10-Q 1 a2053400z10-q.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR ------ 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR ------ 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-12634 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Massachusetts 13-3161322 --------------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 Madison Avenue, New York, New York 10022 -------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212)421-5333 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- PART I - Financial Information Item 1. Financial Statements CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)

2 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (continued)

See Accompanying Notes to Consolidated Financial Statements. 3 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

4 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (continued)

See Accompanying Notes to Consolidated Financial Statements. 5 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statement of Partners' Deficit (Unaudited)

See Accompanying Notes to Consolidated Financial Statements. 6 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited)

7 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited) (continued)

8 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited) (continued)

See Accompanying Notes to Consolidated Financial Statements. 9 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) NOTE 1 - GENERAL The consolidated financial statements for the three months ended May 31, 2001 and 2000, include the accounts of Cambridge + Related Housing Properties Limited Partnership, a Massachusetts limited partnership (the "Partnership"), and nineteen and twenty-four Subsidiary Partnerships ("Subsidiaries", "Subsidiary Partnerships" or "Local Partnerships"), respectively. The Partnership is a limited partner, with an ownership interest of 98.99% in each of the Subsidiary Partnerships. Through the rights of the Partnership and/or one of its general partners (a "General Partner"), which General Partner has a contractual obligation to act on behalf of the Partnership, the right to remove the local 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 quarter ends on May 31. All Subsidiaries have fiscal quarters ending March 31. Accounts of Subsidiaries have been adjusted for intercompany transactions from April 1 through May 31. The Partnership's fiscal quarter ends on May 31 in order to allow adequate time for the Subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with generally accepted accounting principles ("GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. Increases (decreases) in the capitalization of consolidated Subsidiaries attributable to minority interest arise from cash contributions from 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 for both the three months ended May 31, 2001 and 2000, respectively. The Partnership's investment in each Subsidiary is equal to the respec- 10 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) tive Subsidiary's partners' equity less minority interest capital, if any. These unaudited financial statements have been prepared on the same basis as the audited financial statements included in the Partnership's Form 10-K for the year ended February 28, 2001. In the opinion of the General Partners, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Partnership as of May 31, 2001, the results of operations and cash flows for the three months ended May 31, 2001 and 2000. However, the operating results for the three months ended May 31, 2001 may not be indicative of the results for the year. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted. It is suggested that these consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's February 28, 2001 Annual Report on Form 10-K. NOTE 2 - PURCHASE MONEY NOTES PAYABLE 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 Partnership to which the Purchase Money Note relates. 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. As of May 31, 2001, the maturity dates of the Purchase Money Notes associated with the remaining properties owned by the Subsidiary Partnerships were extended for three to five years (see below). Any interest not paid currently accrues, without further interest thereon, through the extended due date of each of the Purchase 11 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) Money Notes, respectively. Continued accrual of such interest without payment would impact the effective rate of the Purchase Money Notes, specifically by reducing the current effective interest rate of 9%. The exact effect is not determinable inasmuch as it depends on the actual future interest payments and ultimate repayment dates of the Purchase Money Notes. Unpaid interest of $30,185,739 and $30,335,470 at May 31, 2001 and February 28, 2001, respectively, has been accrued and is included in the caption due to selling partners. 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 from the sale or refinancing of the apartment complex, or in some cases the Local Partnerships interest ("Local Partnership Interest") to which the Purchase Money Note relates. The Partnership was permitted to extend the term of the Purchase Money Notes for up to five 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. The Partnership sent an extension notice to each Purchase Money Note holder that pursuant to the Purchase Money Note, it was extending the maturity. However in certain cases, the Partnership did not pay the extension fee at that time, deferring such payment to the future. Extension fees in the amount of $873,470 were incurred by the Partnership through May 31, 2001. All Purchase Money Notes are now extended with maturity dates ranging from July 2001 to December 2004. Extension fees of $392,967 were accrued and added to the Purchase Money Notes balance. The Partnership expects that upon final maturity it will be required to refinance or sell its investments in the Local Partnerships in order to pay the Purchase Money Notes and accrued interest thereon. Based on the historical operating results of the Local Partnerships and the current economic conditions including changes in tax laws, it is unlikely that the proceeds from such sales will be sufficient to meet the outstanding balances. Management is working with the Purchase Money Note holders to restructure and/or refinance the Purchase Money Notes. No assurance can be given that management's efforts will be successful. The Purchase 12 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) Money Notes are without personal recourse to either the Partnership or any of its partners and the sellers' recourse, in the event of non-payment, would be to foreclose on the Partnership's interests in the respective Local Partnerships. During the three months ended May 31, 2001 and 2000, the Partnership received cash flow distributions aggregating $36,801 and $43,500, respectively, of which $22,083 and $26,100 was used to pay interest on the Purchase Money Notes. In addition, the Partnership received a distribution of proceeds from the sales of Local Partnerships aggregating $88,378 and $3,461,611 of which $84,877 and $1,667,877 was used to pay principal and interest on the Purchase Money Notes during the three months ended May 31, 2001 and 2000, respectively. NOTE 3 - RELATED PARTY TRANSACTIONS The costs incurred to related parties for the three months ended May 31, 2001 and 2000 were as follows:

(a) After all other expenses of the Partnership are paid, an annual Partnership management fee of up to .5% of invested assets is 13 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) payable to the Partnership's General Partners and affiliates. Partnership management fees owed to the General Partners amounting to approximately $1,234,000 and $1,092,000 were accrued and unpaid as of May 31, 2001 and February 28, 2001, respectively. The General Partners' fees are being paid currently, other than the Partnership Management fees that were accrued and continue to be deferred. (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 General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the Subsidiary Partnerships' performance. (c) Property management fees incurred by Local Partnerships to affiliates of the Local Partnerships amounted to $110,882 and $126,419 for the three months ended May 31, 2001 and 2000, respectively. Of such fees $0 and $28,298, respectively, were incurred to a company which is also an affiliate of the General Partners. (d) Cambridge/Related Housing Associates Limited Partnership, the special limited partner of each of the Subsidiary Partnerships, owning .01%, is entitled to receive a local administrative fee of up to $2,500 per year from each Subsidiary Partnership. (e) The Partnership entered into an agreement with the local general partner of Parktowne Ltd. and Westwood Apartment Company Ltd., which provides for an annual incentive fee based on cash flow distributed from the respective properties. Such fee amounted to $0 and $7,605 for the three months ended May 31, 2001 and 2000, respectively. 14 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) NOTE 4 - SALE OF PROPERTIES GENERAL The Partnership is currently in the process of winding up its operations and disposing of its investments. It is anticipated that this process will take a number of years. As of May 31, 2001, the Partnership has disposed of twenty-six of its forty-four original investments. Six additional investments are listed for sale and the Partnership anticipates that the twelve remaining investments will be listed for sale by December 31, 2002. There may be no assurance as to when the Partnership will dispose of its last remaining investments or the amount of proceeds which may be received. However, based on the historical operating results of the Local Partnerships and the current economic conditions including changes in tax laws, it is unlikely that the proceeds from such sales received by the Partnership will be sufficient to return to the limited partners their original investment. On January 17, 2000, Rolling Meadows Apartments, Ltd. ("Rolling Meadows") entered into an agreement for the purchase and sale of real estate with an unaffiliated third party purchaser for a purchase price of $2,400,000. This contract was terminated on April 30, 2001. Rolling Meadows entered into a new agreement for the purchase and sale of real estate to a different unaffiliated third party purchaser for a purchase price of $2,350,000, which was subsequently reduced to $1,925,000. The sale is expected to occur in August 2001. No assurances can be given that the sale will actually occur. On April 28, 2000, the property and the related assets and liabilities of Pacific Palms were sold to a third party purchaser for approximately $4,900,000, resulting in a gain of approximately $2,554,000. The Partnership used approximately $1,668,000 of the net proceeds to settle the associated Purchase Money Note and accrued interest thereon which had a total outstanding balance of approximately $5,214,000, resulting in forgiveness of indebtedness of approximately $3,546,000. The Partnership netted approximately $1,940,000 of cash which was placed into working capital to pay Partnership expenses. 15 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) On March 16, 2001, the property and the related assets and liabilities of Char-Mur Apartments ("Char-Mur") were sold to an unaffiliated third party purchaser for $475,000, resulting in a loss in the amount of approximately $68,000. The Partnership used approximately $85,000 to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $986,000, resulting in forgiveness of indebtedness income of approximately $901,000. On April 19, 2001, San Diego - Logan Square Gardens Company ("Logan Square") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an unaffiliated third party purchaser for a purchase price of $9,500,000. The closing is expected to occur in November 2001. No assurances can be given that the sale will actually occur. NOTE 5 - COMMITMENTS AND CONTINGENCIES The following disclosure includes changes and/or additions to disclosures regarding the Subsidiary Partnership which were included in the Partnership's Annual Report on Form 10-K for the period ended February 28, 2001. a) Purchase Money Notes As part of the purchase price of its investment in the Local Partnerships, the Partnership issued approximately $61,029,000 of Purchase Money Notes. As of May 31, 2001, unpaid accrued interest on the Purchase Money Notes amounted to approximately $30,185,739. The principal of and all accrued interest on the Purchase Money Notes is due at maturity. The Partnership was permitted to extend the term of the Purchase Money Notes for up to five 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 assets. The Partnership sent an extension notice to each Purchase Money Note holder that pursuant to the note, it was extending the maturity. However in certain cases, the Partnership did not pay the extension fee at that time, deferring such payment to the future. The holders of the 16 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) Note could argue that until the fee is paid the Note has not been properly extended. b) Legal Proceedings On or about July 24, 2000, three partnerships controlled by one of the Purchase Money Note holders commenced litigation in the Circuit Court of Jefferson County, Alabama against the Partnership, captioned as follows: MOBILE EASTWYCK III APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4431, MOBILE APARTMENTS, LTD. V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4432, and ZEIGLER PARTNERS LTD. V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-00-4433 (collectively, the "Litigations"). The Litigation commenced by Mobile Apartments, Ltd. has been voluntarily dismissed by the plaintiff in favor of an interpleader action described below. The plaintiffs in each of the Litigations sold their interest in certain limited partnerships to the Partnership. The interests that were sold to the Partnership consisted of limited partnerships that own low-income housing properties located in Mobile, Alabama (the "Alabama Limited Partnerships"). The Complaints allege that, as payment for a portion of the purchase price of the Partnership's acquired interest in the Alabama Limited Partnership, the plaintiffs took a Purchase Money Note from the Partnership, and the Partnership pledged its right title and interest in the Alabama Limited Partnerships as security for the Purchase Money Notes. The Complaints allege that the Partnership has defaulted in its obligations under the Purchase Money Notes, and that the plaintiffs are entitled to sell the Partnership's interests in the Alabama Limited Partnerships and the underlying property to pay off the Purchase Money Notes. The Partnership has vigorously contested the Litigations, claiming that, among other things, the Purchase Money Notes are not in default, that the Purchase Money Note holder has breached his fiduciary duty to the Partnership as general partner of the Alabama Limited Partnerships, and that the Purchase Money Note holder assigned 25% of the Purchase Money Notes to third parties 17 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2001 (Unaudited) who are not joined in the Litigations. While the Partnership intends to continue to contest the Litigations, because the Litigations are in their earliest stages and no discovery has taken place, management is unable at this time to evaluate the likelihood of an unfavorable outcome or whether the resulting liability, if any, would have a material adverse effect on the financial condition of the Partnership. In or about March 2001, Wallace, Jordan, Ratliff, and Brandt, L.L.C. ("Wallace Jordan"), as Escrow Agents, commenced an interpleader action in the Circuit Court of Jefferson County, Alabama entitled WALLACE, JORDAN, RATLIFF, AND BRANDT, LLC V. SHEARSON + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP ET AL., CV-01-001155 (the "Interpleader Action"). The Interpleader Action seeks to resolve competing claims to $125,000 which is held in escrow by Wallace Jordan following the sale of the property known as Southbay, which was owned by the Local Partnership known as New Jersey, Ltd. The Partnership does not expect to have any liability as a result of the Interpleader Action because the action seeks only to resolve the claims of $125,000 paid into Court; however, because the Interpleader Action is in its earliest stages and no discovery has taken place, management is unable at this time to evaluate the likelihood of an unfavorable outcome or whether such an outcome would have a material adverse effect on the financial condition of the Partnership. The Partnership and the plaintiffs have recently engaged in meaningful settlement negotiations which the Partnership is hopeful will lead to a resolution of these litigations. 18 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES The Partnership's primary sources of funds are (i) cash distributions from operations (ii) cash distributions from sales of the Local Partnerships in which the Partnership has invested, (iii) interest earned on funds and (iv) cash in working capital reserves. All of these sources of funds are available to meet the obligations of the Partnership. During the three months ended May 31, 2001 and 2000, the Partnership received cash flow distributions aggregating $36,801 and $43,500, respectively, of which $22,083 and $26,100, respectively, was used to pay interest on the Purchase Money Notes. In addition, the Partnership received a distribution of proceeds from the sales of Local Partnerships aggregating $88,378 and $3,461,611, of which $84,877 and $1,667,877 was used to pay principal on the Purchase Money Notes during the three months ended May 31, 2001 and 2000, respectively. During the three months ended May 31, 2001, cash and cash equivalents of the Partnership and its nineteen consolidated Local Partnerships decreased approximately ($1,098,000). This decrease was primarily due to principal payments of mortgage notes payable ($681,000), an increase in mortgage escrow deposits ($148,000), distributions paid to partners ($516,000), payments to selling partners ($141,000), and acquisitions of property and equipment ($128,000) which exceeded cash provided by operating activity ($42,000) and proceeds from the sale of properties ($475,000). Included in the adjustments to reconcile the net income to cash provided by operating activities is loss on sale of properties ($68,000), forgiveness of indebtedness income ($901,000) and depreciation ($288,000). The Partnership has a working capital reserve of approximately $833,000 at May 31, 2001. The working capital reserve is temporarily invested in money market accounts which can be easily liquidated to meet obligations as they arise. The General Partners believe that the Partnership's reserves, net proceeds from future sales and future cash flow distributions will be adequate for its operating needs, and plan to continue investing available reserves in short term investments. In March 2001 and 2000, a distribution of approximately $511,000 and $994,000 and $5,000 and $10,000 was paid to the limited partners and General Partners, respec- 19 tively, from net proceeds from the sale of properties. None of the total distributions of approximately $516,000 and $1,004,000 for the three months ended May 31, 2001, was deemed to be a return of capital in accordance with GAAP. Partnership management fees owed to the General Partners amounting to approximately $1,234,000 and $1,092,000 were accrued and unpaid as of May 31, 2001 and February 28, 2001, respectively. The General Partners' fees are being paid currently, other than the Partnership management fees that were accrued and continue to be deferred. The Local Partnerships that receive government assistance are subject to low-income use restrictions which limit the owners' ability to sell or refinance the properties. In order to maintain the existing inventory of affordable housing, Congress passed a series of related acts including the Emergency Low Income Preservation Act of 1987, the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (together the "Preservation Acts") and the Housing Opportunity Program Extension Act of 1996 (the "1996 Act"). In exchange for maintaining the aforementioned use restrictions, the Preservation Acts provided financial incentives for owners of government assisted properties. The 1996 Act provided financial assistance by funding the sale of such properties to not-for-profit owners and also restores the owners ability to prepay their U.S. Department of Housing and Urban Development ("HUD") mortgage and convert the property to condominiums or market-rate rental housing. Local general partners had filed for incentives under the Preservation Acts or the 1996 Act for the following local partnerships: San Diego - Logan Square Gardens Company, Albuquerque - Lafayette Square Apts. Ltd., Westgate Associates Limited, Riverside Gardens Limited Partnership, Pacific Palms, Canton Commons Associates, Rosewood Manor Associates, Bethany Glen Associates and South Munjoy Associates, Limited. As of May 31, 2001, all of these Local Partnerships were sold except for Logan Square and Lafayette Square. The Preservation Acts have subsequently been repealed or revoked. The Local General Partner of the Logan Square and Lafayette Square Properties is currently negotiating purchase and sale contracts. For a discussion of Purchase Money Notes payable see Note 2 to the financial statements. For a discussion of the Partnership's sale of properties see Note 4 to the financial statements. 20 For a discussion of contingencies affecting certain Local Partnerships, see Note 5 to the financial statements and Part II, Item 1 of this report. Since the maximum loss the Partnership would be liable for 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 although the Partnership would lose its entire investment in the property and any ability for future appreciation. Management is not aware of any trends or events, commitments or uncertainties which have not otherwise been 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. The portfolio is diversified by the location of the properties around the United States so that if one area of the United States is experiencing downturns in the economy, the remaining properties in the portfolio may be experiencing upswings. However, the geographic diversifications of the portfolio may not protect against a general downturn in the national economy. RESULTS OF OPERATIONS The results of operations of the Partnership, as well as the Local Partnerships, remained fairly consistent during the three months ended May 31, 2001 and 2000, excluding Pacific Palms, Westwood Apartments Company, Ltd., Parktowne, Ltd., Westgate Associates, Limited, New Jersey, Ltd. and Char-Mur Apartments, which sold their properties (collectively the "Sold Assets"), and administrative and management, operating and repairs and maintenance. The Partnership's primary source of income continues to be its portion of the Local Partnerships' operating results. The majority of Local Partnership income continues to be in the form of rental income with the corresponding expenses being divided among operations, depreciation, and mortgage interest. In addition, the Partnership incurred interest expense relating to the Purchase Money Notes issued when the Local Partnership Interests were acquired. Rental income decreased approximately 16% for the three months ended May 31, 2001, as compared to 2000. Excluding the Sold Assets, rental income increased approximately 4%, primarily due to rental rate increases and decreases in vacancies at several Local Partnerships. 21 Other income increased approximately $13,000 for the three months ended May 31, 2001, as compared to 2000. Excluding the Sold Assets, such income increased approximately $27,000, primarily due to an increase in interest income on higher replacement reserve balances at four Local Partnerships. Total expenses, excluding the Sold Assets, administrative and management, operating and repairs and maintenance remained fairly consistent with an increase of approximately 1% for the three months ended May 31, 2001, as compared to 2000. Administrative and management decreased approximately 8% for the three months ended May 31, 2001, as compared to 2000. Excluding the Sold Assets, administrative and management increased approximately 12%, primarily due to an increase in legal fees at the Partnership level. Operating increased approximately 18% for the three months ending Mary 31, 2001, as compared to 2000. Excluding the Sold Assets, operating increased approximately 34%, primarily due to an increase in utility costs and usage at two Local Partnerships. Repairs and maintenance decreased approximately 28% for the three months ended May 31, 2001, as compared to 2000. Excluding the Sold Assets, repairs and maintenance decreased approximately 12%, primarily due to the correction of deficiencies noted on HUD inspections at two Local Partnerships in 2000. Taxes and insurance, interest and depreciation expense decreased approximately ($93,000), ($237,000) and ($114,000), respectively, for the three months ended May 31, 2001, respectively, as compared to 2000, primarily due to decreases relating to the Sold Assets. Excluding the Sold Assets, taxes and insurance and interest increased (decreased) approximately ($6,000) and $1,000, respectively, for the three months ended May 31, 2001 as compared to 2000. Excluding the Sold Assets, Buena Vista Manor Apartments, Ltd., Zeigler Boulevard, Ltd., Eastwyck III, Ltd., Rolling Meadows Apartments, Ltd., Wingate Associates, Limited, and San Diego-Logan Square Gardens Company for depreciation only, depreciation expense remained fairly consistent with an increase of approximately $2,000 for the three months ended May 31, 2001 as compared to 2000. These six properties are not depreciated during the period because they are classified as assets held for sale. 22 Item 3. Quantitative and Qualitative Disclosures about Market Risk None 23 PART II - OTHER INFORMATION Item 1. Legal Proceedings - This information is incorporated by reference in Note 5 to the Financial Statements. Item 2. Changes in Securities and Use of Proceeds - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27 Financial Data Schedule (filed herewith) (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter. 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP (Registrant) By: GOVERNMENT ASSISTED PROPERTIES, INC., a General Partner Date: June 29, 2001 By:/s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive and Financial Officer Date: June 29, 2001 By:/s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer By: RELATED HOUSING PROGRAMS CORPORATION, a General Partner Date: June 29, 2001 By:/s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive Financial Officer Date: June 29, 2001 By:/s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer

CAMBRIDGE RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP 10-Q