SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-17695
HEALTHCARE PROPERTIES, L.P.
---------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 62-1317327
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14160 Dallas Parkway, Suite 300, Dallas, Texas 75254
----------------------------------------------------
(Address of principal executive office)
(972) 770-5600
--------------
(Registrant's telephone number, including area code)
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 at least the past 90 days. YES x NO
---- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
CONSOLIDATED BALANCE SHEETS
September 30, 2002 December 31, 2001
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 803,942 $ 1,694,546
Accounts receivable, less allowance for doubtful
accounts of $648,698 in 2002 and $652,212 in 2001 - 89,185
Prepaid expenses 1,106 -
Assets held for sale, at the lower of carrying value or
fair value less estimated costs to sell 1,363,652 1,863,652
Property and improvements, net 646 3,272,204
---------------- ----------------
Total assets $ 2,169,346 $ 6,919,587
================ ================
LIABILITIES AND PARTNERSHIP EQUITY
Accounts payable and accrued expenses $ 95,214 $ 175,001
Operating facility accounts payable - 3,345
Security deposits - 101,247
Mortgage loans payable - 1,123,389
---------------- ----------------
Total liabilities 95,214 1,402,982
---------------- ----------------
Partnership equity (deficit):
Limited partners (4,148,325 units outstanding in 2002 and 2001)
2,103,609 5,550,910
General partner (29,477) (34,305)
---------------- ----------------
Total partnership equity 2,074,132 5,516,605
---------------- ----------------
Total liabilities and partnership equity $ 2,169,346 $ 6,919,587
================ ================
See notes to financial statements
1
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
September 30, 2002 September 30, 2001
Revenues:
Rental $ - $ 916,291
Net patient services 15,255 146,696
---------------- ----------------
15,255 1,062,987
---------------- ----------------
Expenses:
Facility operating expenses - 615,224
Depreciation 83 101,741
Write-down of asset held for sale to
estimated net realizable value 500,000 -
Administrative and other 132,103 101,647
Bad debts - 153,083
---------------- ----------------
632,186 971,695
---------------- ----------------
(Loss) income from operations (616,931) 91,292
---------------- ----------------
Other income (expenses):
Gain on disposition of property - 2,444,448
Interest income 6,538 48,089
Interest expense - (88,698)
Amortization - (15,977)
---------------- ----------------
6,538 2,387,862
---------------- ----------------
(Loss) income before extraordinary item (610,393) 2,479,154
Extraordinary loss on disposition of
operating property - (434,199)
---------------- ----------------
Net (loss) income $ (610,393) $ 2,044,955
================ ================
Allocation of net (loss) income
Limited partner $ (598,185) $ 1,917,572
General partner (12,208) 127,383
---------------- ----------------
$ (610,393) $ 2,044,955
================ ================
Basic per limited partnership unit calculations:
(Loss) income before extraordinary item $ (.14) $ .56
Extraordinary loss - (.10)
---------------- ----------------
Net (Loss) income $ (.14) $ .46
---------------- ----------------
Distributions $ .43 $ 2.04
================ ================
WEIGHTED AVERAGE NUMBER OF UNITS 4,148,325 4,148,325
================ ================
See Notes to financial statements
2
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine months ended
September 30, 2002 September 30, 2001
Revenues:
Rental $ 37,071 $ 3,053,044
Net patient services 15,255 2,995,552
--------------- ---------------
52,326 6,048,596
--------------- ---------------
Expenses:
Facility operating expenses - 3,255,203
Depreciation 13,610 369,735
Write-down of asset held for sale to
estimated net realizable value 500,000 -
Administrative and other 434,994 616,016
(Recoveries) bad debts (3,514) 670,542
--------------- ---------------
945,090 4,911,496
--------------- ---------------
(Loss) income from operations (892,764) 1,137,100
--------------- ---------------
Other income (expenses):
Gain on disposition of property 2,283,193 2,444,448
Interest income 28,827 245,012
Other income 63,498 -
Interest expense (11,234) (325,543)
Amortization - (50,070)
--------------- ---------------
2,364,284 2,313,847
--------------- ---------------
Income before extraordinary item 1,471,520 3,450,947
Extraordinary loss on disposition
of operating property - (434,199)
--------------- ----------------
Net income $ 1,471,520 $ 3,016,748
=============== ===============
Allocation of net income
Limited partner $ 1,452,699 $ 2,869,929
General partner 18,821 146,819
--------------- ---------------
$ 1,471,520 $ 3,016,748
=============== ===============
Basic per limited partnership unit calculations:
Income before extraordinary item $ .35 $ .79
Extraordinary loss - (.10)
--------------- ---------------
Net income $ .35 $ .69
=============== ===============
Distributions $ 1.18 $ 3.22
=============== ===============
WEIGHTED AVERAGE NUMBER OF UNITS 4,148,325 4,148,325
=============== ===============
See notes to financial statements
3
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERSHIP EQUITY (DEFICIT)
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
EQUITY (DEFICIT) at
January 1, 2002 $ 5,550,910 $ (34,305) $ 5,516,605
Distributions (4,900,000) (13,993) (4,913,993)
Net Income - nine months ended
September 30, 2002 1,452,699 18,821 1,471,520
--------------- ------------- ---------------
EQUITY (DEFICIT) at
September 30, 2002 $ 2,103,609 $ (29,477) $ 2,074,132
=============== ============= ===============
See notes to financial statements
4
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30, 2002 September 30, 2001
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,471,520 $ 3,016,748
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Write-down of asset for sale to estimated
net realizable value 500,000 -
(Recoveries) bad debts (3,514) 670,542
Depreciation and amortization 13,610 419,805
Gain on disposition of property, net (2,283,193) (2,444,448)
Extraordinary loss on disposition of
operating property - 434,199
Changes in assets and liabilities:
Accounts receivable 92,699 (411,666)
Prepaid expenses (1,106) 15,200
Deferred charges - (165,000)
Accounts payable &
accrued expenses (83,133) (402,556)
Security deposits (101,247) 100,357
-------------- --------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (394,364) 1,233,181
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 4,417,753 3,830,941
Purchases of property and improvement - (20,500)
-------------- --------------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 4,417,753 3,810,441
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage loans payable - (70,580)
Distributions (4,913,993) (13,552,041)
-------------- --------------
NET CASH USED IN
FINANCING ACTIVITIES (4,913,993) (13,622,621)
-------------- --------------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (890,604) (8,578,999)
CASH AND CASH EQUIVALENTS
Beginning of Period 1,694,546 13,514,255
-------------- --------------
CASH AND CASH EQUIVALENTS
End of Period $ 803,942 $ 4,935,256
============== ==============
CASH PAID FOR INTEREST $ 22,304 $ 344,773
============== ==============
See notes to financial statements
5
HEALTHCARE PROPERTIES, L.P. AND SUBSIDIARIES
(A Delaware Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002 and 2001
(Unaudited)
A. ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments
considered necessary have been included. Operating results are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002. The unaudited condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and the notes thereto
included in Registrant's annual report on Form 10-K for the year ended December
31, 2001.
Net income (loss) of Registrant and taxable income (loss) are generally
allocated 98 percent to the limited partners and 2 percent to the general
partner. The net income of Registrant from the disposition of a property is
allocated (i) to partners with deficit capital accounts on a pro rata basis,
(ii) to limited partners until they have been paid an amount equal to the amount
of their Adjusted Investment, as defined, (iii) to the limited partners until
they have been allocated income equal to their 12 percent Liquidation
Preference, and (iv) thereafter, 80 percent to the limited partners and 20
percent to the general partner. The net loss of Registrant from the disposition
of a property is allocated (i) to partners with positive capital accounts on a
pro rata basis and (ii) thereafter, 98 percent to the limited partners and 2
percent to the general partner. Distributions of available cash flow are
generally distributed 98 percent to the limited partners and 2 percent to the
general partner, until the limited partners have received an annual preferential
distribution, as defined. Thereafter, available cash flow is distributed 90
percent to the limited partners and 10 percent to the general partner.
B. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
PARTNER
Personnel working at the Cambridge facility and certain home office personnel
who perform services for the Registrant are employees of Capital Senior Living,
Inc. ("CSL"), the managing agent of Registrant. Registrant reimburses CSL for
the salaries, related benefits, and overhead reimbursements of such personnel as
reflected in the accompanying condensed consolidated financial statements.
Reimbursements and fees paid to Capital Realty Group Senior Housing, Inc.
("CRGSH" or the "General Partner") and CSL are as follows:
Nine months ended
September 30, 2002 September 30, 2001
------------------ ------------------
Salary and benefit reimbursements $ - $ 2,450,174
Administrative reimbursements 77,792 148,441
Property management fees - 208,708
General partner fees 371 53,891
--------------- ---------------
$ 78,163 $ 2,861,214
=============== ===============
In connection with the sale of the Hearthstone and Trinity Hills facilities in
the first quarter of 2002, the General Partner was paid fees of $174,000 or 3%
of the sales proceeds as allowed in the Partnership Agreement.
Currently, Capital Senior Living Properties, Inc., formerly an affiliate of
CRGSH, holds approximately 57 percent of the outstanding units of Registrant.
Registrant is included in the consolidated financial statements of Capital
6
Senior Living Properties, Inc. and its parent company, Capital Senior Living
Corporation, a public company that files with the Securities and Exchange
Commission.
On June 10, 1998, the sole owner of the General Partner, Capital Realty Group
Corporation, sold all of its shares of CRGSH common stock to Retirement
Associates, Inc. ("Associates"). Mr. Robert Lankford is the President of
Associates and has brokered and continues to broker real estate as an
independent contractor with Capital Realty Group Corporation and its affiliates.
C. DISPOSITION OF PROPERTIES
The Hearthstone facility was sold on January 1, 2002 for $4,000,000, resulting
in a gain on sale of $1,777,113 and net cash proceeds of $2,641,003 after
payment of settlement costs. The Trinity Hills facility was sold on February 28,
2002 for $1,800,000, resulting in a gain of $506,079 and net cash proceeds of
$1,747,323 after payment of settlement costs.
During the third quarter of 2001, the Registrant sold its Cambridge facility and
its remaining Cedarbrook house for net proceeds of $3,644,457 and a gain on sale
of $2,444,448. During 2001, the lessee of the McCurdy facility defaulted on its
minimum lease payment. The Registrant attempted to work with the current lessee
to stabilize its census, but was unable to do so. The facility was foreclosed by
the lender on September 11, 2001, resulting in an extraordinary loss of
$434,199.
D. VALUATION OF RENTAL PROPERTY
Generally accepted accounting principles require that the Registrant evaluate
whether an event or circumstance has occurred that would indicate that the
estimated undiscounted future cash flows of its properties, taken individually,
will be less than the respective net book value of the properties. If such a
shortfall exists, then a write-down to fair value is recorded. The Registrant
performs such evaluations on an on-going basis. During the three months ended
September 30, 2002, based on the Registrant's evaluation of its remaining
property, The Crenshaw Creek, the Registrant recorded a $500,000 write-down due
to a reduction in estimated net realizable value.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Registrant commenced an offering to the public on August 31, 1987, of depository
units representing beneficial assignments of limited partnership interests
("Units"). On October 14, 1987, Registrant commenced operations, having
previously accepted subscriptions for more than the specified minimum of 120,000
Units. As of August 30, 1989, the offering was closed except for Units for sale
to existing investors under the terms of a distribution reinvestment plan. As of
September 30, 1995, Registrant had sold Units aggregating approximately $43.4
million. Due to the suspension of the distribution reinvestment plan, Registrant
does not anticipate any additional inflow of investment.
All of the net proceeds of the offering were originally invested in 12
properties or used for working capital reserves. Registrant partially financed
the acquisition of eight of its original properties with non-recourse debt. Four
properties were initially unleveraged. As of September 30, 2002, eleven of the
original twelve properties had either been sold or deeded back to the lender,
leaving Registrant one unleveraged property, the Crenshaw Creek facility. As of
September 30, 2002, the Crenshaw Creek facility is classified as an asset held
for sale.
Potential sources of liquidity for Registrant include current holdings of cash
and cash equivalents, collection of outstanding receivables on previously owned
facilities which are fully reserved as of September 30, 2002, collection on
defaulted rent and/or damage settlements related to leases in default, and a
potential sale of Registrant's remaining asset.
As of September 30, 2002, Registrant had cash and cash equivalents aggregating
$803,942. The cash and cash equivalents will be used for working capital,
emergency reserves, and future potential cash distributions.
7
Registrant's general policy is to maintain sufficient cash and cash equivalents
to address continuing maintenance expenditures on its remaining asset. Future
cash distributions will be dependent on the sale of its remaining asset. Cash
and sale distributions of $4,913,993 and $13,552,041 were made for the nine
months ended September 30, 2002 and 2001 respectively. The Units are not
publicly traded and as a result the liquidity of each Limited Partner's
individual investment is limited.
Results of Operations
Discussion of Nine Months and Three Months Ended September 30, 2002
Rental revenues for the nine months ended September 30, 2002 decreased
$3,015,973 from the comparable nine months ended September 30, 2001, primarily
due to the sale of the Hearthstone and Trinity Hills facilities during the nine
months ended September 30, 2002. Net patient services revenue for the nine
months ended September 30, 2002 decreased $2,980,297 from the nine months ended
September 30, 2002 primarily due to the sale of the Cambridge facility in August
2001. Interest income for the nine months ended September 30, 2002 decreased
$216,185 from the nine months ended September 30, 2001 primarily due to
decreasing cash available for investment. Other income of $63,498 was received
during the first quarter ended March 31, 2002 due to payment of an
administrative claim on the Cambridge facility. A gain of $2,283,193 was
recognized during the first quarter ended March 31, 2002 due to the sale of the
Hearthstone and Trinity Hills facilities. A gain of $2,444,448 was recognized
during the third quarter ended September 30, 2001 due to the sale of the
Cambridge facility and the remaining Creekbrook house.
Facility operating expenses for the nine months ended September 30, 2002
decreased by $3,255,203 from the comparable 2001 period primarily due to the
sale of the Cambridge facility. Depreciation for the nine months ended September
30, 2002, decreased $356,125 from the comparable 2001 period due to the sale of
the Hearthstone and Trinity Hills facilities. During the third quarter of 2002,
the Registrant recorded a $500,000 write-down on the Crenshaw property to its
estimated net realizable value. Administrative expenses decreased $181,022 for
the nine months ended September 30, 2002 in comparison to 2001 due to decreased
management fees. Bad debt expense decreased $674,056 for the nine months ended
September 30, 2002 in comparison to the 2001 period due to the foreclosure of
the McCurdy property in 2001. Interest expense for the nine months ended
September 30, 2002 decreased by $314,309 from the comparable 2001 period, due to
the sale of the Hearthstone facility and foreclosure of the McCurdy facility,
and retirement of the related mortgages. Amortization expense for the nine
months ended September 30, 2002 decreased $50,070 from the comparable 2001
period, due to fully amortized deferred charges in 2001.
For the three months ended September 30, 2002 as compared with the three months
ended September 30, 2001, Registrant's revenue was impacted by the same shifts
of revenue as discussed above. Similarly, a comparison of third quarter 2002
operating expenses versus third quarter 2001 reflects the same variances as
discussed above, with the exception that administrative and other expenses for
the three months ended September 30, 2002 increased $30,456 from the comparable
2001 period due to increased professional fees.
Cash and cash equivalents as of September 30, 2002 decreased by $890,604 from
the balance at December 31, 2001. Cash flows increased by $7,688,395 for the
nine months ended September 30, 2002 in comparison to the nine months ending
September 30, 2001 primarily due to cash proceeds from the sale of the
Hearthstone and Trinity Hills facilities and decreased cash distributions. Net
accounts receivable of $0 at September 30, 2002 reflected a decrease of $89,185
from the balance at December 31, 2001 due to collections of account receivable
balances. Accounts payable, accrued expenses, and operating facility accounts
payable balances decreased $83,132 at September 30, 2002, from the balance at
December 31, 2001 primarily due to paid real estate taxes and interest on the
Hearthstone facility.
8
Following is a brief discussion of the status of Registrant's properties:
Cedarbrook, Cane Creek, Crenshaw Creek and Sandybrook Facilities
Rebound, Inc. a subsidiary of HealthSouth Corporation, formerly leased the
Cedarbrook, Crenshaw Creek, Cane Creek and Sandybrook facilities pursuant to a
master lease with Registrant through the end of the lease term, November 30,
2001. The Cedarbrook, Cane Creek and Sandybrook facilities have been previously
sold.
Due to low occupancy, HealthSouth closed the Crenshaw Creek facility in May
2000. HealthSouth continued to make full lease payments under the terms of the
master lease on a timely basis through the end of the lease term, November 30,
2001. HealthSouth transferred the Crenshaw Creek facility to the Registrant by
the end of its lease term and the facility is held for sale as of September 30,
2002.
Cambridge Facility
The lessee of the Cambridge facility, Nursing Centers of America-Cambridge
(NCAC), filed a voluntary petition under Chapter 11 of the Federal Bankruptcy
Code in February of 1992. Registrant commenced litigation against NCAC seeking
full payment of future rentals under the lease of NCAC.
On August 1, 1996, the United States Bankruptcy Court approved the transfer of
the operations of NCA Cambridge Nursing Home to Cambridge LLC, a subsidiary of
Registrant, thereby releasing the operations of the Cambridge facility from the
jurisdiction of the United States Bankruptcy Court. Registrant's subsidiary
operated this property through August 2001. On August 15, 2001, the Cambridge
facility was sold for $3,600,000 resulting in a gain on sale of $2,443,030 and
net cash proceeds of $3,457,205 after payment of settlement costs. Additionally,
Registrant has engaged an independent third party consultant to explore the
possibility of selling the license of the Cambridge facility to prospective
nursing home purchasers. There can be no assurances such sale will occur.
Registrant had filed an administrative claim with the trustee of the United
States Bankruptcy Court for unpaid lease payments. At December 31, 1999,
Registrant recorded a receivable for $700,000 related to this administrative
claim, which was approved by the United States Bankruptcy Court. The $700,000
account receivable was collected on March 1, 2000. In January 2002, an
additional $63,498 was received related to the administrative claim. It is
unlikely that material future disbursements will be made to Registrant from
NCAC's bankruptcy.
Hearthstone, Trinity Hills and McCurdy Facilities
The Hearthstone lease expired on November 7, 2000. The lessee and Registrant
attempted to negotiate an extension of the lease, but were unsuccessful in doing
so. On January 18, 2000, the parent company of the lessee filed for Chapter 11
bankruptcy in the United States Bankruptcy Court for the District of Delaware.
The Hearthstone lessee did not pay its April 2001 rent to Registrant. Registrant
negotiated with an unaffiliated operator to take over the lease, effective May
1, 2001 for a five-year term through April 30, 2006. The Hearthstone facility
was subsequently sold and the lease terminated on January 1, 2002 for
$4,000,000, resulting in a gain on sale of $1,777,113 and net cash proceeds of
$2,641,003 after payment of settlement costs. Registrant received notice from
the original lessee (who had filed for Chapter 11 bankruptcy) of a potential
claim against Registrant regarding ownership of the furniture, fixtures and
equipment at the Hearthstone facility. The Registrant has subsequently been
released from this claim. The Trinity Hills lease expired on June 30, 2000,
however, the lessee continued to lease the facility on a month-to-month basis.
On February 2, 2000, the parent company of the lessee filed for Chapter 11
bankruptcy in the United States Bankruptcy Court for the District of Delaware.
The lessee was current on its rent and lease participation payments through
December 31, 2001. Registrant negotiated with an unaffiliated operator to take
over the lease effective January 1, 2002 for a five-year term through December
2006, with an option to purchase held by the lessee The Trinity Hills facility
was subsequently sold to the lessee on February 28, 2002 for $1,800,000,
resulting in a gain of $506,079 and net cash proceeds of $1,747,323 after
payment of settlement costs. The lessee of the McCurdy facility defaulted on its
minimum lease payments as of January 2001. Registrant attempted to work with the
current lessee to stabilize its census, but was unable to do so. Registrant
discontinued mortgage payments to the lender after the lessee's default on
payment of lease obligations. The facility was foreclosed by the lender on
September 11, 2001, resulting in an extraordinary loss of $434,199, which was
recorded in the quarter ended September 30, 2001.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Registrant's primary market risk exposure is from fluctuations in interest rates
and the effects of those fluctuations on the market values of its cash
equivalent short-term investments. The cash equivalent short-term investments
consist primarily of overnight investments that are not significantly exposed to
interest rate risk, except to the extent that changes in interest rates will
ultimately affect the amount of interest income earned on these investments.
9
Item 4. Controls and Procedures
The Registrant's General Partner, including its Chief Executive Officer and
Chief Financial Officer, after evaluating the effectiveness of the Registrant's
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15-d-14(c)
under the Securities Exchange Act of 1934) as of a date (the "Evaluation Date"),
which was within 90 days of this quarterly report on Form 10-Q, have concluded
in their judgment that, as of the Evaluation Date, the Registrant's disclosure
controls and procedures were adequate and designed to ensure that material
information relating to the Registrant and its subsidiaries would be made known
to them.
There were no significant changes in the Registrant's internal controls or, to
the General Partner's knowledge, in other factors that could significantly
affect the Registrant's disclosure controls and procedures subsequent to the
Evaluation Date.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant has pending claims incurred in the normal course of
business that, in the opinion of management, based on the advice of
legal counsel, will not have a material effect of the financial
statements of the Registrant.
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) Exhibit:
99.1 Certification pursuant to Section 906 of the Sarbanes
- Oxley Act of 2002
(B) Reports on Form 8-K:
None
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.
HEALTHCARE PROPERTIES, L.P.
By: CAPITAL REALTY GROUP SENIOR HOUSING, INC.
General Partner
By: /s/ Robert Lankford
------------------------------------------
Robert Lankford
President (duly authorized officer and principal financial officer)
Date: November 13, 2002
11
CERTIFICATION
I, Robert Lankford, Chief Executive Officer and Chief Financial Officer of the
General Partner of Healthcare Properties L.P., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Healthcare Properties
L.P. ("Registrant");
2. 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;
3. 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;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Registrant and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, is made known to me by others
within the Registrant, particularly during the period in which this
quarterly report is being prepared;
b) 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
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date.
5. I have disclosed, based on my most recent evaluation, to the Registrant's
auditors and the General Partner's board of directors:
a) 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
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. 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 my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ Robert Lankford
-----------------------------
Robert Lankford
Chief executive officer and
Chief financial officer of the
General Partner
November 13, 2002
12