMs $7,226,406 $13,154,200 $ 9,756,900 $30,137,506 Principal repayments (71,831) (112,469) (61,943) (246,243) Acquisition fees and expenses net of accumulated amortization 297,992 565,112 588,771 1,451,875 $7,452,567 $13,606,843 $10,283,728 $31,343,138 -7- Participating Guaranteed Loans Investment in Participating Guaranteed Loans ("PGLs") on the balance sheets as of September 30, 1995 and December 31, 1994 is comprised of the following: September 30, 1995: Cross Creek The Highlands Signature Place Total Investment in PGL $ 400,000 $ 1,095,800 $100 $ 1,495,900 Principal Repayment (1) - (1,095,800) - (1,095,800) $ 400,000 $ - $100 $ 400,100 December 31, 1994: Cross Creek The Highlands Signature Place Total Investment in PGL $ 400,000 $ 1,095,800 $100 $1,495,900 (1) As described below in Recent Developments - the Highlands, the Highlands PGL was repaid in full upon the sale of the Highlands on January 31, 1995. As the Earn-out periods for each of the Properties expired during 1994, the Partnership has no further commitments to fund amounts under the PGLs. Recent Developments - The Highlands As discussed in the Partnership's 1994 Annual Report on Form 10-K and Current Report on Form 8-K dated March 10, 1995, in accordance with the terms and conditions of the Purchase and Sale Agreement dated October 14, 1994, the Highlands Borrower sold the Highlands to Richland Properties, Inc. (the "New Highlands Borrower") effective January 31, 1995. The sale closed in escrow pending the receipt by the Partnership of a new GNMA certificate in the principal amount of $13,037,676 and bearing interest at 7.625% per annum. The new GNMA certificate was received by the Partnership on February 15, 1995, at which time the sale was completed and the Partnership received the payments described below, together with the other closing documents. In addition, a Mutual Release was delivered, effective January 31, 1995, pursuant to which all obligations of, and claims against, the Highlands Borrower and its general partners were released by the Partnership and Related Mortgage Company ("RMC"), and all obligations of, and claims against, the Partnership and RMC were released by the Highlands Borrower and its general partners. The Partnership retained its beneficial interest in the Highlands Mortgage (the "Modified Mortgage") and related promissory note (the "Modified Note"), which were modified to provide for (a) prepayment at any time with a prepayment charge payable to RMC equal to 1% of the outstanding principal, and (b) a reduction in the interest rate from 8.5% to 7.875% per annum, one-quarter of one percent of which is retained by RMC and GNMA as a servicing and guarantee fee. Accordingly, the Partnership earns an interest rate of 7.625% per annum. The New Highlands Borrower is required pursuant to the Modified Note and Modified Mortgage to make equal monthly payments of principal and interest until maturity on May 15, 2032. The Modified Mortgage is coinsured by RMC and HUD under Section 221(d)(4) of the National Housing Act for new construction of multi-family residential properties. The Supplemental Interest Agreement was terminated, and the Partnership and the New Highlands Borrower entered into an Amended and Restated Subordinated Mortgage and Security Agreement to secure the Partnership's call option. The Partnership has the -8- option, upon six months written notice, to require prepayment in full of the Modified Note on or after January 31, 2005. No prepayment fee will be imposed if the Partnership exercises this option. Enforcement of this option would require the termination of the coinsurance contract and the surrender of the new GNMA certificate. In addition, the General Partner may decide to sell the new GNMA certificate at any time prior to maturity if it determines that prevailing market conditions warrant such sale. The Additional Interest Agreement has been amended and restated (the "Amended and Restated Agreement") to provide that the Partnership will no longer be entitled to any participations in net cash flow or net appreciation in value of the Highlands. Concurrent with the sale of the Highlands as described above, the Highlands PGL was repaid as the Partnership received $2,439,955, which included $1,095,800 of principal, $210,798 of accrued interest, a prepayment fee of $324,000 and participation in net appreciation of the Highlands of $809,357. Subsequent thereto, the Partnership received participation in net cash flow of the Highlands in the amount of $23,105. The Partnership distributed these proceeds, along with first quarter distributable cash flow from operations, to its Partners on May 15, 1995. Also on January 31, 1995, the Partnership and the Highlands Borrower (together with its partners) entered into a Special Closing Agreement, pursuant to which each of the two letters of credit held by the Partnership were reduced from $75,000 to $17,500. The two letters of credit are held as security for the obligations of the Highlands Borrower and its partners under the Special Closing Agreement. Such obligations represent the payment of additional taxes due on the recording of the original loan documents, in the event the State of Florida determines that such amounts are due. The Highlands Borrower will be obligated to pay 35% of these additional taxes in excess of the first $35,000 of such liability, with the balance of such liability remaining the responsibility of the Partnership. NOTE 3 - TRANSACTIONS WITH THE GENERAL PARTNER The following is a summary of the fees earned and reimbursable expenses incurred by the General Partner for the nine months ended September 30, 1995 and 1994: Total for the nine Total for the nine Unpaid at months ended months ended September 30, 1995 September 30, 1995 September 30, 1995 Asset management fees $ - $ 71,125 $118,424 Reimbursement of general and administrative expenses to the General Partner 75,000 75,000 93,750 $75,000 $146,125 $212,174 -9- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Partnership's cash and cash equivalents balance at September 30, 1995 consists of $426,266 of working capital reserves as well as cash generated from operations net of accrued interest. The Partnership's working capital reserves are invested in short-term obligations of the United States government and other cash equivalents. The Partnership derives its income primarily from its investments in PIMs, which are long-term, fixed interest rate Government National Mortgage Association ("GNMA") securities, guaranteed as to the timely payment of principal and interest by GNMA and backed by the full faith and credit of the United States Government. The Partnership's only operating expenses are general and administrative expenses which include audit and tax return preparation fees, printing and postage costs for quarterly and annual reports, and reimbursement to the General Partner for reimbursable expenses incurred in accordance with the Partnership Agreement. In addition, the Partnership pays an Asset Management Fee to the General Partner of .5% annually of the average aggregate amount invested in the Cross Creek and Signature Place Mortgages. As discussed in Note 2 to the financial statements, the Amended and Restated Agreement entered into as a condition of the sale of the Highlands provides that the Partnership will no longer be entitled to any participations in net cash flow or net appreciation of the Highlands. Accordingly, the General Partner has decided to forego an asset management fee with respect to the aggregate amount invested in the Highlands Modified Mortgage. After the payment of general and administrative expenses, the Partnership distributes all of its income plus principal repayments on the PIMs to the Partners on a quarterly basis. Management expects that the sale of the Highlands as previously discussed in Note 2 will cause the Partnership's net income to decrease by less than $100,000 per annum. This decrease is a result of lower interest income related to the reduction of the interest rate on the Modified Note and the repayment of the PGL as offset by reductions in asset management fees and general and administrative expenses. As more fully described in the Partnership's Annual Report on Form 10-K, the Partnership sold the Highlands PGL and realized a gain primarily as a result of its participation in the net appreciation in value of the Highlands. Accordingly, as referred to above, the Amended and Restated Agreement provides that the Partnership will no longer be entitled to any participations in net cash flow or net appreciation in value of the Highlands. Conversely, the Cross Creek and Signature Place Mortgages entitle the Partnership to participate in the net cash flow of those properties above certain levels and in any net appreciation in value upon refinancing. Results of Operations The Partnership's decrease in net income for the three months ended September 30, 1995 as compared to the corresponding period of 1994 was a result of the loss of interest earned in 1994 on the excess working capital reserves of $2,088,773 which were distributed to Partners in November 1994 as well as the interest rate reduction on the Modified Note and the repayment of the Highlands PGL as referred to in Note 2 to the financial statements. Partially offsetting the reduction in interest income was a decrease in general and administrative expenses primarily representing professional fees incurred during 1994 associated with the Highlands legal proceedings and sale. In addition, asset management fees decreased as the General Partner -10- has decided to forego an asset management fee with respect to the aggregate amount invested in the Highlands Modified Mortgage. The Partnership's net income increased for the nine months ended September 30, 1995 over the corresponding period in 1994. As referred to in Note 2 to the financial statements, in conjunction with the sale of the Highlands on January 31, 1995, the Partnership received $1,367,260 representing interest on the PGL, participations in net appreciation in value and net cash flow, and a prepayment fee. Offsetting these proceeds was a non-cash expense of approximately $563,000 representing unamortized acquisition costs related to the Highlands taken against the sales proceeds in the first quarter of 1995. Furthermore, interest income declined during the third quarter of 1995 resulting from the interest rate redcution on the Modified Note and the effect of the repayment of the PGL. Also contributing to the increase in net income for the nine months ended September 30, 1995 were decreases in general and administrative expenses and asset management fees as discussed above. Until such time, if any, that the Partnership receives participations on the Cross Creek and Signature Place Mortgages, net income is expected to remain at the levels discussed above. -11- 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 None (b) Reports on Form 8-K None -12- SIGNATURES Pursuant to the requirements 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 on November 9, 1995. NYLIFE Government Mortgage Plus Limited Partnership By: NYLIFE Realty Inc. General Partner By: /s/ Michael J. Nocera Michael J. Nocera President By: /s/ Kevin M. Micucci Kevin M. Micucci Vice President and Controller (Principal Financial and Accounting Officer) -13-