FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO 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 0-10255
SHELTER PROPERTIES I LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0707398
(State or other jurisdiction of (I.R.S. 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 (864) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) SHELTER PROPERTIES I LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
(Unaudited)
March 31, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 1,729
Restricted--tenant security deposits 134
Accounts receivable 7
Escrow for taxes and insurance 105
Restricted escrows 986
Other assets 358
Investment properties:
Land $ 1,427
Buildings and related personal property 17,968
19,395
Less accumulated depreciation (13,103) 6,292
$ 9,611
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 42
Tenant security deposits 134
Accrued taxes 61
Other liabilities 241
Mortgage notes payable 11,540
Partners' Deficit
General partners $ (51)
Limited partners (15,000 units
issued and outstanding) (2,356) (2,407)
$ 9,611
See Accompanying Notes to Consolidated Financial Statements
b) SHELTER PROPERTIES I LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(Unaudited)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $1,172 $1,138
Interest income 33 16
Other income 45 48
Total revenues 1,250 1,202
Expenses:
Operating 342 308
General and administrative 30 43
Property management fees 61 60
Maintenance 153 132
Depreciation 151 152
Interest 241 237
Property taxes 62 65
Total expenses 1,040 997
Net income $ 210 $ 205
Net income allocated to general partners (1%) $ 2 $ 2
Net income allocated to limited partners (99%) 208 203
$ 210 $ 205
Net income per limited partnership unit $13.84 $13.54
See Accompanying Notes to Consolidated Financial Statements
c) SHELTER PROPERTIES I LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 15,000 $ 2 $15,000 $15,002
Partners' deficit at
December 31, 1996 15,000 $(53) $(1,314) $(1,367)
Distributions to partners -- (1,250) (1,250)
Net income for the three
months ended March 31, 1997 2 208 210
Partners' deficit at
March 31, 1997 15,000 $(51) $(2,356) $(2,407)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) SHELTER PROPERTIES I LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 210 $ 205
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 151 152
Amortization of discounts and loan costs 22 30
Change in accounts:
Restricted cash (3) (7)
Accounts receivable 28 (1)
Escrows for taxes and insurance 7 (44)
Other assets 3 (13)
Accounts payable (23) (83)
Tenant security deposit liabilities 2 6
Accrued taxes (9) 65
Other liabilities (23) (1)
Net cash provided by operating activities 365 309
Cash flows from investing activities:
Property improvements and replacements (92) (40)
Deposits to restricted escrows (46) (13)
Net cash used in investing activities (138) (53)
Cash flows from financing activities:
Payments on mortgage notes payable (31) (95)
Distributions to partners (1,250) (5)
Loan costs paid (12) --
Net cash used in financing activities (1,293) (100)
Net (decrease) increase in cash (1,066) 156
Cash and cash equivalents at beginning of period 2,795 1,068
Cash and cash equivalents at end of period $ 1,729 $1,224
Supplemental disclosure of cash flow information:
Cash paid for interest $ 219 $ 206
See Accompanying Notes to Consolidated Financial Statements
e) SHELTER PROPERTIES I LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Shelter Properties I Limited
Partnership (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 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 Shelter Realty I Corporation (the "Corporate General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ended March 31, 1997, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1997. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the year ended December 31,
1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - RECONCILIATION OF CASH FLOWS
The following is a reconciliation of the subtotal on the accompanying statements
of cash flows captioned "net cash provided by operating activities" to "net cash
provided by (used in) operations," as defined in the partnership agreement.
However, "net cash provided by (used in) operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
Three Months Ended
March 31,
(in thousands)
1997 1996
Net cash provided by operating activities $ 365 $ 309
Payments on mortgage notes payable (31) (95)
Property improvements and replacements (92) (40)
Change in restricted escrows, net (46) (13)
Changes in reserves for net operating
liabilities 18 78
Additional reserves (250) (240)
Net cash provided by (used in) operations $ (36) $ (1)
At March 31, 1997 and 1996, the Corporate General Partner believed it to be in
the best interest of the Partnership to reserve an additional $250,000 and
$240,000 respectively. Such additional reserves insure adequate liquidity to
fund the on-going capital projects at the various properties.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. Balances and other transactions with
Insignia Financial Group, Inc. ("Insignia") and certain of its affiliates in
1997 and 1996 are as follows (in thousands):
Three Months Ended
March 31,
1997 1996
Property management fees $ 61 $ 60
Reimbursement for services of affiliates 22 22
Due to general partners 101 101
Included in "Reimbursement for services of affiliates" for 1997 is approximately
$3,000 of reimbursements for construction oversight costs.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Corporate General Partner. An affiliate of
the Corporate General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Corporate General
Partner, who receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Corporate General Partner by virtue of the agent's obligations is not
significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consists 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
Quail Hollow Apartments
West Columbia, South Carolina 90% 97%
Windsor Hills Apartments
Blacksburg, Virginia 99% 99%
Heritage Pointe Apartments
(Formerly Rome Georgian Apartments)
Rome, Georgia 88% 89%
Stone Mountain West Apartments
Stone Mountain, Georgia 98% 98%
The Corporate General Partner attributes the decrease in occupancy at Quail
Hollow Apartments to an increase in the number of residents moving out to buy or
build homes in the area.
The Partnership's net income for the three months ended March 31, 1997, was
approximately $210,000. The Partnership reported net income of approximately
$205,000 for the three months ended March 31, 1996. The increase in net income
is due to an increase in rental income and interest income and a decrease in
general and administrative expenses. Rental income increased due to increases
in rental rates, which was only partially offset by a decrease in occupancy at
Quail Hollow. Interest income increased due to an increase in interest rates as
well as an increase in the cash balances earning interest. General and
administrative expenses decreased due to a decrease in audit expense and
insurance expense. The increase in net income was partially offset by an
increase in operating expenses and maintenance expenses. The increase in
operating expenses was primarily due to an increase in courtesy patrol expense,
payroll expenses, and utilities. The increase in courtesy patrol expenses is
due to the monthly monitoring charge for the alarms in each apartment as well as
the office at Stone Mountain West. This service was not provided as of March
31, 1996. The increase in payroll expenses at Heritage Pointe is due to an
increase in the number of staff members. At March 31, 1996 the staff consisted
of three full time employees. As of March 31, 1997, an additional maintenance
technician has been hired, as well as a full time and part time leasing agent.
Maintenance expenses increased primarily due to the installation of more
efficient plumbing fixtures at Windsor Hills, the installation of moisture
barriers under several buildings at Heritage Pointe and the purchase of golf
carts at Heritage Pointe and Stone Mountain West.
Included in maintenance expense in 1997 is approximately $44,000 of major
repairs and maintenance comprised of exterior building improvements, major
landscaping, golf carts and computers.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environments 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 Corporate 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
Corporate General Partner will be able to sustain such a plan.
At March 31, 1997, the Partnership reported unrestricted cash of approximately
$1,729,000 compared to approximately $1,224,000 at March 31, 1996. Net cash
provided by operating activities increased as a result of a decrease in accounts
receivable and other assets. Net cash used in investing activities increased
due to an increase in property improvements and replacements, and deposits to
restricted escrows. Net cash used in financing activities increased as a result
of an increase in distributions to partners.
As required by the 1996 refinancings of Quail Hollow, Heritage Pointe and Stone
Mountain West, certain capital improvements will be performed in 1997. These
projects include repaving and restriping the parking lots, resurfacing the
pools, exterior painting, floor covering replacement, appliance replacement and
various ADA conversions. These projects will be funded out of the capital
reserve accounts. The Partnership has no material capital programs scheduled to
be performed in 1997 at Windsor Hills, although certain routine capital and
maintenance expenditures have been budgeted. These expenditures will be incurred
only if cash is available from operations or reserves.
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. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $11,540,000, net of discount, is amortized over
varying periods with required balloon payments ranging from November 15, 2002,
to November 1, 2003, at which time the individual properties will either be
refinanced or sold. During the three months ended March 31, 1997, the
Partnership made a distribution of approximately $1,250,000. During the three
months ended March 31, 1996, distributions in the amount of approximately $5,000
were paid on behalf of the partners to the State of South Carolina related to
the taxable income generated by Quail Hollow in 1995. Future cash distributions
will depend on the levels of net cash generated from operations, property sales,
and the availability of cash reserves.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 1997.
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.
SHELTER PROPERTIES I LIMITED PARTNERSHIP
By: Shelter Realty I Corporation
Corporate General Partner
By:/s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By:/s/ Ronald Uretta
Ronald Uretta
Treasurer
(Principal Financial Officer
and Principal Accounting Officer)
Date: May 9, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties I Limited Partnership 1997 First Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000316220
<NAME> SHELTER PROPERTIES I LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,729
<SECURITIES> 0
<RECEIVABLES> 7
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 19,395
<DEPRECIATION> 13,103
<TOTAL-ASSETS> 9,611
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,540
0
0
<COMMON> 0
<OTHER-SE> (2,407)
<TOTAL-LIABILITY-AND-EQUITY> 9,611
<SALES> 0
<TOTAL-REVENUES> 1,250
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,040
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210
<EPS-PRIMARY> 13.84<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
