FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-17645
UNITED INVESTORS GROWTH PROPERTIES
(Exact name of small business issuer as specified in its charter)
Missouri 43-1483928
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
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
a) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1995
Assets
Cash:
Unrestricted $ 257,545
Restricted-tenant security deposits 74,353
Accounts receivable, net of allowance
of $47,751 71,256
Escrows for taxes and insurance 95,605
Restricted escrow 117,793
Other assets 253,533
Investment properties:
Land $ 1,979,187
Buildings and related personal property 14,987,589
16,966,776
Less accumulated depreciation (3,565,553) 13,401,223
$14,271,308
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 79,640
Tenant security deposits 72,321
Accrued taxes 89,344
Other liabilities 114,350
Mortgage notes payable 13,060,326
Minority interest 66,438
Partners' Capital
General partner $ 874
Limited partners (39,297 units issued
and outstanding) 788,015 788,889
14,271,308
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Rental income $ 807,900 $ 842,443 $2,572,310 $2,519,246
Other income 50,618 43,313 124,043 117,011
Total revenues 858,518 885,756 2,696,353 2,636,257
Expenses:
Operating 234,195 254,728 728,576 709,012
General and administrative 23,791 17,298 59,286 51,082
Property management fees 45,312 46,368 142,501 139,466
Maintenance 104,029 93,501 252,662 241,873
Depreciation 163,492 183,708 512,291 549,034
Amortization 7,110 4,321 16,802 12,536
Interest 375,084 389,412 1,193,217 1,198,973
Property taxes 89,034 108,516 291,893 294,184
Tenant reimbursements (15,058) (53,965) (92,082) (126,739)
Total expenses 1,026,989 1,043,887 3,105,146 3,069,421
Minority interest in net
(income) loss of joint
venture (45,781) 24,899 (18,378) 58,776
Gain on disposition of
investment property 165,584 -- 165,584 --
Net loss $ (48,668) $ (133,232) $ (261,587) $ (374,388)
Net income (loss) allocated
to general partner $ 76,866 $ (1,332) $ 74,737 $ (3,744)
Net loss allocated to
limited partners (125,534) (131,900) (336,324) (370,644)
$ (48,668) $ (133,232) $ (261,587) $ (374,388)
Net loss per limited
partnership unit $ (3.19) $ (3.36) $ (8.56) $ (9.43)
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 39,297 $ 100 $9,824,250 $9,824,350
Partners' capital (deficit) at
December 31, 1994 39,297 $(73,863) $1,124,339 $1,050,476
Net income (loss) for the nine
months ended September 30, 1995 -- 74,737 (336,324) (261,587)
Partners' capital at
September 30, 1995 39,297 $ 874 $ 788,015 $ 788,889
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net loss $ (261,587) $ (374,388)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Minority interest in net income (loss) of
joint venture 18,378 (58,776)
Depreciation 512,291 549,034
Amortization of loan costs, lease commissions,
loan premium and intangible assets 94,184 37,892
Gain on sale of property (165,584) --
Change in accounts:
Restricted cash 12,802 13,699
Accounts receivable (28,629) (1,610)
Escrows for taxes and insurance 15,754 (5,418)
Other assets (32,745) (23,901)
Accounts payable (11,124) (99,190)
Tenant security deposit liabilities (15,603) 8,201
Accrued property taxes 175 55,754
Other liabilities (38,354) 10,032
Net cash provided by operating activities 99,958 111,329
Cash flows from investing activities:
Property improvements and replacements (73,508) (36,021)
Deposits to restricted escrows (14,718) (34,536)
Receipts from restricted escrow -- 6,891
Proceeds from sale of property 3,989,528 --
Net cash provided by (used in) investing
activities 3,901,302 (63,666)
Cash flows from financing activities:
Distributions from minority interest 18,000 25,680
Payments of mortgage notes payable (135,105) (91,201)
Repayment on mortgage notes payable (3,873,707) --
Loan costs paid -- (23,082)
Net cash used in financing activities (3,990,812) (88,603)
Net increase (decrease) in cash 10,448 (40,940)
Cash at beginning of period 247,097 399,119
Cash at end of period $ 257,545 $ 358,179
Supplemental disclosure of cash flow information:
Cash paid for interest $1,156,919 $ 1,203,659
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) UNITED INVESTORS GROWTH PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements 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 the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - Basis of Accounting
The financial statements include the Partnership's operating divisions,
Terrace Royale Apartments, Deerfield Apartments, and Greystone South Plaza
Center. During the second quarter of 1994, Cheyenne Woods Apartments was
restructured into a lower tier partnership, known as Cheyenne Woods United
Investors, L.P. ("Cheyenne"), in which United Investors Growth Properties is the
99.99% limited partner. Although legal ownership of the asset was transferred
to a new entity, United Investors Growth Properties retained substantially all
economic benefits from the property. The Partnership consolidates its interest
in Cheyenne (whereby all accounts of Cheyenne are included in the consolidated
financial statements of the Partnership). In addition, the Partnership owns a
60% interest in Renaissance Village Associates ("Renaissance"). The Partnership
consolidates its interest in Renaissance (whereby all accounts of the joint
venture are included in the Partnership's financial statements with intercompany
accounts being eliminated). The minority partner's share of the joint venture's
net assets are reflected as minority interest in the balance sheet of the
Partnership. Earnings and losses attributable to the minority partner's
ownership of the joint venture are reflected as a reduction or addition to net
income of the Partnership. During the third quarter of 1995, Renaissance
Village Apartments was sold by Renaissance (see Note D for further discussion).
Pursuant to the terms in the Partnership Agreement, net income and net loss
for each fiscal year shall be allocated 99% to the limited partners and 1% to
the General Partner.
Note B - Basis of Accounting (continued)
Gain from a sale shall be allocated as follows: (a) first to each partner who
has a negative capital account, an amount equal to (or in proportion to if less
than) such partner's negative capital account balance and (b) second, 99% to the
limited partners and 1% to the General Partner, until each limited partner has
been allocated an amount equal to (or in proportion to if less than) the excess,
if any, of such limited partner's adjusted capital investment over his capital
account.
Loss from a sale shall be allocated as follows: (a) first to each partner who
has a positive capital account, an amount equal to (or in proportion to if less
than) such partner's positive capital account balance and (b) second, 99% to the
limited partners and 1% to the General Partner.
Anything in the Partnership Agreement to the contrary notwithstanding, the
interests of the General Partner, in the aggregate, in each material item of
income, gain, loss deduction and credit of the Partnership will be equal to at
least 1% of each such item at all times during the existence of the Partnership.
Note C - Repurchase of Units
The partnership agreement for the Partnership contains a provision which
states that the General Partner shall purchase up to 10% of the limited
partnership Units outstanding at the fifth anniversary date of the last
Additional Closing Date. Pursuant to this provision, the General Partner
accepted repurchase notices representing 10% of the limited partnership Units at
September 30, 1995, and is in the process of effecting the transfer of Units.
Note D - Sale of Investment Property
On August 30, 1995, Renaissance Village Apartments was sold to an
unaffiliated party, Kauri Investments, Ltd. The Partnership recognized a gain
on the sale of $165,584. The minority interest share of this gain was
approximately $66,000. Currently, the joint venture is in the process of being
dissolved. Once all the remaining liabilities of the joint venture are
satisfied, the remaining cash of the joint venture will be distributed to the
joint venturers.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's remaining investment properties consist of three apartment
complexes and a retail center. The following table sets forth the average
occupancy of the properties for the nine months ended September 30, 1995 and
1994:
Average
Occupancy
1995 1994
Terrace Royale Apartments
Bothell, Washington 93% 94%
Cheyenne Woods Apartments
North Las Vegas, Nevada 97% 93%
Greystone South Plaza Center
Lenexa, Kansas 81% 79%
Deerfield Apartments
Memphis, Tennessee 98% 97%
The General Partner attributes the increase in occupancy at Cheyenne Woods to
the relocation of several tenants from a competing property during the fourth
quarter of 1994. A new apartment complex has recently started leasing near
Terrace Royale and two new apartment complexes are under construction near
Deerfield. It is unknown at this time how these new complexes will impact the
future occupancy and rental rates of Terrace Royale and Deerfield.
The Partnership incurred a net loss of $261,587 for the nine months ended
September 30, 1995, of which $48,668 was a loss for the third quarter. The
corresponding net loss for 1994 was $374,388 and $133,232, respectively. The
decrease in the net loss for both periods was primarily due to the sale of
Renaissance Village Apartments (see Note D of the Consolidated Financial
Statements). The Partnership recognized a gain on sale of $165,584. The
minority interest share of this gain was approximately $66,000. Also
contributing to the decrease in net loss for the nine month period ended
September 30, 1995, was an increase in rental revenues resulting from increased
occupancy at Cheyenne and increased rental rates at Deerfield. Depreciation
expense decreased for the nine months ended September 30, 1995, compared to the
corresponding period of 1994 as a result of the write-down of Renaissance in
1994 and the sale of Renaissance in 1995. Partially offsetting these decreases
in the net loss was a decrease in tenant reimbursements due to decreases in
reimbursable expenses.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each 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 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
General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $257,545
compared to $247,097 at December 31, 1994. Net cash provided by operating
activities decreased primarily as a result of increased accounts receivable
balances and fewer prepaid rent collections. Net cash provided by investing
activities increased as a result of the proceeds received from the sale of
Renaissance Village. Net cash used in financing activities increased due to the
repayment of the mortgage note payable on Renaissance Village Apartments.
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 various properties to adequately maintain the
physical assets and meet other operating needs of the Partnership. Such assets
are currently thought to be sufficient for any near-term needs of the
Partnership. The mortgage indebtedness of $13,060,326 matures at various times
with balloon payments due at maturity at which time the properties will either
be refinanced or sold. Future cash distributions will depend on the levels of
net cash generated from operations, property sales and the availability of cash
reserves. No cash distributions were made in 1994 or during the first nine
months of 1995.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: A Form 8-K dated August 30, 1995 was filed
reporting the sale of the Renaissance Village Apartments.
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
(A Missouri Limited Partnership)
By: United Investors Real Estate, Inc., a
Delaware corporation, its General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 13, 1995