Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
Commission File Number 0-20638
PATRIOT TAX CREDIT PROPERTIES L.P.,
(Exact name of registrant as specified in its charter)
Delaware 13-3519080
- --------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- -------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
N/A
-------------------------------
Former name, former address and
former fiscal year, if changed since last report
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
Item 1. Financial Statements
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
------------ ------------
June 30, March 31,
2002 2002
------------ ------------
(Unaudited)
ASSETS
Investment in property:
Land $ 4,005,633 $ 4,005,633
Buildings and improvements 75,718,200 75,707,158
Accumulated depreciation (24,629,447) (24,091,263)
------------ ------------
Net investment in property 55,094,386 55,621,528
------------ ------------
Cash and cash equivalents 2,911,905 1,005,628
Cash and cash equivalents
held in escrow 1,290,644 1,681,511
Deferred financing costs, net
of accumulation of $3,504,232
and $3,433,205 1,858,913 1,879,582
Other assets 315,371 303,834
------------ ------------
Total assets $ 61,471,219 $ 60,492,083
============ ============
2
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(continued)
------------ ------------
June 30, March 31,
2002 2002
------------ ------------
(Unaudited)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable $ 45,871,754 $ 46,015,770
Accrued interest payable 2,065,340 2,040,908
Other accrued expenses
and liabilities 1,649,742 1,775,134
Due to Local General Partners and
affiliates of Local Partnerships 4,893,838 4,651,838
Development fees payable 1,151,510 1,151,510
Real estate taxes payable 186,439 81,878
Due to General Partner and
its affiliates 8,451,612 6,565,471
------------ ------------
Total liabilities 64,270,235 62,282,509
------------ ------------
Minority interest in local
partnerships (865,749) (606,601)
------------ ------------
PARTNERS' CAPITAL (DEFICIT)
Limited partners (38,125 BUC$
issued and outstanding) (2,672,322) (1,926,627)
General partner (1 BUC$
issued and outstanding) 739,055 742,802
------------ ------------
Total partners' capital (deficit) (1,933,267) (1,183,825)
------------ ------------
Total liabilities and partners'
capital (deficit) $ 61,471,219 $ 60,492,083
============ ============
See accompanying notes to consolidated financial statements.
3
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
------------------------------
Three Months Ended
June 30,
------------------------------
2002 2001
------------------------------
Revenues
Rental income $ 2,339,384 $ 2,297,142
Other income 200,358 172,155
Interest income 5,392 4,484
----------- -----------
2,545,134 2,473,781
Expenses
Interest 1,170,383 1,175,751
Depreciation and amortization 609,211 612,070
Operating and other 177,170 186,122
Taxes and insurance 300,800 294,959
Repairs and maintenance 674,986 685,041
General and administrative 477,787 444,415
Partnership management fees 59,014 59,014
Property management fees 84,066 88,700
----------- -----------
Total expenses 3,553,417 3,546,072
----------- -----------
Loss before minority interest (1,008,283) (1,072,291)
Minority interest in loss of
local partnerships 258,841 278,613
----------- -----------
Net loss $ (749,442) $ (793,678)
=========== ===========
Net loss - limited partners $ (745,695) $ (789,710)
=========== ===========
Number of limited partnership
units outstanding 38,125 38,125
=========== ===========
Net loss per limited
partnership unit $ (19.56) $ (20.71)
=========== ===========
See accompanying notes to consolidated financial statements.
4
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Limited General
Total Partners Partner BUC$
----------- ------------ ----------- -------
Partners' capital
April 1, 2002 $(1,183,825) $ (1,926,627) $ 742,802 38,125
Net loss-Three
Months ended
June 30, 2002 (749,442) (745,695) (3,747) 0
----------- ------------ ----------- -------
Partners' capital
(deficit) -
June 30, 2002 $(1,933,267) $ (2,672,322) $ 739,055 38,125
=========== ============ =========== =======
See accompanying notes to consolidated financial statements.
5
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
------------------------------
Three Months Ended
June 30,
------------------------------
2002 2001
------------------------------
Cash flows from operating activities:
Net loss $ (749,442) $ (793,678)
----------- -----------
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 609,211 612,070
Minority interest in loss of
local partnerships (258,841) (278,613)
Decrease in cash held
in escrow 390,867 288,417
Increase (decrease) in real estate
taxes payable 104,561 (4,023)
Increase in accrued interest payable 24,432 21,822
Increase in other assets (11,537) (41,535)
(Decrease) increase in other liabilities (125,392) 190,710
Increase in partnership management
fees 59,014 59,014
Increase in public funds payable 16,014 13,865
(Decrease) increase in asset manage-
ment fee (11,000) 1,375
----------- -----------
Total adjustments 797,329 863,102
----------- -----------
Net cash provided by operating
activities 47,887 69,424
----------- -----------
Cash flows from investing activities:
Investment in property (11,042) (21,029)
----------- -----------
6
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
------------------------------
Three Months Ended
June 30,
------------------------------
2002 2001
------------------------------
Cash flows from financing activities:
Increase in deferred costs (50,358) 0
Payments of mortgage notes (144,016) (165,687)
Distribution to minority interest (307) 0
Advances from General Partner 1,822,113 215,068
Advances from local limited partner 0 350,000
Increase in due to Local General
Partners and affiliates of
Local Partnerships, General
Partners and its affiliates 284,435 165,859
Decrease in due to Local General
Partners and affiliates of Local
Partnerships, General Partner and
its affiliates (42,435) (21,882)
----------- -----------
Net cash provided by financing
activities 1,869,432 543,358
----------- -----------
Net increase in cash and
cash equivalents 1,906,277 591,753
Cash and cash equivalents at
beginning of period 1,005,628 667,371
----------- -----------
Cash and cash equivalents at
end of period $ 2,911,905 $ 1,259,124
=========== ===========
Supplemental disclosure of cash flow information:
Non-cash Financing activity:
Interest paid $ 1,145,951 $ 1,153,929
=========== ===========
See accompanying notes to consolidated financial statements.
7
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
Note 1 - General
These consolidated financial statements have not been audited. In the opinion of
management, the consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the financial position of Patriot Tax Credit Properties L.P. (the "Partnership")
as of June 30, 2002 and the results of operations and its cash flows for the
three months ended June 30, 2002 and 2001. However, the operating results and
cash flows for the interim periods may not be indicative of the results expected
for a full year.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Partnership's Annual Report on Form 10-K filed
with the Securities and Exchange Commission for the year ended March 31, 2002.
The Partnership invests in partnerships (the "Local Partnerships") which own the
properties. The financial statements of the Local Partnerships consolidated
herein are for the three month period ended March 31, 2002 and occupancy rates
are as of March 31, 2002.
Note 2 - Related Parties
The General Partner and its affiliates have performed and will continue to
perform services for the Partnership which include, but are not limited to:
accounting and financial management; registrar, transfer and assignment
functions; asset management; investor communications; and printing and other
administrative services. The General Partner and its affiliates receive
Partnership management fees and reimbursements for general and administrative
8
PATRIOT TAX CREDIT PROPERTIES L.P.
(a limited partnership)
AND SUBSIDIARIES
NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(Unaudited)
costs incurred in connection with these services, the amount of which is limited
by the provisions of the Partnership Agreement. The costs and expenses incurred
to the General Partner were:
Three Months Ended
June 30,
------------------------------
2002 2001
------------------------------
Partnership Management fees (a) $ 59,014 $ 59,014
Property Management fees 26,338 24,949
Local administrative fees 5,062 5,062
General and administrative 21,514 15,239
Interest (b) 113,666 82,667
----------- -----------
$ 225,594 $ 186,931
=========== ===========
(a) A Partnership management fee for managing the affairs of the Partnership
equal to 0.375% of invested assets is payable from operations and reserves to
the General Partner and its affiliates. Partnership management fees owed to the
General Partner amounting to approximately $486,000 and $427,000 were accrued
and unpaid as of June 30, 2002 and March 31, 2002, respectively.
As of June 30, 2002, the properties owned by four of the Local Partnerships are
managed by a local general partner ("Local General Partner") or its affiliates
and one Local Partnership is managed by an affiliate of the General Partner and
Local General Partner.
(b) During the three months ended June 30, 2002, the General Partner and its
affiliates advanced $1,886,141 to the Partnership and as of June 30, 2002 and
March 31, 2002, total advances outstanding are $8,451,612 and $6,565,471,
respectively. The advances are unsecured, bear interest at prime +2% and are due
on demand.
Without the General Partner's continued allowance of accrual without payment of
certain fees, expense reimbursements and advances the Partnership will not be in
a position to meet its financial obligations. The General Partner and its
affiliates have agreed to support the Partnership's operating expenses for the
foreseeable future.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership invested in eight Local Partnerships that are owners of
affordable multi-family residential complexes. The Local Partnerships are
operated in accordance with the rules and regulations of Section 42 of the
Internal Revenue Code in order to protect the housing tax credits authorized
hereby (the "Housing Tax Credits"). The Partnership's primary source of funds is
rental revenues, which is fully utilized at the property level. The Partnership
is dependent upon the support of the General Partner and certain of its
affiliates in order to meet its obligations at the Partnership level. The
General Partner and these affiliates have agreed to continue such support for
the foreseeable future. Without the General Partner's continued allowance of
accrual without payment of certain fees, expense reimbursements and advances the
Partnership will not be in a position to meet its obligations.
For the three months ended June 30, 2002, cash and cash equivalents of the
Partnership and its eight Local Partnerships increased approximately $1,906,000.
The increase is primarily attributable to advances from General Partner
($1,822,000) and cash provided by operating activities ($48,000) which exceeded
payments of mortgage notes ($144,000), a net increase in due to Local General
Partners and affiliates of Local Partnerships, General Partner and its
affiliates ($242,000), an increase in deferred costs ($50,000) and investment in
property ($11,000). Included in adjustments to reconcile the net loss to cash
provided by operating activities is depreciation and amortization of
approximately $609,000.
Summer Creek Villas Local Partnership ("Summer Creek Villas")
- -------------------------------------------------------------
Summer Creek Villas has experienced lower than expected economic occupancy
levels over the course of the last several years, which has resulted in
recurring losses from operations and has adversely affected the liquidity of
Summer Creek Villas. Despite an increase in rent levels during 2001, Summer
Creek Villas' operations are impeded by its inability to raise rents
sufficiently to pay for the operating and debt costs. Summer Creek Villas has
been unable to obtain maximum rents as potential residents are restricted based
on county median income levels, which limit the maximum income that a
prospective resident can earn. Summer Creek Villas has been obligated, since
1996, to repay significant amounts of principal on its mortgage.
10
Effective January 1, 1999, Summer Creek Villas entered into a funding agreement
with its Class C local limited partner which provides for a series of loans to
be made to Summer Creek Villas in each of the years 1999, 2000 and 2001, in
amounts not to exceed $2,000,000 in the aggregate. Although no formal agreements
have been reached with its other partners, additional loans from the Partnership
(which is the Class A limited partner) are expected to be obtained in accordance
with the loans to be provided under the funding agreement. Loans made through
June 30, 2002 to fund operating deficits total $8,735,749 and are comprised of
$6,735,749 from the Partnership (which was eliminated in consolidation) and
$2,000,000 from the Class C local limited partner. Management of Summer Creek
Villas plans to request additional funding from its partners (including the
Partnership) in the coming year.
Summer Creek Villas' ability to continue its operations is dependent upon
management achieving the plans described in Form 10-K and above. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Any adjustments would be
limited solely to Summer Creek Villas' financial statements.
Results of Operations
- ---------------------
Results of operations for the Local Partnerships consolidated herein are for the
three month period ended June 30, 2002. Information disclosed below with respect
to each Local Partnership is consistent with this method of presentation.
Rental income increased approximately $42,000 for the three months ended June
30, 2002 as compared to the corresponding period in 2001, primarily due to
rental rate increases.
Other income increased approximately $28,000 for the three months ended June 30,
2002 as compared to the corresponding period in 2001, primarily due to an
increase in redecorating fees and termination fees received at Summer Creek
Villas.
11
Property Information
- --------------------
Occupancies at the properties were as follows:
March 31,
------------------------------
2002 2001
------------------------------
Property
Hubbard's Ridge 99% 100%
Cutler Canal II 98 97
Diamond Street 94 92
Papillion Heights 85 83
Hill Top Homes 91 96
Summer Creek Villas 90 90
Brookland Park Plaza 88 99
Compton Townhouses 97 100
(Occupancies are calculated by dividing occupied units by total available
units.)
The Partnership holds a 66.5% interest in Summer Creek Villas, a 98% interest in
Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a 98.99% interest in
Cutler Canal II, Diamond Street, Papillion Heights and Brookland Park Plaza.
None of the above properties experienced significant changes in occupancy rates.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - 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:
Description:
3.1 Amendment to Certificate of Limited Partnership dated October 1,
1997 (3)
4.1 Agreement of Limited Partnership as adopted on May 3, 1989 and
Amendments thereto dated May 25, 1989 and December21, 1989 (1)
4.2 Amendment Number 1 to Prudential-Bache Tax Credit Properties L.P.
Amended and Restated Agreement of Limited Partnership, dated October 1, 1997 (3)
10.1 Form of Purchase and Sale Agreement pertaining to the
Partnership's Acquisition of Local Partnership Interests (2)
10.2 Form of Amended and Restated Agreement of Local Limited
Partnership of Local Partnerships (2)
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(1) Filed as an exhibit to Pre-Effective Amendment No. 1 to Form
S-11 Registration Statement (No. 33-28571) (the "Registration Statement") and
incorporated herein by reference.
(2) Filed as an exhibit to Pre-Effective Amendment No. 2 to Form
S-11 Registration Statement and incorporated herein by reference.
13
(3) Filed as an exhibit to Registrant's Current Report on Form
8-K dated October 1, 1997 and incorporated herein by reference.
(b)Reports on Form 8-K - None.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PATRIOT TAX CREDIT PROPERTIES L.P.
(Registrant)
By: RCC PARTNERS 96, L.L.C.,
General Partner
Date: August 8, 2002
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Member, President and
Chief Executive and
Financial Officer
Date: August 8, 2002
By: /s/ Glenn F. Hopps
------------------
Glenn F. Hopps
Treasurer and
Chief Accounting Officer
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 Quarterly Report of Patriot Tax Credit Properties L.P.
(the "Partnership") on Form 10-Q for the period ending June 30, 2002 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 RCC
Partners 96, L.L.C., the 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.
/s/ Alan P. Hirmes
Alan P. Hirmes
Chief Executive Officer and Chief Financial Officer
August 8, 2002