U.S. 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, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 2-84760
Winthrop Growth Investors 1 Limited Partnership
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2839837
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, MA 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
March 31, December 31,
Assets 1997 1996
-------- --------
Investment in Real Estate
Land $ 4,015 $ 4,015
Buildings and improvements, net of accumulated
depreciation of $20,338 (1997) and
$19,942 (1996) 18,345 18,598
-------- --------
22,360 22,613
Other assets:
Cash and cash equivalents 1,192 1,348
Deferred costs, net of accumulated amortization
of $1,165 (1997) and $1,135 (1996) 1,223 1,253
Replacement reserves and escrow accounts 1,643 1,459
Other assets 514 453
-------- --------
Total assets $ 26,932 $ 27,126
======== ========
Liabilities and Partners' Capital
Mortgages payable $ 21,507 $ 21,563
Accounts payable 52 171
Tenant security deposits 168 169
Accrued expenses and other liabilities 630 514
-------- --------
Total liabilities 22,357 22,417
-------- --------
Partners' capital (deficit):
Limited partners' capital; 50,005 units authorized,
23,139 issued and outstanding 5,812 5,938
General partners' deficit (1,237) (1,229)
-------- --------
Total partners' capital 4,575 4,709
-------- --------
Total liabilities and partners' capital $ 26,932 $ 27,126
======== ========
See notes to consolidated financial statements.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1997
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
(In Thousands, Except Unit Data) March 31, March 31,
1997 1996
------- -------
Income:
Rental $ 1,679 $ 1,569
Interest on short-term investments 15 17
Other 70 69
------- -------
Total Income 1,764 1,655
------- -------
Expenses:
Leasing 58 42
General and administrative 154 201
Management fees 86 82
Utilities 176 173
Repairs and maintenance 281 266
Insurance 62 68
Taxes 155 165
Depreciation 396 393
Amortization 30 36
Interest expense 450 481
------- -------
Total expenses 1,848 1,907
------- -------
Net loss $ (84) $ (252)
======= =======
Net loss allocated to general partners $ (8) $ (25)
======= =======
Net loss allocated to limited partners $ (76) $ (227)
======= =======
Net loss per Limited Partnership Unit $ (3.28) $ (9.81)
======= =======
Distributions per Limited Partnership Unit $ 2.16 $ 2.16
======= =======
See notes to consolidated financial statements.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
Consolidated Statement of Partners' Capital (Deficit) (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited Limited General
Partnership Partners' Partners' Total
Interest Capital Deficit Capital
----------------- -------------------- ----------------------- -------------------
Balance - January 1, 1997 23,139 $ 5,938 $(1,229) $ 4,709
Net loss -- (76) (8) (84)
Distribution -- (50) -- (50)
------- ------- ------- -------
Balance - March 31, 1997 23,139 $ 5,812 $(1,237) $ 4,575
======= ======= ======= =======
See notes to consolidated financial statements.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB MARCH 31, 1997
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, March 31,
(In Thousands) 1997 1996
------- -------
Cash Flows from Operating Activities:
Net loss $ (84) $ (252)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 426 429
Changes in assets and liabilities:
Increase in other assets (61) (127)
Increase in replacement reserve and escrow accounts (202) (191)
Decrease in accounts payable (119) (32)
(Decrease) increase in tenant security deposits (1) 13
Increase in accrued expenses and other liabilities 116 108
------- -------
Net cash provided by (used in) operating activities 75 (52)
------- -------
Cash Flows from Investing Activities:
Additions to buildings and improvements (143) (93)
Deposits to reserve for replacement (60) (311)
Withdrawals from reserve for replacements 78 --
------- -------
Net cash used in investing activities (125) (404)
------- -------
Cash Flows from Financing Activities:
Notes payable proceeds -- 2,700
Principal payments on mortgage notes (56) (1,487)
Distributions paid to partners (50) (50)
Deferred financing costs paid -- (197)
------- -------
Net cash (used in) provided by financing activities (106) 966
------- -------
Net (decrease) increase in cash and cash equivalents (156) 510
Cash and cash equivalents, beginning of period 1,348 908
------- -------
Cash and cash equivalents, end of period $ 1,192 $ 1,418
======= =======
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ 450 $ 481
======= =======
See notes to consolidated financial statements.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated financial
statements, related footnotes and discussions contained in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
March 31, 1997 presentation. The balance sheet at December 31, 1996 was
derived from audited financial statements at such date.
The results of operations for the three months ended March 31, 1997 and
1996 are not necessarily indicative of the results to be expected for the
full year.
2. Related Party Transactions
Winthrop Management, an affiliate of the Managing General Partner, is
entitled to receive 5% of gross receipts from all Partnership properties
they manage. Winthrop Management earned $86,000 and $82,000 for the three
months ended March 31, 1997 and 1996, respectively.
Winthrop Management received reimbursement of accountable administrative
expenses amounting to approximately $46,000 and $40,000, respectively
during the three months ended March 31, 1997 and 1996.
During the quarter ended March 31, 1997 an affiliate of the Managing
General Partner acquired, pursuant to a tender offer for a purchase price
of $275 per unit, approximately 21% of the total limited partnership units
of the Partnership (4,867.34 units).
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation
This item should be read in conjunction with the financial statements and other
items contained elsewhere in the report.
Liquidity and Capital Resources
All of the Registrant's real estate properties are residential properties with
apartments leased to tenants pursuant to leases with original terms ranging from
three to fourteen months. The Registrant receives rental income from its
apartments and is responsible for operating expenses, administrative expenses,
capital improvements and debt service payments. The Registrant uses working
capital reserves provided from any undistributed cash flow from operations and
proceeds from mortgage refinancings as its primary sources of liquidity. For the
long term, cash from operations is expected to remain the Registrant's primary
source of liquidity, (i.e., until additional debt is refinanced or properties
sold). The Registrant distributed $50,000 to the holders of limited partnership
units ($2.16 per unit) during the three months ended March 31, 1997.
The level of liquidity based on cash and cash equivalents experienced a $156,000
decrease at March 31, 1997 as compared to December 31, 1996. The decrease was
due to $106,000 of net cash used in financing activities and $125,000 of net
cash used in investing activities, which was partially offset by $75,000 of net
cash provided by operating activities. Financing activities consisted of $56,000
of mortgage principal payments and $50,000 of distributions to limited partners.
Investing activities consisted of $143,000 of improvements to real estate and
$60,000 of deposits to replacement reserves, which was partially offset by
$78,000 of withdrawals from replacement reserves. All other increases
(decreases) in certain assets and liabilities are the result of the timing of
receipt and payment of various operating activities.
The Registrant continues to make capital improvements to the properties to
enhance their competitiveness within their markets. The $143,000 Registrant
spent on capital improvements during the three months ended March 31, 1997, was
funded from operating cash and replacement reserves held by mortgage lenders.
The Registrant anticipates it will spend approximately $621,000 for capital
improvements during the balance of 1997. The Registrant expects to spend
approximately $100,000 for exterior painting and $100,000 for interior
replacement (kitchen cabinet and counter tops) at Meadow Wood Apartments,
approximately $70,000 for electrical work at Stratford Place Apartments and
$38,000 of interior replacements (kitchen tile and lighting) at Stratford
Village Apartments.
The Registrant invests its working capital reserves in a money market account.
The Managing General Partner believes that, if market conditions remain
relatively stable, cash flow from operations, when combined with working capital
reserves, will be sufficient to fund required capital improvements, regular debt
service payments and maintain quarterly distribution levels until the mortgages
mature. The Registrant has a balloon payment of approximately $4,000,000 in 2000
and a balloon payment of approximately $8,000,000 in 2006. Registrant will
either have to extend or refinance these mortgages, or sell a property, prior to
the due date of these balloon payments.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (Continued)
During the quarter ended March 31, 1997 an affiliate of the Managing General
Partner acquired, pursuant to a tender offer for a purchase price of $275 per
unit, approximately 21% of the total limited partnership units of the Registrant
(4,867.34 units).
Results of Operations
The Registrant's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 1997 and 1996:
Average Occupancy
-----------------------
Property 1997 1996
- ------------------------------------ ---- ----
Meadow Wood Apartments 91% 84%
Stratford Place Apartments 99% 92%
Stratford Village Apartments 86% 90%
Sunflower Apartments 94% 88%
Registrant's net loss for the three months ended March 31, 1997, was $84,000, as
compared to a net loss of $252,000 for the three months ended March 31, 1996.
Revenues for the three months ended March 31, 1997 increased by $109,000, as
compared to the 1996 period, due to increases in rental revenue of $110,000 and
other income of $1,000 which was partially offset by a decrease in interest
income of $2,000. Rental revenue increased primarily because of increases in
occupancy and rental rates. Occupancy increased at all the properties except for
Stratford Village Apartments and rental rates increased at all the properties
except Stratford Place Apartments. The occupancy decreased at Stratford Village
Apartments due to construction of three new apartment complexes in the area with
competitive rents.
Expenses decreased by $59,000 for the three months ended March 31, 1997, as
compared to 1996, primarily due to decreases in general and administrative
expenses of $47,000 and interest expense of $31,000, which was partially offset
by increases to repairs and maintenance of $15,000. General and administrative
expenses decreased primarily due to decreases in administrative and professional
costs. Mortgage interest expense decreased because of decreases in interest
rates on the loan encumbering Sunflower Apartments, and repairs and maintenance
increased primarily due to an overall increase in maintenance payroll and
concrete repairs.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to Section 9.4 of the
Partnership Agreement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended March
31, 1997.
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB MARCH 31, 1997
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
Managing General Partner
BY: /s/ Michael L. Ashner
----------------------------
Michael L. Ashner
Chief Executive Officer and Director
BY: /s/ Edward V. Williams
----------------------------
Edward V. Williams
Chief Financial Officer
Dated: May 14, 1997
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
MARCH 31, 1997
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 14
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