UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the fiscal year ended March 25, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
Commission File Number 0-13782
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Massachusetts 13-3228969
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Initial Limited Partnership Interests
(Title of Class)
Additional Limited Partnership Interests
(Title of Class)
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
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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]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes No X
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The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 25, 2002 was
$(10,453,000) based on Limited Partner equity (deficit) as of such date.
Registrant's voting and non-voting common equity is not publicly traded.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business.
General
Cambridge Advantaged Properties Limited Partnership (formerly Hutton Advantaged
Properties Limited Partnership) (the "Partnership") is a limited partnership
which was formed under the laws of the Commonwealth of Massachusetts on June 28,
1984. The General Partners of the Partnership ("General Partners") are Assisted
Housing Associates Inc. (formerly Cambridge Assisted Housing Associates Inc.)
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership. The general partners of Cambridge/Related are the Assisted General
Partner and the Related General Partner. The General Partners manage and control
the affairs of the Partnership. See Item 10, Directors and Executive Officers of
the Registrant, below.
On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. In connection with the Transfer, the Partnership paid to the
Assisted General Partner the accrued asset management fees owed to it in the
aggregate amount of $1,334,116. See Note 8 - Related Party Transactions to the
Financial Statements included in Item 8. below.
Effective May 19, 1994, the Partnership's name was changed to Cambridge
Advantaged Properties Limited Partnership.
On August 9, 1984, pursuant to a prospectus dated August 9, 1984 as supplemented
by the supplements thereto dated September 7, 1984, October 5, 1984 and November
20, 1984 (as so supplemented, the "Prospectus"), the Partnership commenced a
public offering (the "Offering", as so supplemented). Pursuant to the Offering,
the Partnership issued 6,674 Units (as defined below) in 1984, each Unit
consisting of one initial limited partnership interest (the "Initial Limited
Partnership Interest") and one warrant to purchase an additional limited
partnership interest (the "Additional Limited Partnership Interest") and
together with the Initial Limited Partnership Interests (the "Limited
Partnership Interests") during the period from January 1, 1985 through January
25, 1985 (a "Unit"), and 5,400 Additional Limited Partnership Interests in 1985.
The Partnership received $53,754,300 (net of Offering expenses and sales
commissions of $6,615,700) as a result of the Offering. The Offering was
completed in March 1985 and no further issuance of Additional Limited
Partnership Interests is anticipated.
Investment Objectives/Government Incentives
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The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships"), each of which owns or leases and operates an existing
residential housing development (an "Apartment Complex") which is receiving some
form of local, state or federal assistance, including, without limitation,
mortgage insurance, rental assistance payments, permanent mortgage financing
and/or interest reduction payments ("Government Assistance"). In acquiring its
interests in the Local Partnerships ("Local Partnership Interests"), the
Partnership's investment objectives are to:
(1) Provide current tax benefits in the form of passive tax losses which limited
partners may use to offset passive taxable income from other sources;
2
(2) provide long-term capital appreciation through an increase in the value of
the Partnership's investments in Local Partnerships;
(3) provide cash distributions from sale or refinancing transactions; and
(4) preserve and protect the Partnership's capital.
The Partnership is in the process of winding up its operations as it continues
to sell its assets; therefore investment objectives (1), (2) and (4) are no
longer applicable. During the year ended March 25, 2003, the Partnership has
distributed approximately $1,524,000 from sales transactions. The Partnership
has to date distributed approximately $6,944,000 from sales transactions and
expects to continue to make distributions from excess sales proceeds, although
such aggregate distributions and will not equal the original investment. The
Partnership will no longer be generating passive losses due to the sale of
properties. However, passive losses previously allocated (to the extent unused)
are available to offset the income expected to be generated from the sales
effort.
Federal, state and local government agencies have provided significant
incentives in order to stimulate private investment in government assisted
housing. See "Government Programs and Regulations," below. Notwithstanding these
incentives, there remain significant risks. These risks include, but are not
limited to, the uncertainty as to the financial strength and expertise of the
general partners of the Local Partnerships ("Local General Partners"); the
long-term nature of investments in government-assisted housing has limited the
ability of the Partnership to vary its investment portfolio in response to
changing economic, financial and investment conditions; and changes in local
economic circumstances and housing patterns which have an impact on real estate
values and, in the Partnership's current liquidation phase, the ability to
achieve a profit on the sale of the Apartment Complexes. Apartment Complexes
benefiting from Government Assistance also have required greater management
expertise and have had higher operating expenses than conventional apartment
buildings. See Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, below.
Investments
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The Local Partnership Interests owned by the Partnership were acquired from
unaffiliated sellers. The Partnership became the principal limited partner in
these Local Partnerships pursuant to local limited partnership agreements
entered into with the Local General Partners. As a limited partner, the
Partnership's liability for obligations of the Local Partnerships is limited to
its investment. The Local General Partners of the Local Partnerships retain
responsibility for maintaining, operating and managing the Apartment Complexes.
The Partnership is a limited partner, with an ownership interest of 98.99% in
each of the 4 remaining subsidiary partnerships.
Each Local Partnership also has as a special limited partner (the "Local
Affiliated Partner"), either C/R Special Partnership or another affiliate of the
General Partners, which under certain circumstances has the right to replace the
Local General Partners of the Local Partnership and also has certain rights with
respect to voting on or approving of certain matters, including the sale of an
Apartment Complex. These rights were given to the Local Affiliated Partner
rather than the Partnership to avoid claims that by the existence or exercise by
the Partnership of such rights it would be taking part in the control of the
Local Limited Partnerships' operations and should therefore incur liability as a
General Partner of the Local Partnerships. The Local Affiliated Partner has
agreed to exercise these rights as a fiduciary of the Limited Partners of the
Partnership.
Purchase Money Notes
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Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
3
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 is an obligation at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2003 and 2002 include $4,336,417 of interest accrued
through August 31, 1989.
The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and the
ultimate repayment dates of the Purchase Money Notes. The Purchase Money Notes,
after the extended maturity dates, call for the simple accrual of interest on
the balance of principal, interest and Purchase Money Note Extension Fees
Payable as of the date of maturity at one of the following two rates: (i) the
lesser of 12% or the legally allowable rate; or (ii) the lesser of prime plus 2%
or the lowest legally allowable rate. Unpaid interest of approximately
$9,917,000 and $22,909,000 as of March 25, 2003 and 2002, respectively, has been
accrued and is included in due to selling partners in the consolidated balance
sheets. In general, the interest on and the principal of each Purchase Money
Note is also payable to the extent of the Partnership's actual receipt of
proceeds of the sale or refinancing of the Apartment Complex.
The Partnership extended the terms of the Purchase Money Notes (ranging from
August to December 1996) for up to three additional years (four years with
respect to three subsidiary partnerships and seven years with respect to three
subsidiary partnerships). In connection with such extensions, the Partnership
incurred an extension fee of 1/2 % per annum of the outstanding principal
balance of the Purchase Money Notes. Of such fees incurred, $47,367 was accrued
and added to the Purchase Money Notes balance. The extension fees are being
amortized over the term of the extensions. The Purchase Money Notes with seven
year extensions have all been sold. Additionally, an oral agreement was reached
in November 2002 that extended the maturity dates of the remaining Purchase
Money Notes through June 2003. Further extensions, until such properties are
sold, are currently in the discussion stage. The Partnership is working with the
Local General Partners and Purchase Money Note holders to refinance or sell the
properties. No assurance can be given that management's efforts will be
successful. Based on the historical operating results of the Local Partnerships
and the current economic conditions, including changes in tax laws, the proceeds
from such sales will not be sufficient to meet the outstanding balances of
principal, accrued interest and extension fees. The Purchase Money Notes are
without personal recourse to either the Partnership or any of its partners and
the Purchase Money Note holder's recourse, in the event of nonpayment, would be
to foreclose on the Partnership's interests in the respective subsidiary
partnerships.
Distributions aggregating approximately $10,072,000, $4,452,000 and $6,550,000
were made to the Partnership during each of the years ended March 25, 2003, 2002
and 2001, respectively, of which approximately $8,776,000, $3,872,000 and
$5,147,000, respectively, was used to pay principal, interest and extension fees
on the Purchase Money Notes. In addition, approximately $0, $0 and $598,000 for
the 2002, 2001 and 2000 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes.
Government Programs and Regulations
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The General Partners will carefully analyze the opportunities available upon the
expiration of the properties' HUD contracts, as well as the tax consequences of
4
each option to investors. Prior to expiration of the properties' HUD contracts,
and based on the historical operating results and current economic conditions
including changes in tax laws, it is uncertain as to whether there would be a
return to the investors upon the sale of the applicable properties in the
Partnership's portfolio.
The Local Partnerships which receive government assistance are subject to
low-income use restrictions which limit the owners' abilities to sell or
refinance the properties. In order to maintain the existing inventory of
affordable housing, Congress passed a series of related acts including the
Emergency Low Income Preservation Act of 1987, the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (together the "Preservation
Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996
Act"). In exchange for maintaining the aforementioned use restrictions, the
Preservation Acts provided financial incentives for owners of government
assisted properties. The 1996 Act provided financial assistance by funding the
sale of such properties to not-for-profit owners and also restores the owners'
abilities to prepay their HUD mortgage and convert the property to condominiums
or market-rate rental housing.
The following eight Local Partnerships filed for incentives under the
Preservation Acts: Lansing, MI - Cranbrook Manor Apts., Romulus, MI - Oakbrook
Villa Apts., New Bedford, MA - Buttonwood Acres, Wyandotte, MI - Villa Apollo
Associates Limited Partnership and Villa Apollo # 2 Limited Partnership, South
Dartmouth, MA - Solemar, Sterling Heights, MI - Carlton Terrace Apartments, and
San Diego, CA - Lancaster Manor Apartments. Subsequently all of the properties
owned by these eight Local Partnerships were sold.
Funding for the 1996 Act is subject to appropriations by Congress. Congress has
not appropriated any funds for preservation since 1997. Accordingly, no
assurance can be given that any of the Local Partnerships will obtain such
incentives.
In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals in instances where the existing Section 8 Contracts exceed
current market rents. As a result, Section 8 Contracts that are renewed in the
future in projects insured by the Federal Housing Administration ("FHA") may not
provide sufficient cash flow to permit owners of properties to meet the debt
service requirements of these existing FHA-insured mortgages. MAHRA also
provides for the restructuring of these mortgage loans so that the annual debt
service on the restructured loan (or loans) can be supported by Section 8 rents
established at the market rents. The restructured loans will be held by the
current lender or another lender. There can be no assurance that a property
owner will be permitted to restructure its mortgage indebtedness pursuant to the
new rules implementing MAHRA or that an owner, or the holder of the mortgage,
would choose to restructure the mortgage if it were able to participate. MAHRA
went into effect on September 11, 1998 when interim regulations implementing the
program were published. It should be noted that there are many uncertainties as
to the economic and tax impacts on a property owner because of the combination
of the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRA.
On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that were eligible for prepayment had to give notice of
such prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.
5
On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.
Sales of Underlying Properties/Local Partnership Interests
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General
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The Partnership is currently in the process of disposing of its investments. As
of March 25, 2003, the Partnership had disposed of fifty-seven of its sixty-one
original investments. Three additional investments are listed for sale and the
Partnership anticipates that the remaining investment will be liquidated
sometime during the first half of 2003. There can be no assurance as to whether
or not the Partnership will achieve this goal. Furthermore, there can be no
assurance that any proceeds will be realized based on the historical operating
results of the Local Partnerships and the current economic conditions. Moreover,
the Local General Partners and noteholders generally have decision-making rights
with respect to the sale of each property which makes it more cumbersome for the
General Partners to cause a sale of each property.
In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly-owned by the
Partnership.
On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Ferry Apartments, Ltd., Bonnie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
In each case, the interests were contributed subject to each respective Purchase
Money Note. The contribution did not involve any consideration being paid to the
Partnership; therefore, there should not be any tax effect to the limited
partners of the Partnership. As of March 25, 2003, all of these properties were
sold or disposed.
On March 28, 2003, the Partnership's interest in Saraland Apartments
("Saraland") was transferred to the U.S. Environmental Protection Agency
pursuant to the First Amended Bankruptcy Plan by order of the United States
Bankruptcy Court in Dallas, TX, resulting in a gain of approximately $350,000.
No proceeds were used to pay off the Purchase Money Note and accrued interest,
which had a total outstanding balance of approximately $2,124,000 resulting in
additional gain of approximately $2,124,000 (see Note 11).
On December 31, 2002, the Partnership's limited partnership interest in Summer
Arms Apartments ("Summer Arms") was sold to the Purchase Money Note Holder for
$25,000, resulting in gain of approximately $252,000. No proceeds were used to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $3,275,000, resulting in a gain
on sale of approximately $3,275,000.
On December 20, 2002, the property and related assets and liabilities of
Pinewood Village ("Pinewood") were sold to an unaffiliated third party for
$2,000,000, resulting in a gain of approximately $1,030,000. The Partnership
used approximately $1,453,000 of the proceeds to pay off the Purchase Money Note
6
and accrued interest thereon, which had a total outstanding balance of
approximately $1,634,000, resulting in forgiveness of indebtedness income of
approximately $180,000.
On July 31, 2002, the Purchase Money Note Holder agreed to purchase the limited
partnership interests in Cabarrus Arms Associates ("Cabarrus Arms") for an
agreed upon price of $25,000. Such purchase is expected to be finalized sometime
during 2003. No assurance can be given that the closing will actually occur.
On July 31, 2002, the Purchase Money Note Holder agreed to purchase the limited
partnership interests in Hathaway Court Associates ("Hathaway") for an agreed
upon price of $50,000. Such purchase is expected to be finalized sometime during
2003. No assurance can be given that the closing will actually occur.
On May 30, 2002, the property and the related assets and liabilities of
Lexington Village ("Lexington") were sold to an affiliate of the Local General
Partner for approximately $1,350,000, resulting in a gain of approximately
$412,000. The Partnership used approximately $617,000 of the proceeds to pay off
the Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $3,445,000, resulting in forgiveness of
indebtedness income of approximately $2,828,000.
On May 9, 2002, the property and the related assets and liabilities of Huntley
#1 were sold to the Local General Partner for approximately $1,750,000,
resulting in a gain of approximately $158,000. The Partnership used
approximately $1,277,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had an outstanding balance of approximately
$2,645,000, resulting in forgiveness of indebtedness income of approximately
$1,368,000.
On May 9, 2002, the property and the related assets and liabilities of Huntley
#2 were sold to the Local General Partner for approximately $1,750,000,
resulting in a gain of approximately $379,000. The Partnership used
approximately $1,194,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had an outstanding balance of approximately
$1,725,000, resulting in forgiveness of indebtedness income of approximately
$531,000.
On April 30, 2002, the property and the related assets and liabilities of
Shelton Beach Apartments ("Northpointe I") were sold to an unaffiliated third
party for $2,333,333, resulting in a gain of approximately $598,000. The
Partnership used approximately $1,124,000 of proceeds to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $3,239,000, resulting in forgiveness of indebtedness
income of approximately $2,115,000.
On April 30, 2002, the property and the related assets and liabilities of
Northpointe II were sold to an unaffiliated third party for $1,666,667 resulting
in a gain of approximately $394,000. The Partnership used approximately $570,000
of the proceeds to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$2,119,000, resulting in forgiveness of indebtedness income of approximately
$1,549,000.
On February 15, 2002, the property and the related assets and liabilities of
Robindale East Apartments ("Robindale") were sold to an unaffiliated third party
for $735,000, resulting in a loss of approximately $527,000. No proceeds were
used to settle the related Purchase Money Note and accrued interest thereon,
which had a total outstanding balance of approximately $2,904,000, resulting in
forgiveness of indebtedness income of such amount. The auditors for Robindale
modified their report due to the uncertainty of this subsidiary partnership to
continue in existence since the sole revenue producing asset was sold during the
year.
7
On February 14, 2002, the property and the related assets and liabilities of
Nottingham Woods Apartments ("Nottingham") were sold to an unaffiliated third
party for $1,900,000, resulting in a gain of approximately $806,000. The
Partnership used approximately $249,000 of the proceeds to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $3,251,000, resulting in forgiveness of indebtedness
income. In Fiscal Year 2003, additional proceeds of approximately $298,000 were
received, of which approximately $223,000 was paid on the Purchase Money Note,
resulting in net forgiveness of indebtedness income of approximately $2,779,000.
On December 4, 2001, the Partnership's Limited Partnership Interests in
Greenwood Manor, Henslee Heights, Hereford Manor, Malvern Manor, and Southwest
Apartments were sold to the Local General Partner effective January 1, 2002 for
$11,988, $27,972, $11,988, $7,920, and $9,990, resulting in losses of
approximately $264,000, $685,000, $329,000, $303,000, and $159,000,
respectively. No proceeds were used to settle the related Purchase Money Notes
and interest thereon which were assigned to the Local General Partner, resulting
in gains on sale of properties of approximately $2,153,000, $2,692,000,
$1,682,000, $1,769,000, and $1,480,000, respectively.
On November 20, 2001, the property and related assets and liabilities of
Vincennes NiBlack Apts. ("Autumn Ridge") were sold to a unaffiliated third party
for $2,500,000, resulting in a loss of approximately $262,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $3,567,000 for the Fiscal
Year 2002. In Fiscal 2003, additional proceeds of approximately $1,500,000 were
received and paid on the Purchase Money Note, resulting in a reversal of
forgiveness of indebtedness income of such amount.
On November 13, 2001, the property and related assets and liabilities of Seymour
O'Brien Manor Apts. ("Seymour O'Brien") were sold to an unaffiliated third party
for $920,000, resulting in a loss of approximately $126,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $1,842,000 for the Fiscal
Year 2002. In Fiscal 2003, additional proceeds of approximately $792,000 were
received and paid on the Purchase Money Note, resulting in a reversal of
forgiveness of indebtedness income of such amount.
On August 15, 2001 the Partnership's Limited Partnership Interest in Hackley
Village ("Hackley") was assigned to the Local General Partner resulting in a
loss of approximately $522,000. The Partnership paid approximately $9,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $1,816,000, resulting in gain
on sale of property of such amount.
On August 14, 2001 the Partnership's Limited Partnership Interest in University
Gardens Apts. ("University") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $330,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,246,000, resulting in gain on sale
of property of such amount.
On August 14, 2001, the Partnership's Limited Partnership Interest in Southside
Village Apts. ("Southside") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $218,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,926,000, resulting in gain on sale
of property of such amount.
On July 20, 2001, the property and related assets and liabilities of Washington
Highland Apts. ("Washington Highland") were sold to an unaffiliated third party
purchaser for $800,000, resulting in a loss of approximately $482,000. The
Partnership used approximately $238,000 of the proceeds to pay off the Purchase
8
Money Note and accrued interest thereon, which had a total outstanding balance
of $1,905,000 resulting in forgiveness of indebtedness income of approximately
$1,668,000.
On June 27, 2001, the property and related assets and liabilities of Oakwood
Manor ("Oakwood") were sold to an unaffiliated third party purchaser for
$3,099,000, resulting in a loss of approximately $145,000. The Partnership used
approximately $1,077,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $6,803,000
resulting in forgiveness of indebtedness income of approximately $5,726,000.
On May 10, 2001, the property and related assets and liabilities of Ware Manor
Associates ("Ware Manor") were sold to an unaffiliated third party for
$1,364,500, resulting in a gain of approximately $389,000. The Partnership used
approximately $472,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,846,000,
resulting in forgiveness of indebtedness income of approximately $1,374,000.
On April 20, 2001, the property and related assets and liabilities of Northwoods
III Apartments were sold to an unaffiliated third party for $3,316,000,
resulting in a gain of approximately $1,266,000. The Partnership used
approximately $791,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,756,000,
resulting in forgiveness of indebtedness income of approximately $965,000.
On April 11, 2001, the property and related assets and liabilities of Tall Pines
("Tall Pines") were sold to an unaffiliated third party for $2,145,000,
resulting in a gain of approximately $751,000. The Partnership used
approximately $1,015,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $3,424,000,
resulting in forgiveness of indebtedness income of approximately $2,409,000.
On March 30, 2001 Nu-Elm Apartments ("Nu-Elm") entered into a purchase and sale
agreement with an unaffiliated third party for a purchase price of $1,300,000.
The contract has expired and the property was placed back on the market.
On January 5, 2001, the property and the related assets and liabilities of West
Scenic Apartments, Ltd. ("West Scenic") were sold back to the Purchase Money
Note Holder for $1,188,000 resulting in a loss of approximately $973,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,839,000, resulting in forgiveness of indebtedness income during the 2001
Fiscal Year.
On December 20, 2000, the property and related assets and liabilities of
Cedarbay, Ltd. ("Cedarbay") were sold to an unaffiliated third party for
$2,049,600, resulting in a gain of approximately $52,000. The Partnership used
approximately $228,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $3,157,000, resulting in forgiveness of indebtedness income of
approximately $2,943,000 inclusive of forgiveness of approximately $14,000 in
accounts payable.
On December 19, 2000, the property and related assets and liabilities of Conifer
208 ("Conifer") were sold to an unaffiliated third party for $1,750,000,
resulting in a gain of approximately $846,000. The Partnership used
approximately $1,231,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $1,691,000, resulting in forgiveness of indebtedness income of
approximately $460,000.
On December 18, 2000, the Partnership's limited partnership interest in Solemar
at South Dartmouth, L.P. ("Solemar") was sold to a third party for $501,000,
resulting in a loss in the amount of $2,369,000. The Purchase Money Note was
9
assumed by the Local Partnership. No proceeds were used to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $5,473,000, resulting in a gain on sale of property.
On November 7, 2000, the property and related assets and liabilities of
Cloisters Associates, Ltd. ("Sundown") were sold to an unaffiliated third party
for $2,800,000, resulting in a gain of approximately $713,000. The Partnership
used approximately $519,000 of the proceeds to pay off the Purchase Money Note
and accrued interest thereon, which amounted to $4,825,000, resulting in
forgiveness of indebtedness income of approximately $4,306,000.
On July 14, 2000, the property and related assets and liabilities of Casa Ramon
Apartments were sold to an unaffiliated third party for $4,500,000, resulting in
a gain of approximately $2,999,000. The Partnership used approximately
$3,062,000 of the proceeds to pay off the Purchase Money Note and accrued
interest thereon which had a total outstanding balance of approximately
$3,172,000 resulting in forgiveness of indebtedness income of approximately
$111,000.
On June 30, 2000, the Partnership sold 1% of its interest in Bonnie Doone
Apartments, Florence Apartments, Dickens Ferry Apartments and Decatur Apartments
to the Purchase Money Note holder, in each case, for $100. Simultaneously, the
Partnership assigned its remaining interest of 97.99% in each of such four Local
Partnerships and the related Purchase Money Notes and interest thereon to the
Purchase Money Note holder, resulting in gains of approximately $1,903,000,
$2,373,000, $2,091,000 and $2,867,000, respectively.
On March 31, 2000, the Partnership's limited partnership interest in Caroline
Forest Apartments ("Caroline Forest") was sold to the Purchase Money Note holder
for $90,000, resulting in a loss in the amount of approximately $338,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $1,736,000,
resulting in forgiveness of indebtedness income.
On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain in the amount of approximately $1,457,000. Approximately $1,397,000 of
the proceeds was used to pay off the Purchase Money Note.
On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss in the amount of approximately $4,445,000. No proceeds were
used to settle the associated Purchase Money Note and accrued interest which had
a total outstanding balance of approximately $11,511,000, operating deficit
loans and advances of approximately $558,000 and various payables of $162,000
resulting in forgiveness of indebtedness income.
Segments
- --------
The Partnership operates in one segment, which is the investment in multi-family
residential property.
Competition
- -----------
The real estate business is highly competitive and each of the Local
Partnerships in which the Partnership has invested owns an Apartment Complex
which must compete for tenants with other rental housing in its area. However,
the rental assistance and the preferred interest rates on mortgage financing
generally make it possible to offer the apartments to eligible tenants at a cost
to the tenant significantly below the market rate for comparable conventionally
financed apartments in the area.
Employees
- ---------
The Partnership does not have any employees. All services are performed for the
Partnership by its General Partners and their affiliates. The General Partners
10
receive compensation in connection with such activities as set forth in Items 11
and 13 herein. In addition, the Partnership reimburses the General Partners and
certain of their affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership Agreement ("Partnership Agreement").
Item 2. Properties.
As of March 25, 2003, the Partnership holds a 98.99% limited partnership
interest in each of four Local Partnerships, which own four Apartment Complexes
receiving Government Assistance. During the fiscal year ended March 25, 2003,
the properties and the related assets and liabilities owned by six subsidiary
partnerships were sold and the Partnership's Local Partnership Interests in two
subsidiary partnerships were sold. Through the fiscal year ended March 25, 2003,
the properties and the related assets and liabilities owned by thirty-one
subsidiary partnerships were sold and the Partnership's Local Partnership
Interests in twenty-six subsidiary partnerships were sold (see Item 7, below).
Set forth below is certain information concerning the Apartment Complexes and
their operations and finances. See Schedule III to the financial statements
included herein for information regarding encumbrances and for additional
information pertaining to the Apartment Complexes.
Each of the Local Partnerships owns one Apartment Complex. The Apartment
Complexes owned as of March 25, 2003 are located in Kentucky (1), Michigan (1),
Missouri (1) and North Carolina (1).
The 4 Apartment Complexes owned by the Local Partnerships at March 25, 2003
contain a total of 493 rental units. The largest of the Apartment Complexes
consists of 186 units; the smallest Apartment Complex contains 72 units.
Construction of each Apartment Complex was completed between 1972 and 1974.
The remaining Apartment Complexes are occupied by low, moderate and
middle-income tenants, some of whom are elderly. Each Apartment Complex is
located in the vicinity of other housing developments receiving Government
Assistance.
All of the Apartment Complexes are subject to existing permanent first mortgages
(the "Mortgage Loans"). In some cases the Apartment Complexes are also subject
to supplemental mortgages (the "Supplemental Mortgage Loans"). See Schedule III.
LOCAL PARTNERSHIP SCHEDULE
Government
Assistance
------------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ------------- --------------------------------
(Number of Units) Completed Programs(a) 2002 2001 2000 1999 1998
- ----------------- --------- ------------- ---- ---- ---- ---- ----
Knollwood I 1978 Sec.221(d)(4) (e) (e) (e) (e) (e)
Mobile, AL (192)
Knollwood II 1979 Sec.221(d)(4) (e) (e) (e) (e) (e)
Mobile, AL (192)
Knollwood III 1981 Sec.221(d)(4) (e) (e) (e) (e) (e)
Mobile, AL (192)
Knollwood, IV 1983 Sec.221(d)(4) (e) (e) (e) (e) (e)
Mobile, AL (128)
Parklane II 1977 Sec.221(d)(4) (e) (e) (e) (e) (e)
Mobile, AL(140)
Cedarbay 1981 Sec.221(d)(4) (n) (n) (n) 93% 94%
Mobile, AL(112)
Northwoods III Apts. 1982 Sec.221(d)(4) (p) (p) 87% 87% 88%
Pensacola, FL (192)
11
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government
Assistance
------------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ------------- --------------------------------
(Number of Units) Completed Programs(a) 2002 2001 2000 1999 1998
- ----------------- --------- ------------- ---- ---- ---- ---- ----
Westminster Manor Apts. 1972 Sec.221(d)(4) (f) (f) (f) (f) (f)
Arvada, CO (280) HAP
Northgate Townhouse Apts. 1977 Sec.221(d)(4) (f) (f) (f) (f) (f)
Thornton, CO (184) HAP
Hackley Village 1971 Sec.236 (q) (q) 93% 98% 100%
Muskegon, MI (54) HAP
Huntley #1 1972 Sec.236 (s) 88% 98% 95% 98%
Holt, MI (88) HAP
Huntley #2 1973 Sec.236 (s) 82% 99% 97% 99%
Holt, MI (72) HAP
Seymour O'Brien Manor Apts. 1972 Sec.236 (p) (p) 100% 100% 98%
Seymour, IN (56) HAP
Washington Highland Apts. 1972 Sec.236 (p) (p) 96% 93% 100%
Washington, IN (56) HAP
Vincennes Niblack Apts. 1972 Sec.236 (p) (p) 96% 91% 94%
("Autumn Ridge Apartments") HAP
Vincennes, IN (144)
Casa Ramon Apartments 1974 Sec.236 (n) (n) (n) 99% 100%
Orange, CA (75) HAP
Nu-Elm Apartments 1972 Sec.236 86% 93% 92% 99% 94%
Springfield, MI (72) HAP
Buttonwood Acres 1973 Sec.236 (f) (f) (f) (f) (f)
New Bedford, MA (132) HAP(b)
Rockdale West 1974 Sec.236 (i) (i) (i) (i) (i)
New Bedford, MA (225) HAP(b)
Solemar 1976 (c) (o) (o) (o) 98% 100%
South Dartmouth, MA (200)
Decatur Apartments 1971 Sec.236 (o) (o) (o) (l) 84%
Decatur, AL (100) HAP
Florence Apartments 1973 Sec.236 (o) (o) (o) (l) 94%
Florence, AL (96)
Saraland Apartments (g) 1972 Sec.236 (t) 0% 0% 0% 0%
Saraland, AL (60) HAP
University Gardens Apts. 1971 Sec.236 (q) (q) 100% 100% 100%
Waxahachie, TX (104)
Southside Village Apts. 1972 Sec.236 (q) (q) 91% 96% 97%
Brownwood, TX (104) HAP
Dickens Ferry Apartments 1972 Sec.236 (o) (o) (o) (l) 95%
Mobile, AL (80) HAP
Bonnie Doone Apartments 1972 Sec.236 (o) (o) (o) (l) 97%
Athens, AL (60) HAP
Conifer 208 (Conifer Village) 1972 Sec.236 (n) (n) (n) 97% 100%
Spokane, WA (64) HAP
Conifer 307 (Fircrest) 1973 Sec.236 (k) (k) (k) (k) 97%
Beaverton, OR (60) HAP
Conifer 317 (Pinewood) 1974 Sec.236 (s) 96% 100% 98% 92%
Hillsboro, OR (50)
Bicentennial Apts. 1976 Sec.221(d)(4) (d) (d) (d) (d) (d)
Houston, TX (292)
12
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government
Assistance
------------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ------------- --------------------------------
(Number of Units) Completed Programs(a) 2002 2001 2000 1999 1998
- ----------------- --------- ------------- ---- ---- ---- ---- ----
Bellfort Apts. 1979 Sec.221(d)(4) (k) (k) (k) (k) 93%
Houston, TX (272) HAP
Cloisters (Sundown) 1974 Sec.236 (n) (n) (n) 98% 98%
Birmingham, AL (192) HAP
Cabarrus Arms 1974 Sec.236 97% 96% 95% 96% 96%
Kannapolis, NC (76) HAP
Summer Arms Apts. 1974 Sec.236 (t) 92% 98% 96% 96%
Sumter, SC (100) HAP
Lexington Village 1973 Sec.236 (s) 75% 95% 97% 98%
Conyers, GA (108) HAP
Ware Manor 1971 Sec.236 (p) (p) 93% 98% 98%
Waycross, GA (84) HAP
Nottingham Woods Apts. 1974 Sec.236 (p) (p) 97% 92% 96%
Oxford, AL (144)
Hathaway Court 1974 Sec.236 98% 100% 100% 100% 99%
Covington, KY (159) HAP
Tall Pines 1972 Sec.236 (p) (p) 98% 99% 97%
La Grange, GA (115) HAP
Shelton Beach Apts. 1975 Sec.221(d)(4) (s) 94% 92% 83% 91%
Saraland, AL (112)
Northpointe II 1978 Sec.221(d)(4) (s) 91% 93% 86% 86%
Saraland, AL (80)
Caroline Forest Apts. 1973 Sec.236 (o) (o) (o) 100% 100%
Salem, VA (72) (m)
Park of Pecan I 1979 Sec.221(d)(4) (i) (i) (i) (i) (i)
Rosenberg, TX (137)
Park of Pecan II 1978 Sec.221(d)(4) (i) (i) (i) (i) (i)
Rosenberg, TX (136)
Villa Apollo No. 1 1971 Sec.236 (j) (j) (j) (j) 90%
Brownstown Township, MI (112) HAP
Carlton Terrace Apartments 1973 Sec.236 (j) (j) (j) (j) 98%
Sterling Heights, MI (300)
Cranbrook Manor Apartments 1970 Sec.236 (j) (j) (j) (j) 78%
Lansing, MI (136) HAP
Oakbrook Villa Apartments 1970 Sec.236 (k) (k) (k) (k) 91%
Romulus, MI (352) HAP
Pebble Creek 1973 Sec.236 98% 99% 100% 100% 99%
East Lansing, MI (186)
Villa Apollo No. 2 1971 Sec.236 (j) (j) (j) (j) 89%
Brownstown Township, MI (286) HAP
Greenwood Manor 1974 Sec.236 (q) (q) 91% 92% 80%
Pine Bluff, AR (64) HAP
Malvern Manor 1974 Sec.236 (q) (q) 90% 98% 92%
Malvern, AR (50) HAP
Hereford Manor 1973 Sec.236 (q) (q) 94% 84% 92%
Siloam Springs, AR (50) HAP
Henslee Heights 1974 Sec.236 (q) (q) 100% 100% 97%
Pine Bluff, AR (78) HAP
13
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government
Assistance
------------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ------------- --------------------------------
(Number of Units) Completed Programs(a) 2002 2001 2000 1999 1998
- ----------------- --------- ------------- ---- ---- ---- ---- ----
Oakwood Manor 1972 Sec.236 (p) (p) 76% 82% 92%
Little Rock, AR (200) HAP
West Scenic Apartments 1971 Sec.236 (n) (n) (n) 95% 95%
North Little Rock, AR (150)
Robindale East Apartments 1974 Sec.236 (p) (p) 73% 91% 87%
Blytheville, AR (88) HAP
Southwest Apartments 1970 Sec.236 (q) (q) 94% 94% 96%
Little Rock, AR (49) HAP
Valley Arms 1975 Sec.236 (k) (k) (k) (k) 28%
Statesville, NC (100) HAP
Lancaster Manor 1970 Sec.221(d)(3) (h) (h) (h) (h) (h)
San Diego, CA (248)
(a) The Partnership invested in Local Partnerships owning existing Apartment
Complexes which receive either federal or state subsidies. HUD, through FHA,
administers a variety of subsidies for low and moderate-income housing. FHA
administers similar housing programs for non-urban areas. The federal programs
generally provide one or a combination of the following forms of assistance: (1)
mortgage loan insurance, (2) rental subsidies and (3) reduction of mortgage
interest payments.
(1) HUD provides mortgage insurance for rental housing projects pursuant to a
number of sections of Title II of the National Housing Act ("NHA"), including
Section 236, Section 221(d)(4), Section 221(d)(3) and Section 220. Under all of
these programs, HUD will generally provide insurance equal to 100% of the total
replacement cost of the project to non-profit owners and 90% of the total
replacement cost to limited-distribution owners. Mortgages are provided by
institutions approved by HUD, including banks, savings and loan companies and
local housing authorities. Section 221(d)(4) of NHA provides for federal
insurance of private construction and permanent mortgage loans to finance new
construction of rental apartment complexes containing five or more units. The
most significant difference between the Section 221(d)(4) program and the
Section 221(d)(3) program is the maximum amount of the loan which may be
obtained. Under the Section 221(d)(3) program, non-profit sponsors may obtain a
permanent mortgage equal to 100% of the total replacement cost; no equity
contribution is required of a non-profit sponsor. In all other respects the
Section 221(d)(3) program is substantially similar to the Section 221(d)(4)
program.
(2) Many of the tenants in HUD insured projects receive some form of rental
assistance payments, primarily through the Section 8 Housing Assistance Payments
Program (the "Section 8 Program"). Apartment Complexes not receiving assistance
through the Section 8 Program ("Section 8 Payments") will generally have
limitations on the amounts of rent which may be charged. One requirement imposed
by HUD regulations effective for apartment complexes initially approved for
Section 8 Payments on or after November 5, 1979 is to limit the amount of the
owner's annual cash distributions from operations to 10% of the owner's equity
investment in an apartment complex if the apartment complex is intended for
occupancy by families and to 6% of the owner's equity investment in an apartment
complex intended for occupancy by elderly persons. The owner's equity investment
in the apartment complex is 10% of the project's replacement cost as determined
by HUD.
(3) Section 236 Program. As well as providing mortgage insurance, the Section
236 program also provides an interest credit subsidy which reduces the cost of
14
debt service on a project mortgage, thereby enabling the owner to charge the
tenants lower rents for their apartments. Interest credit subsidy payments are
made monthly by HUD directly to the mortgagee of the project. Each payment is in
an amount equal to the difference between (i) the monthly interest payment
required by the terms of the mortgage to pay principal, interest and the annual
mortgage insurance premium and (ii) the monthly payment which would have been
required for principal and interest if the mortgage loan bore interest at the
rate of 1%. These payments are credited against the amounts otherwise due from
the owner of the project, who makes monthly payments of the balance.
(b) The Local Partnership receives monthly rent supplements from HUD through
MHFA and the New Bedford Housing Authority.
(c) MHFA provides interest credit subsidies pursuant to Section 13A of the
Massachusetts Acts of 1966. The Local Partnership also receives monthly rent
supplements from the Dartmouth Housing Authority and the South Shore Housing
Authority pursuant to Section 707 of the Massachusetts Act of 1966.
(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997 (see Item 7. below).
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998 (see Item 7. below).
(f) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 1998 (see Item 7. below).
(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene found
to be present in the air of some apartments (see Item 7. below).
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999 (see Item 7. below).
(i) The Partnership's Local Partnership Interest in this Local Partnership was
sold during the fiscal year ended March 25, 1999 (see Item 7. below).
(j) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2000 (see Item 7. below).
(k) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000 (see Item 7. below).
(l) As a result of on-going litigation related to the Roar Properties (as
defined herein), occupancy rates have not been provided by the management agent
pursuant to the instructions from the Local General Partner.
(m) The Partnership's Local Partnership Interest in this Local Partnership was
sold on March 31, 2000 (see Item 7. below).
(n) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2001.
(o) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2001.
15
(p) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2002.
(q) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2002.
(s) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2003.
(t) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2003.
All leases are generally for periods not exceeding one to two years and no
tenant occupies more than 10% of the rentable square footage.
Management continuously reviews the physical state of the properties and budgets
improvements when required, which are generally funded from cash flow from
operations or release of replacement reserve escrows.
Management continuously reviews the insurance coverage of the properties and
believes such coverage is adequate.
See Item 1, Business, above for the general competitive conditions to which the
properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost for the properties as shown in Schedule
III to the financial statements included herein.
Item 3. Legal Proceeding.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fiscal year
covered by this report through the solicitation of proxies or otherwise and Note
11 to the financial statements.
16
PART II
Item 5. Market for the Registrant's Limited Partnerships Interests and Related
Security Holder Matters.
As of March 25, 2003, the Partnership had issued and outstanding 12,074 Limited
Partnership Interests, of which 6,674 are Initial Limited Partnership Interests
and 5,400 are Additional Limited Partnership Interests, each representing a
$5,000 capital contribution to the Partnership, for aggregate gross proceeds of
$60,370,000. Additional Limited Partnership Interests are the Limited
Partnership Interests acquired upon the exercise of warrants or sold by the
Partnership upon the nonexercise of the warrants. The warrants are rights
granted pursuant to the Partnership Agreement as part of the purchase of an
Initial Limited Partner Interest. No further issuance of Initial Limited
Partnership Interests or Additional Limited Partnership Interests is anticipated
and all warrants have expired.
The offering of Units consisting of Initial Limited Partnership Interests and
warrants to purchase Additional Limited Partnership Interests terminated in
1984. The offering of Additional Limited Partnership Interests terminated in
March 1985.
No public market has developed, and it is not anticipated that any public market
will develop, for the secondary purchase and sale of any Limited Partnership
Interests. Limited Partnership Interests may be transferred only if certain
requirements are satisfied, including the rendering of an opinion of counsel to
the Partnership that such transfer would not cause a termination of the
Partnership under Section 708 of the Internal Revenue Code and would not violate
any federal or state securities laws.
As of May 1, 2003, there were approximately 4,401 registered holders of Limited
Partnership Interests.
In March 2003, 2001, 2000 and 1998, distributions of approximately $1,509,000,
$1,389,000, $1,980,000 and $1,997,000 and $15,000, $14,000, $20,000 and $20,000
was paid to the Limited Partners and General Partners, respectively, from net
proceeds from the sale of properties by Local Partnerships in which the
Partnership had invested (see Item 7. below). Of the total distributions of
approximately $1,524,000, $1,403,000, $2,000,000 and $2,017,000 for the years
ended March 25, 2003, 2001, 2000 and 1998, there was no return of capital
determined in accordance with U.S. generally accepted accounting principles.
With the exception of these distributions, the Partnership has made no
distributions to its Limited Partners from its inception on June 28, 1984 to
March 25, 2003. There are no material restrictions upon the Partnership's
present or future ability to make distributions in accordance with the
provisions of the Partnership Agreement. The Partnership has invested as a
limited partner in Local Partnerships owning Apartment Complexes that receive
Governmental Assistance under programs which in many instances restrict the cash
return available to owners. See Item 8, Footnote 11(e) below, for a discussion
of these restrictions. The Partnership does not anticipate providing significant
cash distributions to its Limited Partners in circumstances other than
refinancing or sale of the Apartment Complexes or the Local Partnership
Interests. These distributions will not be sufficient to return to Limited
Partners the full amount of their original investment in the Partnership.
17
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the
Partnership. Additional detailed financial information is set forth in audited
financial statements and footnotes contained in Item 8 hereof and in the
schedules contained in Item 14 hereof.
Year Ended March 25,
---------------------------------------------------------------------------------
OPERATIONS 2003 2002 2001 2000 1999
- ---------- ------------- ------------- ------------- ------------- -------------
Revenues $ 14,178,518 $ 28,892,169 $ 34,185,019 $ 38,002,609 $ 36,695,719
Operating expenses (7,202,590) (16,215,466) (28,223,218) (35,058,379) (39,658,795)
Loss on impairment of
assets 0 0 0 0 (2,399,391)
Minority interest (337,639) 213,740 (888,911) (3,110,714) (4,662)
------------- ------------- ------------- ------------- -------------
Income (loss) before
extraordinary item 6,638,289 12,890,443 5,072,890 (166,484) (5,367,129)
Extraordinary item-
forgiveness of indebt-
edness 11,962,803 21,389,335 21,773,849 23,069,821 4,232,663
------------- ------------- ------------- ------------- -------------
Net income (loss) $ 18,601,092 $ 34,279,778 $ 26,846,739 $ 22,903,337 $ (1,134,466)
============= ============= ============= ============= =============
Income (loss) before
extraordinary item per
Unit $ 544 $ 1,057 $ 416 $ (14) $ (440)
Extraordinary item per
Unit 981 1,754 1,785 1,892 347
------------- ------------- ------------- ------------- -------------
Net income (loss) per
Unit $ 1,525 $ 2,811 $ 2,201 $ 1,878 $ (93)
============= ============= ============= ============= =============
Year Ended March 25,
---------------------------------------------------------------------------------
FINANCIAL POSITION 2003 2002 2001 2000 1999
- ------------------ ------------- ------------- ------------- ------------- -------------
Total assets $ 10,583,374 $ 27,426,999 $ 51,182,923 $ 81,413,006 $ 112,436,709
============= ============= ============= ============= =============
Long-term obligations $ 18,613,182 $ 45,956,744 $ 103,353,307 $ 162,421,389 $ 212,711,021
============= ============= ============= ============= =============
Total liabilities $ 22,420,241 $ 56,178,198 $ 113,797,425 $ 169,474,875 $ 221,443,873
============= ============= ============= ============= =============
Minority interest $ 59,888 $ 222,153 $ 638,628 $ 635,465 $ 593,370
============= ============= ============= ============= =============
During the years ended March 25, 1999, 2000, 2001, 2002 and 2003, total assets
decreased primarily due to depreciation and the sale of properties (see Note 10
in Item 8, Financial Statements and Supplementary Data), partially offset by net
additions to property and equipment. Long-term obligations and total liabilities
decreased for the years ended March 25, 1999, 2000, 2001, 2002 and 2003
primarily due to the forgiveness of indebtedness on Purchase Money Notes and
amounts due to selling partners as a result of the sale, principal repayments of
mortgage notes payable and payments of interest on Purchase Money Notes,
partially offset by accruals of interest on Purchase Money Notes.
18
Selected Quarterly Financial Data (Unaudited)
---------------------------------------------
Quarter Ended
------------------------------------------------------------
OPERATIONS June 25, September 25, December 25, March 25,
2002 2002 2002 2003
--------------------- ------------ ------------ ------------ ------------
Revenues $ 1,982,707 $ 3,224,244 $ 3,529,709 $ 5,441,858
Operating expenses (2,178,640) (1,864,150) (1,502,553) (1,657,247)
Minority Interest 64,728 (145,658) 21,514 (278,223)
------------ ------------ ------------ ------------
(Loss) income before
extraordinary item (131,205) 1,214,436 2,048,670 3,506,388
Extraordinary item-
forgiveness of indebt-
edness 5,683,676 11,104,825 (242,779) (4,582,919)
------------ ------------ ------------ ------------
Net income (loss) $ 5,552,471 $ 12,319,261 $ 1,805,891 $ (1,076,531)
============ ============ ============ ============
(Loss) income before
extraordinary item per
Unit $ (11) $ 100 $ 168 $ 288
Extraordinary item per
Unit 466 910 (20) (376)
------------ ------------ ------------ ------------
Net income (loss) per
Unit $ 455 $ 1,010 $ 148 $ (88)
============ ============ ============ ============
Quarter Ended
------------------------------------------------------------
OPERATIONS June 25, September 25, December 25, March 25,
2001 2001 2001 2002
--------------------- ------------ ------------ ------------ ------------
Revenues $ 2,536,631 $ 5,864,412 $ 10,180,566 $ 10,310,560
Operating expenses (5,145,579) (4,410,027) (3,391,622) (3,268,238)
Minority Interest 241,128 109,450 (123,311) (13,527)
------------ ------------ ------------ ------------
(Loss) income before (2,367,820) 1,563,835 6,665,633 7,028,795
extraordinary item
Extraordinary item-
forgiveness
of indebtedness 3,839,356 10,473,627 1,667,561 5,408,791
------------ ------------ ------------ ------------
Net income $ 1,471,536 $ 12,037,462 $ 8,333,194 $ 12,437,586
============ ============ ============ ============
(Loss) income before
extraordinary item
per Unit $ (194) $ 128 $ 547 $ 576
Extraordinary item per
Unit 315 859 136 444
------------ ------------ ------------ ------------
Net income per Unit $ 121 $ 987 $ 683 $ 1,020
============ ============ ============ ============
19
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
- -------------------------------
General
- -------
The Partnership's capital was originally invested primarily in 61 Local
Partnerships, in which the Partnership made an initial investment of $50,293,934
(including acquisition expenses). These investments are highly illiquid. At the
beginning of fiscal year 2002, the Partnership had interests in 12 Local
Partnerships. During the fiscal year ended March 25, 2003, the property and the
related assets and liabilities owned by six subsidiary partnerships were sold
and the Partnership's Local Partnership Interests in two subsidiary partnerships
were sold. Through the fiscal year ended March 25, 2003, the properties and the
related assets and liabilities owned by thirty-one subsidiary partnerships were
sold and the Partnership's Local Partnership Interests in twenty-six subsidiary
partnerships were sold. As of March 25, 2003, the Partnership owned interests in
4 Local Partnerships.
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery (see below).
During the year ended March 25, 2003, cash and cash equivalents of the
Partnership decreased approximately $3,743,000. This decrease is due to cash
used in operating activities ($2,270,000), principal payments of Purchase Money
Notes ($5,809,000), repayments of mortgage notes payable ($6,118,000), a
decrease in the capitalization of minority interest ($500,000), costs paid
relating to sale of property ($595,000), distributions paid ($1,524,000) and
acquisition of property and equipment and property and equipment held for sale
($164,000) which exceeded a decrease in mortgage escrow deposits ($451,000) and
proceeds from the sale of property ($12,787,000). Included in the adjustments to
reconcile the net income to cash used in operating activities is gain on sale of
property ($9,239,000), forgiveness of indebtedness income ($11,963,000) and
depreciation ($779,000).
Distributions aggregating approximately $10,072,000, $4,452,000 and $6,550,000
were made to the Partnership during the 2002, 2001 and 2000 Fiscal Years,
respectively, of which approximately $8,776,000, $3,872,000 and $5,147,000,
respectively, was used to pay principal, interest and extension fees on the
Purchase Money Notes. In addition, approximately $0, $0 and $598,000 for the
2002, 2001 and 2000 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes.
The Partnership's primary sources of funds are the cash distributions from
operations of the Local Partnerships in which the Partnership has invested and
net proceeds from sales. These sources are available to meet obligations of the
Partnership. However, the cash distributions received from the Local
Partnerships to date have not been sufficient to meet all such obligations of
the Partnership. Accordingly, certain fees and expense reimbursements owed to
the General Partners amounting to approximately $3,439,000, $3,217,000 and
$2,514,000, were accrued and unpaid as of March 25, 2003, 2002 and 2001,
respectively. Without the General Partners' continued allowance of accrual
without payment of certain fees and expense reimbursements, the Partnership will
not be in a position to meet its obligations. The General Partners have
continued allowing the accrual without payment of these amounts but are under no
obligation to continue to do so. Proceeds received from future sales will be
used to pay any outstanding amounts due to the General Partners.
20
Government Programs and Regulations
- -----------------------------------
For a discussion of Government Programs and Regulations see Item 1. Business.
Critical Accounting Policies
- ----------------------------
In preparing the consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Company's accounting policies included in Note 2 to
the consolidated financial statements in this annual report on Form 10-K.
a) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, and any other costs incurred
in acquiring the properties. The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and straight-line methods.
Expenditures for repairs and maintenance are charged to expense as incurred;
major renewals and betterments are capitalized. At the time property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are eliminated from the assets and accumulated depreciation
accounts and the profit or loss on such disposition is reflected in earnings.
The Partnership complies with Statement of Financial Accounting Standards (SFAS)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss
on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time property investments
themselves are reduced to estimated fair value (generally using discounted cash
flows) when the property is considered to be impaired and the depreciated cost
exceeds estimated fair value.
b) Income Taxes
No provision has been made for income taxes in the accompanying consolidated
financial statements since such taxes, if any, are the responsibility of the
individual partners. For income tax purposes, the Partnership has a fiscal year
ending December 31.
Purchase Money Notes
- --------------------
For a discussion of Purchase Money Notes Payable, see Note 7 to the Financial
Statements.
Sale of Underlying Properties/Local Partnership Interests
- ---------------------------------------------------------
For a discussion of the sale of properties in which the Partnership owns direct
and indirect interests, see Note 10 to the Financial Statements.
For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss for which the Partnership would be liable is its net investment in the
respective Local Partnerships, the resolution of the existing contingencies is
not anticipated to impact future results of operations, liquidity or financial
condition in a material way except that the Partnership would lose its
investment in the properties and any potential proceeds from the sale or
refinancing of the properties.
Except as described above, management is not aware of any trends or events,
commitments or uncertainties, which have not been otherwise disclosed, that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. Due to the sale
21
of properties, the portfolio is not diversified by the location of the
properties around the United States. The Partnership has four remaining
properties and therefore the Partnership may not be protected against a general
downturn in the national economy.
Results of Operations
- ---------------------
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.
For the year ended March 25, 2003, the Partnership did not record a loss on
impairment of assets. Through March 25, 2003, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.
The following is a summary of the results of operations of the Partnership for
the 2002, 2001 and 2000 Fiscal Years.
The results of operations of the Partnership, as well as the Local Partnerships,
excluding gain on sale of properties, forgiveness of indebtedness income,
administrative and management, taxes and insurance and financial remained fairly
constant for the 2002, 2001 and 2000 Fiscal Years. Contributing to the
relatively stable operations at the Local Partnerships is the fact that all of
the Apartment Complexes receive Government Assistance.
Net income during the 2002, 2001 and 2000 Fiscal Years totaled $18,601,092,
$34,279,778 and $26,846,739, respectively.
2002 vs. 2001
- -------------
Rental income decreased by 59% for the 2002 Fiscal Year as compared to the 2001
Fiscal Year. Excluding Bellfort Apartments, Valley Arms, Conifer 307, Cloisters
(Sundown), Conifer 208, West Scenic Apartments, Tall Pines, Northwoods III
Apartments, Ware Manor, Oakwood Manor, Washington Highlands Apartments, Seymour
O'Brien Manor Apartments, Vincennes NiBlack Apartments, Nottingham Woods
Apartments, Robindale East Apartments, Shelton Beach Apartments, Northpointe II,
Huntley #1, Huntley #2, Lexington Village and Conifer 317 which sold their
properties and the related assets and liabilities and Southside Village
Apartments, University Gardens Apartments, Hackley Village, Greenwood Manor,
Malvern Manor, Hereford Manor, Henslee Heights, Southwest Apartments, Saraland
Apartments and Summer Arms Apartments in which the Partnership sold its Local
Partnership interests (collectively, the "Sold Assets"), rental income increased
by approximately 6% during the 2002 Fiscal Year as compared to the 2001 Fiscal
Year primarily due to rental rate increases.
22
Other income decreased approximately 54% for the 2002 Fiscal Year as compared to
the 2001 Fiscal Year. Excluding the Sold Assets, other income decreased
approximately 30% primarily due to a decrease in interest income in 2002 at one
Local Partnership and the Partnership level as a result of lower interest rates.
Total expenses, excluding the Sold Assets, administrative and management, taxes
and insurance and financial, remained fairly consistent with a decrease of
approximately 8% for the 2002 Fiscal Year as compared to the 2001 Fiscal Year.
Administrative and management decreased approximately 46% for the 2002 Fiscal
Year as compared to the 2001 Fiscal Year. Excluding Sold Assets, such expense
decreased approximately 17% primarily due to a decrease in legal fees in 2002.
Taxes and insurance decreased approximately 43% for the 2002 Fiscal Year as
compared to the 2001 Fiscal Year. Excluding the Sold Assets, such expense
increased approximately 19% primarily due to an increase in insurance premiums
at the Local Partnerships.
Financial decreased approximately 73% for the 2002 Fiscal Year as compared to
the 2001 Fiscal Year. Excluding the Sold Assets, such expense decreased
approximately 17% primarily due to a decrease in the prime interest rate in
2002.
Administrative and management-related parties, operating, repairs and
maintenance and depreciation decreased approximately $474,000, $1,345,000,
$1,785,000 and $585,000 respectively, during the 2002 Fiscal Year compared to
the 2001 Fiscal Year. Excluding the Sold Assets, such expenses increased
(decreased) approximately $(104,000), $27,000, $(53,000) and $1,000,
respectively, during the 2002 Fiscal Year compared to the 2001 Fiscal Year.
Gain on sale of properties and forgiveness of indebtedness income will continue
to fluctuate as a result of the disposition of properties.
2001 vs. 2000
- -------------
Rental income decreased by 36% for the 2001 Fiscal Year as compared to the 2000
Fiscal Year. Excluding Oakbrook Villa Apartments, Bellfort Apartments, Valley
Arms, Conifer 307, Casa Ramon Apartments, Cloisters (Sundown), Conifer 208,
Cedarbay, West Scenic Apartments, Tall Pines, Northwoods III Apartments, Ware
Manor, Oakwood Manor, Washington Highlands Apartments, Seymour O'Brien Manor
Apartments, and Vincennes NiBlack Apartments which sold their properties and the
related assets and liabilities and Cranbrook Manor Apartments, Caroline Forest
Apartments, Bonnie Doone Apartments, Dickens Ferry Apartments, Decatur
Apartments, Florence Apartments, Solemar, Southside Village Apartments,
University Gardens Apartments, Hackley Village, Greenwood Manor, Malvern Manor,
Hereford Manor, Henslee Heights, and Southwest Apartments in which the
Partnership sold its Local Partnership interests (collectively, the "Sold
Assets"), rental income increased by approximately 3% during the 2001 Fiscal
Year as compared to the 2000 Fiscal Year primarily due to rental rate increases.
Other income decreased approximately 22% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, other income increased
approximately 13% primarily due to an underaccrual of interest income at two
Local Partnerships in 2000, partially offset by a decrease in interest income at
the Partnership level as the result of lower cash and cash equivalent balances
in 2001.
A gain on sale of properties and forgiveness of indebtedness income was recorded
in the 2001 Fiscal Year (see Notes 10 and 11, respectively, in Item 8. Financial
Statements and Supplemental Data, below).
23
Total expenses, excluding the Sold Assets, administrative and management,
financial and depreciation, remained fairly consistent with an increase of
approximately 2% for the 2001 Fiscal Year as compared to the 2000 Fiscal Year.
Administrative and management decreased approximately 39% for the 2001 Fiscal
Year as compared to the 2000 Fiscal Year. Excluding the Sold Assets, such
expense decreased approximately 12% primarily due to a decrease in legal
expenses at the Partnership level.
Financial decreased approximately 56% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expense decreased
approximately 27% primarily due to a decrease in the prime interest rate in
2001.
Depreciation decreased approximately 58% for the 2001 Fiscal Year as compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expense increased
approximately 34% primarily due to the expiration of a sales contract at one
Local Partnership. The Local Partnership was classified as an asset held for
sale in 2000 and was not depreciated.
Administrative and management-related parties, operating, repairs and
maintenance, and taxes and insurance decreased approximately $319,000, $939,000,
$1,537,000, and $594,000 respectively, during the 2001 Fiscal Year compared to
the 2000 Fiscal Year. Excluding the Sold Assets, such expenses increased
(decreased) approximately ($22,000), $111,000, ($45,000), and $68,000,
respectively, during the 2001 Fiscal Year compared to the 2000 Fiscal Year.
Results of Operations of Certain Local Partnerships
- ---------------------------------------------------
Saraland Apartments, Ltd.
- -------------------------
Saraland Apartments, Ltd. ("Saraland") was designated as a superfund site by the
Environmental Protection Agency ("EPA") in the mid-1990's after the EPA funded
the cleanup of hazardous waste caused by the property's former owner, Redwing
Carriers, Inc. (n/k/a Rentokil Initial Environmental Services, Inc. "Rentokil").
During the year ended December 31, 1996, the tenants of Saraland were moved to
temporary housing to facilitate cleanup of the site. However, as of February
1997, the EPA, along with other agencies, concluded that the apartment residents
should not return to the site, and the tenants were permanently relocated. The
EPA has since concluded that the apartments will have to be demolished in order
to accomplish the removal of contamination that has been found to exist
underneath the buildings. The EPA filed suit and named Rentokil, Saraland and
others as potentially responsible parties. Various other lawsuits have been
filed on related issues.
All parties involved in the EPA litigation entered into a Consent Decree which
would dispose of all claims in that litigation. The Bankruptcy Court approved
the Consent Decree on March 13, 2002. Saraland filed its voluntary petition for
relief under Chapter 11 of Title 11, United States Code on March 21, 2001 and
The First Amended Plan of Reorganization was filed on April 26, 2002. On July
23, 2002 the United States Bankruptcy Court for the Northern District of Texas
Dallas Division confirmed the plan of reorganization. Under the plan, effective
March 28, 2003, the Partnership was released from all claims in the EPA
litigation in exchange for a $100,000 cash payment to the EPA and for the
transfer of its interest in the property, subject to the existing secured
indebtedness, to Rentokil.
The plan also requires that other unsecured claims be paid a pro rata
distribution for allowed claims from a $20,000 fund to be contributed by the
general partners of Saraland.
24
Other
- -----
The Partnership's investment as a limited partner in the Local Partnerships is
subject to the risks incident to the management and ownership of improved real
estate. The Partnership's investments also could be adversely affected by poor
economic conditions, which generally could increase vacancy levels, rental
payment defaults, and operating expenses, any or all of which could threaten the
financial viability of one or more of the Local Limited Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving Government Assistance. These include: governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent units in the Apartment 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 HUD to make the rental assistance payments it
has contracted to make; and the possibility that, when the rental assistance
contracts expire, there may not be market demand for apartments at full market
rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs, such as fuel, utilities, and labor.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
25
Item 8. Financial Statements and Supplementary Data.
Sequential
Page
----------
(a) 1. Financial Statements
Independent Auditors' Report 27
Consolidated Balance Sheets at
March 25, 2003 and 2002 112
Consolidated Statements of Income
for the Years Ended March 25, 2003,
2002 and 2001 113
Consolidated Statements of Changes
in Partners' Deficit for the Years
Ended March 25, 2003, 2002 and 2001 114
Consolidated Statements of Cash
Flows for the Years Ended March 25,
2003, 2002 and 2001 115
Notes to Consolidated Financial
Statements 118
26
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries
We have audited the consolidated balance sheets of Cambridge Advantaged
Properties Limited Partnership and Subsidiaries as of March 25, 2003 and 2002,
and the related consolidated statements of income, changes in partners' deficit,
and cash flows for the years ended March 25, 2003, 2002 and 2001 (the 2002, 2001
and 2000 Fiscal Years, respectively). The financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the financial statements for 15 (2002 Fiscal Year), 31 (2001 Fiscal Year) and 43
(2000 Fiscal Year) subsidiary partnerships whose net income (losses) aggregated
$3,741,030, ($1,523,249) and $11,048,206 for the 2002, 2001 and 2000 Fiscal
Years, respectively, and whose assets constituted 86% and 91% of the
Partnership's assets at March 25, 2003 and 2002, respectively, presented in the
accompanying consolidated financial statements. The financial statements of
these subsidiary partnerships were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for these subsidiary partnerships, is based
solely upon the reports of the other auditors.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based upon our audits and the reports of the other auditors, the
accompanying consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Cambridge Advantaged
Properties Limited Partnership and Subsidiaries at March 25, 2003 and 2002, and
the results of their operations and their cash flows for the years ended March
25, 2003, 2002 and 2001, in conformity with U.S. generally accepted accounting
principles.
As discussed in Note 10, the Partnership is currently in the process of
disposing of its investments. As of March 25, 2003, the Partnership has disposed
of fifty-seven of its sixty-one original investments. Three additional
investments are listed for sale and the remaining investment is expected to be
liquidated during 2003.
As discussed in Note 7, the principal of and all accrued interest on the
Purchase Money Notes are due at final maturity. The remaining Purchase Money
Notes are now extended, with maturity dates through June 2003 and the
Partnership is attempting to refinance or sell the properties. It is uncertain
as to whether the proceeds from such sales will be sufficient to meet the
outstanding balances of the Purchase Money Notes and accrued interest thereon.
The consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
May 28, 2003
27
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Cedarbay, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Cedarbay, Ltd. for the year ended December 31, 2000. This
financial statement is the responsibility of the partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation for the year ended
December 31, 2000, in conformity with generally accepted accounting principles.
As described in note A to the financial statement, on June 19, 2000, the
partnership adopted a plan to sell the rental property and liquidate the
partnership in lieu of continuing the business. On December 20, 2000, the
partnership sold the rental property. As a result, the partnership's financial
statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 19, 2001
28
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northwoods III Apartments, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Northwoods III Apartments, Ltd. for the period January 1, 2001
through August 23, 2001. This financial statement is the responsibility of the
partnership's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the changes in net assets in liquidation for the period
January 1, 2001 through August 23, 2001, in conformity with accounting
principles generally accepted in the United States of America.
As described in note A to the financial statement, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On April 23, 2001, the partnership sold the rental
property. As a result, the partnership's financial statement is presented on the
liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
August 23, 2001
29
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northwoods III Apartments, Ltd.
We have audited the accompanying balance sheets of Northwoods III Apartments,
Ltd. as of December 31, 2000 and 1999, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. 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
management, 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 financial position of Northwoods III Apartments, Ltd.
as of December 31, 2000 and 1999, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 16, 2001
30
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Hackley Village Associates #1
We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of August 15, 2001, and the related
statements of income, and cash flows, and changes in partner's equity for the
period then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of August 15, 2001, and the results of its operations and its cash flows and
its changes in partners' equity for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government auditing Standards, we have also issued a report
dated October 3, 2001, on our consideration of Hackley Village Associates'
internal controls and a report dated October 3, 2001, on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
October 3, 2001
31
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Hackley Village Associates #1
We have audited the accompanying balance sheet of Hackley Village Associates #1,
HUD Project #047-44030-LDP-SUP, as of December 31, 2000, and the related
statements of income, and cash flows, and changes in partner's equity for the
year then ended. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government auditing Standards, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hackley Village Associates #1
as of December 31, 2000, and the results of its operations and its cash flows
and its changes in partners' equity for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 15) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Project #047-44030-LDP-SUP. Such information has been subject to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government auditing Standards, we have also issued a report
dated February 7, 2001, on our consideration of Hackley Village Associates'
internal controls and a report dated February 7, 2001, on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
February 7, 2001
32
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Huntley Associates (A Limited
Partnership) as of May 8, 2002, and the related statements of income and changes
in partner's equity for period January 1, 2002 to May 8, 2002. We have also
audited the statements of cash flows for the period January 1, 2002 to May 8,
2002. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Huntley Associates as of May 8,
2002, and the results of its operations and cash flows for the period January 1,
2002 to May 8, 2002 in conformity with accounting principles generally accepted
in the United States of America.
In accordance with Government Auditing Standards, we have also issue a report
dated September 11, 2002 on our consideration of Huntley Associates' internal
controls and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of the
audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audit.
The accompanying supplemental included in the report (shown on pages 10 to 12)
is presented for the purposes of additional analysis and is not a required part
of the financial statements of Huntley Associates. Such information has been
subjected to the auditing procedures applied in the audit of financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
September 11, 2002
33
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 2001, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 2001. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44029 LDP-SUP as
at December 31, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issue a report
dated January 21, 2002 on our consideration of Huntley Associates' internal
controls and a report dated January 21, 2002 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
January 21, 2002
34
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Huntley Associates
We have audited the accompanying balance sheet of Project #047-44029 LDP-SUP of
Huntley Associates (A Limited Partnership) as of December 31, 2000, and the
related statements of income and changes in partner's equity for the year then
ended. We have also audited the statements of cash flows for the years ended
December 31, 2000. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44029 LDP-SUP as
at December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 12) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates. Such information has been subjected to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issue a report
dated January 22, 2001 on our consideration of Huntley Associates' internal
controls and a report dated January 22, 2001 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 2001
35
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of May 8, 2002, and the related
statements of operations and changes in partner's equity for the period then
ended. We have also audited the statements of cash flows for the period ended
May 8, 2002. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
May 8, 2002, and the results of its operations and the changes in partners'
equity and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report
dated September 10, 2002 on our consideration of Huntley #2's internal control
and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grants. Those reports are an integral part of the audit performed
in accordance Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
The accompanying supplemental information (shown on pages 10 to 15) is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements of Huntley Associates #2. Such information has been subject
to the auditing procedures applied in the audit of the basic financial
statements and in our opinion, is fairly stated, in all material respects, in
relation to the financial statements taken as a whole.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
September 10, 2002
36
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 2001, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 2001. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
December 31, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 16, 2002 on our consideration of Huntley Associates #2's internal
controls and a report dated January 16, 2002 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
January 16, 2002
37
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Huntley Associates #2
We have audited the accompanying balance sheet of Project #047-44063-LDP of
Huntley Associates #2 (A Limited Partnership) as of December 31, 2000, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statements of cash flows for the years
ended December 31, 2000. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #047-44063-LDP as at
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 10 to 15) are presented for the purposes of
additional analysis and are not a required part of the financial statements of
Huntley Associates #2. Such information has been subject to the auditing
procedures applied in the audit of financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 25, 2001 on our consideration of Huntley Associates #2's internal
controls and a report dated January 25, 2001 on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 25, 2001
38
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at November 13,
2001, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the period ended December 31, 2002. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
December 31, 2002, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report
dated March 25, 2003 on our consideration of Seymour O'Brien Manor Apartments (a
Limited Partnership) internal controls and a report dated March 25, 2003 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
March 25, 2003
39
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at November 13,
2001, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the period ended November 13, 2001. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
November 13, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 8, 2002 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 8, 2002 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
January 8, 2002
40
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Seymour O'Brien Manor Apartments
We have audited the accompanying balance sheet of Project #073-44152 LDP of
Seymour O'Brien Manor Apartments (a Limited Partnership) as at December 31,
2000, and the related statements of operations and changes in partner's equity
for the year then ended. We have also audited the statements of cash flows for
the year ended December 31, 2000. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #073-44152 LDP as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Seymour O'Brien Manor Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2001 on our consideration of Seymour O'Brien Manor Apartments
(a Limited Partnership) internal controls and a report dated January 15, 2001 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2001
41
[Letterhead of Bordman & Winnick]
Independent Auditors Report
To the Partners of
Washington Highland Apartments
We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of July 20, 2001, and
the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statement of cash flows for the years
ended July 20, 2001. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
July 20, 2001, and the results of its operations and the changes in partners'
equity and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated September 13, 2001 on our consideration of Washington Highland Apartment
(a Limited Partnership) internal controls and a report dated September 13, 2001
on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
September 13, 2001
42
[Letterhead of Bordman & Winnick]
Independent Auditors Report
To the Partners of
Washington Highland Apartments
We have audited the accompanying balance sheet of HUD Project No. 073-44073 of
Washington Highland Apartment (a Limited Partnership) as of December 31, 2000,
and the related statements of operations and changes in partner's equity for the
year then ended. We have also audited the statement of cash flows for the years
ended December 31, 2000. These financial statements are the responsibility of
the project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HUD Project No. 073-44073 as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of
Washington Highland Apartments. Such information has been subject to the
auditing procedures applied in the audit of basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 14, 2001 on our consideration of Washington Highland Apartment (a
Limited Partnership) internal controls and a report dated January 14, 2001 on
its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 14, 2001
43
[Letterhead of BORDMAN & WINNICK]
Independent Auditor's Report
To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of AUTUMN RIDGE APARTMENTS
formerly known as Vincennes Niblack Apartments (A Limited Partnership) as at
December 31, 2002, and the related statements of operations, changes in
partner's equity and cash flows for the period ended December 31, 2002. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project # 073-58501 LDP as of
December 31, 2002, and the results of its operations and the changes in
partners' equity and cash flows for the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
March 25, 2003
44
[Letterhead of BORDMAN & WINNICK]
Independent Auditor's Report
To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of Project #073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as at November 20, 2001, and the related statements of
operations and changes in partner's equity for the period January 1, 2001 to
November 20, 2001. We have also audited the statements of cash flows for the
period January 1, 2001 to November 20, 2001. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project # 073-58501 LDP as of
November 20, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the period January 1, 2001 to November 20,
2001 in conformity with accounting principles generally accepted in the United
States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 8, 2002 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 8, 2002 on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
EIN 38-2900295
West Bloomfield, MI
January 8, 2002
45
[Letterhead of BORDMAN & WINNICK]
Independent Auditors Report
To the Partners of
AUTUMN RIDGE APARTMENTS Formerly known as
Vincennes Niblack Apartments
We have audited the accompanying balance sheet of Project No. 073-58501 LDP of
AUTUMN RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments (A
Limited Partnership) as at December 31, 2000, and the related statements of
operations and changes in partner's equity for the year then ended. We have also
audited the statements of cash flows for the year ended December 31, 2000. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project # 073-58501 LDP as at
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of AUTUMN
RIDGE APARTMENTS formerly known as Vincennes Niblack Apartments. Such
information has been subject to the auditing procedures applied in the audit of
basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 2001 on our consideration of AUTUMN RIDGE APARTMENTS' formerly
known as Vincennes Niblack Apartments (A Limited Partnership) internal controls
and reports dated January 22, 2001 on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 22, 2001
46
[Letterhead of Bordman & Winnick]
To the Partners of
Casa Ramon Apartments
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Project #122-44476 LDP-SUP of
Casa Ramon Apartments (A Limited Partnership) as at July 14, 2000, and the
related statements of operations and changes in partner's equity for the period
then ended. We have also audited the statements of cash flows for the period
ended July 14, 2000. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #122-44476 LDP-SUP as
at July 14, 2000, and the results of its operations and the changes in partners'
equity and cash flows for the year then ended in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on page 9) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Casa
Ramon Apartments. Such information has been subject to the auditing procedures
applied in the audit of basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated September 19, 2000 on our consideration of Casa Ramon Apartments' internal
controls and a report dated September 19, 2000, on its compliance with laws and
regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
September 19, 2000
47
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Nu-Elm Apartments (A Limited
Partnership) as of December 31, 2002, and the related statements of operations
and changes in partner's equity and cash flows for the year then ended. These
financial statements are the responsibility of Nu-Elm Apartments' management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of
the United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nu-Elm Apartments as of
December 31, 2002, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles generally accepted in the United States
of America.
In accordance with Government Auditing Standards, we have also issued our
reports dated January 28, 2003 on our consideration of Nu-Elm Apartments'
internal control and on our tests of the compliance with certain provisions of
laws, regulations, contracts, and grants. Those report are an integral part of
the audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
The accompanying supplemental information (shown on pages 9 to 11) is presented
for the purposes of additional analysis and is not a required part of the basic
financial statements of Nu-Elm Apartments. Such information has been subject to
the auditing procedures applied in the audit of basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 28, 2003
48
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 2001, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the year ended
December 31, 2001. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and GOVERNMENT AUDITING STANDARDS, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #084-44035 LDP as of
December 31, 2001, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles generally accepted in the United States
of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 31, 2002 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 31, 2002 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 31, 2002
49
[Letterhead of Bordman & Winnick]
Independent Auditor's Report
To the Partners of
Nu-Elm Apartments
We have audited the accompanying balance sheet of Project #084-44035 LDP of
Nu-Elm Apartments (A Limited Partnership) as of December 31, 2000, and the
related statements of operations and changes in partner's equity for the year
then ended. We have also audited the statement of cash flows for the year ended
December 31, 2000. These financial statements are the responsibility of the
project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Project #084-44035 LDP as of
December 31, 2000, and the results of its operations and the changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report (shown on pages 9 to 11) are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of Nu-Elm
Apartments. Such information has been subject to the auditing procedures applied
in the audit of basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 15, 2001 on our consideration of Nu-Elm Apartments (A Limited
Partnership) internal controls and a report dated January 15, 2001 on its
compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
EIN 38-2900295
January 15, 2001
50
[Letterhead of Lefkowitz, Garfinkel, Champi & DeRienzo
P.C.]
Independent Auditors' Report
The Partners
Solemar at South Dartmouth Limited Partnership
Quincy, Massachusetts
We have audited the accompanying balance sheet of Solemar at South Dartmouth
Limited Partnership, MHFA Project No. 72-085-N, as of December 31, 2000, and the
related statements of operations, partners' equity (deficiency) and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solemar at South Dartmouth
Limited Partnership as of December 31, 2000, and the results of its operations,
changes in partners' equity (deficiency) and cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United
States.
In accordance with Government Auditing Standards, we have also issued our report
dated January 30, 2001 on our consideration of the Partnership's internal
control over financial reporting and on its compliance with laws and
regulations. That report is a integral part of an audit performed in accordance
with Government Auditing Standards and should be read in conjunction with this
report in considering the results of our audit.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Providence, Rhode Island
January 30, 2001
51
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Decatur Apartments, Ltd.
Decatur, Alabama
We have audited the accompanying balance sheet of Decatur Apartments, Ltd. (the
Project), Project No. 062-44012-LD as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD programs, specific
requirements applicable to the nonmajor HUD program, and specific requirements
applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
July 24 2000
52
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Florence Apartments, Ltd.
Florence, Alabama
We have audited the accompanying balance sheet of Florence Apartments, Ltd. (the
Project), Project No. 062-44083-LD, as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of June 30, 2000
and the results of its operations, changes in owners' equity anFd cash flows for
the six months then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD programs and
specific requirements applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
July 24, 2000
53
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), as of December 31, 2002, and the related statements of profit and loss
and changes in owners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2002 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 31, 2003
54
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), as of December 31, 2001, and the related statements of profit and
loss, changes in owners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with U.S. 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2001 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain. The
Project is also in default on the mortgage and future financing is uncertain.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
the footnotes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2002
55
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Saraland Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Saraland Apartments, Ltd. (the
Project), Project No. 062-44065-LD, as of December 31, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of December 31,
2000 and the results of its operations, changes in owners' equity and cash flows
for the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in the Notes to the
Financial Statements, the Project is located on an Environmental Protection
Agency "Superfund Cleanup" site and has been determined to be uninhabitable. The
Project is a party to related litigation of which the outcome is uncertain. The
Project is also in default on the mortgage and future financing is uncertain.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
the footnotes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 15, 2001 on our
consideration of the Project's internal controls and reports dated January 15,
2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the major HUD program,
and specific requirements applicable to Fair Housing and Non-Discrimination.
Those reports are an integral part of an audit performed in accordance with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.
56
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
January 15, 2001
57
[Letterhead of Crabtree & Associates, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of University Gardens Apartments
LTD., (a limited partnership) as of August 14, 2001 and the related statements
of income, changes in partners' equity, and cash flows for the period January 1,
2001 through August 14, 2001. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with U.S. 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of University Gardens Apartments,
Ltd. as of August 14, 2001, and the results of its operations and its cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information included in this report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of University Gardens Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree & Associates, L.L.P.
Certified Public Accountants
Azle, Texas
December 18, 2001
58
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
University Gardens Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of University Gardens Apartments
LTD., Project No. 112-44200 LD, (a limited partnership) as of December 31, 2000
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide 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 management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of University Gardens Apartments
LTD. at December 31, 2000 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 7, 2001 on our consideration of University
Gardens Apartments, Ltd.'s internal control structure and reports dated February
7, 2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of University Gardens Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 7, 2001
59
[Letterhead of Crabtree & Associates, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of Southside Village Apartments
LTD., (a limited partnership) as of August 14, 2001 and the related statements
of income, changes in partners' equity, and cash flows for the period January 1,
2001 through August 14, 2001. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with U.S. 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Southside Village Apartments
Ltd. as of August 14, 2001, and the results of its operations and its cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Southside Village Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree & Associates, L.L.P.
Certified Public Accountants
Azle, Texas
December 18, 2001
60
[Letterhead of Crabtree, Crabtree & Hatter, L.L.P.]
INDEPENDENT AUDITOR'S REPORT
To The Partners
Southside Village Apartments LTD.
(A Limited Partnership)
We have audited the accompanying balance sheet of Southside Village Apartments
LTD., Project No. 113-44076 LD, (a limited partnership) as of December 31, 2000
and the related statements of income, changes in partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Officer
of Inspector General in August 1997. Those standards and the Guide 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 management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly in
all material respects, the financial position of Southside Village Apartments
LTD. at December 31, 2000 and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Guide, we have also
issued a report dated February 11, 2001 on our consideration of Southside
Village Apartments, Ltd.'s internal control structure and reports dated February
11, 2001 on its compliance with laws and regulations applicable to the basic
financial statements, specific requirements applicable to the non-major HUD
program and specific requirements applicable to Affirmative Fair Housing.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in this report is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Southside Village Apartments, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Crabtree, Crabtree & Hatter, L.L.P.
Certified Public Accountants
Azle, Texas
February 11, 2001
61
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Dickens Ferry Apartments, Ltd.
Mobile, Alabama
We have audited the accompanying balance sheet of Dickens Ferry Apartments, Ltd.
(the Project), Project No. 062-44055-LD as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD program, specific
requirements applicable to the nonmajor HUD program, and specific requirements
applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
July 24, 2000
62
[Letterhead of BROWDER & ASSOCIATES, P.C.]
Independent Auditor's Report
To the Partners of
Bonnie Doone Apartments, Ltd.
Athens, Alabama
We have audited the accompanying balance sheet of Bonnie Doone Apartments, Ltd.
(the Project), Project No. 062-44045-LD, as of June 30, 2000, and the related
statements of profit and loss, changes in owners' equity, and cash flows for the
six months then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Project as of June 30, 2000
and the results of its operations, changes in owners' equity and cash flows for
the six months then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated July 24, 2000 on our
consideration of the Project's internal controls and reports dated July 24, 2000
on its compliance with laws and regulations applicable to the basic financial
statements, specific requirements applicable to the major HUD programs, specific
requirements applicable to the nonmajor HUD program, and specific requirements
applicable to Fair Housing and Non-Discrimination.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information included in the report
is presented for the purpose of additional analysis and is not a required part
of the basic financial statements of the Project. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Browder & Associates, P.C.
Audit Principal: E.O. Browder, Jr.
Birmingham, Alabama
Federal Employer Identification Number: 63-0986156
July 24, 2000
63
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 208, A Limited Partnership
Tacoma, Washington
We have audited the statement of net assets available for liquidation of Conifer
208, A Limited Partnership, as of December 31, 2000, and the related statement
of changes in net assets in liquidation for the period from December 21, 2000 to
December 31, 2000. In addition, we have audited the statement of income from
operations for the period from January 1, 2000 to December 21, 2000 and this
statement of changes in partners' equity and cash flows for the year ended
December 31, 2000. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about weather 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 2 to the financial statements, closing on the sale of the
rental property occurred December 21, 2000, and the Partnership commenced
liquidation shortly thereafter. As a result, the Partnership has changed its
basis of accounting, for periods subsequent to December 21, 2000, from the
going-concern basis to liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for liquidation of Conifer 208
as of December 31, 2000, the results of its operations for the period January 1,
2000 to December 21, 2000, the changes in its net assets in liquidation for the
period from December 21, 2000 to December 31, 2000, and its cash flows for the
twelve months ended December 31, 2000 in conformity with generally accepted
accounting principles applied on the basis described in the preceding paragraph.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 5, 2001
64
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 307, A Limited Partnership
Tacoma, Washington
We have audited the statement of net assets available for liquidation of Conifer
307 Oreg.Ltd., (a Limited Partnership), as of May 31, 2000, and the related
statement of changes in net assets in liquidation for the period from March 9,
2000 to May 31, 2000. In addition, we have audited the statement of income from
operations for the period from January 1, 2000 to March 8, 2000 and the
statements of changes in partners' equity and cash flows for the five months
ended May 31, 2000. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about weather 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 2 to the financial statements., closing on the sale of the
rental property occurred March 8, 2000, and the Partnership commenced
liquidation shortly thereafter. As a result, the Partnership has changed its
basis of accounting, for periods subsequent to March 8, 2000, from the
going-concern basis to liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for liquidation of Conifer 307
Oreg. Ltd. as of May 31, 2000, the results of its operations for the period
January 1, 2000 to March 8, 2000, the changes in its net assets in liquidation
for the period from March 9, 2000 to May 31, 2000, and its cash flows for the
five months ended May 31, 2000 in conformity with generally accepted accounting
principles applied on the basis described in the preceding paragraph.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
June 20, 2000
65
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheet of Conifer 317, An Oregon Limited
Partnership, sponsor of FHA Project No. 126-44134, as of December 19, 2002, and
the related statements of profit and loss, changes in partners' equity, and cash
flows for the period then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 317, An Oregon Limited
Partnership as of December 19, 2002, and the results of its operations and its
cash flows for the period then ended in conformity with accounting principles
generally accepted in the United States of America.
The Partnership is regulated by the U.S. Department of Housing and Urban
Development (HUD) as to rental charges, operating methods and reporting
requirements. The financial statements are presented in sufficient detail to
facilitate the electronic submission of certain financial information by the
Partnership to HUD's Real Estate Assessment Center.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
on pages 15 through 18 is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such additional
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated January 25, 2003, on our consideration of the Partnership's internal
control and reports dated January 25, 2003, on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
January 25, 2003
66
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
2001, and the related statements of profit and loss, changes in partners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan
and perform an 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conifer 317, An Oregon Limited
Partnership, as of December 31, 2001, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
The Partnership is regulated by the U.S. Department of Housing and Urban
Development (HUD) as to rental charges, operating methods and reporting
requirements. The financial statements are presented in sufficient detail to
facilitate the electronic submission of certain financial information by the
Partnership to HUD's Real Estate Assessment Center.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
shown on pages 15 through 18 is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such additional
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated February 8, 2002, on our consideration of the Partnership's internal
controls and reports, dated February 8, 2002, on its compliance with laws and
regulations. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 8, 2002
67
[Letterhead of Blume Loveridge & Co., PLLC]
INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS
Partners
Conifer 317, an Oregon Limited Partnership
Tacoma, Washington
We have audited the accompanying balance sheets of Conifer 317, An Oregon
Limited Partnership, sponsor of FHA Project No. 126-44134, as of December 31,
2000 and 1999, and the related statements of income, changes in partners' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. 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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform an 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 management, 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 financial position of Conifer 317, An Oregon Limited
Partnership, as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information shown on pages
10 to 14 is presented for purposes of additional analysis for the year ended
December 31, 2000, and is not a required part of the basic financial statements.
Such additional information has been subjected to the auditing procedures
applied in the audit of the basic financial statements for that year, and, in
our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report,
dated February 3, 2001, on our consideration of the Partnership's internal
controls and reports, dated February 3, 2001, on its compliance with laws and
regulations. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our related audit.
/s/ Blume Loveridge & Co., PLLC
Bellevue, Washington
February 3, 2001
68
[Letterhead of Deloitte & Touche LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bellfort Associates, Ltd.
We have audited the accompanying balance sheets of Bellfort Associates, Ltd.
(the "Partnership"), a Texas limited partnership, as of January 12, 2000 and
December 31, 1999, and the related statements of operations, partners' equity
(deficiency), and cash flows for the period January 1, 2000 through January 12,
2000 and each of the two years in the period ended December 31, 1999 and 1998.
These financial statements are the responsibility of the Partnership's
management. 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
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Bellfort Associates, Ltd. as of January 12,
2000 and December 31, 1999, and the results of its operations and its cash flows
for the period January 1, 2000 through January 12, 2000 and each of the two
years in the period ended December 31, 1999 and 1998 in conformity with
accounting principles generally accepted in the United States of America
As discussed in Notes 1 and 4 to the financial statements, the Partnership sold
its income producing property on January 12, 2000 which raises substantial doubt
about the Partnership's ability to continue as a going concern. The General
Partner has indicated that the Partnership is expected to be terminated in 2000.
/s/ Deloitte & Touche LLP
Houston, Texas
August 23, 2000
69
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cloisters Associates, Ltd.
Atlanta, Georgia
We have audited the balance sheets of Cloisters Associates, Ltd.("the
Partnership") as of November 8, 2000 and December 31, 1999, and the related
statements of operations, changes in partners' capital (deficit), and cash flows
for the period ended November 8, 2000 and each of the two years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Partnership's management. 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
management, 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 financial position of Cloisters Associates, Ltd. at
November 8, 2000 and December 31, 1999, and the results of its operations and
its cash flows for the period ended November 8, 2000 and each of the two years
in the period ended December 31, 1999 in conformity with generally accepted
accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
December 15, 2000
70
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cabarrus Arms Associates
Atlanta, Georgia
We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 2002 and 2001, and the related statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the three years in the period ended December 31, 2002. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Cabarrus Arms Associates at
December 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.
As discussed in Note B to the financial statements, effective December 31, 2002,
the Partnership changed its method of accounting for property and equipment
which was previously classified as held for sale.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 29, 2003
71
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cabarrus Arms Associates
Atlanta, Georgia
We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Cabarrus Arms Associates at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002
72
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Cabarrus Arms Associates
Atlanta, Georgia
We have audited the balance sheets of Cabarrus Arms Associates ("the
Partnership") as of December 31, 2000 and 1999, and the related statements of
operations, changes in partners' capital (deficit), and cash flows for each of
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Partnership's management. 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
management, 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 financial position of Cabarrus Arms Associates at
December 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2000 in conformity
with generally accepted accounting principles.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 24, 2001
73
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Summer Arms Apartments, Ltd.
Sumter, South Carolina
We have audited the accompanying balance sheets of Summer Arms Apartments, Ltd.
(a limited partnership) as of December 31, 2002, 2001 and 2000, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Summer Arms Apartments, Ltd. (a
limited partnership) as of December 31, 2002, 2001 and 2000, and the results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 31, 2003
74
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Summer Arms Apartments, Ltd.
Sumter, South Carolina
We have audited the accompanying balance sheets of Summer Arms Apartments, Ltd.
(a limited partnership) as of December 31, 2001, 2000 and 1999, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Summer Arms Apartments, Ltd. (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
February 1, 2002
75
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Lexington Village Company
Conyers, Georgia
We have audited the accompanying balance sheets of Lexington Village Company (a
limited partnership) as of August 31, 2002 and December 31, 2001 and 2000, and
the related statements of operations, changes in partners' equity and cash flows
for the period of January 1, 2002 to August 31, 2002 and for the years ended
December 31, 2001 and 2000. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Lexington Village Company (a
limited partnership) as August 31, 2002 and December 31, 2001 and 2000, and the
results of its operations and its cash flows for the period of January 1, 2002
to August 31, 2002 and for years ended December 31, 2001 and 2000, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
September 4, 2002
76
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Lexington Village Company
Conyers, Georgia
We have audited the accompanying balance sheets of Lexington Village Company (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Lexington Village Company (a
limited partnership) as of December 31, 2001, 2000 and 1999, and the results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
February 1, 2002
77
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Ware Manor Associates
Waycross, Georgia
We have audited the accompanying balance sheets of Ware Manor Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999 and the
related statements of operations, changes in partners' equity and cash flows for
the period of January 1, 2001 to June 20, 2001 and for the years ended December
31, 2000 and 1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Ware Manor Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999, and the
results of its operations and its cash flows for the period of January 1, 2001
to June 20, 2001 and for years ended December 31, 2000 and 1999, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
August 23, 2001
78
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia
We have audited the balance sheet of Nottingham Woods Apartments Limited ("the
Partnership") as of March 31, 2002, and the related statements of income,
changes in partners' capital (deficit), and cash flows for the three months then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nottingham Woods Apartments
Limited at March 31, 2002, and the results of its operations and its cash flows
for the three months then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
April 23, 2002
79
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Nottingham Woods Apartments Limited
Atlanta, Georgia
We have audited the balance sheets of Nottingham Woods Apartments Limited ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' deficit, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Nottingham Woods Apartments
Limited at December 31, 2001 and 2000, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002, except for Note I,
which is as of February 14, 2002
80
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Hathaway Court Associates
Atlanta, Georgia
We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 2002 and 2001, and the related statements of
operations, changes in partners' deficit, and cash flows for each of the three
years in the period ended December 31, 2002. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Hathaway Court Associates at
December 31, 2002 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
January 28, 2003
81
[Letterhead of WILLIAMS BENATOR & LIBBY, LLP]
INDEPENDENT AUDITORS' REPORT
Partners
Hathaway Court Associates
Atlanta, Georgia
We have audited the balance sheets of Hathaway Court Associates ("the
Partnership") as of December 31, 2001 and 2000, and the related statements of
operations, changes in partners' deficit, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Hathaway Court Associates at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
February 8, 2002
82
[Letterhead of Mauldin & Jenkins]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Tall Pines Associates
LaGrange, Georgia
We have audited the accompanying balance sheets of Tall Pines Associates (a
limited partnership) as of June 20, 2001 and December 31, 2000 and 1999, and the
related statements of operations, changes in partners' equity and cash flows for
the period of January 1, 2001 to June 20, 2001 and for years ended December 31,
2000 and 1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, 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 financial position of Tall Pines Associates as of
June 20, 2001 and December 31, 2000 and 1999, and the results of its operations
and its cash flows for the period of January 1, 2001 to June 20, 2001 and for
years ended December 31, 2000 and 1999, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
August 23, 2001
83
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelton Beach Apartments, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Shelton Beach Apartments, Ltd. for the period January 1, 2002
through August 9, 2002. This financial statement is the responsibility of the
partnership's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects the changes in net assets in liquidation for the period
January 1, 2002 through August 9, 2002, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in note A to the financial statements, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On May 1, 2002, the partnership sold the rental
property. As a result, the partnership's financial statement is presented on the
liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 9 through 11
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
August 9, 2002
84
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelton Beach Apartments, Ltd.
We have audited the accompanying statement of net assets in liquidation of
Shelton Beach Apartments, Ltd. as of December 31, 2001, and the related
statement of changes in net assets in liquidation for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As discussed in note A to the financial statements, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. As a result, the partnership's financial statements
are presented on the liquidation basis of accounting.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Shelton Beach
Apartments, Ltd. as of December 31, 2001, and the changes in net assets in
liquidation for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in note A to the financial statements, the partnership has entered
into a purchase and sale agreement to sell the rental property.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 12 through 14
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 11, 2002
85
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelton Beach Apartments, Ltd.
We have audited the accompanying balance sheets of Shelton Beach Apartments,
Ltd. as of December 31, 2000 and 1999, and the related statements of revenue and
expenses, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. 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
management, 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 financial position of Shelton Beach Apartments, Ltd.
as of December 31, 2000 and 1999, and the results of its operations, the changes
in partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 16, 2001
86
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northpointe II, Ltd.
We have audited the accompanying statement of changes in net assets in
liquidation of Northpointe II, Ltd. for the period January 1, 2002 through
August 9, 2002. This financial statement is the responsibility of the
partnership's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the changes in net assets in liquidation for the period
January 1, 2002 through August 9, 2002, in conformity with accounting principles
generally accepted in the United States of America.
As described in note A to the financial statements, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On May 1, 2002, the partnership sold the rental
property As a result, the partnership's financial statement is presented on the
liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on pages 8 through 10
is presented for purposes of additional analysis and is not a required part of
the basic financial statement. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
August 9, 2002
87
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northpointe II, Ltd.
We have audited the accompanying statement of net assets in liquidation of
Northpointe II, Ltd. as of December 31, 2001, and the related statement of
changes in net assets in liquidation for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As discussed in note A to the financial statements, during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. As a result, the partnership's financial statements
are presented on the liquidation basis of accounting.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Northpointe II, Ltd. as
of December 31, 2001, and the changes in net assets in liquidation for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.
As discussed in note A to the financial statements, the partnership has entered
into a purchase and sale agreement to sell the rental property.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 12 through 14
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 11, 2002
88
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Northpointe II, Ltd.
We have audited the accompanying balance sheets of Northpointe II, Ltd. as of
December 31, 2000 and 1999, and the related statements of revenue and expenses,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. 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
management, 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 financial position of Northpointe II, Ltd. as of
December 31, 2000 and 1999, and the results of its operations, the changes in
partners' capital and cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 12
through 14 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 16, 2001
89
[Letterhead of KPMG LLP]
Independent Auditors' Report
The Partners
Caroline Forest Apartments:
We have audited the accompanying balance sheet of Caroline Forest Apartments
Limited Partnership (a Virginia Limited Partnership) as of March 31, 2000, and
the related statements of profit and loss, changes in partners' equity and cash
flows for the three-month period then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caroline Forest Apartments
Limited Partnership (a Virginia Limited Partnership) as of March 31, 2000, and
the results of its operations and its cash flows for the three-month period then
ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Government Auditing Standards, we have also issued a report
dated July 7, 2000 on our consideration of the Partnership's internal control
over financial reporting and a report dated July 7, 2000 on our tests of its
compliance with certain provisions of laws and regulations. Those reports are an
integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplementary information as listed in the
accompanying table of contents, is presented for purposes of additional analysis
and is not a required part of the basic financial statement. Such information
has been subjected to the auditing procedures applied in the audits of the basic
financial statement and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statement taken as a whole.
/s/ KPMG LLP
Roanoke, Virginia
July 7, 2000
90
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 2002, and
the related statements of Profit and Loss, and changes in accumulated earnings
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 2002, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 10 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 2003 on our consideration of the partnership's internal
control structure on its compliance with laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 29, 2003
91
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 2001, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 2001. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 2001, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 10 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2002 on our consideration of the partnership's internal
control structure and a report dated January 21, 21002 on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 21, 2002
92
[Letterhead of Bordman & Winnick]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Pebble Creek LDHA
We have audited the accompanying balance sheet of MSHDA Development No. 277 of
Pebble Creek LDHA (A Michigan Limited Partnership) as of December 31, 2000, and
the related statements of Profit and loss, and changes in accumulated earnings
for the year then ended. We have also audited the statements of cash flows for
the years ended December 31, 2000. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements above present fairly, in all material
respects, the financial position of MSHDA Development No. 277, Pebble Creek
LDHA, as of December 31, 2000, and the results of its operations and the changes
in cumulative income and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Pebble
Creek LDHA, MSHDA NO. 277 on pages 10 to 16 is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. This additional information is the responsibility of the
partnership's management. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 18, 2001 on our consideration of the partnership's internal
control structure and a report dated January 18, 2001 on its compliance with
laws and regulations.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 18, 2001
93
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Greenwood Manor, Ltd.:
We have audited the accompanying financial statements of Greenwood Manor, Ltd.,
(the "Partnership") as of December 31, 2001, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards issued by the
Comptroller General of the United States. 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenwood Manor, Ltd. as of
December 31, 2001, and the results of its operations, changes in partners'
equity, and cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 17, 2002, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 17, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part the basic financial statements of Greenwood Manor, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 17, 2002
94
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Greenwood Manor, Ltd.:
We have audited the accompanying balance sheet of Greenwood Manor, Ltd., (the
"Partnership") as of December 31, 2000, and the related statements of income,
changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Greenwood Manor, Ltd. as of
December 31, 2000, and the results of its operations, changes in partners'
equity, and cash flows for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 18, 2001, on our
consideration of Greenwood Manor Ltd.'s internal control and reports dated
January 18, 2001, on its compliance with specific requirements applicable to
major HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part the basic financial statements of Greenwood Manor, Ltd. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 18, 2001
95
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Malvern Manor, Ltd.:
We have audited the accompanying financial statements of Malvern Manor, Ltd.
(the "Partnership") as of December 31, 2001, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2001, and the results of its operations, changes in partners' equity and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 25, 2002, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
January 25, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 25, 2002
96
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Malvern Manor, Ltd.:
We have audited the accompanying financial statements of Malvern Manor, Ltd.
(the "Partnership") as of December 31, 2000, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 24, 2001, on our
consideration of Malvern Manor, Ltd.'s internal control and reports dated
January 24, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 24, 2001
97
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Hereford Manor, Ltd.:
We have audited the accompanying financial statements of Hereford Manor, Ltd.
(the "Partnership") as of December 31, 2001, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the general partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at December 31,
2001, and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with accepted accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated January 21, 2002, on our
consideration of Hereford Manor, Ltd.'s internal control and reports dated
January 21, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 21, 2002
98
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Hereford Manor, Ltd.:
We have audited the accompanying financial statements of Hereford Manor, Ltd.
(the "Partnership") as of December 31, 2000, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership at December 31,
2000, and the results of its operations, changes in partners' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards and Consolidated Audit Guide
for Audits of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a reported dated February 2, 2001, on our
consideration of Hereford's internal control and reports dated February 2, 2001,
on its compliance with specific requirements applicable to major HUD programs,
specific requirements applicable to nonmajor HUD transactions and specific
requirements applicable to fair housing and nondiscrimination. Those reports are
an integral part of an audit performed in accordance with government Auditing
Standards and should be read in conjunction with this report in considering the
results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 12, 2001
99
rhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Henslee Heights, Ltd.:
We have audited the accompanying financial statements of Henslee Heights, Ltd.
(the "Partnership") as of December 31, 2001, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the general partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2001, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 17, 2002, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 17, 2002, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis. Such information has been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 17, 2002
100
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Henslee Heights, Ltd.:
We have audited the accompanying financial statements of Henslee Heights, Ltd.
(the "Partnership") as of December 31, 2000, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide of HUD Programs issued by the U.S. Department of Housing and Urban
Development, we have also issued a report dated January 24, 2001, on our
consideration of Henslee Heights, Ltd.'s internal control structure and reports
dated January 24, 2001, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
nondiscrimination. Those reports are integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis. Such information has been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 24, 2001
101
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Oakwood Manor, Ltd.:
We have audited the accompanying special-purpose balance sheet of Oakwood Manor,
Ltd. (the "Partnership") as of June 27, 2001, and the related special-purpose
statements of income, partners' equity, and cash flows for the period then
ended. These financial statements are the responsibility of the general partner.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge Advantaged Properties Limited Partnership
("Cambridge"), and on the basis of accounting practices specified by the
management of Cambridge. These financial statements are not intended to be a
presentation in conformity with accounting principles generally accepted in the
United States of America.
In our opinion, such special-purpose financial statements present fairly, in all
material respects, the financial position of the Partnership as of June 27,
2001, and the results of its operations and its cash flows for the period then
ended in conformity with the basis of accounting described in Note 1.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Notes 1 and 7 to
the financial statements, the Partnership sold its sole revenue producing asset
during the period, which raises substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
This report is intended solely for the information and use of the partners of
Oakwood Manor, Ltd., management and Cambridge and should not be used for any
other purpose.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
November 28, 2001
102
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Oakwood Manor, Ltd.:
We have audited the accompanying financial statements of Oakwood Manor, Ltd.
(the "Partnership") as of December 31, 2000, and for the year then ended, listed
in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a reported dated January 30, 2001, on our
consideration of Oakwood Manor, Ltd.'s internal control and a report dated
January 30, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to non-major HUD
transactions and specific requirements applicable to fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 30, 2001
103
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
West Scenic Apartments, Ltd.:
We have audited the accompanying special-purpose balance sheet of West Scenic
Apartments, Ltd. (the "Partnership") as of January 5, 2001, and the related
special-purpose statements of income, partners' equity, and cash flows for the
five day period then ended. These financial statements are the responsibility of
the General Partner. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance 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 Partner, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying special-purpose financial statements have been prepared, as
described in Note 1 to the financial statements, for the purpose of
consolidation with those of Cambridge Advantaged Properties Limited Partnership
("Cambridge"), and on the basis of accounting practices specified by the
management of Cambridge. These financial statements are not intended to be a
presentation in conformity with generally accepted accounting principles.
In our opinion, such special-purpose financial statements present fairly, in all
material respects, the financial position of the Partnership as of January 5,
2001, and the results of its operations and its cash flows for the five day
period then ended in conformity with the basis of accounting described in Note
1.
This report is intended solely for the information and use of the partners of
West Scenic Apartments, Ltd., management and Cambridge and should not be used
for any other purpose.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 16, 2001
104
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
West Scenic Apartments, Ltd.:
We have audited the accompanying financial statements of West Scenic Apartments,
Ltd. (the "Partnership") as of December 31, 2000, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued a report dated January 31,
2001, on our consideration of West Scenic Apartments, Ltd.'s internal control
and reports dated January 31, 2001, on its compliance with specific requirements
applicable to major HUD programs, specific requirements applicable to nonmajor
HUD transactions and specific requirements applicable to fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 31, 2001
105
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (the "Partnership") as of February 15, 2002, and for the period
then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the general partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of February
15, 2002, and the results of its operations, changes in partners' equity, and
cash flows for the period then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Notes 1 and 8 to
the financial statements, the Partnership sold its sole revenue producing asset
during the period, which raises substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated May 1, 2002, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated May 1, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
May 1, 2002
106
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (the "Partnership") as of December 31, 2001, and for the year
then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the general partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2001, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 16, 2002, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated January 16, 2002, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 11 and 12 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 16, 2002
107
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robindale East Apartments, Ltd.:
We have audited the accompanying financial statements of Robindale East
Apartments, Ltd. (the "Partnership") as of December 31, 2000, and for the year
then ended, listed in the foregoing table of contents. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 29, 20001, on our
consideration of Robindale East Apartments, Ltd.'s internal control and a report
dated January 29, 2001, on its compliance with specific requirements applicable
to major HUD programs, specific requirements applicable to nonmajor HUD
transactions, and specific requirements applicable to fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 29, 2001
108
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Southwest Apartments, Ltd.:
We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (the "Partnership") as of December 31, 2001, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the general partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the United States. 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 partner, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2001, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 21, 2002, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 21, 2002, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 9 and 10 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 21, 2002
109
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Southwest Apartments, Ltd.:
We have audited the accompanying financial statements of Southwest Apartments,
Ltd. (the "Partnership") as of December 31, 2000, and for the year then ended,
listed in the foregoing table of contents. These financial statements are the
responsibility of the General Partner. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 2000, and the results of its operations, changes in partners' equity, and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 25, 2001, on our
consideration of Southwest Apartments, Ltd.'s internal control and reports dated
January 25, 2001, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to nonmajor HUD
transactions and specific requirements applicable to fair housing and
non-discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information shown on pages 10 and 11 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
January 25, 2001
110
[Letterhead of JEFFREY PHILLIPS MOSLEY & SCOTT, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Valley Arms, Ltd.:
We are engaged to audit the accompanying balance sheet of Valley Arms, Ltd. (the
"Partnership") as of December 31, 2000, and the related statements of profit and
loss, partners' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the General Partner.
Management has refused to provide written representations as to its
responsibility for the fair presentation of the financial statements and other
matters which could materially affect the amounts and classification of items
included in the financial statements. Such representations are required under
generally accepted auditing standards.
Since the management of the Partnership has refused to provide written
representations as noted in the preceding paragraph, the scope of our work was
not sufficient to enable us to express, and we do not express, and opinion on
the financial statements referred to above.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to the
financial statements, the Partnership filed a petition for bankruptcy under
Chapter 11 during the year ended December 31, 1998, and sold its sole revenue
producing asset on April 13, 1999, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Jeffrey Phillips Mosley & Scott, P.A.
Little Rock, Arkansas
February 1, 2001
111
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 25,
------------------------
2003 2002*
----------- -----------
Property and equipment - net, less accumulated
depreciation (Notes 2, 4 and 6) $ 3,478,246 $ 5,470,303
Property and equipment -
held for sale (Notes 2, 4, 6 and 7) 2,465,394 11,548,976
Cash and cash equivalents (Notes 2 and 11) 1,224,252 4,967,577
Cash - restricted for tenants' security deposits (Note 3) 127,214 304,539
Mortgage escrow deposits (Notes 3, 5 and 6) 2,754,151 4,376,911
Prepaid expenses and other assets (Note 8) 534,117 758,693
----------- -----------
Total assets $10,583,374 $27,426,999
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable (Notes 3 and 6) $ 5,059,854 $13,137,483
Purchase money notes payable (Notes 3 and 7) 3,635,924 9,861,837
Due to selling partners (Notes 3 and 7) 9,917,404 22,957,424
Deferred revenue on sale of properties 0 5,905,828
Accounts payable, accrued expenses and other
liabilities 153,890 587,491
Tenants' security deposits payable 119,183 283,920
Due to general partners of subsidiaries and their
affiliates (Note 8) 22,391 114,744
Due to general partners and affiliates (Note 8) 3,511,595 3,329,471
----------- -----------
22,420,241 56,178,198
----------- -----------
Minority interest (Note 2) 59,888 222,153
----------- -----------
Commitments and contingencies (Notes 6, 7, 8 and 11)
Partners' deficit
Limited partners (11,240,263) (28,146,094)
General partners (656,492) (827,258)
----------- -----------
(11,896,755) (28,973,352)
----------- -----------
Total liabilities and partners' deficit $10,583,374 $27,426,999
=========== ===========
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
112
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended March 25,
---------------------------------------
2003 2002 2001
----------- ----------- -----------
Revenues
Rentals, net $ 4,505,438 $11,017,460 $17,152,679
Other 434,385 947,492 1,211,751
Gain on sale of properties (Note 10) 9,238,695 16,927,217 15,820,589
----------- ----------- -----------
Total revenues 14,178,518 28,892,169 34,185,019
----------- ----------- -----------
Expenses
Administrative and management 1,282,928 2,385,647 3,906,671
Administrative and management-
related parties(Note 8) 1,341,084 1,815,488 2,134,544
Operating 814,883 2,159,557 3,098,242
Repairs and maintenance 985,589 2,771,078 4,307,937
Taxes and insurance 866,716 1,522,710 2,117,113
Financial, principally interest 1,132,302 4,196,910 9,446,421
Depreciation 779,088 1,364,076 3,212,290
----------- ----------- -----------
Total expenses 7,202,590 16,215,466 28,223,218
----------- ----------- -----------
Income before minority interest and
extraordinary item 6,975,928 12,676,703 5,961,801
Minority interest (income) loss of
subsidiaries (337,639) 213,740 (888,911)
----------- ----------- -----------
Income before extraordinary item 6,638,289 12,890,443 5,072,890
Extraordinary item-forgiveness of
indebtedness income (Notes 6 and 10) 11,962,803 21,389,335 21,773,849
----------- ----------- -----------
Net income $18,601,092 $34,279,778 $26,846,739
=========== =========== ===========
Limited Partners Share:
Income before extraordinary item $ 6,571,906 $12,761,539 $ 5,022,161
Extraordinary item 11,843,175 21,175,442 21,556,111
----------- ----------- -----------
Net income $18,415,081 $33,936,981 $26,578,272
=========== =========== ===========
Number of units outstanding 12,074 12,074 12,074
=========== =========== ===========
Income before extraordinary item per
limited partner unit $ 544 $ 1,057 $ 416
Extraordinary item per limited
partner unit 981 1,754 1,785
----------- ----------- -----------
Net income per limited partnership
unit $ 1,525 $ 2,811 $ 2,201
=========== =========== ===========
See accompanying notes to consolidated financial statements.
113
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
Limited General
Total Partners Partners
------------ ------------ ------------
Balance - March 26, 2000 $(88,697,334) $(87,272,836) $ (1,424,498)
Net income 26,846,739 26,578,272 268,467
Distributions (1,402,535) (1,388,510) (14,025)
------------ ------------ ------------
Balance - March 25, 2001 (63,253,130) (62,083,074) (1,170,056)
Net income 34,279,778 33,936,980 342,798
------------ ------------ ------------
Balance - March 25, 2002 (28,973,352) (28,146,094) (827,258)
Net income 18,601,092 18,415,081 186,011
Distributions (1,524,495) (1,509,250) (15,245)
------------ ------------ ------------
Balance - March 25, 2003 $(11,896,755) $(11,240,263) $ (656,492)
============ ============ ============
See accompanying notes to consolidated financial statements.
114
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Year Ended March 25,
----------------------------------------
2003 2002 2001
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 18,601,092 $ 34,279,778 $ 26,846,739
------------ ------------ ------------
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Gain on sale of properties (9,238,695) (16,927,217) (15,820,589)
Extraordinary item-forgiveness of
indebtedness income (11,962,803) (21,389,335) (21,773,849)
Depreciation 779,088 1,364,076 3,212,290
Minority interest in income (loss) of
subsidiaries 337,639 (213,740) 888,911
(Increase) decrease in assets:
Cash-restricted for tenants' security
deposits 38,680 60,234 55,469
Mortgage escrow deposits - operating 386,089 45,298 1,161,193
Prepaid expenses and other assets (212,554) 14,827 (237,713)
Increase (decrease) in liabilities:
Due to selling partners 1,012,395 3,787,630 8,588,157
Payments of interest to selling
partners (2,966,329) (115,683) (3,464,303)
Accounts payable, accrued expenses and
other liabilities 836,904 (261,696) (700,883)
Tenants' security deposits payable (63,193) (37,030) (88,239)
Due to general partners of subsidiaries
and their affiliates 12,974 19,584 91,706
Due to general partners of subsidiaries
and their affiliates (98,827) 0 (12,461)
Due to general partners and affiliates 267,324 731,026 135,075
------------ ------------ ------------
Total adjustments (20,871,308) (32,922,026) (27,965,236)
------------ ------------ ------------
Net cash (used in) provided by
operating activities (2,270,216) 1,357,752 (1,118,497)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of properties 12,787,113 15,419,779 14,465,557
Costs paid relating to sale of
properties (595,318) (556,642) (248,996)
Acquisitions of property and equipment (78,873) (353,374) (1,483,538)
Acquisitions of property and equipment -
held for sale (85,400) (105,102) (51,729)
Decrease (increase) in mortgage escrow
deposits 451,155 (236,255) 57,081
------------ ------------ ------------
Net cash provided by investing
activities 12,478,677 14,168,406 12,738,375
------------ ------------ ------------
115
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
Year Ended March 25,
----------------------------------------
2003 2002 2001
------------ ------------ ------------
Cash flows from financing activities:
Principal payments of purchase
money notes (5,809,460) (3,776,208) (2,668,624)
Principal payments of mortgage
notes payable (6,117,927) (10,120,797) (7,217,599)
Distributions paid (1,524,495) (1,402,535) 0
Decrease in capitalization of
minority interest (499,904) (202,735) (885,748)
------------ ------------ ------------
Net cash used in financing activities (13,951,786) (15,502,275) (10,771,971)
------------ ------------ ------------
Net (decrease) increase in cash and
cash equivalents (3,743,325) 23,883 847,907
Cash and cash equivalents at beginning
of year 4,967,577 4,943,694 4,095,787
------------ ------------ ------------
Cash and cash equivalents at end
of year $ 1,224,252 $ 4,967,577 $ 4,943,694
============ ============ ============
Supplemental disclosure of cash flows
information:
Cash paid during the year for interest $ 3,045,739 $ 609,095 $ 4,126,412
============ ============ ============
Supplemental disclosures of noncash
investing and financing activities:
Increase in property and equipment-held
for sale reclassified from property
and equipment $ 784,434 $ 4,975,310 $ 16,291,211
Increase in purchase money notes
payable due to the capitalization
of prepaid expenses and other assets 0 0 5,209
Increase in accounts payable, accrued
expenses and other liabilities for
acquisitions of property and equipment 0 0 37,070
Increase in deferred revenue
reclassified from purchase money
notes payable and due to selling
partners 0 5,906,928 3,839,356
Distributions payable 0 0 1,402,535
Forgiveness of indebtedness:
Decrease in purchase money notes
payable (789,814) (3,078,993) (9,619,581)
Decrease in due to selling partners (7,782,197) (14,470,986) (11,433,550)
Decrease in due to general partners of
subsidiaries and their affiliates 0 0 (558,299)
Decrease in deferred revenue on sale
of properties (5,906,928) (3,839,356) 0
Decrease in accounts payable, accrued
expenses and other liabilities 0 0 (162,419)
116
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
Year Ended March 25,
----------------------------------------
2003 2002 2001
------------ ------------ ------------
Summarized below are the components
of the gain on sale of properties:
Decrease in property and equipment,
net of accumulated depreciation $ 836,680 $ 8,824,210 $ 14,546,004
Decrease in property and equipment -
held for sale 9,624,144 12,232,872 11,097,071
Decrease in cash - restricted for
tenants'
security deposits 138,645 176,886 171,634
Decrease in mortgage escrow deposits 785,516 1,468,683 2,307,112
Decrease in prepaid expenses and
other assets 437,130 287,452 285,395
Decrease in mortgage notes payable (1,959,702) (4,494,870) (9,200,379)
Decrease in purchase money
notes payable (1,449,327) (5,210,794) (6,990,061)
Decrease in due to selling partners (3,997,337) (14,008,934) (13,227,995)
Increase in deferred revenue on sale
of properties 1,100 0 0
Decrease in accounts payable, accrued
expenses and other liabilities (1,270,505) (795,917) (357,370)
Decrease in tenant's security
deposits payable (101,544) (161,000) (180,932)
Decrease in due to general partners
of subsidiaries and their affiliates (6,500) (3,105) (54,507)
Decrease in due to general partners
and affiliates (85,200) (379,563) 0
See accompanying notes to consolidated financial statements.
117
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
NOTE 1 - Organization
Cambridge Advantaged Properties Limited Partnership (the "Partnership") was
formed pursuant to the laws of the Commonwealth of Massachusetts on June 28,
1984. The Partnership invests, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships"), each of which owns and operates an existing residential housing
development (an "Apartment Complex") that is financed and/or operated with some
form of local, state or federal assistance, including mortgage insurance, rental
assistance payments, permanent mortgage financing and/or interest reduction
payments ("Government Assistance").
The General Partners of the Partnership are Assisted Housing Associates Inc.,
(the "Assisted General Partner"), and Related Beta Corporation (the "Related
General Partner"), both of which are Delaware corporations affiliated with The
Related Companies, L.P. ("Related"), a New York limited partnership, and
Cambridge/Related Associates Limited Partnership (formerly Hutton/Related
Associates Limited Partnership) ("Cambridge/Related"), a Massachusetts limited
partnership, which is also affiliated with Related. The general partners of
Cambridge/Related are the Assisted General Partner and the Related General
Partner. The General Partners manage and control the affairs of the Partnership.
Pursuant to the public offering, the Partnership received $53,754,000 (net of
offering expenses and sales commissions of $6,615,700) from 4,452 investors in
12,074 limited partnership interests. The offering was completed in March 1985
and no further issuance of initial limited partnership interests or additional
limited partnership interests is anticipated.
As of March 25, 2003, the Partnership holds a 98.99% limited partnership
interest in each of the four remaining Local Partnerships, which own Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2003, the properties and the related assets and liabilities owned by six
subsidiary partnerships were sold and the Partnership's Local Partnership
Interests in two subsidiary partnerships were sold, respectively. Through the
fiscal year ended March 25, 2003, the properties and the related assets and
liabilities owned by thirty-one subsidiary partnerships were sold and the
Partnership's Local Partnership Interests in twenty-six subsidiary partnerships
were sold, respectively (see Note 10).
The terms of the Partnership Agreement provide, among other things, that profits
and losses, in general, be shared 99% by the limited partners and 1% by the
General Partners.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership
and 13, 30 and 43, subsidiary partnerships in which the Partnership is a limited
partner for the years ended March 25, 2003, 2002 and 2001, respectively. The
Partnership is a limited partner, with an ownership interest of 98.99% in each
of the subsidiary partnerships. The Partnership continues to hold its interest
in certain subsidiary partnerships which have sold their properties and have not
formally liquidated. Through the rights of the Partnership and/or an affiliate
of a General Partner, which affiliate has a contractual obligation to act on
behalf of the Partnership, to remove the general partner of the subsidiary
partnerships and to approve certain major operating and financial decisions, the
Partnership has a controlling financial interest in the subsidiary partnerships.
118
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
For financial reporting purposes, the Partnership's fiscal year ends March 25.
All subsidiaries have fiscal years ending December 31. Accounts of subsidiaries
have been adjusted for intercompany transactions from January 1 through March
25. The Partnership's fiscal year ends on March 25 in order to allow adequate
time for the subsidiaries' financial statements to be prepared and consolidated.
The books and records are maintained on the accrual basis of accounting in
accordance with U.S. generally accepted accounting principles ("GAAP").
All intercompany accounts and transactions have been eliminated in
consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.
Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $5,000, $49,000 and $41,000 for the years ended March
25, 2003 (the "2002 Fiscal Year"), March 25, 2002 (the "2001 Fiscal Year") and
March 25, 2001 (the "2000 Fiscal Year"), respectively. The Partnership's
investment in each subsidiary is equal to the respective subsidiary's partners'
equity less minority interest capital, if any. In consolidation, all subsidiary
partnership losses are included in the Partnership's capital account except for
losses allocated to minority interest capital.
b) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, the property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows).
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. All property and equipment for subsidiary partnerships whose assets
and liabilities are under sales contracts are classified as assets held for
sale.
For the year ended March 25, 2003, the Partnership has not recorded a loss on
impairment of assets. Through March 25, 2003, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.
c) Interest Subsidies
Interest expense has been reduced by interest subsidies (Note 6).
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
d) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.
e) Income Taxes
No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the responsibility of the individual
partners. For income tax purposes, the Partnership has a fiscal year ending
December 31 (Note 9).
f) Loss Contingencies
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates the amount of a potential environmental
liability independently from any potential claim for recovery.
g) Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:
Cash and Cash Equivalents, Cash-Restricted for Tenants' Security Deposits and
- --------------------------------------------------------------------------------
Mortgage Escrow Deposits
- ------------------------
The carrying amount approximates fair value.
Mortgage Notes Payable
- ----------------------
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
The estimated fair values of the Partnership's mortgage notes payable are as
follows:
March 25, 2003 March 25, 2002
----------------------- ------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ---------- ----------- -----------
Mortgage notes payable for
which it is:
Practicable to estimate fair value $5,059,854 $5,502,323 $10,381,052 $10,848,189
Not practicable to estimate
fair value $ 0 (a) $ 2,756,431 (a)
Purchase money notes payable for
which it is:
Practicable to estimate fair value $ 0 $ 0 $ 0 $ 0
Not practicable to estimate
fair value $3,635,924 (b) $ 9,861,837 (b)
Due to selling partners for which it is:
Not practicable to estimate
fair value $9,917,404 (b) $23,474,596 (b)
(a) Management believes it is not practical to estimate the fair value of the
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the Local Partnerships.
(b) For the reasons discussed in Note 7, it is not practicable to estimate the
fair value of these notes, or accrued interest thereon.
The carrying amount of other financial instruments that require such disclosure
approximates fair value.
NOTE 4 - Property and Equipment and Property and Equipment-Held for Sale
The components of property and equipment and their estimated useful lives are as
follows:
March 25,
---------------------- Estimated
2003 2002 Useful Lives
---------- ---------- -------------------
Land $ 266,942 $ 613,524
Buildings and improvements 6,382,726 12,028,469 5 - 40 Years
Furniture and fixtures 100,334 467,863 3 - 10 Years
---------- ----------
6,750,002 13,109,856
Less: Accumulated depreciation (3,271,756) (7,639,553)
---------- ----------
$3,478,246 $5,470,303
========== ==========
Property acquisition fees of $5,131,535 were earned by the General Partners of
the Partnership and have been capitalized as a cost of property and equipment.
121
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
Depreciation expense for the 2002, 2001 and 2000 Fiscal Years amounted to
$779,088, $1,364,076 and $3,212,290, respectively.
The components of property and equipment held for sale are as follows:
March 25,
------------------------
2003 2002
----------- -----------
Land $ 421,499 $ 1,265,470
Buildings and improvements 8,216,060 25,536,100
Furniture and fixtures 698,306 1,073,490
----------- -----------
9,335,865 27,875,060
Less: Accumulated depreciation (6,870,471) (16,326,084)
----------- -----------
$ 2,465,394 $11,548,976
=========== ===========
NOTE 5 - Mortgage Escrow Deposits
Mortgage escrow deposits consist of the following:
March 25,
------------------------
2003 2002
----------- -----------
Reserves for replacements $ 2,072,906 $ 3,269,620
Real estate taxes, insurance and other 681,245 1,107,291
----------- -----------
$ 2,754,151 $ 4,376,911
=========== ===========
NOTE 6 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $36,000, including principal and interest at rates varying from
6.75% to 7.0% per annum, through June 2014. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership, the assignment of certain subsidiary
partnership's rents and leases and is without further recourse. Under the terms
of regulatory agreements with the Secretary of HUD, the subsidiary partnerships
paid only that portion of the monthly payments that would be required if the
interest rate was in the range of 1% - 3% per annum; the balance was subsidized
under Section 236 of the National Housing Act.
122
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
Annual principal payment requirements for each of the next five years are as
follows:
Amount
----------
2003 $ 306,982
2004 328,540
2005 351,614
2006 376,310
2007 402,876
Thereafter 3,293,532
----------
Total $5,059,854
==========
The mortgage agreements require monthly deposits to replacement reserves of
approximately $18,000 and monthly deposits to escrow accounts for real estate
taxes, hazard, and mortgage insurance and other (Note 5).
NOTE 7 - Purchase Money Notes Payable
Purchase money notes in the original amount of $85,458,825 were issued to the
selling partners of the subsidiary partnerships as part of the purchase price
and are secured only by the interest in the subsidiary partnership to which the
purchase money note relates (the "Purchase Money Notes"). A portion of these
Purchase Money Notes, in the original amount of $31,932,568 is an obligation at
the subsidiary partnership level, whereas the remaining $53,526,257 is recorded
at the Partnership level. The Purchase Money Notes generally provided for
compound interest at rates which, in general, ranged from 9% to 10% per annum
through August 31, 1989. Thereafter, simple interest has accrued, without
further interest thereon, through maturity as extended (see below). Purchase
Money Notes at March 25, 2003 and 2002 include $4,336,417 of interest accrued
through August 31, 1989.
The Purchase Money Notes, which provide for simple interest, will not be in
default if not less than 60% of the cash flow actually distributed to the
Partnership by the corresponding subsidiary partnership (generated by the
operations, as defined) is applied first to accrued interest and then to current
interest thereon. Any interest not paid currently accrues, without further
interest thereon, through the extended due date of the Purchase Money Note.
Continued accrual of such interest beyond the initial term, without payment,
reduces the effective interest rate of 9%. The exact effect is not determinable
inasmuch as it is dependent on the actual future interest payments and the
ultimate repayment dates of the Purchase Money Notes. The Purchase Money Notes,
after the extended maturity dates, call for the simple accrual of interest on
the balance of principal, interest and Purchase Money Note Extension Fees
Payable as of the date of maturity at one of the following two rates: (i) the
lesser of 12% or the legally allowable rate; or (ii) the lesser of prime plus 2%
or the lowest legally allowable rate. Unpaid interest of approximately
$9,917,000 and $22,909,000 as of March 25, 2003 and 2002, respectively, has been
accrued and is included in due to selling partners in the consolidated balance
sheets. In general, the interest on and the principal of each Purchase Money
Note is also payable to the extent of the Partnership's actual receipt of
proceeds of the sale or refinancing of the Apartment Complex.
The Partnership extended the terms of the Purchase Money Notes (ranging from
August to December 1996) for up to three additional years (four years with
respect to three subsidiary partnerships and seven years with respect to three
subsidiary partnerships). In connection with such extensions, the Partnership
incurred an extension fee of 1/2 % per annum of the outstanding principal
balance of the Purchase Money Notes. Of such fees incurred, $47,367 was accrued
and added to the Purchase Money Notes balance. The extension fees are being
123
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
amortized over the term of the extensions. The Purchase Money Notes with seven
year extensions have all been sold. Additionally, an oral agreement was reached
in November 2002 that extended the maturity dates of the remaining Purchase
Money Notes to June 2003. Further extensions, until such properties are sold,
are currently in the discussion stage. The Partnership is working with the Local
General Partners and Purchase Money Note holders to refinance or sell the
properties. No assurance can be given that management's efforts will be
successful. Based on the historical operating results of the Local Partnerships
and the current economic conditions, including changes in tax laws, the proceeds
from such sales will not be sufficient to meet the outstanding balances of
principal, accrued interest and extension fees. The Purchase Money Notes are
without personal recourse to either the Partnership or any of its partners and
the Purchase Money Note holder's recourse, in the event of nonpayment, would be
to foreclose on the Partnership's interests in the respective subsidiary
partnerships.
Distributions aggregating approximately $10,072,000, $4,452,000 and $6,550,000
were made to the Partnership during each of the years ended March 25, 2003, 2002
and 2001, respectively, of which approximately $8,776,000, $3,872,000 and
$5,147,000, respectively, was used to pay principal, interest and extension fees
on the Purchase Money Notes. In addition, approximately $0, $0 and $598,000 for
the 2002, 2001 and 2000 Fiscal Years, respectively, was paid as "additional"
interest on the Purchase Money Notes.
NOTE 8 - Related Party Transactions
The costs incurred to related parties were as follows:
Year Ended March 25,
--------------------------------------
2003 2002 2001
----------- ----------- -----------
Partnership management fees (a) $ 1,052,162 $ 1,069,239 $ 1,085,769
Expense reimbursement (b) 82,193 150,097 148,355
Local administrative fee (c) 16,250 38,750 54,355
------------ ----------- -----------
Total general and administrative-
General Partners 1,150,605 1,258,086 1,288,479
------------ ----------- -----------
Property management fees incurred to
affiliates of the subsidiary
partnerships' general partners 190,479 557,402 846,065
------------ ----------- -----------
Total general and administrative-related
parties $ 1,341,084 $ 1,815,488 $ 2,134,544
============ =========== =-=========
(a) After all other expenses of the Partnership are paid, an annual partnership
management fee of up to .5% of invested assets is payable to the Partnership's
General Partners and affiliates. Partnership management fees owed to the General
Partners amounting to approximately $3,524,000 and $3,122,000 were accrued and
unpaid as of March 25, 2003 and 2002, respectively. Without the General
Partners' continued allowance of accrual without payment of certain fees and
expense reimbursements, the Partnership will not be in a position to meet its
obligations. The General Partners have continued allowing the accrual without
payment of these amounts but are under no obligation to continue to do so.
Proceeds received from future sales will be used to pay any outstanding amounts
due to the General Partners.
(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
124
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the Related General Partner performs asset monitoring for the
Partnership. These services include site visits and evaluations of the
subsidiary partnership's performance. Expense reimbursements and asset
monitoring fees owed to the Related General Partner amounting to $37,858 and
$95,092 were accrued and unpaid as of March 25, 2003 and 2002, respectively.
(c) C/R Special Partnership, the special limited partner, owning a .01%
interest, is entitled to receive a local administrative fee of up to $2,500 per
year from each subsidiary partnership.
NOTE 9 - Income Taxes
A reconciliation of the financial statement net income to the income tax income
for the Partnership and its subsidiaries is as follows:
Year Ended December 31,
--------------------------------------
2002 2001 2000
------------ ----------- -----------
Financial statement net income $ 18,601,092 $33,764,246 $26,846,739
Difference resulting from parent company
having a different fiscal year for
income tax and financial reporting
purposes (454,038) (1,151,548) (83,979)
Difference resulting primarily from
depreciation and amortization expense
recorded for financial reporting
purposes and income tax purposes 558,422 1,698,402 1,855,267
Difference between gain on sale of assets
recorded for financial reporting
purposes and for income tax purposes 15,087,741 18,142,817 12,690,603
Difference between a forgiveness of
indebtedness income recorded for
financial reporting purposes and for
income tax purposes 3,140,441 (14,208,768) 4,538,705
Other, including accruals for financial
reporting purposes not deductible for
tax purposes until paid 41,967 (1,127,675) 3,500
------------ ----------- -----------
Income as shown on the income tax return
for the calendar year ended $ 36,975,625 $37,117,474 $45,850,835
============ =========== ===========
NOTE 10 - Sale of Properties
General
- -------
The Partnership is currently in the process of disposing of its investments. As
of March 25, 2003, the Partnership had disposed of fifty-seven of its sixty-one
original investments. Three additional investments are listed for sale and the
Partnership anticipates that the remaining investment will be liquidated
sometime during the first half of 2003. There can be no assurance as to whether
or not the Partnership will achieve this goal. Furthermore, there can be no
assurance that any proceeds will be realized based on the historical operating
results of the Local Partnerships and the current economic conditions. Moreover,
the Local General Partners and noteholders generally have decision-making rights
with respect to the sale of each property which makes it more cumbersome for the
General Partners to cause a sale of each property.
125
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
In order to facilitate an orderly disposition of the Partnership's assets, the
Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the
"Trust"), a Delaware limited liability company which is wholly-owned by the
Partnership.
On July 21, 1999, the Partnership contributed its limited partnership interest
in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments,
Ltd., Dickens Ferry Apartments, Ltd., Bonnie Doone Apartments, Ltd., University
Gardens Apartments, Ltd., and Southside Village Apartments, Ltd. to the Trust.
In each case, the interests were contributed subject to each respective Purchase
Money Note. The contribution did not involve any consideration being paid to the
Partnership; therefore, there should not be any tax effect to the limited
partners of the Partnership. As of March 25, 2003, all of these properties were
sold or disposed.
On March 28, 2003, the Partnership's interest in Saraland Apartments
("Saraland") was transferred to the U.S. Environmental Protection Agency
pursuant to the First Amended Bankruptcy Plan by order of the United States
Bankruptcy Court in Dallas, TX, resulting in a gain of approximately $350,000.
No proceeds were used to pay off the Purchase Money Note and accrued interest,
which had a total outstanding balance of approximately $2,124,000 resulting in
additional gain of approximately $2,124,000 (see Note 11).
On December 31, 2002, the Partnership's limited partnership interest in Summer
Arms Apartments ("Summer Arms") was sold to the Purchase Money Note Holder for
$25,000, resulting in gain of approximately $252,000. No proceeds were used to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $3,275,000, resulting in a gain
on sale of approximately $3,275,000.
On December 20, 2002, the property and related assets and liabilities of
Pinewood Village ("Pinewood") were sold to an unaffiliated third party for
$2,000,000, resulting in a gain of approximately $1,030,000. The Partnership
used approximately $1,453,000 of the proceeds to pay off the Purchase Money Note
and accrued interest thereon, which had a total outstanding balance of
approximately $1,634,000, resulting in forgiveness of indebtedness income of
approximately $180,000.
On July 31, 2002, the Purchase Money Note Holder agreed to purchase the limited
partnership interests in Cabarrus Arms Associates ("Cabarrus Arms") for an
agreed upon price of $25,000. Such purchase is expected to be finalized sometime
during 2003. No assurance can be given that the closing will actually occur.
On July 31, 2002, the Purchase Money Note Holder agreed to purchase the limited
partnership interests in Hathaway Court Associates ("Hathaway") for an agreed
upon price of $50,000. Such purchase is expected to be finalized sometime during
2003. No assurance can be given that the closing will actually occur.
On May 30, 2002, the property and the related assets and liabilities of
Lexington Village ("Lexington") were sold to an affiliate of the Local General
Partner for approximately $1,350,000, resulting in a gain of approximately
$412,000. The Partnership used approximately $617,000 of the proceeds to pay off
the Purchase Money Note and accrued interest thereon, which had a total
outstanding balance of approximately $3,445,000, resulting in forgiveness of
indebtedness income of approximately $2,828,000.
On May 9, 2002, the property and the related assets and liabilities of Huntley
#1 were sold to the Local General Partner for approximately $1,750,000,
resulting in a gain of approximately $158,000. The Partnership used
approximately $1,277,000 of the proceeds to pay off the Purchase Money Note and
126
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
accrued interest thereon, which had an outstanding balance of approximately
$2,645,000, resulting in forgiveness of indebtedness income of approximately
$1,368,000.
On May 9, 2002, the property and the related assets and liabilities of Huntley
#2 were sold to the Local General Partner for approximately $1,750,000,
resulting in a gain of approximately $379,000. The Partnership used
approximately $1,194,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had an outstanding balance of approximately
$1,725,000, resulting in forgiveness of indebtedness income of approximately
$531,000.
On April 30, 2002, the property and the related assets and liabilities of
Shelton Beach Apartments ("Northpointe I") were sold to an unaffiliated third
party for $2,333,333, resulting in a gain of approximately $598,000. The
Partnership used approximately $1,124,000 of proceeds to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $3,239,000, resulting in forgiveness of indebtedness
income of approximately $2,115,000.
On April 30, 2002, the property and the related assets and liabilities of
Northpointe II were sold to an unaffiliated third party for $1,666,667 resulting
in a gain of approximately $394,000. The Partnership used approximately $570,000
of the proceeds to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$2,119,000, resulting in forgiveness of indebtedness income of approximately
$1,549,000.
On February 15, 2002, the property and the related assets and liabilities of
Robindale East Apartments ("Robindale") were sold to an unaffiliated third party
for $735,000, resulting in a loss of approximately $527,000. No proceeds were
used to settle the related Purchase Money Note and accrued interest thereon,
which had a total outstanding balance of approximately $2,904,000, resulting in
forgiveness of indebtedness income of such amount. The auditors for Robindale
modified their report due to the uncertainty of this subsidiary partnership to
continue in existence since the sole revenue producing asset was sold during the
year.
On February 14, 2002, the property and the related assets and liabilities of
Nottingham Woods Apartments ("Nottingham") were sold to an unaffiliated third
party for $1,900,000, resulting in a gain of approximately $806,000. The
Partnership used approximately $249,000 of the proceeds to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $3,251,000, resulting in forgiveness of indebtedness
income. In Fiscal Year 2003, additional proceeds of approximately $298,000 were
received, of which approximately $223,000 was paid on the Purchase Money Note,
resulting in net forgiveness of indebtedness income of approximately $2,779,000.
On December 4, 2001, the Partnership's Limited Partnership Interests in
Greenwood Manor, Henslee Heights, Hereford Manor, Malvern Manor, and Southwest
Apartments were sold to the Local General Partner effective January 1, 2002 for
$11,988, $27,972, $11,988, $7,920, and $9,990, resulting in losses of
approximately $264,000, $685,000, $329,000, $303,000, and $159,000,
respectively. No proceeds were used to settle the related Purchase Money Notes
and interest thereon which were assigned to the Local General Partner, resulting
in gains on sale of properties of approximately $2,153,000, $2,692,000,
$1,682,000, $1,769,000, and $1,480,000, respectively.
On November 20, 2001, the property and related assets and liabilities of
Vincennes NiBlack Apts. ("Autumn Ridge") were sold to a unaffiliated third party
127
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
for $2,500,000, resulting in a loss of approximately $262,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $3,567,000 for the Fiscal
Year 2002. In Fiscal 2003, additional proceeds of approximately $1,500,000 were
received and paid on the Purchase Money Note, resulting in a reversal of
forgiveness of indebtedness income of such amount.
On November 13, 2001, the property and related assets and liabilities of Seymour
O'Brien Manor Apts. ("Seymour O'Brien") were sold to an unaffiliated third party
for $920,000, resulting in a loss of approximately $126,000. No proceeds were
used to settle the Purchase Money Note and accrued interest thereon, resulting
in forgiveness of indebtedness income of approximately $1,842,000 for the Fiscal
Year 2002. In Fiscal 2003, additional proceeds of approximately $792,000 were
received and paid on the Purchase Money Note, resulting in a reversal of
forgiveness of indebtedness income of such amount.
On August 15, 2001 the Partnership's Limited Partnership Interest in Hackley
Village ("Hackley") was assigned to the Local General Partner resulting in a
loss of approximately $522,000. The Partnership paid approximately $9,000 to
settle the associated Purchase Money Note and accrued interest thereon, which
had a total outstanding balance of approximately $1,816,000, resulting in gain
on sale of property of such amount.
On August 14, 2001 the Partnership's Limited Partnership Interest in University
Gardens Apts. ("University") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $330,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,246,000, resulting in gain on sale
of property of such amount.
On August 14, 2001, the Partnership's Limited Partnership Interest in Southside
Village Apts. ("Southside") was sold to the Local General Partner for $5,000,
resulting in a loss in the amount of $218,000. The Partnership was released from
the associated Purchase Money Note and accrued interest thereon, which had a
total outstanding balance of approximately $3,926,000, resulting in gain on sale
of property of such amount.
On July 20, 2001, the property and related assets and liabilities of Washington
Highland Apts. ("Washington Highland") were sold to an unaffiliated third party
purchaser for $800,000, resulting in a loss of approximately $482,000. The
Partnership used approximately $238,000 of the proceeds to pay off the Purchase
Money Note and accrued interest thereon, which had a total outstanding balance
of $1,905,000 resulting in forgiveness of indebtedness income of approximately
$1,668,000.
On June 27, 2001, the property and related assets and liabilities of Oakwood
Manor ("Oakwood") were sold to an unaffiliated third party purchaser for
$3,099,000, resulting in a loss of approximately $145,000. The Partnership used
approximately $1,077,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $6,803,000
resulting in forgiveness of indebtedness income of approximately $5,726,000.
On May 10, 2001, the property and related assets and liabilities of Ware Manor
Associates ("Ware Manor") were sold to an unaffiliated third party for
$1,364,500, resulting in a gain of approximately $389,000. The Partnership used
approximately $472,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,846,000,
resulting in forgiveness of indebtedness income of approximately $1,374,000.
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CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
On April 20, 2001, the property and related assets and liabilities of Northwoods
III Apartments were sold to an unaffiliated third party for $3,316,000,
resulting in a gain of approximately $1,266,000. The Partnership used
approximately $791,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $1,756,000,
resulting in forgiveness of indebtedness income of approximately $965,000.
On April 11, 2001, the property and related assets and liabilities of Tall Pines
("Tall Pines") were sold to an unaffiliated third party for $2,145,000,
resulting in a gain of approximately $751,000. The Partnership used
approximately $1,015,000 of the proceeds to pay off the Purchase Money Note and
accrued interest thereon, which had a total outstanding balance of $3,424,000,
resulting in forgiveness of indebtedness income of approximately $2,409,000.
On March 30, 2001 Nu-Elm Apartments ("Nu-Elm") entered into a purchase and sale
agreement with an unaffiliated third party for a purchase price of $1,300,000.
The contract has expired and the property was placed back on the market.
On January 5, 2001, the property and the related assets and liabilities of West
Scenic Apartments, Ltd. ("West Scenic") were sold back to the Purchase Money
Note Holder for $1,188,000 resulting in a loss of approximately $973,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$3,839,000, resulting in forgiveness of indebtedness income during the 2001
Fiscal Year.
On December 20, 2000, the property and related assets and liabilities of
Cedarbay, Ltd. ("Cedarbay") were sold to an unaffiliated third party for
$2,049,600, resulting in a gain of approximately $52,000. The Partnership used
approximately $228,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $3,157,000, resulting in forgiveness of indebtedness income of
approximately $2,943,000 inclusive of forgiveness of approximately $14,000 in
accounts payable.
On December 19, 2000, the property and related assets and liabilities of Conifer
208 ("Conifer") were sold to an unaffiliated third party for $1,750,000,
resulting in a gain of approximately $846,000. The Partnership used
approximately $1,231,000 of the proceeds to settle the associated Purchase Money
Note and accrued interest thereon, which had a total outstanding balance of
approximately $1,691,000, resulting in forgiveness of indebtedness income of
approximately $460,000.
On December 18, 2000, the Partnership's limited partnership interest in Solemar
at South Dartmouth, L.P. ("Solemar") was sold to a third party for $501,000,
resulting in a loss in the amount of $2,369,000. The Purchase Money Note was
assumed by the Local Partnership. No proceeds were used to settle the associated
Purchase Money Note and accrued interest thereon, which had a total outstanding
balance of approximately $5,473,000, resulting in a gain on sale of property.
On November 7, 2000, the property and related assets and liabilities of
Cloisters Associates, Ltd. ("Sundown") were sold to an unaffiliated third party
for $2,800,000, resulting in a gain of approximately $713,000. The Partnership
used approximately $519,000 of the proceeds to pay off the Purchase Money Note
and accrued interest thereon, which amounted to $4,825,000, resulting in
forgiveness of indebtedness income of approximately $4,306,000.
On July 14, 2000, the property and related assets and liabilities of Casa Ramon
Apartments were sold to an unaffiliated third party for $4,500,000, resulting in
a gain of approximately $2,999,000. The Partnership used approximately
$3,062,000 of the proceeds to pay off the Purchase Money Note and accrued
129
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
interest thereon which had a total outstanding balance of approximately
$3,172,000 resulting in forgiveness of indebtedness income of approximately
$111,000.
On June 30, 2000, the Partnership sold 1% of its interest in Bonnie Doone
Apartments, Florence Apartments, Dickens Ferry Apartments and Decatur Apartments
to the Purchase Money Note holder, in each case, for $100. Simultaneously, the
Partnership assigned its remaining interest of 97.99% in each of such four Local
Partnerships and the related Purchase Money Notes and interest thereon to the
Purchase Money Note holder, resulting in gains of approximately $1,903,000,
$2,373,000, $2,091,000 and $2,867,000, respectively.
On March 31, 2000, the Partnership's limited partnership interest in Caroline
Forest Apartments ("Caroline Forest") was sold to the Purchase Money Note holder
for $90,000, resulting in a loss in the amount of approximately $338,000. No
proceeds were used to settle the associated Purchase Money Note and accrued
interest which had a total outstanding balance of approximately $1,736,000,
resulting in forgiveness of indebtedness income.
On March 7, 2000, the property and related assets and liabilities of Conifer 307
("Fircrest") were sold to an unaffiliated third party for $2,500,000, resulting
in a gain in the amount of approximately $1,457,000. Approximately $1,397,000 of
the proceeds was used to pay off the Purchase Money Note.
On January 6, 2000, the property and related assets and liabilities of Bellfort
Apts. ("Bellfort") were sold to an unaffiliated third party for $175,100,
resulting in a loss in the amount of approximately $4,445,000. No proceeds were
used to settle the associated Purchase Money Note and accrued interest which had
a total outstanding balance of approximately $11,511,000, operating deficit
loans and advances of approximately $558,000 and various payables of $162,000
resulting in forgiveness of indebtedness income.
NOTE 11 - Commitments and Contingencies
a) Subsidiary Partnerships - Event of Default
Saraland Apartments, Ltd.
- -------------------------
Saraland was designated as a superfund site by the Environmental Protection
Agency ("EPA") in the mid-1990's after the EPA funded the cleanup of hazardous
waste caused by the property's former owner, Redwing Carriers, Inc. (n/k/a
Rentokil Initial Environmental Services, Inc. "Rentokil").
During the year ended December 31, 1996, the tenants of Saraland were moved to
temporary housing to facilitate cleanup of the site. However, as of February
1997, the EPA, along with other agencies, concluded that the apartment residents
should not return to the site, and the tenants were permanently relocated. The
EPA has since concluded that the apartments will have to be demolished in order
to accomplish the removal of contamination that has been found to exist
underneath the buildings. The EPA filed suit and named Rentokil, Saraland and
others as potentially responsible parties. Various other lawsuits have been
filed on related issues.
All parties involved in the EPA litigation entered into a Consent Decree which
would dispose of all claims in that litigation. The Bankruptcy Court approved
the Consent Decree on March 13, 2002. Saraland filed its voluntary petition for
relief under Chapter 11 of Title 11, United States Code on March 21, 2001 and
The First Amended Plan of Reorganization was filed on April 26, 2002. On July
23, 2002 the United States Bankruptcy Court for the Northern District of Texas
130
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
Dallas Division confirmed the plan of reorganization. Under the plan, effective
March 28, 2003, the Partnership was released from all claims in the EPA
litigation in exchange for a $100,000 cash payment to the EPA and for the
transfer of its interest in the property, subject to the existing secured
indebtedness, to Rentokil.
The plan also requires that other unsecured claims be paid a pro rata
distribution for allowed claims from a $20,000 fund to be contributed by the
general partners of Saraland.
b) Management Agreement
The subsidiary partnerships have entered into management agreements of which
some are with affiliates of the subsidiaries' general partners, which require
annual fees ranging from approximately 6% to 10% of gross rental revenues. Such
management fees amounted to $691,345, $889,446 and $1,395,709 for the 2002, 2001
and 2000 Fiscal Years, respectively.
c) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") up to $100,000. As of March 25, 2003, uninsured cash and
cash equivalents approximated $1,019,000.
d) Housing Assistance Payments Contracts
In September 1997, Congress enacted the Multi-Family Assisted Housing Reform and
Affordability Act of 1997 ("MAHRA") which provides for the renewal of Section 8
Housing Assistance Payments Contracts ("Section 8 Contracts") to be based upon
market rentals in instances where the existing Section 8 Contracts exceed
current market rents. As a result, Section 8 Contracts that are renewed in the
future in projects insured by the Federal Housing Administration ("FHA") may not
provide sufficient cash flow to permit owners of properties to meet the debt
service requirements of these existing FHA-insured mortgages. MAHRA also
provides for the restructuring of these mortgage loans so that the annual debt
service on the restructured loan (or loans) can be supported by Section 8 rents
established at the market rents. The restructured loans will be held by the
current lender or another lender. There can be no assurance that a property
owner will be permitted to restructure its mortgage indebtedness pursuant to the
new rules implementing MAHRA or that an owner, or the holder of the mortgage,
would choose to restructure the mortgage if it were able to participate. MAHRA
went into effect on September 11, 1998 when interim regulations implementing the
program were published. It should be noted that there are many uncertainties as
to the economic and tax impact on a property owner because of the combination of
the reduced Section 8 contract rents and the restructuring of the existing
FHA-insured mortgage loan under MAHRA.
On October 21, 1998 President Clinton signed the Fiscal Year 1999 Departments of
Veteran Affairs, Housing and Urban Development and Independent Agencies
Appropriation Legislation into law. The bill provides, among other things, that
owners of a property that was eligible for prepayment had to give notice of such
prepayment to HUD tenants and to the chief executive of the state or local
government for the jurisdiction in which the housing is located. The notice must
be provided not less than 150 days, but not more than 270 days, before such
payment. Moreover, the owner may not increase the rent charged to tenants for a
period of 60 days following such prepayment. The bill also provides for
tenant-based vouchers for eligible tenants (generally below 80% of area median
income) at the true comparable market rents for unassisted units in order to
protect current residents from substantial increases in rent.
131
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2003
On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent
Agencies Appropriations Act (the "Appropriations Act"). The Appropriations Act
contains revisions to the HUD Mark-to-Market Program and other HUD programs
concerning the preservation of the HUD housing stock. On December 29, 1999 HUD
issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in
Fiscal Year 2000" reflecting the changes in the Appropriations Act and
superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice
99-36 clarifies many of the earlier uncertainties with respect to the earlier
HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market
Program which allows owners with Section 8 contracts to increase the rents to
market levels where contract rents are currently below market.
e) Other
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. Due to the sale of
properties, the portfolio is not diversified by the location of the properties
around the United States. The Partnership has four remaining properties and
therefore the Partnership may not be protected against a general downturn in the
national economy. There are also substantial risks associated with owning
properties receiving government assistance, for example the possibility that
Congress may not appropriate funds to enable HUD to make rental assistance
payments. HUD also restricts annual cash distributions to partners based on
operating results and a percentage of the owner's equity contribution. The
Partnership cannot sell or substantially liquidate its investments in subsidiary
partnerships during the period that the subsidy agreements are in existence,
without HUD's approval. Furthermore, there may not be market demand for
apartments at full market rents when the rental assistance contracts expire.
132
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by the General Partners.
Assisted Housing Associates, Inc. ("Assisted General Partner"), Related Beta
Corporation ("Related General Partner") and Cambridge/Related Associates Limited
Partnership ("Cambridge/Related") are all affiliates of Related. The general
partner of Related is The Related Realty Group, Inc., of which Stephen M. Ross
is president, director and a stockholder. The General Partners will manage and
control the affairs of the Partnership directly and by engaging other affiliates
of Related. The general partners of Cambridge/Related are the Assisted General
Partner and The Related General Partner.
The Assisted General Partner was incorporated in Delaware on June 25, 1985 and
the Related General Partner was incorporated in Delaware on January 23, 1984.
On November 25, 1997, an affiliate of the Related General Partner purchased 100%
of the stock of the Assisted General Partner (the "Transfer"), then an affiliate
of Lehman Brothers, Inc. The Assisted General Partner is also a partner of
Cambridge/Related and, therefore, as a result of the Transfer, such affiliate
also acquired the Assisted General Partner's general partner interest in
Cambridge/Related and C/R Special Partnership, the special limited partner of
the Partnership. In connection with the Transfer, the Partnership paid to the
Assisted General Partner the accrued asset management fees owed to it in the
aggregate amount of $1,334,116.
In December 2002, Charter Municipal Mortgage Acceptance Company ("CharterMac"),
which is also managed by an affiliate of Related Capital Company, announced a
proposed acquisition of Related Capital Company, an affiliate of the General
Partner. Pursuant to the proposed acquisition, CharterMac will acquire
controlling interests in the general partners of the General Partners. This
acquisition is not anticipated to affect the Partnership or its day-to-day
operations as management of the General Partners will not change.
Certain information concerning the directors and executive officers of the
General Partners is set forth below.
The directors and executive officers of the Related General Partner are as
follows:
Name Position
- ---- --------
Stephen M. Ross Director
Alan P. Hirmes President
Stuart J. Boesky Vice President
Denise Kiley Vice President
Marc D. Schnitzer Vice President
Mark E. Carbone Vice President
133
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
STEPHEN M. ROSS, 63, is the President, a Director and a shareholder of The
Related Realty Group, Inc., the General Partner of The Related Companies, L.P.
He graduated from the University of Michigan School of Business Administration
with a Bachelor of Science degree and from Wayne State University School of Law
with a Juris Doctor degree. Mr. Ross then received a Master of Laws degree in
taxation from New York University School of Law. He joined the accounting firm
of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York,
where he worked for two large Wall Street investment banking firms in their real
estate and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. ("TRCLP") in 1972 to develop, manage, finance and
acquire subsidized and conventional apartment developments. Mr. Ross also serves
on the Board of Trustees of Charter Municipal Mortgage Acceptance Company.
ALAN P. HIRMES, 48, has been a Certified Public Accountant in New York since
1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr.
Hirmes was employed by Weiner & Co., Certified Public Accountants. Mr. Hirmes is
also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University
with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees
of Charter Municipal Mortgage Acceptance Company and American Mortgage
Acceptance Company.
STUART J. BOESKY, 47, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of
Kaye, Fialkow Richard & Rothstein (which subsequently merged with Strook &
Strook & Lavan) and from 1978 to 1980 was a consultant specializing in real
estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law. Mr. Boesky also serves
on the Board of Trustees of, Charter Municipal Mortgage Acceptance Company and
American Mortgage Acceptance Company.
DENISE L. KILEY, 43, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Capital in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981 through 1985 she was an auditor
with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College.
MARC D. SCHNITZER, 42, joined Capital in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983.
MARK E. CARBONE, 46, rejoined Capital in 1998 where his primary responsibility
has been disposition of real estate. From 1994 to 1998 he was President of WHC,
Inc., a distressed asset real estate fund. From 1986 to 1994 he was President of
Marigold Real Estate and Development, Inc., a real estate development company
located in Greenwich, CT. From 1979 to 1986 he was a Vice President at Related
Capital Company. He received a Bachelor of Arts in Government from Harvard
University in 1979.
134
GLENN F. HOPPS, 40, joined Capital in December 1990, and prior to that date Mr.
Hopps was employed by Marks Shron & Company and Weissbarth, Altman and
Michaelson certified public accountants. Mr. Hopps graduated from New York State
University at Albany with a Bachelor of Science Degree in Accounting.
TERESA WICELINSKI, 37, joined Capital in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski, graduated from Pace University with a Bachelor of Arts Degree in
Accounting.
The directors and executive officers of the Assisted General Partner are as
follows:
Name Position
- ---- --------
Michael Brenner Director
Alan P. Hirmes President
Stuart J. Boesky Executive Vice President
Mark E. Carbone Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
MICHAEL BRENNER, 57, is the Executive Vice President and Chief Financial Officer
of TRCLP. Prior to joining TRCLP in 1996, Mr. Brenner was a partner with Cooper
& Lybrand, having served as managing partner of its Industry Programs and Client
Satisfaction initiatives from 1993-1996, managing partner of the Detroit group
of offices from 1986-1993 and Chairman of its National Real Estate Industry
Group from 1984-1986. Mr. Brenner graduated summa cum laude from the University
of Detroit with a Bachelors degree in Business Administration and from the
University of Michigan with a Masters of Business Administration, with
distinction. Mr. Brenner also serves on the Board of Trustees of Charter
Municipal Mortgage Acceptance Company.
Biographical information with respect to Messrs, Hirmes, Boesky, Carbone, Ms.
Kiley, Hopps and Ms. Wicelinski is set forth above.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the General Partners for their services. However, under the terms of
the Amended and Restated Agreement of Limited Partnership of the Partnership,
the General Partners and their affiliates are entitled to receive compensation
from the Partnership in consideration of certain services rendered to the
Partnership by such parties. In addition, the General Partners collectively hold
a 1% interest in all profits, losses and distributions attributable to
operations and a subordinated 15% interest in such items attributable to sales
and refinancings. See Note 8 to the Financial Statements in Item 8 above, which
information is incorporated herein by reference thereto. Certain directors and
officers of the General Partners receive compensation from the General Partner
and their affiliates for services performed for various affiliated entities
which may include services performed for the Partnership.
135
Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partners and/or their affiliates is limited
by the terms of the Partnership Agreement and may not be increased therefrom on
a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The General Partners own all of the outstanding general partnership interests in
the Partnership. The General Partners have a 1% interest in all profits, losses
and distributions of the Partnership from operations and a subordinated 15%
interest in such items from sale or refinancing proceeds. Except as aforesaid,
no person is known to own beneficially in excess of 5% of the outstanding
partnership interests.
At March 25, 2003, security ownership by the General Partners and their
affiliates is as listed:
Percentage of
Outstanding
Name of General Partner
Title of Class Beneficial Ownership Amount Interest
- -------------- -------------------- ------ ---------------
General Partnership Assisted Housing
Interest in the Associates Inc. $10 13.2%
Partnership
General Partnership Related Beta Corporation 6 19.8%
Interest in the
Partnership
General Partnership
Interest in the Cambridge/Related Associates
Partnership Limited Partnership 4 67.0%
------
100.0%
No director or executive officer of any General Partner owns any Initial Limited
Partnership Interests or Additional Limited Partnership Interests.
Item 13. Certain Relationships and Related Transactions.
The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed below and in Item 11 above
and also Note 8 to the Financial Statements in Item 8 above, which are
incorporated herein by reference. However, there have been no direct financial
transactions between the Partnership and the directors and officers of the
General Partners.
C/R Special Partnership is the special limited partner of each Local
Partnership, with a .01% interest in profits, losses and distributions from such
Local Partnerships. As set forth in Item 1, C/R Special Partnership has been
admitted to the Local Partnerships for the purpose of monitoring the Local
Partnerships and exercising certain rights under the Local Partnership
Agreements on behalf of the Partnership.
136
Item 14. Controls and Procedures
The Chief Executive Officer and Chief Financial Officer of Related Beta
Corporation (general partner of each of the Partnership and Cambridge and
Related Associates, general partners of the Partnership) and Assisted Housing
Associates Inc. (general partner of the Partnership), has evaluated the
Partnership's disclosure controls and procedures relating to the Partnership's
annual report on Form 10-K for the period ending March 15, 2003 as filed with
the Securities and Exchange Commission and has judged such controls and
procedures to be effective as of March 15, 2003 (the "Evaluation Date").
There have been no significant changes in the internal controls or in other
factors that could significantly affect internal controls relating to the
Partnership since the Evaluation Date.
137
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential
Page
----------
(a) 1. Financial Statements
Independent Auditors' Report 27
Consolidated Balance Sheets at March 25, 2003
and 2002 112
Consolidated Statements of Income for the Years
Ended March 25, 2003,2002 and 2001 113
Consolidated Statements of Changes in Partners'
Deficit for the Years Ended March 25, 2003, 2002
and 2001 114
Consolidated Statements of Cash Flows for the
Years Ended March 25, 2003, 2002 and 2001 115
Notes to Consolidated Financial Statements 118
(a)2. Financial Statement Schedules
-----------------------------
Independent Auditors' Report 145
Schedule I - Condensed Financial Information
of Registrant 146
Schedule III - Real Estate and Accumulated
Depreciation 149
The remaining schedules are omitted because the
required information is included in the financial
statements and notes thereto, or they are not
applicable or not required.
(a)3. Exhibits
--------
(3) Amended and Restated Agreement and Certificate of
Limited Partnership as filed with the Secretary of
State of the State of the Commonwealth of
Massachusetts.**
(10A) Form of Escrow Agreement**
(21) Subsidiaries of the Registrant 139
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
** Incorporated by reference to exhibits filed
with Amendment No.1 to Cambridge Advantaged
Properties L.P.'s Registration Statement on Form
S-11 Registration File No. 2-91993.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter.
138
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(Continued)
(c) Subsidiaries of the Registrant (Exhibit 21)
------------------------------
Jurisdiction
of Formation
-------------
Nu-Elm Apartments MO
Cabarrus Arms Associates, LTD GA
Hathaway Court Associates KY
Pebble Creek LDHA MI
(d) Not applicable
139
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 below on
its behalf by the undersigned, thereunto duly authorized.
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
(Registrant)
By: RELATED BETA CORPORATION
a General Partner
Date: June 3, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
By: ASSISTED HOUSING ASSOCIATES, INC.
a General Partner
Date: June 3, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
By: CAMBRIDGE AND RELATED ASSOCIATES
LIMITED PARTNERSHIP
By: Related Beta Corporation
Date: June 3, 2003
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
140
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/ Alan P. Hirmes President (chief executive and financial
- ------------------ officer) of Related Beta Corporation
Alan P. Hirmes and Assisted Housing Associates, Inc. June 3, 2003
/s/ Glen F. Hopps Treasurer (chief accounting
- ----------------- officer) of Related Beta Corporation
Glenn F. Hopps and Assisted Housing Associates, Inc. June 3, 2003
/s/ Stephen M. Ross
- ------------------- Director of Related Beta Corporation June 3, 2003
Stephen M. Ross
141
CERTIFICATION
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Beta Corporation (general partner of each of the Partnership and
Cambridge and Related Associates, General Partners of the Partnership) and
Assisted Housing Associates, Inc. (general partner of the Partnership), hereby
certify that:
1. I have reviewed this annual report on Form 10-K for the period ending
March 25, 2003 of the Partnership;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this annual report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14)
for the Partnership and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Partnership, including its
consolidated subsidiaries, is made known to me by others within
those entities, particularly during the period in which this
annual report was being prepared;
b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of March 25, 2003 (the "Evaluation
Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
142
5. I have disclosed, based on our most recent evaluation, to the
Partnership's auditors and to the board of directors of the General
Partners:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Partnership's
ability to record, process, summarize and report financial data
and have identified for the Partnership's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal controls; and
6. I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
June 3, 2003
143
Exhibit 99.1
CERTIFICATION PURSUANT TO
18.U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Cambridge Advantaged Properties Limited
Partnership (the "Partnership") on Form 10-K for the period ending March 25,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Alan P. Hirmes, Chief Executive Officer and Chief Financial
Officer of Related Beta Corporation (general partner of each of the Partnership
and Cambridge and Related Associates, general partner of the Partnership) and
Assisted Housing Associates, Inc. (general partner of the Partnership), certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and Chief Financial Officer
June 3, 2003
144
INDEPENDENT AUDITORS' REPORT
To the Partners of
Cambridge Advantaged Properties
Limited Partnership and Subsidiaries
In connection with our audits of the consolidated financial statements of
Cambridge Advantaged Properties Limited Partnership and Subsidiaries included in
the Form 10-K as presented in our opinion dated June 5, 2003 on pages 28 and 29,
and based on the reports of other auditors, we have also audited supporting
Schedule I for the 2002, 2001 and 2000 Fiscal Years and Schedule III at March
25, 2003. In our opinion, and based on the reports of the other auditors
(certain of which were modified due to the uncertainties of these subsidiary
partnerships' abilities to continue in existence), these consolidated schedules
present fairly, when read in conjunction with the related consolidated financial
statements, the financial data required to be set forth therein.
As discussed in Note 10, the Partnership is currently in the process of
disposing of its investments. As of March 25, 2003, the Partnership has disposed
of fifty-seven of its sixty-one original investments. Three additional
investments are listed for sale and the remaining investment is expected to be
liquidated during 2003.
As discussed in Note 7, the principal of and all accrued interest on the
Purchase Money Notes are due at final maturity. The remaining Purchase Money
Notes are now extended, with maturity dates through June 2003 and the
Partnership is attempting to refinance or sell the properties. It is uncertain
as to whether the proceeds from such sales will be sufficient to meet the
outstanding balances of the Purchase Money Notes and accrued interest thereon.
The consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
May 28, 2003
145
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
ASSETS
March 25,
-------------------------
2003 2002
------------ -----------
Cash and cash equivalents $ 970,273 $ 2,111,766
Investment in and advances to subsidiary partnerships 4,312,170 11,964,839
Other assets 415,566 473,806
------------ ----------
Total assets $ 5,698,009 $14,550,411
============ ===========
LIABILITIES AND PARTNERS' DEFICIT
Purchase money notes payable $ 3,635,924 $ 9,861,837
Due to general partner and affiliates 3,439,463 3,078,766
Due to selling partners 9,917,404 22,909,179
Other liabilities 0 5,954,932
------------ ------------
Total liabilities 16,992,791 41,804,714
Partners' deficit (11,294,782) (27,254,303)
------------ ------------
Total liabilities and partners' deficit $ 5,698,009 $14,550,411
============ ===========
Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' deficit on the consolidated balance sheet will differ
from partners' deficit shown above.
146
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF INCOME
Year Ended March 25,
--------------------------------------------
2003 2002 2001
------------ ------------ ------------
Revenues
Other income $ 53,011 $ 94,778 $ 194,105
------------ ------------ ------------
Total revenues 53,011 94,778 194,105
------------ ------------ ------------
Expenses
Administrative and management 139,595 297,794 520,432
Administrative and management-related
parties 1,134,355 1,219,336 1,234,125
Financial, principally interest 1,012,395 3,787,630 8,559,575
------------ ------------ ------------
Total expenses 2,286,345 5,304,760 10,314,132
------------ ------------ ------------
Loss from operations (2,233,334) (5,209,982) (10,120,027)
Gain on sale of investments in subsidiary
partnerships 5,690,236 15,998,925 14,076,580
Forgiveness of indebtedness income 11,962,803 21,389,335 9,542,034
Distribution income of subsidiary
partnerships in excess of investments 139,402 845,503 120,047
Equity in income of subsidiary
partnerships (*) 1,924,909 1,189,720 1,564,867
------------ ------------ ------------
Net income $ 17,484,016 $ 34,213,501 $ 15,183,501
============ ============ ============
(*) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to $1,119,403, $445,165 and
$12,005,114 for the years ended March 25, 2003, 2002 and 2001.
147
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Year Ended March 25,
--------------------------------------------
2003 2002 2001
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 17,484,016 $ 34,213,501 $ 15,183,501
------------ ------------ ------------
Adjustments to reconcile net income
to net cash used in operating activities:
Gain on sale of investments in subsidiary
partnerships (5,690,236) (15,998,925) (14,076,580)
Forgiveness of indebtedness income (11,962,803) (21,389,335) (9,542,034)
Equity in income of subsidiary partnerships (1,924,909) (1,189,720) (1,564,867)
Distribution income of subsidiary partnerships
in excess of investments (139,402) (845,503) (120,047)
(Increase) decrease in other assets 58,240 19,709 (390,293)
Increase (decrease) in liabilities:
Due to general partners and affiliates 360,697 696,027 226,542
Due to selling partners 1,012,395 3,787,630 8,559,575
Payments to selling partners (2,966,329) (115,683) (3,462,448)
Other liabilities (142,948) 21,729 (48,026)
------------ ------------ ------------
Total adjustments (21,395,295) (35,014,071) (20,418,178)
------------ ------------ ------------
Net cash used in operating activities (3,911,279) (800,570) (5,234,677)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of investments in
subsidiary partnerships 31,959 165,465 553,995
Distributions from subsidiaries 10,071,782 4,451,612 6,550,351
------------ ------------ ------------
Net cash provided by investing activities 10,103,741 4,617,077 7,104,346
------------ ------------ ------------
Cash flows from financing activities:
Principal payments of purchase money
notes payable (5,809,460) (3,776,208) (2,266,919)
Increase in purchase money notes payable 0 0 5,208
Distributions to partners (1,524,495) (1,402,536) 0
------------ ------------ ------------
Net cash used in financing activities (7,333,955) (5,178,744) (2,261,711)
------------ ------------ ------------
Net decrease in cash and cash equivalents (1,141,493) (1,362,237) (392,042)
Cash and cash equivalents, beginning of year 2,111,766 3,474,003 3,866,045
------------ ------------ ------------
Cash and cash equivalents, end of year $ 970,273 $ 2,111,766 $ 3,474,003
============ ============ ============
148
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2003
Cost (a)
Initial Cost to Partnership Capitalized
--------------------------- Subsequent to
Bulidings and Acquisition:
Subsidiary Partnership Residential Property Encumbrances Land Improvements Improvements
- ------------------------------------------- ------------ ----------- ------------- -------------
(10)Pebble Creek $ 3,596,848 $ 266,942 $ 4,968,283 $ 1,514,777
(1) Knollwood I (e) 0 311,807 5,924,337 (6,236,144)
(1) Knollwood II (e) 0 310,663 5,902,600 (6,213,263)
(1) Knollwood III (e) 0 310,257 5,899,971 (6,210,228)
(1) Knollwood IV (e) 0 210,423 3,998,047 (4,208,470)
(1) Parklane II (e) 0 228,684 4,344,999 (4,573,683)
(6) Northwoods III (n) 0 183,789 3,492,002 (3,675,791)
(1) Northpointe I (Shelton Beach) (p) 0 156,968 2,982,380 (3,139,348)
(1) Cedarbay (l) 0 184,523 3,505,947 (3,690,470)
(1) Northpointe II (p) 0 118,651 2,254,361 (2,373,012)
(9) Rockdale West (i) 0 610,192 8,240,035 (8,850,227)
(9) Buttonwood Acres (f) 0 382,930 4,392,292 (4,775,222)
(9) Solemar I (m) 0 567,644 7,359,738 (7,927,382)
(2) West Scenic (l) 0 201,556 3,893,464 (4,095,020)
(2) Greenwood Manor (o) 0 84,416 1,603,982 (1,688,398)
(2) Henslee Heights (o) 0 107,068 2,035,034 (2,142,102)
(2) Hereford Manor (o) 0 70,391 1,319,817 (1,390,208)
(2) Oakwood Manor (n) 0 295,312 5,627,044 (5,922,356)
(2) Robindale East (n) 0 121,808 2,314,340 (2,436,148)
(12)Valley Arms (j) 0 257,254 2,648,264 (2,905,518)
(2) Malvern Manor (o) 0 73,494 1,396,388 (1,469,882)
(2) Southwest (o) 0 68,995 1,310,896 (1,379,891)
(3) Lancaster Manor Associates (h) 0 392,991 7,476,427 (7,869,418)
(16)Caroline Apartments (m) 0 122,239 1,804,976 (1,927,215)
(1) Florence Apartments (m) 0 135,644 2,533,694 (2,669,338)
(1) Saraland Apartments (g)(q) 0 79,104 1,487,507 (1,566,611)
(1) Bonnie Doone (m) 0 89,034 1,649,278 (1,738,312)
(13)Pinewood Village (Conifer 317) (p) 0 110,658 1,229,121 (1,339,779)
(17)Conifer Village (Conifer 208)(l) 0 83,189 1,569,170 (1,652,359)
(13)Fircrest Manor (Conifer 307)(j) 0 133,179 1,479,049 (1,612,228)
(4) Westminster Manor (f) 0 457,575 8,662,800 (9,120,375)
(4) Northgate Townhouse (f) 0 336,820 6,280,710 (6,617,530)
(15)Pecan Park I (i) 0 193,864 3,682,091 (3,875,955)
(15)Pecan Park II (i) 0 187,760 3,481,597 (3,669,357)
(15)Bicentennial Square (d) 0 1,147,629 6,576,179 (7,723,808)
(15)Bellfort Arms (j) 0 1,130,077 6,996,265 (8,126,342)
(8) Hathaway Court 2,706,335 217,960 4,157,713 324,354
(5) Lexington Village (p) 0 133,830 2,580,297 (2,714,127)
(5) Ware Manor (n) 0 108,955 2,079,603 (2,188,558)
(14)Summer Arms (q) 0 123,135 2,381,092 (2,504,227)
(12)Cabarrus Arms 1,139,777 102,987 1,850,151 256,043
(1) Sundown Apts. (Cloister)(l) 0 357,930 5,134,467 (5,492,397)
(5) Tall Pines (n) 0 166,974 2,657,152 (2,824,126)
(1) Nottingham Woods (n) 0 185,145 3,556,877 (3,742,022)
(7) Seymour O'Brien Manor (n) 0 77,893 1,483,726 (1,561,619)
(7) Washington Highlands (n) 0 79,571 1,508,983 (1,588,554)
Gross Amount at which Carried At Close of Period
-------------------------------------------------
Bulidings and Accumulated
Subsidiary Partnership Residential Property Land Improvements Total Depreciation
- ------------------------------------------- ----------- ------------- ------------ ------------
(10)Pebble Creek $ 266,942 $ 6,483,060 $ 6,750,002 $ (3,271,757)
(1) Knollwood I (e) 0 0 0 0
(1) Knollwood II (e) 0 0 0 0
(1) Knollwood III (e) 0 0 0 0
(1) Knollwood IV (e) 0 0 0 0
(1) Parklane II (e) 0 0 0 0
(6) Northwoods III (n) 0 0 0 0
(1) Northpointe I (Shelton Beach) (p) 0 0 0 0
(1) Cedarbay (l) 0 0 0 0
(1) Northpointe II (p) 0 0 0 0
(9) Rockdale West (i) 0 0 0 0
(9) Buttonwood Acres (f) 0 0 0 0
(9) Solemar I (m) 0 0 0 0
(2) West Scenic (l) 0 0 0 0
(2) Greenwood Manor (o) 0 0 0 0
(2) Henslee Heights (o) 0 0 0 0
(2) Hereford Manor (o) 0 0 0 0
(2) Oakwood Manor (n) 0 0 0 0
(2) Robindale East (n) 0 0 0 0
(12)Valley Arms (j) 0 0 0 0
(2) Malvern Manor (o) 0 0 0 0
(2) Southwest (o) 0 0 0 0
(3) Lancaster Manor Associates (h) 0 0 0 0
(16)Caroline Apartments (m) 0 0 0 0
(1) Florence Apartments (m) 0 0 0 0
(1) Saraland Apartments (g)(q) 0 0 0 0
(1) Bonnie Doone (m) 0 0 0 0
(13)Pinewood Village (Conifer 317) (p) 0 0 0 0
(17)Conifer Village (Conifer 208)(l) 0 0 0 0
(13)Fircrest Manor (Conifer 307)(j) 0 0 0 0
(4) Westminster Manor (f) 0 0 0 0
(4) Northgate Townhouse (f) 0 0 0 0
(15)Pecan Park I (i) 0 0 0 0
(15)Pecan Park II (i) 0 0 0 0
(15)Bicentennial Square (d) 0 0 0 0
(15)Bellfort Arms (j) 0 0 0 0
(8) Hathaway Court 217,960 4,482,067 4,700,027 (3,915,592)
(5) Lexington Village (p) 0 0 0 0
(5) Ware Manor (n) 0 0 0 0
(14)Summer Arms (q) 0 0 0 0
(12)Cabarrus Arms 102,987 2,106,194 2,209,181 (1,809,475)
(1) Sundown Apts. (Cloister)(l) 0 0 0 0
(5) Tall Pines (n) 0 0 0 0
(1) Nottingham Woods (n) 0 0 0 0
(7) Seymour O'Brien Manor (n) 0 0 0 0
(7) Washington Highlands (n) 0 0 0 0
Life on which
Depreciation in
Latest Income
Date of Date Statment is
Subsidiary Partnership Residential Property onstruction Acquired Computed(b)(c)
- ------------------------------------------- ----------- ---------- ---------------
(10)Pebble Creek (c) Nov. 1984 5 - 27.5
(1) Knollwood I (e) (c) Sept. 1984 30
(1) Knollwood II (e) (c) Sept. 1984 30
(1) Knollwood III (e) (c) Sept. 1984 30
(1) Knollwood IV (e) (c) Sept. 1984 30
(1) Parklane II (e) (c) Sept. 1984 30
(6) Northwoods III (n) (c) Oct. 1984 15 - 30
(1) Northpointe I (Shelton Beach) (p) (c) Nov. 1984 15 - 30
(1) Cedarbay (l) (c) Sept. 1984 15 - 30
(1) Northpointe II (p) (c) Nov. 1984 15 - 30
(9) Rockdale West (i) (c) Oct. 1984 15-27
(9) Buttonwood Acres (f) (c) Oct. 1984 20
(9) Solemar I (m) (c) Oct. 1984 15-27
(2) West Scenic (l) (c) Dec. 1984 10 - 30
(2) Greenwood Manor (o) (c) Dec. 1984 30
(2) Henslee Heights (o) (c) Dec. 1984 35
(2) Hereford Manor (o) (c) Dec. 1984 35
(2) Oakwood Manor (n) (c) Dec. 1984 5 - 30
(2) Robindale East (n) (c) Dec. 1984 10 - 30
(12)Valley Arms (j) (c) Dec. 1984 35
(2) Malvern Manor (o) (c) Dec. 1984 35
(2) Southwest (o) (c) Dec. 1984 30
(3) Lancaster Manor Associates (h) (c) Dec. 1984 30
(16)Caroline Apartments (m) (c) Nov. 1984 28
(1) Florence Apartments (m) (c) Oct. 1984 15 - 30
(1) Saraland Apartments (g)(q) (c) Oct. 1984 5 - 30
(1) Bonnie Doone (m) (c) Nov. 1984 27.5 - 30
(13)Pinewood Village (Conifer 317) (p) (c) Nov. 1984 15 - 30
(17)Conifer Village (Conifer 208)(l) (c) Nov. 1984 19 - 30
(13)Fircrest Manor (Conifer 307)(j) (c) Nov. 1984 20 - 30
(4) Westminster Manor (f) (c) Oct. 1984 30
(4) Northgate Townhouse (f) (c) Oct. 1984 30
(15)Pecan Park I (i) (c) Dec. 1984 30
(15)Pecan Park II (i) (c) Dec. 1984 18 - 30
(15)Bicentennial Square (d) (c) Dec. 1984 30 - 40
(15)Bellfort Arms (j) (c) Nov. 1984 30
(8) Hathaway Court (c) Nov. 1984 20
(5) Lexington Village (p) (c) Nov. 1984 15 - 27.5
(5) Ware Manor (n) (c) Nov. 1984 15 - 27.5
(14)Summer Arms (q) (c) Nov. 1984 20
(12)Cabarrus Arms (c) Nov. 1984 7 - 20
(1) Sundown Apts. (Cloister)(l) (c) Nov. 1984 10 - 20
(5) Tall Pines (n) (c) Nov. 1984 20 - 27.5
(1) Nottingham Woods (n) (c) Nov. 1984 10 - 20
(7) Seymour O'Brien Manor (n) (c) Oct. 1984 5 - 27.5
(7) Washington Highlands (n) (c) Oct. 1984 5 - 27.5
149
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2003
(continued)
Cost (a)
Initial Cost to Partnership Capitalized
--------------------------- Subsequent to
Bulidings and Acquisition:
Subsidiary Partnership Residential Property Encumbrances Land Improvements Improvements
- ------------------------------------------- ------------ ----------- ------------- -------------
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) 0 184,718 3,502,697 (3,687,415)
(11)Nu Elm 1,252,818 100,552 1,913,293 412,812
(3) Casa Ramon (l) 0 121,197 2,318,916 (2,440,113)
(10)Hackley Village (o) 0 80,562 1,530,639 (1,611,201)
(10)Huntley Associates I (p) 0 125,087 2,376,634 (2,501,721)
(10)Huntley Associates II (p) 0 98,140 1,864,671 (1,962,811)
(1) Decatur (m) 0 135,554 2,531,304 (2,666,858)
(1) Dickens Ferry (m) 0 108,914 2,058,001 (2,166,915)
(15) University Gardens (o) 0 127,004 2,288,254 (2,415,258)
(15)Southside Villages (o) 0 135,624 2,508,705 (2,644,329)
(10)Carlton Terrace (k) 0 755,304 8,627,605 (9,382,909)
(10)Apollo Villa (k) 0 229,304 2,903,658 (3,132,962)
(10)Apollo Villa II (k) 0 577,304 7,260,975 (7,838,279)
(10)Cranbrook Manor (k) 0 261,948 3,510,485 (3,772,433)
(10)Oakbrook Villa (j) 0 411,597 9,143,169 (9,554,766)
------------ ----------- --------- -------------
$ 8,695,778 $14,730,719 $ 222,052,152 $(220,697,004)
============ =========== ============= =============
Gross Amount at which Carried At Close of Period
-------------------------------------------------
Bulidings and Accumulated
Subsidiary Partnership Residential Property Land Improvements Total Depreciation
- ------------------------------------------- ----------- ------------- ------------ ------------
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) 0 0 0 0
(11)Nu Elm 100,552 2,326,105 2,426,657 (1,145,403)
(3) Casa Ramon (l) 0 0 0 0
(10)Hackley Village (o) 0 0 0 0
(10)Huntley Associates I (p) 0 0 0 0
(10)Huntley Associates II (p) 0 0 0 0
(1) Decatur (m) 0 0 0 0
(1) Dickens Ferry (m) 0 0 0 0
(15) University Gardens (o) 0 0 0 0
(15)Southside Villages (o) 0 0 0 0
(10)Carlton Terrace (k) 0 0 0 0
(10)Apollo Villa (k) 0 0 0 0
(10)Apollo Villa II (k) 0 0 0 0
(10)Cranbrook Manor (k) 0 0 0 0
(10)Oakbrook Villa (j) 0 0 0 0
----------- ------------- ------------ ------------
$ 688,441 $ 15,397,426 $16,085,867 $(10,142,227)
=========== ============= ============ ============
Life on which
Depreciation in
Latest Income
Date of Date Statment is
Subsidiary Partnership Residential Property Construction Acquired Computed(b)(c)
- ------------------------------------------- ------------ ---------- ---------------
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) (c) Oct. 1984 5 - 27.5
(11)Nu Elm (c) Oct. 1984 5 - 27.5
(3) Casa Ramon (l) (c) Oct. 1984 5 - 27.5
(10)Hackley Village (o) (c) Oct. 1984 5 - 27.5
(10)Huntley Associates I (p) (c) Oct. 1984 5 - 27.5
(10)Huntley Associates II (p) (c) Oct. 1984 5 - 27.5
(1) Decatur (m) (c) Oct. 1984 15 - 40
(1) Dickens Ferry (m) (c) Nov. 1984 15 - 40
(15) University Gardens (o) (c) Nov. 1984 25
(15)Southside Villages (o) (c) Nov. 1984 25
(10)Carlton Terrace (k) (c) Dec. 1984 25
(10)Apollo Villa (k) (c) Dec. 1984 25
(10)Apollo Villa II (k) (c) Dec. 1984 25
(10)Cranbrook Manor (k) (c) Dec. 1984 5 - 40
(10)Oakbrook Villa (j) (c) Dec. 1984 5 - 40
(a) No carrying costs have been capitalized since all properties were acquired
after completion of construction.
(b) Furniture and fixtures, included in buildings and improvements, are
depreciated primarily by the straight-line method over the estimated useful
lives ranging from 5 to 15 years.
(c) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight-line method over the estimated useful
lives determined by the Partnership at date of acquisition.
(d) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1997. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(f) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1998. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(g) During the fiscal year ended March 25, 1998, the Local Partnership's
property was declared unsafe to live due to amounts of Benzene and Aldrene
found to be present in the air of some apartments. See Note 11 in Item 8,
Financial Statements and Supplementary Data.
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(i) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 1999. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(j) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(k) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 2000. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(l) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2001.
(m) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 2001.
(n) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2002.
(o) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2002.
(p) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2003.
(q) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2003.
Geographic Locations: (1) Alabama, (2) Arkansas, (3) California, (4) Colorado,
(5) Georgia, (6) Florida, (7) Indiana, (8) Kentucky, (9) Massachusetts, (10)
Michigan, (11) Missouri, (12) North Carolina, (13) Oregon, (14) South Carolina,
(15) Texas, (16) Virginia, (17) Washington.
Cost of Property and Equipment Accumulatd Depreciation
----------------------------------------------- -----------------------------------------------
Year Ended March 25,
--------------------------------------------------------------------------------------------------
2003 2002 2001 2003 2002 2001
------------- ------------- ------------- ------------- ------------- -------------
Balance at beginning of period $ 40,984,916 $ 85,344,137 $ 133,535,911 $ 23,965,637 $ 46,362,176 $ 67,270,922
Additions during period:
Improvements 164,274 459,572 1,572,337
Depreciation expense 779,088 1,364,076 3,212,290
Deductions during period:
Dispositions (25,063,323) (44,818,793) (49,764,111) (14,602,498) (23,760,615) (24,121,036)
------------- ------------- ------------- ------------- ------------- -------------
Balance at close of period $ 16,085,867 $ 40,984,916 $ 85,344,137 $ 10,142,227 $ 23,965,637 $ 46,362,176
============= ============= ============= ============= ============= =============
150
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2003
(continued)
At the time the local partnerships were acquired by Cambridge Advantaged
Properties Limited Partnership, the entire purchase price paid by Cambridge
Advantaged Properties Limited Partnership was pushed down to the local
partnerships as property and equipment with an offsetting credit to capital.
Since the projects were in the construction phase at the time of acquisition,
the capital accounts were insignificant at the time of purchase. Therefore,
there are no material differences between the original cost basis for tax and
GAAP.