FORM 10-QSB.--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-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-15675
DAVIDSON GROWTH PLUS, L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 52-1462866
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
(Unaudited)
June 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,210
Restricted-tenant security deposits 112
Accounts receivable 5
Escrows for taxes and insurance 329
Restricted escrows 446
Other assets 400
Investment properties:
Land $ 4,650
Buildings and related personal property 18,816
23,466
Less accumulated depreciation (7,994) 15,472
$17,974
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 41
Tenant security deposits 110
Accrued taxes 218
Other liabilities 270
Subordinated management fee 59
Mortgage notes payable 12,243
Minority Interest 360
Partners' Capital (Deficit)
General partner $ (678)
Limited partners (28,372.00 units
issued and outstanding) 5,351 4,673
$17,974
See Accompanying Notes to Consolidated Financial Statements
b) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,236 $ 1,163 $ 2,452 $ 2,328
Other income 63 60 125 141
Total revenues 1,299 1,223 2,577 2,469
Expenses:
Operating 408 391 795 727
General and administrative 67 61 115 113
Maintenance 143 156 323 274
Depreciation 188 177 373 351
Interest 269 272 540 546
Property taxes 108 109 218 214
Subordinated partnership
management fee 4 3 10 9
Total expenses 1,187 1,169 2,374 2,234
Loss on disposition of
investment property (8) -- (8) (3)
Minority interest in net
income of joint venture (20) (14) (34) (32)
Net income $ 84 $ 40 $ 161 $ 200
Net income allocated to
general partners (3%) $ 3 $ 1 $ 5 $ 6
Net income allocated to
limited partners (97%) 81 39 156 194
$ 84 $ 40 $ 161 $ 200
Net income per limited
partnership unit $ 2.85 $ 1.38 $ 5.50 $ 6.84
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 28,372 $ 1 $28,376 $28,377
Partners' capital (deficit) at
December 31, 1995 28,372 $(672) $ 5,544 $ 4,872
Distributions to partners -- (11) (349) (360)
Net income for the six months
ended June 30, 1996 -- 5 156 161
Partners' capital (deficit) at
June 30, 1996 28,372 $(678) $ 5,351 $ 4,673
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 161 $ 200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 373 351
Amortization of discounts and loan costs 50 48
Minority interest in net income of joint venture 34 32
Loss on disposition of investment property 8 3
Change in accounts:
Restricted cash (4) 3
Accounts receivable 5 1
Escrows for taxes and insurance (44) (53)
Accounts payable 8 (18)
Tenant security deposit liabilities 4 2
Accrued taxes 56 29
Other liabilities (23) (58)
Subordinated management fee 10 9
Net cash provided by operating activities 638 549
Cash flows from investing activities:
Property improvements and replacements (134) (95)
Deposits to restricted escrows (10) (10)
Receipts from restricted escrows 22 10
Net cash used in investing activities (122) (95)
Cash flows from financing activities:
Payments on mortgage notes payable (100) (92)
Distributions to partners (360) (1,052)
Distributions to minority interest (7) (158)
Net cash used in financing activities (467) (1,302)
Net increase (decrease) in cash and cash equivalents 49 (848)
Cash and cash equivalents at beginning of period 1,161 1,978
Cash and cash equivalents at end of period $ 1,210 $ 1,130
Supplemental disclosure of cash flow information:
Cash paid for interest $ 491 $ 498
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) DAVIDSON GROWTH PLUS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Managing General Partner, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six month
period ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.
Note B - Transactions with Affiliated Parties
Affiliates of Insignia Financial Group, Inc. ("Insignia") own the controlling
ownership interest in the Partnership s Managing General Partner with certain
affiliates of Insignia providing property management and asset management
services to the Partnership.
The following payments were made to Insignia and its affiliates for the six
months ended June 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $ 127 $ 120
Reimbursement for services
of affiliates 66 81
Note B - Transactions with Affiliated Parties (continued)
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the Managing General Partner. An affiliate
of the Managing General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the Managing General
Partner who receives payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Managing General Partner by virtue of the agent's obligations is not
significant.
The partnership agreement provides for the Managing General Partner to
receive a fee for managing the affairs of the Partnership. The fee is 2% of
adjusted cash from operations as defined in the partnership agreement. The fee
is payable only after the Partnership has distributed, to the limited partners,
adjusted cash from operations in any year equal to 10% of the limited partners
adjusted invested capital as defined in the partnership agreement. Unpaid
subordinated partnership management fees at June 30, 1996, were $59,000, of
which $10,000 related to the six months ending June 30, 1996.
On December 8, 1995, an affiliate of the Managing General Partner, DGP
Acquisition, L.L.C., ("DGP Acquisition"), distributed an offer to purchase up to
11,349 Limited Partner Units (the "Tender Offer") for a cash price of $240 per
Unit to Limited Partners of record as of October 1, 1995. The Tender Offer,
which originally expired on January 8, 1996, was extended to January 16, 1996.
Approximately 254 Limited Partners holding approximately 2,049 Units (7.22% of
total Units) accepted the Tender Offer and sold their units to DGP Acquisition
for an aggregate sales price of approximately $492,000. As of January 1996,
there were 2,829 holders of record owning approximately 28,372 Units.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 1996 and 1995:
Average
Occupancy
1996 1995
The Fairway Apartments
Plano, Texas 97% 97%
The Village Apartments
Brandon, Florida 98% 98%
Brighton Crest Apartments
Marietta, Georgia 96% 95%
The Partnership realized net income of $161,000 for the six months ended June
30, 1996, compared to net income of $200,000 for the six months ended June 30,
1995. The Partnership realized net income of $84,000 for the three months ended
June 30, 1996, compared to net income of $40,000 for the three months ended June
30, 1995. The decrease in other income for the six months ended June 30, 1996,
compared to the six months ended June 30, 1995, was primarily due to a
nonrecurring tax refund received in the first quarter of 1995 for The Village
Apartments resulting from a property tax appeal instituted by the Managing
General Partner that resulted in a property value reassessment.
The increase in operating expenses for the six months ended June 30, 1996,
was due to increases of approximately $15,000 at The Fairway Apartments and
approximately $47,000 at Brighton Crest Apartments. The increase at The
Fairway Apartments was primarily due to increases in advertising costs resulting
from efforts to improve occupancy levels. The increase at Brighton Crest
Apartments was primarily due to increases in advertising costs, utility costs,
and miscellaneous administrative costs. The increase in maintenance expense for
the six months ended June 30, 1996, was due to increases of approximately
$14,000 at The Village Apartments and approximately $35,000 at The Fairway
Apartments. The increase at The Village Apartments was due to increases in
sidewalk and parking lot repairs and major landscaping projects including sod,
shrub, and tree replacements. The increase at The Fairway Apartments was due
to increases in exterior building maintenance resulting from siding and
foundation repairs. In addition, landscaping expense increased due to tree
trimming and tree removal projects and repairs to the sprinkler system. The
loss on disposal of property related to roof replacements at The Fairway.
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
expense. 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.
The Partnership held unrestricted cash of $1,210,000 at June 30, 1996,
compared to unrestricted cash of $1,130,000 at June 30, 1995. Net cash provided
by operating activities increased primarily due to increased revenue collections
and the timing of trade payables payments. Net cash used in investing
activities increased due to increased property improvements and replacements.
Net cash used in financing activities decreased due to decreased partner
distributions and reduced distributions to the minority interest.
On December 8, 1995, an affiliate of the Managing General Partner, DGP
Acquisition, L.L.C., ("DGP Acquisition"), distributed an offer to purchase up to
11,349 Limited Partner Units (the "Tender Offer") for a cash price of $240 per
Unit to Limited Partners of record as of October 1, 1995. The Tender Offer,
which originally expired on January 8, 1996, was extended to January 16, 1996.
Approximately 254 Limited Partners holding approximately 2,049 Units (7.22% of
total Units) accepted the Tender Offer and sold their units to DGP Acquisition
for an aggregate sales price of approximately $492,000. As of January 1996,
there were 2,829 holders of record owning approximately 28,372 Units.
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 property 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 $12,243,000, net of discount, is amortized over periods ranging
from 21 to approximately 29 years with balloon payments due in 2002 and 2003 at
which time the individual properties will either be refinanced or sold. Future
cash distributions will depend on the levels of net cash generated from
operations, property sales and the availability of cash reserves. Cash
distributions of $360,000 and $1,052,000 were made to the partners during the
six months ended June 30, 1996 and 1995, respectively. Cash distributions of
$7,000 and $158,000 were paid to the minority interest holder during the six
months ended June 30, 1996 and 1995, respectively.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 1996.
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.
DAVIDSON GROWTH PLUS L.P.
BY: DAVIDSON DIVERSIFIED PROPERTIES, INC.,
Managing General Partner
BY: /s/ Carroll D. Vinson
Carroll D. Vinson
President
BY: /s/ Robert D. Long
Robert D. Long, Jr.
Vice President/CAO
DATE: July 31, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Davidson
Growth Plus L.P. 1996 Second Quarter 10-QSB and is qualified in its entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000795757
<NAME> DAVIDSON GROWTH PLUS L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,210
<SECURITIES> 0
<RECEIVABLES> 5
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,502
<PP&E> 23,466
<DEPRECIATION> (7,994)
<TOTAL-ASSETS> 17,974
<CURRENT-LIABILITIES> 639
<BONDS> 12,243
0
0
<COMMON> 0
<OTHER-SE> 4,673
<TOTAL-LIABILITY-AND-EQUITY> 17,974
<SALES> 2,577
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,374
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 540
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161
<EPS-PRIMARY> 5.50<F1>
<EPS-DILUTED> 0
<FN>
<F1> Multiplier is 1.
</FN>
</TABLE>
