-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CDtmhwrd4Y9miIcl8VeTa2FsmygQ3NrvPVpHRbklQUD5E9u0j0J0d9niGb5PUUIu tmwfYpqG9C11RkTQC2W/wg== 0000721465-97-000008.txt : 19971006 0000721465-97-000008.hdr.sgml : 19971006 ACCESSION NUMBER: 0000721465-97-000008 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19971003 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APT HOUSING PARTNERS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000721465 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042791736 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 002-84474 FILM NUMBER: 97690493 BUSINESS ADDRESS: STREET 1: 500 W CUMMINGS PARK STE 6050 CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179354200 MAIL ADDRESS: STREET 1: 500 W CUMMINGS PARK STE 6050 CITY: WOBURN STATE: MA ZIP: 01801 10-K/A 1 INDEPENDENT AUDITOR'S REPORT To the Partners of APT Housing Partners Limited Partnership Woburn, Massachusetts We have audited the accompanying balance sheets of APT Housing Partners Limited Partnership (a Massachusetts Limited Partnership) as of December 31, 1996 and 1995, and the related statements of income, partners' capital (deficiency), 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 did not audit the financial statements of Ashland Commons Associates and Rockledge Apartments Associates("Local Limited Partnerships"), the investments in which, as discussed in Note 3 to the financial statements, are accounted for by the equity method of accounting. The Partnership's cumulative share of losses of and distributions from the Local Limited Partnerships have exceeded its investments therein. Accordingly, the Partnership has reduced the investments to zero and has suspended application of the equity method. The financial statements of the Local Limited Partnerships were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Local Limited Partnerships, is based solely on the reports of the other auditors. The financial statements of APT Housing Partners Limited Partnership for the year ended December 31, 1994, were audited by other auditors whose report dated February 18, 1995, expressed an unqualified opinion on those statements. We conducted our audits in accordance with 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 audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the 1996 and 1995 financial statements referred to above present fairly, in all material respects, the financial position of APT Housing Partners Limited Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic 1996 and 1995 financial statements taken as a whole. The supplemental schedules listed in the accompanying index on page 15 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a required part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements. In our opinion, which insofar as it relates to amounts included for the Local Limited Partnerships, is based on the reports of other auditors, these schedules fairly state in all material respects the financial data required to be set forth therein in relation to the basic 1996 and 1995 financial statements taken as a whole. Robert Ercolini & Company LLP Boston, Massachusetts March 19, 1997 ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1996 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Profit and Loss 5 Statement of Partners' Deficit 6 Statement of Cash Flows 7 Summary of Accounting Policies 9 Notes to Financial Statements 10 February 4, 1997 To the Partners of Ashland Commons Associates Woburn, Massachusetts We have audited the accompanying balance sheet of Ashland Commons Associates, HUD Project No. 023-35279, (a limited partnership) as of December 31, 1996 and the related statements of profit and loss, partners' deficit 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 referred to above present fairly, in all material respects, the financial position of Ashland Commons Associates as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 BALANCE SHEET DECEMBER 31, 1996 ASSETS CURRENT ASSETS Cash and Cash Equivalents $300,024 Tenants: Accounts Receivable 3,059 Property Insurance 572 Mortgage Insurance 9,873 Total Current Assets 313,528 DEPOSITS HELD IN TRUST - FUNDED Tenants' Security Deposits (Contra) 14,503 Total Deposits Held in Trust 14,503 RESTRICTED DEPOSITS AND FUNDED RESERVES Mortgage Escrow Deposits 61,340 Reserve for Replacements 225,309 Residual Receipts 85,458 Total Deposits 372,107 FIXED ASSETS Land 215,210 Building (Mortgaged) - Note 2 5,404,364 Less Accumulated Depreciation 2,695,603 2,923,971 OTHER ASSETS Deferred Charges 98,341 $3,722,450 LIABILITIES AND PARTNERS' DEFICIT CURRENT LIABILITIES Accounts Payable $28,096 Accrued Interest Payable 46,314 Mortgage Payable - Current Portion 24,934 Rent Deferred Credits 1 Total Current Liabilities 99,345 DEPOSIT LIABILITIES Tenants' Security Deposits (Contra) 13,912 Total Deposits Liabilities 13,912 LONG-TERM LIABILITIES Mortgage Loan Payable - Note 2 4,738,829 Less: Current Portion 24,934 Total Long-Term Liabilities 4,713,895 Total Liabilities 4,827,152 COMMITMENTS AND CONTINGENCIES - NOTES 2,3, AND 4 PARTNERS' DEFICIT - Note 4: General Partners (100,679) Limited Partners (1,004,023) Total Partners' Deficit (1,104,702) $3,722,450 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1996 REVENUES: Rental income, less vacancies of $2,216 $1,230,592 Interest income 35,152 Miscellaneous income 2,333 Total revenues 1,268,077 COST OF OPERATIONS: Repairs and maintenance $126,134 Salaries and wages 114,301 Real estate taxes 72,905 Management fee (Note 3) 48,516 Utilities 33,938 Administrative 32,102 Insurance 35,575 Payroll taxes 11,329 Depreciation and Amortization 206,104 680,904 Income before interest expenses 587,173 INTEREST EXPENSE, including MIP of $23,746 580,735 NET INCOME $6,438 Net Income to General Partners $290 Net Income to Limited Partners $6,148 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PARTNERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1996 General Limited Total Partner Partners BALANCE, at December 31, 1995 $ (1,019,095) $ (96,827) $ (922,268) Net income for the period 6,438 290 6,148 Distributions (92,045) (4,142) (87,903) BALANCE, at December 31, 1996 $ (1,104,702) $ (100,679) $(1,004,023) Percent of interest in profit and losses 100% 4.5% 95.5% See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996 OPERATING ACTIVITIES: Rental Income $ 1,230,899 Interest Income 35,152 Other Income 2,333 1,268,384 Administrative expenses 31,923 Management fee 48,177 Operating and maintenance expenses 168,840 Payrolls 124,064 Utilities 44,047 Real estate taxes and escrow deposits 73,619 Payroll taxes 11,329 Insurance 21,220 Interest on mortgage 557,206 Mortgage insurance premium 29,836 Tenant security deposits 591 1,110,852 Net cash provided by operating activities 157,532 INVESTING ACTIVITIES: Increase in residual receipts fund (24,092) Increase in reserve for replacements - net (39,870) Net cash used by investing activities (63,962) FINANCING ACTIVITIES: Partners' distributions (92,045) Mortgage principal payments (22,187) Net cash used by financing activities (114,232) Net decrease in cash (20,662) CASH, at beginning of year 320,686 CASH, at end of year $ 300,024 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996 (Continued) Cash Flows from Operating Activities: Net income $ 6,438 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 206,104 Changes in operating assets and liabilities: Decrease in tenants' rents receivable 393 Decrease in prepaid expenses 9 Increase in tenants' security deposits (1,860) Decrease in mortgage escrow deposits 7,173 Decrease in accounts payable and accrued expenses (61,908) Increase in tenants' security deposits payable 1,269 Decrease in prepaid rents (86) Net cash provided by operating activities $ 157,532 ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The partnership, for tax purposes, charged to expense certain costs, such as interest and real estate taxes during construction. Accordingly, the cost of property and equipment shown in these statements includes $649,227 which has been deducted for tax purposes. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings is based on a 25 year life using the straight-line method for financial reporting purposes. For income tax purposes, accelerated depreciation methods are used. AMORTIZATION Amortization of financing costs is based on a forty year life using the straight-line method for both financial reporting and income tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Ashland Commons Associates is a Massachusetts limited partnership which was formed on September 29, 1982 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 96 residential units under the provisions of Section 221 (d)(4) of the National Housing Act. The partnership has a Section 8 contract with HUD to receive rent subsidy equal to approximately 85% of the total rental income. This contract expires September, 2002. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is insured by the Federal Housing Administration (FHA) and is payable in monthly installments of approximately $48,283, including interest at 11.728% per annum, through 2024. Annual principal payments will average approximately $31,917 each year for the next five years. The partnership is required to make monthly payments of $2,094 into a fund for replacements. Withdrawals from this fund can only be made upon the approval of the Federal Housing Commissioner. Management believes it is not practical to estimate fair market value of the mortgaged property because it is not determinable as to whether financing with similar characteristics is currently available to the partnership. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - RELATED PARTY TRANSACTIONS The partnership pays a 4.5% management fee based on gross revenues collected, which, at present, is capped at $43 PUPM, to an affiliate of a general partner, and also $506 per month for bookkeeping. Further, the management company is reimbursed at cost for salaries and wages and related employee expenses such as payroll taxes, health insurance, disability insurance, workers compensation and other insurance. NOTE 4 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the Federal Housing Administration. Total distributions are limited to $92,045 per annum as allowed by MHFA. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1995 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Profit and Loss 5 Statement of Partners' Deficit 6 Statement of Cash Flows 7 Summary of Accounting Policies 9 Notes to Financial Statements 10 January 20, 1996 To the Partners of Ashland Commons Associates Woburn, Massachusetts We have audited the accompanying balance sheet of HUD Project No. 023-35279 of the Ashland Commons Associates (a limited partnership) as of December 31, 1995 and the related statements of profit and loss, partners' deficit 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 referred to above present fairly, in all material respects, the financial position of HUD Project No. 023-35279 as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 BALANCE SHEET DECEMBER 31, 1995 ASSETS CURRENT ASSETS Cash and Cash Equivalents $320,686 Tenants: Accounts Receivable 3,452 Property Insurance 534 Mortgage Insurance 9,920 Total Current Assets 334,592 DEPOSITS HELD IN TRUST - FUNDED Tenants' Security Deposits (Contra) 12,643 Total Deposits Held in Trust 12,643 RESTRICTED DEPOSITS AND FUNDED RESERVES Mortgage Escrow Deposits 68,513 Reserve for Replacements 185,439 Residual Receipts 61,366 Total Deposits 315,318 FIXED ASSETS Land 215,210 Building (Mortgaged) - Note 2 5,404,364 Less Accumulated Depreciation 2,494,407 3,125,167 OTHER ASSETS Deferred Charges 103,249 $3,890,969 LIABILITIES AND PARTNERS' DEFICIT CURRENT LIABILITIES Accounts Payable $89,787 Accrued Interest Payable 46,531 Mortgage Payable - Current Portion 22,187 Rent Deferred Credits 87 Total Current Liabilities 158,592 DEPOSIT LIABILITIES Tenants' Security Deposits (Contra) 12,643 Total Deposits Liabilities 12,643 LONG-TERM LIABILITIES Mortgage Loan Payable - Note 2 4,761,016 Less: Current Portion 22,187 Total Long-Term Liabilities 4,738,829 Total Liabilities 4,910,064 COMMITMENTS AND CONTINGENCIES - NOTES 2,3, AND 4 PARTNERS' DEFICIT - Note 4: General Partners (96,827) Limited Partners (922,268) Total Partners' Deficit (1,019,095) $3,890,969 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1995 REVENUES: Rental income, less vacancies of $13,882 $1,218,926 Interest income 32,704 Miscellaneous income 2,289 Total revenues 1,253,919 COST OF OPERATIONS: Repairs and maintenance $148,377 Salaries and wages 108,719 Real estate taxes 75,666 Management fee (Note 3) 48,177 Utilities 42,785 Administrative 30,978 Insurance 35,487 Payroll taxes 11,179 Depreciation and Amortization 206,104 707,472 Income before interest expenses 546,447 INTEREST EXPENSE, including MIP of $23,852 583,309 NET LOSS $(36,862) Net Loss to General Partners $1,659 Net Loss to Limited Partners $35,203 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PARTNERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1995 General Limited Total Partner Partners BALANCE, at December 31, 1994 $ (891,066) $ (91,066) $ (800,000) Net loss for the period (36,862) (1,659) (35,203) Distributions (91,167) (4,102) (87,065) BALANCE, at December 31, 1995 $(1,019,095) $ (96,827) $ (922,268) Percent of interest in profit and losses 100% 4.5% 95.5% See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1995 OPERATING ACTIVITIES: Rental Income $ 1,233,270 Interest Income 32,704 Other Income 2,289 1,268,263 Administrative expenses 30,847 Management fee 47,676 Operating and maintenance expenses 187,102 Payrolls 108,201 Utilities 33,702 Real estate taxes and escrow deposits 75,678 Payroll taxes 11,179 Insurance 40,132 Interest on mortgage 559,650 Mortgage insurance premium 23,769 Tenant security deposits (341) 1,117,595 Net cash provided by operating activities 150,668 INVESTING ACTIVITIES: Increase in residual receipts fund (11,965) Increase in reserve for replacements - net (22,245) Net cash used by investing activities (34,210) FINANCING ACTIVITIES: Expenses not realted to project operations (878) Partners' distributions (91,167) Mortgage principal payments (19,743) Net cash used by financing activities (111,788) Net increase in cash and cash equivalents 4,670 CASH AND CASH EQUIVALENTS, at beginning of year 316,016 CASH AND CASH EQUIVALENTS, at end of year $ 320,686 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1995 (Continued) Cash Flows from Operating Activities: Net loss $ (36,862) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and Amortization 206,104 Expense not related to project operations 878 Changes in operating assets and liabilities: Decrease in accounts receivable 14,612 Increase in tenants' rents receivable (323) Decrease in prepaid expenses 25,100 Decrease in tenants' security deposits 1,155 Increase in mortgage escrow deposits (29,564) Decrease in accounts payable and accrued expenses (29,673) Decrease in tenants' security deposits payable (814) Increase in prepaid rents 55 Net cash provided by operating activities $ 150,668 ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The partnership, for tax purposes, charged to expense certain costs, such as interest and real estate taxes during construction. Accordingly, the cost of property and equipment shown in these statements includes $649,227 which has been deducted for tax purposes. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings is based on a 25 year life using the straight-line method for financial reporting purposes. For income tax purposes, accelerated depreciation methods are used. AMORTIZATION Amortization of financing costs is based on a forty year life using the straight-line method for both financial reporting and income tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Ashland Commons Associates is a Massachusetts limited partnership which was formed on September 29, 1982 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 96 residential units under the provisions of Section 221 (d)(4) of the National Housing Act. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is insured by the Federal Housing Administration (FHA) and is payable in monthly installments of approximately$48,283, including interest at 11.728% per annum, through 2024. Annual principal payments will average approximately $28,401 each year for the next five years. The partnership is required to make monthly payments of $2,094 into a fund for replacements. Withdrawals from this fund can only be made upon the approval of the Federal Housing Commissioner. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - RELATED PARTY TRANSACTIONS The partnership pays a 4.5% management fee based on gross revenues collected, which, at present, is capped at $41.82 PUPM, to an affiliate of a general partner, and also $506 per month for data processing. Further, the management company is reimbursed at cost for salaries and wages adn related employee expenses such as payroll taxes, health insurance, disability insurance, workers compensation and other insurance. NOTE 4 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the Federal Housing Adminstration. Total distributions are limited to $92,045 per annum as allowed by MHFA. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1994 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Profit and Loss 5 Statement of Partners' Deficit 7 Statement of Cash Flows 8 Summary of Accounting Policies 10 Notes to Financial Statements 11 January 24, 1995 To the Partners of Ashland Commons Associates Woburn, Massachusetts We have audited the accompanying balance sheet of HUD Project No. 023-35279 of the Ashland Commons Associates (a limited partnership) as of December 31, 1994 and the related statements of profit and loss, partners' deficit 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 principals used and significant estimates made by management, as well as evaluating the overall financial statements 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. 023-35279 as of December 31, 1994, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 BALANCE SHEET DECEMBER 31, 1994 ASSETS CURRENT ASSETS Cash and Cash Equivalents $316,016 Tenants: Accounts Receivable 3,129 Accounts Receivable 14,612 Property Insurance 25,591 Mortgage Insurance 9,963 Total Current Assets 369,311 DEPOSITS HELD IN TRUST - FUNDED Tenants' Security Deposits (Contra) 13,798 Total Deposits Held in Trust 13,798 RESTRICTED DEPOSITS AND FUNDED RESERVES Mortgage Escrow Deposits 38,949 Reserve for Replacements 163,194 Residual Receipts 49,401 Total Deposits 251,544 FIXED ASSETS Land 215,210 Building (Mortgaged) - Note 2 5,404,364 Less Accumulated Depreciation 2,293,211 3,326,363 OTHER ASSETS Deferred Charges 108,157 $4,069,173 LIABILITIES AND PARTNERS' DEFICIT CURRENT LIABILITIES Accounts Payable (Note 4) $119,267 Accrued Interest Payable 46,724 Mortgage Payable - Current Portion 19,729 Rent Deferred Credits 32 Total Current Liabilities 185,752 DEPOSIT LIABILITIES Tenants' Security Deposits (Contra) 13,457 Total Deposits Liabilities 13,457 LONG-TERM LIABILITIES Mortgage Loan Payable - Note 2 4,780,759 Less: Current Portion 19,729 Total Long-Term Liabilities 4,761,030 Total Liabilities 4,960,239 COMMITMENTS AND CONTINGENCIES - NOTES 2,3, AND 5 Partners' Deficit - Note 5 (891,066) $4,069,173 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1994 REVENUES Gross Potential Rental Income $1,249,771 Less Vacancies, Bad Debts, & Section 236 Excess Rental Income Remitted 2,287 Effective Rental Income 1,247,484 Interest Subsidy 0 Other Income 22,909 Residual Receipts (Remitted) or Reimbursed 0 Total Income 1,270,393 OPERATING EXPENSES Admininstration 140,158 Maint., Res. Services & Security 300,393 Utilities 35,022 Taxes (RE & Other) 68,122 Insurance 18,599 Depreciation & Amortization 206,110 Interest (Financing & Other) 576,555 Subtotal 1,344,959 Net Income or (Loss) for the Development before Non-Operating Items ( 74,566) Non-Operating Items [Gains or (Losses)] 0 Net Income or (Loss) for the Development ( 74,566) See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PARTNERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1994 General Limited Total Partner Partners BALANCE, at December 31, 1993 $ (730,369) $ (83,835) $ (646,534) Net loss for the period (74,566) (3,355) (71,211) Distributions (86,131) (3,876) (82,255) BALANCE, at December 31, 1994 $ (891,066) $ (91,066) $ (800,000) Percent of interest in profit and losses 100% 4.5% 95.5% See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 OPERATING ACTIVITIES: Rental Income $ 1,231,577 Interest Income 22,203 Other Income 706 1,254,486 Administrative expenses 26,207 Management fee 48,180 Operating and maintenance expenses 188,454 Payrolls 96,368 Utilities 39,390 Real estate taxes and escrow deposits 72,728 Payroll taxes 4,094 Insurance 43,971 Interest on mortgage 561,825 Mortgage insurance premium 23,904 Tenant security deposits (1,334) 1,103,787 Net cash provided by operating activities 150,699 INVESTING ACTIVITIES: Increase in residual receipts fund (2,535) Decrease in reserve for replacements - net 7,812 Net cash provided by investing activities 5,277 FINANCING ACTIVITIES: Partners' distributions (86,131) Mortgage principal payments (17,568) Net cash used by financing activities (103,699) Net increase in cash 52,277 CASH, at beginning of year 263,739 CASH, at end of year $ 316,016 See accompanying summary of accounting policies and notes to financial statements. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 (Continued) Cash Flows from Operating Activities: Net loss $ (74,566) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and Amortization 206,110 Changes in operating assets and liabilities: Increase in accounts receivable (13,627) Increase in tenants' rents receivable (2,286) Increase in prepaid expenses (21,757) Decrease in tenants' security deposits 2,169 Increase in deposits in escrow (5,960) Increase in accounts payable and accrued expenses 61,445 Decrease in tenants' security deposits payable (835) Increase in prepaid rents 6 Net cash provided by operating activities $ 150,699 ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The partnership, for tax purposes, charged to expense certain costs, such as interest and real estate taxes during construction. Accordingly, the cost of property and equipment shown in these statements includes $649,227 which has been deducted for tax purposes. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings is based on a 25 year life using the straight-line method for financial reporting purposes. For income tax purposes, accelerated depreciation methods are used. AMORTIZATION Amortization of financing costs is based on a forty year life using the straight-line method for both financial reporting and income tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ASHLAND COMMONS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Ashland Commons Associates is a Massachusetts limited partnership which was formed on September 29, 1982 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 96 residential units under the provisions of Section 221 (d)(4) of the National Housing Act. The partnership has a contract with HUD to receive rent subsidy equal to approximately 80% of the toal rental income. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is insured by the Federal Housing Administration (FHA) and is payable in monthly installments of approximately $48,283, including interest at 11.728% per annum, through 2024. Annual principal payments will average approximately $25,275 each year for the next five years. The partnership is required to make monthly payments of $2,094 into a fund for replacements. Withdrawals from this fund can only be made upon the approval of the Federal Housing Commissioner. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - RELATED PARTY TRANSACTIONS The partnership pays a 4.5% management fee based on gross revenues collected, which, at present, is capped at $41.82 PUPM, to an affiliate of a general partner, and also $509 per month for data processing. NOTE 4 - ACCOUNTS PAYABLE Accounts payable consisted of: Payroll $ 3,652 Insurance 110 Operating and maintenance 96,756 Utilities 12,132 Administrative expenses 6,617 Total $ 119,267 NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the Federal Housing Administration. Total distributions are limited to $92,045 per annum as allowed by MHFA. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1996 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Profit and Loss 5 Statement of Partners' Equity (Deficit) 6 Statement of Cash Flows 7 Summary of Accounting Policies 8 Notes to Financial Statements 9 February 5, 1997 To the Partners of Rockledge Apartments Associates Woburn, Massachusetts We have audited the accompanying balance sheet of Rockledge Apartments Associates, MHFA Project No. 71-187-N, (a limited partnership) as of December 31, 1996 and the related statements of operations, partners' equity (deficit) 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 referred to above present fairly, in all material respects, the financial position of Rockledge Apartments Associates as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N BALANCE SHEET DECEMBER 31, 1996 ASSETS CURRENT ASSETS Cash and Cash Equivalents $164,844 Tenants: Accounts Receivable 7,196 Total Current Assets 172,040 DEPOSITS HELD IN TRUST - FUNDED Tenants' Security Deposits (Contra) 25,103 Total Deposits Held in Trust 25,103 RESTRICTED DEPOSITS AND FUNDED RESERVES Mortgage Escrow Deposits 16,219 Reserve for Replacements 173,341 Total Deposits 189,560 FIXED ASSETS Land 90,000 Building (Mortgaged) - Note 2 1,888,360 Less Accumulated Depreciation 1,077,953 900,407 $1,287,110 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts Payable $18,804 Accrued Interest Payable 1,977 Mortgage Payable - Current Portion 23,584 Total Current Liabilities 44,365 DEPOSIT LIABILITIES Tenants' Security Deposits (Contra) 23,358 Total Deposits Liabilities 23,358 LONG-TERM LIABILITIES Note payable to affiliate - Note 335,922 Mortgage Loan Payable - Note 2 1,252,527 Less: Current Portion 23,584 Total Long-Term Liabilities 1,264,865 Total Liabilities 1,332,588 COMMITMENTS AND CONTINGENCIES - NOTES 2,3, AND 4 PARTNERS' EQUITY (DEFICIT) - Note 4: General Partners 3,417 Limited Partners (48,895) Total Partners' Deficit (45,478) $1,287,110 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1996 REVENUES: Rental income, less vacancies of $10,596 $376,348 Interest income 18,848 Miscellaneous income 587 Total revenues 395,783 COST OF OPERATIONS: Repairs and maintenance $111,343 Salaries and wages 67,501 Real estate taxes 24,035 Management fee (Note 4) 22,793 Utilities 46,256 Administrative 27,066 Insurance 5,548 Payroll taxes and employee benefits 16,012 Depreciation and Amortization 65,048 385,652 Income before interest expenses 10,131 INTEREST EXPENSE (Notes 2 and 3) 28,648 NET LOSS $(18,517) Net Loss to General Partners $556 Net Loss to Limited Partners $17,967 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 1996 General Limited Total Partner Partners BALANCE, at December 31, 1995 $ (26,961) $ 4,215 $ (31,176) Net loss for the period (18,517) (556) (17,961) BALANCE, at December 31, 1996 $ (45,478) $ 3,659 $ (49,137) Percent of interest in profit and losses 100% 3% 97% See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996 OPERATING ACTIVITIES: Net loss $ (18,517) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and Amortization 65,048 Changes in operating assets and liabilities: Decrease in tenants' rents receivable 7,144 Increase in tenants' security deposits (1,017) Decrease in mortgage escrow deposits 1,201 Decrease in accounts payable and accrued expenses (8,185) Decrease in tenants' security deposits payable (510) Net cash provided by operating activities 45,164 INVESTING ACTIVITIES: Increase in reserve for replacements - net (55,267) FINANCING ACTIVITIES: Note payable to affiliate principal payments (7,743) Mortgage principal payments (21,979) Net cash used by financing activities (29,722) Net decrease in cash and cash equivalents (39,825) CASH AND CASH EQUIVALENTS, at beginning of year 204,669 CASH AND CASH EQUIVALENTS, at end of year $ 164,844 Disclosure of Accounting Policy and Supplemental Information: Supplemental Disclosures of Cash Flow information: Cash paid during the year for interest $ 106,766 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings and equipment is based on a twenty-five year life and a five year life respectively. The ACRS method is used for tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Rockledge Apartments Associates is a Massachusetts limited partnership which was formed on February 24, 1973 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 60 residential units. The partnership has a contract with HUD to receive rent subsidy equal to approximately 84% of the total rental income. The contract expires in May, 2018. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is payable to the Massachusetts Housing Finance Agency (MHFA) over a forty year period, in monthly installments of approximately $3,841 (after interest subsidy payments of $6,597 monthly), including interest at 7.5485% per annum, through 2018. Principal payments for the next five years are as follows: 1997 23,584 1998 25,310 1999 27,116 2000 29,163 2001 31,311 The partnership is required to make monthly payments of $7,858 to MHFA for real estate taxes, insurance, and a reserve for replacements. Withdrawals must have the approval of MHFA. Management believes it is not practical to estimate fair market value of the mortgaged property because it is not determinable as to whether financing with similar characteristics is currently available to the partnership. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - NOTES PAYABLE The note payable to affiliate bears interest at the rate of 12% per annum for a period of 15 years at which time the note is payable in full. Interest is payable only from Distributable Cash and residual amounts of Net Capital Transactions proceeds. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 4 - RELATED PARTY TRANSACTIONS The partnership pays to an affiliate of a general partner a monthly management fee of 6% rents collected and a monthly bookkeeping fee of $375, and an annual fee of $1,862 to another affiliate of a general partner. NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the MHFA. Annual distributions are limited to $9,847, as allowed by MHFA. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1995 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Profit and Loss 5 Statement of Partners' Equity (Deficit) 6 Statement of Cash Flows 7 Summary of Accounting Policies 8 Notes to Financial Statements 9 January 24, 1996 To the Partners of Rockledge Apartments Associates Woburn, Massachusetts We have audited the accompanying balance sheet of MHFA Project No. 71-187-N of the Rockledge Apartments Associates (a limited partnership) as of December 31, 1995 and the related statements of operations, partners' equity (deficit) 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 referred to above present fairly, in all material respects, the financial position of MHFA Project No. 71-187-N as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N BALANCE SHEET DECEMBER 31, 1995 ASSETS CURRENT ASSETS Cash and Cash Equivalents $204,669 Tenants: Accounts Receivable 14,340 Total Current Assets 219,009 DEPOSITS HELD IN TRUST - FUNDED Tenants' Security Deposits (Contra) 24,086 Total Deposits Held in Trust 24,086 RESTRICTED DEPOSITS AND FUNDED RESERVES Mortgage Escrow Deposits 17,420 Reserve for Replacements 118,074 Total Deposits 135,494 FIXED ASSETS Land 90,000 Building (Mortgaged) - Note 2 1,888,360 Less Accumulated Depreciation 1,012,960 965,400 OTHER ASSETS Deferred Charges 55 $1,344,044 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts Payable $26,862 Accrued Interest Payable 2,104 Mortgage Payable - Current Portion 21,979 Total Current Liabilities 50,945 DEPOSIT LIABILITIES Tenants' Security Deposits (Contra) 23,868 Total Deposits Liabilities 23,868 LONG-TERM LIABILITIES Note payable to affiliate - Note 343,665 Mortgage Loan Payable - Note 2 1,274,506 Less: Current Portion 21,979 Total Long-Term Liabilities 1,296,192 Total Liabilities 1,371,005 COMMITMENTS AND CONTINGENCIES - NOTES 2,3, AND 4 PARTNERS' EQUITY (DEFICIT) - Note 4: General Partners 8,972 Limited Partners (35,933) Total Partners' Deficit (26,961) $1,344,044 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1995 REVENUES: Rental income, less vacancies of $5,838 $392,567 Interest income 15,258 Miscellaneous income 880 Total revenues 408,705 COST OF OPERATIONS: Repairs and maintenance $89,579 Salaries and wages 47,910 Real estate taxes 43,163 Management fee (Note 4) 23,586 Utilities 44,090 Administrative 28,711 Insurance 5,578 Payroll taxes and employee benefits 12,508 Depreciation and Amortization 65,137 360,262 Income before interest expenses 48,443 INTEREST EXPENSE (Notes 2 and 3) 30,822 NET INCOME $17,621 Net Income to General Partners $529 Net Income to Limited Partners $17,092 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF PARTNERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1995 General Limited Total Partner Partners BALANCE, at December 31, 1994 $ (44,582) $ 3,686 $ (48,268) Net Income for the period 17,621 5,286 12,335 BALANCE, at December 31, 1995 $ (26,961) $ 8,972 $ (35,933) Percent of interest in profit and losses 100% 3% 97% See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1995 OPERATING ACTIVITIES: Net income $ 17,621 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 65,137 Changes in operating assets and liabilities: Increase in tenants' rents receivable (3,540) Decrease in prepaid expenses 5,745 Increase in tenants' security deposits (3,256) Increase in mortgage escrow deposits (3,394) Increase in accounts payable 5,757 Increase in tenants' security deposits payable 3,619 Decrease in prepaid rents (90) Net cash provided by operating activities 87,599 INVESTING ACTIVITIES: Decrease in reserve for replacements - net 4,628 FINANCING ACTIVITIES: Note payable to affiliate principal payments (1,812) Mortgage principal payments (20,486) Net cash used by financing activities (22,298) Net increase in cash and cash equivalents 69,929 CASH AND CASH EQUIVALENTS, at beginning of year 134,740 CASH AND CASH EQUIVALENTS, at end of year $ 204,669 Disclosure of Accounting Policy and Supplemental Information: Supplemental Disclosures of Cash Flow information: Cash paid during the year for interest $ 114,191 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings and equipment is based on a twenty-five year life and a five year life respectively. The ACRS method is used for tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Rockledge Apartments Associates is a Massachusetts limited partnership which was formed on February 24, 1973 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 60 residential units. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is payable to the Massachusetts Housing Finance Agency (MHFA) over a forty year period, in monthly installments of approximately $3,841 (after interest subsidy payments of $6,597 monthly), including interest at 7.5485% per annum, through 2018. Principal payments for the next five years are as follows: 1996 21,979 1997 23,584 1998 25,310 1999 27,116 2000 29,163 The partnership is required to make monthly payments of $7,858 to MHFA for real estate taxes, insurance, and a reserve for replacements. Withdrawals must have the approval of MHFA. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - NOTES PAYABLE The note payable to affiliate bears interest at the rate of 12% per annum for a period of 15 years at which time the note is payable in full. Interest is payable only from Distributable Cash and residual amounts of Net Capital Transactions proceeds. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 4 - RELATED PARTY TRANSACTIONS The partnership pays a monthly management fee of 6% rents collected to an affiliate of a general partner and an annual fee of $1,862 to another affiliate of a general partner. NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the MHFA. Annual distributions are limited to $9,847, as allowed by MHFA. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N REPORT ON FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1994 CONTENTS Page Auditors' Report 3 Financial Statements: Balance Sheet 4 Statement of Operations (Form F.C. - 2A) 5 Statement of Partners' Equity (Deficit) (Form F.C. - 3C) 6 Statement of Cash Flows 7 Summary of Accounting Policies 8 Notes to Financial Statements 9 January 25, 1995 To the Partners of Rockledge Apartments Associates Woburn, Massachusetts We have audited the accompanying balance sheet of MHFA Project No. 71-187-N of the Rockledge Apartments Associates (a limited partnership) as of December 31, 1994 and the related statements of operations, partners' equity (deficit) 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 statements 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 MHFA Project No. 71-187-N as of December 31, 1994, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. Lloyd B. McManus, C.P.A., P.C. Boston, Massachusetts ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N BALANCE SHEET December 31, 1994 ASSETS Property (mortgaged) - Note 2: Land $ 90,000 Building 1,624,825 Furnishings and equipment 263,535 1,978,360 Less accumulated depreciation 947,967 NET PROPERTY AND EQUIPMENT 1,030,393 Cash 134,740 Rents receivable 10,800 Tenants' security deposits 20,830 Prepaid expenses 5,745 Deposits in escrow 14,026 Reserve for replacement funded 122,702 Deferred finance fees 199 $ 1,339,435 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage loan payable (Note 2) $ 1,294,992 Note payable to affiliate (Note 3) 45,477 Accounts payable 2,073 Accrued expenses 21,136 Tenants' security deposits payable 20,249 Prepaid rent 90 TOTAL LIABILITIES 1,384,017 Commitments and contingencies (Notes 2, 3 and 4) Partners' deficit (Note 5) (44,582) $ 1,339,435 See accompanying summary of accounting policies and notes to financial statement. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994 REVENUES: Gross Potential Rental Income $ 412,701 Less Vacancies, Bad Debts & Section 236 Excess Rental Income remitted 31,755 Effective Rental Income 380,946 Interest subsidy 80,546 Other income - Total 10,847 Residual receipts (remitted) or reimbursed -- Total Income 472,339 OPERATING EXPENSES: Administration $ 68,685 Maintenance, Res. Svcs. & Security 128,761 Utilities 43,890 Taxes (R.E. & Other) 41,970 Insurance 6,772 Depreciation and Amortization 65,137 Interest (Financing & Other) 107,435 Subtotal 462,650 Net Income for the Development before Non-Operating Items 9,689 Non-Operating Items (Gains or Losses) -- Net Income for the Development 9,689 Add: Revenues of the Partnership not Applicable to the Development -- Subtr: Expenses of the Partnership not Applicable to the Development 5,460 Net Income for the Partnership $ 4,229 F.C. - 2A See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 023-35279 STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 1994 General Limited Total Partners Partners BALANCE, December 31, 1993 $ (48,811) $ 3,559 $ (52,370) Add: Capital Contributions -- -- -- Add: Net Income for the period 4,229 127 4,102 Deduct: Distribution -- -- -- BALANCE, December 31, 1994 $ (44,582) $ 3,686 $ (48,268) Form F.C. - 3C See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 071-187-N STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 OPERATING ACTIVITIES: Net Income $ 4,229 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and Amortization 65,137 Changes in operating assets and liabilities: Increase in rents receivable (4,154) Decrease in prepaid expenses 762 Decrease in tenants' security deposits 3,863 Increase in insurance and real estate tax escrows (3,750) Decrease in accounts payable (1,377) Decrease in accrued expenses (9,632) Decrease in tenants' security deposits payable (2,110) Decrease in prepaid rents (209) Net cash provided by operating activities 52,759 INVESTING ACTIVITIES: Increase in reserve for replacements - net (16,648) Net cash used in investing activities (16,648) FINANCING ACTIVITIES: Decrease in mortgage loan payable (19,097) Net cash used in financing activities (19,097) Net increase in cash 17,014 CASH, at beginning of year 117,726 CASH, at end of year $ 134,740 Supplemental Disclosures of Cash Flow information: Cash paid during the year for interest $ 117,392 See accompanying summary of accounting policies and notes to financial statements. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING Financial Statements are prepared on the accrual basis and all development and construction costs were capitalized. The balance sheet does not give effect to any assets that the partners may have outside their interest in the partnership, nor to any personal obligations, including income taxes, of the individual partners. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment are stated at cost. Depreciation of buildings and equipment is based on a twenty-five year life and a five year life respectively. The ACRS method is used for tax purposes. INCOME TAXES The partnership, as an entity, is not subject to income tax. The partners' share of the loss for tax purposes is includable in their income tax returns. CASH AND CASH EQUIVALENTS For purposes of statement of cash flows, the Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS NOTE 1 - GENERAL Rockledge Apartments Associates is a Massachusetts limited partnership which was formed on February 24, 1973 for the purpose of owning, rehabilitating and operating a multi-unit apartment complex containing 60 residential units. NOTE 2 - MORTGAGE LOAN PAYABLE The mortgage note is payable to the Massachusetts Housing Finance Agency (MHFA) over a forty year period, in monthly installments of approximately $3,841 (after interest subsidy payments of $6,597 monthly), including interest at 7.5485% per annum, through 2018. Principal payments for the next five years are as follows: 1995 20,486 1996 21,979 1997 23,584 1998 25,310 1999 27,116 The partnership is required to make monthly payments of $7,861 to MHFA for real estate taxes, insurance, and a reserve for replacements. Withdrawals must have the approval of MHFA. The partnership and its partners have no personal liability on the mortgage loan; the mortgaged property is the only collateral for the loan. NOTE 3 - NOTES PAYABLE The note payable to affiliate bears interest at the rate of 12% per annum for a period of 15 years at which time the note is payable in full. Interest is payable only from Distributable Cash and residual amounts of Net Capital Transactions proceeds. ROCKLEDGE APARTMENTS ASSOCIATES (a limited partnership) PROJECT NO: 71-187-N NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 4 - RELATED PARTY TRANSACTIONS The partnership pays a monthly management fee of 6% rents collected to an affiliate of a general partner and an annual fee of $1,862 to another affiliate of a general partner. NOTE 5 - CAPITAL DISTRIBUTION RESTRICTION No distribution of assets may be made except from "surplus cash" as defined in the regulatory agreement with the MHFA. Annual distributions are limited to $9,847, as allowed by MHFA. -----END PRIVACY-ENHANCED MESSAGE-----