FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 2-84760
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP (Exact name of
small business issuer as specified in its charter)
Massachusetts 04-2839837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
a)
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 542
Receivables and deposits 327
Restricted escrows 265
Other assets 969
Investment properties:
Land $ 2,391
Buildings and related personal property 36,351
38,742
Less accumulated depreciation (21,368) 17,374
$ 19,477
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 128
Tenant security deposit liabilities 146
Accrued property taxes 51
Other liabilities 222
Mortgage notes payable 19,869
Partners' (Deficit) Capital
General partners $ (966)
Limited partners (23,139 units
issued and outstanding) 27 (939)
$ 19,477
See Accompanying Notes to Consolidated Financial Statements
b)
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $ 1,641 $ 1,851
Other income 88 84
Total revenues 1,729 1,935
Expenses:
Operating 569 754
General and administrative 84 59
Depreciation 463 532
Interest 401 448
Property taxes 98 140
Total expenses 1,615 1,933
Net income $ 114 $ 2
Net income allocated to general partners (10%) $ 11 $ --
Net income allocated to limited partners (90%) 103 2
$ 114 $ 2
Net income per limited partnership unit $ 4.45 $ 0.09
Distribution per limited partnership unit $130.08 $ 21.18
See Accompanying Notes to Consolidated Financial Statements
c)
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 23,149 $ 2,000 $23,149 $25,149
Partners' (deficit) capital at
December 31, 2000 23,139 $ (899) $ 2,934 $ 2,035
Distributions to partners -- (78) (3,010) (3,088)
Net income for the three months
ended March 31, 2001 -- 11 103 114
Partners' (deficit) capital
at March 31, 2001 23,139 $ (966) $ 27 $ (939)
See Accompanying Notes to Consolidated Financial Statements
d)
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $ 114 $ 2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 463 532
Amortization of loan costs and deferred costs 20 24
Bad debt expense, net -- 98
Change in accounts:
Receivables and deposits 68 (44)
Other assets 35 31
Accounts payable (139) 65
Tenant security deposit liabilities (4) 7
Accrued property taxes 51 (67)
Other liabilities (59) 8
Net cash provided by operating activities 549 656
Cash flows from investing activities:
Property improvements and replacements (129) (677)
Net deposits to restricted escrows (6) (55)
Net cash used in investing activities (135) (732)
Cash flows from financing activities:
Payments on mortgage notes payable (83) (74)
Distributions paid to limited partners (3,088) (490)
Net cash used in financing activities (3,171) (564)
Net decrease in cash and cash equivalents (2,757) (640)
Cash and cash equivalents at beginning of period 3,299 1,889
Cash and cash equivalents at end of period $ 542 $ 1,249
Supplemental disclosure of cash flow information:
Cash paid for interest $ 353 $ 432
At March 31, 2000, accounts payable and property improvements and replacements
were adjusted by approximately $457,000 for non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
e)
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Winthrop Growth
Investors 1 Limited Partnership (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The General Partner of the Partnership is Two Winthrop
Properties, Inc. (the "Managing General Partner"), an affiliate of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust. In the opinion of the Managing General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ended March 31, 2001 are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 2001. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2000.
Principles of Consolidation
The consolidated statements of the Partnership include its 99%, 99.9%, and
99.98% general partnership interests in DEK Associates, Meadow Wood Associates,
and Stratford Place Investors Limited Partnership, respectively. Additionally,
the Partnership is the 100% beneficiary of the Stratford Village Realty Trust.
All significant interpartnership balances have been eliminated.
Segment Reporting
Statement of Financial Standards ("SFAS") No. 131, Disclosure about Segments of
an Enterprise and Related Information established standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The Managing General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the consolidated financial statements as currently presented.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were paid or
accrued to the Managing General Partner and affiliates during the three months
ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 85 $ 97
Reimbursement for services of affiliates (included in
investment properties and general and administrative
expenses) 60 35
During the three months ended March 31, 2001 and 2000, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$85,000 and $97,000 during the three months ended March 31, 2001 and 2000,
respectively.
An affiliate of the Managing General Partner received reimbursements of
accountable administrative expenses amounting to approximately $60,000 and
$35,000 for the three months ended March 31, 2001 and 2000, respectively.
In addition to its indirect ownership of the Managing General Partner interest
in the Partnership, AIMCO and its affiliates owned 9,045.25 limited partnership
units in the Partnership representing approximately 39.09% of the outstanding
units at March 31, 2001. A number of these units were acquired pursuant to
tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its
affiliates will acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO either through private purchases or tender offers. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters, which would include without
limitation, voting on certain amendments to the Partnership Agreement and voting
to remove the Managing General Partner. When voting on matters, AIMCO would in
all likelihood vote the Units it acquired in a manner favorable to the interest
of the Managing General Partner because of their affiliation with the Managing
General Partner.
Note C - Supplementary Information Required Pursuant to Section 9.4 of the
Partnership Agreement
Statement of cash available for distribution for the three months ended March
31, 2001 and 2000 (in thousands):
2001 2000
Net Income $ 114 $ 2
Add: Amortization expense 20 24
Depreciation expense 463 532
Less: Cash to reserves (433) (58)
Cash available for distribution $ 164 $ 500
Distributions allocated to
Limited Partners $ 148 $ 500
General Partners' interest in
cash available for distribution $ 16 $ --
Note D - Distributions
During the three months ended March 31, 2001, the Partnership paid distributions
to the partners of approximately $3,088,000 (approximately $3,010,000 to the
limited partners or $130.08 per limited partnership unit). These distributions
consisted of approximately $1,893,000 (approximately $81.81 per limited
partnership unit) all to the limited partners from the refinancing proceeds of
Ashton Ridge Apartments and approximately $97,000 all to the limited partners
($4.18 per limited partnership unit) from the remaining sale proceeds of
Sunflower Apartments. The distributions also consisted of approximately
$1,098,000 (approximately $1,020,000 to the limited partners or $44.09 per
limited partnership unit) from operations of the Partnership's remaining
investment properties.
During the three months ended March 31, 2000, the Partnership paid a
distribution to the limited partners from operations of approximately $490,000
($21.18 per limited partnership unit) which had been declared and accrued at
December 31, 1999. Subsequent to March 31, 2001, the Partnership declared and
paid a distribution to the partners from operations of approximately $164,000
(approximately $148,000 or $6.40 per limited partnership unit).
Note E - Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2001 and 2000:
Average Occupancy
2001 2000
Ashton Ridge Apartments (formerly
Meadow Wood Apartments)
Jacksonville, Florida 96% 93%
Stratford Place Apartments
Gaithersburg, Maryland 97% 98%
Stratford Village Apartments
Montgomery, Alabama 89% 92%
The Managing General Partner attributes the increase in occupancy at Ashton
Ridge Apartments to the completion of renovation projects at the property which
enhanced the property's curb appeal and improved marketing efforts. The Managing
General Partner attributes the decrease in occupancy at Stratford Village
Apartments to numerous evictions in the current quarter. Management is evicting
tenants who are not complying with the collection policy in an effort to improve
the tenant base.
Results of Operations
The Partnership's net income for the three months ended March 31, 2001, was
approximately $114,000 compared to net income of approximately $2,000 for the
three months ended March 31, 2001. The increase in net income is primarily
attributable to a decrease in total expenses which was partially offset by a
decrease in total revenues as a result of the sale of Sunflower Apartments
during December 2000. Excluding the impact of the reversal of $103,000 in
accruals related to the 2000 sale of Sunflower Apartments for the three months
ended March 31, 2001 and the impact of the operations of Sunflower Apartments
for the three months ended March 31, 2000, the Partnership's net income for the
three months ended March 31, 2001, was approximately $11,000 as compared to a
net loss of approximately $49,000 for the three months ended March 31, 2000. The
increase in income is primarily attributable to an increase in total revenues
which was partially offset by an increase in total expenses. The increase in
total revenues is attributable to an increase in rental income and other income.
Rental income increased as a result of an increase in average rental rates at
Ashton Ridge Apartments and Stratford Place Apartments. Rental income also
increased as a result of occupancy at Ashton Ridge Apartments which more than
offset the decrease in occupancy at Stratford Place Apartments and Stratford
Village Apartments. Other income increased primarily due to an increase in
interest income as a result of higher cash balances being maintained in interest
bearing accounts. The increase in other income was partially offset by a
decrease in lease cancellation fees and late charges at the Partnership's
investment properties. The increase in total expenses is primarily attributable
to an increase in operating expense, depreciation expense and general and
administrative expenses. Operating expense increased as a result of an increase
in property expenses partially offset by a reduction in maintenance expense.
Property expenses increased as a result of an increase in employee salaries and
related benefits and an increase in utility charges by the various service
providers. Depreciation expense increased due to property improvements and
replacements placed in service during the last twelve months which are now being
depreciated. General and administrative expenses increased due to an increase in
general partner reimbursements allowed under the Partnership Agreement. Included
in general and administrative expenses are costs associated with the quarterly
and annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $542,000 compared to approximately $1,249,000 at March 31, 2000.
The decrease in cash and cash equivalents for the three months ended March 31,
2001 from the Partnership's year ended December 31, 2000 was approximately
$2,757,000. This decrease is due to approximately $3,171,000 of cash used in
financing activities and approximately $135,000 of cash used in investing
activities partially offset by approximately $549,000 of cash provided by
operating activities. Cash used in investing activities consisted of property
improvements and replacements and net deposits to restricted escrows maintained
by the mortgage lenders. Cash used in financing activities consisted of
distributions paid to the partners and principal payments made on mortgages
encumbering the Partnership's investment properties. The Partnership invests its
working capital reserves in a money market account.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state and local legal and regulatory requirements. Capital improvements planned
for each of the Partnership's properties are detailed below.
Ashton Ridge Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $47,000 for capital improvements consisting primarily of floor
covering and appliance replacements, plumbing improvements, roof replacements,
and structural improvements. These improvements were funded from operating cash
flow and replacement reserves. Approximately $316,000 has been budgeted for
capital improvements during the year 2001 at Ashton Ridge Apartments consisting
primarily of floor covering and appliance replacements, installation of a
sprinkler system, plumbing improvements, and air conditioning unit replacement.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Stratford Place Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $48,000 for capital improvements consisting primarily of floor
covering replacement, plumbing enhancements, other building improvements, and
lighting enhancements. These improvements were funded from operating cash flow.
Approximately $96,000 has been budgeted for capital improvements during the year
2001 at Stratford Place Apartments consisting primarily of floor covering
replacements, water heater replacements, air conditioning unit replacements, and
appliance replacements. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Stratford Village Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $34,000 for capital improvements consisting primarily of floor
covering and appliance replacements, plumbing enhancements, other building
improvements, and lighting enhancements. These improvements were funded from
operating cash flow. Approximately $62,000 has been budgeted for capital
improvements during the year 2001 at Stratford Village Apartments consisting
primarily of air conditioning unit replacements, floor covering and appliance
replacements, and plumbing enhancements. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $19,869,000 has maturity dates ranging from July
2006 to November 2024. The Managing General Partner will attempt to refinance
such indebtedness and/or sell the properties prior to such maturity date. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
During the three months ended March 31, 2001, the Partnership paid distributions
to the partners of approximately $3,088,000 (approximately $3,010,000 to the
limited partners or $130.08 per limited partnership unit). These distributions
consisted of approximately $1,893,000 (approximately $81.81 per limited
partnership unit) from the refinancing proceeds of Ashton Ridge Apartments and
approximately $97,000 ($4.18 per limited partnership unit) all to the limited
partners from the remaining sale proceeds of Sunflower Apartments. The
distributions also consisted of approximately $1,098,000 (approximately
$1,020,000 to the limited partners or $44.09 per limited partnership unit) from
operations of the Partnership's remaining investment properties. During the
three months ended March 31, 2000, the Partnership paid a distribution to the
limited partners from operations of approximately $490,000 ($21.18 per limited
partnership unit) which had been declared and accrued at December 31, 1999.
Subsequent to March 31, 2001, the Partnership declared and paid a distribution
to the partners from operations of approximately $164,000 (approximately
$148,000 or $6.40 per limited partnership unit). The Partnership's distribution
policy is reviewed on a quarterly basis. Future cash distributions will depend
on the levels of net cash generated from operations, the availability of cash
reserves, and the timing of debt maturities, refinancings and/or property sales.
There can be no assurance, however, that the Partnership will generate
sufficient funds from operations, after required capital expenditures, to permit
distributions to its partners during the remainder of 2001 or subsequent
periods.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2001.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
By: Two Winthrop Properties, Inc.
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Vice President - Residential
By: /s/Martha L. Long
Martha L. Long
Vice President and
Controller - Residential
Date: May 9, 2001