SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995 Commission File Number 2-84760
------------- -------
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
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 offices) (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
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
Income
Rental $ 1,580,719 $ 1,531,671 $ 3,162,507 $ 3,032,222
Interest on short-term investments 11,331 14,484 23,536 32,153
Other 62,996 62,369 130,037 122,833
------------ ------------ ------------ ------------
1,655,046 1,608,524 3,316,080 3,187,208
----------- ----------- ----------- -----------
Expenses
Leasing 45,853 45,879 103,721 87,033
General & administrative 72,305 77,713 161,639 131,615
Management Fees 81,619 79,988 163,665 160,133
Utilities 143,037 147,234 304,268 294,802
Repairs & Maintenance 315,379 316,497 615,077 587,388
Insurance 63,491 59,442 131,449 116,403
Taxes 129,592 132,005 263,594 265,670
---------- ----------- ----------- -----------
Total operating expenses 851,276 858,758 1,743,413 1,643,044
Other expenses
Depreciation 414,585 407,800 823,765 815,600
Amortization 25,315 31,003 50,634 62,006
Interest expense 478,714 502,535 956,215 1,025,366
Other expenses 55,201 21,326 78,562 97,005
----------- ----------- ----------- -----------
Total expenses 1,825,091 1,821,422 3,652,589 3,643,021
----------- ----------- ----------- -----------
Net loss $ (170,045) $ (170,045) $ (212,898) $ (336,509) $ (455,813)
=========== =========== =========== ===========
Net loss allocated
General Partners $ (17,005) $ (21,290) $ (33,651) $ (45,581)
Limited Partners $ (153,040) $ (191,608) $ (302,858) $ (410,232)
----------- ------------ ------------ -----------
$ (170,045) $ (212,898) $ (336,509) $ (455,813)
=========== ============= ============= ==========
Net loss per unit outstanding - Limited Partners $ (6.61) $ (8.28) $ (13.09) $ (17.73)
============ ============= ============= =============
</TABLE>
See notes to Financial Statements.
<PAGE>
BALANCE SHEETS
<TABLE>
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
June 30, December 31,
1995 1994
(Unaudited) (Audited)
---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in Real Estate
Land $ 4,015,369 $ 4,015,369
Buildings and improvements 37,493,153 37,218,583
------------ ------------
41,508,522 41,233,952
Less accumulated depreciation 17,607,610 16,783,845
------------ ------------
23,900,912 24,450,107
Cash and cash equivalents 730,975 923,214
Tenant security deposits - funded 143,622 125,295
Accounts receivable and other receivables 26,107 27,542
Escrow accounts 441,565 250,622
Reserve accounts 465,729 413,464
Deferred costs, net of accumulated amortization
of $973,357 and $922,723 1,070,364 1,120,998
Prepaid expenses and other assets 89,071 199,999
------------ ------------
2,967,433 3,061,134
Total Assets $ 26,868,345 $ 27,511,241
============ ============
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<S> <C> <C>
Liabilities applicable in investment in
real property
Mortgage payable $ 20,402,978 $ 20,711,814
Other liabilities
Accounts payable 122,569 105,449
Tenant security deposits 149,375 133,245
Accrued expenses and other liabilities 413,117 343,958
------------ ------------
Total Liabilities 21,088,039 21,294,466
Partners' Capital
Limited Partners 6,927,525 7,330,343
General Partners (1,147,219) (1,113,568)
------------ ------------
Total Partners' Capital 5,780,306 6,216,775
Total Liabilities and Partners' Capital $ 26,868,345 $ 27,511,241
============ ============
</TABLE>
See notes to Financial Statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Six Months Ended
June 30, 1995 and 1994 (Unaudited) 1995 1994
---------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (336,509) $ (455,813)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 874,399 877,606
Changes in assets and liabilities:
Increase in tenant security deposits - funded (18,327) (66,629)
Decrease (increase) in accounts receivable and
other receivables 1,435 (4,908)
Increase in escrow accounts (190,943) (118,057)
Decrease in prepaid expenses and other assets 110,928 173,437
Increase (decrease) in accounts payable 17,120 (12,195)
Increase (decrease) in tenant security deposits 16,130 (7,213)
Increase in accrued expenses and other liabilities 69,159 100,901
----------- -----------
Net cash provided by operating activities 543,392 487,129
Cash flows from investing activities:
Additions to buildings and improvements (274,570) (64,791)
Increase in reserve accounts (52,265) (60,705)
----------- ------------
Net cash used in investing activities (326,835) (125,496)
----------- ------------
Cash flows from financing activities:
Principal payments on mortgage note (308,836) (1,627,862)
Cash distributions paid to partners (99,960) (99,971)
------------ ------------
Net cash used in financing activities (408,796) (1,727,833)
------------ ------------
Net decrease in cash and cash equivalents (192,239) (1,366,200)
Cash and cash equivalents, beginning 923,214 2,394,552
------------ ------------
Cash and cash equivalents, end $ 730,975 $ 1,028,352
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 956,215 $ 1,025,366
============ ============
</TABLE>
See notes to Financial Statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
---------------------------------------------------------------------------------------------------------------------------
Units of
For the Six Months Ended Limited General Limited
June 30, 1995 and 1994 Partnership Partners' Partners' Total
(Unaudited) Interest Capital Capital Capital
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 23,139 $(1,113,568) $ 7,330,343 $ 6,216,775
Net loss (33,651) (302,858) (336,509)
Distributions - (99,960) (99,960)
---------- ------------- ---------- ----------
Balance, June 30, 1995 23,139 $(1,147,219) $ 6,927,525 $ 5,780,306
======== =========== =========== ===========
Balance, December 31, 1993 23,139 $(1,036,192) $ 8,226,672 $ 7,190,480
Net loss (45,581) (410,232) (455,813)
Distributions - (99,971) (99,971)
------------ -------------- ----------- -----------
Balance, June 30, 1994 23,139 $(1,081,773) $ 7,716,469 $ 6,634,696
========= =========== =========== ===========
</TABLE>
See notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The condensed consolidated financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The Registrant's accounting and
financial reporting policies are in conformity with generally accepted
accounting principles and include adjustments in interim periods considered
necessary for a fair presentation of the results of operations. Certain
information and footnote disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. It is
suggested that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included in the
Registrant's latest annual report on Form 10-K.
The accompanying consolidated financial statements reflect the Partnership's
results of operations for an interim period and are not necessarily indicative
of the results of operations for the year ending December 31, 1995.
2. CASH AVAILABLE FOR DISTRIBUTION
The Managing General Partner determined it to be in the best interest of the
Partnership to retain cash available for distribution from July 1, 1987 to
December 31, 1990 in order to increase the Partnership's operating reserves. In
1991, Management began to distribute cash available for distribution. A
distribution of $49,980 was paid in the quarter ended June 30, 1995 representing
cash available for distribution from the prior quarter. Going forward, the
Managing General Partner has determined to again retain any cash available for
distribution pending the refinancing of the first mortgage loan encumbering
Stratford Place Apartments.
3. TAXABLE INCOME
The Partnership's results of operations on a tax basis are expected to differ
from net income for financial reporting purposes primarily due to the accounting
differences in the recognition of depreciation and amortization.
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Partnerships operating results for the quarter ended June 30, 1995 improved
relative to the same period in 1994. The Partnership's net loss for the quarter
declined from $212,898 in 1994 to $170,045 in 1995. Revenue increased by 2.9%
and expenses remained stable.
The Partnership operated at a net loss of $336,509 for the six months ended June
30, 1995, compared to a net loss of $455,813 for the six months ended June 30,
1994. Excluding non-cash items such as depreciation and amortization, however,
the Partnership's properties have, in the aggregate, generated cash flow, which
the Partnership has used to make improvements to the properties, principal
payments on the loans encumbering the properties and cash distributions to
limited partners.
The Partnership's income increased by 4.0% for the first six months of 1995
compared to the first six months of 1994, primarily as a result of a 4.3%
increase in rental income. On an aggregate basis, average rents at the
Partnership's four properties have increased by 5.2% since the first six months
of 1994. While overall average occupancy declined slightly from 92% to 90%, the
Partnership was able to significantly reduce the level of tenant concessions,
especially at Stratford Place Apartments. Occupancy improved at Stratford Place
(from 92% to 96%) was stable at Sunflower (92%) but was lower at Meadow Wood
(87% compared to 92%) and Stratford Village (86% compared to 92%).
The direct operating costs of the Partnership's properties increased by 6.1%,
primarily as a result of a one-time fee that was paid to a consultant for
reducing the 1994 through 1996 real estate tax liability of some of the
Partnership's properties. This payment is reflected in the Partnership's
"General & Administrative" expense. In addition, the Partnership's utility
expense increased by 3.2% and repairs and maintenance expense increased by 4.7%,
primarily as a result of additional carpet replacements in apartment units.
Interest expense declined as a result of the Partnership's significantly
reducing the principal balance of the Sunflower mortgage loan as part of a
restructuring of the loan during 1994.
The Dallas (Sunflower) and Gaithersburg, Maryland (Stratford Place) markets are
currently stable. The submarket of Jacksonville in which Meadow Wood is located
has weakened somewhat as indicated by the property's lower occupancy for the
quarter. Competition in the Montgomery, Alabama, market in which Stratford
Village is located has increased dramatically with the addition of over 1,000
new apartment units to the market over the last year. The Partnership continues
to make capital improvements to the properties to enhance their competitiveness
within their local markets. The Partnership spent $274,570 on capital
improvements during the first six months of 1995 compared to $64,791 in the six
months of 1994. At two of the properties (Meadow Wood and Stratford Village), a
portion of the capital improvements is funded by replacement reserves held by
the mortgage lenders, with the balance being funded from operations. The balance
of these replacement reserves was $465,729 at June 30, 1995. Capital
improvements from the other two properties are funded entirely from operations.
The Partnership is currently pursuing a refinancing of the first mortgage loan
encumbering Stratford Place Apartments in Gaithersburg, Maryland, and it is
unclear whether the Partnership will be able to obtain a new loan large enough
to repay the existing loan in its entirety. In addition, the Partnership has
been using its reserves to make the increased debt service payments on the
Sunflower Apartments mortgage loan that are required by the restructuring of
that loan. The increased payments are serving to significantly reduce the
principal balance of that loan such that the loan will be fully repaid by the
end of 1996. For these reasons the Partnership has elected to temporarily
suspend quarterly cash distributions in order to be certain that the Partnership
has sufficient reserves to refinance the Stratford Place loan. Cash
distributions should resume after the Sunflower loan is retired.
The results of operations in future quarters may differ from the results of
operations for the quarter ended June 30, 1995, due to inflation and changing
economic conditions which could affect occupancy levels, rental rates and
operating expenses.
<PAGE>
PART II - OTHER INFORMATION
NOT APPLICABLE
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WINTHROP GROWTH INVESTORS 1
LIMITED PARTNERSHIP
(Registrant)
BY: TWO WINTHROP PROPERTIES, INC.
Managing General Partner
DATED: August 11, 1995 By: /s/Richard J. McCready
Richard J. McCready
Chief Operating Officer
DATED: August 11, 1995 By: /s/Thomas C. Staples
Thomas C. Staples
Chief Accounting Officer
<PAGE>
SUPPLEMENTARY INFORMATION REQUIRED
PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT
June 30, 1995
(Unaudited)
1. Statement of Cash Available for Distribution for the
three months ended June 30, 1995:
<TABLE>
<S> <C>
Net loss $(170,045)
Add: Amortization charges to income not affecting
cash available for distribution 10,783
Net loss from the Properties 149,607
Cash from reserves 59,635
---------
Cash Available for Distribution $ 49,980
=========
Distributions allocated to Limited Partners $ 49,980
=========
2. Fees and other compensation paid or accrued by the Partnership to the
General Partners, or their affiliates, during the three months ended
June 30, 1995:
---------------------------------------------------------------------------------------------------------------------------
Entity Receiving Form of
Compensation Compensation Amount
---------------------------------------------------------------------------------------------------------------------------
Winthrop Management Property Management Fee $81,619
</TABLE>
All other information required pursuant to Section 9.4 of the Partnership
Agreement is set forth in the attached Report on Form 10-Q or Partnership
Report.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
six month period ending June 30, 1995 and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000722565
<NAME> Winthrop Growth Investors 1 L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1.00000
<CASH> 730,975
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,236,458
<PP&E> 41,508,522
<DEPRECIATION> 17,607,610
<TOTAL-ASSETS> 26,868,345
<CURRENT-LIABILITIES> 685,061
<BONDS> 20,402,978
<COMMON> 0
0
0
<OTHER-SE> 5,780,306
<TOTAL-LIABILITY-AND-EQUITY> 26,868,345
<SALES> 0
<TOTAL-REVENUES> 3,316,080
<CGS> 0
<TOTAL-COSTS> 1,743,413
<OTHER-EXPENSES> 952,961
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 956,215
<INCOME-PRETAX> (336,509)
<INCOME-TAX> 0
<INCOME-CONTINUING> (336,509)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (336,509)
<EPS-PRIMARY> (13.090)
<EPS-DILUTED> 0.000
</TABLE>
