SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-15347
Growth Hotel Investors,
a California Limited Partnership
(Exact name of Registrant as specified in its charter)
California 94-2964750
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address principal executive office) (Zip Code)
Registrant's telephone number, including area code (770) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether 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_____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution securities under a plan confirmed
by a court. Yes X No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding each of the issuer's classes common stock, as the latest
practicable date _____________________.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
September 30, December 31,
1995 1994
------------- ------------
Assets
Cash and cash equivalents $ 5,319,000 $ 4,899,000
Restricted cash 263,000 335,000
Deferred costs 759,000 52,000
Accounts receivable and other assets 414,000 205,000
Investment in unconsolidated joint venture 8,623,000 8,487,000
Real Estate:
Real estate 23,066,000 21,904,000
Accumulated depreciation (8,501,000) (7,984,000)
----------- -----------
Real estate, net 14,565,000 13,920,000
----------- -----------
Total assets $29,943,000 $27,898,000
=========== ===========
Liabilities and Partners' Equity
Accounts payable and other liabilities $ 571,000 $ 697,000
Notes payable 7,630,000 7,655,000
----------- -----------
Total liabilities 8,201,000 8,352,000
----------- -----------
Minority interest in consolidated joint ventures 83,000 48,000
----------- -----------
Partners' Equity (Deficit):
General partner (1,017,000) (1,171,000)
Limited partners (36,932 units outstanding at
September 30, 1995 and December 31, 1994) 22,676,000 20,669,000
----------- -----------
Total partners' equity 21,659,000 19,498,000
----------- -----------
Total liabilities and partners' equity $29,943,000 $27,898,000
=========== ===========
See notes to consolidated financial statements.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Consolidated Statements of Operations
For the Nine Months Ended
September 30, September 30,
1995 1994
------------- -------------
Revenues:
Hotel operations $6,207,000 $6,052,000
Equity in unconsolidated joint venture's
operations 1,732,000 1,629,000
Interest and other revenue 159,000 153,000
---------- ----------
Total revenues 8,098,000 7,834,000
---------- ----------
Expenses:
Hotel operations 3,637,000 3,751,000
Interest 615,000 751,000
Depreciation 518,000 465,000
General and administrative 307,000 469,000
---------- ----------
Total expenses 5,077,000 5,436,000
---------- ----------
Income from operations before minority
interest in joint ventures' operations
and extraordinary item 3,021,000 2,398,000
Minority interest in joint ventures'
operations (35,000) (26,000)
---------- ----------
Income before extraordinary item 2,986,000 2,372,000
Extraordinary item:
Gain on extinguishment of debt - 605,000
---------- ----------
Net income $2,986,000 $2,977,000
========== ==========
Net income per limited partnership assignee unit:
Net income before extraordinary item $ 75.19 $ 59.73
Extraordinary item - 15.24
---------- ----------
Net income $ 75.19 $ 74.97
========== ==========
Cash distributions per limited partnership
assignee unit $ 20.85 $ 20.01
========== ==========
See notes to consolidated financial statements.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Consolidated Statements of Operations
For the Three Months Ended
September 30, September 30,
1995 1994
------------- -------------
Revenues:
Hotel operations $2,362,000 $2,218,000
Equity in unconsolidated joint venture's
operations 708,000 671,000
Interest and other revenue 53,000 24,000
---------- ----------
Total revenues 3,123,000 2,913,000
---------- ----------
Expenses:
Hotel operations 1,303,000 1,276,000
Interest 206,000 180,000
Depreciation 185,000 155,000
General and administrative 108,000 163,000
---------- ----------
Total expenses 1,802,000 1,774,000
---------- ----------
Income from operations before minority
interest in joint ventures' operations
and extraordinary item 1,321,000 1,139,000
Minority interest in joint ventures' operations (13,000) (5,000)
---------- ----------
Net income $1,308,000 $1,134,000
========== ==========
Net income per limited partnership assignee unit $ 32.93 $ 28.57
========== ==========
See notes to consolidated financial statements.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Consolidated Statements of Cash Flows
For the Nine Months Ended
September 30, September 30,
1995 1994
------------- -------------
Operating Activities:
Net income $2,986,000 $2,977,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 585,000 477,000
Minority interest in joint ventures' operations 35,000 26,000
Equity in unconsolidated joint venture's
operations (1,732,000) (1,629,000)
Gain on extinguishment of debt - (605,000)
Deferred income (38,000) (38,000)
Deferred costs paid (775,000) -
Changes in operating assets and liabilities:
Accounts receivable and other assets (209,000) (35,000)
Accounts payable and other liabilities (88,000) (12,000)
---------- ----------
Net cash provided by operating activities 764,000 1,161,000
---------- ----------
Investing Activities:
Additions to real estate (1,162,000) (258,000)
Decrease in restricted cash 72,000 80,000
Unconsolidated joint venture distributions 1,596,000 220,000
Proceeds from cash investments - 3,169,000
---------- ----------
Cash provided by investing activities 506,000 3,211,000
---------- ----------
Financing Activities:
Satisfaction of note payable - (2,030,000)
Notes payable principal payments (25,000) (21,000)
Cash distributions to partners (825,000) (794,000)
---------- ----------
Cash (used in) financing activities (850,000) (2,845,000)
---------- ----------
Increase in Cash and Cash Equivalents 420,000 1,527,000
Cash and Cash Equivalents at Beginning of Period 4,899,000 2,122,000
---------- ----------
Cash and Cash Equivalents at End of Period $5,319,000 $3,649,000
========== ==========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 615,000 $ 789,000
========== ==========
Supplemental Disclosure on Non-Cash Investing
and Financing Activities:
Foreclosure of property in 1994 - See Note 5
See notes to consolidated financial statements.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
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 for the year ended December 31,
1994. Certain balance sheet accounts have been reclassified in
order to conform to the current period.
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, except for as
described in Note 5.
At September 30, 1995, the Partnership had approximately $2,315,000
invested in overnight purchase agreements.
The results of operations for the nine and three months ended
September 30, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
On August 17, 1995, the stockholders of National Property
Investors, Inc. ("NPI, Inc."), the sole shareholder of NPI Equity
Investments II, Inc. ("NPI Equity"), the managing general partner
of Fox Realty Investors, the general partner of the Partnership's
general partner, entered into an agreement to sell to IFGP
Corporation, an affiliate of Insignia Financial Group, Inc.
("Insignia"), all of the issued and outstanding stock of NPI, Inc.
The sale of the stock is subject to the satisfaction of certain
conditions and is scheduled to close in January 1996.
2. Transactions with Related Parties
Affiliates of the Managing General Partner ("MGP") received
reimbursements of administrative expenses amounting to $90,000 and
$104,000 during the nine months ended September 30, 1995 and 1994,
respectively. These reimbursements are primarily included in
general and administrative expenses.
An affiliate of MGP was paid a $1,000 fee, during the nine months
ended September 30, 1994, relating to a successful real estate tax
appeal on a property owned by the unconsolidated joint venture.
This fee is included in operating expenses.
In accordance with the Partnership Agreement, the general partner
receives cash distributions as follows: (1) a Partnership
management incentive not to exceed ten percent, determined on a
cumulative, noncompounded basis, of cash from operations available
for distribution (as defined in the Partnership Agreement)
distributed to partners, and (2) a continuing interest representing
a two percent share of cash distributions, after allocation of the
Partnership management incentive. A portion of the Partnership
management incentive is subordinated to certain cash distributions
to the limited partners. Cash distributions to the general partner
for the nine months ended September 30, 1995 and 1994 are as
follows:
1995 1994
---- ----
Partnership management incentive $40,000 $40,000
Continuing interest 15,000 15,000
------- -------
Total $55,000 $55,000
======= =======
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Transactions with Related Parties (Continued)
In addition to the fees paid to the general partner and affiliates
as set forth above, the Partnership has agreements with affiliates
of its joint venture partners, which provide for the management and
operation of the joint venture properties. Fees paid pursuant to
these agreements are generally based on a percentage of gross
revenues from operations of the properties and were $61,000 and
$67,000 for the nine months ended September 30, 1995 and 1994.
These fees are included in operating expenses.
3. Restricted Cash
Restricted cash at September 30, 1995 and December 31, 1994
represents the amount maintained by certain properties pursuant to
the related notes payable agreements to meet future capital
requirements.
4. Amendment to Services Agreement
The Partnership paid $775,000 in January 1995 to MMI amending their
services agreement to provide for a reduction in the monthly asset
management fee from $29,750 to $5,500, the elimination of fees
payable to MMI for its assistance in refinancings and sales of
properties owned by the Partnership and provides the Partnership
with the ability to terminate MMI's services at will.
The buyout of the service contract is being amortized over the
remaining term of the service agreement of 10 years. For the nine
months ended September 30, 1995, approximately $58,000 has been
amortized and is included in general and administrative expenses.
5. Extraordinary Item - Gain on Extinguishment of Debt
On April 4, 1994, the Hampton Inn - Elk Grove Village was disposed
of through foreclosure for $3,550,000 to the holder of the deed of
trust on the property. The disposition value is comprised of the
note payable of $2,772,000, plus $778,000 of net liabilities,
including $260,000 of accrued interest, $444,000 of accrued
property taxes and $74,000 of other liabilities. At the date of
disposition of the Hampton Inn - Elk Grove, the net carrying value
of the property, after provision for impairment, was $2,945,000.
As a result of the disposition of this property through
foreclosure, the Partnership recognized an extraordinary gain on
extinguishment of debt of $605,000 in the second quarter of 1994.
Since the appointment of a receiver, on February 4, 1994,
accounting records for Elk Grove have not been available to the
Partnership. The results of operations for Elk Grove included in
the financial statements are through February 4, 1994.
6. Subsequent Event
On October 2, 1995, the Partnership entered into an agreement
pursuant to which it was granted an option to acquire its joint
venture partner's interest in the Hampton Inn - Aurora for an
aggregate purchase price of $150,000. This option is exercisable
from February 2, 1996 through October 2, 1996. In connection with
this transaction, the land was transferred to the Partnership and
the joint venture partner as tenants in common and then leased back
to the Partnership.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Investment in Unconsolidated Joint Venture
The following are the condensed balance sheets as of September 30, 1995
and December 31, 1994 and condensed statements of operations for the
nine and three months ended September 30, 1995 and 1994 for Registrant's
investment in the Combined Fund, which is reported under the equity
method of accounting.
GROWTH HOTEL INVESTORS COMBINED FUND NO. 1
CONDENSED BALANCE SHEETS
September 30, December 31,
1995 1994
------------- ------------
Cash and cash equivalents $ 3,355,000 $ 2,953,000
Restricted cash 576,000 1,988,000
Deferred costs and other assets 1,346,000 1,244,000
Real Estate:
Real estate 87,242,000 94,793,000
Accumulated depreciation (26,272,000) (34,108,000)
----------- -----------
Real estate, net 60,970,000 60,685,000
----------- -----------
Total assets $66,247,000 $66,870,000
=========== ===========
Liabilities and Partners' Equity
Accounts payable and other liabilities $ 1,095,000 $ 1,250,000
Due to an affiliate of the joint venture partner 511,000 646,000
Notes payable 40,939,000 41,361,000
----------- -----------
Total liabilities 42,545,000 43,257,000
----------- -----------
Minority interest in consolidated joint venture (4,088,000) (3,746,000)
----------- -----------
Commitments and Contingencies
Partners' Equity:
GHI 8,623,000 8,487,000
GHI II 19,167,000 18,872,000
----------- -----------
Total partners' equity 27,790,000 27,359,000
----------- -----------
Total liabilities and partners' equity $66,247,000 $66,870,000
=========== ===========
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Investment in Unconsolidated Joint Venture (Continued)
GROWTH HOTEL INVESTORS COMBINED FUND NO. 1
CONDENSED STATEMENTS OF OPERATIONS
For the Nine Months Ended
September 30, September 30,
1995 1994
------------- -------------
Revenues $28,489,000 $26,532,000
Expenses 23,030,000 21,860,000
----------- -----------
Income before minority interest in joint
venture's operations 5,459,000 4,672,000
Minority interest in joint venture's operations 1,000 461,000
----------- -----------
Net income $ 5,460,000 $ 5,133,000
=========== ===========
Allocation of income:
GHI $ 1,732,000 $ 1,629,000
GHI II 3,728,000 3,504,000
----------- -----------
Net income $ 5,460,000 $ 5,133,000
=========== ===========
For the Three Months Ended
September 30, September 30,
1995 1994
------------- -------------
Revenues $10,149,000 $ 9,529,000
Expenses 8,220,000 7,569,000
----------- -----------
Income before minority interest in joint
venture's operations 1,929,000 1,960,000
Minority interest in joint venture's operations 305,000 154,000
----------- -----------
Net income $ 2,234,000 $ 2,114,000
=========== ===========
Allocation of income:
GHI $ 708,000 $ 671,000
GHI II 1,526,000 1,443,000
----------- -----------
Net income $ 2,234,000 $ 2,114,000
=========== ===========
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
All of Registrant's properties are hotels. Registrant receives hotel
operating revenues and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments.
Registrant uses working capital reserves provided from any undistributed
cash flow from operations as its primary source of liquidity. For the long
term, cash from operations will remain Registrant's primary source of
liquidity. All of Registrant's properties generated positive cash flow
during the nine months ended September 30, 1995. Additionally,
Registrant's investment in the unconsolidated joint venture distributed
$1,596,000 to Registrant under the terms of the joint venture agreement.
In the second quarter, Registrant distributed to the holders of limited
partnership units $20.85 per unit ($770,000 in total) and $55,000 to the
general partner.
The level of liquidity based upon cash and cash equivalents experienced a
$420,000 increase at September 30, 1995, as compared to December 31, 1994.
The increase consisted of $764,000 provided by operating activities and
$506,000 provided by investing activities which were partially offset by
$825,000 of cash distributed to the partners and $25,000 of notes payable
principal payments (financing activities). Cash provided by investing
activities consisted of $1,596,000 of distributions received from the
unconsolidated joint venture and a $72,000 decrease in restricted cash
which were partially offset by $1,162,000 of improvements to real estate at
all of Registrant's properties. Guest room renovations consisted of
$315,000 at Registrant's Hampton Inn - Albuquerque, $142,000 at the Hampton
Inn - Aurora, $366,000 at the Hampton Inn - Brentwood and $339,000 at the
Hampton Inn - Syracuse properties. Registrant's cash provided by operating
activities during the nine months ended September 30, 1995, was partially
offset by the $775,000 paid to MMI to amend their services agreement to
provide for a reduction in their monthly asset management fee from $29,750
to $5,500, the elimination of fees payable to MMI for its assistance in the
refinancing and sales of properties owned by Registrant and provides
Registrant with the ability to terminate MMI's services at will. In order
to remain competitive, the unconsolidated joint venture expects to spend
approximately $5,000,000 to upgrade its hotels during the next twelve to
eighteen months. The improvements will be funded from working capital
reserves and restricted cash. All other increases and decreases in certain
assets and liabilities are the result of the timing of the receipt and
payment of various operating activities.
Working capital reserves are invested in money market accounts and
repurchase agreements secured by United States Treasury obligations. 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 essential capital improvements
and debt service payments during the next twelve months and the foreseeable
future. The first mortgage encumbering Registrant's Hampton Inn -
Brentwood property matures in January 1996, at which time a balloon payment
of approximately $2,185,000 will be due. Registrant expects to pay off the
mortgage on or prior to the maturity date from working capital reserves.
If the mortgage is not paid off, Registrant will be required to extend,
refinance or sell the property at the maturity date of the mortgage.
Although management is confident that this mortgage can be replaced or paid
off, if the mortgage is not extended, refinanced, paid off,
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
or the property is not sold, the property could be lost through
foreclosure. If the property is lost through foreclosure, Registrant would
incur a loss of approximately $1,477,000. Management believes that there
will be sufficient cash flow generated by the remaining properties to
continue operations in the event that the property is lost through
foreclosure. In addition, Registrant's unconsolidated joint venture has
balloon payments due in 1996 of $40,275,000 and Registrant's remaining
properties have balloon payments due in 1997 of $5,412,000. The managing
general partner believes, however, that each property generates sufficient
cash flow to allow all mortgages to be refinanced or satisfied in an
orderly fashion. On October 2, 1995, Registrant entered into an agreement
pursuant to which it was granted an option to acquire its joint venture
partner's interest in the Hampton Inn - Aurora for an aggregate price of
$150,000. This option is exercisable from February 2, 1996 through October
2, 1996.
On August 17, 1995, the stockholders of NPI, Inc., the sole shareholder of
NPI Equity, agreed to sell to Insignia all of the issued and outstanding
stock of NPI, Inc. The consummation of this transaction is subject to the
satisfaction of certain conditions (including, third party consents and
other conditions not within the control of the parties to the agreement)
and is scheduled to close in January 1996. Upon closing, it is expected
that Insignia will elect new officers and directors of NPI Equity. The
Managing General Partner does not believe these transactions will have a
significant effect on Registrant's liquidity or results of operation.
Real Estate Market
The income and expenses of operating the properties owned by Registrant are
subject to factors outside of Registrant's control, such as over-supply of
similar properties resulting from over-building, increases in unemployment,
population shifts or changes in patterns or needs of users. Expenses, such
as local real estate taxes and miscellaneous expenses, are subject to
change and cannot always be reflected in room rate increases due to market
conditions. In addition, there are risks inherent in owning and operating
lodging facilities because such properties are management and labor
intensive and especially susceptible to the impact of economic and other
conditions outside the control of Registrant.
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. Registrant 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 still owned by Registrant.
Results of Operations
Nine Months Ended September 30, 1995 vs. September 30, 1994
Operating results, before minority interest in joint ventures and the
extraordinary item, improved by $623,000 during the nine months ended
September 30, 1995, as compared to 1994, due to an increase in revenues of
$264,000 and a decrease in expenses of $359,000. Operating results
improved at all of Registrant's properties. In addition, Registrant's
Hampton Inn - Elk Grove property, which had been
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Nine Months Ended September 30, 1995 vs. September 30, 1994 (Continued)
generating losses, was lost to foreclosure during the 1994 period. With
respect to the remaining properties, operating results, before minority
interest in joint ventures, improved by $369,000 due to an increase in
revenues of $429,000, which was partially offset by an increase in expenses
of $60,000.
With respect to the remaining properties, revenues from hotel operations
increased by $326,000, for the nine months ended September 30, 1995, as
compared to 1994, primarily due to increased average daily room rates at
all of Registrant's hotels, which was partially offset by a decrease in
occupancy at the Hampton Inn - Syracuse and the Hampton Inn - Brentwood
properties. Occupancy at Registrant's Hampton Inn - Albuquerque and
Hampton Inn - Aurora properties remained relatively constant. Equity from
unconsolidated joint venture operations improved by $103,000 during the
nine months ended September 30, 1995, as compared to 1994, primarily due to
improved hotel operating revenues at all the joint venture properties,
except the Hampton Inn - San Antonio hotel. Interest and other revenue
remained relatively constant.
Expenses declined by $359,000 for the nine months ended September 30, 1995,
as compared to 1994, due to the disposition of Registrant's Hampton Inn -
Elk Grove property during 1994. With respect to the remaining properties,
expenses increased $60,000, due to increases in hotel operation expenses of
$94,000 and depreciation expense of $53,000, which were partially offset by
a decrease in interest expense of $87,000. In addition, general and
administrative expenses declined by $162,000.
Hotel operating expenses increased primarily due to increased repairs and
maintenance at Registrant's Hampton Inn - Brentwood and slight increases in
advertising and marketing expenses at Registrant's Hampton Inn - Aurora.
Depreciation expense increased due to fixed asset additions. Interest
expense declined primarily due to the satisfaction of the note encumbering
Registrant's Syracuse property in May 1994, coupled with amortization of
mortgage principal balances. General and administrative expenses declined
by $162,000 due to a decrease in asset management costs associated with the
amendment of Registrant's services agreement in January 1995 and a decrease
in reimbursed expenses, which were partially offset by amortization of the
cost of the buy-out of the services agreement.
Three Months Ended September 30, 1995 vs. September 30, 1994
Operating results, before minority interest in joint ventures improved by
$182,000 during the three months ended September 30, 1995, as compared to
1994, due to an increase in revenues of $210,000 which was partially offset
by an increase in expenses of $28,000.
Revenues increased $210,000 during the three months ended September 30,
1995, as compared to 1994, due to increases in revenues from hotel
operations of $144,000, increase in equity from unconsolidated joint
venture's operations of $37,000 and interest and other revenues of $29,000.
The increase in revenues from hotel operations is due to increased average
daily rates at all of Registrant's properties, which was partially offset
by a decline in occupancy. Interest income increased due to an increase in
average working capital reserves available for investment and increased
interest rates. Equity from the unconsolidated joint venture operations
improved during the three months ended September 30, 1995 as compared to
1994 due to improved operations.
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GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended September 30, 1995 vs. September 30, 1994 (Continued)
Expenses increased $28,000 during the three months ended September 30, 1995,
as compared to 1994, due to increases in hotel operations of $27,000, interest
expense of $26,000 and depreciation of $30,000, which were partially offset by
a decrease in general and administrative expenses of $55,000.
Hotel operating expenses increased primarily due to increased repairs and
maintenance at Registrant's Hampton Inn - Brentwood hotel and slight
increases in advertising and marketing expenses at Registrant's Hampton Inn
- - Aurora hotel. Interest expense increased due to an under accrual of
interest expense at Registrant's Hampton Inn - Aurora at September 30,
1994, which was partially offset by amortization of mortgage principal
balances. Depreciation expense increased due to the effect of fixed asset
additions. General and administrative expense declined due to a decrease
in asset management costs associated with the amendment of Registrant's
services agreement in January 1995, which was partially offset by
amortization of the cost of the buy-out of the services agreement.
Unconsolidated Joint Venture Operations
(Growth Hotel Investors Combined Fund No. 1)
Nine Months Ended September 30, 1995 vs September 30, 1994
Operating results, prior to minority interests in joint venture operations,
improved $787,000 for the nine months ended September 30, 1995, as compared
to 1994, due to an increase in revenues of $1,957,000 which was partially
offset by an increase in expenses of $1,170,000. Revenues increased at all
of the joint venture properties, except the Hampton Inn - San Antonio
property, due to higher average daily room rates at all of the joint
venture's properties. Occupancy remained relatively stable on an overall
basis throughout the portfolio. The largest increases in revenues were at
Registrant's Hampton Inn - Atlanta-Roswell, Chapel Hill, Nashville,
Greensboro, Greenville and North Little Rock joint venture properties. The
increase in operating expenses was consistent with the increase in
revenues.
Under the terms of the joint venture agreement, the income from the
Combined Fund was allocated in different proportions during the nine months
ended September 30, 1995, as compared to 1994.
Three Months Ended September 30, 1995 vs September 30, 1994
Operating results, prior to minority interests in joint venture operations
declined $31,000 for the three months ended September 30, 1995, as compared
to 1994 due to an increase in expenses of $651,000 which was partially
offset by an increase in revenues of $620,000. Revenues increased at all
of the joint venture properties, except the Hampton Inn - San Antonio
property. The increase in revenue is attributable to higher average daily
room rates at all of the joint venture's properties. Occupancy remained
relatively stable on an overall basis throughout the portfolio. The
largest increases in revenues were at Registrant's Hampton Inn - Memphis -
Poplar, Mountain Brook, Chapel Hill and Greensboro joint venture
properties. Expenses increased by $651,000 due to the increase in revenues
and depreciation of recent improvements to properties.
13 of 18
GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended September 30, 1995 vs September 30, 1994 (Continued)
Under the terms of the joint venture agreement, the income from the
Combined Fund was allocated in different proportions during the three
months ended September 30, 1995, as compared to 1994.
Properties
A description of the hotel properties in which Registrant has an ownership
interest during the period covered by this Report, together with occupancy
and room rate data, follows:
GROWTH HOTEL INVESTORS,
a California Limited Partnership
OCCUPANCY AND ROOM RATE SUMMARY
<TABLE>
<CAPTION>
Average Average
Occupancy Rate (%) Daily Room Rate($)
---------------------------- -------------------------------------
Nine Months Three Months Nine Months Three Months
Date Ended Ended Ended Ended
of September 30, September 30, September 30, September 30,
Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Hotel Investors:
Hampton Inn-Syracuse 117 12/85 64 72 77 81 54.82 50.25 57.54 54.27
East Syracuse, New York
Hampton Inn-Brentwood 114 12/85 83 87 90 91 60.89 54.10 65.19 54.67
Nashville, Tennessee
Hampton Inn-Aurora 132 12/86 82 80 87 88 56.84 52.02 60.49 54.70
Aurora, Colorado
Hampton Inn-Albuquerque North 125 04/87 84 85 88 95 54.99 51.68 56.86 52.26
Albuquerque, New Mexico
Growth Hotel Investors
Combined Fund No. 1:
Hampton Inn-Memphis-I40 East 117 12/86 82 85 87 90 53.20 49.81 54.46 51.26
Memphis, Tennessee
Hampton Inn-Columbia-West 121 12/86 85 85 83 86 54.05 50.78 54.50 51.57
West Columbia, South Carolina
Hampton Inn-Spartanburg 112 12/86 72 72 76 78 47.27 42.70 48.80 43.04
Spartanburg, South Carolina
Hampton Inn-Little Rock-North 123 12/86 82 78 86 88 48.64 45.65 49.96 45.62
North Little Rock, Arkansas
Hampton Inn-Amarillo 116 12/86 78 80 89 93 51.14 48.20 55.55 52.35
Amarillo, Texas
</TABLE>
14 of 18
GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties (Continued)
<TABLE>
<CAPTION>
Average Average
Occupancy Rate (%) Daily Room Rate($)
---------------------------- -------------------------------------
Nine Months Three Months Nine Months Three Months
Date Ended Ended Ended Ended
of September 30, September 30, September 30, September 30,
Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hampton Inn-Greenville 123 12/86 81 81 83 83 52.10 47.30 52.82 47.96
Greenville, South Carolina
Hampton Inn-Charleston-Airport 125 12/86 79 83 78 84 53.70 50.29 53.62 50.47
North Charleston, South Carolina
Hampton Inn-Memphis-Poplar 126 12/86 86 88 90 90 64.34 59.77 64.55 61.41
Memphis, Tennessee
Hampton Inn-Greensboro 121 12/86 89 89 90 92 57.54 50.76 57.45 50.67
Greensboro, North Carolina
Hampton Inn-Birmingham 123 12/86 84 85 85 86 58.42 54.95 59.81 55.89
Birmingham, Alabama
Hampton Inn-Atlanta-Roswell 129 03/87 84 83 84 87 58.43 54.18 60.33 54.80
Roswell, Georgia
Hampton Inn-Chapel Hill 122 03/87 88 82 94 86 55.90 50.14 57.01 51.82
Chapel Hill, North Carolina
Hampton Inn-Dallas-Richardson 130 03/87 78 77 77 76 50.39 46.74 50.52 46.76
Richardson, Texas
Hampton Inn-Nashville-Briley 120 03/87 90 89 95 96 61.98 56.77 63.38 58.91
Parkway
Nashville, Tennessee
Hampton Inn-San Antonio-Northwest 123 06/87 67 76 72 78 58.85 58.53 59.97 62.04
San Antonio, Texas
Hampton Inn-Madison Heights 126 12/87 73 73 81 81 53.56 51.27 54.03 51.15
Madison Heights, Michigan
Hampton Inn-Mountain Brook 131 12/87 79 82 87 83 57.95 54.98 59.50 55.05
Birmingham, Alabama
Hampton Inn-Northlake 130 09/88 82 78 87 85 54.39 52.48 55.53 52.56
Atlanta, Georgia
</TABLE>
(1) Property was foreclosed upon by the lender. See Item 1, note 5.
15 of 18
GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2. NPI, Inc. Stock Purchase Agreement dated as of August 17,
1995 incorporated by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 24, 1995.
(b) Report on Form 8-K
On August 24, 1995, Registrant filed a Current Report on Form
8-K with the Securities and Exchange Commission with respect
to the sale of the stock of NPI, Inc. (Item 1, Change in
Control).
16 of 18
GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GROWTH HOTEL INVESTORS,
a California Limited Partnership
By: MONTGOMERY REALTY COMPANY - 85,
Its General Partner
By: FOX REALTY INVESTORS,
Its General Partner
By: NPI Equity Investments II, Inc.,
Managing Partner
/S/ ARTHUR N. QUELER
----------------------------------
Secretary/Treasurer and Director
(Principal Financial Officer)
17 of 18
GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995
a California Limited Partnership
EXHIBIT INDEX
Exhibit Page No.
- ------- --------
2. NPI, Inc. Stock Purchase Agreement *
dated August 17, 1995
* Incorporated by reference to Exhibit 2 to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission on August 24,
1995.
18 of 18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information
extracted from Growth Hotel Investors 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,582,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 414,000 <F2>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 23,066,000
<DEPRECIATION> (8,501,000)
<TOTAL-ASSETS> 29,943,000
<CURRENT-LIABILITIES> 0
<BONDS> 7,630,000
<COMMON> 0
0
0
<OTHER-SE> 21,659,000
<TOTAL-LIABILITY-AND-EQUITY> 29,943,000
<SALES> 0
<TOTAL-REVENUES> 7,939,000
<CGS> 0
<TOTAL-COSTS> 4,155,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 615,000
<INCOME-PRETAX> 2,986,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,986,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,986,000
<EPS-PRIMARY> 75.19
<EPS-DILUTED> 75.19
<FN>
<F1> Cash includes restricted cash
of $263,000.
<F2> Total receivables includes other
assets of $134,000.
</FN>
</TABLE>
