SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2002
Commission File Number 33-19316
Qualified Housing Partners Limited Partnership
(Exact name of registrant as specified in its charter)
North Carolina 56-1589469
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 220
4700 Homewood Court
Raleigh, North Carolina 27609
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(919)787-4243
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES (X) NO ( )
PART I
FINANCIAL INFORMATION
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
Item 1: Financial Statements
- Unaudited Consolidated Balance Sheets
- Unaudited Consolidated Statements of Income and
Expenses (Three Months)
- Unaudited Consolidated Statements of Income and
Expenses (Six Months)
- Unaudited Consolidated Statements of Cash Flows
- Unaudited Cash Available for Distribution and
Reserves
- Unaudited Notes to Financial Statements
Item 2: Management's Discussion
- Liquidity and Capital Resources
- Results of Operations
- Tax Credits
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and December 31, 2001
06/30/02
(Unaudited) 12/31/01
ASSETS
Rental Properties
Land $1,326,402 $1,326,402
Buildings 34,385,351 34,375,952
Furniture & Fixtures 2,067,222 2,054,878
Construction in Progress 209,471 209,471
37,988,446 37,966,703
Accumulated Depreciation (12,180,814) (11,740,067)
25,807,632 26,226,636
Cash 229,164 327,416
Other Assets 2,288,422 2,301,299
TOTAL ASSETS $28,325,218 $28,855,351
LIABILITIES AND PARTNERS' CAPITAL
Liabilities Applicable to Rental
Properties $24,812,461 $25,038,280
Other Liabilities 1,182,066 1,211,279
Total Liabilities 25,994,527 26,249,559
Minority Interests in Subsidiary
Operating Partnerships 1,703,395 1,705,615
Partners' Capital 627,296 900,177
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $28,325,218 $28,855,351
See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
Three Months Ended June 30, 2002 and 2001
(Unaudited)
04/01/02- 04/01/01-
06/30/02 06/30/01
Revenue
Rent $962,985 $947,498
Other 22,321 22,819
985,306 970,317
Rental Expense
Interest 157,307 163,095
Depreciation 219,174 222,197
Repairs and Maintenance 290,125 269,766
Utilities 82,292 82,262
Real Estate Taxes 85,563 66,921
Management Fees 106,855 110,526
Advertising 2,520 1,221
Other 162,643 110,683
1,106,479 1,025,671
Loss from Rental Activities (121,173) (55,354)
Other Income (Expenses)
Interest Income 98 120
Management Fees (21,140) (21,140)
Administrative Costs (5,825) (5,892)
Loss Before Deducting Minority
Interests in Subsidiary Operating
Partnerships (148,040) (82,266)
Minority Interests in Losses of
Subsidiary Operating Partnerships 1,224 560
Net Loss ($146,816) ($81,706)
Net Loss Allocated to General Partners ($1,468) ($817)
Net Loss Allocated to Limited Partners (145,348) (80,889)
Net Loss ($146,816) ($81,706)
Net Loss per Limited Partnership Unit ($16.76) ($9.33)
Average Number of Limited Partnership
Units Outstanding 8,673 8,673
See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
Six Months Ended June 30, 2002 and 2001
(Unaudited)
01/01/02- 01/01/01-
06/30/02 06/30/01
Revenue
Rent $1,922,665 $1,883,387
Other 52,971 51,719
1,975,636 1,935,106
Rental Expense
Interest 315,922 332,122
Depreciation 440,746 449,142
Repairs and Maintenance 537,328 488,310
Utilities 174,181 179,766
Real Estate Taxes 179,825 103,503
Management Fees 223,459 226,586
Advertising 5,181 2,235
Other 306,898 295,835
2,183,540 2,077,499
Loss from Rental Activities (207,904) (142,393)
Other Income (Expenses)
Interest Income 189 359
Management Fees (42,281) (42,281)
Administrative Costs (24,985) (26,249)
Loss Before Deducting Minority
Interests in Subsidiary Operating
Partnerships (274,981) (210,564)
Minority Interests in Losses of
Subsidiary Operating Partnerships 2,100 1,438
Net Loss ($272,881) ($209,126)
Net Loss Allocated to General Partners ($2,729) ($2,091)
Net Loss Allocated to Limited Partners (270,152) (207,035)
Net Loss ($272,881) ($209,126)
Net Loss per Limited Partnership Unit ($31.15) ($23.87)
Average Number of Limited Partnership
Units Outstanding 8,673 8,673
See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2002 and 2001
(Unaudited)
01/01/02- 01/01/01-
06/30/02 06/30/01
Cash Flows from Operating Activities
Net Loss ($272,881) ($209,126)
Adjustments to Reconcile Net Loss
To Net Cash Provided by Operating
Activities:
Depreciation 440,746 449,142
Minority Interest in Losses of
Subsidiary Operating Partnerships (2,100) (1,438)
Other (16,335) (89,549)
Net Cash Provided by Operating Activities 149,430 149,029
Cash Flows from Investing Activities
Purchases of Buildings and Equipment (21,743) (17,964)
Net Cash Used by Investing Activities (21,743) (17,964)
Cash Flows from Financing Activities
Principal Payments on Borrowings (225,819) (202,785)
Return of Equity to Minority Investors (120) (50,162)
Net Cash Used by Financing Activities (225,939) (252,947)
Net Decrease in Cash (98,252) (121,882)
Cash Beginning 327,416 360,620
Cash Ending $229,164 $238,738
See accompanying notes.
CASH AVAILABLE FOR DISTRIBUTION AND RESERVES
Quarter Ended June 30, 2002 (Unaudited)
Cash Receipts from Operating Partnerships $30,704
Cash Receipts (Disbursements) from Operations
Interest 97
Expenses (38,137)
Reserves Utilized for Operations ($7,336)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Note A - Basis of Presentation
The unaudited consolidated financial statements included
herein have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission. In
the opinion of the Partnership, all adjustments which are
considered necessary for a fair statement of the results for
the interim periods have been made; all such adjustments are
of a normal recurring nature.
These financial statements, which do not include all
disclosures included in the annual financial statements,
should be read in conjunction with the consolidated
financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
The results of operations for the six months ended
June 30, 2002 are not necessarily indicative of the
results to be achieved for the year.
Note B - Net Loss Per Limited Partnership Unit
Net loss per limited partnership Unit is based upon the net
loss allocated to the limited partners and is computed using
the number of Units outstanding of 8,673.
Note C - Liabilities Applicable to Rental Properties
Liabilities applicable to rental properties at June 30,
2002 consist of $24,812,461 of permanent mortgage loans to
Subsidiary Operating Partnerships.
Note D - Related Party Transactions
The accompanying consolidated financial statements reflect
transactions between Qualified Housing Partners Limited
Partnership ("QHP") and its general partners or affiliates
and between the various Subsidiary Operating Partnerships
and their general partners or affiliates.
Frederick Investment Corporation, the Managing General
Partner of QHP, is a general or special limited partner in
each of the Operating Partnerships. Each Operating
Partnership also has one or more other general partners (the
"Local General Partners"). Following is a summary of
related party transactions for the three months ended
June 30, 2002.
QHP General Local General
Items Paid or Payable Partners Partners
Management Fees $21,000 $97,000
Reimbursable Operating Expenses $8,500 $0
Following is a summary of related party transactions for the
six months ended June 30, 2002.
QHP General Local General
Items Paid or Payable Partners Partners
Management Fees $42,000 $204,000
Reimbursable Operating Expenses $12,800 $0
MANAGEMENT'S DISCUSSION
Liquidity and Capital Resources
Net of the Subsidiary Operating Partnerships, QHP held
approximately $25,000 in cash and liquid investments at
June 30, 2002. These assets will be held as working
capital.
At June 30, 2002, there were 640 holders of limited
partnership Units.
Results of Operations
Occupancy averaged 92%, with 857 out of a total of 934
apartment units owned by the Subsidiary Operating
Partnerships occupied as of June 30, 2002. This is
down 2.4% over the same period in 2001.
The Partnership's loss from rental activities, including
depreciation, during the second quarter of 2002 is $121,173 as
compared with a loss of $55,354 for the same period in 2001.
Second quarter revenue increased due to rent increases received
in the first quarter. Maintenance and repairs are up slightly
as expected with aging properties. Property tax accruals
exceed the accruals made from the previous year but are not
expected to vary greatly at year-end. As compared to the same
period last year, other expenses are up in the second quarter
after being down in the first quarter due to timing differences.
Dimmitt Senior Citizen Housing in Texas continues to have
vacancy problems as a result of a diminishing market. After over
a year of discussions with Rural Development, they have finally
verbally agreed to a rent increase to help offset some of the
vacancy loss the property has suffered. The managing General
Partner is working with the local General Partner and Rural
Development to determine how to handle liabilities such as
property insurance and real estate taxes for which there
will be insufficient funds available.
Tax Credits
One of the Partnership's primary investment objectives, the
generation of tax benefits through Low Income Housing Tax
Credits, has been substantially fulfilled. The majority of
the apartment units stopped producing tax credits in 1999.
The ten-year tax credit period for the final two properties
expired in the first quarter of 2000. A small number of
apartment units are generating tax credits over a
fifteen-year period rather than the ten years. This will
produce an insignificant amount of tax credits over the
next four or five years.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 The Partnership Agreement is Exhibit A
to the Prospectus that is part of the
Registration Statement on Form S-11,
Number 33-19316 and effective May 20,
1988, the final form of which was filed
on May 20, 1988 pursuant to Rule 424(b),
and is incorporated herein b reference.
(b) Reports
No reports on Form 8-K were filed for the
quarter ended June 30, 2002.
SIGNATURES
Under the requirements of the Securities Exchange Act of 1934,
the Bank has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Frederick Investment Corporation
A General Partner
Date: August 14, 2002 By: /s/ George F. Marshall
George F. Marshall, President
(Chief Executive Officer)
Date: August 14, 2002 By: /s/ Jenny C. Petri
Jenny C. Petri, Vice President
(Chief Financial Officer)
Date: August 14, 2002 By: /s/ George F. Marshall
George F. Marshall
A General Partner
CERTIFICATION
The undersigned hereby certifies that the Form 10-Q filed by
Qualified Housing Partners Limited Partnership (the "Issuer")
for the quarter ended June 30, 2002, fully complies with the
requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and the information contained in that
report fairly presents, in all material respects, the financial
condition and results of operations of the Issuer.
Frederick Investment Corporation
A General Partner
Date: August 14, 2002 By: /s/ George F. Marshall
George F. Marshall, President
(Chief Executive Officer)
Date: August 14, 2002 By: /s/ Jenny C. Petri
Jenny C. Petri, Vice President
(Chief Financial Officer)
Date: August 14, 2002 By: /s/ George F. Marshall
George F. Marshall
A General Partner