<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 September 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
(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)
Five Cambridge Center, Boston, MA 02142-1493
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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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<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
September 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 $21,213 (1997) and $19,942 (1996) 17,952 18,598
------------ ------------
21,967 22,613
Other assets:
Cash and cash equivalents 1,276 1,348
Deferred costs, net of accumulated amortization
of $1,217 (1997) and $1,135 (1996) 1,171 1,253
Replacement reserves and escrow accounts 1,780 1,459
Other assets 424 453
------------ ------------
Total assets $ 26,618 $ 27,126
============ ============
Liabilities and Partners' Capital
Mortgages payable $ 21,391 $ 21,563
Tenant security deposits 158 169
Accrued expenses and other liabilities 853 685
------------ ------------
Total liabilities 22,402 22,417
------------ ------------
Partners' capital (deficit):
Limited partners' capital; 50,005 units authorized,
23,139 issued and outstanding 5,479 5,938
General partners' deficit (1,263) (1,229)
------------ ------------
Total partners' capital 4,216 4,709
------------ ------------
Total liabilities and partners' capital $ 26,618 $ 27,126
============ ============
</TABLE>
See notes to consolidated financial statements.
2 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
For the Nine Months Ended
September 30, September 30,
1997 1996
------------- -------------
Income:
Rental $ 4,993 $ 4,837
Interest on short-term investments 45 56
Other 232 221
------------- -------------
Total income 5,270 5,114
------------- -------------
Expenses:
Leasing 163 173
General and administrative 376 494
Management fees 256 249
Utilities 520 511
Repairs and maintenance 942 1,031
Insurance 192 202
Taxes 465 481
Depreciation 1,271 1,178
Amortization 82 68
Interest expense 1,346 1,421
------------- -------------
Total expenses 5,613 5,808
------------- -------------
Net loss $ (343) $ (694)
============= =============
Net loss allocated to general partners $ (34) $ (69)
============= =============
Net loss allocated to limited partners $ (309) $ (625)
============= =============
Net loss per Limited Partnership Unit $ (13.35) $ (27.01)
============= =============
Distributions per Limited Partnership Uni $ 6.48 $ 6.48
============= =============
See notes to consolidated financial statements.
3 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
For the Nine Months Ended
September 30, September 30,
1997 1996
------------- -------------
Income:
Rental $ 1,645 $ 1,662
Interest on short-term investments 14 20
Other 85 74
------------- -------------
Total Income 1,744 1,756
Expenses:
Leasing 59 68
General and administrative 126 157
Management fees 85 85
Utilities 174 166
Repairs and maintenance 364 388
Insurance 65 69
Taxes 153 151
Depreciation 478 393
Amortization 22 23
Interest expense 447 463
------------- -------------
Total expenses 1,973 1,963
============= =============
Net loss $ (229) $ (207)
============= =============
Net loss allocated to general partners $ (23) $ (21)
============= =============
Net loss allocated to limited partners $ (206) $ (186)
============= =============
Net loss per Limited Partnership Unit $ (8.90) $ (8.04)
============= =============
Distributions per Limited Partnership Uni $ 2.16 $ 2.16
============= =============
See notes to consolidated financial statements.
4 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 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 - (309) (34) (343)
Distributions - (150) (150)
----------- --------- --------- -------
Balance - September 30, 1997 23,139 $ 5,479 $ (1,263) 4,216
=========== ========= ========= ========
See notes to consolidated financial statements.
5 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended
September 30, September 30,
(In Thousands) 1997 1996
------------- -------------
Cash Flows from Operating Activities:
Net loss (343) $ (694)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,353 1,246
Changes in assets and liabilities:
Decrease (increase) in other assets 29 (15)
Increase in escrow accounts (507) (353)
Decrease in accounts payable (163) (1)
(Decrease) increase in tenant security deposits (11) 9
Increase in accrued expenses and other liabilities 331 243
------------- -------------
Net cash provided by operating activities 689 435
Cash Flows from Investing Activities:
Additions to buildings and improvements (625) (353)
Deposits to reserve for replacements (181) (675)
Withdrawals from reserve for replacements 367 -
------------- -------------
Net cash used in investing activities (439) (1,028)
------------- -------------
Cash Flows from Financing Activities:
Satisfaction of mortgages payable - (10,198)
Notes payable proceeds - 12,200
Principal payments on mortgage notes (172) (302)
Distributions paid to partners (150) (150)
Deferred financing costs paid - (346)
------------- -------------
Net cash (used in) provided by financing (322) 1,204
------------- -------------
Net (decrease) increase in cash and cash equivalents (72) 611
------------- -------------
Cash and cash equivalents, beginning of period 1,348 908
------------- -------------
Cash and cash equivalents, end of period $ 1,276 $ 1,519
============= =============
Supplemental Disclosure of Cash Flow
Information -
Cash paid for interest $ 1,346 $ 1,427
============= =============
See notes to consolidated financial statements.
6 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 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 September 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 nine and three months ended
September 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 $256,000 and
$249,000 for the nine months ended September 30, 1997 and 1996,
respectively.
Winthrop Management received reimbursement of accountable
administrative expenses amounting to approximately $71,000 and $79,000
during the nine months ended September 30, 1997 and 1996, respectively.
7 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 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 $150,000 to the holders of limited partnership
units ($6.48 per unit) during the nine months ended September 30, 1997.
The level of liquidity based on cash and cash equivalents experienced a $72,000
decrease at September 30, 1997, as compared to December 31, 1996. The decrease
was due to $689,000 of net cash provided by operating activities being offset by
$439,000 of net cash used in investing activities and $322,000 of cash used in
financing activities. Investing activities consisted of $625,000 of improvements
to real estate and $181,000 of deposits to replacement reserves, which were
offset by $367,000 of withdrawals from replacement reserves. Financing
activities consisted of $172,000 of mortgage principal payments and $150,000 of
distributions to limited partners. 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 $625,000 that the
Registrant spent on capital improvements during the nine months ended September
30, 1997 was funded from operating cash and replacement reserves held by
mortgage lenders. The $625,000 of improvements included electrical improvements,
kitchen cabinets and counter tops, and interior improvements at Stratford Place
Apartments; appliance replacements, structural improvements and kitchen cabinets
at Meadow Wood Apartments; and appliance replacements and common area
improvements at Sunflower Apartments. The Registrant anticipates it will spend
approximately $454,000 for capital improvements during the balance of 1997. The
Registrant expects to spend approximately $162,000 for structural improvements
(decks, stairways and breezeway), $25,000 for interior replacement (kitchen
cabinet and counter tops) and $150,000 for exterior painting at Meadow Wood
Apartments; approximately $63,000 for electrical work, $5,000 for improvements
to the laundry rooms, $13,000 for plumbing repairs and $13,000 for structural
improvements at Stratford Place Apartments; and $10,000 for interior
replacements (kitchen tile and lighting) at Stratford Village Apartments.
8 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 30, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Liquidity and Capital Resources (continued)
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.
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 nine
months ended September 30, 1997 and 1996:
Average Occupancy
----------------------------
Property 1997 1996
- --------------------------- ---- ----
Meadow Wood Apartments 87% 87%
Stratford Place Apartments 97% 94%
Stratford Village Apartments 87% 89%
Sunflower Apartments 95% 92%
The Registrant's net loss for the nine months ended September 30, 1997, was
approximately $343,000, as compared to a net loss of approximately $694,000 for
the nine months ended September 30, 1996. Net loss for the three months ended
September 30, 1997, was approximately $229,000, as compared to a net loss of
approximately $207,000 for the three months ended September 30, 1996.
Revenues for the nine months ended September 30, 1997 increased by $156,000, as
compared to the 1996 comparable period, primarily due to increases in rental
revenue of $156,000. Rental revenue increased primarily due to increases in
occupancy at Stratford Place and Sunflower Apartments and increases in rental
rates at all the properties except Stratford Place Apartments. Occupancy
declined at Stratford Village Apartments due to construction of three new
apartment complexes in the area with competitive rents.
9 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 30, 1997
Item 2. Management's Discussion and Analysis or Plan of Operation (Continued)
Results of Operations (continued)
Expenses decreased by $195,000 for the nine months ended September 30, 1997, as
compared to 1996, primarily due to decreases in general and administrative
expenses of $118,000, repairs and maintenance of $89,000 and interest expense of
$75,000. 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.
10 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 30, 1997
Part II
Item 5. Other Information
On October 28, 1997, Insignia Financial Group, Inc. ("Insignia")
acquired 100% of the Class B stock, of First Winthrop Corporation,
the sole shareholder of the Registrant's General Partner. In
connection with this acquisition a nominee of Insignia was elected as a
director of the General Partner and has been appointed to the board of
directors of the General Partner. The nominee has the authority to
appoint members to a newly created residential committee. This
committee is generally authorized to act on behalf of the General
Partner in managing the business activities of the Registrant. On
October 28, 1997, the partnership terminated Winthrop Management as the
managing agent at its properties and appointed an affiliate of Insignia
to assume management of the properties. The General Partner does not
believe this transaction will have a material effect on the affairs and
operations of the Registrant.
An affiliate of the Managing General Partner has entered into an
agreement to sell all of its limited partnership units to IPTI, LLC, an
affiliate of Insignia. The transfer of these units is not expected to
take place until April, 1998.
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 September 30, 1997.
11 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
FORM 10 - QSB SEPTEMBER 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.
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
By: Two Winthrop Properties, Inc.
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: November 12, 1997
12 of 14
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
SEPTEMBER 30, 1997
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 14
13 of 14
</TABLE>
<PAGE>
Exhibit 99
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
SEPTEMBER 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 September 30, 1997:
Net Loss $ (229,000)
Add: Amortization expense 22,000
Depreciation expense 478,000
Less: Cash to reserves (221,000)
-----------
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
September 30, 1997:
Entity Receiving Form of
Compensation Compensation Amount
- ----------------- ----------------------------------------- ------
General Partners Interest in Cash Available for Distribution $ -
Winthrop Management Property Management Fee $85,000
14 of 14
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,276,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 43,180,000
<DEPRECIATION> (21,213,000)
<TOTAL-ASSETS> 26,618,000
<CURRENT-LIABILITIES> 0
<BONDS> 21,391,000
<COMMON> 0
0
0
<OTHER-SE> 4,216,000
<TOTAL-LIABILITY-AND-EQUITY> 26,618,000
<SALES> 0
<TOTAL-REVENUES> 5,225,000
<CGS> 0
<TOTAL-COSTS> 4,267,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,346,000
<INCOME-PRETAX> (343,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (343,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,000)
<EPS-PRIMARY> 13.35
<EPS-DILUTED> 13.35
</TABLE>
