UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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 past 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
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2005
Assets
Cash and cash equivalents $ 424
Receivables and deposits 321
Restricted escrows 158
Other assets 465
Investment property:
Land $ 690
Buildings and related personal property 14,160
14,850
Less accumulated depreciation (10,180) 4,670
Assets held for sale (Note A) 5,860
$ 11,898
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 92
Tenant security deposit liabilities 38
Accrued property taxes 59
Other liabilities 268
Mortgage note payable 5,416
Liabilities related to assets held for sale (Note A) 8,245
Partners' Deficit
General partners $ (180)
Limited partners (23,139 units
issued and outstanding) (2,040) (2,220)
$ 11,898
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months
Ended March 31,
2005 2004
(Restated)
Revenues:
Rental income $ 630 $ 602
Other income 54 69
Total revenues 684 671
Expenses:
Operating 235 178
General and administrative 36 44
Depreciation 164 178
Interest 101 104
Property tax 64 56
Total expenses 600 560
Income from continuing operations 84 111
Income (loss) from discontinued operations (Note A) 74 (23)
Net income $ 158 $ 88
Net income allocated to general partners (10%) $ 16 $ 9
Net income allocated to limited partners (90%) 142 79
$ 158 $ 88
Per limited partnership unit:
Income from continuing operations $ 3.28 $ 4.32
Income (loss) from discontinued operations 2.86 (0.91)
Net income per limited partnership unit $ 6.14 $ 3.41
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 23,149 $ 2 $23,149 $23,151
Partners' deficit at
December 31, 2004 23,139 $ (196) $(2,182) $(2,378)
Net income for the three months
Ended March 31, 2005 -- 16 142 158
Partners' deficit
at March 31, 2005 23,139 $ (180) $(2,040) $(2,220)
See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2005 2004
Cash flows from operating activities:
Net income $ 158 $ 88
Adjustments to reconcile net income to net cash
provided by operating activities:
Casualty gain (29) --
Depreciation 352 366
Amortization of loan costs and deferred costs 14 11
Bad debt expense, net 17 42
Change in accounts:
Receivables and deposits (122) (93)
Other assets 41 (29)
Accounts payable 16 (66)
Tenant security deposit liabilities 11 4
Accrued property taxes 59 56
Other liabilities 116 6
Net cash provided by operating activities 633 385
Cash flows from investing activities:
Insurance proceeds received 50 --
Property improvements and replacements (504) (36)
Net receipts from (deposits to) restricted escrows 40 (21)
Net cash used in investing activities (414) (57)
Cash flows from financing activities:
Payments on mortgage notes payable (103) (109)
Advances from affiliates 90 --
Repayment of advances from affiliates (90) --
Net cash used in financing activities (103) (109)
Net increase in cash and cash equivalents 116 219
Cash and cash equivalents at beginning of period 308 885
Cash and cash equivalents at end of period $ 424 $ 1,104
Supplemental disclosure of cash flow information:
Cash paid for interest $ 266 $ 308
Supplemental disclosure of noncash information:
Property improvements and replacements in accounts
payable $ 25 $ --
Included in property improvements and replacements for the three months ended
March 31, 2005 are approximately $23,000 of improvements, which were included in
accounts payable at December 31, 2004.
See Accompanying Notes to Consolidated Financial Statements
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 AIMCO/Winthrop
Growth Investors I, GP, LLC, a Delaware limited liability company ("AIMCO GP" or
the "Managing General Partner"), a wholly-owned subsidiary of AIMCO Properties,
L.P., 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 months ended March 31, 2005 are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2005. 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, 2004.
On September 30, 2004, AIMCO/Winthrop Growth Investors I GP, LLC, a Delaware
limited liability company acquired the general partner interests in the
Partnership from Linnaeus-Lexington Associates Limited Partnership and Two
Winthrop Properties, Inc. ("Two Winthrop") for an aggregate cash consideration
of $1,023,000. Prior to the transfer of the general partner interests to
AIMCO/GP, AIMCO/NHP Properties, Inc. ("AIMCO/NHP"), also an affiliate of AIMCO
held 100% of the voting rights with respect to the Class B stock of FWC, which
provided AIMCO/NHP with the right to elect one director to the board of
directors of Two Winthrop. That one director had the power to appoint the sole
member of the Residential Committee of Two Winthrop's board of directors. The
Residential Committee was vested with the authority to elect certain officers,
and subject to certain limitations, the Residential Committee and its appointed
officers had the right to cause the managing general partner of the Partnership
to take such actions as it deemed necessary and advisable in connection with the
activities of the Partnership. Accordingly, although ownership of the general
partner interests was transferred, the effective control of the day-to-day
management of the Partnership remains vested in an affiliate of AIMCO. As used
herein, the term "Managing General Partner" shall mean Two Winthrop, with
respect to matters occurring prior to September 30, 2004 and AIMCO GP for
matters occurring from and after September 30, 2004.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying statement of operations for the three months ended March 31, 2004
has been restated to reflect the operations of Stratford Place Apartments as
income (loss) from discontinued operations. During the three months ended March
31, 2005, the Partnership entered into a Purchase and Sale Contract to sell
Stratford Place Apartments to a third party for a purchase price of
approximately $29,000,000. The anticipated closing date for the transaction is
May 17, 2005. In accordance with SFAS No. 144, the assets and liabilities of
Stratford Place Apartments have been classified as held for sale at March 31,
2005. Included in the income (loss) from discontinued operations for the three
months ended March 31, 2005 and 2004 are revenues of approximately $823,000 and
$792,000, respectively.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends 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.
Affiliates of the Managing General Partner receive 5% of gross receipts from the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $75,000 and
$73,000 during the three months ended March 31, 2005 and 2004, respectively,
which is included in operating expenses and income (loss) from discontinued
operations.
Affiliates of the Managing General Partner charged the Partnership for
reimbursement of accountable administrative expenses amounting to approximately
$74,000 and $34,000 for the three months ended March 31, 2005 and 2004,
respectively which is included in general and administrative expenses,
investment properties, and assets held for sale. The portion of these
reimbursements included in investment properties are fees related to
construction management services provided by an affiliate of the Managing
General Partner of approximately $44,000 and $4,000 for the three months ended
March 31, 2005 and 2004, respectively. The construction management service fees
are calculated based on a percentage of certain additions to investment
properties.
During the three months ended March 31, 2005 and in accordance with the
Partnership Agreement, an affiliate of the Managing General Partner advanced the
Partnership approximately $90,000 to fund the payment of real estate taxes at
Ashton Ridge Apartments. Interest was charged at the prime rate plus 2% (7.75%
at March 31, 2005) and was less than $1,000 for the three months ended March 31,
2005. The advance and associated accrued interest was repaid by the Partnership
during the same period.
The Partnership insures its properties 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 properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the
Managing General Partner. During the three months ended March 31, 2005, the
Partnership was charged by AIMCO and its affiliates approximately $48,000 for
hazard insurance coverage and fees associated with policy claims administration.
Additional charges will be incurred by the Partnership during 2005 as other
insurance policies renew later in the year. The Partnership was charged by AIMCO
and its affiliates approximately $72,000 for insurance coverage and fees
associated with policy claims administration during the year ended December 31,
2004.
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, 2005 and 2004 (in thousands):
Three Months Three Months
Ended Ended
March 31, March 31,
2005 2004
Net income $ 158 $ 88
Add: Amortization expense 14 11
Depreciation expense 352 366
Less: Cash to reserves (524) (465)
Cash available for distribution $ -- $ --
Distributions allocated to
Limited Partners $ -- $ --
General Partners' interest in
cash available for distribution $ -- $ --
Note D - Casualty Events
During the three months ended March 31, 2005 there was a casualty gain of
approximately $29,000 recorded for Stratford Place Apartments related to damages
to the property caused by a fire on January 12, 2005. This gain was the result
of the write off of net fixed assets of approximately $21,000 and insurance
proceeds received of approximately $50,000 and is included in income (loss) from
discontinued operations.
On February 1, 2005, a flood occurred at Stratford Place Apartments resulting in
expected property damage of approximately $53,000. Negotiations concerning this
casualty are ongoing with the insurance carrier. The Partnership does not
anticipate recording a loss related to this damage.
Note E - Contingencies
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Managing General Partner, are defendants in a lawsuit alleging that they
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.
The complaint attempts to bring 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. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call." Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company 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. Oral argument relating to the
certification of the collective action took place on May 12, 2005 and the
parties await a ruling from the Court. Although the outcome of any litigation is
uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome
will have a material adverse effect on its financial condition or results of
operations. Similarly, the Managing 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.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, the presence of hazardous
substances on a property could result in claims by private plaintiffs for
personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership and operation of its property, the Partnership
could potentially be liable for environmental liabilities or costs associated
with its property.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the Managing General Partner have
implemented a national policy and procedures to prevent or eliminate mold from
its properties and the Managing General Partner believes that these measures
will eliminate, or at least minimize, the effects that mold could have on
residents. To date, the Partnership has not incurred any material costs or
liabilities relating to claims of mold exposure or to abate mold conditions.
Because the law regarding mold is unsettled and subject to change the Managing
General Partner can make no assurance that liabilities resulting from the
presence of or exposure to mold will not have a material adverse effect on the
Partnership's consolidated financial condition or results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") is conducting a formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, 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,
capitalization of payroll and certain other costs, and tax credit transactions.
At the end of the first quarter of 2005, the SEC added certain tender offers for
limited partnership interests as an area of investigation. AIMCO is cooperating
fully. AIMCO is not able to predict when the investigation will be resolved.
AIMCO does not believe that the ultimate outcome will have a material adverse
effect on its consolidated financial condition or results of operations.
Similarly, the Managing General Partner does not believe that the ultimate
outcome will have a material adverse effect on the Partnership's financial
condition or results of operations.
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 Partnership's investment property consists of one apartment complex. In
addition, one apartment complex is classified as held for sale at March 31, 2005
(as discussed in "Results of Operations"). The following table sets forth the
average occupancy of the remaining property for the three months ended March 31,
2005 and 2004:
Average Occupancy
2005 2004
Ashton Ridge Apartments
Jacksonville, Florida 96% 94%
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment properties, the
interest rate on the mortgage loan, costs incurred to operate the investment
properties, general economic conditions and weather. 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 expenses. 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, the Managing General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions, accordingly, there is no guarantee that the Managing General Partner
will be able to sustain such a plan. Further, a number of factors that are
outside the control of the Partnership such as the local economic climate and
weather can adversely or positively affect the Partnership's financial results.
Results of Operations
The Partnership's net income for the three months ended March 31, 2005 was
approximately $158,000 compared to net income of approximately $88,000 for the
three months ended March 31, 2004. The increase in net income is due to an
increase in income from discontinued operations offset by a decrease in income
from continuing operations.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying statement of operations for the three months ended March 31, 2004
has been restated to reflect the operations of Stratford Place Apartments as
income (loss) from discontinued operations. During the three months ended March
31, 2005, the Partnership entered into a Purchase and Sale Contract to sell
Stratford Place Apartments to a third party for a purchase price of
approximately $29,000,000. The anticipated closing date for the transaction is
May 17, 2005. In accordance with SFAS No. 144, the assets and liabilities of
Stratford Place Apartments have been classified as held for sale at March 31,
2005. Included in the income (loss) from discontinued operations are revenues of
approximately $823,000 and $792,000, respectively.
The Partnership recognized income from continuing operations of approximately
$84,000 for the three months ended March 31, 2005 compared to income from
continuing operations of approximately $111,000 for the same period in 2004. The
decrease in income from continuing operations is due to an increase in total
expenses partially offset by an increase in total revenues.
Total expenses increased for the three months ended March 31, 2005 due to an
increase in operating expenses partially offset by a decrease in depreciation
expense. Operating expenses increased due to an increase in property expense
partially offset by a decrease in maintenance expense. Property expense
increased due to increases in salaries and other related benefits, courtesy
patrol costs and utilities at Ashton Ridge Apartments. Maintenance expense
decreased primarily due to a reduction of the estimated cleanup costs related to
Hurricane Jeanne at Ashton Ridge Apartments. Depreciation expense decreased due
to assets becoming fully depreciated in 2004 at Ashton Ridge Apartments.
Included in general and administrative expenses are costs of services included
in the management reimbursements to the Managing General Partner as allowed
under the Partnership Agreement, costs of professional services associated with
the administration of the Partnership, costs associated with the annual audit
required by the Partnership Agreement and costs associated with the quarterly
and annual communications with investors and regulatory agencies.
Total revenues increased for the three months ended March 31, 2005 due to an
increase in rental income partially offset by a decrease in other income. Rental
income increased due to an increase in occupancy, at the investment property, an
increase in the average rental rates and a decrease in bad debt expense. Other
income decreased primarily due to a decrease in lease cancellation fees and
cable television fees at the Partnership's property.
Liquidity and Capital Resources
At March 31, 2005, the Partnership had cash and cash equivalents of
approximately $424,000 compared to approximately $1,104,000 at March 31, 2004.
Cash and cash equivalents increased approximately $116,000 since December 31,
2004 due to approximately $633,000 of cash provided by operating activities
partially offset by approximately $414,000 and $103,000 of cash used in
investing and financing activities, respectively. Cash used in investing
activities consisted of property improvements and replacements partially offset
by receipts from escrow accounts maintained by the mortgage lenders and
insurance proceeds. Cash used in financing activities consisted of principal
payments made on the mortgages encumbering the Partnership's investment
properties and repayments of advances from affiliates, partially offset by
advances from affiliates. 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 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. The Managing General Partner
monitors developments in the area of legal and regulatory compliance. For
example, 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. Capital improvements planned for the
Partnership's property are detailed below.
Ashton Ridge Apartments
During the three months ended March 31, 2005, the Partnership completed
approximately $263,000 of capital improvements at Ashton Ridge Apartments
consisting primarily of floor covering replacements, roof replacement and
structural improvements and reconstruction of damages to the property caused by
Hurricane Jeanne. These improvements were funded from operating cash flow. The
Partnership regularly evaluates the capital improvement needs of the property.
While the Partnership has no material commitments for property improvements and
replacements, certain routine capital expenditures are anticipated during 2005.
Such capital expenditures will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.
Stratford Place Apartments
During the three months ended March 31, 2005, the Partnership completed
approximately $243,000 of capital improvements at Stratford Place Apartments
consisting primarily of floor covering, window and appliance replacements and
reconstruction of damages to the property caused by a fire at the property in
January 2005 (see "Note D"). These improvements were funded from insurance
proceeds, operating cash flow and replacement reserves. This property is under
contract to be sold with an anticipated sale date of May 17, 2005.
Capital expenditures will be incurred only if cash is available from operations
or from Partnership reserves. To the extent that capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected 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 Ashton Ridge Apartments of approximately $5,416,000 has
a maturity date of January 2021 at which time the loan is scheduled to be fully
amortized. The mortgage indebtedness encumbering Stratford Place Apartments of
approximately $8,047,000 requires a balloon payment of approximately $7,739,000
in July 2006. This property is under contract to be sold with an anticipated
sale date of May 17, 2005.
There were no distributions paid during the three months ended March 31, 2005
and 2004. Future cash distributions will depend on the levels of cash generated
from operations, availability of cash reserves and the timing of debt
maturities, refinancings and/or property sales. The Partnership's cash available
for distribution is reviewed on a monthly basis. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after required capital expenditures, to permit any distributions to its partners
during 2005 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 10,984.25 limited partnership units
(the "Units") in the Partnership representing 47.47% of the outstanding Units at
March 31, 2005. 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 Units in exchange for cash or a combination of cash and
units in AIMCO Properties, L.P., the operating partnership of AIMCO either
through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that would include, but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Managing General Partner. As a result of its ownership of 47.47%
of the outstanding units, AIMCO and its affiliates are in a position to
influence all voting decisions with respect to the Partnership. Although the
Managing General Partner owes fiduciary duties to the limited partners of the
Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as
its sole stockholder. As a result, the duties of the Managing General Partner,
as managing general partner, to the Partnership and its limited partners may
come into conflict with the duties of the Managing 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
Investment properties are 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 properties. 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
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line basis over the term of the lease. 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.
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 Managing 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 Managing 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
AIMCO Properties L.P. and NHP Management Company, both affiliates of the
Managing General Partner, are defendants in a lawsuit alleging that they
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.
The complaint attempts to bring 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. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call." Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company 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. Oral argument relating to the
certification of the collective action took place on May 12, 2005 and the
parties await a ruling from the Court. Although the outcome of any litigation is
uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome
will have a material adverse effect on its financial condition or results of
operations. Similarly, the Managing General Partner does not believe that the
ultimate outcome will have a material adverse effect on the Partnership's
financial condition or results of operations.
The Managing 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 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index Attached.
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: AIMCO/Winthrop Growth Investors I,
GP, LLC
Managing General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: May 16, 2005
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
Exhibit Index
Exhibit Number Description of Exhibit
3.1 Amended and Restated Agreement of Limited Partnership of
Winthrop Growth Investors I Limited Partnership dated May 11,
1984 (included as an exhibit to the Partnership's Registration
Statement on Form S-11, File No. 2-84760 and incorporated
herein by reference).
3.2 Amendment to Amended and Restated Agreement of Limited
Partnership dated August 23, 1985 (Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995 is incorporated herein by reference).
3.3 Amendment to the Amended and Restated Agreement of Limited
Partnership, dated November 20, 2003, filed as an exhibit to
the Registrant's Current Report on Form 8-K dated December 3,
2003 and incorporated herein by reference.
3.4 Amendment to Amended and Restated Agreement of Limited
Partnership, dated September 30, 2004, filed as an exhibit to
the Registrant's Current Report on Form 8-K dated September
30, 2004 and filed on October 5, 2004, incorporated herein by
reference.
3.5 Certificate of Amendment to the Second Amended and Restated
Certificate of Limited Partnership of Winthrop Growth
Investors 1 Limited Partnership, filed as an exhibit to the
Registrant's Current Report on Form 8-K dated September 30,
2004 and filed on October 5, 2004, incorporated herein by
reference.
10.1 Replacement Reserve Agreement, filed as exhibit 10.20 to the
Registrant's Current Report on Form 8-K dated December 22,
2000, and incorporated herein by reference.
10.2 Purchase Agreement between Linnaeus-Lexington Associates
Limited Partnership and AIMCO/Winthrop Growth Investors 1 GP,
LLC, dated September 30, 2004, filed as exhibit 10.22 to the
Registrant's Current Report on Form 8-K dated September 30,
2004 and filed on October 5, 2004, incorporated herein by
reference.
10.3 Assignment and Assumption of General Partner Interest in
Winthrop Growth Investors 1 Limited Partnership, dated
September 30, 2004, filed as exhibit 10.23 to the Registrant's
Current Report on Form 8-K dated September 30, 2004 and filed
on October 5, 2004, incorporated herein by reference.
10.4 Assignment and Assumption of General Partner Interest in
Winthrop Growth Investors 1 Limited Partnership, dated
September 30, 2004, filed as exhibit 10.24 to the Registrant's
Current Report on Form 8-K dated September 30, 2004 and filed
on October 5, 2004, incorporated herein by reference.
10.5 Purchase and Sale Contract between Stratford Place Investors
Limited Partnership, a Delaware limited partnership, as
Seller, and FF Realty LLC, a Delaware limited liability
company, as Purchaser, effective February 28, 2005 filed as
exhibit 10.5 to the Registrant's Current Report on Form 8-K
dated February 28, 2005 and filed on March 4, 2005 and
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.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth
Investors I Limited Partnership;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: May 16, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of
AIMCO/Winthrop Growth Investors I,
GP, LLC, equivalent of the chief
executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth
Investors I Limited Partnership;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: May 16, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of
AIMCO/Winthrop Growth
Investors I, GP, LLC,
equivalent of the chief
accounting 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 Winthrop Growth
Investors I Limited Partnership (the "Partnership"), for the quarterly period
ended March 31, 2005 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 Stephen B. Waters, 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 16, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: May 16, 2005
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.