FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________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 (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 508
Receivables and deposits 189
Restricted escrows 429
Other assets 224
Investment properties:
Land $ 4,650
Buildings and related personal property 20,602
25,252
Less accumulated depreciation (11,310) 13,942
$ 15,292
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 109
Tenant security deposit liabilities 112
Accrued property taxes 240
Other liabilities 303
Mortgage notes payable 11,480
Minority interest 62
Partners' (Deficit) Capital
General partners $ (729)
Limited partners (28,371.75 units issued and
outstanding) 3,715 2,986
$ 15,292
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 1,345 $ 1,298 $ 2,637 $ 2,617
Other income 115 89 189 176
Total revenues 1,460 1,387 2,826 2,793
Expenses:
Operating 496 507 993 932
General and administrative 72 70 128 138
Depreciation 244 211 481 407
Interest 250 258 502 517
Property taxes 120 118 237 237
Total expenses 1,182 1,164 2,341 2,231
Income before minority interest
in net income of joint venture 278 223 485 562
Minority interest in net income
of joint venture (24) (17) (40) (56)
Net income $ 254 $ 206 $ 445 $ 506
Net income allocated to general
partners (3%) $ 8 $ 6 $ 13 $ 15
Net income allocated to limited
partners (97%) 246 200 432 491
$ 254 $ 206 $ 445 $ 506
Net income per limited
partnership unit $ 8.67 $ 7.05 $15.23 $ 17.31
Distributions per limited
partnership unit $ 15.55 $ 31.47 $ 23.76 $ 31.47
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 28,371.75 $ 1 $28,376 $28,377
Partners' (deficit) capital at
December 31, 1999 28,371.75 $ (721) $ 3,957 $ 3,236
Distributions to partners -- (21) (674) (695)
Net income for the six
months ended June 30, 2000 -- 13 432 445
Partners' (deficit) capital
at June 30, 2000 28,371.75 $ (729) $ 3,715 $ 2,986
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 445 $ 506
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 481 407
Amortization of discounts and loan costs 50 52
Minority interest in net income of joint venture 40 56
Change in accounts:
Receivables and deposits 177 (14)
Other assets (21) (52)
Accounts payable 29 (5)
Tenant security deposit liabilities (8) (16)
Accrued property taxes 43 48
Other liabilities (14) (8)
Net cash provided by operating activities 1,222 974
Cash flows from investing activities:
Property improvements and replacements (382) (185)
Net (deposits to) receipts from restricted escrows (162) 107
Net cash used in investing activities (544) (78)
Cash flows from financing activities:
Payments on mortgage notes payable (138) (126)
Distributions to partners (695) (921)
Distributions to minority partner (83) (79)
Net cash used in financing activities (916) (1,126)
Net decrease in cash and cash equivalents (238) (230)
Cash and cash equivalents at beginning of period 746 1,186
Cash and cash equivalents at end of period $ 508 $ 956
Supplemental disclosure of cash flow information:
Cash paid for interest $ 453 $ 465
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
e)
DAVIDSON GROWTH PLUS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Davidson Growth
Plus, L.P. (the "Partnership" or "Registrant") 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 Davidson Growth Plus GP Corporation (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 six month periods ended June 30, 2000, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2000. 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, 1999.
Principles of Consolidation
The consolidated financial statements of the Partnership include its 99% limited
partnership interest in The New Fairways, LP and its 82.5% general partnership
interest in Sterling Crest Joint Venture ("Sterling Crest") which operates
Brighton Crest. Because the Partnership may remove the general partner of The
New Fairways, L.P. and has a controlling interest in Sterling Crest, the
partnerships are controlled and consolidated by the Partnership. All significant
inter-entity balances have been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. 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. Affiliates of the Managing General Partner provide
property management and asset management services to the Partnership. The
Partnership Agreement provides for (i) payments to affiliates for services and
(ii) reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
<PAGE>
The following amounts were paid or accrued to the Managing General Partner
and/or its affiliates during the six month periods ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $144 $141
Reimbursement for services of affiliates (included in
general and administrative expense) 55 50
Subordinated management fee (included in general and
administrative expense) 18 25
During the six months ended June 30, 2000 and 1999, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $144,000 and
$141,000 for the six months ended June 30, 2000 and 1999, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $55,000 and
$50,000 for the six months ended June 30, 2000 and 1999, respectively.
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. Payment of this
management fee is subordinated 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 June
30, 2000, are approximately $151,000. Included in the $151,000 subordinated
management fee payable at June 30, 2000, were Partnership management fees of
approximately $18,000 and $25,000 for the six month periods ended June 30, 2000
and 1999, respectively.
On September 25, 1997, an affiliate of the Managing General Partner purchased
Lehman Brothers' Class "D" subordinated bonds of SASCO, 1992-MI. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including The Fairway Apartments owned by the Partnership.
AIMCO and its affiliates currently own 14,515 limited partnership units in the
Partnership representing 51.16% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests 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. As a result of its
ownership of 51.16% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. 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>
Note D - Distributions to Partners
Cash distributions from operations of approximately $695,000 (approximately
$674,000 to the limited partners or $23.76 per limited partnership unit) were
paid to the partners during the six months ended June 30, 2000. Cash
distributions from operations of approximately $921,000 (approximately $893,000
to the limited partners or $31.47 per limited partnership unit) were paid to the
partners during the six months ended June 30, 1999.
Note E - 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 three apartment complexes one each in Marietta, Georgia; Plano, Texas; and
Brandon, Florida. 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 segments are the same as those of the Partnership as described in
the Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1999.
Factors management used to identify the enterprise's reportable segments: The
Partnership's reportable segment consists of investment properties that offer
similar products and services. Although each of the investment properties is
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
Segment information for the three and six month periods ended June 30, 2000 and
1999, is shown in the following tables (in thousands). The "Other" column
includes Partnership administration related items and income and expense not
allocated to the reportable segment.
For the Three Months Ended
June 30, 2000 Residential Other Totals
Rental income $ 1,345 $ -- $ 1,345
Other income 103 12 115
Interest expense 250 -- 250
Depreciation 244 -- 244
General and administrative expense -- 72 72
Minority interest in net income of
joint venture -- (24) (24)
Segment profit (loss) 338 (84) 254
<PAGE>
For the Six Months Ended
June 30, 2000 Residential Other Totals
Rental income $ 2,637 $ -- $ 2,637
Other income 167 22 189
Interest expense 502 -- 502
Depreciation 481 -- 481
General and administrative expense -- 128 128
Minority interest in net income of
joint venture -- (40) (40)
Segment profit (loss) 591 (146) 445
Total assets 15,149 143 15,292
Capital expenditures for investment
properties 382 -- 382
For the Three Months Ended
June 30, 1999 Residential Other Totals
Rental income $ 1,298 $ -- $ 1,298
Other income 68 21 89
Interest expense 258 -- 258
Depreciation 211 -- 211
General and administrative expense -- 70 70
Minority interest in net income of
joint venture -- (17) (17)
Segment profit (loss) 272 (66) 206
For the Six Months Ended
June 30, 1999 Residential Other Totals
Rental income $ 2,617 $ -- $ 2,617
Other income 130 46 176
Interest expense 517 -- 517
Depreciation 407 -- 407
General and administrative expense -- 138 138
Minority interest in net income of
joint venture -- (56) (56)
Segment profit (loss) 654 (148) 506
Total assets 15,599 302 15,901
Capital expenditures for investment
properties 185 -- 185
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership'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 Partnership'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.
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, 2000 and 1999:
Average Occupancy
Property 2000 1999
Brighton Crest Apartments 93% 94%
Marietta, Georgia
The Fairway Apartments 96% 93%
Plano, Texas
The Village Apartments 96% 97%
Brandon, Florida
The Managing General Partner attributes the increase in occupancy at The Fairway
Apartments to improved market conditions in the Plano, Texas area and an
increase in concessions offered to attract tenants.
Results of Operations
The Partnership realized net income of approximately $445,000 for the six months
ended June 30, 2000, compared to net income of approximately $506,000 for the
six months ended June 30, 1999. The Partnership's net income for the three
months ended June 30, 2000, was approximately $254,000 compared to net income of
approximately $206,000 for the three months ended June 30, 1999. The decrease in
net income for the six months ended June 30, 2000 is primarily attributable to
an increase in total expenses partially offset by an increase in total revenues
and a decrease in minority interest in income from the joint venture. The
increase in net income for the three month period ended June 30, 2000, is due to
an increase in total revenues which is partially offset by a slight increase in
total expenses. Total revenues increased for the three and six month periods
ended June 30, 2000 primarily as a result of an increase in rental income and an
increase in other income. Rental income increased primarily due to an increase
in average rental rates at all of the Partnership's properties and increased
occupancy at The Fairway Apartments. These factors were partially offset by
decreased occupancy at Brighton Crest and The Village Apartments and an increase
in concession costs at all of the Partnership's properties. Other income
increased primarily due to an increase in tenant charges at The Fairway
Apartments.
The increase in total expenses for the six months ended June 30, 2000 is
primarily attributable to increases in operating expenses and depreciation
expense, partially offset by a decrease in interest expense and general and
administrative expenses. The increase in total expenses for the three month
period ended June 30, 2000 is primarily attributable to the increase in
depreciation expense, partially offset by a decrease in operating expenses. The
increase in depreciation expense for the three and six month periods ended June
30, 2000 is due to an increase in capital improvements put into service during
the past twelve months. Operating expenses increased for the six months ended
June 30, 2000 due to increased advertising and utility expenses at Brighton
Crest Apartments and increased maintenance and repairs expenses at The Fairway
Apartments. Operating expenses decreased for the three month period ended June
30, 2000 due to decreased maintenance and repairs expenses at Brighton Crest
Apartments during the three month period ended June 30, 2000 compared to the
corresponding period in 1999. General and administrative expenses decreased for
the six months ended June 30, 2000 primarily due to decreased legal expenses
partially offset by increased professional fees associated with managing the
Partnership and increased reimbursements to the Managing General Partner.
Included in general and administrative expenses at both June 30, 2000 and 1999,
are reimbursements to the Managing General Partner allowed under the Partnership
Agreement associated with its management of the Partnership. 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. The decrease in minority interest in net income of the joint venture
for the six month period ended June 30, 2000 is due to decreased occupancy and
increased concession costs at the joint venture's property, Brighton Crest.
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.
Liquidity and Capital Resources
The Partnership held cash and cash equivalents of approximately $508,000 at June
30, 2000, compared to approximately $956,000 at June 30, 1999. The decrease in
cash and cash equivalents of approximately $238,000 from the Partnership's cash
balance at December 31, 1999, is due primarily to approximately $544,000 of cash
used in investing activities and to approximately $916,000 of cash used in
financing activities, which was partially offset by approximately $1,222,000 of
cash provided by operating activities. Cash used in investing activities
consisted of property improvements and replacements and net deposits to escrow
accounts maintained by the mortgage lenders. Cash used in financing activities
consisted primarily of distributions from operations to the partners, and to a
lesser extent, payments of principal made on the mortgages encumbering the
Partnership's properties and distributions to the minority partner of Sterling
Crest. 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 various 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. Capital
improvements planned for the Partnership's properties are detailed below.
Brighton Crest Apartments
During the six months ended June 30, 2000, the Partnership completed
approximately $167,000 of capital improvements at the property, consisting
primarily of roof replacement, carpet and vinyl replacements, appliances, major
landscaping, and other building improvements. These improvements were funded
from cash from operations. The Partnership has evaluated the capital improvement
needs of the property for the year 2000. The amount budgeted is approximately
$265,000, consisting primarily of air conditioning unit replacements, plumbing
upgrades, and carpet and vinyl replacements. 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.
Fairway Apartments
During the six months ended June 30, 2000, the Partnership completed
approximately $40,000 of capital improvements at the property, consisting
primarily of carpet and tile replacements, interior decoration, and appliances.
These improvements were funded from operating cash flow. The Partnership has
evaluated the capital improvement needs of the property for the year 2000. The
amount budgeted is approximately $150,000, consisting primarily of air
conditioning unit replacements, carpet replacements, interior decoration,
parking lot improvements, and appliances. 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.
The Village Apartments
During the six months ended June 30, 2000, the Partnership completed
approximately $175,000 of budgeted and non-budgeted capital improvements at the
property, consisting primarily of plumbing upgrades, carpet and vinyl
replacements, roof replacement, appliances, and building improvements. These
improvements were funded from operating cash flow. The Partnership has evaluated
the capital improvement needs of the property for the year 2000. The amount
budgeted in 2000 is approximately $92,000, consisting primarily of air
conditioning unit replacement, appliances, carpet and vinyl replacements, and
plumbing upgrades. 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.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected.
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 $11,480,000, net of discounts, is amortized over
periods ranging from approximately 21 to 29 years with balloon payments due in
2002 and 2003. 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
may risk losing such properties through foreclosure.
Cash distributions from operations of approximately $695,000 (approximately
$674,000 to the limited partners or $23.76 per limited partnership unit) were
paid to the partners during the six months ended June 30, 2000. Cash
distributions from operations of approximately $921,000 (approximately $893,000
to the limited partners or $31.47 per limited partnership unit) were paid to the
partners during the six months ended June 30, 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 improvements to
permit further distributions to its partners during the remainder of the year
2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
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, 2000.
<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.
DAVIDSON GROWTH PLUS, L.P.
By: DAVIDSON GROWTH PLUS GP CORPORATION
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
