UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] 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 33-17577
U.S. Realty Income Partners L.P.
(Exact name of small business issuer as specified in its charter)
DELAWARE 62-1331754
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 50507, Nashville, TN 37205
(Address of principal executive offices) (Zip Code)
(615) 298-5700
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the 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
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
INDEX
PART I Financial Information
Item l. Financial Statements 3
Compilation Report 4
Balance Sheets at June 30, 1995 & December
31, 1994 5
Statements of Partnership Equity for the period
January 1, 1994 through June 30, 1995 6
Statements of Operations for the three months
& six months ended June 30, 1995 & 1994 7
Statements of Cash Flows for the six months ended
June 30, 1995 & 1994 8
Notes to Financial Statements 9 - 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13 - 15
PART II Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Default Upon Senior Securities 16
Item 4. Submissions of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following balance sheet at June 30, 1995 (unaudited) and
statements of operations, partnership equity, and cash flows for the three
and six months ended June 30, 1995 (unaudited), for U.S. Realty Income
Partners L.P. (a Delaware limited partnership) (the "Partnership"), have
not been examined by independent public accountants but reflect, in the
opinion of management, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the information required.
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnership's 1994
Annual Report, as reported on Form 10-K.
<PAGE>
OSBORNE & CO., P.C.
761 OLD HICKORY BLVD., SUITE 201
BRENTWOOD, TN 37027
To the Partners
U.S. Realty Income Partners L.P.
P. O. Box 50507
Nashville, TN 37205
We have compiled the accompanying balance sheet of U.S. Realty Income
Partners L.P. (a limited partnership) as of March 31, 1995 and the related
statements of operations, partnership equity, and cash flows for the three
months then ended, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
We are not considered to be independent with respect to U.S. Realty Income
Partners L.P. according to Securities and Exchange Commission regulations.
The financial statements for the year ended December 31, 1994, were
audited by other accountants, and they expressed an unqualified opinion on
them in their report dated March 15, 1995, but they have not performed any
auditing procedures since that date.
August 2, 1995
Certified Public Accountants
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
Unaudited Audited
June 30, December 31,
1995 1994
ASSETS
CASH $ 173,170 $ 165,281
TENANT RECEIVABLES 1,940 5,879
PROPERTY AND IMPROVEMENTS, net of
accumulated depreciation of
$1,036,148 and $958,434 4,273,779 4,351,493
INVESTMENT IN JOINT VENTURE 1,000 1,000
OTHER ASSETS 286,579 299,587
TOTAL ASSETS $4,736,468 $4,823,240
LIABILITIES AND PARTNERSHIP EQUITY
ACCOUNTS PAYABLE $ 16,634 $ 1,560
ACCRUED EXPENSES 54,544 114,438
NOTES PAYABLE 3,662,352 3,681,141
TOTAL LIABILITIES 3,733,530 3,797,139
MINORITY PARTNER'S INTEREST IN JOINT
VENTURE ( 128,060) ( 136,399)
PARTNERSHIP EQUITY 1,130,998 1,162,500
TOTAL PARTNERSHIP EQUITY 1,002,938 1,026,101
TOTAL LIABILITIES & PARTNERSHIP EQUITY $4,736,468 $4,823,240<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERSHIP EQUITY
Period from January 1, 1994 to June 30, 1995
Limited General
Partners Partner Total
Distributive share of
net earnings 95% 5% 100%
Balance at January 1, 1994 $1,421,694 ($173,992) $1,247,702
Net loss ( 80,942) ( 4,260) ( 85,202)
Balance at December 31, 1994 1,340,752 ( 178,252) 1,162,500
Net loss ( 29,927) ( 1,575) ( 31,502)
Balance at June 30, 1995 $1,310,825 ($179,827) ($1,130,998
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended
June 30, 1995 & 1994
Unaudited Unaudited Unaudited Unaudited
3 Months 3 Months 6 Months 6 Months
1995 1994 1995 1994
Revenues
Rental income $ 140,237 $ 135,250 $ 327,804 $ 303,976
CAM reimbursements 20,325 34,844 42,482 51,953
Miscellaneous 68 139 191 230
Interest income 1,189 368 2,680 717
161,819 170,601 373,157 356,876
Expenses
Interest 91,718 92,620 183,669 185,451
Professional fees 1,366 3,000 17,716 14,848
Depreciation 38,862 38,852 77,714 77,703
Amortization 5,467 6,759 13,125 13,518
Property taxes 17,012 17,012 34,023 34,023
Leasing & admin. 17,849 17,958 30,631 31,934
Management fees 5,488 5,513 14,416 12,976
Repairs 7,250 6,129 16,134 15,031
185,012 187,843 387,428 385,484
Net Loss Before Minority
Partner's Share of Loss( 23,193) ( 17,242) ( 14,271) ( 28,608)
Minority Partner's Interest
in Share of Loss 3,298 1,101 ( 8,339) ( 2,383)
Loss From Operations ( 19,895) ( 16,141) ( 22,610) ( 30,991)
Provision for Loss in
Investment in JV ( 4,181) ( 6,658) ( 8,892) ( 13,747)
Net Loss ($ 24,076) ($ 22,799) ($ 31,502) ($ 44,738)
Net Loss per Unit ($ 4.71) ($ 4.46) ($ 6.16) ($ 8.75)
Weighted Average
Number of Units 4,858 4,858 4,858 4,858
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ending June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 31,502) ($ 44,738)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Minority partner's interest in net loss
of consolidated partnership 8,339 2,383
Depreciation 77,714 77,703
Amortization 13,125 13,518
Decrease (increase) in:
Tenant receivables 3,939 ( 7,977)
Other assets ( 116) 0
Increase (decrease) in:
Accounts payable 15,074 397
Professional Fees Payable ( 25,871) ( 5,419)
Tenant Deposits 0 300
Accrued expenses ( 34,024) ( 34,024)
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 26,678 2,143
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and improvements 0 ( 934)
NET CASH PROVIDED BY INVESTING ACTIVITIES 0 ( 934)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage note ( 18,789) ( 17,007)
NET CASH PROVIDED BY FINANCING ACTIVITIES ( 18,789) ( 17,007)
NET INCREASE (DECREASE) IN CASH 7,889 ( 15,798)
CASH AT BEGINNING OF YEAR 165,281 118,781
CASH AT END OF PERIOD $ 173,170 $ 102,983
SUPPLEMENTAL DISCLOSURES:
INTEREST PAID $ 183,669 $ 185,451
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
June 30, 1995
A. ACCOUNTING POLICIES
Refer to the Partnership's annual financial statements for the year
ended December 31, 1994 for a description of the accounting policies which
have been continued without change. Also, refer to the footnotes of these
annual statements for additional details of the Partnership's financial
condition. The details in those notes have not significantly changed
except as a result of normal transactions in the interim. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary have been included. Operating results are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1995.
B. INVESTMENT IN JOINT VENTURES
The Partnership has a 50% interest in DR/US West End General
Partnership, a joint venture formed to own and operate a commercial office
building in Nashville, Tennessee. The Company's initial investment of
$900,000 in the general partner joint venture was made on November 1,
1988. Effective December 31, 1991, the Partnership adopted the
liquidation method of accounting for its investment in the joint venture.
Investment in joint venture at December 31, 1991 $ 1,000
Additional equity contributions 28,448
Provision for loss in investment ( 28,448)
Investment in joint venture at December 31, 1992 1,000
Additional equity contributions 31,787
Provision for loss in investment ( 31,787)
Investment in joint venture at December 31, 1993 1,000
Additional equity contributions 25,174
Provision for loss in investment ( 25,174)
Investment in joint venture at December 1994 1,000
Additional equity contributions 8,892
Provision for loss in investment ( 8,892)
Investment in joint venture at June 30, 1995 $ 1,000
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
June 30, 1995
continued
B. INVESTMENT IN JOINT VENTURES - CONTINUED
June 30, December 31,
1995 1994
ASSETS
Cash $ 38,437 $ 47,642
Restricted cash 308,415 184,012
Tenant receivables 6,277 944
Property and improvements - net 10,342,611 10,517,143
Deferred fees - net 106,106 114,520
$10,801,846 $10,864,261
LIABILITIES AND PARTNERSHIP EQUITY
Accrued expenses $ 108,567 $ 30,201
Accrued interest 78,845 103,188
Tenant deposits 6,090 13,892
Mortgages and notes payable 7,501,833 7,635,320
7,695,335 7,782,601
Partnership equity 3,106,511 3,081,660
$ 10,801,846 $ 10,864,261
Property and improvements consist of:
1995 1994
Building $ 10,661,345 $ 661,345
Personal property 371,085 370,113
Tenant finishes 908,033 869,736
11,940,463 11,901,194
Less accumulated depreciation ( 2,813,045) ( 2,599,244)
9,127,418 9,301,950
Land 1,215,193 1,215,193
$ 10,342,611 $ 10,517,143
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
June 30, 1995
continued
B. INVESTMENT IN JOINT VENTURES - CONTINUED
The following information summarizes the activity of the joint venture.
Three Months Ending Six Months Ending
June 30, June 30,
1995 1994 1995 1994
Revenues
Rental income $476,644 $443,053 $925,542 $859,914
Miscellaneous income 23,402 19,613 46,310 41,664
Interest income 2,976 1,185 5,309 3,795
503,022 463,851 977,161 905,373
Expenses
Interest 172,343 174,492 348,448 346,971
Depreciation & amortiz. 119,624 123,527 239,248 247,054
Utilities 52,498 53,344 110,844 115,066
Property taxes 43,323 43,323 86,646 86,637
Repairs & maintenance 22,670 23,204 41,152 37,997
Personnel/administrative 27,127 21,263 49,716 40,582
Janitorial 21,320 20,905 40,412 40,287
Management fees 29,208 18,747 37,680 36,238
Insurance 3,828 3,727 7,056 7,334
481,941 482,532 961,202 958,166
NET LOSS $ 21,081 ($ 18,681) ($ 15,959) ($ 52,793)
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
June 30, 1995
continued
B. INVESTMENT IN JOINT VENTURE - CONTINUED
Mortgages payable consist of: 1995 1994
Mortgage - 9%, monthly principal and
interest of $62,981 - Matures
April 1, 1997 $ 6,637,127 $6,721,112
Joint venture partner - prime
+1%, interest only, matures
March 1, 2028 673,512 673,512
Nonrecourse promissory note - 8% monthly
principal payment of $10,000 and
interest mature February 1, 1997 190,696 240,696
$ 7,501,335 $7,635,320
C. TRANSACTIONS WITH AFFILIATES
Fees and other costs and expense paid to the general partner or its
affiliates were as follows:
Six Months Year Ended
Ended June 30 December 31,
1995 1994
Administrative expenses $ 49,000 $ 36,000
In 1995, the Partnership paid $31,000 in deferred payments in
addition to normal recurring charges.
The Partnership believes the amounts paid to affiliates are
representative of amounts which would have been paid to independent
parties for similar services.
<PAGE>
PART I - FINANCIAL INFORMATION
continued
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At December 31, 1993, the partnership had $165,281 in cash and
cash equivalents. This represents 3.40% of capital raised. At June 30,
1995, the Partnership had $173,170 in cash and cash equivalents. This
represents 3.56% of capital raised. The Partnership had established a
working capital reserve of 5% of the gross proceeds of the offering.
After May 15, 1990, the Partnership's Prospectus provided that the working
capital reserve could be reduced to 3% of capital raised depending upon
the Partnership's experience with its properties. The working capital was
reduced to allow the Partnership to pay costs associated with the DR/US
refinancing. In the event such reserves are insufficient to satisfy
unanticipated costs, the Partnership will be required to borrow additional
funds to meet such costs. The General Partner does not anticipate having
to borrow for working capital reserves in 1995.
The General Partner has deemed it advisable not to make any cash
distributions since May 1990. The General Partner does not expect to make
any cash distributions in 1995.
Bellevue
The Bellevue property was 100% leased at December 31, 1994 and
June 30, 1995. Lease rents from the tenants amounts to $48,367 per
occupancy month. In addition, the tenants pay common area maintenance
charges of $5,881 per month for a total of $54,248 per month.
On February 1, 1989, the Joint Venture obtained a $3,800,000 first
mortgage loan on this property from an unaffiliated lender. The mortgage
bears interest at a rate of 10% per annum and required monthly
installments of interest only through February 1, 1991. Monthly debt
service was $31,667 until March 1991 at which time monthly installments of
principal and interest rose to $33,743. The Joint Venture has paid debt
service on a current basis.
In the first quarter of 1996, the first mortgage will become due.
Negotiations have begun to refinance this indebtedness. The results of
our efforts will be communicated on a timely basis.
<PAGE>
DR/US WEST END
The DR/US West End property was 95% leased at December 31, 1994
and 100% leased on June 30, 1995. One tenant occupies 45.9% of the space
with payments providing base annual lease income of $932,000. The lease
for this tenant runs through October 31, 1998, with two additional three-
year options to renew at market rates. This tenant may cancel its lease
with six months' notice after 1998 with a termination payment equal to the
present value of future rents due using a discount rate of prime plus two
percent. The lease was extended for two more years, through October 31,
1998, at $19.35 per square foot in the first year and at a market rate in
the second year. Negotiations have commenced with our lead tenant in an
effort to renew this lease on a long-term basis. The first mortgage
principal debt balance at June 30, 1995 was $6,637,127 which bears
interest at 9%. In addition the other joint venture partner has loaned
$673,512 to the joint venture at prime plus 1% which matures March 1,
2028, in order to meet its obligations. Also, there is a $190,696
nonrecourse promissory note bearing interest only at 8% which matures
February 1, 1997. All payments for debt service were current as of June
30, 1995. Negotiations are continuing to restructure all debt. In our
next correspondence, details of our efforts regarding this effort may be
available.
<PAGE>
PART I - FINANCIAL INFORMATION
continued
Results of Operations
The Partnership holds joint venture interests in two joint
ventures, Bellevue Plaza Partners (66 2/3%) and DR/US West End General
Partnership (50%). The operational results of the Partnership for the six
months ending June 30, 1995 are summarized below.
Bellevue DR/US Partnership Total
Revenues $372,400 $ 977,161 $ 757 $1,350,318
Operating expenses 80,786 373,506 41,026 495,318
Interest 183,669 348,448 - 532,117
Depreciation & amort. 83,928 239,248 7,911 330,087
347,383 961,202 48,937 1,357,522
Net income (loss) 25,017 15,959 ( 48,180) ( 7,214)
Partnership share 66 2/3% 50% 100%
Partnership net income
(loss) $ 16,678 N/A ($ 48,180) ($ 31,502)
Partnership Oper. cash
flow $ 96,835 ($ 70,157) ($ 26,678)
Operational results for the comparable six month period ended
June 30, 1994 were:
Bellevue DR/US Partnership Total
Revenues $356,729 $ 905,373 $ 147 $1,262,249
Operating expenses 79,918 364,141 43,540 473,852
Interest 185,451 346,971 - 532,422
Depreciation & amort. 84,210 247,054 6,112 337,376
349,579 958,166 49,652 1,343,650
Net loss 7,150 ( 52,793) ( 49,505) ( 81,401)
Partnership share 66 2/3% 50% 100%
Partnership net inc.
(loss) from oper. $ 4,767 - ($ 49,505 ($ 44,738)
Partnership oper-
ating cash flow $ 37,208 ($ 35,065) ($ 2,143)
The Partnership utilized the proceeds of the offering to acquire,
operate and hold for investment existing income producing commercial real
estate properties. Since the proceeds of the offering were less than the
maximum amount the Partnership was unable to diversify its investments to
the extent initially desired.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities
None.
ITEM 3. Default Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
1. Exhibits
None.
2. Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
U.S. REALTY INCOME PARTNERS L.P.
By: Vanderbilt Realty Joint Venture,
the General Partner
By: Vanderbilt Realty Associates, Inc.
its Managing General Partner
By: Robert Bond Miller
Robert Bond Miller
President, Director, Chief Executive
Officer, Chief Financial Officer and
Chief Accounting Officer
August 10, 1995
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERSHIP EQUITY
Period from January 1, 1992 to March 31, 1993
Limited General
Partners Partner Total
Distributive share of net
earnings (loss) 95% 5% 100%
Balance at January 1, 1992 $1,771,185 ($155,598) $1,615,587
Net Loss ( 194,051) ( 10,213) ( 204,264)
Balance at December 31, 1992 $1,577,134 ($165,811) $1,411,323
Net Loss ( 17,241) ( 907) ( 18,148)
Balance at March 31, 1993 $1,559,893 ($166,718) $1,393,175
<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
Unaudited
Three Months Ending
March 31,
1995 1994
REVENUES:
Rental income $187,567 $168,726
Common area maintenance 22,156 17,109
Miscellaneous 123 90
Interest 1,492 349
211,338 186,274
EXPENSES:
Interest 91,952 92,831
Legal and professional 16,350 11,848
Depreciation 38,852 38,852
Amortization 6,759 6,759
Property taxes 17,012 17,012
Leasing and administrative 13,681 13,976
Management fees 8,927 7,463
Repairs and maintenance 8,884 8,902
202,417 197,642
NET INCOME (LOSS) BEFORE MINORITY PARTNER'S
SHARE OF LOSS 8,921 ( 11,368)
Minority Partner's Interest in
Share of Income ( 11,637) ( 3,485)
LOSS FROM OPERATIONS ( 2,716) ( 14,853)
Provision for Loss in Investment in
Joint Venture ( 4,711) ( 7,087)
NET LOSS ($ 7,427) ($ 21,940)
NET LOSS PER UNIT ($ 1.45) ($ 4.29)
Weight Average Number of Units 4,858 4,858
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
June 30, 1995
continued
B.INVESTMENT IN JOINT VENTURE - CONTINUED
The following information summarizes the activity of the joint venture.
Three Months Ending
March 31,
1995 1994
REVENUES:
Rental income $448,898 $416,861
Miscellaneous income 22,908 22,051
Interest income 2,333 2,610
474,139 441,522
EXPENSES:
Interest 176,105 172,479
Depreciation & amortization 119,624 123,527
Utilities 58,346 61,722
Property taxes 43,323 43,314
Repairs & maintenance 18,482 14,793
Personnel & administrative 22,589 19,319
Janitorial 19,092 19,382
Management fees 18,472 17,491
Insurance 3,228 3,607
479,261 475,634
NET LOSS ($ 5,122) ($ 34,112)
