10-Q 1 camr_may2003.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 May 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)

============ ============= ~~November~~May 3031, February 28, ~~2002~~2003 2002*2003 ------------ ------------- ASSETS Property and equipment~~, net of accumulated depreciation of $11,136,745 and $10,819,771, respectively $ 5,624,792 $ 5,941,766 Property and equipment~~-held for sale, net of accumulated depreciation of $114,~~347~~144,~~772~~839 and $175,~~546~~868,~~742~~186, respectively 10$ 3,~~482~~845,~~355~~522 16$ 5,~~273~~029,~~634~~926 Cash and cash equivalents 1871,~~137,072~~067 ~~780~~851,~~650~~768 Cash - restricted for tenants' security deposits ~~182,958~~602 ~~235~~11,~~380~~457 Mortgage escrow deposits 5222,~~941,586~~058 61,~~203~~207,~~393~~847 Rents receivable 564,~~287~~360 ~~194~~8,~~567~~372 Prepaid expenses and other assets ~~495~~414,~~122~~250 ~~955~~334,~~391~~407 ------------ ------------ Total assets $23 5,~~920~~357,~~172~~859 $30 7,~~584~~443,~~781~~777 ============ ============

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

============ ============= ~~November~~May 3031, February 28, ~~2002~~2003 2002*2003 ------------ ------------- LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable $ 122,~~496~~229,~~906~~535 $ 162,~~740~~953,~~978~~940 Purchase Money Notes payable (Note 2) 51,~~778~~465,~~821~~667 162,~~067~~408,~~193~~117 Due to selling partners (Note 2) 92,~~028~~198,~~606~~275 243,~~289~~685,~~106~~011 ~~Deferred revenue on sale of properties 16,610,373 0~~ Accounts payable, accrued expenses and other liabilities 1189,~~005,148~~795 2374,~~362,862~~298 Tenants' security deposits payable ~~182,958~~602 ~~235~~11,~~380~~457 Due to general partners of subsidiaries and their affiliates 6333,423 833,423 Due to general partners and affiliates 2,~~659~~814,~~712~~927 2,~~447~~685,~~759~~431 ------------ ------------ Total liabilities 478,~~825~~932,~~947~~224 6212,151,~~701~~677 ------------ ------------ Minority interest (90120,~~482~~386) ~~153~~(91,~~784~~601) ------------ ------------ Commitments and contingencies ~~(Note 6)~~ Partners' deficit: Limited partners (232,~~128~~970,~~612~~912) (304,~~954~~121,~~969~~609) General partners (~~686~~483,~~681~~067) (~~765~~494,~~735~~690) ------------ ------------ Total partners' deficit (233,~~815~~453,~~293~~979) (314,~~720~~616,~~704~~299) ------------ ------------ Total liabilities and partners' deficit $ 235,~~920~~357,~~172~~859 $ 307,~~584~~443,~~781~~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 ~~Nine~~May ~~Months Ended November 30~~31, ~~November 30,~~ --------------------------- ~~---------------------------~~2003 2002 ~~2001~~* 2002 2001* --------------------------- ~~---------------------------~~ Revenues: Rentals, net $ 2529,~~067,292~~730 $ 2,~~965~~505,~~185~~909 ~~$ 6,873,254 $ 8,973,492~~ Other 4812,~~133~~370 9661,~~448~~929 ~~371,459 303,201~~ Gain ~~(loss)~~ on sale of properties (Note 4) 51,~~484~~369,~~379~~607 ~~(631~~661,~~165)~~280 ~~5,884,790 (718,787)~~ ------------ ------------ ~~------------ ------------~~ Total revenues 71,~~599~~911,~~804~~707 23,~~430~~229,~~468~~118 ~~13,129,503 8,557,906~~ ------------ ------------ ~~------------ ------------~~ Expenses Administrative and management ~~507~~141,~~457~~319 ~~406~~722,~~833~~033 ~~1,786,539 1,959,833~~ Administrative and management- related parties (Note 3) ~~309~~313,~~691~~599 ~~355~~313,~~056~~214 ~~934,793 1,135,329~~ Operating ~~400~~148,~~019~~620 ~~530~~510,~~360~~717 ~~1,360,236 1,776,656~~ Repairs and maintenance ~~560~~111,~~668~~083 ~~746~~515,~~141~~151 ~~1,579,728 2,169,532~~ Taxes and insurance ~~246~~75,~~841~~945 ~~356~~296,~~352~~895 ~~833,732 1,047,169~~ Interest ~~282~~34,~~441~~457 ~~554~~437,~~228~~232 ~~1,077,765 1,701,933~~ Depreciation 0 105,~~657~~658 ~~266,877 316,974 892,621~~ ------------ ------------ ~~------------ ------------~~ Total expenses 2825,~~412,774~~023 32,~~215~~900,~~847~~900 ~~7,889,767 10,683,073~~ ------------ ------------ ~~------------ ------------~~ Income ~~(loss)~~ before minority interest and extraordinary item 51,~~187~~086,~~030~~684 ~~(785~~328,~~379)~~218 ~~5,239,736 (2,125,167)~~ Minority interest in loss of subsidiaries ~~115~~28,~~316~~783 5125,~~772~~715 ~~238,183 4,478~~ ------------ ------------ Income before extraordinary item 1,115,467 453,933 ------------ ------------ ~~Income (loss) before extraordinary item 5,302,346 (779,607) 5,477,919 (2,120,689)~~ Extraordinary item- forgiveness of indebtedness income (Note 4) ~~0 3~~46,~~861,270~~853 2,427,492 ~~4,762,489~~ ------------ ------------ ~~------------ ------------~~ Net income $ 51,~~302~~162,~~346~~320 $ ~~3,081,663 $ 7,905,411 $~~ 2,~~641~~881,~~800~~425 ============ ============ ~~============ ============~~

* As restated - see Note 5 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 ~~Nine~~May ~~Months Ended November 30~~31, ~~November 30,~~ ------------------------- -~~------------------------~~ ~~2002~~2003 2001* 2002 ~~2001~~* ------------------------- -~~------------------------~~ Income ~~(loss)~~ before extraordinary item - limited partners $ 51,~~249~~104,~~323~~312 $ ~~(771~~449,~~811)~~394 ~~$ 5,423,140 $(2,099,482)~~ Extraordinary item - limited partners ~~0 3~~46,~~822,657~~385 2,403,217 ~~4,714,864~~ ----------- ----------- -~~----------~~ ~~-----------~~ Net income - limited partners $ 51,~~249~~150,~~323~~697 $ ~~3,050,846 $ 7,826,357 $~~ 2,~~615~~852,~~382~~611 =========== =========== =~~==========~~ ~~===========~~ Number of limited ~~partnership~~Partnership units outstanding 10,038 10,038 ~~10,038 10,038~~ =========== =========== =~~==========~~ ~~===========~~ Income ~~(loss)~~ before extraordinary item per limited partnership unit $ ~~522~~110.9401 $ ~~(76~~44.~~89)~~77 ~~$ 540.26 $ (209.15)~~ Extraordinary item per limited partnership unit ~~0 380~~4.8262 239.41 ~~469.70~~ ----------- ----------- -~~----------~~ ~~-----------~~ Net income per limited partnership unit $ ~~522~~114.9463 $ ~~303~~284.9318 ~~$ 779.67 $ 260.55~~ =========== =========== =~~========== ===========~~

* As restated - see Note 5 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, ~~2002~~2003 ~~- as restated see Note 5~~ $(314,~~720~~616,~~704~~299) $(304,~~954~~121,~~969~~609) $ (~~765~~494,~~735~~690) Net income - ~~nine~~three months ended ~~November~~May 3031, ~~2002~~2003 71,~~905~~162,~~411~~320 71,~~826~~150,~~357~~697 7911,~~054~~623 ------------ ------------ ------------ Balance-May ~~November 30~~31, ~~2002~~2003 $(233,~~815~~453,~~293~~979) $(232,~~128~~970,~~612~~912) $ (~~686~~483,~~681~~067) ============ ============ ============

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)

========================== ~~Nine~~Three Months Ended ~~November~~May 3031, -------------------------- ~~2002~~2003 ~~2001~~2002* -------------------------- Cash flows from operating activities: Net income $ 71,~~905~~162,~~411~~320 $ 2,~~641~~881,~~800~~425 ----------- ------------ Adjustments to reconcile net income to net cash (used in) provided by operating activities: (Gain) ~~loss~~ on sale of properties (Note 4) (51,~~884~~369,~~790~~607) ~~718~~(661,~~787~~280) Extraordinary item - forgiveness of indebtedness income (Note 4) (246,~~427,492~~853) (42,~~762~~427,~~489~~492) Depreciation ~~316,974~~0 ~~892~~105,~~621~~658 Minority interest in loss of subsidiaries (~~238~~28,~~183~~783) (4125,~~478~~715) Increase in cash-restricted for tenants' security deposits (~~17,389~~427) (214,~~450~~694) Decrease ~~(increase)~~ in mortgage escrow deposits ~~269~~246,~~301~~209 ~~(123~~273,~~047)~~287 Decrease in rents receivable 684,~~975~~012 95148,~~171~~854 ~~Decrease~~ (~~increase~~Increase) decrease in prepaid expenses and other assets ~~152,943~~ (~~173~~98,~~259~~192) 339,866 Increase in due to selling partners ~~840~~33,~~846~~667 1328,~~316,569~~159 Decrease in accounts payable, accrued expenses and other liabilities (~~315~~139,~~593~~867) (~~554~~925,~~129~~192) Increase (decrease) in tenants' security deposits payable ~~2,324~~427 (~~1,057~~897) Increase in due to general partners of subsidiaries and their affiliates ~~55,000 130,155 Decrease in due to general partners of subsidiaries and their affiliates~~ 0 ~~(114~~2,~~292)~~500 Increase in due to general partners and affiliates ~~211~~129,~~954~~496 ~~327~~247,~~041~~395 ----------- ------------ Total adjustments (61,~~965~~269,~~130~~918) (2,~~254~~709,~~857~~551) ----------- ------------ Net cash (used in) provided by operating activities ~~940~~(107,~~281~~598) ~~386~~171,~~943~~874 ----------- ------------

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

========================== ~~Nine~~Three Months Ended ~~November~~May 3031, -------------------------- ~~2002~~2003 ~~2001~~2002* -------------------------- Cash flows from investing activities: Proceeds from sale of properties 72,~~965~~722,~~180~~041 2596,~~525,000~~872 Acquisitions of property and equipment (~~139~~23,~~046~~537) (~~387~~20,~~026~~615) Increase in mortgage escrow deposits (~~344~~101,~~480~~865) (~~527~~166,~~985~~799) ----------- ------------ Net cash provided by investing activities 72,~~481~~596,~~654~~639 1409,~~609,989~~458 ----------- ------------ Cash flows from financing activities: Principal payments of mortgage notes payable (153,~~809,104~~740) (2186,~~561,561~~509) Decrease in minority interest (~~6,083~~2) (~~1,179~~365) ~~Distributions~~Principal ~~paid~~payments ~~to partners 0 (516,300) Payments~~ of ~~Purchase~~purchase ~~Money~~money ~~Notes~~notes payable (2942,~~640,000~~450) (~~153~~340,~~162~~000) Payments to selling partners (31,~~610~~473,~~326~~550) (~~457~~56,~~412~~420) ----------- ------------ Net cash used in financing activities (82,~~065~~469,~~513~~742) (3583,~~689,614~~294) ----------- ------------ Net increase (decrease) in cash and cash equivalents ~~356~~19,~~422~~299 (1,~~692,682~~962) Cash and cash equivalents at beginning of period 851,768 780,650 ~~2,477,459~~ ----------- ------------ Cash and cash equivalents at end of period $ 1871,~~137,072~~067 $ ~~784~~778,~~777~~688 =========== ============

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

========================== ~~Nine~~Three Months Ended ~~November~~May 3031, -------------------------- ~~2002~~2003 ~~2001~~2002* -------------------------- Supplemental disclosures of noncash activities: ~~Increase~~Forgiveness of indebtedness Decrease in ~~property~~purchase ~~and~~money ~~equipment-~~notes ~~held~~payable ~~for~~$ ~~sale~~0 ~~reclassified~~$ ~~from~~(720,000) ~~property~~Decrease ~~and~~in ~~equipment~~due $to 0selling $partners 4(46,~~955~~853) (1,~~919~~685,795) ~~Increase~~Decrease in ~~deferred~~accounts ~~revenue~~payable, accrued expenses and other liabilities 0 (21,697) Summarized below are the components of the gain on sale of properties: ~~reclassified~~Decrease ~~from~~in ~~Purchase~~property ~~Money~~and ~~Notes~~equipment ~~payable~~held ~~and~~for ~~due~~sale, tonet ~~selling~~of ~~partners~~accumulated 16depreciation $ 1,~~610~~207,~~373~~941 5$ 3,~~092~~356,~~137~~895 ~~Increase~~Decrease in ~~Purchase~~cash-restricted ~~Money~~for ~~Notes~~tenants' ~~payable~~security ~~due~~deposits to11,282 ~~the~~28,212 ~~capitalization~~Decrease ofin mortgage escrow deposits 841,445 82,044 Decrease in prepaid expenses and other assets ~~177~~18,~~053~~349 ~~380~~296,~~153~~169 ~~Summarized~~Decrease ~~below~~in ~~are~~accounts ~~the~~payable, ~~components~~accrued ofexpenses ~~forgiveness~~and ofother ~~indebtedness:~~liabilities (44,636) (143,051) Decrease in ~~Purchase~~tenants' ~~Money~~security ~~Notes~~deposits payable (~~720~~11,~~000~~282) (112,~~844,438~~622) Decrease in due to selling partners ~~(1,685,795)~~0 (2764,~~787,896~~540) Decrease in ~~due~~purchase tomoney ~~general~~notes ~~partners~~payable ~~and affiliates~~ 0 (~~130~~455,~~155~~800) Decrease in ~~accounts~~mortgage notes payable (670,665) ~~accrued~~(2,434,990) ~~expenses~~Decrease in due to general partner and ~~other~~their ~~liabilities~~affiliates 0 (2116,~~697~~726) 0

* 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 May 31, 2003 (Unaudited) Note 1 - General The consolidated financial statements for the three months ended May 31, 2003 and 2002, include the accounts of Cambridge + Related Housing Properties Limited Partnership, a Massachusetts limited partnership (the "Partnership"), and two and twelve Subsidiary Partnerships ("Subsidiaries", "Subsidiary Partnerships" or "Local Partnerships"), respectively. The Partnership is a limited partner, with an ownership interest of 98.99% in each of the Subsidiary Partnerships. Through the rights of the Partnership and/or one of its general partners (a "General Partner"), which General Partner has a contractual obligation to act on behalf of the Partnership, the right to remove the local general partner of the Subsidiary Partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the Subsidiary Partnerships. For financial reporting purposes, the Partnership's fiscal quarter ends on May 31. All Subsidiaries have fiscal quarters ending March 31. Accounts of Subsidiaries have been adjusted for intercompany transactions from April 1 through May 31. The Partnership's fiscal quarter ends on May 31 in order to allow adequate time for the Subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with generally accepted accounting principles ("GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. Increases (decreases) in the capitalization of consolidated Subsidiaries attributable to minority interest arise from cash contributions from and cash distributions to the minority interest partners. Losses attributable to minority interests which exceed the minority interests' investment in a Subsidiary have been charged to the Partnership. Such losses aggregated approximately $0 for the three months ended May 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 May 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 May 31, 2003 and the results of operations and cash flows for the three months ended May 31, 2003 and 2002. However, the operating results for the three months ended May 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 May 31, 2003 only one Subsidiary Partnership's Purchase Money Note remains outstanding. 11 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2003 (Unaudited) Note 3 - Related Party Transactions The costs incurred to related parties for the three months ended May 31, 2003 and 2002 were as follows:

========================== ~~Nine~~Three Months Ended ~~November~~May 3031, -------------------------- 2003 2002 2001* -------------------------- ~~Summarized~~Partnership ~~below~~management ~~are~~fees ~~the~~(a) ~~components of the gain on sale of properties: Decrease in property and equipment held for sale, net of accumulated depreciation~~ $ 5241,~~930,325~~710 $ 2242,~~221,125~~778 ~~Decrease~~Expense inreimbursement ~~property~~(b) ~~and equipment~~32,161 ~~net of accumulated depreciation 0 650~~36,~~345~~009 ~~Decrease~~Local inadministrative ~~cash-restricted~~fee ~~for tenants' security deposits 69,811 21,064 Decrease in mortgage escrow deposits 336,986 153,371 Decrease~~ (~~increase~~d) in625 ~~prepaid expenses and other assets 484~~3,~~379~~125 ~~(1,262)~~----------- ~~(Decrease)~~---------- ~~increase~~Total ingeneral ~~accounts payable, accrued expenses~~ and ~~other~~admini- ~~liabilities~~strative-General (1Partners 274,~~020,422)~~496 70281,~~446~~912 ~~Decrease~~----------- in---------- ~~tenants'~~Property ~~security~~management ~~deposits~~fees ~~payable~~incurred ~~(54,746)~~to ~~(17,557)~~affiliates ~~Decrease~~of inthe ~~due~~Subsidiary toPartnerships' ~~selling~~general partners (~~764,540~~c) ~~0 Decrease in Purchase Money Notes payable (455~~39,~~800)~~103 ~~0 Decrease in mortgage notes payable (2~~31,~~434,968)~~302 0----------- ~~Decrease~~---------- inTotal ~~due to~~ general ~~partner~~ and ~~their~~administrative-related ~~affiliates~~parties 0$ ~~(40~~313,~~208)~~599 ~~Decrease~~$ ~~in rents receivable 69~~313,~~305~~214 ~~61,443~~=========== ==========

(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 $2,218,000 and $1,976,000 were accrued and unpaid as of May 31, 2003 and February 28, 2003, respectively. The General Partners' fees are being paid currently, other than the Partnership management fees that were accrued and continue to be deferred. (b) The Partnership reimburses the General Partners and their affiliates for actual Partnership operating expenses incurred by the General Partners and their affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the Subsidiary Partnerships' performance. 12 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2003 (Unaudited) (c) Property management fees incurred by Local Partnerships to affiliates of the Local Partnerships amounted to $39,103 and $31,302 for the three months ended May 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 May 31, 2003, the Partnership has disposed of forty-three of its forty-four original investments. 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 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 13 CAMBRIDGE + RELATED HOUSING PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements May 31, 2003 (Unaudited) 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 July 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 has been increased by $167,963 and $335,925 for the three months ended May 31, 2002 and the year ended February 28, 2002, respectively. 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 three months ended May 31, 2003 and 2002, the Partnership received cash flow distributions aggregating $12,831 and $94,026, 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 $591,871, of which $2,416,000 and $340,000 was used to pay principal and interest on the Purchase Money Notes during the three months ended May 31, 2003 and 2002, respectively. During the three months ended May 31, 2003, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately ($19,000). This increase was due to proceeds from sale of properties ($2,722,000) which exceeded cash used in operations ($108,000), principal payments of mortgage notes payable of ($54,000), an increase in mortgage escrow deposits relating to investing activities ($102,000), payments to selling partners ($1,474,000), acquisitions of property and equipment ($24,000) and principal payments of Purchase Money Notes payable ($942,000). Included in the adjustments to reconcile the net income to cash used in 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 $788,000 at May 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. Partnership management fees owed to the General Partners amounting to approximately $2,218,000 and $1,976,000 were accrued and unpaid as of May 31, 15 2003 and February 28, 2003, respectively. The General Partners' fees are being paid currently, other than the Partnership management fees that were accrued and continue to be deferred. 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. 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; 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 16 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 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 identified any variable interest entities that were created after January 31, 2003 and is currently evaluating the impact of the provisions of FIN 46 on its consolidated financial statements. Results of Operations --------------------- During the periods ended May 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"). Excluding the Sold Assets, the results of operations of the Partnership, as well as the Local Partnerships, remained fairly consistent during the three months ended May 31, 2003 and 2002, other than other income, 17 administrative and management, repairs and maintenance and taxes and insurance. The majority of Local Partnership income continues to be in the form of rental income with the corresponding expenses being divided among operations and mortgage interest. In addition, the Partnership incurred interest expense relating to the Purchase Money Notes issued when the Local Partnership Interests were acquired. Rental income decreased approximately 79% for the three months ended May 31, 2003, as compared to 2002. Excluding the Sold Assets, rental income decreased approximately 3% for the three months ended May 31, 2003 as compared to 2002, primarily due to an increase in vacancies at the remaining Local Partnership. Other income decreased approximately $50,000 for the three months ended May 31, 2003, as compared to 2002. Excluding the Sold Assets, other income increased approximately $1,000 primarily due to larger cash and cash equivalents balances earning interest at the Partnership level. Administrative and management decreased approximately $581,000 for the three months ended May 31, 2003, as compared to 2002. Excluding the Sold Assets, administrative and management decreased approximately $27,000 primarily due to a decrease in legal costs at the Partnership level. Repairs and maintenance decreased approximately $404,000 for the three months ended May 31, 2003, as compared to 2002. Excluding the Sold Assets, repairs and maintenance increased approximately $23,000 primarily due to an increase in snow removal expense due to severe winter weather at the remaining Local Partnership. Taxes and insurance decreased approximately $221,000 for the three months ended May 31, 2003, as compared to 2002. Excluding the Sold Assets, taxes and insurance increased approximately $6,000 primarily due to an increase in liability insurance premiums at the remaining Local Partnership. Operating, interest and depreciation expense decreased approximately $362,000, $403,000 and $106,000 for the three months ended May 31, 2003, as compared to 2002, primarily due to decreases relating to the Sold Assets. Bay Village was not depreciated during the period ended May 31, 2003 because it is classified as an asset held for sale. 18 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 The 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 Cambridge + Related Housing Properties L.P. (the "Partnership"), has evaluated the Partnership's disclosure controls and procedures relating to the Partnership's quarterly report on Form 10-Q for the period ending May 31, 2003 as filed with the Securities and Exchange Commission and has judged such controls and procedures to be effective as of May 31, 2003 (the "Evaluation Date"). There have been no significant changes in the internal controls or in other factors that could significantly affect internal controls relating to the Partnership since the Evaluation Date. 19 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 99.1 Certification Pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter. 20 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: July 7, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive and Financial Officer Date: July 7, 2003 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer By: RELATED HOUSING PROGRAMS CORPORATION, a General Partner Date: July 7, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Principal Executive and Financial Officer Date: July 7, 2003 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer and Principal Accounting Officer CERTIFICATION 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: 1. I have reviewed this quarterly report on Form 10-Q for the period ending May 31, 2003 of the Partnership; 2. 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; 3. 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; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15-d-14) for the Partnership and I have: a) designed such disclosure controls and procedures to ensure the 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) evaluated the effectiveness of the Partnership's disclosure controls and procedures as of May 31, 2003 (the "Evaluation Date"); and c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the Partnership's auditors and to the boards of directors of the General Partners: d) all significant deficiencies in the design or operation of internal controls which could adversely affect the Partnership's ability to record, process, summarize and report financial data and have identified for the Partnership's auditors any material weaknesses in internal controls; and e) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer July 7, 2003 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Cambridge + Related Housing Properties Limited Partnership (the "Partnership") on Form 10-Q for the period ending May 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 July 7, 2003

======================= ======================= Three Months Ended Nine Months Ended November 30, November 30, ----------------------- ----------------------- 2002 2001 2002 2001 ----------------------- ----------------------- Partnership management fees (a) $ 242,778 $ 241,953 $ 728,335 $ 725,860 Expense reimbursement (b) 27,121 21,000 97,812 99,026 Local administrative fee (d) 3,125 4,000 9,375 12,000 ---------- ---------- ---------- ---------- Total general and admini- strative-General Partners 273,024 266,953 835,522 836,886 ---------- ---------- ---------- ---------- Property management fees incurred to affiliates of the Subsidiary Partnerships' general partners (c) 36,667 88,103 99,271 298,443 ---------- ---------- ---------- ---------- Total general and administrative-related parties $ 309,691 $ 355,056 $ 934,793 $1,135,329 ========== ========== ========== ==========

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