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 March 31, 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 hte 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
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U.S. REALTY INCOME PARTNERS L.P.
INDEX
PART I Financial Information
Item l. Financial Statements 3
Compilation Report 4
Balance Sheets at March 31, 1995 and December
31, 1994 5
Statements of Partnership Equity for the period
January 1, 1994 through March 31, 1995 6
Statements of Operations for the three months
ended March 31, 1995 and 1994 7
Statements of Cash Flows for the three months ended
March 31, 1995 and 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 March 31, 1995 (unaudited) and
statements of operations, partnership equity, and cash flows for the three
months ended March 31, 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.
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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 financal 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.
May 5, 1995
Certified Public Accountants
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U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
Unaudited Audited
March 31, December 31,
1995 1994
ASSETS
CASH $ 142,944 $ 165,281
TENANT RECEIVABLES 99 5,879
PROPERTY AND IMPROVEMENTS, net of
accumulated depreciation of $997,286
and $958,434 4,312,641 4,351,493
INVESTMENT IN JOINT VENTURE 1,000 1,000
OTHER ASSETS 292,827 299,587
TOTAL ASSETS $4,749,511 $4,823,240
LIABILITIES AND PARTNERSHIP EQUITY
ACCOUNTS PAYABLE $ 1,605 $ 1,560
ACCRUED EXPENSES 45,732 114,438
NOTES PAYABLE 3,671,863 3,681,141
TOTAL LIABILITIES 3,719,200 3,797,139
MINORITY PARTNER'S INTEREST IN JOINT
VENTURE ( 124,762) ( 136,399)
PARTNERSHIP EQUITY 1,155,073 1,162,500
TOTAL PARTNERSHIP EQUITY 1,030,311 1,026,101
TOTAL LIABILITIES & PARTNERSHIP EQUITY $4,749,511 $4,823,240<PAGE>
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERSHIP EQUITY
Period from January 1, 1994 to March 31, 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 ( 7,056) ( 371) ( 7,427)
Balance at March 31, 1995 $1,333,696 ($178,623) $1,155,073
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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)
STATEMENTS OF CASH FLOWS
Unaudited
Three Months Ending March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations ($ 7,427) ($ 21,941)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities
Minority partner's interest in net income
of consolidated partnership 11,637 3,484
Depreciation 38,852 38,852
Amortization 6,759 6,759
Decrease (increase) in:
Tenant receivables 5,780 7,987
Increase (decrease) in:
Accounts payable 45 924
Professional Fees Payable ( 17,671) ( 2,000)
Accrued expenses ( 51,035) ( 51,035)
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 13,060 ( 16,970)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and improvements - ( 935)
NET CASH PROVIDED BY INVESTING ACTIVITIES - ( 935)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on mortgage note ( 9,278) ( 8,398)
NET CASH PROVIDED BY FINANCING ACTIVITIES ( 9,278) ( 8,398)
NET INCREASE (DECREASE) IN CASH ( 22,338) ( 26,303)
CASH AT BEGINNING OF YEAR 165,281 118,783
CASH AT END OF PERIOD $ 142,943 $ 92,480
SUPPLEMENTAL DISCLOSURES:
INTEREST PAID $ 91,952 $ 92,831
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
March 31, 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 4,712
Provision for loss in investment ( 4,712)
Investment in joint venture at March 31, 1995 $ 1,000
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
March 31, 1995
continued
B. INVESTMENT IN JOINT VENTURES - CONTINUED
March 31, December 31,
1995 1994
ASSETS
Cash $ 12,961 $ 47,642
Restricted cash 270,150 184,012
Tenant receivables 2,782 944
Property and improvements - net 10,443,292 10,517,143
Deferred fees - net 103,482 114,520
$10,832,667 $10,864,261
LIABILITIES AND PARTNERSHIP EQUITY
Accrued expenses $ 93,567 $ 30,201
Accrued interest 76,613 103,188
Tenant deposits 13,892 13,892
Mortgages and notes payable 7,567,346 7,635,320
7,751,418 7,782,601
Partnership equity 3,081,249 3,081,660
$ 10,832,667 $ 10,864,261
Property and improvements consist of:
1995 1994
Building $ 10,661,345 $ 661,345
Personal property 370,113 370,113
Tenant finishes 902,786 869,736
11,934,244 11,901,194
Less accumulated depreciation ( 2,706,145) ( 2,599,244)
9,228,099 9,301,950
Land 1,215,193 1,215,193
$ 10,443,292 $ 10,517,143
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
March 31, 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)
U.S. REALTY INCOME PARTNERS L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Unaudited
March 31, 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 $ 6,673,138 $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 220,696 240,696
$ 7,567,346 $7,635,320
C. TRANSACTIONS WITH AFFILIATES
Fees and other costs and expense paid to the general partner or
its affiliates were as follows:
Three Months
Year Ended
Ended March 31, December 31,
1995 1994
Administrative expenses $ 40,000 $ 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 similiar 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
Bellevue
The Bellevue property was 100% leased at December 31, 1994 and
March 31, 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 Partnership has paid debt
service on a current basis.
DR/US WEST END
The DR/US West End property was 95% leased at December 31, 1994
and 100% leased on March 31, 1995. No tenant leases are currently under
negotiation. One tenant occupies 45.9% of the space with payments
providing base annual lease income of $932,000. The lease 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 tenant
previously had the option to reduce its total square footage, by extending
its lease term. 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. The first mortgage principal debt balance
at March 31, 1995 was $6,673,138 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 $220,696 nonrecourse promissory note
bearing interest only at 8% which matures February 1, 1997. All payments
for debt service were current as of March 31, 1995.
<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
three months ending March 31, 1995 are summarized below.
Bellevue DR/US Partnership Total
Revenues $210,892 $ 474,139 $ 446 $ 685,477
Operating expenses 41,026 183,532 28,539 253,097
Interest 91,952 176,105 - 268,057
Depreciation & amortization 43,004 119,624 2,607 165,235
175,982 479,261 31,146 686,389
Net income (loss) 34,910 ( 5,122) ( 30,700) ( 912)
Partnership share 66 2/3% 50% 100%
Partnership net income
(loss) $ 23,273 N/A ($ 30,700) ($ 7,427)
Partnership Operating cash
flow $ 46,033 ($ 59,093) ($ 13,060)
Operational results for the comparable three month period ended
March 31, 1994 were:
Bellevue DR/US Partnership Total
Revenues $186,180 $ 441,522 $ 94 $ 627,796
Operating expenses 39,892 179,628 19,308 238,828
Interest 92,831 172,479 - 265,310
Depreciation & amort. 43,003 123,527 2,608 169,138
175,726 475,634 21,916 673,276
Net loss 10,454 ( 34,112) ( 21,822) ( 45,480)
Partnership share 66 2/3% 50% 100%
Partnership net income
(loss) from oper. $ 6,969 N/A ($ 21,822) ($ 14,853)
Partnership operating
cash flow $ 4,244 ($ 21,214) ($ 16,970)
The Partnership has utilized the proceeds of the offering as set
forth under "Estimated Use of Proceeds for the Offering," in the
Partnership's Prospectus to acquire, operate and hold for investment
existing income producing commercial real estate properties. Since the
proceeds of the offering are less than the maximum amount the Partnership
was unable to diversify its investments to the extent initially desired.
At December 31, 1993, the partnership had $165,281 in cash and
cash equivalents. This represents 3.40% of capital raised. At March 31,
1995, the Partnership had $142,944 in cash and cash equivalents. This
represents 2.94% 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.
<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.
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
May 10, 1995
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