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 September 30, 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 0-15675
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)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 895
Restricted-tenant security deposits 111
Accounts receivable 6
Escrows for taxes and insurance 225
Restricted escrows 444
Other assets 434
Investment properties:
Land $ 4,650
Buildings and related personal property 18,867
23,517
Less accumulated depreciation (8,185) 15,332
$17,447
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 16
Tenant security deposits 111
Accrued taxes 191
Other liabilities 265
Subordinated management fee 63
Mortgage notes payable 12,203
Minority Interest 280
Partners' Capital (Deficit)
General partner $ (689)
Limited partners (28,372 units
issued and outstanding) 5,007 4,318
$17,447
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 Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,253 $ 1,169 $ 3,705 $ 3,496
Other income 89 65 214 207
Total revenues 1,342 1,234 3,919 3,703
Expenses:
Operating 397 403 1,192 1,130
General and administrative 46 47 161 160
Maintenance 247 147 570 421
Depreciation 191 181 564 532
Interest 269 272 809 818
Property taxes 118 109 336 323
Subordinated partnership
management fee 4 4 14 13
Total expenses 1,272 1,163 3,646 3,397
Loss on disposition of
investment property -- (6) (8) (9)
Minority interest in net
income of joint venture (25) (7) (59) (39)
Net income $ 45 $ 58 $ 206 $ 258
Net income allocated to
general partners (3%) $ 1 $ 2 $ 6 $ 8
Net income allocated to
limited partners (97%) 44 56 200 250
$ 45 $ 58 $ 206 $ 258
Net income per limited
partnership unit $ 1.55 $ 1.99 $ 7.05 $ 8.83
<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 -- (23) (737) (760)
Net income for the nine months
ended September 30, 1996 -- 6 200 206
Partners' capital (deficit) at
September 30, 1996 $ 28,372 $ (689) $ 5,007 $ 4,318
<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>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 206 $ 258
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 564 532
Amortization of discounts and loan costs 74 73
Minority interest in net income of joint
venture 59 39
Loss on disposition of investment property 8 9
Change in accounts:
Restricted cash (2) --
Accounts receivable 4 2
Escrows for taxes and insurance 60 (169)
Other assets (48) --
Accounts payable (17) 3
Tenant security deposit liabilities 5 3
Accrued taxes 29 136
Other liabilities (28) 88
Subordinated management fee 14 13
Net cash provided by operating activities 928 987
Cash flows from investing activities:
Property improvements and replacements (185) (181)
Deposits to restricted escrows (8) (15)
Receipts from restricted escrows 22 39
Net cash used in investing activities (171) (157)
Cash flows from financing activities:
Payments on mortgage notes payable (151) (140)
Distributions to partners (760) (1,388)
Distributions to minority interest (112) (175)
Net cash used in financing activities (1,023) (1,703)
Net decrease in cash and cash equivalents (266) (873)
Cash and cash equivalents at beginning of period 1,161 1,978
Cash and cash equivalents at end of period $ 895 $ 1,105
Supplemental disclosure of cash flow information:
Cash paid for interest $ 734 $ 746
<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 three and nine
month periods ended September 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 consolidated 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 nine
months ended September 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $192 $181
Reimbursement for services
of affiliates 109 110
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, and 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 September 30, 1996, were $63,000, of
which $14,000 related to the nine months ending September 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.
On August 29, 1996, the Limited Partnership Agreement was amended to remove
Davidson Diversified Properties, Inc. ("DDPI") as Managing General Partner and
admit Davidson Growth Plus GP Corporation ("DGPGP"), an affiliate, as Managing
General Partner in the place and stead of DDPI effective as of that date.
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
nine months ended September 30, 1996 and 1995:
Average
Occupancy
1996 1995
Brighton Crest Apartments
Marietta, Georgia 96% 95%
The Fairway Apartments
Plano, Texas 97% 97%
The Village Apartments
Brandon, Florida 98% 98%
The Partnership realized net income of approximately $206,000 for the nine
months ended September 30, 1996, compared to net income of approximately
$258,000 for the nine months ended September 30, 1995. The Partnership realized
net income of approximately $45,000 for the three months ended September 30,
1996, compared to net income of approximately $58,000 for the three months ended
September 30, 1995. The decrease in net income for the three and nine month
periods ended September 30, 1996, is primarily attributable to increased
maintenance expenses. The increase in maintenance expenses was due to phase one
of a three phase exterior renovation project at The Fairway Apartments totaling
approximately $101,000. Expenses associated with this project include exterior
painting and siding replacement and the addition of ground floor patio fencing.
Also contributing to the increase in maintenance expenses were tree trimming,
tree removal, and sprinkler repairs at The Fairway Apartments, and sidewalk and
parking lot repairs at The Village Apartments. Mitigating the increase in
maintenance expense was an increase in rental and other income. Rental income
increased as a result of increases in rental rates at all of the properties.
Other income increased due to increased corporate unit rentals at Brighton Crest
Apartments in connection with the 1996 Summer Olympics. The loss on disposal of
property related to roof replacements at The Fairway Apartments.
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 approximately $895,000 at September
30, 1996, compared to unrestricted cash of approximately $1,105,000 at September
30, 1995. Net cash provided by operating activities decreased primarily due to
the increase in maintenance expenses noted above. Net cash used in investing
activities increased primarily due to a decrease in receipts from restricted
escrows. Net cash used in financing activities decreased due to decreased
distributions to partners.
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 $12,203,000, 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 $760,000 and $1,388,000 were made to the partners during the
nine months ended September 30, 1996 and 1995, respectively. Cash distributions
of $112,000 and $175,000 were paid to the minority interest holder during the
nine months ended September 30, 1996 and 1995, respectively.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On August 29, 1996, the Limited Partnership Agreement was amended to
remove Davidson Diversified Properties, Inc. ("DDPI") as managing general
partner and admit Davidson Growth Plus GP Corporation ("DGPGP"), an
affiliate, as managing general partner in the place and stead of DDPI
effective as of that date.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: None.
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 September 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 Growth Plus GP Corporation
Managing General Partner
BY: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: November 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Davidson
Growth Plus L.P. 1996 Third 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 895
<SECURITIES> 0
<RECEIVABLES> 6
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 23,517
<DEPRECIATION> (8,185)
<TOTAL-ASSETS> 17,447
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 12,203
0
0
<COMMON> 0
<OTHER-SE> 4,318
<TOTAL-LIABILITY-AND-EQUITY> 17,447
<SALES> 0
<TOTAL-REVENUES> 3,919
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,646
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> 809
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 206
<EPS-PRIMARY> 7.05<F1>
<EPS-DILUTED> 0
<FN>
<F2>Registrant has an unclassified balance sheet.
<F1>Multiplier is 1.
</FN>
</TABLE>
