United States
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, 2004
[ ] 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 0-17645
UNITED INVESTORS GROWTH PROPERTIES
(Exact Name of Registrant as Specified in Its Charter)
Missouri 43-1483928
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2004
Assets
Cash and cash equivalents $ 63
Receivables and deposits 18
Restricted escrows 35
Other assets 48
Investment property:
Land $ 240
Buildings and related personal property 5,036
5,276
Less accumulated depreciation (2,499) 2,777
$ 2,941
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 57
Tenant security deposit liabilities 12
Accrued property taxes 40
Due to affiliates 736
Other liabilities 73
Mortgage note payable 3,339
Partners' Deficit
General partner $ (23)
Limited partners (39,287 units
issued and outstanding) (1,293) (1,316)
$ 2,941
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2004 2003
(Restated)
Revenues:
Rental income $ 132 $ 182
Other income 58 3
Casualty gain -- 13
Total revenues 190 198
Expenses:
Operating 105 83
General and administrative 14 32
Depreciation 65 65
Interest 74 73
Property taxes 34 46
Bad debt 88 43
Total expenses 380 342
Loss from continuing operations (190) (144)
Loss from discontinued operations -- (23)
Net loss $ (190) $ (167)
Net loss allocated to general partner (1%) $ (2) $ (2)
Net loss allocated to limited partners (99%) (188) (165)
$ (190) $ (167)
Per limited partnership unit:
Loss from continuing operations $(4.79) $(3.63)
Loss from discontinued operations -- (.57)
Net loss $(4.79) $(4.20)
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 39,297 $ -- $ 9,824 $ 9,824
Partners' deficit at
December 31, 2003 39,287 $ (21) $(1,560) $(1,581)
Non-cash contribution associated
With a distribution for the
Three months ended March 31, 2004
(Note B) -- -- 455 455
Net loss for the three months
ended March 31, 2004 -- (2) (188) (190)
Partners' deficit at
March 31, 2004 39,287 $ (23) $(1,293) $(1,316)
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2004 2003
Cash flows from operating activities:
Net loss $ (190) $ (167)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Casualty gain -- (13)
Depreciation 65 111
Bad debt 88 43
Amortization of loan costs 4 6
Change in accounts:
Receivables and deposits (49) (53)
Other assets (20) 1
Accounts payable (43) 33
Tenant security deposit liabilities (7) 1
Accrued property taxes (17) 5
Due to affiliates 19 24
Other liabilities 5 32
Net cash (used in) provided by operating
activities (145) 23
Cash flows from investing activities:
Net insurance proceeds received -- 39
Property improvements and replacements (9) (13)
Net (deposits to) withdrawals from restricted escrows (9) 51
Net cash (used in) provided by investing
activities (18) 77
Cash flows from financing activities:
Advances from affiliates 193 --
Payments on mortgage notes payable (13) (39)
Net cash provided by (used in) financing
activities 180 (39)
Net increase in cash and cash equivalents 17 61
Cash and cash equivalents at beginning of period 46 189
Cash and cash equivalents at end of period $ 63 $ 250
Supplemental disclosure of cash flow information:
Cash paid for interest $ 60 $ 114
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Going Concern
The accompanying consolidated financial statements have been prepared assuming
the Partnership will continue as a going concern. The Partnership continues to
generate recurring operating losses, suffers from a lack of cash, and has
advances due to the General Partner. In addition, the remaining active property
in the Partnership, Deerfield Apartments, has experienced decreasing occupancy
levels. The General Partner is currently evaluating the capital improvements
needed at the property to improve its condition and increase occupancy. Upon
completion of any needed capital improvements, the General Partner intends to
market the property for sale.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and classification of
liabilities that may result from these uncertainties.
Note B - Basis of Presentation
The accompanying unaudited consolidated financial statements of United Investors
Growth Properties (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. In the opinion of United Investors Real Estate, Inc. (the
"General Partner" or "UIRE"), a Delaware corporation, 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, 2004, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2004. 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, 2003.
Until May 1, 2003, the General Partner was an affiliate of AIMCO. On May 1,
2003, Everest Properties, Inc. ("Everest"), a California corporation, acquired
all of the capital stock of the General Partner and held the capital stock of
the General Partner until February 27, 2004, when Everest transferred it back to
an affiliate of AIMCO. The capital stock was acquired in connection with the
purchase by Everest or its affiliates of limited partnership units (the "Units")
in partnerships in which UIRE serves as the general partner. From May 1, 2003 to
February 27, 2004, as the sole stockholder of UIRE, Everest was in a position to
remove and elect the directors of UIRE and consequently to control the
Partnership. Everest did not directly own any limited partnership interests of
the Partnership, however, Everest's affiliate, Everest Properties, LLC, owned
14,328 Units.
In connection with the transaction described above, the General Partner and the
Partnership entered into a Services Agreement effective May 1, 2003 ("the
Services Agreement") with Everest, pursuant to which Everest agreed to provide
or arrange for the provision of portfolio management services and property
management services for the Partnership. Subject to certain limitations, the
portfolio management services included the services the General Partner of the
Partnership generally performs or procures in connection with management of the
Partnership. As compensation for providing the portfolio management services and
the property management services, the General Partner agreed to pay and assign
over to Everest all of the income, distributions, fees, commissions,
reimbursements and other payments payable by the Partnership to the General
Partner or any of its affiliates. Between May 1, 2003 and February 27, 2004, at
Everest's direction, affiliates of AIMCO continued to provide certain portfolio
and property management services for the Partnership.
On February 27, 2004, AIMCO and its affiliates reacquired all of the capital
stock of UIRE and 14,328 Units in the Partnership from Everest. Upon the
effective date of the transaction, the Services Agreement was terminated and
AIMCO, as the sole stockholder of UIRE, was again in a position to control the
Partnership.
Prior to February 27, 2004, the Partnership owned 100% of the membership
interest in AIMCO Terrace Royale, L.L.C., a Delaware limited liability company.
Effective January 1, 2004, the Partnership adopted a new operating agreement for
that company, appointed Everest as its manager, changed the company's name to
Everest Terrace Royale, LLC ("Terrace Royale"), and distributed to its partners
all of the membership interests that the Partnership held in Terrace Royale, as
a distribution in kind. The record date for the distribution, and the effective
date for allocation, tax and all other purposes, was January 1, 2004. Limited
partners of the Partnership received one unit of membership interest in Terrace
Royale for each unit of limited partnership interest held in the Partnership on
the record date. The distribution of the net liabilities of Terrace Royale was
accounted for as a non-cash contribution to the limited partners equity in the
accompanying Consolidated Statement of Changes in Partners' Deficit.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statement of operations for the three months ended
March 31, 2003 has been restated to reflect the operations of Terrace Royale as
loss from discontinued operations due to the distribution of the property out of
the Partnership effective January 1, 2004.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
Affiliates of the General Partner were entitled to receive 5% of gross receipts
from the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$7,000 and $18,000 for the three months ended March 31, 2004 and 2003,
respectively, which is included in operating expenses and loss from discontinued
operations.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $11,000 and $18,000 for the
three months ended March 31, 2004 and 2003, respectively, which is included in
general and administrative expenses. As of March 31, 2004, the Partnership owed
approximately $85,000 to an affiliate of the General Partner for reimbursement
of accountable administrative expenses.
During the three months ended March 31, 2004, an affiliate of the General
Partner advanced the Partnership approximately $193,000 to cover operating
obligations at Deerfield Apartments. There were no such advances during the
three months ended March 31, 2003. At March 31, 2004, the Partnership owed an
affiliate of the General Partner approximately $651,000 for advances and accrued
interest. Interest is charged at prime plus 2% or 6.00% at March 31, 2004.
Interest expense was approximately $8,000 and $6,000 during the three months
ended March 31, 2004 and 2003, respectively.
The Partnership insures its property up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers' compensation, property casualty and vehicle
liability. The Partnership insures its property above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During 2004, the Partnership anticipates its cost for insurance
coverage and fees associated with policy claims administration provided by AIMCO
and its affiliates will be approximately $9,000. The Partnership was charged
approximately $24,000 for 2003.
Note D - Casualty Gain
During the three months ended March 31, 2003, a net casualty gain of
approximately $13,000 was recorded at Deerfield Apartments. The casualty gain
related to mold damage to the apartment complex that occurred in October 2002.
The gain was a result of the receipt of insurance proceeds of approximately
$39,000 offset by approximately $26,000 of undepreciated fixed assets being
written off.
Note E - Contingencies
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The Complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The Defendants have filed
an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with this case will be material to
the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment property that are not of a routine nature
arising in the ordinary course of business.
Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the Central Regional Office of the United States Securities and Exchange
Commission is conducting an investigation relating to certain matters. AIMCO
believes the areas of investigation include AIMCO's miscalculated monthly net
rental income figures in third quarter 2003, forecasted guidance, accounts
payable, rent concessions, vendor rebates, and capitalization of expenses and
payroll. AIMCO is cooperating fully. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations taken as a whole. Similarly, the General
Partner does not believe that the ultimate outcome will have a material adverse
effect on the Partnership's consolidated financial condition or results of
operations taken as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The following table sets forth the average occupancy of the property for each of
the three month periods ended March 31, 2004 and 2003:
Average Occupancy
Property 2004 2003
Deerfield Apartments 63% 80%
Memphis, Tennessee
The General Partner attributes the decrease in occupancy at Deerfield Apartments
to increased competition in the local market and increased resident application
standards.
The Partnership's financial results are dependent upon a number of factors
including the ability to attract and maintain tenants at the investment
property, interest rates on mortgage loans, costs incurred to operate the
investment property, general economic conditions and weather. As part of the
ongoing business plan of the Partnership, the General Partner monitors the
rental market environment of its investment property to assess the feasibility
of increasing rents, maintaining or increasing occupancy levels and protecting
the Partnership from increases in expenses. As part of this plan, the 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, the General Partner may use rental concessions and
rental rate reductions to offset softening market conditions, accordingly, there
is no guarantee that the General Partner will be able to sustain such a plan.
Further, a number of factors which are outside the control of the Partnership
such as the local economic climate and weather can adversely or positively
impact the Partnership's financial results.
Results of Operations
The Partnership's net loss for the three months ended March 31, 2004 was
approximately $190,000 compared to a net loss of approximately $167,000 for the
three months ended March 31, 2003.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statement of operations for the three months ended
March 31, 2003 has been restated to reflect the operations of Terrace Royale as
loss from discontinued operations due to the distribution of the property out of
the Partnership effective January 1, 2004. Included in loss from discontinued
operations are revenues of approximately $194,000 for the three months ended
March 31, 2003.
The Partnership's loss from continuing operations for the three months ended
March 31, 2004 was approximately $190,000 compared to loss from continuing
operations of approximately $144,000 for the three months ended March 31, 2003.
The increase in loss from continuing operations for the three months ended March
31, 2004 is due to a decrease in total revenues and an increase in total
expenses. Total revenues decreased due to a decrease in rental income and
casualty gain partially offset by an increase in other income. Rental income
decreased due to decreases in occupancy and average rental rates at Deerfield
Apartments. Other income increased due to an increase in lease cancellation
fees.
During the three months ended March 31, 2003, a net casualty gain of
approximately $13,000 was recorded at Deerfield Apartments. The casualty gain
related to mold damage to the apartment complex. The gain was a result of the
receipt of insurance proceeds of approximately $39,000 offset by approximately
$26,000 of undepreciated fixed assets being written off.
The increase in total expenses was due to increases in operating expenses and
bad debt expense partially offset by decreases in general and administrative and
property tax expenses. Operating expenses increased due to increases in
administrative and maintenance expenses. Administrative expense increased due to
increases in legal fees and office equipment. Maintenance expense increased due
to an increase in maintenance and repairs and contract labor. Bad debt expense
increased as the result of increased standards for tenants as property
management attempts to develop a more stable tenant base. Property tax expense
decreased as a result of a decrease in the assessed value at Deerfield
Apartments.
General and administrative expenses decreased due to a decrease in management
reimbursements to the General Partner as allowed under the Partnership
Agreement. Also included in general and administrative expense are costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
Liquidity and Capital Resources
At March 31, 2004, the Partnership had cash and cash equivalents of
approximately $63,000 compared to approximately $250,000 at March 31, 2003. The
increase in cash and cash equivalents of approximately $17,000 from December 31,
2003, is due to approximately $180,000 of cash provided by financing activities,
partially offset by approximately $145,000 of cash used in operating activities
and approximately $18,000 of cash used in investing activities. Cash provided by
financing activities consisted of advances received from an affiliate of the
General Partner partially offset by payments of principal made on the mortgages
encumbering the Partnership's properties. Cash used in investing activities
consisted of net deposits to escrow accounts maintained by the mortgage lender
and property improvements and replacements. The Partnership invests its working
capital reserves in interest bearing accounts.
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 property 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. The General Partner monitors
developments in the area of legal and regulatory compliance and is studying new
federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act
of 2002 mandates or suggests additional compliance measures with regard to
governance, disclosure, audit and other areas. In light of these changes, the
Partnership expects that it will incur higher expenses related to compliance,
including increased legal and audit fees. Capital improvements planned for the
Partnership's property are detailed below.
Deerfield Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $9,000 of capital improvements at Deerfield Apartments, consisting
primarily of appliance and floor covering replacements. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $66,000 in capital improvements during the remainder of
2004. The General Partner is currently evaluating additional capital
improvements needed at the property to improve its condition and increase
occupancy.
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 assets are thought to be sufficient for any near term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's investment property of approximately
$3,339,000 has a maturity date of December 2004 and requires a balloon payment
of approximately $3,303,000 at maturity. The General Partner will attempt to
refinance such indebtedness and/or sell the property prior to such maturity
date. If the property cannot be refinanced and/or sold for a sufficient amount,
the Partnership may risk losing the property through foreclosure.
The Partnership did not distribute any funds during the three months ended March
31, 2004 and 2003. The Partnership's cash available for distribution is reviewed
on a monthly basis. Future distributions will depend on the levels of net cash
generated from operations, the availability of cash reserves, and the timing of
debt maturity, refinancing, and/or property sale. In light of the amount due to
an affiliate of the General Partner at March 31, 2004, it is not anticipated
that the Partnership will make any distributions in the foreseeable future.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 14.328 limited partnership units
(the "Units") in the Partnership representing 36.47% of the outstanding Units at
March 31, 2004. Until May 1, 2003, AIMCO was the indirect sole stockholder of
UIRE, the sole general partner of the Partnership, and therefore held all of the
general partner interest in the Partnership. On May 1, 2003, Everest acquired
all of the capital stock of the General Partner and held the capital stock of
the General Partner until February 27, 2004, when Everest transferred it back to
an affiliate of AIMCO. The capital stock was acquired in connection with the
purchase by Everest or its affiliates of limited partnership interests in
partnerships for which UIRE serves as the general partner. In connection with
the acquisition of UIRE, Everest also acquired the 14,328 Units in the
Partnership owned by AIMCO as of May 1, 2003. A number of these Units were
acquired pursuant to tender offers made by AIMCO or its affiliates. From May 1,
2003 to February 27, 2004, as the sole stockholder of UIRE, Everest was in a
position to remove the current directors and elect the directors of UIRE and
consequently to control the Partnership. An Everest affiliate, Everest
Properties, LLC, owned 14,328 Units representing 36.47% of the outstanding Units
as of December 31, 2003. On February 27, 2004, AIMCO and its affiliates acquired
all of the capital stock of UIRE and 14,328 Units in the Partnership from
Everest. Upon the completion of this transaction, AIMCO, as the sole stockholder
of UIRE, was in a position to control the Partnership. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. Although the General Partner owes fiduciary duties
to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO,
as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
The investment property is recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment property. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
asset.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the General Partner, who are the equivalent of the Partnership's principal
executive officer and principal financial officer, respectively, has evaluated
the effectiveness of the Partnership's disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and principal financial officer of the General Partner, who are the
equivalent of the Partnership's principal executive officer and principal
financial officer, respectively, have concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The Complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The Defendants have filed
an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with this case will be material to
the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
3.1 Form of Agreement of Limited Partnership (part of the
Prospectus of Partnership contained in the Partnership's
Amendment to Registration Statement filed on June 9,
1988, is incorporated herein by reference).
3.2 Seventh Amendment to Agreement of Limited Partnership
(Exhibit 4.3 to the Partnership's Quarterly Report on
Form 10-Q filed on May 15, 1989, is incorporated herein
by reference).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 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:
Current Report on Form 8-K dated January 1, 2004 and filed on
March 24, 2004 disclosing the acquisition of all capital stock
of United Investors, Real Estate, Inc., by AIMCO and its
affiliates.
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.
UNITED INVESTORS GROWTH PROPERTIES
By: United Investors Real Estate, Inc.
Its General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President
and Chief Accounting Officer
Date: May 17, 2004
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of United Investors
Growth Properties;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 17, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of United Investors
Real Estate, Inc., equivalent of the
chief executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Thomas M. Herzog, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of United Investors
Growth Properties;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 17, 2004
/s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President and Chief
Accounting Officer of United Investors
Real Estates, Inc., equivalent of the
chief financial officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
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 on Form 10-QSB of United Income Growth
Partnership (the "Partnership"), for the quarterly period ended March 31, 2004
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Martha L. Long, as the equivalent of the chief executive officer of
the Partnership, and Thomas M. Herzog, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(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 results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: May 17, 2004
/s/Thomas M. Herzog
Name: Thomas M. Herzog
Date: May 17, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.