FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
[No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[No Fee Required]
For the transition period from _________to _________
Commission file number 2-84760
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
(Name of small business issuer in its charter)
Massachusetts 04-2839837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $7,722,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or
"Registrant") was organized under the Uniform Limited Partnership Act of the
Commonwealth of Massachusetts on June 20, 1983 for the purpose of owning and
leasing income-producing residential, commercial and industrial properties. The
general partners of the Partnership are Two Winthrop Properties, Inc., a
Massachusetts corporation (the "Managing General Partner"), and
Linnaeus-Lexington Associates Limited Partnership. The Managing General Partner
is wholly-owned by First Winthrop Corporation, a Delaware corporation ("First
Winthrop"), the controlling entities of which are Winthrop Financial Associates,
A Limited Partnership ("WFA"), and Apartment Investment and Management Company
("AIMCO"). The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2003 unless terminated prior to such date.
The Partnership was initially capitalized with contributions of $1,000 from each
of the general partners and $5,000 from the Initial Limited Partner. The
Partnership, through its public offering of limited partner units ("Unit" or
"Units"), sold 23,144 Units aggregating $23,144,000. An additional five Units
were held by WFC Realty Co., Inc., a subsidiary of First Winthrop ("WFC
Realty"). These five units were subsequently purchased by LON-WGI Associates
LLC, an affiliate of First Winthrop, during the first quarter of 1997 for $275
per Unit (See "Transfers of Control" below).
The Partnership is engaged in the business of operating and holding real estate
properties for investment. The Partnership invested approximately $18,177,000 of
the original offering proceeds (net of sales commissions and sales and
organizational costs, but including acquisition fees and expenses) in four
apartment complexes. Two of the properties were acquired in joint venture
arrangements, one in a partnership arrangement and one directly. Subsequent to
the acquisition, the joint venture arrangements were converted to limited
partnerships. For additional information with respect to the Partnership's
properties see "Item 2. Description of Properties".
The Partnership does not have any employees. Management and administrative
services are provided by the Managing General Partner and by agents retained by
the Managing General Partner. An affiliate of the Managing General Partner has
been providing such property management services.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner in such market area, could have a material effect on the rental market
for the apartments at the Partnership's properties and the rents that may be
charged for such apartments. While the Managing General Partner and its
affiliates own and/or control a significant number of apartment units in the
United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
<PAGE>
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfers of Control
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
Managing General Partner as well as a 20.7% limited partnership interest in the
Partnership. Pursuant to this transaction, the by-laws of the Managing General
Partner were amended to provide for the creation of a Residential Committee.
Pursuant to the amended and restated by-laws, Insignia had the right to elect
one director to the Managing General Partner's Board of Directors and to cause
the Managing General Partner to take such actions as it deemed necessary and
advisable in connection with the activities of the Registrant.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation. As a result, AIMCO acquired all of the rights of Insignia in and to
the limited partnership interests and the rights granted to Insignia pursuant to
the First Winthrop Corporation transaction. The Managing General Partner does
not believe that this transaction has had or will have a material effect on the
affairs and operations of the Partnership.
Item 2. Description of Properties:
The following table sets forth the Partnership's investment properties:
<TABLE>
<CAPTION>
Date of Type of
Property Purchase Type of Ownership Use
<S> <C>
Sunflower Apartments 08/84 Fee ownership subject Apartment
Dallas, Texas to a first mortgage 248 units
Ashton Ridge Apartments 12/84 Fee ownership subject Apartment
(formerly Meadow Wood Apartments) to a first mortgage 356 units
Jacksonville, Florida
Stratford Place Apartments 12/85 Fee ownership subject Apartment
Gaithersburg, Maryland to a first mortgage 350 units
Stratford Village Apartments 02/86 Fee ownership subject Apartment
Montgomery, Alabama to a first mortgage 224 units
</TABLE>
<PAGE>
Schedule of Properties:
Set forth below for each of the Partnership's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Sunflower $ 9,042 $ 6,256 5-25 yrs S/L $ 3,465
Ashton Ridge 12,933 6,581 5-25 yrs S/L 4,388
Stratford Place 15,542 7,686 5-25 yrs S/L 5,876
Stratford Village 9,139 4,880 5-25 yrs S/L 2,865
Totals $46,656 $25,403 $16,594
</TABLE>
See "Item 7. Financial Statements - Note A" for a description of the
Partnership's depreciation policy.
Schedule of Property Indebtedness:
The following table sets forth certain information relating to the loans
encumbering the Partnership's properties:
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
Sunflower
<S> <C> <C> <C> <C> <C> <C>
1st Mortgage $ 2,593 7.46% 360 mos. 02/11/26 $ --
Ashton Ridge
1st Mortgage 4,103 10.00% (1) 12/01/00 4,071
Stratford Place
1st Mortgage 9,046 8.23% (1) 07/01/06 7,739
Stratford Village
1st Mortgage 5,064 7.72% 360 mos. 11/01/24 --
Totals $20,806 $11,810
</TABLE>
(1) The principal balance is being amortized over varying periods with balloon
payments due December 1, 2000 with respect to the Ashton Ridge loan and
July 1, 2006 with respect to the Stratford Place loan.
(2) See "Item 7. Financial Statements - Note D" for information with respect
to the Partnership's ability to prepay these loans and other specific loan
terms.
<PAGE>
Schedule of Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1999 and 1998 for each property:
Average Annual Average
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Sunflower $ 5,921 $ 5,585 97% 98%
Ashton Ridge 6,514 6,377 92% 86%
Stratford Place 8,080 7,625 97% 97%
Stratford Village 6,752 6,788 93% 84%
The increase at Ashton Ridge Apartments is due to the completion of renovation
projects at the property which enhanced the property's curb appeal and improved
marketing efforts. The Managing General Partner attributes the increase in
occupancy at Stratford Village Apartments to increased marketing and improved
tenant retention efforts.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other properties in the area. The Managing General Partner
believes that all of the properties are adequately insured. Each property is an
apartment complex which leases its units for lease terms of one year or less. No
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, subject to normal depreciation and deterioration
as is typical for assets of this type and age.
Schedule of Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for each property are as follows:
1999 1999
Billing Rate
(in thousands)
Sunflower $155 2.76%
Ashton Ridge 145 2.07%
Stratford Place 188 3.36%
Stratford Village 56 3.45%
Capital Improvements:
Sunflower Apartments: The Partnership completed approximately $297,000 in
capital expenditures at Sunflower Apartments as of December 31, 1999, consisting
primarily of exterior painting, roof replacement, carpet and vinyl replacement,
parking lot upgrades, and structural improvements. These improvements were
funded from operating cash flow and Partnership reserves. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $74,400. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Ashton Ridge Apartments (formerly Meadow Wood Apartments): The Partnership
completed approximately $766,000 in capital expenditures at Ashton Ridge
Apartments as of December 31, 1999, consisting primarily of carpet and vinyl
replacement, parking lot upgrades, roof replacement, interior decoration, model
improvements, major landscaping, fencing, cabinet replacement, appliances, and
other building improvements. These improvements were funded from operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $106,800. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Stratford Place Apartments: The Partnership completed approximately $658,000 in
capital expenditures at Stratford Place Apartments as of December 31, 1999,
consisting primarily of plumbing replacements, structural upgrades, air
conditioning unit replacements, carpet and vinyl replacement, and parking lot
upgrades. These improvements were funded from the Partnership's operating cash
flow and reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $105,000. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Stratford Village: The Partnership completed approximately $167,000 in capital
expenditures at Stratford Village as of December 31, 1999, consisting primarily
of carpet and vinyl replacement, other building improvements, and parking lot
upgrades. These improvements were funded from the Partnership's operating cash
flow and reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $67,200. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
Item 3. Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Partners
During the quarter ended December 31, 1999, no matter was submitted to a vote of
the unit holders through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for the Partnership's Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, originally sold 23,149
Limited Partnership Units. As of December 31, 1999, the number of holders of
Limited Partnership Units was 894 and the number of units outstanding was
23,139. Affiliates of the Managing General Partner owned approximately 6,474.34
Units or approximately 27.98% at December 31, 1999. There is no intention to
sell additional Limited Partnership Units nor is there an established public
trading market for these Units.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate Partnership Unit
01/01/98 - 12/31/98 $700,000 (1) $30.25
01/01/99 - 12/31/99 490,000 (1) 21.18
(1) Distribution was made from cash from operations (see "Item 6. Management's
Discussion and Analysis or Plan of Operation" for further details).
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings, and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in the year
2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 6,474.34 limited partnership units in the Partnership representing 27.98% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership units in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership's net loss for the year ended December 31, 1999 was
approximately $38,000 as compared to a net loss of approximately $173,000 for
the year ended December 31, 1998. The decrease in net loss is primarily due to
an increase in total revenues which is partially offset by an increase in total
expenses. Total revenues increased primarily due to an increase in rental
income. The increase in rental income is primarily attributable to the increase
in average annual rental rates at all of the Partnership's investment properties
with the exception of Stratford Village, and increased occupancy at Stratford
Village and Ashton Ridge. These increases more than offset the decrease in
rental rates at Stratford Village, the decrease in occupancy at Sunflower and
the increase in concession costs and bad debt expense at Ashton Ridge.
Total expenses for 1999 as compared to 1998 increased due to an increase in
general and administrative expense, depreciation expense, and operating expenses
partially offset by a decrease in property tax expense. General and
administrative expenses increased primarily due to increased general partner
reimbursements allowed under the Partnership Agreement and increased
professional fees associated with managing the Partnership. These increases were
partially offset by reduced printing and mailing costs and reduced tax fees and
licenses. Included in general and administrative expenses are reimbursements to
affiliates of the Managing General Partner allowed under the Partnership
Agreement associated with its management of the Partnership. In addition, costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are also included. Depreciation expense increased due to property improvements
and replacements added in the last twelve months which are now being
depreciated. Operating expenses increased due to an increase in utility charges
at some of the Partnership's properties; increased payroll costs at all the
Partnership's properties; and increased license fees at Stratford Place
Apartments for inspections related to code adherence. These increases were
partially offset by reduced maintenance expenses due to extensive repairs
performed in 1998 at the properties and reduced insurance expense due to a
change in insurance carriers late in 1998. Property tax expense decreased
primarily due to a tax refund received at Stratford Place Apartments for prior
year taxes and a reduced assessed value for this property for 1999.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each 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 Managing 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 Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $1,889,000 as compared to approximately $1,863,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $26,000 for the
year ended December 31, 1999 is due to approximately $1,973,000 of cash provided
by operating activities, which was substantially offset by approximately
$1,073,000 of cash used in investing activities and approximately $874,000 of
cash used in financing activities. Cash used in investing activities consisted
of property improvements and replacements partially offset by net withdrawals
from escrow accounts maintained by the mortgage lenders and net insurance
proceeds received. Cash used in financing activities consisted of payments of
principal made on the mortgages encumbering the Partnership's properties and
distributions paid to the partners. The Partnership invests its working capital
reserves in money market accounts.
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 properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$353,400. The additional capital expenditures will be incurred only if cash is
available from operations and Partnership reserves. To the extent that such
budgeted capital improvements are completed, the Registrant's distributable cash
flow, if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $20,806,000 is amortized over varying periods with
balloon payments of approximately $4,071,000 in December 2000 and $7,739,000 in
July 2006. Although there can be no assurance that it will be able to do so, the
Managing General Partner believes it will be able to refinance the debt maturing
in December 2000. The Managing General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
A cash distribution from operations of approximately $490,000 ($21.18 per
limited partnership unit) was declared during the year ended December 31, 1999,
and paid in January 2000. Cash distributions from operations of approximately
$700,000 ($30.25 per limited partnership unit) were declared during the year
ended December 31, 1998. $600,000 of this amount was paid in January 1999.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings, and/or property sales. The Partnership's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in the year
2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 6,474.34 limited partnership units in the Partnership representing
approximately 27.98% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership units in the Partnership for cash or in exchange for units in the
operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
<PAGE>
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Report of Independent Public Accountants - Arthur Andersen LLP
Independent Auditors' Report - Imowitz Koenig & Co., LLP
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999
and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years
ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999
and 1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Independent Public Accountants
To the Partners of
Winthrop Growth Investors 1 Limited Partnership:
We have audited the accompanying consolidated balance sheet of Winthrop Growth
Investors 1 Limited Partnership and its subsidiaries as of December 31, 1999,
and the related consolidated statements of operations, changes in partners'
(deficit) capital and cash flows for the year ended December 31, 1999. These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Winthrop Growth
Investors 1 Limited Partnership and its subsidiaries as of December 31, 1999,
and the results of their operations and cash flows for the year ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States.
/s/Arthur Andersen LLP
Certified Public Accountants
Denver, Colorado
March 3, 2000
<PAGE>
Independent Auditors' Report
The Partners
Winthrop Growth Investors 1 Limited Partnership
Greenville, South Carolina
We have audited the accompanying consolidated statements of operations,
partners' capital and cash flows of Winthrop Growth Investors 1 Limited
Partnership (a limited partnership) (the "Partnership") and its subsidiaries for
the year ended December 31, 1998. These consolidated financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Winthrop Growth Investors 1 Limited Partnership and its subsidiaries for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/IMOWITZ KOENIG & CO., LLP
Certified Public Accountants
New York, New York
January 13, 1999
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
Assets
Cash and cash equivalents $ 1,889
Receivables and deposits 674
Restricted escrows 414
Other assets 1,098
Investment properties (Notes D and F)
Land $ 4,015
Buildings and related personal property 42,641
46,656
Less accumulated depreciation (25,403) 21,253
$ 25,328
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 615
Tenant security deposit liabilities 170
Accrued property taxes 139
Distribution payable 490
Other liabilities 291
Mortgage notes payable (Note D) 20,806
Partners' (Deficit) Capital
General partners $ (1,279)
Limited partners (23,139 units
issued and outstanding) 4,096 2,817
$ 25,328
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $ 7,371 $ 6,932
Other income 351 346
Total revenues 7,722 7,278
Expenses:
Operating 3,216 3,084
General and administrative 233 178
Depreciation 2,015 1,795
Interest 1,811 1,843
Property taxes 485 551
Total expenses 7,760 7,451
Net loss (Note E) $ (38) $ (173)
Net loss allocated to general partners (10%) $ (4) $ (17)
Net loss allocated to limited partners (90%) (34) (156)
$ (38) $ (173)
Net loss per limited partnership unit $ (1.47) $ (6.74)
Distributions per limited partnership unit $ 21.18 $ 30.25
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 23,149 $ 2,000 $23,149 $25,149
Partners' (deficit) capital at
December 31, 1997 23,139 $(1,258) $ 5,476 $ 4,218
Net loss for the year
ended December 31, 1998 -- (17) (156) (173)
Distributions to limited partners -- -- (700) (700)
Partners' (deficit) capital at
December 31, 1998 23,139 (1,275) 4,620 3,345
Net loss for the year
ended December 31, 1999 -- (4) (34) (38)
Distributions to limited partners -- -- (490) (490)
Partners' (deficit) capital at
December 31, 1999 23,139 $(1,279) $ 4,096 $ 2,817
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1999 1998
Cash flows from operating activities:
Net loss $ (38) $ (173)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 2,015 1,795
Amortization of loan costs and deferred costs 105 116
(Gain) loss on disposal of property (49) 34
Change in accounts:
Receivables and deposits 36 (117)
Other assets 73 (99)
Accounts payable (39) 48
Tenant security deposit liabilities 25 (2)
Accrued property taxes (154) 164
Other liabilities (1) (21)
Net cash provided by operating activities 1,973 1,745
Cash flows from investing activities:
Property improvements and replacements (1,431) (1,398)
Net withdrawals from restricted escrows 295 359
Net insurance proceeds received 63 --
Net cash used in investing activities (1,073) (1,039)
Cash flows from financing activities:
Payments on mortgage notes payable (274) (251)
Distributions paid to limited partners (600) (100)
Net cash used in financing activities (874) (351)
Net increase in cash and cash equivalents 26 355
Cash and cash equivalents at beginning of period 1,863 1,508
Cash and cash equivalents at end of period $ 1,889 $ 1,863
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,751 $ 1,773
Supplemental disclosure of non-cash activity:
Distribution payable $ 490 $ 600
Property improvements and replacements included
in accounts payable $ 457 $ --
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Winthrop Growth Investors 1 Limited Partnership (the "Partnership"
or "Registrant") was organized on June 20, 1983 under the Uniform Limited
Partnership Act of the Commonwealth of Massachusetts for the purpose of
investing in income-producing residential, commercial and industrial real estate
properties. The general partners of the Partnership are Two Winthrop Properties,
Inc., a Massachusetts corporation (the "Managing General Partner"), and
Linnaeus-Lexington Associates Limited Partnership. The Managing General Partner
is wholly-owned by First Winthrop Corporation, the controlling entities of which
are Winthrop Financial Associates, A Limited Partnership, and Apartment
Investment and Management Company ("AIMCO") (See "Note B - Transfer of
Control"). The Partnership Agreement provides that the Partnership will
terminate December 31, 2003 unless terminated prior to such date. The
Partnership, via its controlling interest in three partnerships and a trust, is
the owner of four residential apartment complexes located in various parts of
the United States.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Principles of Consolidation: The consolidated statements of the Partnership
include its 99%, 99.9% and 99.98% general partnership interests in DEK
Associates, Meadow Wood Associates and Stratford Place Investors Limited
Partnership, respectively. Additionally, the Partnership is the 100% beneficiary
of the Stratford Village Realty Trust. All significant interpartnership balances
have been eliminated. In addition, due to the cumulative minority interest loss
exceeding minority interest capital, the Partnership recorded 100% of the losses
in 1999 and 1998.
Allocation of Profits and Losses and Cash Distributions: In accordance with the
Partnership Agreement, profits and losses other than from sales or refinancings
shall be allocated 10% to the general partners and 90% to the limited partners.
The limited partners are entitled to a noncumulative quarterly priority cash
distribution of 1.5% of their average Adjusted Capital Contribution, as defined,
of cash available for distribution. The general partners would then be entitled
to one-ninth of the amount distributed to the limited partners, with the balance
allocated 90% to the limited partners and 10% to the general partners. Sales and
refinancing proceeds are to be distributed according to the provisions of the
Partnership Agreement.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per limited
partnership unit is computed by dividing the net income (loss) allocated to the
limited partners by 23,139 units outstanding.
Cash and Cash Equivalents: Includes cash on hand, in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. The security deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
<PAGE>
Investment Properties: Investment properties, which consist of four apartment
complexes, are stated at cost. Acquisition fees are capitalized as a cost of
real estate. In accordance with "Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", the Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
No adjustments for impairment of value were recorded in either of the years
ended December 31, 1999 or 1998.
Loan Costs: Loan costs of approximately $945,000, less accumulated amortization
of approximately $541,000 are included in other assets and are being amortized
on a straight-line basis over the lives of the respective loans. The
amortization of loan costs is included in interest expense.
Deferred Costs: Costs related to the acquisition of the properties of
approximately $1,187,000, less accumulated amortization of approximately
$641,000, are included in other assets and are being amortized over 25 years.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987, and (2) for personal property over 5 years for additions prior to January
1, 1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the alternative depreciation system is used for depreciation of (1)
real property over 40 years and (2) personal property additions over 5-20 years.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
Restricted Escrows: In relation to the mortgages at all four properties, the
mortgage lenders have required a "replacement reserve" for certain capital
improvements. At December 31, 1999, the balance was approximately $414,000.
Segment Reporting: SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note H" for required disclosure.
Advertising: Advertising costs of approximately $106,000 in 1999 and $101,000
in 1998 are charged to expense as incurred and are included in operating
expense.
<PAGE>
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except long-term debt)
approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Reclassification: Certain reclassifications have been made to the 1998
information to conform to the 1999 presentation.
Note B - Transfer of Control
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
Managing General Partner as well as a 20.7% limited partnership interest in the
Partnership. Pursuant to this transaction, the by-laws of the Managing General
Partner were amended to provide for the creation of a Residential Committee.
Pursuant to the amended and restated by-laws, Insignia had the right to elect
one director to the Managing General Partner's Board of Directors and to cause
the Managing General Partner to take such actions as it deemed necessary and
advisable in connection with the activities of the Registrant.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation. As a result, AIMCO acquired all of the rights of Insignia in and to
the limited partnership interest and the rights granted to Insignia pursuant to
the First Winthrop Corporation transaction. The Managing General Partner does
not believe that this transaction has had or will have a material effect on the
affairs and operations of the Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to the
Managing General Partner and affiliates during the years ended December 31, 1999
and 1998:
1999 1998
(in thousands)
Property management fees (included in $383 $362
operating expenses)
Reimbursement for services of affiliates
(included in investment properties,
operating expenses and general and
administrative expenses) 162 76
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to 5% of gross receipts from all of the
Partnership's investment properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$383,000 and $362,000 during the years ended December 31, 1999 and 1998,
respectively.
An affiliate of the Managing General Partner received reimbursements of
accountable administrative expenses amounting to approximately $162,000 and
$76,000 for the years ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 6,474.34 limited partnership units in the Partnership representing 27.98% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership units in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
Note D - Mortgage Notes Payable
The principle terms of the mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Sunflower
<S> <C> <C> <C> <C> <C> <C>
1st Mortgage $ 2,593 $ 19 7.46% 02/11/26 $ --
Ashton Ridge
(formerly
Meadow Wood)
1st Mortgage 4,103 37 10.00% 12/01/00 4,071
Stratford Place
1st Mortgage 9,046 75 8.23% 07/01/06 7,739
Stratford Village
1st Mortgage 5,064 38 7.72% 11/01/24 --
$20,806 $ 169 $11,810
</TABLE>
The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. The mortgage encumbering the Sunflower Apartments property
is subject to a prepayment penalty if the loan is prepaid prior to February 11,
2006. The mortgage encumbering the Stratford Place Apartments property is
subject to a prepayment penalty if the loan is paid prior to maturity. Further,
the Partnership's investment properties may not be sold subject to existing
indebtedness. Although there can be no assurance that it will be able to do so,
the Managing General Partner believes it will be able to refinance the debt
maturing in December 2000.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1999, are as follows (in thousands):
2000 $ 4,365
2001 284
2002 307
2003 333
2004 360
Thereafter 15,157
$20,806
Note E - Income Taxes
No provision for income taxes is made in the consolidated financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.
The following is a reconciliation of reported net loss and Federal taxable loss
(in thousands, except per unit data):
1999 1998
Net loss - financial statements $ (38) $ (173)
Differences resulted from:
Depreciation and amortization (25) (26)
Other (62) 72
Net loss - income tax method $ (125) $ (127)
Taxable loss per limited partnership unit
outstanding after giving effect to the
allocation to the general partner $(4.86) $ (5.49)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 2,817
Land and buildings 129
Accumulated depreciation (4,789)
Other 544
Net liabilities - Federal tax basis $(1,299)
<PAGE>
Note F - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Cost
And Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Sunflower $ 2,593 $ 1,624 $ 5,938 $ 1,480
Ashton Ridge 4,103 690 8,988 3,255
Stratford Place 9,046 1,368 11,978 2,196
Stratford Village 5,064 333 7,918 888
Totals $20,806 $ 4,015 $34,822 $ 7,819
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Sunflower $ 1,624 $ 7,418 $ 9,042 $ 6,256 08/84 5-25
Ashton Ridge 690 12,243 12,933 6,581 12/84 5-25
Stratford Place 1,368 14,174 15,542 7,686 12/85 5-25
Stratford Village 333 8,806 9,139 4,880 02/86 5-25
Totals $ 4,015 $42,641 $46,656 $25,403
</TABLE>
<PAGE>
Reconciliation of Real Estate and Accumulated Depreciation:
Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $44,801 $43,474
Property improvements 1,888 1,398
Property dispositions (33) (71)
Balance at end of year $46,656 $44,801
Accumulated Depreciation
Balance at beginning of year $23,407 $21,649
Additions charged to expense 2,015 1,795
Property dispositions (19) (37)
Balance at end of year $25,403 $23,407
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998 is approximately $47,785,000 and $44,927,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $30,192,000 and $28,250,000,
respectively.
Note G- Distributions
A cash distribution from operations of approximately $490,000 ($21.18 per
limited partnership unit) was declared during the year ended December 31, 1999,
and paid in January 2000. Cash distributions from operations of approximately
$700,000 ($30.25 per limited partnership unit) were declared during the year
ended December 31, 1998, $600,000 of this amount was paid in January 1999.
Note H - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
residential properties. The Partnership's residential property segment consists
of four apartment complexes in Alabama, Florida, Maryland, and Texas. The
Partnership rents apartment units to tenants for terms that are typically twelve
months or less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segment are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the Partnership's reportable segment: The
Partnership's reportable segment consists of investment properties that offer
similar products and services. Although each of the investment properties are
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
<PAGE>
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related items
and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
Rental income $ 7,371 $ -- $ 7,371
Other income 333 18 351
Interest expense 1,811 -- 1,811
Depreciation 2,015 -- 2,015
General and administrative expense -- 233 233
Segment income (loss) 177 (215) (38)
Total assets 24,252 1,076 25,328
Capital expenditures for investment
properties 1,888 -- 1,888
1998
Residential Other Totals
Rental income $ 6,932 $ -- $ 6,932
Other income 331 15 346
Interest expense 1,843 -- 1,843
Depreciation 1,795 -- 1,795
General and administrative expense -- 178 178
Segment (loss) (10) (163) (173)
Total assets 24,611 1,341 25,952
Capital expenditures for investment
properties 1,398 -- 1,398
Note I- Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Effective December 8, 1999, the Registrant dismissed its prior Independent
Auditors, Imowitz Koenig & Co., LLP ("Imowitz") and retained as its new
Independent Auditors, Arthur Andersen LLP. Imowitz's Independent Auditors'
Report on the Registrant's financial statements for the calendar year ended
December 31, 1998 did not contain an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles. The decision to change Independent Auditors was approved by the
Managing General Partner's directors. During the calendar year ended 1998 and
through December 8, 1999, there were no disagreements between the Registrant and
Imowitz on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure which disagreements if not resolved
to the satisfaction of Imowitz, would have caused it to make reference to the
subject matter of the disagreements in connection with its reports.
Effective December 8, 1999, the Registrant engaged Arthur Andersen LLP as its
Independent Auditors. During the last two calendar years and through December 8,
1999, the Registrant did not consult Arthur Andersen LLP regarding any of the
matters or events set forth in Item 304 (a)(2)(i) and (ii) of Regulation S-B.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act.
Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or
"Registrant") has no officers or directors. Two Winthrop Properties, Inc. (the
"Managing General Partner") manages and controls substantially all of the
Partnership's affairs and has general responsibility and ultimate authority in
all matters affecting its business.
As of December 31, 1999, the names of the directors and executive officers of
the Managing General Partner their ages and the nature of all positions held by
each of them, are as follows:
Name Age Position
Patrick J. Foye 42 Vice President - Residential and Director
Martha L. Long 40 Senior Vice President and Controller - Residential
Michael L. Asner 47 Chief Executive Officer and Director
Peter Braverman 48 Executive Vice President and Director
Patrick J. Foye has been Executive Vice President and Director of the
Managing General Partner since October 1, 1998. Mr. Foye has served as
Executive Vice President of Apartment Investment and Management Company
("AIMCO") since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in
the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998
and was Managing Partner of the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island
Power Authority and serves as a member of the New York State Privatization
Council. He received a B.A. from Fordham College and a J.D. from Fordham
University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Michael L. Ashner has been the Chief Executive Officer of Winthrop Financial
Associates, A Limited Partnership ("WFA") and the Managing General Partner since
January 15, 1996. From June 1994 until January 1996, Mr. Ashner was a Director,
President and Co-chairman of National Property Investors, Inc., a real estate
investment company ("NPI"). Mr. Ashner was also a Director and executive officer
of NPI Property Management Corporation ("NPI Management") from April 1984 until
January 1996. In addition, since 1981 Mr. Ashner has been President of Exeter
Capital Corporation, a firm which has organized and administered real estate
limited partnerships.
Peter Braverman has been a Vice President of WFA and the Managing General
Partner since January 1996. From June 1995 until January 1996, Mr. Braverman was
a Vice President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.
Item 10. Executive Compensation
The Partnership did not pay any remuneration to the officers or directors of the
Managing General Partner during the year ended December 31, 1999.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Entity Number of Units Percentage
AIMCO Properties LP 6,474.34 27.98%
(an affiliate of AIMCO)
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the Managing General Partner owns any Units of the
Partnership of record or beneficially.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to the
Managing General Partner and affiliates during the years ended December 31, 1999
and 1998:
1999 1998
(in thousands)
Property management fees $383 $362
Reimbursement for services of affiliates 162 76
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner, were entitled to 5% of gross receipts from all of the
Partnership's investment properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$383,000 and $362,000 during the years ended December 31, 1999 and 1998,
respectively.
An affiliate of the Managing General Partner received reimbursements of
accountable administrative expenses amounting to approximately $162,000 and
$76,000 for the years ended December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 6,474.34 limited partnership units in the Partnership representing 27.98% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership units in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are filed
as part of this Annual Report and incorporated in this Annual Report
as set forth in said index.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year
1999:
Current Report on Form 8-K dated December 10, 1999 and filed on
December 14, 1999, disclosing the dismissal of Imowitz Koenig & Co.,
LLP as the Registrant's certifying accountant and the appointment of
Arthur Andersen LLP as the certifying accountants for the year ended
December 31, 1999.
<PAGE>
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.
WINTHROP GROWTH INVESTORS 1 LIMITED
PARTNERSHIP
By: Two Winthrop Properties, Inc.
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Vice President - Residential
By: /s/Martha L. Long
Martha L. Long
Vice President and
Controller - Residential
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf by the registrant and in the capacities and on the
date indicated.
/s/Patrick J. Foye Vice President - Residential Date:
Patrick J. Foye and Director
/s/Martha L. Long Vice President and Date:
Martha L. Long Controller - Residential
<PAGE>
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
Exhibit Index
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT; incorporated by reference to the
Registrant's Current Report on Form 8-K, dated October 1,
1998.
3 Amended and Restated agreement of Limited Partnership of
Winthrop Growth Investors I Limited Partnership dated as of
May 11, 1984.
3(a) Amendment to Amended and Restated Agreement of Limited
Partnership dated August 23, 1995.
10 (a) Documents related to Sunflower Apartments property
10 (b) Documents relating to Meadow Wood Apartments property in
Jacksonville, Florida
10 (c) Documents relating to Stratford Village Apartments property
in Montgomery, Alabama
10 (d) Amendment Number One to the Joint Venture Agreement of DEK
Associates Joint Venture, dated October 7, 1988 (Sunflower)
10 (e) Meadow Wood Winthrop Associates Limited Partnership
Certificate and Agreement filed on December 1, 1988
10 (f) Management Agreement between Winthrop Management and Meadow
Wood dated February 1, 1990
10 (g) Management Agreement between Stratford Place and Winthrop
Management dated January 1, 1990
10 (h) Management Agreement between Sunflower and Winthrop
Management dated April 1, 1990
16 (i) Letter dated September 19, 1996 from Arthur Andersen LLP
16.1(i) Letter dated December 14, 1999, from Imowitz Koenig & Co.,
LLP regarding its concurrence with the statements made by the
Registrant.
27 Financial Data Schedule.
99 Supplementary information required pursuant to Section 9.4
of the Partnership Agreement.
<PAGE>
(a) Filed as an exhibit to the Registrant's Registration
Statement on Form S-11, File No. 2-84760, and incorporated
herein by reference.
(b) Files as an exhibit to the Registrant's Current Report on Form
8-K dated March 17, 1986, and incorporated herein by
reference.
(c) Filed as an exhibit to the Registrant's Annual Report on Form
8-K for the year ended December 31, 1989, and incorporated
here in by reference.
(d) Filed as an exhibit to the Registrant's Current Report on Form
8-K filed on September 6, 1995, and incorporated herein by
reference.
(e) Filed as an exhibit to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994, and incorporated
here in by reference.
(f) Filed as an exhibit to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995, and incorporated
herein by reference.
(g) Filed as an exhibit to the Registrant's Current Report on Form
8-K dated September 19, 1996, and incorporated herein by
reference.
(h) Filed as an exhibit to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1998, and incorporated
herein by reference.
(i) Filed as an exhibit to the Registrant's Current Report on Form
8-K dated December 10, 1999, and incorporated herein by
reference.
<PAGE>
Exhibit 99
Supplementary Information Required Pursuant to Section 9.4 of the Partnership
Agreement (Unaudited)
1. Statement of Cash Available for Distribution:
Three Months Ended Year Ended
December 31, 1999 December 31, 1999
(in thousands)
Net loss $ (203) $ (38)
Add:
Amortization expense 23 105
Depreciation expense 610 2,015
Less cash from (to) reserves 60 (1,592)
Cash available for distribution $ 490 $ 490
Distributions allocated to
limited partners $ 490 $ 490
2. Fees and other compensation paid or accrued by the Partnership to the
general partners, or their affiliates, during the year ended December 31,
1999:
Entity Receiving Form of
Compensation Compensation Amount
General Partners Interest in Cash Available for Distribution $ --
Affiliates of the Property Management Fee $ 383
Managing General
Partner
Affiliates of the Reimbursement for Services $ 162
Managing General
Partner
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Winthrop
Growth Investors 1 Limited Partnership 1999 Fourth Quarter 10-KSB and is
qualified in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000722565
<NAME> Winthrop Growth Investors 1 Limited Partnership
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,889
<SECURITIES> 0
<RECEIVABLES> 674
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 46,656
<DEPRECIATION> 25,403
<TOTAL-ASSETS> 25,328
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 20,806
0
0
<COMMON> 0
<OTHER-SE> 2,817
<TOTAL-LIABILITY-AND-EQUITY> 25,328
<SALES> 0
<TOTAL-REVENUES> 7,722
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,760
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,811
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38)
<EPS-BASIC> (1.47)<F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
