<PAGE>
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 June 30, 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
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(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_____
1 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1997 1996
----------- -----------
<S> <C> <C>
Investment in Real Estate
Land $ 4,015 $ 4,015
Buildings and improvements, net of accumulated
depreciation of $20,735 (1997) and
$19,942 (1996) 18,201 18,598
----------- -----------
22,216 22,613
Other assets:
Cash and cash equivalents 1,391 1,348
Deferred costs, net of accumulated amortization
of $1,195 (1997) and $1,135 (1996) 1,193 1,253
Replacement reserves and escrow accounts 1,612 1,459
Other assets 444 453
----------- -----------
Total assets $ 26,856 $ 27,126
=========== ===========
Liabilities and Partners' Capital
Mortgages payable $ 21,450 $ 21,563
Accounts payable 33 171
Tenant security deposits 161 169
Accrued expenses and other liabilities 717 514
----------- -----------
Total liabilities 22,361 22,417
----------- -----------
Partners' capital (deficit):
Limited partners' capital; 50,005 units authorized,
23,139 issued and outstanding 5,735 5,938
General partners' deficit (1,240) (1,229)
----------- -----------
Total partners' capital 4,495 4,709
----------- -----------
Total liabilities and partners' capital $ 26,856 $ 27,126
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2 of 13
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Unit Data) For the Six Months Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Income:
Rental $ 3,348 $ 3,175
Interest on short-term investments 31 36
Other 147 147
----------- -----------
Total income 3,526 3,358
----------- -----------
Expenses:
Leasing 104 105
General and administrative 250 337
Management fees 171 164
Utilities 346 345
Repairs and maintenance 578 643
Insurance 127 133
Taxes 312 330
Depreciation 793 785
Amortization 60 45
Interest expense 899 958
----------- -----------
Total expenses 3,640 3,845
----------- -----------
Net loss $ (114) $ (487)
=========== ===========
Net loss allocated to general partners $ (11) $ (49)
=========== ===========
Net loss allocated to limited partners $ (103) $ (438)
=========== ===========
Net loss per Limited Partnership Unit $ (4.45) $ (18.93)
=========== ===========
Distributions per Limited Partnership Unit $ 4.32 $ 4.32
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Unit Data) For the Three Months Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Income:
Rental $ 1,669 $ 1,606
Interest on short-term investments 16 19
Other 77 78
----------- -----------
Total Income 1,762 1,703
----------- -----------
Expenses:
Leasing 46 63
General and administrative 96 136
Management fees 85 82
Utilities 170 172
Repairs and maintenance 297 377
Insurance 65 65
Taxes 157 165
Depreciation 397 392
Amortization 30 9
Interest expense 449 478
----------- -----------
Total expenses 1,792 1,939
----------- -----------
Net loss $ (30) $ (236)
=========== ===========
Net loss allocated to general partners $ (3) $ (24)
=========== ===========
Net loss allocated to limited partners $ (27) $ (212)
=========== ===========
Net loss per Limited Partnership Unit $ (1.17) $ (9.16)
=========== ===========
Distributions per Limited Partnership Unit $ 2.16 $ 2.16
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4 of 13
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statement of Partners' Capital (Deficit) (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
Units of
Limited Limited General
Partnership Partners' Partners' Total
Interest Capital Deficit Capital
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance - January 1, 1997 23,139 $ 5,938 $ (1,229) $ 4,709
Net loss -- (103) (11) (114)
Distributions -- (100) -- (100)
------------- ------------- ------------- -------------
Balance - June 30, 1997 23,139 $ 5,735 $ (1,240) $ 4,495
============= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
5 of 13
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
(In Thousands) June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (114) $ (487)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 853 830
Changes in assets and liabilities:
Decrease in other assets 9 240
Increase in escrow accounts (350) (379)
(Decrease) increase in accounts payable (138) 42
(Decrease) increase in tenant security deposits (8) 10
Increase in accrued expenses and other liabilities 203 153
----------- -----------
Net cash provided by operating activities 455 409
----------- -----------
Cash Flows from Investing Activities:
Additions to buildings and improvements (396) (166)
Deposits to reserve for replacements (128) (621)
Withdrawals from reserve for replacements 325 --
----------- -----------
Net cash used in investing activities (199) (787)
----------- -----------
Cash Flows from Financing Activities:
Satisfaction of mortgages payable -- (10,198)
Notes payable proceeds -- 12,200
Principal payments on mortgage notes (113) (257)
Distributions paid to partners (100) (100)
Deferred financing costs paid -- (532)
----------- -----------
Net cash (used in) provided by financing activities (213) 1,113
----------- -----------
Net increase in cash and cash equivalents 43 735
Cash and cash equivalents, beginning of period 1,348 908
----------- -----------
Cash and cash equivalents, end of period $ 1,391 $ 1,643
=========== ===========
Supplemental Disclosure of Cash Flow Information -
Cash paid for interest $ 899 $ 958
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6 of 13
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 June 30, 1997 presentation. The
balance sheet at December 31, 1996 was derived from audited financial
statements at such date.
The results of operations for the six and three months ended June 30,
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 $171,000 and
$164,000 for the six months ended June 30, 1997 and 1996,
respectively.
Winthrop Management received reimbursement of accountable
administrative expenses amounting to approximately $46,000 and $60,000
during the six months ended June 30, 1997 and 1996, respectively.
On February 6, 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).
7 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 $100,000 to the holders of limited
partnership units ($4.32 per unit) during the six months ended June 30, 1997.
The level of liquidity based on cash and cash equivalents experienced a $43,000
increase at June 30, 1997, as compared to December 31, 1996. The increase was
due to $455,000 of net cash provided by operating activities which was
partially offset by $213,000 of cash used in financing activities and $199,000
of net cash used in investing activities. Financing activities consisted of
$113,000 of mortgage principal payments and $100,000 of distributions to
limited partners. Investing activities consisted of $396,000 of improvements to
real estate and $128,000 of deposits to replacement reserves, which were offset
by $325,000 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 $396,000 Registrant
spent on capital improvements during the six months ended June 30, 1997 was
funded from operating cash and replacement reserves held by mortgage lenders.
The Registrant anticipates it will spend approximately $312,000 for capital
improvements during the balance of 1997. The Registrant expects to spend
approximately $25,000 for structural improvements (decks, stairways and
breezeway) and $50,000 for interior replacement (kitchen cabinet and counter
tops) at Meadow Wood Apartments, approximately $70,000 for electrical work and
$40,000 for improvements to the laundry rooms at Stratford Place Apartments and
$20,000 for 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.
The Registrant will either have to extend or refinance these mortgages, or sell
a property, prior to the due date of these balloon payments.
8 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (continued)
On February 6, 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 six
months ended June 30, 1997 and 1996:
Average Occupancy
Property 1997 1996
- ---------------------------- ---- ----
Meadow Wood Apartments 89% 86%
Stratford Place Apartments 98% 95%
Stratford Village Apartments 86% 88%
Sunflower Apartments 95% 91%
Registrants net loss for the six months ended June 30, 1997, was approximately
$114,000, as compared to a net loss of approximately $487,000 for the six
months ended June 30, 1996. Net loss for the three months ended June 30, 1997,
was approximately $30,000, as compared to a net loss of approximately $236,000
for the three months ended June 30, 1996.
Revenues for the six months ended June 30, 1997 increased by $168,000, as
compared to the 1996 comparable period, due to increases in rental revenue of
$173,000 which was partially offset by a decrease in interest income of $5,000.
Rental revenue increased primarily because of increases in occupancy at all the
properties other than Stratford Village and increases in rental rates 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 $205,000 for the six months ended June 30, 1997, as
compared to 1996, primarily due to decreases in general and administrative
expenses of $87,000, repairs and maintenance of $65,000 and interest expense of
$59,000. General and administrative expenses decreased primarily due to
decreases in administrative and professional costs. Mortgage interest expense
decreased due to principal amortization and reduction in interest rates on the
mortgage refinancings of Sunflower Apartments in January 1996 and Stratford
Place Apartments in May 1996. Repairs and maintenance decreased primarily due
to an overall increase in capital improvements being done on the properties.
9 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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 June 30, 1997.
10 of 13
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WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 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: August 6, 1997
11 of 13
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
JUNE 30, 1997
Exhibit Index
Exhibit Page No.
27. Financial Data Schedule --
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 13
12 of 13
<PAGE>
Exhibit 99
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
JUNE 30, 1997
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement
1. Statement of Cash Available for Distribution for the three months ended
June 30, 1997:
Net Loss $ (30,000)
Add:Amortization expense 30,000
Depreciation expense 397,000
Less:Cash to reserves (347,000)
---------
Cash Available for Distribution $ 50,000
=========
Distributions allocated to Limited Partners $ 50,000
=========
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, 1997:
Entity Receiving Form of
Compensation Compensation Amount
- ------------------- ------------------------------------------- ---------
General Partners Interest in Cash Available for Distribution $ --
Winthrop Management Property Management Fee $ 85,000
13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Growth Investors 1 Limited Partnership and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,391,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 42,951,000
<DEPRECIATION> (20,735,000)
<TOTAL-ASSETS> 26,856,000
<CURRENT-LIABILITIES> 0
<BONDS> 21,450,000
<COMMON> 0
0
0
<OTHER-SE> 4,495,000
<TOTAL-LIABILITY-AND-EQUITY> 26,856,000
<SALES> 0
<TOTAL-REVENUES> 3,495,000
<CGS> 0
<TOTAL-COSTS> 2,741,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 899,000
<INCOME-PRETAX> (114,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (114,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,000)
<EPS-PRIMARY> (4.45)
<EPS-DILUTED> (4.45)
</TABLE>
