10-Q 1 a2069522z10-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 December 25, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR --- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-13782 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP ------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-3228969 -------------------------------- ------------------- (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 ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)

=============~~=======~~ =============~~=======~~ ~~SEPTEMBER~~DECEMBER 25, MARCH 25, 2001 2001* -------------~~-------~~ -------------~~-------~~ ASSETS Property and equipment - less accumulated depreciation of $2110,~~467~~701,~~313~~600 and $25,089,665, respectively $ 169,~~852~~097,~~870~~325 $ 20,186,022 Property and equipment - held for sale - less accumulated depreciation of $1319,~~867~~958,~~712~~370 and $21,272,511, respectively 1216,~~562~~165,~~810~~845 18,795,939 Cash and cash equivalents 2,~~829~~769,~~640~~875 4,943,694 Cash - restricted for tenants' security deposits ~~449~~389,~~464~~666 541,659 Mortgage escrow deposits 5,~~554~~583,~~156~~398 5,654,637 Prepaid expenses and other assets ~~984~~900,~~459~~016 1,060,972 -------------- ------------- Total assets $ 3934,~~233~~906,~~399~~125 $ 51,182,923 ============= =============

2 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

=============~~=======~~ =============~~=======~~ ~~SEPTEMBER~~DECEMBER 25, MARCH 25, 2001 2001* -------------~~-------~~ -------------~~-------~~ LIABILITIES AND PARTNERS' DEFICIT Liabilities Mortgage notes payable $ 2017,~~306~~564,~~328~~057 $ 27,753,150 Purchase Money Notes payable (Note 2) 1614,~~135~~536,~~440~~004 23,477,968 Due to selling partners (Note 2) 3633,~~876~~799,~~567~~345 52,122,189 Deferred revenue on sale of properties 105,~~900~~477,~~346~~535 3,838,789 Accounts payable, accrued expenses and other liabilities ~~987~~924,~~314~~118 1,644,571 Tenants' security deposits payable ~~413~~357,~~046~~998 481,950 Due to general partners of subsidiaries and their affiliates 98,238 98,265 Due to general partners and affiliates 3,~~127~~325,~~839~~330 2,978,008 Distributions payable 0 1,402,535 ------------- ------------- Total liabilities 8876,~~845~~082,~~118~~625 113,797,425 ------------- ------------- Minority interest ~~132~~234,~~413~~438 638,628 ------------- ------------- Commitments and contingencies (Note 5) Partners' deficit: Limited partners (4840,~~709~~459,~~166~~304) (62,083,074) General partners (1951,~~034,966~~634) (1,170,056) ------------- ------------- Total partners' deficit (4941,~~744~~410,~~132~~938) (63,253,130) ------------- ------------- Total liabilities and partners' deficit $ 3934,~~233~~906,~~399~~125 $ 51,182,923 ============= =============

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 3 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

============================~~===~~ ===========================~~====~~ THREE MONTHS ENDED ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 25, ~~SEPTEMBER~~DECEMBER 25, ----------------------------~~---~~ ---------------------------~~----~~ 2001 2000 2001 2000 ----------------------------~~---~~ ---------------------------~~----~~ Revenues: Rentals, net $ 2,~~972~~591,~~306~~487 $ 43,~~466~~983,~~198~~695 $ 68,~~330~~921,~~360~~847 $ 913,~~092~~075,~~195~~890 Other ~~227~~152,~~487~~337 ~~307~~284,~~333~~581 ~~413~~565,~~602~~939 ~~570~~854,~~207~~788 Gain on sale of property (Note 4) 27,~~664~~436,~~619~~742 93,~~512~~009,~~645~~268 19,~~657~~093,~~081~~823 912,~~077~~086,~~102~~370 ------------ ------------ ------------ ------------ Total revenues 510,~~864~~180,~~412~~566 147,~~286~~277,~~176~~544 818,~~401~~581,~~043~~609 1826,~~739~~017,~~504~~048 ------------ ------------ ------------ ------------ Expenses Administrative and management ~~683~~502,~~697~~271 1780,~~189,864~~626 1,~~364~~866,~~535~~806 23,~~310~~090,~~198~~824 Administrative and management- related parties (Note 3) ~~475~~448,~~193~~858 ~~538~~542,~~119~~231 ~~959~~1,~~430~~408,288 1,~~091~~633,~~199~~430 Operating ~~558~~485,~~473~~216 ~~729~~677,~~937~~657 1,~~361~~846,~~591~~807 12,~~618~~296,~~504~~161 Repairs and maintenance ~~758~~602,~~529~~519 1,~~005~~096,~~759~~384 12,~~539~~142,~~926~~445 23,~~017~~114,~~913~~297 Taxes and insurance ~~388~~311,~~125~~758 ~~526~~465,~~348~~042 ~~797~~1,~~783~~109,541 1,~~046~~511,~~583~~625 Interest 1781,~~225,944~~508 21,~~605~~149,~~178~~132 23,~~767~~548,~~487~~995 67,~~429~~578,~~189~~321 Depreciation ~~320~~259,~~066~~492 ~~875~~786,~~676~~427 ~~764~~1,~~854~~024,346 12,~~794~~580,~~273~~700 ------------ ------------ ------------ ------------ Total expenses 43,~~410~~391,~~027~~622 75,~~470~~497,~~881~~499 912,~~555~~947,~~606~~228 1621,~~307~~805,~~859~~358 ------------ ------------ ------------ ------------ Net income ~~(loss)~~ before minority interest 16,~~454~~788,~~385~~944 61,~~815~~780,~~295~~045 (15,~~154~~634,~~563)~~381 24,~~431~~211,~~645~~690 Minority interest in ~~loss~~ (income) loss of subsidiaries ~~109~~(123,~~450~~311) (6831,~~508~~240) ~~350~~227,~~578~~267 (~~103~~934,~~064~~304) ------------ ------------ ------------ ------------ Income ~~(loss)~~ before extra-ordinary item 16,~~563~~665,~~835~~633 6948,~~808,787~~805 ~~(803~~5,~~985)~~861,648 23,~~328~~277,~~581~~386 Extraordinary item- forgiveness of indebtedness income (Note 4) 101,~~473~~667,~~627~~561 ~~121~~(4,~~236~~646) 1415,~~312~~980,~~983~~544 14,~~122~~118,~~786~~140 ------------ ------------ ------------ ------------ Net income $12 8,~~037~~333,~~462~~194 $ 6944,~~930,023~~159 $13 21,~~508~~842,~~998~~192 $16 17,~~451~~395,~~367~~526 ============ ============ ============ ============ Limited Partners Share: Income ~~(loss)~~ before extraordinary item $ 16,~~548~~598,~~196~~977 $ 6939,~~740,699~~317 $ ~~(795~~5,~~945)~~803,032 $ 23,~~305~~244,~~295~~612 Extraordinary item 101,~~368~~650,~~891~~885 ~~120~~(4,~~023~~600) 1415,~~169~~820,~~853~~738 13,~~981~~976,~~558~~959 ------------ ------------ ------------ ------------ Net income $11 8,~~917~~249,~~087~~862 $ 6934,~~860,722~~717 $13 21,~~373~~623,~~908~~770 $16 17,~~286~~221,~~853~~571 ============ ============ ============ ============

4 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (continued)

See accompanying notes to consolidated financial statements. 5 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) ============================================ LIMITED GENERAL TOTAL PARTNERS PARTNERS -------------------------------------------- Balance - March 26, 2001 $(63,253,130) $(62,083,074) $ (1,170,056) Net income 21,842,192 21,623,770 218,422 ------------ ------------ ------------ Balance - December 25, 2001 $(41,410,938) $(40,459,304) $ (951,634) ============ ============ ============

See accompanying notes to consolidated financial statements. 6 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited)

============================~~===================================~~ ~~LIMITED~~NINE ~~GENERAL~~MONTHS ~~TOTAL~~ENDED ~~PARTNERS~~DECEMBER ~~PARTNERS~~25, ---------------------------- 2001 2000 ---------------------------- Cash flows from operating activities: Net income $ 21,842,192 $ 17,395,526 ------------ ~~Balance~~------------ Adjustments to reconcile net income to net cash (used in) provided by operating activities: Gain on sale of properties (Note 4) (9,093,823) (12,086,370) Extraordinary item-forgiveness ~~March~~of 26indebtedness income (Note 4) (15,980,544) ~~2001~~(14,118,140) $Depreciation 1,024,346 2,580,700 Minority interest in (63loss) income of subsidiaries (227,~~253~~267) 934,~~130~~304 Decrease in cash-restricted for tenants' security deposits 10,481 29,490 (Increase) $decrease in mortgage escrow deposits (62296,~~083~~468) 907,~~074~~804 Increase in prepaid expenses and other assets (325,882) $(345,907) Increase in due to selling partners 3,059,794 7,087,052 Payments of interest to selling partners (94,019) (3,370,496) (Decrease) increase in accounts payable, accrued expenses and other liabilities (1,~~170~~827,~~056~~887) ~~Net~~1,366,869 ~~income~~Increase 13(decrease) in tenants' security deposits payable 3,~~508~~177 (58,~~998~~337) 13Increase in due to general partners of subsidiaries and their affiliates 383 558,~~373~~299 Decrease in due to general partners of subsidiaries and their affiliates (410) (468,~~908~~852) ~~135~~Increase in due to general partners and affiliates 514,~~090~~178 73,998 ------------ ------------ Total adjustments (23,233,941) (16,909,586) ------------ ~~Balance~~ ------------ ~~September~~Net ~~25,~~cash ~~2001 $~~(~~49,744,132)~~used ~~$(48,709,166~~in)provided $by operating activities (1,~~034~~391,~~966~~749) ~~===========~~485,940 ~~===========~~------------ ~~===========~~------------

7 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited) (continued)

============================~~==========~~ ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 25, ---------------------------- 2001 2000 ---------- ~~2001 2000~~ ------------------ Cash flows from investing activities: Proceeds from sale of properties 12,203,542 7,357,350 Acquisitions of property and equipment (312,006) (1,227,478) (Increase) decrease in mortgage escrow deposits (823,988) 148,735 ------------ ------------ ~~Cash~~Net ~~flows~~cash ~~from~~provided ~~operating~~by investing activities: ~~Net income $ 13~~11,~~508~~067,~~998~~548 ~~$ 16~~6,~~451~~278,~~367~~607 ------------ ------------ ~~Adjustments~~Cash toflows ~~reconcile~~from ~~net~~financing ~~income~~activities: toIncrease ~~net cash (used~~ in) ~~provided~~purchase bymoney ~~operating~~notes ~~activities:~~payable ~~Gain~~0 on5,209 ~~sale~~Principal payment of ~~properties~~mortgage ~~(Note~~notes 4)payable (18,~~657~~164,~~081~~825) (92,~~077~~450,~~102~~025) ~~Extraordinary~~Principal ~~item-forgiveness~~payments of ~~indebtedness~~purchase ~~income~~money ~~(Note~~notes 4)payable (143,~~312~~507,~~983~~870) (141,~~122~~862,~~786~~733) ~~Depreciation~~Decrease ~~764,854~~in ~~1,794,273~~capitalization ~~Minority~~of minority interest in (~~loss~~176,923) ~~income of subsidiaries~~ (~~350~~813,~~578~~247) ~~103,064~~------------ ~~Decrease~~------------ inNet cash~~-restricted~~ ~~for~~used ~~tenants'~~in ~~security~~financing ~~deposits~~activities 13(11,~~016 15~~849,~~000~~618) (~~Increase~~5,120,796) ~~decrease~~------------ in------------ ~~mortgage~~Net ~~escrow deposits~~ (~~101,299~~decrease) ~~616,662~~increase ~~Increase~~ in ~~prepaid~~cash ~~expenses~~ and ~~other~~cash ~~assets~~equivalents (~~360~~2,~~301) (446~~173,~~206~~819) ~~Increase in due to selling partners 2~~1,~~327~~643,~~661~~751 ~~6,098,026~~Cash ~~Payments~~and ofcash ~~interest~~equivalents to- ~~selling~~beginning ~~partners~~of ~~(94~~period 4,~~019)~~943,694 (24,~~652~~095,~~035)~~787 ~~(Decrease)~~------------ ~~increase~~------------ inCash ~~accounts~~and ~~payable,~~cash ~~accrued~~equivalents ~~expenses~~- ~~and~~end ~~other~~of ~~liabilities~~period ~~(1,887,603)~~$ 2,~~218~~769,~~805~~875 ~~Increase~~$ ~~(decrease)~~5,739,538 in============ ~~tenants'~~============ ~~security~~Supplemental ~~deposits~~disclosures ~~payable~~of ~~6,576~~noncash ~~(56,867)~~activities: Increase in ~~due~~property toand ~~general~~equipment ~~partners~~- ofheld ~~subsidiaries~~for sale reclassified from property and ~~their~~equipment ~~affiliates~~$ ~~383~~5,764,304 ~~558~~$ 19,~~299~~012,555 Decrease in ~~due~~property toand ~~general~~equipment, ~~partners~~net of ~~subsidiaries~~accumulated ~~and~~depreciation ~~their affiliates~~ (~~410~~1,114) (~~468~~2,~~852~~343) Increase ~~(decrease)~~ in ~~due~~deferred torevenue ~~general~~on ~~partners~~sale ~~and~~of ~~affiliates~~properties ~~316,687~~reclassified ~~(211,849)~~from ~~-----------~~purchase ~~-----------~~money ~~Total~~notes ~~adjustments~~payable ~~(15,335,097)~~and ~~(15,631,568)~~due ~~-----------~~to ~~-----------~~selling ~~Net~~partners ~~cash (used in)provided by operating activities (1~~5,~~826~~407,~~099)~~677 ~~819~~13,~~799 ----------- -----------~~489,268

8 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Unaudited) (continued)

============================~~==========~~ ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 25, ----------------------------~~----------~~ 2001 2000 ----------------------------~~----------~~ ~~Cash~~Forgiveness ~~flows~~of ~~from~~indebtedness ~~investing~~income ~~activities~~(Note 4): ~~Proceeds~~Decrease ~~from~~in ~~sale~~deferred ofrevenue ~~properties~~from ~~11,393,542~~sale ~~2,857,350 Acquisitions~~ of property ~~and equipment~~ (~~208~~3,~~766) (411~~839,~~718~~356) ~~Increase~~0 Decrease in ~~mortgage~~purchase ~~escrow~~money ~~deposits~~note payable (~~599~~1,~~971~~479,557) (307,~~383~~741,369) ~~------------~~Decrease ~~-----------~~in ~~Net~~due ~~cash~~to ~~provided~~selling bypartners ~~investing activities~~ (10,~~584~~661,~~805~~631) 2(5,~~415~~616,~~249~~053) ~~------------~~Decrease ~~-----------~~in ~~Cash~~due ~~flows~~to ~~from~~general ~~financing~~partners ~~activities:~~of ~~Increase~~subsidiaries inand ~~purchase~~their ~~money~~affiliates ~~notes payable~~ 0 5(558,~~209~~299) ~~Principal~~Decrease ~~payment~~in ofaccounts ~~mortgage notes~~ payable (7,~~446,822)~~ ~~(1,385,695)~~accrued ~~Principal~~expenses ~~payments~~and ofother ~~purchase~~liabilities ~~money~~0 ~~notes payable~~ (3162,~~270,301~~419) ~~(1,002,082)~~ Decrease in ~~capitalization~~due ofto ~~minority~~general ~~interest~~partners ~~(155,637)~~and affiliates 0 (1040,~~209~~000) ~~------------~~Summarized ~~-----------~~below ~~Net~~are ~~cash~~the ~~used~~components inof ~~financing~~the ~~activities~~gain ~~(10,872,760)~~on ~~(2,392,777)~~sale ~~------------~~of ~~-----------~~property: ~~Net~~Decrease ~~(decrease) increase~~ in ~~cash~~property and ~~cash equivalents (2~~equipment,~~114,054)~~ ~~842,271~~and ~~Cash~~property and ~~cash equivalents~~ equipment-held ~~beginning~~for ofsale ~~period 4~~13,~~943~~005,~~694~~337 415,~~095~~075,~~787~~070 ~~------------~~Decrease ~~-----------~~in ~~Cash and~~ cash ~~equivalents~~ - ~~end~~restricted offor ~~period~~tenants' $security 2deposits 141,~~829,640~~512 ~~$ 4~~83,~~938,058~~961 ~~============~~Decrease ~~===========~~in ~~Supplemental~~mortgage ~~disclosures~~escrow ofdeposits ~~noncash~~1,191,695 ~~activities:~~696,164 ~~Increase~~Decrease in ~~property~~prepaid expenses and ~~equipment~~other -assets ~~held~~486,838 ~~for~~168,567 ~~sale~~Decrease ~~reclassified~~in ~~from~~purchase ~~property~~money ~~and~~notes ~~equipment~~payable $ (2,~~163~~355,~~925~~100) ~~$ 2~~(5,~~755~~172,~~607~~016) Decrease in ~~property~~due ~~and~~to ~~equipment,~~selling ~~net~~partners of(6,817,633) ~~accumulated depreciation~~ (29,~~165~~854,311) 0Decrease ~~Increase~~ in ~~deferred~~accounts ~~revenue~~payable, onaccrued ~~sale~~expenses ofand ~~properties~~other ~~reclassified~~liabilities ~~from~~(224,675) ~~purchase~~(474,477) ~~money~~Decrease ~~notes~~in tenant's security deposits payable ~~and~~(127,129) (95,837) Decrease in due to ~~selling~~general partners 10and affiliates (166,~~892,510~~856) 0 Decrease in mortgage notes payable 0 (5,156,141)

See accompanying notes to consolidated financial statements. 9 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) Note 1 - General The consolidated financial statements for the nine months ended December 25, 2001 and 2000 include the accounts of Cambridge Advantaged Properties Limited Partnership (the "Partnership") and thirty and forty-three subsidiary partnerships, respectively ("subsidiaries," "subsidiary partnerships" or "Local Partnerships"). 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 an affiliate of one of its General Partners (a "General Partner"), which affiliate has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary partnerships (the "Local General Partner") 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 December 25. All subsidiaries have fiscal quarters ending September 30. Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from October 1 through December 25. The Partnership's fiscal quarter ends on December 25 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 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 $7,000 and $3,000 and $24,000 and $24,000 for the three and nine months 10 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) ended December 25, 2001 and 2000, respectively. The Partnership's investment in each subsidiary is equal to the respective subsidiary's partners' equity less minority interest capital, if any. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. The 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 March 25, 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 December 25, 2001, the results of operations for the three and nine months ended December 25, 2001 and cash flows for the nine months ended December 25, 2001 and 2000. However, the operating results for the nine months ended December 25, 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 March 25, 2001 Annual Report on Form 10-K. Note 2 - Purchase Money Notes Payable Purchase Money Notes (the "Purchase Money Notes") in the original amount of $85,458,825 were issued to the selling partners of the subsidiary partnerships as part of the purchase price and are secured only by the interest in the subsidiary partnership to which the Purchase Money Note relates. A portion of these Purchase Money Notes, in the original amount of $31,932,568, are obligations at the subsidiary partnership level, whereas the remaining $53,526,257 is recorded at the Partnership level. The Purchase Money Notes generally provided for compound interest at rates which, in general, ranged from 9% to 10% per annum through August 31, 1989. Thereafter, simple interest has accrued, without further interest thereon, through maturity as extended (see below). 11 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) Purchase Money Notes at December 25, 2001 and March 25, 2001 include $4,336,417 of interest accrued through August 31, 1989. 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 from operations, as defined) is applied first to accrued interest and then to current interest thereon. Any interest not paid currently accrues, without further interest thereon, through the extended due date of the Purchase Money Note. Continued accrual of such interest beyond the initial term, without payment, reduces the effective interest rate of 9%. The exact effect is not determinable inasmuch as it is dependent on the actual future interest payments and ultimate repayment dates of the Purchase Money Notes. The Purchase Money Notes, after the extended maturity dates, call for the simple accrual of interest on the balance of principal, interest and Purchase Money Note extension fees payable as of the date of maturity at one of the following two rates: (i) the lesser of 12% or the lowest legally allowable rate; or (ii) the lesser of prime plus 2% or the lowest legally allowable rate. Unpaid interest of approximately $33,654,000 and $51,597,000 as of December 25, 2001 and March 25, 2001, respectively, has been accrued and is included in due to selling partners in the consolidated balance sheets. In general, the interest on and the principal of each Purchase Money Note is also payable to the extent of the Partnership's actual receipt of proceeds of the sale or refinancing of the apartment complex. The Partnership extended the original terms of the Purchase Money Notes (ranging from August to December 1996) for up to three additional years (four years with respect to three subsidiary partnerships and seven years with respect to three subsidiary partnerships). In connection with such extensions, the Partnership incurred extension fees of 1/2 % per annum of the outstanding principal balance of the Purchase Money Notes aggregating $365,180. The Purchase Money Notes with seven year extensions (one of which was subsequently sold) have maturity dates of October 2003. Additionally, an oral agreement was reached in August 2001 to extend the maturity dates of the remaining Purchase Money Notes to September 2002 and November 2002. The 12 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) Partnership is working with the Local General Partners and Purchase Money Note holders to refinance or sell the properties. No assurance can be given that management's efforts will be successful. Additional extension fees of $174,412 were accrued and added to the Purchase Money Notes balance. The extension fees are being amortized over the term of the extensions. 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 of principal, accrued interest and extension fees. The Purchase Money Notes are without personal recourse to either the Partnership or any of its partners and the selling partner's recourse, in the event of nonpayment, would be to foreclose on the Partnership's interests in the respective subsidiary partnerships. Distributions aggregating approximately $4,180,000 and $6,523,000 were made to the Partnership for the nine months ended December 25, 2001 and 2000, respectively, of which $3,593,000 and $2,773,000, respectively, were used to pay principal and interest on the Purchase Money Notes. In addition, approximately $0 and $598,000 was paid as "additional" interest on the Purchase Money Notes for the nine months ended December 25, 2001 and 2000, respectively. 13 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) Note 3 - Related Party Transactions The costs incurred to related parties for the three and nine months ended December 25, 2001 and 2000 were as follows:

~~======================================~~THREE ~~SIX~~MONTHS ENDED NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 25, DECEMBER 25, ---------- ---------- ---------- ---------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- ~~Forgiveness~~Partnership ofmanage- ~~indebtedness~~ment ~~income~~fees (~~Note 4~~a): ~~Decrease~~$ in271,000 ~~deferred~~$ ~~revenue~~280,000 ~~from~~$ ~~sale~~813,000 of$ ~~property (3~~840,~~839,356)~~000 0Expense ~~Decrease~~reimburse- inment ~~purchase money note payable~~ (~~1,148,096~~b) (728,~~741~~001 47,~~369)~~768 ~~Decrease~~112,143 in123,169 ~~due~~Local toadministra- ~~selling~~tive ~~partners~~fee (~~9,325,531~~c) (514,~~620~~000 16,~~699)~~000 ~~Decrease in prepaid expenses and other assets 0 (40~~42,000) ~~Decrease in due to general partners of subsidiaries and their affiliates 0 (558~~48,~~299)~~000 ~~Decrease~~---------- in---------- ~~accounts~~---------- ~~payable,~~---------- ~~accrued~~Total ~~expenses~~general and ~~other~~administrative- ~~liabilities~~General 0Partners ~~(162~~313,~~419)~~001 ~~Summarized below are the components of the gain on sale of property: Decrease in property and equipment~~343,768 ~~and property and equipment-held for sale 9~~967,~~008,040~~143 131,~~624~~011,~~809~~169 ~~Decrease~~---------- in---------- ~~cash~~---------- ---------- ~~restricted~~Property ~~for~~manage- ~~tenants'~~ment ~~security~~fees ~~deposits~~incurred ~~79,179~~to ~~83,821~~affiliates ~~Decrease~~of inthe ~~mortgage~~subsidiary ~~escrow~~partnerships' ~~deposits~~general ~~801,751~~partners ~~696~~135,~~164~~857 ~~Decrease in prepaid expenses and other assets 436~~198,~~814~~463 95441,~~322~~145 ~~Decrease in purchase money notes payable 0 (5~~622,~~172,016)~~261 ~~Decrease~~---------- in---------- ~~due~~---------- to---------- ~~selling~~Total ~~partners~~general ~~(185,354)~~and ~~(9,854,311)~~administrative- ~~Decrease~~related inparties ~~accounts~~$ ~~payable~~448,858 ~~accrued~~$ ~~expenses and other liabilities (161~~542,~~609)~~231 ~~(446~~$1,~~906) Decrease in tenant's security deposits payable (75~~408,~~480)~~288 ~~(80~~$1,~~594) Decrease in due to general partners and affiliates (166~~633,~~856)~~430 ~~(9,900)~~========== ~~Decrease~~========== in========== ~~mortgage notes payable 0 (5,156,141)~~==========

(a) After all other expenses of the Partnership are paid, an annual partnership management fee of up to .5% of invested assets is payable to the Partnership's General Partners and affiliates. Partnership management fees owed to the General Partners amounting to approximately $2,691,000 and $2,178,000 were accrued and unpaid as of December 25, 2001 and March 25, 2001, respectively. Without the General Partner's continued allowance of accrual without payment of certain fees and expense reimbursements, the Partnership will not be in a position to meet its obligations. The General Partners have continued allowing the accrual without payment of these amounts but are under no obligation to continue to do so. Proceeds received from future sales will be used to pay any outstanding amounts due to the General Partners. 14 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) (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. Expense reimbursements and asset monitoring fees owed to the General Partners amounting to approximately $63,000 and $61,187 were accrued and unpaid as of December 25, 2001 and March 25, 2001, respectively. (c) C/R Special Partnership, the special limited partner, owning a .01% interest, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. Note 4 - Sale of Properties GENERAL The Partnership is currently in the process of disposing of its investments. It is anticipated that this process will take a number of years. As of December 25, 2001, the Partnership has disposed of forty-two of its sixty-one original investments. On December 4, 2001, the Partnership sold its Limited Partnership Interest in five Local Partnerships effective January 1, 2002. Eleven additional investments are listed for sale and the Partnership anticipates that a number of the three remaining investments will be listed for sale by March 31, 2002. There can 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 received by the Partnership from such sales will be sufficient to return their original investment. Moreover, the Local General Partners and holders of the Purchase Money Notes generally have decision-making rights with respect to the sale of each property which therefore makes it more cumbersome for the General Partners to sell each property. 15 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) In order to facilitate an orderly disposition of the Partnership's assets, the Partnership formed a new entity: Cambridge Advantaged Liquidating L.L.C. (the "Trust"), a Delaware limited liability company which is wholly-owned by the Partnership. On July 21, 1999, the Partnership contributed its limited partnership interest in Decatur Apartments, Ltd., Florence Apartments, Ltd., Saraland Apartments, Ltd., Dickens Ferry Apartments, Ltd., Boonie Doone Apartments, Ltd., University Gardens Apartments, Ltd., and Southside Village Apartments, Ltd., to the Trust. In each case, the interests were contributed subject to each respective Purchase Money Note. The contribution did not involve any consideration being paid to the Partnership, therefore, there should not be any tax effect to the limited partners of the Partnership. As of December 25, 2001 all of these properties were sold except for Saraland Apartments, Ltd. INFORMATION REGARDING DISPOSITIONS. On January 5, 2001, the property and the related assets and liabilities of West Scenic Apartments, Ltd. ("West Scenic") were sold back to the Purchase Money Note Holder for $1,218,000 resulting in a loss of approximately $973,000. No proceeds were used to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $3,839,000, resulting in forgiveness of indebtedness income of such amount. On April 11, 2001, the property and related assets and liabilities of Tall Pines ("Tall Pines") were sold to an unaffiliated third party for $2,145,000, resulting in a gain of approximately $751,000. The Partnership used approximately $1,015,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of $3,424,000, resulting in forgiveness of indebtedness income of approximately $2,409,000. On April 20, 2001, the property and related assets and liabilities of Northwoods III Apartments were sold to an unaffiliated third party for $3,316,000, resulting in a gain of approximately $1,266,000. The Partnership used approximately $791,000 of the 16 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of $1,756,000, resulting in forgiveness of indebtedness income of approximately $965,000. On May 10, 2001, the property and related assets and liabilities of Ware Manor Associates ("Ware Manor") were sold to an unaffiliated third party for $1,364,500, resulting in a gain of approximately $389,000. The Partnership used approximately $472,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of $1,846,000, resulting in forgiveness of indebtedness income of approximately $1,374,000. On May 21, 2001, Lexington Village ("Lexington") entered into a purchase and sale agreement with an unaffiliated third party purchaser for a purchase price of $1,350,000. The closing is expected to occur in 2002. No assurance can be given that the closing will actually occur. On June 27, 2001, the property and related assets and liabilities of Oakwood Manor ("Oakwood") were sold to an unaffiliated third party purchaser for $3,099,000, resulting in a gain of approximately $259,000. The Partnership used approximately $1,077,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of $6,803,000 resulting in forgiveness of indebtedness income of approximately $5,726,000. On July 20, 2001, the property and related assets and liabilities of Washington Highland Apts. ("Washington Highland") were sold to an unaffiliated third party purchaser for $800,000, resulting in a loss of approximately $482,000. The Partnership will use approximately $238,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of $1,905,000 resulting in forgiveness of indebtedness income of approximately $1,667,000. 17 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) On August 14, 2001, the Partnership's Limited Partnership Interest in Southside Village Apts. ("Southside") was sold to the Local General Partner for $5,000, resulting in a loss in the amount of $222,000. The Partnership was released from the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $3,930,000, resulting in gain on sale of property of such amount. On August 14, 2001 the Partnership's Limited Partnership Interest in University Gardens Apts. ("University") was sold to the Local General Partner for $5,000, resulting in a loss in the amount of $334,000. The Partnership was released from the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $3,251,000, resulting in gain on sale of property of such amount. On August 15, 2001 the Partnership's Limited Partnership Interest in Hackley Village ("Hackley") was assigned to the Local General Partner resulting in a loss of approximately $522,000. The Partnership paid approximately $9,000 to settle the associated Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $1,825,000, resulting in gain on sale of property of such amount. On August 21, 2001, Nottingham Woods Apartments, Ltd. ("Nottingham Woods") entered into a purchase and sale agreement with an unaffiliated third party purchaser for a purchase price of $1,900,000. The closing is expected to occur in 2002. No assurance can be given that the closing will actually occur. On September 20, 2001, Shelton Beach Apartments, Ltd. ("Shelton Beach") entered into a purchase and sale agreement with an unaffiliated third party purchaser for a purchase price of $2,333,333. The closing is expected to occur in 2002. No assurance can be given that the closing will actually occur. On September 20, 2001, Northpointe II Apartments, Ltd. ("Northpointe II") entered into a purchase and sale agreement with an 18 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) unaffiliated third party purchaser for a purchase price of $1,666,667. The closing is expected to occur in 2002. No assurance can be given that the closing will actually occur. On November 13, 2001, the property and related assets and liabilities of Seymour O'Brien Manor Apts. ("Seymour O'Brien") were sold to an unaffiliated third party for $920,000, resulting in a loss of approximately $620,000. The Partnership will use approximately $702,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $1,842,000, resulting in forgiveness of indebtedness income of approximately $1,140,000 which will be recognized in the Partnership's next quarterly filing which will be the March 25, 2002 10-K. On November 20, 2001, the property and related assets and liabilities of Vincennes NiBlack Apts. ("Autumn Ridge") were sold to a unaffiliated third party for $2,500,000, resulting in a loss of approximately $879,000. The Partnership will use approximately $1,296,000 of the proceeds to pay off the Purchase Money Note and accrued interest thereon, which had a total outstanding balance of approximately $3,567,000, resulting in forgiveness of indebtedness income of approximately $2,271,000 which will be recognized in the Partnership's next quarterly filing which will be the March 25, 2002 10-K. On November 20, 2001, Robindale East Apts. ("Robindale") entered into a purchase and sale agreement with a third party for the purchase price of $10,000. The closing is expected to occur in 2002. No assurance can be given that the closing will actually occur. On December 4, 2001, the Partnership's Limited Partnership Interests in Greenwood Manor, Henslee Heights, Hereford Manor, Malvern Manor, and Southwest Apartments were sold to the Local General Partner effective January 1, 2002 for $11,988, $27,972, $11,988, $7,920, and $9,990, resulting in losses of approximately $282,000, $647,000, $345,000, $328,000, and $183,000, respectively. 19 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) No proceeds were used to settle the related Purchase Money Notes and interest thereon which were assigned to the Local General Partner, resulting in gains on sale of properties of approximately $2,144,000, $2,680,000, $1,675,000, $1,761,000, and $1,473,000, respectively, which will be recognized in the Partnership's next quarterly filing which will be the March 25, 2002 10-K. Note 5 - Commitments and Contingencies The following disclosures include changes and/or additions to disclosures regarding the subsidiary partnerships which were included in the Partnership's Annual Report on Form 10-K for the period ended March 25, 2001. MCCONNELL V. HUTTON ADVANTAGED PROPERTIES L.P. On or about November 3, 1999, eight alleged holders of beneficial interests in Purchase Money Notes issued by the Partnership in connection with the Partnership's acquisition of Limited Partnership Interests in the West Scenic, Oakwood and Robindale Local Partnerships brought an action in the Chancery Court of Pulaski County, Arkansas, entitled McConnell, et al., v. Hutton Advantaged Properties Limited Partnership, et al., Case No. EQ 99-5769 (the "McConnell Action"). Plaintiffs' original complaint contained a single count alleging fraud in connection with the Partnership's acquisition of limited partnership interests in those three Local Partnerships and named as defendants the Partnership, its general partners, its special limited partner and the general partner of the special limited partner, as well as two other defendants who are not affiliated with the Partnership. On or about December 27, 1999, the plaintiffs in the McConnell Action amended their complaint to add a second count alleging that the Purchase Money Notes involved in the McConnell Action had matured and were in default. Defendants (other than the two defendants who are not affiliated with the Partnership) have reached a written agreement with plaintiffs to settle the claims between them, which settlement contemplates the sale of real property owned by the West Scenic, Oakwood, and Robindale limited partnerships and an allocation of the sale proceeds between the plaintiffs, the Partnership and others. On January 5, 2001, the property and the related assets 20 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) and liabilities of West Scenic were sold. On June 27, 2001, the property and related assets and liabilities of Oakwood were sold (see Notes 4 and 6 for a description of such sales). A contract for the sale of the property and related assets and liabilities of Robindale has been entered into and it is anticipated that such sale will close in 2002. UNIVERSITY GARDENS APARTMENTS, LTD. AND SOUTHSIDE VILLAGE APARTMENTS, LTD. By letters dated December 29, 1999, from counsel for Skyline Properties, Inc., Trustee of the University Gardens Apartments, Ltd. Partners Liquidating Trust and Southside Village Apartments, Ltd. Partners Liquidating Trust, ("Skyline"), the Partnership was informed of Skyline's intent to file an involuntary substitution affidavit pursuant to Section 7.1 of the relevant security agreements. Pursuant to a standstill agreement between the parties, on August 14, 2001, both properties' Limited Partnership Interests were sold (see Note 4). SARALAND APARTMENTS, LTD. On March 21, 2001, Saraland Apartments, Ltd. ("Saraland") filed a petition for relief under chapter 11 of the bankruptcy code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. The filing was commenced in response to a nonjudicial foreclosure brought by HUD. Another lawsuit under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act, is currently pending in the District Court for the Southern District of Alabama (the "District Court") against Saraland and others who it claims are potentially responsible parties. Redwing Carriers, Inc. ("Redwing"), a codefendant in this lawsuit, has commenced an action, also in the District Court, to recover all or a pro rata share of its environmental response costs from Saraland and others. Another lawsuit, pending in Circuit Court, Mobile County, Alabama, was filed by the former tenants of Saraland against Saraland and Redwing and is also related to the environmental issues. 21 CAMBRIDGE ADVANTAGED PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements December 25, 2001 (Unaudited) The debtor has filed a preliminary plan of reorganization and disclosure statement. The debtor has reached a settlement with HUD and expects to file an updated plan of reorganization and disclosure soon. 22 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 the cash distributions from operations of the Local Partnerships in which the Partnership has invested and net proceeds from sales. These sources are available to meet obligations of the Partnership. However, the cash distributions received from the Local Partnerships to date have not been sufficient to meet all such obligations of the Partnership. Accordingly, certain fees and expense reimbursements owed to the General Partners amounting to approximately $3,029,000 and $2,514,000, were accrued and unpaid as of December 25, 2001 and March 25, 2001, respectively. Without the General Partners' continued allowance of accrual without payment of certain fees and expense reimbursements, the Partnership will not be in a position to meet its obligations. The General Partners have continued allowing the accrual without payment of these amounts but are under no obligation to do so. Proceeds received from future sales will be used to pay any outstanding amounts due to the General Partners. Distributions aggregating approximately $4,180,000 and $6,523,000 were made to the Partnership for the nine months ended December 25, 2001 and 2000, respectively, of which $3,593,000 and $2,773,000, respectively, were used to pay principal and interest on the Purchase Money Notes. In addition, approximately $0 and $598,000 was paid as "additional" interest on the Purchase Money Notes for the nine months ended December 25, 2001 and 2000, respectively. During the nine months ended December 25, 2001, cash and cash equivalents of the Partnerships and its thirty consolidated Local Partnerships decreased approximately $2,174,000. This decrease was due to principal payment of mortgage notes payable ($8,165,000), principal payments of Purchase Money Notes payable ($3,508,000), acquisitions of property and equipment ($312,000), an increase in mortgage escrow deposits ($824,000), a decrease in capitalization of minority interest ($177,000) and cash used in operating activities ($1,392,000) which exceeded proceeds from mortgage notes payable ($12,204,000). Included in the adjustments to reconcile the net income to cash used in operating activities are gain on sale of properties ($9,094,000), forgiveness of indebtedness income ($15,981,000) and depreciation ($1,024,000). 23 For a discussion of Purchase Money Notes Payable, see Note 2 to the financial statements. For a discussion of the sale of properties in which the Partnership owns direct and indirect interest, see Note 4 to the financial statements. Even though sales have resulted in net gains for tax purposes, the net sales proceeds have not been sufficient to permit investors to pay the tax incurred and the funds available after payment of all or a portion of the Purchase Money Notes is minimal. For a discussion of contingencies affecting certain Local Partnerships, see Note 5 to the financial statements. Since the maximum loss for which the Partnership would be liable is its net investment in the respective Local Partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way except that the Partnership would lose its investment in the properties and any potential proceeds from the sale or refinancing of the properties. Management is not aware of any trends or events, commitments or uncertainties which have not been otherwise disclosed, that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. 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 diversification of the portfolio may not protect against a general downturn in the national economy. RESULTS OF OPERATIONS During the periods ended December 25, 2001 and 2000, Bellfort, Fircrest, Casa Ramon, Cloisters (Sundown), Conifer 208, Cedarbay, West Scenic, Tall Pines, Northwoods III (Windgate), Oakwood Manor, Ware Manor and Washington Highland sold their properties and the related assets and liabilities and the Partnership sold its Local Partnership Interest in Cranbrook, Caroline Forest Apts., Bonnie Doone Apartments, Florence Apartments, Dickens Ferry Apartments, Decatur Apartments, Solemar, Southside, University and Hackley (collectively the "Sold Assets"). The results of operations of the Partnership, as well as the Local Partnerships, remained fairly consistent during the three and nine months 24 ended December 25, 2001 and 2000, excluding the Sold Assets, other income, gain on sale of properties, forgiveness of indebtedness income, administrative and management, operating, repairs and maintenance and interest expense. 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 which were issued when the Local Partnerships Interests were acquired. Rental income decreased approximately 35% and 32% for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, rental income increased approximately 4% and 6% for the three and six months ended December 25, 2001 as compared to 2000, primarily due to rental rate increases. Other income decreased approximately 46% and 34% for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, other income increased approximately $18,000 and $40,000 for the three and nine months ended December 25, 2001 as compared to 2000 primarily due to an underaccrual of interest income at two Local Partnerships in 2000, partially offset by a decrease in interest income at the Partnership level as the result of lower cash and cash equivalent balances in 2001. Total expenses, excluding the Sold Assets, administrative and management, operating, repairs and maintenance and interest, remained fairly consistent with decreases of less than 1% and approximately 2% for the three and nine months ended December 25, 2001 as compared to 2000. Administrative and management decreased approximately $278,000 and $1,224,000 for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, such expense increased approximately $2,000 and decreased approximately $173,000. The decrease is primarily due to a decrease in legal and accounting expenses at the Partnership level. Operating expenses decreased approximately $192,000 and $449,000 for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, such expense increased approximately $44,000 and $180,000, primarily due to increased utility charges at six Local Partnerships. 25 Repairs and maintenance decreased approximately $494,000 and $972,000 for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, such expense decreased approximately $117,000 and $38,000, primarily due to new siding installed at one Local Partnership in 2000, as well as small decreases at four other Local Partnerships. Interest expense decreased approximately $368,000 and $4,029,000 for the three and nine months ended December 25, 2001 as compared to 2000. Excluding the Sold Assets, such expense increased approximately $164,000 and decreased approximately $991,000. The increase for the three months is primarily due to an overaccrual of interest on the Purchase Money Notes in the first and second quarters of 2000 which was corrected in the third quarter of 2000. The decrease for the nine months is due to a decrease in the prime interest rate in 2001. Administrative and management-related parties, taxes and insurance and depreciation decreased approximately $93,000 and $225,000, $153,000 and $402,000, $527,000 and $1,556,000, respectively, for the three and nine months ended December 25, 2001 as compared to 2000, primarily due to decreases relating to the Sold Assets. Pinewood, Summer Arms, Cabarrus, Robindale, Huntley #1, Huntley #2, Seymour-O'Brien, Autumn Ridge, Nu-Elm, Lexington, Nottingham Woods, Shelton Beach and Northpointe II are not being depreciated during the period ended December 25, 2001 because they are classified as assets held for sale. Gain on sale of properties and forgiveness of indebtedness income will continue to fluctuate as a result of the disposition of properties (see Note 4 of the financial statements). Item 3. Quantitative and Qualitative Disclosures about Market Risk None 26 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 - None (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter. 27 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 ADVANTAGED PROPERTIES LIMITED PARTNERSHIP (Registrant) By: Related Beta Corporation, a General Partner Date: February 4, 2002 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President (principal executive and financial officer) Date: February 4, 2002 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (principal accounting officer) By: ASSISTED HOUSING ASSOCIATES, INC., a General Partner Date: February 4, 2002 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President (principal executive and financial officer) Date: February 4, 2002 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (principal accounting officer) By: CAMBRIDGE AND RELATED ASSOCIATES LIMITED PARTNERSHIP By: Related Beta Corporation, Date: February 4, 2002 By: /s/ Alan P. Hirmes -------------------- Alan P. Hirmes, President (principal executive and financial officer) Date: February 4, 2002 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (principal accounting officer)

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 25, SEPTEMBER 25 ------------------------------ ----------------------------- 2001 2000 2001 2000 ---------------------------------- --------------------------------- Partnership manage- ment fees (a) $271,000 $280,000 $542,000 $ 560,000 Expense reimburse- ment (b) 49,650 38,329 84,142 75,401 Local administra- tive fee (c) 14,000 16,000 28,000 32,000 ------- ------- ------- --------- Total general and administrative- General Partners 334,650 334,329 654,142 667,401 ------- ------- ------- --------- Property manage- ment fees incurred to affiliates of the subsidiary partnerships' general partners 140,543 203,790 305,288 423,798 ------- ------- ------- --------- Total general and administrative- related parties $475,193 $538,119 $959,430 $1,091,199 ======= ======= ======= =========

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