FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period.........to.........
Commission file number 0-15347
GROWTH HOTEL INVESTORS
(Exact name of small business issuer as specified in its charter)
California 94-2964750
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's phone number)
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 .
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Investment Properties:
A description of the hotel properties in which the Partnership has an ownership
interest, together with occupancy and room rate data follows:
<TABLE>
<CAPTION>
Average Average Daily
Occupancy Rate Room Rate
For Quarter Ended For Quarter Ended
March 31, March 31,
Name and Location 1996 1995 1996 1995
Growth Hotel Investors I:
<S> <C> <C> <C> <C>
Hampton Inn-Syracuse 44% 49% $57.32 $51.88
East Syracuse, New York
Hampton Inn-Brentwood 76% 75% 66.24 55.65
Nashville, Tennessee
Hampton Inn-Aurora 68% 76% 59.75 53.22
Aurora, Colorado
Hampton Inn-Albuquerque North 69% 76% 56.85 52.49
Albuquerque, New Mexico
Growth Hotel Investors
Combined Fund No. 1:
Hampton Inn-Memphis I40 East 65% 71% 53.20 50.36
Memphis, Tennessee
Hampton Inn-Columbia-West 73% 82% 58.96 53.03
West Columbia, South Carolina
Hampton Inn-Spartanburg 54% 63% 51.61 46.23
Spartanburg, South Carolina
Hampton Inn-Little Rock, North 64% 72% 51.37 46.78
North Little Rock, Arkansas
Hampton Inn-Amarillo 59% 64% 49.70 46.68
Amarillo, Texas
</TABLE>
<TABLE>
<CAPTION>
Average Average Daily
Occupancy Rate Room Rate
For Quarter Ended For Quarter Ended
March 31, March 31,
Name and Location 1996 1995 1996 1995
Growth Hotel Investors
Combined Fund No. 1:
(continued)
<S> <C> <C> <C> <C>
Hampton Inn-Greenville 76% 77% $ 57.79 $ 51.92
Greenville, South Carolina
Hampton Inn-Charleston-Airport 74% 70% 53.57 52.76
North Charleston, South Carolina
Hampton Inn-Memphis-Poplar 79% 80% 67.95 63.00
Memphis, Tennessee
Hampton Inn-Greensboro 77% 85% 63.42 55.79
Greensboro, North Carolina
Hampton Inn-Birmingham 71% 80% 60.51 57.17
Birmingham, Alabama
Hampton Inn-Atlanta-Roswell 75% 81% 63.36 55.86
Roswell, Georgia
Hampton Inn-Chapel Hill 81% 81% 60.29 54.68
Chapel Hill, North Carolina
Hampton Inn-Dallas-Richardson 78% 71% 55.60 50.25
Richardson, Texas
Hampton Inn-Nashville- 67% 81% 64.66 59.20
Briley Parkway
Nashville, Tennessee
Hampton Inn-San Antonio-Northwest 54% 59% 55.87 56.28
San Antonio, Texas
Hampton Inn-Madison Heights 69% 63% 57.38 53.19
Madison Heights, Michigan
Hampton Inn-Mountain Brook 77% 68% 60.78 56.40
Birmingham, Alabama
Hampton Inn-Northlake 78% 77% 60.22 53.34
Atlanta, Georgia
</TABLE>
The Partnership's net income for the three months ended March 31, 1996 was
approximately $452,000 as compared to $393,000 for the corresponding period of
1995. The increase in net income is attributable to an increase in equity in
unconsolidated joint venture operations. The increase in earnings from the
joint venture is due to an increase in hotel revenues due to an overall room
rate increase at the investment properties. In additon to the increase in the
Partnership's equity in earnings of the joint venture, the Partnership had a
decrease in mortgage interest due to the repayment of long-term debt on the
Partnership's Hampton Inn - Brentwood property during the fourth quarter of
1995. Partially offsetting these increases to income were increases in hotel
operating expenses, depreciation expense and general and administrative
expenses.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the hotel market environment of its investment properties to
assess the feasibility of increasing rates, 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 rates and maintaining a high overall occupancy level. However,
due to changing market conditions, which can result in the use of concessions
and room rate reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a
plan.
At March 31, 1996, the Partnership had unrestricted cash of $3,533,000 as
compared to $5,146,000 at March 31, 1995. Net cash provided by operating
activities increased due to the increase in net income discussed above along
with the Partnership incurring costs of $775,000 during the first quarter of
1995 in relation to a buyout agreement as discussed in "Item 1. Financial
Statements Note D". Net cash used in investing activities increased for the
three month period ended March 31, 1996, in comparison to the three month
period ended March 31, 1995, due to the difference in the timing of the
receipt of distributions from its unconsolidated joint venture. Distributions
will be received in the second quarter of 1996 as compared to the first quarter
of 1995. Net cash used in financing activities increased primarily as a result
of an increase in the amounts due to affiliates in the first quarter of 1995.
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. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $5,429,000 includes mortgages with
maturity dates in 1997. A balloon payment on the mortgage encumbering the
Partnership's Hampton Inn - Aurora property is due in May 1997 in the amount of
approximately $3,034,000. The Partnership's Hampton Inn - Albuquerque has a
balloon payment due in May 1997, in the amount of approximately $2,375,000.
Future cash distributions will depend on the levels of cash generated from
operations, property sales and the availability of cash reserves. The Managing
General Partner is currently evaluating the feasibility of selling all of the
investment properties (as discussed in further detail below) or the refinancing
opportunities. The General Partner is evaluating the possibility of making a
cash distribution in the second quarter of 1996.
On February 15, 1996, Devon Associates, a New York general partnership,
commenced a tender offer (the "Offer") for up to 15,000 of the outstanding
Units at a purchase price of $705.00 per Unit. Due to the participation in
the tender offer by affiliates of NPI Realty, and the Managing General
Partner's related, existing and potential conflicts of interest, the
Partnership, in its Schedule 14D-9 filed with Securities and Exchange Commission
and sent to limited partners, expressed no opinion and made no recommendation
as to whether limited partners should tender their Units pursuant to the Offer.
The expiration of the tender offers described above was midnight, New York time,
on March 25, 1996. See Items 2-4 of the Schedule 14D-9 of the Partnership,
as filed with the Commission on February 29, 1996, as amend by "Amendment
No. 1" thereto, as filed with the Commission on March 7, 1996, and as further
amended by "Amendment No. 2" thereto, as filed with the Commission on March 14,
1996 and as further amended by "Amendemnt No. 3" thereto filed with the
Commission on March 18, 1996 (collectively, the "Schedule 14D-9"), for
additional information with respect to the Offer and the current and potential
conflicts of interest of MRC-85, which Items 2-4 are incorporated herein by
reference.
Devon Associates acquired 13,396 units with respect to this offer. See Part II
Item I - Legal Proceedings.
On March 31, 1996, the Partnership received a letter advising that the
Partnership's and Growth Hotel Investors ("GHI") joint venture partner in
certain of the hotel properties was offering $147,000,000 in cash for all 28
hotel properties directly or indirectly owned by the Partnership and GHI. See
"Amendment No. 2" to the Partnership's Statement on Schedule 14D-9, as filed
with the Commission on March 14, 1996, for a more complete description of this
offer, which "Amendment No. 2 is hereby incorporated by reference herein. By
the terms of the offer, the offer expired on March 31, 1996. The Managing
General Partner determined that before the offer could be recommended, if at
all, to the Partnership's limited partners further analysis of the hotel
properties and their value was needed. See Part II. Item 1 - Legal Proceedings
for information with respect to the marketing of the hotel properties for sale
in connection with the settlement of the actions arising out of the Devon
Associates tender offers.
SIGNATURES
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
By: MONTGOMERY REALTY COMPANY-85,
its general partner
/s/William H. Jarrard, Jr.
President and Director
Date: May 17, 1996
