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, 2004
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
(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
----- -----
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
----- -----
The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 25, 2003 was
$(5,012,000) 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
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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. On November 17, 2003, CharterMac
acquired Related Capital Company, which is the indirect parent of RCC Manager
L.L.C., the sole shareholder of the Related General Partner. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged. 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.
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) 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.
2
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 years ended March 25, 2004, 2003 and 2002 the
Partnership has distributed approximately $0, $1,524,000 and $0, respectively,
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 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 two 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
- --------------------
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 was an obligation at
the subsidiary partnership level, whereas the remaining $53,526,257 was 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).
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%
3
or the lowest legally allowable rate. Unpaid interest of approximately
$5,519,000 and $9,917,000 as of March 25, 2004 and 2003, 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 originally extended the terms of the two remaining Purchase
Money Notes (with maturity dates of October 1996) for up to three additional
years. 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, $23,210 was accrued and added to the
Purchase Money Notes balance. The extension fees have been fully amortized over
the term of the extensions. Additionally, an oral agreement was reached that
extended the maturity dates of the remaining Purchase Money Notes through June
2004. 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 $0, $10,072,000 and $4,452,000 were made
to the Partnership during each of the years ended March 25, 2004, 2003 and 2002,
respectively, of which approximately $0, $8,776,000 and $3,872,000,
respectively, was used to pay principal, interest and extension fees on the
Purchase Money Notes. In addition, no payments were made as "additional"
interest on the Purchase Money Notes for the 2003, 2002 and 2001 Fiscal Years
respectively.
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
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.
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.
4
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, 2004, the Partnership had disposed of fifty-nine of its sixty-one
original investments. The Partnership anticipates that each of the two remaining
investments will be liquidated sometime during 2004 with one of them currently
being listed for sale. 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.
On June 30, 2003 the Partnership's Limited Partnership Interest in Cabarras Arms
Associates ("Cabarras") was sold to the Purchase Money Note Holder for $30,000,
resulting in a loss in the amount of approximately $92,000. The Partnership was
released from the associated Purchase Money Note and accrued interest thereon,
which had a total outstanding balance of approximately $2,415,000, resulting in
gain on sale of property of such amount.
On June 30, 2003, the Partnership's Limited Partnership Interest in Hathaway
Court Associates ("Hathaway") was sold to the Purchase Money Note Holder for
$60,000, resulting in a gain in the amount of approximately $545,000. The
Partnership was released from the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$4,035,000, resulting in gain on sale of property of such amount.
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, which was recognized during the
year ended March 25, 2003.
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 Conifer
317 ("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 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
5
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 Fiscal Year 2003 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
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
6
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.
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 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.
Segments
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The Partnership operates in one segment, which is the investment in multi-family
residential property.
Competition
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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
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The Partnership does not have any employees. All services are performed for the
Partnership by its General Partners and their affiliates. The General Partners
receive compensation in connection with such activities as set forth in Items 11
7
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, 2004, the Partnership holds a 98.99% limited partnership
interest in each of two Local Partnerships, which own two Apartment Complexes
receiving Government Assistance. During the fiscal year ended March 25, 2004,
the Partnership's Local Partnership Interests in two subsidiary partnerships
were sold. Through the fiscal year ended March 25, 2004, 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-eight
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, 2004 are located in Missouri and Michigan.
The two Apartment Complexes owned by the Local Partnerships at March 25, 2004
contain a total of 258 rental units. The larger of the Apartment Complexes
consists of 186 units. Construction of each Apartment Complex was completed
between 1972 and 1973.
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) 2003 2002 2001 2000 1999
- ----------------- --------- ----------- ---- ---- ---- ---- ----
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) (n) 93%
Mobile, AL(112)
Northwoods III Apts. 1982 Sec.221(d)(4) (p) (p) (p) 87% 87%
Pensacola, FL (192)
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) (q) 93% 98%
Muskegon, MI (54) HAP
Huntley #1 1972 Sec.236 (s) (s) 88% 98% 95%
Holt, MI (88) HAP
Huntley #2 1973 Sec.236 (s) (s) 82% 99% 97%
Holt, MI (72) HAP
8
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government
Assistance
----------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ----------- -------------------------------
(Number of Units) Completed Programs(a) 2003 2002 2001 2000 1999
- ----------------- --------- ----------- ---- ---- ---- ---- ----
Seymour O'Brien Manor Apts. 1972 Sec.236 (p) (p) (p) 100% 100%
Seymour, IN (56) HAP
Washington Highland Apts. 1972 Sec.236 (p) (p) (p) 96% 93%
Washington, IN (56) HAP
Vincennes Niblack Apts. 1972 Sec.236 (p) (p) (p) 96% 91%
("Autumn Ridge Apartments") HAP
Vincennes, IN (144)
Casa Ramon Apartments 1974 Sec.236 (n) (n) (n) (n) 99%
Orange, CA (75) HAP
Nu-Elm Apartments 1972 Sec.236 89% 86% 93% 92% 99%
Springfield, MO (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) (o) 98%
South Dartmouth, MA (200)
Decatur Apartments 1971 Sec.236 (o) (o) (o) (o) (l)
Decatur, AL (100) HAP
Florence Apartments 1973 Sec.236 (o) (o) (o) (o) (l)
Florence, AL (96)
Saraland Apartments (g) 1972 Sec.236 (t) (t) 0% 0% 0%
Saraland, AL (60) HAP
University Gardens Apts. 1971 Sec.236 (q) (q) (q) 100% 100%
Waxahachie, TX (104)
Southside Village Apts. 1972 Sec.236 (q) (q) (q) 91% 96%
Brownwood, TX (104) HAP
Dickens Ferry Apartments 1972 Sec.236 (o) (o) (o) (o) (l)
Mobile, AL (80) HAP
Bonnie Doone Apartments 1972 Sec.236 (o) (o) (o) (o) (l)
Athens, AL (60) HAP
Conifer 208 (Conifer Village) 1972 Sec.236 (n) (n) (n) (n) 97%
Spokane, WA (64) HAP
Conifer 307 (Fircrest) 1973 Sec.236 (k) (k) (k) (k) (k)
Beaverton, OR (60) HAP
Conifer 317 (Pinewood) 1974 Sec.236 (s) (s) 96% 100% 98%
Hillsboro, OR (50)
Bicentennial Apts. 1976 Sec.221(d)(4) (d) (d) (d) (d) (d)
Houston, TX (292)
Bellfort Apts. 1979 Sec.221(d)(4) (k) (k) (k) (k) (k)
Houston, TX (272) HAP
Cloisters (Sundown) 1974 Sec.236 (n) (n) (n) (n) 98%
Birmingham, AL (192) HAP
Cabarrus Arms 1974 Sec.236 (u) 97% 96% 95% 96%
Kannapolis, NC (76) HAP
Summer Arms Apts. 1974 Sec.236 (t) (t) 92% 98% 96%
Sumter, SC (100) HAP
Lexington Village 1973 Sec.236 (s) (s) 75% 95% 97%
Conyers, GA (108) HAP
Ware Manor 1971 Sec.236 (p) (p) (p) 93% 98%
Waycross, GA (84) HAP
Nottingham Woods Apts. 1974 Sec.236 (p) (p) (p) 97% 92%
Oxford, AL (144)
Hathaway Court 1974 Sec.236 (u) 98% 100% 100% 100%
Covington, KY (159) HAP
Tall Pines 1972 Sec.236 (p) (p) (p) 98% 99%
9
LOCAL PARTNERSHIP SCHEDULE
(continued)
Government
Assistance
----------- Percentage of Units
HUD Occupied at December 31,
Name and Location Year ----------- -------------------------------
(Number of Units) Completed Programs(a) 2003 2002 2001 2000 1999
- ----------------- --------- ----------- ---- ---- ---- ---- ----
La Grange, GA (115) HAP
Shelton Beach Apts. 1975 Sec.221(d)(4) (s) (s) 94% 92% 83%
Saraland, AL (112)
Northpointe II 1978 Sec.221(d)(4) (s) (s) 91% 93% 86%
Saraland, AL (80)
Caroline Forest Apts. 1973 Sec.236 (o) (o) (o) (o) 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) (j)
Brownstown Township, MI (112) HAP
Carlton Terrace Apartments 1973 Sec.236 (j) (j) (j) (j) (j)
Sterling Heights, MI (300)
Cranbrook Manor Apartments 1970 Sec.236 (j) (j) (j) (j) (j)
Lansing, MI (136) HAP
Oakbrook Villa Apartments 1970 Sec.236 (k) (k) (k) (k) (k)
Romulus, MI (352) HAP
Pebble Creek 1973 Sec.236 98% 98% 99% 100% 100%
East Lansing, MI (186)
Villa Apollo No. 2 1971 Sec.236 (j) (j) (j) (j) (j)
Brownstown Township, MI (286) HAP
Greenwood Manor 1974 Sec.236 (q) (q) (q) 91% 92%
Pine Bluff, AR (64) HAP
Malvern Manor 1974 Sec.236 (q) (q) (q) 90% 98%
Malvern, AR (50) HAP
Hereford Manor 1973 Sec.236 (q) (q) (q) 94% 84%
Siloam Springs, AR (50) HAP
Henslee Heights 1974 Sec.236 (q) (q) (q) 100% 100%
Pine Bluff, AR (78) HAP
Oakwood Manor 1972 Sec.236 (p) (p) (p) 76% 82%
Little Rock, AR (200) HAP
West Scenic Apartments 1971 Sec.236 (n) (n) (n) (n) 95%
North Little Rock, AR (150)
Robindale East Apartments 1974 Sec.236 (p) (p) (p) 73% 91%
Blytheville, AR (88) HAP
Southwest Apartments 1970 Sec.236 (q) (q) (q) 94% 94%
Little Rock, AR (49) HAP
Valley Arms 1975 Sec.236 (k) (k) (k) (k) (k)
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
10
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
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.
(e) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1998.
(f) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 1998.
(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.
(h) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 1999.
(i) The Partnership's Local Partnership Interest in this Local Partnership was
sold during the fiscal year ended March 25, 1999.
(j) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2000.
(k) The property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2000.
(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.
11
(m) The Partnership's Local Partnership Interest in this Local Partnership was
sold on March 31, 2000.
(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.
(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.
(u) The Partnership's Local Partnership interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2004.
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.
12
PART II
Item 5. Market for the Registrant's Limited Partnerships Interests and Related
Security Holder Matters.
As of March 25, 2004, 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, 2004, there were approximately 3,473 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
were 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, 2004. 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.
13
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 2004 2003 2002 2001 2000
- ---------- ------------- ------------- ------------- ------------- -------------
Revenues $ 9,291,063 $ 14,178,518 $ 28,892,169 $ 34,185,019 $ 38,002,609
Operating expenses (3,779,536) (7,202,590) (16,215,466) (28,223,218) (35,058,379)
Minority interest 112,743 (337,639) 213,740 (888,911) (3,110,714)
------------- ------------- ------------- ------------- -------------
Income (loss) before
extraordinary item 5,624,270 6,638,289 12,890,443 5,072,890 (166,484)
Extraordinary item-
forgiveness of indebted-
ness 0 11,962,803 21,389,335 21,773,849 23,069,821
------------- ------------- ------------- ------------- -------------
Net income $ 5,624,270 $ 18,601,092 $ 34,279,778 $ 26,846,739 $ 22,903,337
============= ============= ============= ============= =============
Income (loss) before ex-
traordinary item per Unit $ 461 $ 544 $ 1,057 $ 416 $ (14)
Extraordinary item per Unit 0 981 1,754 1,785 1,892
------------- ------------- ------------- ------------- -------------
Net income per Unit $ 461 $ 1,525 $ 2,811 $ 2,201 $ 1,878
============= ============= ============= ============= =============
Year Ended March 25,
---------------------------------------------------------------------------------
FINANCIAL POSITION 2004 2003 2002 2001 2000
- ------------------ ------------- ------------- ------------- ------------- -------------
Total assets $ 8,431,782 $ 10,583,374 $ 27,426,999 $ 51,182,923 $ 81,413,006
============= ============= ============= ============= =============
Long-term obligations $ 10,192,077 $ 18,613,182 $ 45,956,744 $ 103,353,307 $ 162,421,389
============= ============= ============= ============= =============
Total liabilities $ 14,804,642 $ 22,420,241 $ 56,178,198 $ 113,797,425 $ 169,474,875
============= ============= ============= ============= =============
Minority interest $ (100,375) $ 59,888 $ 222,153 $ 638,628 $ 635,465
============= ============= ============= ============= =============
During the years ended March 25, 2000, 2001, 2002, 2003 and 2004, 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, 2000, 2001, 2002, 2003 and 2004
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.
14
Selected Quarterly Financial Data (Unaudited)
---------------------------------------------
Quarter Ended
------------------------------------------------------------
June 25, September 25, December 25, March 25,
OPERATIONS 2003 2003 2003 2004
- -------------------------- ------------ ------------ ------------ ------------
Revenues $ 754,577 $ 7,677,734 $ 423,667 $ 435,085
Operating expenses (1,149,070) (1,117,238) (735,118) (778,110)
Minority Interest (1,304) 126,427 (896) (11,484)
------------ ------------ ------------ ------------
Net (loss) income $ (395,797) $ 6,686,923 $ (312,347) $ (354,509)
============ ============ ============ ============
Net (loss) income per
Unit $ (32) $ 548 $ (26) $ (29)
============ ============ ============ ============
Quarter Ended
------------------------------------------------------------
June 25, September 25, December 25, March 25,
OPERATIONS 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 indebted-
ness 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)
============ ============ ============ ============
15
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 2003, the Partnership had interests in four Local
Partnerships. During the fiscal year ended March 25, 2004, the Partnership's
Local Partnership Interests in two subsidiary partnerships were sold. Through
the fiscal year ended March 25, 2004, 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-eight subsidiary
partnerships were sold. As of March 25, 2004, the Partnership owned interests in
two 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, 2004, cash and cash equivalents of the
Partnership decreased approximately $360,000. This decrease is due to the
principal payments of mortgage notes payable ($241,000), a decrease in the
capitalization of minority interest ($48,000), costs paid relating to sale of
properties ($1,000), net acquisitions of property and equipment ($88,000) and an
increase in mortgage escrow deposits relating to investing activities ($229,000)
which exceeded cash provided by operating activities ($156,000) and proceeds
from the sale of properties ($90,000). Included in the adjustments to reconcile
the net income to cash provided by operating activities is gain on sale of
properties ($6,904,000) and depreciation ($216,000).
Distributions aggregating approximately $0, $10,072,000 and $4,452,000 were made
to the Partnership during the 2003, 2002 and 2001 Fiscal Years, respectively, of
which approximately $0, $8,776,000 and $3,872,000, respectively, was used to pay
principal, interest and extension fees on the Purchase Money Notes. In addition,
no payments were made as "additional" interest on the Purchase Money Notes for
the 2003, 2002 and 2001 Fiscal Years, respectively.
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 $4,351,000, $3,439,000 and
$3,217,000, were accrued and unpaid as of March 25, 2004, 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.
Government Programs and Regulations
- -----------------------------------
For a discussion of Government Programs and Regulations see Item 1. Business.
16
Tabular Disclosure of Contractual Obligations
- ---------------------------------------------
The following table summarizes the Partnership's commitments as of March 25,
2004 to make future payments under its debt agreements and other contractual
obligations.
Less than 1 - 3 3 -5 More than
Total 1 Year Years Years 5 Years
----------- ----------- ----------- ----------- -----------
Mortgage notes
payable (a) $ 2,664,025 $ 188,409 $ 416,538 $ 475,743 $ 1,583,335
Purchase money
notes payable (b) 2,009,344 2,009,344 -- -- --
Due to Selling Part-
ners (c) 5,518,708 5,518,708 -- -- --
----------- ----------- ----------- ----------- -----------
Total $10,192,077 $ 7,716,461 $ 416,538 $ 475,743 $ 1,583,335
=========== =========== =========== =========== ===========
(a) The mortgage notes are payable in aggregate monthly installments of
approximately $13,000, including principal and interest at rates varying
from 6.75% to 7% per annum, through July 2012. 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.
(b) Nonrecourse Purchase Money Notes (the "Purchase Money Notes") were issued
to the selling partners of the subsidiary partnerships as part of the
purchase price, and are secured only by the Partnership's interest in the
subsidiary partnerships to which the Purchase Money Note relates.
(c) 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.
Off Balance Sheet Arrangements
- ------------------------------
The Partnership has no off-balance sheet arrangements.
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 Partnership'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.
17
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, 2004, the Partnership did not record a loss on
impairment of assets. Through March 25, 2004, the Partnership has recorded
approximately $7,682,000 as a loss on impairment of assets.
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.
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
of properties, the portfolio is not diversified by the location of the
properties around the United States. The Partnership has two remaining
properties and therefore the Partnership may not be protected against a general
downturn in the national economy.
New Accounting Pronouncements
- -----------------------------
In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 were applicable no later than December 15, 2003.
The Partnership has not created any variable interest entities after January 31,
2003. In December 2003 the FASB redeliberated certain proposed modifications and
revised FIN 46 ("FIN 46 (R)"). The revised provisions are applicable no later
than the first reporting period ending after March 15, 2004. The adoption of FIN
46 (R) is not anticipated to have a material impact on the Partnership's
financial reporting and disclosures.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities (or assets in some
circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150
requires disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 generally was effective for all
financial instruments entered into or modified after May 31, 2003, and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it
does not have an impact on the Partnership's financial reporting and
disclosures.
18
Results of Operations
- ---------------------
The following is a summary of the results of operations of the Partnership for
the 2003, 2002 and 2001 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, operating, repairs and maintenance and financial
remained fairly constant for the 2003 Fiscal year as compared to the 2002 Fiscal
year.
Net income during the 2003, 2002 and 2001 Fiscal Years totaled $5,624,270,
$18,601,092 and $34,279,778, respectively.
2003 vs. 2002
- -------------
Rental income decreased by 51% for the 2003 Fiscal Year as compared to the 2002
Fiscal Year. Excluding, 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 Pinewood which sold their properties and the related
assets and liabilities and Saraland Apartments, Summer Arms Apartments, Cabarras
Arms Associates and Hathaway Arms Associates in which the Partnership sold its
Local Partnership interests (collectively, the "2003 Sold Assets"), rental
income increased by approximately 5% during the 2003 Fiscal Year as compared to
the 2002 Fiscal Year primarily due to rental rate increases.
Total expenses, excluding the 2003 Sold Assets, administrative and management,
operating, and financial, remained fairly consistent with an increase of
approximately 4% for the 2003 Fiscal Year as compared to the 2002 Fiscal Year.
Administrative and management decreased approximately 57% for the 2003 Fiscal
Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, such
expense increased approximately 41% primarily due to increased salaries and
benefits at one Local Partnership and the write-off of uncollectible receivables
at the Partnership level.
Operating decreased approximately 49% for the 2003 Fiscal Year as compared to
the 2002 Fiscal Year. Excluding the 2003 Sold Assets, such expense increased
approximately 19% primarily due to an increase in fuel costs and use at one
Local Partnership.
Financial decreased approximately 63% for the 2003 Fiscal Year as compared to
the 2002 Fiscal Year. Excluding the 2003 Sold Assets, such expense decreased
approximately 12% primarily due to decreases in interest due on smaller mortgage
balances at one Local Partnership as well as decreases in interest rates
relating to the Purchase Money Notes at the Partnership level.
Repairs and maintenance, tax and insurance and depreciation decreased
approximately 53%, 57% and 72%, respectively for the 2003 Fiscal Year as
compared to the 2002 Fiscal Year primarily due to decreases in the Sold Assets.
Gain on sale of properties and forgiveness of indebtedness income will continue
to fluctuate as a result of the disposition of properties.
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 Pinewood 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 "2002 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.
19
Other income decreased approximately 54% for the 2002 Fiscal Year as compared to
the 2001 Fiscal Year. Excluding the 2002 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 2002 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 the 2002 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 2002 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 2002 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 2002 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.
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 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.
The Partnership does not have any market risk sensitive instruments.
20
Item 8. Financial Statements and Supplementary Data.
Sequential
Page
(a) 1. Financial Statements ----------
Report of Independent Registered Public Accounting Firm 22
Consolidated Balance Sheets at March 25, 2004 and 2003 69
Consolidated Statements of Income for the Years Ended
March 25, 2004, 2003 and 2002 70
Consolidated Statements of Changes in Partners' Deficit
for the Years Ended March 25, 2004, 2003 and 2002 71
Consolidated Statements of Cash Flows for the Years Ended
March 25, 2004, 2003 and 2002 72
Notes to Consolidated Financial Statements 75
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
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, 2004 and 2003,
and the related consolidated statements of income, changes in partners' deficit,
and cash flows for the years ended March 25, 2004, 2003 and 2002 (the 2003, 2002
and 2001 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 4 (2003 Fiscal Year), 15 (2002 Fiscal Year) and 31
(2001 Fiscal Year) subsidiary partnerships whose net income (losses) aggregated
$805,748, $3,741,030 and ($1,523,249) for the 2003, 2002 and 2001 Fiscal Years,
respectively, and whose assets constituted 88% and 86% of the Partnership's
assets at March 25, 2004 and 2003, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and 2003, and
the results of their operations and their cash flows for the years ended March
25, 2004, 2003 and 2002, 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, 2004, the Partnership has disposed
of fifty-nine of its sixty-one original investments. One additional investment
is listed for sale and the remaining investment is expected to be liquidated
during 2004.
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 2004 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 6, 2004
22
[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
23
[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
24
[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
25
[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
26
[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
27
[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
28
[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
29
[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
30
[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
31
[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
32
[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
33
[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, 2003, 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, 2003, 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 24, 2004 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.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental information
(shown on 10 to 12) and the accompanying Financial Data Templates 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.
/s/ Bordman & Winnick
Certified Public Accountants
West Bloomfield, MI
January 24, 2004
34
[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
35
[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
36
[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
37
[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
38
[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
39
[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
40
[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
41
[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
42
[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 June 30, 2003, and the related statements of operations,
changes in partners' capital (deficit) and cash flows for six 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 Cabarrus Arms Associates at
June 30, 2003, and the results of its operations and its cash flows for six
months then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
July 31, 2003
43
[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
44
[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
45
[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
46
[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
47
[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
48
[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
49
[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 June 30, 2003, and the related statements of operations,
changes in partners' deficit, and cash flows for the six 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 Hathaway Court Associates at
June 30, 2003, and the results of its operations and its cash flows for the six
months then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ Williams Benator & Libby, LLP
Atlanta, Georgia
July 31, 2003
50
[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
51
[Letterhead of maudlin & Jenkins]
INDEPENDENT AUDITORS' 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 through 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. This financial statement is 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
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 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
52
[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
53
[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
54
[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
55
[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
56
[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, 2003, 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, 2003, 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 26, 2004 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 26, 2004
57
[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
58
[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
59
[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
60
[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
61
[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
62
[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, 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
63
[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
64
[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
65
[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
66
[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
67
[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
68
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 25,
----------------------------
2004 2003
------------ ------------
Property and equipment - net, less accumulated
depreciation (Notes 2, 4 and 6) $ 3,347,387 $ 3,478,246
Property and equipment -
held for sale (Notes 2, 4, 6 and 7) 1,281,404 2,465,394
Cash and cash equivalents (Notes 2 and 11) 864,630 1,224,252
Cash - restricted for tenants' security deposits (Note 3) 208,827 127,214
Mortgage escrow deposits (Notes 3, 5 and 6) 2,337,548 2,754,151
Prepaid expenses and other assets (Note 8) 391,986 534,117
------------ ------------
Total assets $ 8,431,782 $ 10,583,374
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable (Notes 3 and 6) $ 2,664,025 $ 5,059,854
Purchase money notes payable (Notes 3 and 7) 2,009,344 3,635,924
Due to selling partners (Notes 3 and 7) 5,518,708 9,917,404
Accounts payable, accrued expenses and other liabilities 139,811 153,890
Tenants' security deposits payable 83,420 119,183
Due to general partners of subsidiaries and their
affiliates (Note 8) 32,400 22,391
Due to general partners and affiliates (Note 8) 4,356,934 3,511,595
------------ ------------
14,804,642 22,420,241
------------ ------------
Minority interest (Note 2) (100,375) 59,888
------------ ------------
Commitments and contingencies (Notes 6, 7, 8 and 11)
Partners' deficit
Limited partners (5,672,236) (11,240,263)
General partners (600,249) (656,492)
------------ ------------
(6,272,485) (11,896,755)
------------ ------------
Total liabilities and partners' deficit $ 8,431,782 $ 10,583,374
============ ============
See accompanying notes to consolidated financial statements
69
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended March 25,
-------------------------------------------
2004 2003 2002
------------ ------------ ------------
Revenues
Rentals, net $ 2,186,458 $ 4,505,438 $ 11,017,460
Other 200,991 434,385 947,492
Gain on sale of properties (Note 10) 6,903,614 9,238,695 16,927,217
------------ ------------ ------------
Total revenues 9,291,063 14,178,518 28,892,169
------------ ------------ ------------
Expenses
Administrative and management 557,096 1,282,928 2,385,647
Administrative and management-related parties
(Note 8) 1,333,689 1,341,084 1,815,488
Operating 414,620 814,883 2,159,557
Repairs and maintenance 468,092 985,589 2,771,078
Taxes and insurance 368,451 866,716 1,522,710
Financial, principally interest 421,318 1,132,302 4,196,910
Depreciation 216,270 779,088 1,364,076
------------ ------------ ------------
Total expenses 3,779,536 7,202,590 16,215,466
------------ ------------ ------------
Income before minority interest and
extraordinary item 5,511,527 6,975,928 12,676,703
Minority interest loss (income) of subsidiaries 112,743 (337,639) 213,740
------------ ------------ ------------
Income before extraordinary item 5,624,270 6,638,289 12,890,443
Extraordinary item-forgiveness of
indebtedness income (Notes 6 and 10) 0 11,962,803 21,389,335
------------ ------------ ------------
Net income $ 5,624,270 $ 18,601,092 $ 34,279,778
============ ============ ============
Limited Partners Share:
Income before extraordinary item $ 5,568,027 $ 6,571,906 $ 12,761,539
Extraordinary item 0 11,843,175 21,175,442
------------ ------------ ------------
Net income - limited partners $ 5,568,027 $ 18,415,081 $ 33,936,981
============ ============ ============
Number of units outstanding 12,074 12,074 12,074
============ ============ ============
Income before extraordinary item per
limited partner unit $ 461 $ 544 $ 1,057
Extraordinary item per limited partner unit 0 981 1,754
------------ ------------ ------------
Net income per limited partnership unit$ 461 $ 1,525 $ 2,811
============ ============ ============
See accompanying notes to consolidated financial statements
70
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
Limited General
Total Partners Partners
------------ ------------ ------------
Balance - March 26, 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)
Net income 5,624,270 5,568,027 56,243
------------ ------------ ------------
Balance - March 25, 2004 $ (6,272,485) $ (5,672,236) $ (600,249)
============ ============ ============
See accompanying notes to consolidated financial statements.
71
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Year Ended March 25,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 5,624,270 $ 18,601,092 $ 34,279,778
------------ ------------ ------------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on sale of properties (6,903,614) (9,238,695) (16,927,217)
Extraordinary item-forgiveness of
indebtedness income 0 (11,962,803) (21,389,335)
Depreciation 216,270 779,088 1,364,076
Minority interest in (loss) income of subsidiaries (112,743) 337,639 (213,740)
(Increase) decrease in assets:
Cash-restricted for tenants' security deposits (120,441) 38,680 60,234
Mortgage escrow deposits - operating (62,594) 386,089 45,298
Prepaid expenses and other assets 79,836 (212,554) 14,827
Increase (decrease) in liabilities:
Due to selling partners 424,737 1,012,395 3,787,630
Payments of interest to selling partners 0 (2,966,329) (115,683)
Accounts payable, accrued expenses and
other liabilities 89,806 836,904 (261,696)
Tenants' security deposits payable 726 (63,193) (37,030)
Due to general partners of subsidiaries and
their affiliates 12,799 12,974 19,584
Due to general partners of subsidiaries and
their affiliates (2,790) (98,827) 0
Due to general partners and affiliates 909,953 267,324 731,026
------------ ------------ ------------
Total adjustments (5,468,055) (20,871,308) (32,922,026)
------------ ------------ ------------
Net cash provided by (used in) operating activities 156,215 (2,270,216) 1,357,752
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of properties 90,000 12,787,113 15,419,779
Costs paid relating to sale of properties (787) (595,318) (556,642)
Acquisitions of property and equipment (88,251) (78,873) (353,374)
Acquisitions of property and equipment -
held for sale (203) (85,400) (105,102)
(Increase) decrease in mortgage escrow deposits (228,576) 451,155 (236,255)
------------ ------------ ------------
Net cash (used in) provided by investing activities (227,817) 12,478,677 14,168,406
------------ ------------ ------------
72
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(continued)
Year Ended March 25,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------
Cash flows from financing activities:
Principal payments of purchase money notes 0 (5,809,460) (3,776,208)
Principal payments of mortgage notes payable (240,500) (6,117,927) (10,120,797)
Distributions paid 0 (1,524,495) (1,402,535)
Decrease in capitalization of
minority interest (47,520) (499,904) (202,735)
------------ ------------ ------------
Net cash used in financing activities (288,020) (13,951,786) (15,502,275)
------------ ------------ ------------
Net (decrease) increase in cash and
cash equivalents (359,622) (3,743,325) 23,883
Cash and cash equivalents at beginning of year 1,224,252 4,967,577 4,943,694
------------ ------------ ------------
Cash and cash equivalents at end of year $ 864,630 $ 1,224,252 $ 4,967,577
============ ============ ============
Supplemental disclosure of cash flows
information:
Cash paid during the year for interest $ 25,884 $ 3,045,739 $ 609,095
============ ============ ============
Supplemental disclosures of noncash investing
and financing activities:
Increase in property and equipment-held for
sale reclassified from property and equipment $ 2,893 $ 784,434 $ 4,975,310
Increase in deferred revenue reclassified from
purchase money notes payable and due to
selling partners 0 0 5,906,928
Summarized below are the components of the
forgiveness of indebtedness:
Decrease in purchase money notes payable $ 0 $ (789,814) $ (3,078,993)
Decrease in due to selling partners 0 (7,782,197) (14,470,986)
Decrease in deferred revenue on sale
of properties 0 (5,906,928) (3,839,356)
73
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(continued)
Year Ended March 25,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------
Summarized below are the components
of the gain on sale of properties:
Decrease in property and equipment,
net of accumulated depreciation $ 0 $ 836,680 $ 8,824,210
Decrease in property and equipment -
held for sale 1,187,033 9,624,144 12,232,872
Decrease in cash - restricted for tenants'
security deposits 38,828 138,645 176,886
Decrease in mortgage escrow deposits 707,773 785,516 1,468,683
Decrease in prepaid expenses and
other assets 62,295 437,130 287,452
Decrease in mortgage notes payable (2,155,329) (1,959,702) (4,494,870)
Decrease in purchase money notes payable (1,626,580) (1,449,327) (5,210,794)
Decrease in due to selling partners (4,823,433) (3,997,337) (14,008,934)
Increase in deferred revenue on sale
of properties 0 1,100 0
Decrease in accounts payable, accrued
expenses and other liabilities (103,885) (1,270,505) (795,917)
Decrease in tenant's security deposits payable (36,489) (101,544) (161,000)
Decrease in due to general partners of
subsidiaries and their affiliates 0 (6,500) (3,105)
Decrease in due to general partners and
affiliates (64,614) (85,200) (379,563)
See accompanying notes to consolidated financial statements.
74
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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. On November 17, 2003, CharterMac acquired Related Capital Company,
which is the indirect parent of RCC Manager L.L.C., the sole shareholder of the
Related General Partner. Pursuant to the acquisition, CharterMac acquired
controlling interests in the General Partners. This acquisition did not affect
the Partnership or its day-to-day operations, as the majority of the General
Partners' management team remained unchanged.
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.
As of March 25, 2004, the Partnership holds a 98.99% limited partnership
interest in each of the two remaining Local Partnerships, which own Apartment
Complexes receiving Government Assistance. During the fiscal year ended March
25, 2004, the Partnership's Local Partnership Interests in two subsidiary
partnerships were sold. Through the fiscal year ended March 25, 2004, 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-eight 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 4,13 and 30, subsidiary partnerships in which the Partnership is a limited
partner for the years ended March 25, 2004, 2003 and 2002, 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.
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.
75
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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 $0, $5,000 and $49,000 for the years ended March 25,
2004 (the "2003 Fiscal Year"), March 25, 2003 (the "2002 Fiscal Year") and March
25, 2002 (the "2001 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, 2004, the Partnership has not recorded a loss on
impairment of assets. Through March 25, 2004, 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).
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.
76
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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.
The estimated fair values of the Partnership's mortgage notes payable are as
follows:
March 25, 2004 March 25, 2003
------------------------- -------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
---------- ------------ ---------- ------------
Mortgage notes payable for
which it is:
Practicable to estimate fair value $2,664,025 $ 2,664,025 $5,059,854 $ 5,502,323
Purchase money notes
payable for which it is:
Not practicable to estimate
fair value $2,009,344 (a) $3,635,924 (a)
Due to selling partners for
which it is:
Not practicable to estimate
fair value $5,518,708 (a) $9,917,404 (a)
(a) 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.
77
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
NOTE 4 - Property and Equipment and Property and Equipment
The components of property and equipment and their estimated useful lives are as
follows:
March 25,
-------------------------- Estimated
2004 2003 Useful Lives
----------- ----------- ------------
Land $ 266,942 $ 266,942
Buildings and improvements 6,382,807 6,382,726 5 - 40 Years
Furniture and fixtures 185,528 100,334 3 - 10 Years
----------- -----------
6,835,277 6,750,002
Less: Accumulated depreciation (3,487,890) (3,271,756)
----------- -----------
$ 3,347,387 $ 3,478,246
=========== ===========
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.
Depreciation expense for the years ended March 25, 2004, 2003 and 2002 amounted
to $216,270, $779,088 and $1,364,076, respectively.
During the year ended March 25, 2004, there was a decrease in accumulated
depreciation in the amount of $136 due to write offs on dispositions.
The components of property and equipment held for sale are as follows:
March 25,
--------------------------
2004 2003
----------- -----------
Land $ 100,552 $ 421,499
Buildings and improvements 1,900,797 8,216,060
Furniture and fixtures 425,511 698,306
----------- -----------
2,426,860 9,335,865
Less: Accumulated depreciation (1,145,456) (6,870,471)
----------- -----------
$ 1,281,404 $ 2,465,394
=========== ===========
During the year ended March 25, 2004 there was a decrease in accumulated
depreciation on assets held for sale in the amount of $5,725,015 due to write
offs on dispositions.
NOTE 5 - Mortgage Escrow Deposits
Mortgage escrow deposits consist of the following:
March 25,
--------------------------
2004 2003
----------- -----------
Reserves for replacements $ 1,664,428 $ 2,072,906
Real estate taxes, insurance and other 673,120 681,245
----------- -----------
$ 2,337,548 $ 2,754,151
=========== ===========
78
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
NOTE 6 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $13,000, including principal and interest at rates varying from
6.75% to 7% per annum, through July 2012. 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.
Annual principal payment requirements for each of the next five years are as
follows:
Amount
------------
2004 $ 188,409
2005 201,352
2006 215,186
2007 229,971
2008 245,772
Thereafter 1,583,335
---------
Total $2,664,025
==========
The mortgage agreements require monthly deposits to replacement reserves of
approximately $9,000 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).
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
$5,519,000 and $9,917,000 as of March 25, 2004 and 2003, 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 originally extended the terms of the two remaining Purchase
Money Notes (with maturity dates of October 1996) for up to three additional
years. 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, $23,210 was accrued and added to the
Purchase Money Notes balance. The extension fees have been fully amortized over
79
the term of the extensions. Additionally, an oral agreement was reached that
extended the maturity dates of the remaining Purchase Money Notes through June
2004. 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 $0, $10,072,000 and $4,452,000 were made
to the Partnership during each of the years ended March 25, 2004, 2003 and 2002,
respectively, of which approximately $0, $8,776,000 and $3,872,000,
respectively, was used to pay principal, interest and extension fees on the
Purchase Money Notes. In addition, no payments were made as "additional"
interest on the Purchase Money Notes for the 2003, 2002 and 2001 Fiscal Years,
respectively.
NOTE 8 - Related Party Transactions
The costs incurred to related parties were as follows:
Year Ended March 25,
------------------------------------
2004 2003 2002
---------- ---------- ----------
Partnership management fees (a) $1,142,000 $1,052,162 $1,069,239
Expense reimbursement (b) 89,509 82,193 150,097
Local administrative fee (c) 3,750 16,250 38,750
---------- ---------- ----------
Total general and administrative-
General Partners 1,235,259 1,150,605 1,258,086
---------- ---------- ----------
Property management fees incurred to
affiliates of the subsidiary partnerships'
general partners 98,430 190,479 557,402
---------- ---------- ----------
Total general and administrative-related parties $1,333,689 $1,341,084 $1,815,488
========== ========== ==========
(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 $4,416,000 and $3,524,000 were accrued and
unpaid as of March 25, 2004 and 2003, 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
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 partnerships' performance. Expense reimbursements and asset
monitoring fees owed to the Related General Partner amounting to $57,095 and
$37,858 were accrued and unpaid as of March 25, 2004 and 2003, 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.
80
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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,
--------------------------------------------
2003 2002 2001
------------ ------------ ------------
Financial statement net income $ 5,624,270 $ 18,601,092 $ 33,764,246
Difference resulting from parent company
having a different fiscal year for income tax
and financial reporting purposes (56,186) (454,038) (1,151,548)
Difference resulting primarily from depreciation
and amortization expense recorded for financial
reporting purposes and income tax purposes 157,985 558,422 1,698,402
Difference between gain on sale of assets
recorded for financial reporting purposes and
for income tax purposes 639,121 15,087,741 18,142,817
Difference between a forgiveness of indebtedness
income recorded for financial reporting
purposes and for income tax purposes 0 3,140,441 (14,208,768)
Other, including accruals for financial reporting
purposes not deductible for tax purposes
until paid (142,155) 41,967 (1,127,675)
------------ ------------ ------------
Income as shown on the income tax return
for the calendar year ended $ 6,223,035 $ 36,975,625 $ 37,117,474
============ ============ ============
NOTE 10 - Sale of Properties
General
- -------
The Partnership is currently in the process of disposing of its investments. As
of March 25, 2004, the Partnership had disposed of fifty-nine of its sixty-one
original investments. One additional investment is listed for sale and the
Partnership anticipates that the remaining investment will be liquidated
sometime during 2004. 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.
On June 30, 2003 the Partnership's Limited Partnership Interest in Cabarras Arms
Associates ("Cabarras") was sold to the Purchase Money Note Holder for $30,000,
resulting in a loss in the amount of approximately $92,000. The Partnership was
released from the associated Purchase Money Note and accrued interest thereon,
which had a total outstanding balance of approximately $2,415,000, resulting in
gain on sale of property of such amount.
On June 30, 2003, the Partnership's Limited Partnership Interest in Hathaway
Court Associates ("Hathaway") was sold to the Purchase Money Note Holder for
$60,000, resulting in a gain in the amount of approximately $545,000. The
Partnership was released from the associated Purchase Money Note and accrued
interest thereon, which had a total outstanding balance of approximately
$4,035,000, resulting in gain on sale of property of such amount.
On March 28, 2003, the Partnership's Limited Partnership 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 which was recognized
during the year ended March 25, 2003.
81
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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 Conifer
317 ("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 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 Fiscal Year 2003 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,
82
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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
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
83
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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 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.
NOTE 11 - Commitments and Contingencies
a) 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 $152,044, $691,345 and $889,446 for the 2003, 2002
and 2001 Fiscal Years, respectively.
b) 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, 2004, uninsured cash and
cash equivalents approximated $646,000.
c) 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 were eligible for prepayment had to give notice of
84
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 25, 2004
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.
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.
d) 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 two 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.
85
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable
Item 9A. Controls and Procedures
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Chief Executive
Officer and Chief Financial Officer of the Assisted General Partner, the Related
General Partner and Cambridge/Related, the general partners of the Partnership,
has evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended ("Exchange Act") as of the end of
the period covered by this report. Based on such evaluation, such officer has
concluded that, as of the end of such period, the Partnership's disclosure
controls and procedures are effective.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes
in Partnership's internal control over financial reporting during the fiscal
year to which this report relates that have materially affected, or are
reasonably likely to materially affect, the Partnership's internal control over
financial reporting.
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. The Partnership has
not adopted a separate code of ethics because the Partnership has no directors
or executive officers. However, the parent company of Related Capital Company
("RCC"), which controls our General Partners, has adopted a code of ethics. See
http://www.chartermac.com
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 RCC. The general partner
of RCC is The Related Realty Group, Inc. The general partners of
Cambridge/Related are the Assisted General Partner and The Related General
Partner. On November 17, 2003, CharterMac acquired RCC, which is the indirect
parent of RCC Manager L.L.C., the sole shareholder of the Related General
Partner. Alan P. Hirmes replaced Stephen M. Ross as Director of the Related
General Partner and Michael Brenner as Director of the Assisted General Partner,
each effective April 1, 2004, as a result of this acquisition. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged.
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.
Certain information concerning the directors and executive officers of the
General Partners is set forth below.
86
The directors and executive officers of the Related General Partner are as
follows:
Name Position
- ---- --------
Alan P. Hirmes Director and President
Stuart J. Boesky Vice President
Denise Kiley Vice President
Marc D. Schnitzer Vice President
Mark E. Carbone Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
ALAN P. HIRMES, 49, 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 CharterMac and American Mortgage Acceptance Company ("AMAC").
STUART J. BOESKY, 48, 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 CharterMac and AMAC.
DENISE L. KILEY, 44, 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. Ms. Kiley also serves on the Board of Trustees of CharterMac.
MARC D. SCHNITZER, 43, 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. Mr. Schnitzer also serves on the Board of
Trustees of CharterMac.
MARK E. CARBONE, 47, 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.
GLENN F. HOPPS, 41, 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, 38, 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.
87
The directors and executive officers of the Assisted General Partner are as
follows:
Name Position
- ---- --------
Alan P. Hirmes Director and President
Stuart J. Boesky Executive Vice President
Mark E. Carbone Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
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.
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.
88
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, 2004, 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.
Item 14. Principal Accountant Fees and Services.
Audit Fees
- ----------
The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and
Fazzari LLP and their respective affiliates (collectively, "Trien") for
professional services rendered for the audit of our annual financial statements
for the years ended March 25, 2004 and 2003 and for the reviews of the financial
statements included in the Partnership's Quarterly Reports on Form 10-Q for
those years were $38,500 and $38,500, respectively.
Audit Related Fees
- ------------------
None.
Tax Fees
- --------
The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their
respective affiliates (collectively, "Weiser") for professional services
rendered for the preparation of our annual tax returns for the years ended
December 31, 2003 and 2002 were $11,500 and $11,000, respectively.
All Other Fees
- --------------
None.
The Partnership is not required to have, and does not have, a stand-alone audit
committee.
89
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential
Page
----------
(a) 1. Financial Statements
Report of Independent Registered Public Accounting Firm 22
Consolidated Balance Sheets at March 25, 2004 and 2003 69
Consolidated Statements of Income for the Years Ended
March 25, 2004, 2003 and 2002 70
Consolidated Statements of Changes in Partners' Deficit
for the Years Ended March 25, 2004, 2003 and 2002 71
Consolidated Statements of Cash Flows for the Years Ended
March 25, 2004, 2003 and 2002 72
Notes to Consolidated Financial Statements 75
(a) 2. Financial Statement Schedules
-----------------------------
Report of Independent Registered Public Accounting Firm 95
Schedule I - Condensed Financial Information of Registrant 96
Schedule III - Real Estate and Accumulated Depreciation 99
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 90
(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a).
(32.1) Certification Pursuant to Rule 13a-14(b) or Rule
15d-14(b) and Section 1350 of Title 18 of the United States
Code (18 U.S.C. 1350). 93
** 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. 94
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter.
(c) Subsidiaries of the Registrant (Exhibit 21)
------------------------------
Jurisdiction
of Formation
------------
Nu-Elm Apartments MO
Pebble Creek LDHA MI
(d) Not applicable
90
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 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Director and President
By: ASSISTED HOUSING ASSOCIATES, INC.
a General Partner
Date: June 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Director and President
By: CAMBRIDGE AND RELATED ASSOCIATES
LIMITED PARTNERSHIP
By: Related Beta Corporation
Date: June 15, 2004
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Director and President
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
- ------------------ --------------------------------------- -----------
Director and President (chief executive
/s/ Alan P. Hirmes and financial officer) of Related Beta
- ------------------ Corporation and Assisted
Alan P. Hirmes Housing Associates, Inc. June 15, 2004
/s/ Glenn F. Hopps Treasurer (chief accounting
- ------------------ officer) of Related Beta Corporation
Glenn F. Hopps and Assisted Housing Associates, Inc. June 15, 2004
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE
13A-14(A) OR RULE 15D-14(A)
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, 2004 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-15(e) and
15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and
I 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) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles; and
c) evaluated the effectiveness of the Partnership's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this annual report based on such
evaluation; and
d) disclosed in this annual report any change in the Partnership's
internal control over financial reporting that occurred during the
period ending March 25, 2004 that has materially affected, or is
reasonably likely to materially affect, the Partnership's internal
control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the Partnership's auditors and to
the boards of directors of the General Partners:
a) all significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Partnership's ability to
record, process, summarize and report financial information; 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 over financial reporting.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
June 15, 2004
Exhibit 32.1
CERTIFICATION PURSUANT
TO RULE 13A-14(B) OR RULE 15D-14(B)
AND SECTION 1350 OF TITLE 18
OF THE UNITED STATES CODE (18 U.S.C. 1350)
In connection with the Annual Report of Cambridge Advantaged Properties Limited
Partnership (the "Partnership") on Form 10-K for the period ending March 25,
2004 as filed with the Securities and Exchange Commission ("SEC") 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.
A signed original of this written statement required by Section 906 has been
provided to the Partnership and will be retained by the Partnership and
furnished to the SEC or its staff upon request.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and Chief Financial Officer
June 15, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
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 May 6, 2004 on page 22, and
based on the reports of other auditors, we have also audited supporting Schedule
I for the 2003, 2002 and 2001 Fiscal Years and Schedule III at March 25, 2004.
In our opinion, and based on the reports of the other auditors, 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, 2004, 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 2004.
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 2004 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 6, 2004
95
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,
----------------------------
2004 2003
------------ ------------
Cash and cash equivalents $ 675,787 $ 970,273
Investment in and advances to subsidiary partnerships 4,601,026 4,312,170
Other assets 328,635 415,566
------------ ------------
Total assets $ 5,605,448 $ 5,698,009
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Purchase money notes payable $ 2,009,344 $ 3,635,924
Due to general partner and affiliates 4,350,684 3,439,463
Due to selling partners 5,518,708 9,917,404
------------ ------------
Total liabilities 11,878,736 16,992,791
Partners' deficit (6,273,288) (11,294,782)
------------ ------------
Total liabilities and partners' deficit $ 5,605,448 $ 5,698,009
============ ============
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.
96
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,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------
Revenues
Other income $ 29,852 $ 53,011 $ 94,778
------------ ------------ ------------
Expenses
Administrative and management 205,911 139,595 297,794
Administrative and management-related parties 1,231,509 1,134,355 1,219,336
Financial, principally interest 424,737 1,012,395 3,787,630
------------ ------------ ------------
Total expenses 1,862,157 2,286,345 5,304,760
------------ ------------ ------------
Loss from operations (1,832,305) (2,233,334) (5,209,982)
Gain on sale of investments in subsidiary
partnerships 6,770,626 5,690,236 15,998,925
Forgiveness of indebtedness income 0 11,962,803 21,389,335
Distribution income of subsidiary partnerships
in excess of investments 0 139,402 845,503
Equity in income of subsidiary partnerships (*) 83,173 1,924,909 1,189,720
------------ ------------ ------------
Net income $ 5,021,494 $ 17,484,016 $ 34,213,501
============ ============ ============
(*) Includes suspended prior year losses in excess of investment in accordance
with equity method of accounting amounting to $455,279, $1,119,403 and $445,165
for the years ended March 25, 2004, 2003 and 2002.
97
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,
--------------------------------------------
2004 2003 2002
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 5,021,494 $ 17,484,016 $ 34,213,501
------------ ------------ ------------
Adjustments to reconcile net income
to net cash used in operating activities:
Gain on sale of investments in subsidiary
partnerships (6,770,626) (5,690,236) (15,998,925)
Forgiveness of indebtedness income 0 (11,962,803) (21,389,335)
Equity in income of subsidiary partnerships (83,173) (1,924,909) (1,189,720)
Distribution income of subsidiary partnerships
in excess of investments 0 (139,402) (845,503)
Decrease in other assets 111,861 58,240 19,709
Increase (decrease) in liabilities:
Due to general partners and affiliates 911,221 360,697 696,027
Due to selling partners 424,737 1,012,395 3,787,630
Payments to selling partners 0 (2,966,329) (115,683)
Other liabilities 0 (142,948) 21,729
------------ ------------ ------------
Total adjustments (5,405,980) (21,395,295) (35,014,071)
------------ ------------ ------------
Net cash used in operating activities (384,486) (3,911,279) (800,570)
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of investments in
subsidiary partnerships 90,000 31,959 165,465
Distributions from subsidiaries 0 10,071,782 4,451,612
------------ ------------ ------------
Net cash provided by investing activities 90,000 10,103,741 4,617,077
------------ ------------ ------------
Cash flows from financing activities:
Principal payments of purchase money
notes payable 0 (5,809,460) (3,776,208)
Distributions to partners 0 (1,524,495) (1,402,536)
------------ ------------ ------------
Net cash used in financing activities 0 (7,333,955) (5,178,744)
------------ ------------ ------------
Net decrease in cash and cash equivalents (294,486) (1,141,493) (1,362,237)
Cash and cash equivalents, beginning of year 970,273 2,111,766 3,474,003
------------ ------------ ------------
Cash and cash equivalents, end of year $ 675,787 $ 970,273 $ 2,111,766
============ ============ ============
98
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2004
Cost (a)
Initial Cost to Partnership Capitalized
------------------------------ Subsequent to
Buildings and Acquisition:
Subsidiary Partnership's Residential Property Encumbrances Land Improvements Improvements
- --------------------------------------------- ------------- ------------- ------------- -------------
(10) Pebble Creek $ 3,464,548 $ 266,942 $ 4,968,283 $ 1,600,052
(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 (r) 0 217,960 4,157,713 (4,375,673)
(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 (r) 0 102,987 1,850,151 (1,953,138)
(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)
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) 0 184,718 3,502,697 (3,687,415)
(11) Nu Elm 1,208,821 100,552 1,913,293 413,015
(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)
Gross Amount at whch Carried at Close of Period
-----------------------------------------------
Buildings and
Subsidiary Partnership's Residential Property Land Improvements Total
- --------------------------------------------- ------------- ------------- -------------
(10) Pebble Creek $ 266,942 $ 6,568,335 $ 6,835,277
(1) Knollwood I (e) 0 0 0
(1) Knollwood II (e) 0 0 0
(1) Knollwood III (e) 0 0 0
(1) Knollwood IV (e) 0 0 0
(1) Parklane II (e) 0 0 0
(6) Northwoods III (n) 0 0 0
(1) Northpointe I (Shelton Beach) (p) 0 0 0
(1) Cedarbay (l) 0 0 0
(1) Northpointe II (p) 0 0 0
(9) Rockdale West (i) 0 0 0
(9) Buttonwood Acres (f) 0 0 0
(9) Solemar I (m) 0 0 0
(2) West Scenic (l) 0 0 0
(2) Greenwood Manor (o) 0 0 0
(2) Henslee Heights (o) 0 0 0
(2) Hereford Manor (o) 0 0 0
(2) Oakwood Manor (n) 0 0 0
(2) Robindale East (n) 0 0 0
(12) Valley Arms (j) 0 0 0
(2) Malvern Manor (o) 0 0 0
(2) Southwest (o) 0 0 0
(3) Lancaster Manor Associates (h) 0 0 0
(16) Caroline Apartments (m) 0 0 0
(1) Florence Apartments (m) 0 0 0
(1) Saraland Apartments (g)(q) 0 0 0
(1) Bonnie Doone (m) 0 0 0
(13) Pinewood Village (Conifer 317) (p) 0 0 0
(17) Conifer Village (Conifer 208)(l) 0 0 0
(13) Fircrest Manor (Conifer 307)(j) 0 0 0
(4) Westminster Manor (f) 0 0 0
(4) Northgate Townhouse (f) 0 0 0
(15) Pecan Park I (i) 0 0 0
(15) Pecan Park II (i) 0 0 0
(15) Bicentennial Square (d) 0 0 0
(15) Bellfort Arms (j) 0 0 0
(8) Hathaway Court (r) 0 0 0
(5) Lexington Village (p) 0 0 0
(5) Ware Manor (n) 0 0 0
(14) Summer Arms (q) 0 0 0
(12) Cabarrus Arms (r) 0 0 0
(1) Sundown Apts. (Cloister)(l) 0 0 0
(5) Tall Pines (n) 0 0 0
(1) Nottingham Woods (n) 0 0 0
(7) Seymour O'Brien Manor (n) 0 0 0
(7) Washington Highlands (n) 0 0 0
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) 0 0 0
(11) Nu Elm 100,552 2,326,308 2,426,860
(3) Casa Ramon (l) 0 0 0
(10) Hackley Village (o) 0 0 0
Life on which
Depreciation
Latest Income
Accumulated Date of Date Statement is
Subsidiary Partnership's Residential Property Depreciation Construction Acquired Computed(b)(c)
- --------------------------------------------- ------------- ------------ ---------- ----------------
(10) Pebble Creek $ (3,487,943) (c) Nov. 1984 5 - 27.5
(1) Knollwood I (e) 0 (c) Sept. 1984 30
(1) Knollwood II (e) 0 (c) Sept. 1984 30
(1) Knollwood III (e) 0 (c) Sept. 1984 30
(1) Knollwood IV (e) 0 (c) Sept. 1984 30
(1) Parklane II (e) 0 (c) Sept. 1984 30
(6) Northwoods III (n) 0 (c) Oct. 1984 15 - 30
(1) Northpointe I (Shelton Beach) (p) 0 (c) Nov. 1984 15 - 30
(1) Cedarbay (l) 0 (c) Sept. 1984 15 - 30
(1) Northpointe II (p) 0 (c) Nov. 1984 15 - 30
(9) Rockdale West (i) 0 (c) Oct. 1984 15 - 27
(9) Buttonwood Acres (f) 0 (c) Oct. 1984 20
(9) Solemar I (m) 0 (c) Oct. 1984 15 - 27
(2) West Scenic (l) 0 (c) Dec. 1984 10 - 30
(2) Greenwood Manor (o) 0 (c) Dec. 1984 30
(2) Henslee Heights (o) 0 (c) Dec. 1984 35
(2) Hereford Manor (o) 0 (c) Dec. 1984 35
(2) Oakwood Manor (n) 0 (c) Dec. 1984 5 - 30
(2) Robindale East (n) 0 (c) Dec. 1984 10 - 30
(12) Valley Arms (j) 0 (c) Dec. 1984 35
(2) Malvern Manor (o) 0 (c) Dec. 1984 35
(2) Southwest (o) 0 (c) Dec. 1984 30
(3) Lancaster Manor Associates (h) 0 (c) Dec. 1984 30
(16) Caroline Apartments (m) 0 (c) Nov. 1984 28
(1) Florence Apartments (m) 0 (c) Oct. 1984 15 - 30
(1) Saraland Apartments (g)(q) 0 (c) Oct. 1984 5 - 30
(1) Bonnie Doone (m) 0 (c) Nov. 1984 27.5 - 30
(13) Pinewood Village (Conifer 317) (p) 0 (c) Nov. 1984 15 - 30
(17) Conifer Village (Conifer 208)(l) 0 (c) Nov. 1984 19 - 30
(13) Fircrest Manor (Conifer 307)(j) 0 (c) Nov. 1984 20 - 30
(4) Westminster Manor (f) 0 (c) Oct. 1984 30
(4) Northgate Townhouse (f) 0 (c) Oct. 1984 30
(15) Pecan Park I (i) 0 (c) Dec. 1984 30
(15) Pecan Park II (i) 0 (c) Dec. 1984 18 - 30
(15) Bicentennial Square (d) 0 (c) Dec. 1984 30 - 40
(15) Bellfort Arms (j) 0 (c) Nov. 1984 30
(8) Hathaway Court (r) 0 (c) Nov. 1984 20
(5) Lexington Village (p) 0 (c) Nov. 1984 15 - 27.5
(5) Ware Manor (n) 0 (c) Nov. 1984 15 - 27.5
(14) Summer Arms (q) 0 (c) Nov. 1984 20
(12) Cabarrus Arms (r) 0 (c) Nov. 1984 7 - 20
(1) Sundown Apts. (Cloister)(l) 0 (c) Nov. 1984 10 - 20
(5) Tall Pines (n) 0 (c) Nov. 1984 20 - 27.5
(1) Nottingham Woods (n) 0 (c) Nov. 1984 10 - 20
(7) Seymour O'Brien Manor (n) 0 (c) Oct. 1984 5 - 27.5
(7) Washington Highlands (n) 0 (c) Oct. 1984 5 - 27.5
(7) Vincennes Niblack ("Autumn Ridge
Apartments) (n) 0 (c) Oct. 1984 5 - 27.5
(11) Nu Elm (1,145,403) (c) Oct. 1984 5 - 27.5
(3) Casa Ramon (l) 0 (c) Oct. 1984 5 - 27.5
(10) Hackley Village (o) 0 (c) Oct. 1984 5 - 27.5
99
CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 25, 2004
(continued)
Cost (a)
Initial Cost to Partnership Capitalized
------------------------------ Subsequent to
Buildings and Acquisition:
Subsidiary Partnership's Residential Property Encumbrances Land Improvements Improvements
- --------------------------------------------- ------------- ------------- ------------- -------------
(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)
------------- ------------- ------------- -------------
$ 4,673,369 $ 14,730,719 $ 222,052,152 $(227,520,734)
============= ============= ============= =============
Gross Amount at whch Carried at Close of Period
-----------------------------------------------
Buildings and Accumulated
Subsidiary Partnership's Residential Property Land Improvements Total Depreciation
- --------------------------------------------- ------------- ------------- ------------- -------------
(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
------------- ------------ ------------- -------------
$ 367,494 $ 8,894,643 $ 9,262,137 $ (4,633,346)
============= ============ ============= =============
Life on which
Depreciation
Latest Income
Date of Date Statement is
Subsidiary Partnership's Residential Property Construction Acquired Computed(b)(c)
- --------------------------------------------- ------------ ---------- ----------------
(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. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(m) The Partnership's Local Partnership Interests in these Local Partnerships
were sold during the fiscal year ended March 25, 2001. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(n) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2002. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(o) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2002. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(p) The Property and the related assets and liabilities were sold during the
fiscal year ended March 25, 2003. See Note 10 in Item 8, Financial
Statements and Supplementary Data.
(q) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2003. See Note 10 in Item
8, Financial Statements and Supplementary Data.
(r) The Partnership's Local Partnership Interest in these Local Partnerships
were sold during the fiscal year ended March 25, 2004. See Note 10 in Item
8, Financial Statements and Supplementary Data.
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 Accumulated Depreciation
-------------------------------------------- --------------------------------------------
Year Ended March 25,
--------------------------------------------------------------------------------------------
2004 2003 2002 2004 2003 2002
------------ ------------ ------------ ------------ ------------ ------------
Balance at beginning of period $ 16,085,867 $ 40,984,916 $ 85,344,137 $ 10,142,227 $ 23,965,637 $ 46,362,176
Additions during period:
Improvements 88,454 164,274 459,572
Depreciation expense 216,270 779,088 1,364,076
Deductions during period:
Dispositions (6,912,184) (25,063,323) (44,818,793) (5,725,151) (14,602,498) (23,760,615)
------------ ------------ ------------ ------------ ------------ ------------
Balance at close of period $ 9,262,137 $ 16,085,867 $ 40,984,916 $ 4,633,346 $ 10,142,227 $ 23,965,637
============ ============ ============ ============ ============ ============
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
100