10-Q 1 f10q_aug2003-camr.txt 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 August 31, 2003 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 ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No X ----- ----- PART I - Financial Information Item 1. Financial Statements CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)

============ ============= ~~May~~August 31, February 28, 2003 2003 ------------ ------------- ASSETS Property and equipment-held for sale, net of accumulated depreciation of $4,144,839 and $5,868,186, respectively $ 34,~~845~~019,~~522~~317 $ 5,029,926 Cash and cash equivalents ~~871~~885,~~067~~274 851,768 Cash - restricted for tenants' security deposits 602 11,457 Mortgage escrow deposits ~~222~~187,~~058~~329 1,207,847 Rents receivable 4,~~360~~148 8,372 Prepaid expenses and other assets ~~414~~390,~~250~~327 334,407 ------------ ------------ Total assets $ 5,~~357~~486,~~859~~997 $ 7,443,777 ============ ============

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

============ ============= ~~May~~August 31, February 28, 2003 2003 ------------ ------------- LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable $ 2,~~229~~186,~~535~~111 $ 2,953,940 Purchase Money Notes payable (Note 2) 1,465,667 2,408,117 Due to selling partners (Note 2) 2,~~198~~229,~~275~~460 3,685,011 Accounts payable, accrued expenses and other liabilities ~~189~~178,~~795~~191 374,298 Tenants' security deposits payable 602 11,457 Due to general partners of subsidiaries and their affiliates 33179,~~423~~986 33,423 Due to general partners and affiliates 2,~~814~~841,~~927~~044 2,685,431 ------------ ------------ Total liabilities 89,~~932~~081,~~224~~061 12,151,677 ------------ ------------ Minority interest (~~120~~119,~~386~~532) (91,601) ------------ ------------ Commitments and contingencies Partners' deficit: Limited partners (2,~~970~~991,~~912~~260) (4,121,609) General partners (483,~~067~~272) (494,690) ------------ ------------ Total partners' deficit (3,~~453~~474,~~979~~532) (4,616,299) ------------ ------------ Total liabilities and partners' deficit $ 5,~~357~~486,~~859~~997 $ 7,443,777 ============ ============

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

========================== ========================= Three Months Ended ~~May~~Six Months Ended August 31, August 31, -------------------------- ------------------------- 2003 2002* 2003 2002 -------------------------- ------------------------- Revenues: Rentals, net $ ~~529~~409,~~730~~572 $ 2,~~505~~300,~~909~~053 $ 939,302 $ 4,805,962 Other 127,~~370~~995 61261,~~929~~397 ~~Gain~~20,365 323,326 (Loss) gain on sale of properties (Note 4) 0 (260,869) 1,369,607 ~~661~~400,~~280~~411 ----------- ----------- ----------- ----------- Total revenues 1417,~~911~~567 2,~~707~~300,581 32,~~229~~329,~~118~~274 5,529,699 ----------- ----------- ----------- ----------- Expenses Administrative and management ~~141~~118,~~319~~788 ~~722~~557,~~033~~049 260,107 1,279,082 Administrative and management- related parties (Note 3) ~~313~~39,~~599~~576 ~~313~~311,~~214~~888 353,175 625,102 Operating ~~148~~121,~~620~~536 ~~510~~449,~~717~~500 270,156 960,217 Repairs and maintenance ~~111~~76,~~083~~766 ~~515~~503,~~151~~909 187,849 1,019,060 Taxes and insurance 7549,~~945~~415 ~~296~~289,~~895~~996 125,360 586,891 Interest 3431,~~457~~185 ~~437~~358,~~232~~092 65,642 795,324 Depreciation 0 105,~~658~~659 0 211,317 ----------- ----------- ----------- ----------- Total expenses ~~825~~437,~~023~~266 2,~~900~~576,~~900~~093 1,262,289 5,476,993 ----------- ----------- ----------- ~~Income~~----------- (Loss) income before minority interest and extraordinary item (19,699) (275,512) 1,~~086~~066,~~684~~985 ~~328~~52,~~218~~706 Minority interest in (income) loss of subsidiaries 28(854) (2,~~783~~848) ~~125~~27,~~715~~929 122,867 ----------- ------------ ~~Income before extraordinary item 1,115,467 453,933~~ ----------- ------------ (Loss) income before extraordinary item (20,553) (278,360) 1,094,914 175,573 Extraordinary item- forgiveness of indebtedness income (Note 4) 0 0 46,853 2,427,492 ----------- ----------- ----------- ----------- Net (loss) income $ (20,553) $ (278,360) $ 1,~~162~~141,~~320~~767 $ 2,~~881~~603,~~425~~065 =========== =========== =========== ===========

See Accompanying Notes to Consolidated Financial Statements. 4 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (continued)

======================== ======================= Three Months Ended ~~May~~Six Months Ended August 31, August 31, ------------------------ ----------------------- 2003 2002* 2003 2002 ------------------------ ----------------------- ~~Income~~(Loss) income before extraordinary item - limited partners $ (20,347) $ (275,576) $1,~~104~~083,~~312~~965 $ ~~449~~173,~~394~~817 Extraordinary item - limited partners 0 0 46,~~385~~384 2,403,217 ---------- ---------- ---------- ---------- Net (loss) income - limited partners $ 1(20,~~150~~347) $ (275,~~697~~576) $1,130,349 $2,~~852~~577,~~611~~034 ========== ========== ========== ========== Number of limited ~~Partnership~~partnership units outstanding 10,038 10,038 10,038 10,038 ========== ========== ========== ========== ~~Income~~(Loss) income before extraordinary item per limited partnership unit $ ~~110~~(2.0102) $ 44(27.7745) $ 107.99 $ 17.32 Extraordinary item per limited partnership unit 0 0 4.62 239.41 ---------- ---------- ---------- ---------- Net (loss) income per limited partnership unit $ ~~114~~(2.6302) $ ~~284~~(27.1845) $ 112.61 $ 256.73 ========== ========== ========== ==========

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

============================================== Limited General Total Partners Partners ---------------------------------------------- Balance - March 1, 2003 $(4,616,299) $(4,121,609) $ (494,690) Net income - ~~three~~six months ended ~~May~~August 31, 2003 1,~~162~~141,~~320~~767 1,~~150~~130,~~697~~349 11,~~623~~418 ----------- ----------- ----------- Balance-~~May~~August 31, 2003 $(3,~~453~~474,~~979~~532) $(2,~~970~~991,~~912~~260) $ (483,~~067~~272) =========== =========== ===========

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

============================ ~~Three~~Six Months Ended ~~May~~August 31, ---------------------------- 2003 2002* ---------------------------- Cash flows from operating activities: Net income $ 1,~~162~~141,~~320~~767 $ 2,~~881~~603,~~425~~065 ----------- ------------ Adjustments to reconcile net income to net cash ~~(used in)~~ provided by operating activities: Gain on sale of properties (Note 4) (1,369,607) (~~661~~400,~~280~~411) Extraordinary item - forgiveness of indebtedness income (Note 4) (46,853) (2,427,492) Depreciation 0 ~~105~~211,~~658~~317 Minority interest in loss of subsidiaries (2827,~~783~~929) (~~125~~122,~~715~~867) Increase in cash-restricted for tenants' security deposits (427) (1416,~~694~~567) Decrease in mortgage escrow deposits ~~246~~199,~~209~~476 ~~273~~427,~~287~~519 Decrease in rents receivable 4,~~012~~224 ~~148~~82,~~854~~190 (Increase) decrease in prepaid expenses and other assets (9874,~~192~~269) ~~339~~22,~~866~~163 Increase in due to selling partners 3364,~~667~~852 ~~328~~619,~~159~~292 Decrease in accounts payable, accrued expenses and other liabilities (~~139~~151,~~867~~471) (~~925~~506,~~192~~272) Increase ~~(decrease)~~ in tenants' security deposits payable 427 ~~(897)~~1,502 Increase in due to general partners of subsidiaries and their affiliates 0146,563 255,~~500~~000 Increase in due to general partners and affiliates ~~129~~155,~~496~~613 ~~247~~1,~~395~~529,079 ----------- ------------ Total adjustments (1,~~269~~099,~~918~~401) (2525,~~709,551~~547) ----------- ------------ Net cash ~~(used in)~~ provided by operating activities ~~(107~~42,~~598)~~366 ~~171~~2,~~874~~077,518 ----------- ------------

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

============================ ~~Three~~Six Months Ended ~~May~~August 31, ---------------------------- 2003 2002* ---------------------------- Cash flows from investing activities: Proceeds from sale of properties 2,722,041 ~~596~~84,~~872~~741 Acquisitions of property and equipment (23197,~~537~~332) (2042,~~615~~781) Increase in mortgage escrow deposits (~~101~~20,~~865~~403) (~~166~~328,~~799~~794) ----------- ------------ Net cash provided by (used in) investing activities 2,~~596~~504,~~639~~306 ~~409~~(286,~~458~~834) ----------- ------------ Cash flows from financing activities: Principal payments of mortgage notes payable (5397,~~740~~164) (~~186~~345,~~509~~566) Decrease in minority interest (2) (~~365~~5,993) Principal payments of purchase money notes payable (942,450) (340,000) Payments to selling partners (1,473,550) (5661,~~420~~004) ----------- ------------ Net cash used in financing activities (2,~~469~~513,~~742~~166) (~~583~~752,~~294~~563) ----------- ------------ Net increase ~~(decrease)~~ in cash and cash equivalents 1933,~~299~~506 (1,~~962)~~038,121 Cash and cash equivalents at beginning of period 851,768 780,650 ----------- ------------ Cash and cash equivalents at end of period $ ~~871~~885,~~067~~274 $ ~~778~~1,~~688~~818,771 =========== ============

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

============================ ~~Three~~Six Months Ended ~~May~~August 31, ---------------------------- 2003 2002* ---------------------------- Supplemental disclosures of noncash activities: ~~Forgiveness~~Increase in deferred revenue on sale of ~~indebtedness~~properties ~~Decrease~~reclassified infrom purchase money notes payable and due to selling partners $ 0 $ 5,735,908 Forgiveness of indebtedness income Decrease in purchase money notes payable 0 (720,000) Decrease in due to selling partners (46,853) (1,685,795) Decrease in accounts payable, accrued expenses and other liabilities 0 (21,697) Summarized below are the components of the gain on sale of properties: Decrease in property and equipment held for sale, net of accumulated depreciation $ 1,207,941 $ 3,356,895 Decrease in cash-restricted for tenants' security deposits 11,282 28,212 Decrease in mortgage escrow deposits 841,445 8285,~~044~~050 Decrease in prepaid expenses and other assets 18,349 ~~296~~379,~~169~~234 Decrease in accounts payable, accrued expenses and other liabilities (44,636) (~~143~~501,~~051~~371) Decrease in tenants' security deposits payable (11,282) (1213,~~622~~147) Decrease in due to selling partners 0 (764,540) Decrease in purchase money notes payable 0 (455,800) Decrease in mortgage notes payable (670,665) (2,434,~~990~~968) Decrease in ~~due~~rent toreceivable ~~general partner and their affiliates~~ 0 ~~(16~~4,~~726)~~765

* As restated - see Note 5 See Accompanying Notes to Consolidated Financial Statements. 9 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements August 31, 2003 (Unaudited) NOTE 1 - GENERAL The consolidated financial statements for the six months ended August 31, 2003 and 2002, include the accounts of Cambridge + Related Housing Properties Limited Partnership, a Massachusetts limited partnership (the "Partnership"), and two and fourteen 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 August 31. All Subsidiaries have fiscal quarters ending June 30. Accounts of Subsidiaries have been adjusted for intercompany transactions from July 1 through August 31. The Partnership's fiscal quarter ends on August 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 U.S. 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 and six months ended August 31, 2003 and 2002, respectively. The Partnership's investment in each Subsidiary is equal to the respective Subsidiary's partners' equity less minority interest capital, if any. 10 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements August 31, 2003 (Unaudited) 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, 2003. 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 August 31, 2003, the results of operations for the three and six months ended August 31, 2003 and 2002 and cash flows for the six months ended August 31, 2003 and 2002. However, the operating results for the six months ended August 31, 2003 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, 2003 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. As of August 31, 2003 only one Subsidiary Partnership's Purchase Money Note totaling approximately $3,679,000, which includes approximately $2,293,000 of interest, remains outstanding. 11 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements August 31, 2003 (Unaudited) NOTE 3 - RELATED PARTY TRANSACTIONS The costs incurred to related parties for the three and six months ended August 31, 2003 and 2002 were as follows:

==================== ==================== Three Months Ended ~~May~~Six Months Ended August 31, August 31, -------------------- -------------------- 2003 2002 2003 2002 -------------------- -------------------- Partnership ~~management~~manage- ment fees (a) $ 0 $242,779 $241,710 $ ~~242~~485,~~778~~557 Expense ~~reimbursement~~reimburse- ment (b) 3224,~~161~~555 3634,~~009~~682 56,716 70,691 Local administrative fee (d) 625 3,125 1,250 6,250 -------- -------- -------- -------- Total general and ~~admini~~administrative- ~~strative-~~General Partners ~~274~~25,~~496~~180 ~~281~~280,~~912~~586 299,676 562,498 -------- -------- -------- -------- Property management fees incurred to ~~affiliates~~affil- iates of the Subsidiary Partnerships' general partners (c) 3914,~~103~~396 31,302 53,499 62,604 -------- -------- -------- -------- Total general and administrative- related parties $ ~~313~~39,~~599~~576 $311,888 ~~313~~$353,~~214~~175 $625,102 ======== ======== ======== ========

(a) After all other expenses of the Partnership are paid, an annual Partnership management fee of up to .5% of invested assets is payable to the Partnership's General Partners and affiliates. Commencing with the quarter ended August 31, 2003, the General Partners waived any Partnership management fees to which they otherwise may have been entitled under the Partnership's Agreement of Limited Partnership. Partnership management fees owed to the General Partners which were accrued prior to the quarter ended August 31, 2003 amounted to approximately $2,218,000 and $1,976,000 as of August 31, 2003 and February 28, 2003, respectively. (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 12 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements August 31, 2003 (Unaudited) 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 $14,396 and $31,302 and $53,499 and $62,604 for the three and six months ended August 31, 2003 and 2002, respectively. (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. NOTE 4 - SALE OF PROPERTIES General ------- The Partnership is currently in the process of winding up its operations and disposing of its investments. As of August 31, 2003, the Partnership has disposed of forty-three of its forty-four original investments. The final property, Bay Village, has entered into a purchase and sale agreement (see below). On March 11, 2003, the property and the related assets and liabilities of El Paso-Gateway East, Ltd. ("Gateway") were sold to an unaffiliated third party for approximately $2,677,000 resulting in a gain in the amount of approximately $1,370,000. The Partnership used approximately $2,416,000 to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $2,463,000, resulting in forgiveness of indebtedness income of approximately $47,000. On July 12, 2002, the property and the related assets and liabilities of San Diego-Logan Square Gardens Company ("Logan") were sold to the Local General Partners for approximately $9,241,000 resulting in a gain in the amount of approximately $5,403,000, which was recognized in the November 30, 2002 10-Q. The Partnership used approximately $5,740,000 to fully settle the associated Purchase Money Note and accrued interest thereon. 13 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements August 31, 2003 (Unaudited) On March 27, 2002, the property and the related assets and liabilities of Ziegler Boulevard, Ltd. ("Ziegler") were sold to an unaffiliated third party purchaser for approximately $2,379,000 resulting in a loss in the amount of approximately $485,000. The Partnership used approximately $340,000 to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $2,746,000 resulting in forgiveness of indebtedness income of approximately $2,406,000. On March 27, 2002, the Partnership's limited partnership interest in Eastwyck III, Ltd. Limited Partnership ("Eastwyck") was sold to the Local General Partners for approximately $5,000 resulting in a loss of approximately $336,000. No proceeds were used to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $1,220,000 resulting in a gain on sale of approximately $1,220,000. On December 18, 2001, Bay Village Company ("Bay Village") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an affiliate of the Local General Partner for a purchase price of $6,075,000. The closing is expected to occur in October 2003. No assurances can be given that the sale will actually occur. NOTE 5 - PRIOR PERIOD ADJUSTMENT During the quarter ended November 30, 2001, extension fees in connection with the Purchase Money Notes were overaccrued by $671,850. Such extension fees were capitalized and amortized over the period of extension, and during the fiscal year end February 28, 2002 the Partnership amortized $335,925 of such extension fees resulting in net income being understated for that year. To correct the misstatement, Partners' deficit was increased by $335,925 for the year ended February 28, 2002, resulting in a restatement of the consolidated statement of cash flows for the six months ended August 31, 2002. 14 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. None of these sources of funds are significant although all of them are available to meet the obligations of the Partnership. During the six months ended August 31, 2003 and 2002, the Partnership received cash flow distributions aggregating $12,831 and $126,618, respectively, of which $0 and $56,419, respectively, was used to pay interest on the Purchase Money Notes. In addition, the Partnership received distributions of proceeds from the sales of Local Partnerships aggregating $2,745,666 and $1,643,610, of which $2,416,000 and $340,000 was used to pay principal and interest on the Purchase Money Notes during the six months ended August 31, 2003 and 2002, respectively. During the six months ended August 31, 2003, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately ($34,000). This increase was due to cash provided by operating activities ($42,000) and proceeds from sale of properties ($2,722,000) which exceeded principal payments of mortgage notes payable of ($97,000), an increase in mortgage escrow deposits relating to investing activities ($20,000), payments to selling partners ($1,474,000), acquisitions of property and equipment ($197,000) and principal payments of Purchase Money Notes payable ($942,000). Included in the adjustments to reconcile the net income to cash provided by operating activities is gain on sale of properties ($1,370,000) and forgiveness of indebtedness income ($47,000). The Partnership has a working capital reserve of approximately $670,000 at August 31, 2003. 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 and net proceeds from future sales will be adequate for its operating needs, and plan to continue investing available reserves in short term investments. Commencing with the quarter ended August 31, 2003, the General Partners waived any Partnership management fees to which they otherwise may have been entitled under the Partnership's Agreement of Limited Partnership. Partnership management 15 fees owed to the General Partners which were accrued prior to the quarter ended August 31, 2003 amounted to approximately $2,218,000 and $1,976,000 as of August 31, 2003 and February 28, 2003, respectively. 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. 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. Due to the sale of properties, the portfolio is not diversified by the location of the properties around the United States, and therefore the Partnership may not be protected against a general downturn in the national economy. The Partnership's remaining investment, Bay Village, has entered into a purchase and sale agreement (see Note 4). Critical Accounting Policies ---------------------------- In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of the Company's accounting policies included in Note 2 to the consolidated financial statements which are include in the Partnership's annual report on Form 10-K for the year ended February 28, 2003. a) Property and Equipment Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; 16 major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The Partnership complies with Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time property investments themselves are reduced to estimated fair value (generally using discounted cash flows) when the property is considered to be impaired and the depreciated cost exceeds estimated fair value. b) Income Taxes No provision has been made for income taxes in the accompanying consolidated financial statements since such taxes, if any, are the responsibility of the individual partners. For income tax purposes, the Partnership has a fiscal year ending December 31. New Accounting Pronouncements ----------------------------- In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003. The Partnership has not created any variable interest entities after January 31, 2003. The adoption of FIN 46 did not have a material impact on the Partnership's financial reporting and disclosures. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. The guidance in SFAS No. 150 generally is effective for all 17 financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it does not have an impact on the Partnership's financial reporting and disclosures. Results of Operations --------------------- During the periods ended August 31, 2003 and 2002, Wingate Associates Limited, Zeigler Boulevard Ltd. and Logan Square Gardens Company sold their properties and the related assets and liabilities and the Partnership's Limited Partnership Interest in Blue Ridge Manor, Ltd., Chaparral Apartments II, Ltd., Lafayette Square Apts., Ltd., Northwood Apartments, Ltd., Oso Bay Apartments, Ltd., Rolling Meadows of Ardmore, Ltd., Tarleton Arms Apartments, Ltd., Gateway East Ltd., Villas South, Ltd. and Eastwyck III, Ltd., were sold (collectively the "Sold Assets"). Rental income decreased approximately 82% and 80% for the three and six months ended August 31, 2003, as compared to 2002. Excluding the Sold Assets, rental income decreased approximately 1% and 2% for the three and six months ended August 31, 2003 as compared to 2002, primarily due to an increase in vacancies at the remaining Local Partnership. Other income decreased approximately $253,000 and $303,000 for the three and six months ended August 31, 2003, as compared to 2002. Excluding the Sold Assets, other income decreased approximately $4,000 and $3,000 primarily due to smaller replacement reserves balances earning interest at the remaining Local Partnership. Administrative and management decreased approximately $438,000 and $1,019,000 for the three and six months ended August 31, 2003, as compared to 2002. Excluding the Sold Assets, administrative and management increased approximately $33,000 and $6,000 primarily due to an increase in accounting fees at the Partnership level. Administrative and management - related parties decreased approximately $272,000 for both the three and six months ending August 31, 2003, as compared to 2002 primarily due to a reduction in partnership management fees due to the waiving of such fees by the Partnership's General Partners. 18 Operating decreased approximately $328,000 and $690,000 for the three and six months ending August 31, 2003, as compared to 2002. Excluding the Sold Assets, operating increased approximately $17,000 and $28,000 primarily due to an increase in gas and water and sewer expenses at the remaining Local Partnership. Repairs and maintenance decreased approximately $427,000 and $831,000 for the three and six months ended August 31, 2003, as compared to 2002. Excluding the Sold Assets, repairs and maintenance increased approximately $35,000 and $59,000 primarily due to an increase in repairs and maintenance payroll expense and snow removal expense due to severe winter weather at the remaining Local Partnership. Taxes and insurance decreased approximately $241,000 and $462,000 for the three and six months ended August 31, 2003, as compared to 2002. Excluding the Sold Assets, taxes and insurance increased approximately $13,000 and $19,000 primarily due to an increase in liability insurance premiums at the remaining Local Partnership. Interest and depreciation expense decreased approximately $327,000 and $730,000 and $106,000 and $211,000 for the three and six months ended August 31, 2003, as compared to 2002, primarily due to decreases relating to the Sold Assets. Bay Village was not depreciated during the period ended August 31, 2003 because it is classified as an asset held for sale. Losses and gains on sales of properties and forgiveness of indebtedness income will continue to fluctuate as a result of the disposition of properties (see Note 4 to the financial statements). Item 3. Quantitative and Qualitative Disclosures about Market Risk None Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures ------------------------------------------------ The Chief Executive Officer and Chief Financial Officer of Government Assisted Properties, Inc. and Related Housing Programs Corporation, each of which is a general partner of Cambridge + Related Housing Properties L.P. (the "Partnership"), has evaluated the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the 19 Securities Exchange Act of 1934 (the "Exchange Act")) as of August 31, 2003 (the "Evaluation Date"). Based on such evaluation, such officer has concluded that, as of the Evaluation Date, the Partnership's disclosure controls and procedures are effective in alerting him, on a timely basis, to material information relating to the Partnership required to be included in the Partnership's reports filed or submitted under the Exchange Act . Changes in Internal Control Over Financial Reporting ---------------------------------------------------------- There has been no significant change in the Partnership's internal control over financial reporting during the Partnership's fiscal quarter ended August 31, 2003 which has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting . 20 PART II - OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities and Use of Proceeds - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 31.1 Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). 32.1 Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350). (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter. 21 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: September 22, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive and Financial Officer Date: September 22, 2003 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer By: RELATED HOUSING PROGRAMS CORPORATION, a General Partner Date: September 22, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive and Financial Officer Date: September 22, 2003 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A) I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Government Assisted Properties, Inc. and Related Housing Programs Corporation (the "General Partners"), each of which is a general partner of Cambridge + Related Housing Properties L.P. (the "Partnership"), hereby certify that: 5. I have reviewed this quarterly report on Form 10-Q for the period ending August 31, 2003 of the Partnership; 6. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 7. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this quarterly report; 8. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and I have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Partnership including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report was being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and c) evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report my conclusion about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the Partnership's internal control over financial reporting that occurred during the period ending August 31, 2003 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Partnership's auditors and to the boards of directors of the General Partners: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Partnership's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal control over financial reporting. Date: September 22, 2003 ------------------ By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) AND SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350) In connection with the Quarterly Report of Cambridge + Related Housing Properties Limited Partnership (the "Partnership") on Form 10-Q for the period ending August 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Government Assisted Properties, Inc. and Related Housing Programs Corporation, each of which is a general partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. By: /s/Alan P. Hirmes ----------------- Alan P. Hirmes Principal Executive Officer and Principal Financial Officer September 22, 2003

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