10-K 1 bbn10kworking.txt BROWN-BENCHMARK PROPERTIES 10-K 12/31/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) { X } ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-16698 Brown-Benchmark Properties Limited Partnership (Exact Name of Registrant as Specified in its Charter) Delaware 31-1209608 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 225 East Redwood Street, Baltimore, Maryland 21202 (Address of Principal Executive Offices) (Zip Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None Securities registered pursuant to section 12(g) of the Act: Assignee Units of Limited Partnership Interests (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ As of December 31, 2001, there were 499,600 Units of Assignee Limited Partnership Interests held by non-affiliates of the Registrant. Because there is not an established public trading market for the Units, the aggregate market value of the Units held by non-affiliates of the Registrant cannot be calculated. Documents Incorporated by Reference The Annual Report for 2001 is incorporated by reference. BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP INDEX

BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP PART I Item 1. Business Brown-Benchmark Properties Limited Partnership (the "Partnership") is a Delaware limited partnership formed on June 1, 1987. The Partnership was formed to develop and operate three residential multifamily communities ("Properties") in Ohio. See Item 2, Properties, herein. The offering proceeds raised from the sale of the Assignee Units (the "Units") and moderate leverage enabled the Partnership to acquire the land and develop the three Properties. Construction was completed at all three Properties by September of 1989. The Partnership's objectives are to (i) preserve and protect Unitholders' capital; (ii) obtain capital appreciation through increases in the value of the Properties; and (iii) provide quarterly cash distributions to Unitholders from income generated by the Properties' rental income. The General Partners of the Partnership are Brown-Benchmark AGP, Inc., a Maryland corporation (the "Administrative General Partner"), and Benchmark Equities, Inc., an Ohio corporation (the "Development General Partner"). On March 4, 2002, the Partnership filed a preliminary Schedule 14A Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934 soliciting the Unitholders' approval of the assignment of the entire General Partnership interest of the Development General Partner to AIMCO/NHP Properties, Inc. or one of its affiliates. NHP is a wholly owned subsidiary of AIMCO Properties, L.P., a Delaware limited partnership, and the assignee of the existing Management Agreements on each of the Partnerships three apartment communities (see below). AIMCO Properties L.P. is the operating partnership of Apartment Investment and Management Company, a Maryland corporation which is a publicly traded real estate investment trust. The Unitholders' consents are not expected to be finalized prior to the filing of this Form 10-K. Pursuant to the Registration Statement, a minimum of 320,000 Units and a maximum of 500,000 Units were registered under the Securities and Exchange Act of 1933, as amended. On February 19, 1988, the minimum offering of $8,000,000 was subscribed and investors holding 320,000 Units were recognized on the books of the Partnership, and on March 23, 1988, the Partnership completed the maximum offering of $12,500,000 with the recognition on the books of the Partnership of investors purchasing the remaining 180,000 Units. Each of the Partnership's three Properties was constructed by an affiliate of the Development General Partner under the terms of a guaranteed fixed-price development agreement. The Partnership's investment in real estate at December 31, 2001 was $25,350,961 before depreciation charges, of which approximately 53% was funded by long-term loans. The Partnership's residential apartment communities face competition from similar properties in their locations. The competition is based on the proximity of the Properties to area employers and commercial and retail facilities. In addition, consideration has been given to the comparability of quality, amenities, rental rates and unit sizes. The Partnership's annual report discusses operations and current leasing information at the properties and is incorporated by reference in Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K, herein. Pursuant to the terms of a Property Management Agreement with the Partnership, each of the Properties is managed by Benchmark Properties, Inc., the Property Manager. The Property Management Agreements are renewable on a year-to-year basis and may be terminated by the Partnership upon 60 days notice without cause. The Property Manager receives a Property Management Fee of 4.5% of gross monthly operating revenues of each Property. See Note 5. "Related Party Transactions," in Item 8. Financial Statements and Supplementary Data, herein. Under the terms of the Property Management Agreements, the Property Manager is responsible for performing, or paying others to perform on its behalf, all leasing-related and other property management services for the Properties. The management and administration of the Partnership is performed by the General Partners or an affiliate thereof. Effective January 7, 2002, the Administrative General Partner has consented to the assignment of the Management Agreements to NHP Management Company in anticipation of the assignment of the General Partnership interest of the Development General Partner to AIMCO/NHP Properties, Inc. or one of its affiliates. (see above) 3 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 2. Properties The Partnership owns land and improvements as described below: Gross Investment 2001 Name and Location in Property Rental Income Woodhills $7,846,134 $1,223,799 West Carrollton, Montgomery County, Ohio Approximately 15 acres as a 186-unit multifamily community, consisting of 12 one-story villas, 54 two-story town-houses, 5 three-story garden-style buildings containing 120 units, a swimming pool, volleyball court, and a clubhouse. Oakbrook $7,803,788 $1,228,092 Reynoldsburg, Franklin County, Ohio Approximately 22 acres as a 181-unit multifamily community, consisting of 20 one-story villas, 81 two-story townhouses, 5 two-story garden-style buildings containing 80 units, a swimming pool, volleyball court and a clubhouse. Deerfield $9,701,039 $1,642,745 Union Township (Greater Cincinnati area) Clermont County, Ohio Approximately 19 acres as a 223-unit multifamily community, consisting of 32 one- and two-story apartment buildings, a swimming pool, volleyball court and a clubhouse. For additional information on the Properties, reference is made to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, herein. Item 3. Legal Proceedings The Partnership is not subject to any material pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to the security holders for a vote during the last quarter of the fiscal year covered by this report. 4 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP PART II Item 5. Market for Registrant's Common Equity and Related Partner Matters An established public trading market for the Units does not exist and the Partnership does not anticipate that a public market will develop. Transfer of Units by an investor and purchase of Units by the Partnership may be accommodated under certain terms and conditions. The Partnership Agreement imposes certain limitations on the transfer of Units and may restrict, delay or prohibit a transfer primarily if: o the transfer of Units would result in 50% or more of all Units having been transferred by assignment or otherwise within a 12-month period; o such a transfer would be a violation of any federal or state securities laws that may cause the Partnership to be classified other than as a partnership for federal income tax purposes; o such transfers would cause the Partnership to be treated as a "publicly traded partnership" under Sections 7704 and 469(k) of the Internal Revenue Code; and o the transfer of Units would cause a technical termination of the Partnership within meaning of Section 708(b)(1)(A) of the Internal Revenue Code. As of December 31, 2001, there were 477 holders of 500,000 Units of the registrant. See Item 12, Security Ownership of Certain Beneficial Owners and Management, herein. Annual distributions of cash to the investors were $765,368, $765,368, $765,368, $765,352 and $574,009 for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively, of which 98% was allocated to Unitholders and 2% to the General Partners. See Item 8, Financial Statements and Supplementary Data, herein. Item 6. Selected Financial Data The following selected financial data should be read in conjunction with the financial statements and accompanying notes in Item 8, Financial Statements and Supplementary Data, herein.

5 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Partnership's liquidity is largely dependent on its ability to maintain reasonably high occupancy levels, achieve rental rate increases as the respective markets allow and to control operating expenses. The Partnership currently has sufficient liquid assets from its rental revenues to satisfy its anticipated operating expenditures and debt service obligations. During 2001, the Partnership maintained a distribution to its partners of 6% on invested capital. Operating net cash flow, as defined in the Partnership Agreement, generated from the three apartment communities totaled $669,388, and funded 87% of the distribution while the balance was funded from reserves. On February 14, 2002, the Partnership made a cash distribution to its partners totaling $191,342, representing an annualized return of 6% on invested capital. Based upon the preliminary 2002 budget, operating cash flow is expected to fully fund a distribution rate of 6% in 2002. The Partnership's long-term debt with Canada Life Assurance Company matures June 1, 2002. The General Partners have had discussions with our lender and expect to receive a loan commitment to extend our existing loan for one year. All terms are expected to remain the same, except that the interest rate should decrease to 7.5% from 7.7%. There will be no prepayment penalty and the loan may be paid off following a sixty-day written notice to the lender. The General Partners expect to evaluate the possibility of selling the portfolio during our extension period. Should an acceptable selling price not be achievable, we expect to secure long term financing. The Partnership does not anticipate any significant capital improvements or repair costs that might adversely impact its liquidity in 2002 Results of Operations Rental revenues for the three apartment communities increased $12,951, or .3%, for the year ended December 31, 2001as compared to the year ended December 31, 2000 versus an increase of $85,314, or 2.1% for the year ended December 31, 2000 compared to the year ended December 31, 1999. The increases in 2001 and 2000 were a result of higher rental rates at each of the properties resulting in revenue growth despite decreases in aggregate occupancy levels. The average monthly rental rate (inclusive of concessions) for the portfolio has increased from $593 in 1999 to $612 in 2000 to $624 in 2001, representing an increase of approximately 3% in 2000 and 2% in 2001. Collectively, the properties' average occupancy level was 94% in 1999, 93% in 2000 and 91% in 2001. Management remains diligent in its efforts to control operating expenditures at each the three communities while preserving the invested capital. Total operating expenses, excluding interest charges, depreciation and amortization costs, increased by 4.3% in 2001 compared to 2000 and 7.1% in 2000 compared to 1999. The majority of the increase in 2001 was due to normal inflation and the continued exterior painting of the communities. The increase in 2000 was due primarily to higher maintenance and repair costs, including exterior painting of a portion of the communities. The proportionately larger increase in operating expenses (excluding interest charges, depreciation and amortization) versus revenues during 2001 and 2000 resulted in decreases of approximately $84,300 (or 3.9%) and $32,700 (or 1.5%), respectively in the combined properties' net operating income. Interest expense on the Partnership's mortgage loans decreased $19,388 and $18,039 in 2001 and 2000 respectively, due to principal payments totaling $261,977 in 2001, versus $242,620 in 2000 and $224,580 in 1999. Capital expenditures for all three communities during 2001 totaled $107,131 and consisted primarily of carpet replacements and upgrades to the unit interiors. Similar improvements to the properties totaled $123,149 and $164,289 in 2000 and 1999 respectively. The average occupancy level experienced at the Oakbrook property in Columbus, Ohio, was 91% in 2001, down from 93% in 2000. The decrease in occupancy resulted from increased competition from new communities 6 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (continued) opened during the last two years. The average market rental rate at Oakbrook increased from $595 in 2000 to $616 in 2001. As a result, revenues at Oakbrook increased by $17,597 in 2001 versus 2000. The apartment market in Columbus remains extremely competitive given the new supply coupled with the favorable environment for first-time home buyers resulting from low interest rates. Management expects to increase marketing efforts in 2002 in an attempt to improve our property's share of the market. At the Woodhills property, in Dayton, Ohio, the average occupancy level in 2001 was 90%, down from 92% in 2000. The average market rental rate (inclusive of rental concessions) increased from $594 in 2000 to $603 in 2001. Revenues at Woodhills decreased by $8,407 in 2001 versus 2000. The apartment market in Dayton remains competitive. There has not been significant growth in the local economy and low interest rates have made home ownership a more affordable alternative. Management is focused on tenant retention to maintain the property's occupancy level during this difficult environment. While the average effective rental rate at Deerfield, our Cincinnati, Ohio, property increased from $641 in 2000 to $648 in 2001, the property's occupancy level slipped from 95% to 93%. As a result, only a modest revenue increase of $3,761 was achieved at the property during 2001 when compared to 2000. Management's goal in 2002 is to improve its occupancy levels through increased marketing efforts. Significant rate increases are not expected in the near term. During 2002, management will strive to improve the portfolio's net operating income by achieving revenue growth through improved occupancy levels, while controlling operating expenditures. Critical Accounting Policies Critical accounting policies are those that are both important to the presentation of financial condition and results of operations and require management's most difficult, complex or subjective judgments. The Partnership's critical accounting policy relates to the evaluation of impairment of long-lived assets. If events or changes in circumstances indicate that the carrying value of a property to be held and used may be impaired, a recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the property in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the property is written down to estimated fair value and an impairment loss is recognized. If the Partnership decides to sell a property, it evaluates the recoverability of the carrying amount of the assets. If the evaluation indicates that the carrying value is not recoverable from estimated net sales proceeds, the property is written down to estimated fair value less costs to sell and an impairment loss is recognized. The estimates of cash flows and fair values of the properties are based on current market conditions and consider matters such as rental rates and occupancies for the property and comparable properties, recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. These estimates are subject to revision as market conditions and the Partnership's assessment of them change. New Accounting Pronouncement In October 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 does not change the fundamental provisions of SFAS No. 121; however, it resolves various implementation issues of SFAS No. 121 and establishes a single accounting model for long-lived assets to be disposed of by sale. It retains the requirement of APB Opinion No. 30 to report separately discontinued operations but extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in distribution to owners) or is classified as held for sale. We do not believe that adoption of SFAS No. 144 in 2002 will have a material effect on the Partnership's financial statements. 7 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 7a. Quantitative and Qualitative Disclosures About Market Risk The Partnership has exposure to changing interest rates since its long-term debt matures on June 1, 2002. The General Partners have had discussions with the current lender to extend the existing loans for a period of one year. All terms are expected to remain the same, except that the interest rate should decrease from 7.7% to 7.5%. The General Partners expect to evaluate the possibility of selling the portfolio during the extension period. Should an acceptable selling price not be achievable, we expect to secure long-term financing at the then current market rate. Item 8. Financial Statements and Supplementary Data Index to Financial Statements: Page(s) Herein Annual Report Independent Auditors' Report 13 4 Balance Sheets 5 Statements of Operations 6 Statements of Partners' Capital (Deficit) 7 Statements of Cash Flows 8 Notes to Financial Statements 9-15 Financial Statement Schedule Schedule III - Real Estate and Accumulated Depreciation 14-15 All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 8 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP PART III Item 10. Directors and Executive Officers of the Registrant The General Partners of the Partnership are Brown-Benchmark AGP, Inc., the Administrative General Partner, and Benchmark Equities, Inc., the Development General Partner. The Partnership's principal executive offices are located at 225 East Redwood Street, Baltimore, Maryland 21202, telephone (410) 727-4083. The General Partners have primary responsibility for overseeing the performance of those who contract with the Partnership, as well as making decisions with respect to the financing, sale and liquidation of the Partnership's assets. The General Partners are responsible for all reports to and communications with investors and others, all distributions and allocations to investors, the administration of the Partnership's business and all filings with the Securities and Exchange Commission and other federal or state regulatory authorities. The Partnership's Partnership Agreement provides for the removal of a General Partner and the election of successor general partners by investors holding a majority of the Units. The directors and executive officers of the General Partners are as follows: The Development General Partner Benchmark Equities, Inc., the Development General Partner, is an Ohio corporation. Affiliated companies of the Development General Partner include its parent, Benchmark Communities, Inc., formerly known as "Vindale Corporation," which was organized in 1946, and since 1978 has concentrated on the development, construction and marketing of residential developments, Benchmark Homes, Inc., the general contractor for the properties and Benchmark Properties, Inc., the property manager at the properties. The Development General Partner and its Affiliates were engaged in all aspects of the building and real estate development process, including manufacturing the industrialized housing components in their plant, developing the site, constructing the components on-site, landscaping and paving the site, marketing the completed housing units and financing. The following individuals are the directors and principal officers of Benchmark Equities, Inc.: Daniel P. Riedel, age 62, has been the Chairman, President and Director of Benchmark Equities, Inc. since its inception in 1987. His responsibilities include administration, marketing, finance and planning. His background includes over 31 years in manufacturing, land development and marketing. Mr. Riedel has been an officer or director of Benchmark Communities, Inc. for 27 years and has held management positions for his entire 37 year career with Benchmark Communities, Inc. He graduated Cum Laude from Michigan State University in 1961, majoring in Industrial Management. Deborah J. Maxson, age 39, has been Treasurer of Benchmark Equities, Inc. and President of Benchmark Properties, Inc. since 1998. Prior to 1998 she was the Controller of Benchmark Properties, Inc. from 1988-1998. She has been with Benchmark since 1986. She attended Fort Sterlacom Community College majoring in accounting. The Administrative General Partner Brown-Benchmark AGP, Inc., the Administrative General Partner, is a Maryland corporation and is wholly owned by Alex. Brown Realty, Inc. The Administrative General Partner is responsible for administering the business of the Partnership including providing clerical services, investor communications services and reports, and for making all reports and filings to regulatory authorities. The Administrative General Partner is reimbursed for such services to the Partnership on a cost basis. 9 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 10. Directors and Executive Officers of the Registrant (continued) The Administrative General Partner (continued) The following individuals are the directors and principal officers of Brown-Benchmark AGP, Inc.: John M. Prugh, age 53, has been a Director and President of the Administrative General Partner since 1987 and of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1984. Mr. Prugh graduated from Gettysburg College in 1970, and was designated a Certified Property Manager by the Institute of Real Estate Management in 1979. He has worked in property management for H. G. Smithy Co., in Washington, D.C., and Dreyfus Bros., Inc. in Bethesda, Maryland. Since 1977, Mr. Prugh has been involved in managing, administering, developing and selling real estate investment projects sponsored by Alex. Brown Realty, Inc. and its subsidiaries. Peter E. Bancroft, age 49, has been the Director and Vice President of the Administrative General Partner since its inception in 1987. He has also been a Senior Vice President of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1983. Mr. Bancroft graduated from Amherst College in 1974, attended the University of Edinburgh, and received a J.D. degree from the University of Virginia School of Law in 1979. Prior to joining Alex. Brown Realty, Inc. in 1983, Mr. Bancroft held legal positions with Venable, Baetjer and Howard and T. Rowe Price Associates, Inc. Terry F. Hall, age 55, has been the Secretary of the Administrative General Partner and a Vice President and Secretary of, and Legal Counsel for, Alex. Brown Realty, Inc. since 1989. Mr. Hall graduated from the University of Nebraska-Lincoln in 1968, and received a J.D. degree from the University of Pennsylvania Law School in 1973. Prior to joining Alex. Brown Realty, Inc. in 1989, Mr. Hall was a Partner at the law firm of Venable, Baetjer and Howard from 1981 to 1986 and an associate at the same firm from 1973 to 1981. Timothy M. Gisriel, age 45, has been the Treasurer of the Administrative General Partner and of Alex. Brown Realty, Inc. and Armata Financial Corp. since 1990. He was Controller of Alex. Brown Realty, Inc. and Armata Financial Corp. from 1984 through 1990. Mr. Gisriel graduated from Loyola College in 1978 and received his Masters of Business Administration degree from the Robert G. Merrick School of Business, University of Baltimore in 1993. Prior to joining Alex. Brown Realty, Inc. in 1984, Mr. Gisriel was an audit supervisor in the Baltimore office of Coopers & Lybrand. He is a Maryland Certified Public Accountant. There is no family relationship among the officers and directors of the Development General Partner or the Administrative General Partner. Item 11. Executive Compensation The officers and directors of the Administrative General Partner and the Development General Partner received no compensation from the Partnership. The General Partners are entitled to receive a share of cash distributions and a share of profits and losses as described in the Agreement of Limited Partnership. (See Note 9. "Partners' Capital" in Item 8. Financial Statements and Supplementary Data, herein.) For a discussion of compensation and fees to which the General Partners are entitled, see Item 13, Certain Relationships and Related Transactions, herein. 10 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Item 12. Security Ownership of Certain Beneficial Owners and Management The following are known to the Partnership to own beneficially more than 5% of the outstanding assignee units of limited partnership interest of the Partnership.

*The cumulative assignee units of limited partnership disclosed above are owned by multiple entities that are controlled by the above named beneficial owners. **While McKenzie Patterson, Inc. held less than 5% of the Units as of December 31, 2001, on December 27, 2001 certain entities controlled by McKenzie Patterson, Inc. commenced a tender offer to purchase for cash up to 100,000 Units at a purchase price of $15 per unit. As of the date of this report, the Partnership is unaware whether any Units have been tendered in response to the offer, but if they have, McKenzie Patterson, Inc. may hold greater than 5% of the outstanding Units. The Assignor Limited Partner, Brown-Benchmark Holding Co., Inc. an affiliate of the Administrative General Partner, holds 40 Units representing a beneficial interest in limited partnership interests in the Partnership. The Units held by the Assignor Limited Partner have all rights attributable to such Units under the Limited Partnership Agreement except that these Units are nonvoting. The General Partners each have a 1% interest in the Partnership as General Partners, but hold no Units. There are no arrangements, known to the Partnership, the operation of which may at a subsequent date result in a change of control of the registrant. Item 13. Certain Relationships and Related Transactions The General Partners and their affiliates have and are permitted to engage in transactions with the Partnership. For a summarization of fees paid during 2001, 2000 and 1999, and to be paid to the General Partners and their affiliates at December 31, 2001, see Note 5. "Related Party Transactions" in Item 8. Financial Statements and Supplementary Data, herein. 11 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)1. Financial Statements: See Index to Financial Statements and Supplementary Data in Item 8 on page 8, herein. 2. Financial Statement Schedule: See Index to Financial Statements and Supplementary Data in Item 8 on page 8, herein. 3. Exhibits: (3, 4) Agreement of Limited Partnership on pages 1 through 39 of Exhibit A to the Fund's Registration Statement on Form S-11 (File No. 33-38437) incorporated herein by reference. (10) Assignment of Management Rights dated January 7, 2002 in which Benchmark Properties, Inc., are affiliate of the Development General Partner, assigns its rights under the existing management agreement of each of the three apartment communities to NHP Management Company. (13) Annual Report for 2001. (b) Reports on Form 8-K: None. 12 INDEPENDENT AUDITORS' REPORT The Partners Brown-Benchmark Properties Limited Partnership: Under date of January 25, 2002, we reported on the balance sheets of Brown-Benchmark Properties Limited Partnership as of December 31, 2001 and 2000, and the related statements of operations, partners' capital (deficit) and cash flows for each of the years in the three-year period ended December 31, 2001 which are included in the Annual Report on Form 10-K for 2001. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG LLP Baltimore, Maryland January 25, 2002 13 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Page 1 SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION 31-Dec-01

14 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP Page 2 SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION 31-Dec-01

(2) AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $25,350,961 AT DECEMBER 31, 2001. (3) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS FOR INFORMATION CONCERNING TRANSACTIONS WITH AFFILIATES. (4) SEE NOTE 6 OF NOTES TO THE FINANCIAL STATEMENTS FOR INFORMATION REGARDING MORTGAGE LOAN AGREEMENTS, COLLATERALIZED BY THE LAND, BUILDINGS AND IMPROVEMENTS. 15 BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BROWN-BENCHMARK PROPERTIES LIMITED PARTNERSHIP DATE: 3/15/01 BY: /s/ John M. Prugh John M. Prugh President and Director Administrative General Partner Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, this report has been signed by the following in the capacities and on the dates indicated. DATE: 3/15/01 By: /s/ John M. Prugh John M. Prugh President and Director Brown-Benchmark AGP, Inc. Administrative General Partner DATE: 3/28/01 By: /s/ Peter E. Bancroft Peter E. Bancroft Vice President and Director Brown-Benchmark AGP, Inc. Administrative General Partner DATE: 3/15/01 By: /s/ Terry F. Hall Terry F. Hall Secretary Brown-Benchmark AGP, Inc. Administrative General Partner DATE: 3/15/01 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Treasurer Brown-Benchmark AGP, Inc. Administrative General Partner DATE: 3/16/01 By: /s/ Daniel P. Riedel Daniel P. Riedel Chairman, President and Director Benchmark Equities, Inc. Development General Partner DATE: 3/16/01 By: /s/ Deborah J. Maxon Deborah J. Maxson Treasurer Benchmark Equities, Inc. Development General Partner -15-

BROWN BENCHMARK PROPERTIES LIMITED PARTNERSHIP 10-K