SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2003
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 a 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 such shorter period the registrant has
been required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the 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 by Rule 12b-2 of the Act.). Yes No X
As of December 31, 2002, there were 8,673 units of limited partnership
interests in registrant outstanding, $1,000 per unit, and the aggregate
value of such units was $8,673,000. Of such units, 8,653 having an
aggregate value of $8,653,000, were held by limited partners deemed
by the registrant to be non-affiliates.
PART I
FINANCIAL INFORMATION
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
Item 1: Financial Statements
- Unaudited Consolidated Balance Sheets
- Unaudited Consolidated Statements of Income and
Expenses
- Unaudited Consolidated Statements of Cash Flows
- Unaudited Cash Available for Distribution and
Reserves
- Unaudited Notes to Financial Statements
Item 2: Management's Discussion
- Liquidity and Capital Resources
- Results of Operations
- Tax Credits
Item 4: Controls and Procedures
Within the 90 days prior to the date of this report, the
Partnership carried out an evaluation under the supervision
and with the participation of the Partnership's management,
including the Partnership's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures
pursuant to Securities Exchange Act Rule 13a-14. Based upon that
evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Partnership's disclosure controls
and procedures are effective in timely alerting them to material
information relating to the Partnership required to be included
in the Partnership's periodic SEC Filings. There were no
significant changes in the Partnership's internal controls or
in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
QUALIFIED HOUSING PARTNERS LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
March 31, 2003 and December 31, 2002
03/31/03 12/31/02
(Unaudited)
ASSETS
Rental Properties
Land $1,326,402 $1,326,402
Buildings 34,682,855 34,654,470
Furniture & Fixtures 2,152,319 2,147,070
38,161,576 38,127,942
Accumulated Depreciation (12,811,360) (12,590,134)
25,350,216 25,537,808
Cash 212,667 211,526
Other Assets 2,134,807 2,206,104
TOTAL ASSETS $27,697,690 $27,955,438
LIABILITIES AND PARTNERS' CAPITAL
Liabilities Applicable to Rental
Properties $24,456,892 $24,578,133
Other Liabilities 1,230,480 1,260,483
Total Liabilities 25,687,372 25,838,616
Minority Interests in Subsidiary
Operating Partnerships 1,700,771 1,701,471
Partners' Capital 309,547 415,351
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $27,697,690 $27,955,438
See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
Three Months Ended March 31, 2003 and 2002
(Unaudited)
01/01/03- 01/01/02-
03/31/03 03/31/02
Revenue
Rent $1,008,307 $959,680
Other 20,207 30,650
1,028,514 990,330
Rental Expense
Interest 149,428 158,615
Depreciation 221,225 221,572
Repairs and Maintenance 257,863 247,203
Utilities 92,401 91,889
Real Estate Taxes 94,467 94,262
Management Fees 115,172 116,604
Advertising 1,958 2,661
Other 160,057 144,255
1,092,571 1,077,061
Loss from Rental Activities (64,057) (89,731)
Other Income (Expenses)
Interest Income 14 91
Management Fees (21,141) (21,141)
Administrative Costs (21,267) (19,160)
Loss Before Deducting Minority
Interests in Subsidiary Operating
Partnerships (106,451) (126,941)
Minority Interests in Losses of
Subsidiary Operating Partnerships 647 876
Net Loss ($105,804) ($126,065)
Net Loss Allocated to General Partners ($1,058) ($1,261)
Net Loss Allocated to Limited Partners (104,746) (124,804)
Net Loss ($105,804) ($126,065)
Net Loss per Limited Partnership Unit ($12.08) ($14.39)
Average Number of Limited Partnership
Units Outstanding 8,673 8,673
See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2003 and 2002
(Unaudited)
01/01/03- 01/01/02-
03/31/03 03/31/02
Cash Flows from Operating Activities
Net Loss ($105,804) ($126,065)
Adjustments to Reconcile Net Loss
To Net Cash Provided by Operating
Activities:
Depreciation 221,225 221,572
Minority Interest in Losses of
Subsidiary Operating Partnerships (647) (876)
Other 41,295 1,986
Net Cash Provided by Operating Activities 156,069 96,617
Cash Flows from Investing Activities
Purchases of Buildings and Equipment (33,634) (1,077)
Net Cash Used by Investing Activities (33,634) (1,077)
Cash Flows from Financing Activities
Principal Payments on Borrowings (121,241) (111,217)
Return of Equity to Minority Investors (53) (60)
Net Cash Used by Financing Activities (121,294) (111,277)
Net Increase (Decrease) in Cash 1,141 (15,737)
Cash Beginning 211,526 327,416
Cash Ending $212,667 $311,679
See accompanying notes.
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 consolidated financial statements, which do not
include all disclosures included in the annual
consolidated financial statements, should be read in
conjunction with the consolidated financial statements
and notes thereto included in the Partnership's latest
annual report on Form 10-K.
The results of operations for the three months ended
March 31, 2003 are not necessarily indicative of the
results to be achieved for the year.
Note B - Net Loss Per Limited Partnership Unit
Net loss per limited partnership Unit is based upon the net
loss allocated to the limited partners and is computed using
the number of Units outstanding of 8,673.
Note C - Liabilities Applicable to Rental Properties
Liabilities applicable to rental properties at March 31,
2003 consist of $24,456,892 of permanent mortgage loans to
Subsidiary Operating Partnerships.
Note D - Related Party Transactions
The accompanying consolidated financial statements reflect
transactions between Qualified Housing Partners Limited
Partnership ("QHP") and its general partners or affiliates
and between the various Subsidiary Operating Partnerships
and their general partners or affiliates.
Frederick Investment Corporation, the Managing General
Partner of QHP, is a general or special limited partner in
each of the Operating Partnerships. Each Operating
Partnership also has one or more other general partners (the
"Local General Partners"). Following is a summary of
related party transactions for the three months ended
March 31, 2003.
QHP General Local General
Items Paid or Payable Partners Partners
Management Fees $21,000 $106,000
Reimbursable Operating Expenses $9,100 $0
MANAGEMENT'S DISCUSSION
Liquidity and Capital Resources
Net of the Subsidiary Operating Partnerships, QHP held
approximately $24,000 in cash and liquid investments at
March 31, 2003. These assets will be held as working
capital.
At March 31, 2003, there were 645 holders of limited
partnership Units.
Results of Operations
The Partnership's loss from rental activities, including
depreciation, during the first quarter of 2003 is $64,057 as
compared with a loss of $86,731 for the same period in 2002.
Revenue increased as a result of many properties receiving
rent increases in the first quarter. Maintenance expenses
continue to increase as the properties age. Other Expenses
were up due to rising property insurance costs. Other
variances were a result of normal business fluctuations.
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 through 2003.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 The Partnership Agreement is Exhibit A
to the Prospectus that is part of the
Registration Statement on Form S-11,
Number 33-19316 and effective May 20,
1988, the final form of which was filed
on May 20, 1988 pursuant to Rule 424(b),
and is incorporated herein by reference.
(b) Reports
No reports on Form 8-K were filed for the
quarter ended March 31, 2003.
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: May 13, 2003 By: /s/ George F. Marshall
George F. Marshall, President
(Chief Executive Officer)
Date: May 13, 2003 By: /s/ Jenny C. Petri
Jenny C. Petri, Vice President
(Chief Financial Officer)
Date: May 13, 2003 By: /s/ George F. Marshall
George F. Marshall
A General Partner
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C.ss.1350)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C.ss.1350), the undersigned, George F. Marshall,
Chief Executive Officer of Qualified Housing Partners
Limited Partnership, a North Carolina limited partnership,
does hereby certify, to his knowledge, that:
The Quarterly Report on Form 10-Q for the period ended
March 31, 2003 of the Partnership (the "Report")
fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, and
the information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
Date: May 13, 2003 By: /s/ George F. Marshall
George F. Marshall
General Partner
(Chief Executive Officer)
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C.ss.1350)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C.ss.1350), the undersigned, Jenny C. Petri,
Chief Financial Officer of Qualified Housing Partners
Limited Partnership, a North Carolina limited partnership,
does hereby certify, to her knowledge, that:
The Quarterly Report on Form 10-Q for the period ended
March 31, 2003 of the Partnership (the "Report")
fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, and
the information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.
FREDERICK INVESTMENT CORPORATION
Date: May 13, 2003 By: /s/ Jenny C. Petri
Jenny C. Petri, Vice President
(Chief Financial Officer)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Section 302 Certification
I, George F. Marshall, certify that:
I have reviewed this quarterly report on Form 10-Q of Qualified
Housing Partners Limited Partnership, a North Carolina limited
partnership (the "registrant");
Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary 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
quarterly report;
Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, is made known to us by others within
those entities, particularly during the period in
which this quarterly report is being prepared;
evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
The registrant's other certifying officer and I have indicated
in this quarterly 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.
Date: May 13, 2003 By: /s/ George F. Marshall
George F. Marshall, General Partner
Chief Executive Officer
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Section 302 Certification
I, Jenny C. Petri, certify that:
I have reviewed this quarterly report on Form 10-Q of Qualified
Housing Partners Limited Partnership, a North Carolina limited
partnership (the "registrant");
Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary 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
quarterly report;
Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, is made known to us by others within
those entities, particularly during the period in
which this quarterly report is being prepared;
evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors
(or persons performing the equivalent functions):
all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
The registrant's other certifying officer and I have indicated
in this quarterly 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.
FREDERICK INVESTMENT CORPORATION
Date: May 13, 2003 By: /s/ Jenny C. Petri
Jenny C. Petri, Vice President
(Chief Financial Officer)