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, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-17646
UNITED INVESTORS INCOME PROPERTIES
(Exact name of small business issuer as specified in its charter)
Missouri 43-1483942
(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 (803) 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) UNITED INVESTORS INCOME PROPERTIES
BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C
Assets
Cash:
Unrestricted $ 922,336
Restricted-tenant security deposits 50,567
Accounts receivable 15,746
Escrows for taxes 96,114
Other assets 1,792
Investment properties:
Land $ 1,861,813
Buildings and related personal
property 10,035,909
11,897,722
Less accumulated depreciation (2,076,030) 9,821,692
Investment in Joint venture 654,445
$11,562,692
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $80,631
Tenant security deposits 54,576
Accrued taxes 28,371
Other liabilities 59,765
Partners' Capital (Deficit)
General partner $ (19,944)
Limited partners (61,063 units
issued and outstanding) 11,359,293 11,339,349
$11,562,692
</TABLE>
See Accompanying Notes to Financial Statements
1
<PAGE>
b) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $364,047 $403,136 $731,761 $807,801
Other income 22,928 26,398 51,865 48,310
Total revenues 386,975 429,534 783,626 856,111
Expenses:
Operating 104,708 103,585 195,460 187,273
General and administrative 18,768 18,445 35,708 32,232
Property management fees 19,098 22,290 38,364 45,352
Maintenance 64,215 41,641 102,222 91,039
Depreciation 85,381 84,509 170,399 168,650
Property taxes 36,886 41,197 77,716 86,535
Tenant reimbursements (761) (4,660) (2,529) (23,644)
Total expenses 328,295 307,007 617,340 587,437
Equity in income of
joint venture 8,312 1,211 18,960 15,534
Net income $ 66,992 $123,738 $185,246 $284,208
Net income allocated to
general partners (1%) $ 670 $ 1,237 $ 1,852 $ 2,842
Net income allocated to
limited partners (99%) 66,322 122,501 183,394 281,366
$ 66,992 $123,738 $185,246 $284,208
Net income per limited
partnership unit $ 1.09 $ 2.01 $ 3.00 $ 4.61
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE>
c) UNITED INVESTORS INCOME PROPERTIES
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 61,063 $ 100 $15,265,750 $15,265,850
Partners' capital (deficit) at
December 31, 1994 61,063 $(18,324) $11,519,621 $11,501,297
Partners' distributions -- (3,472) (343,722) (347,194)
Net income for the six months
ended June 30, 1995 -- 1,852 183,394 185,246
Partners' capital (deficit) at
June 30, 1995 61,063 $(19,944) $11,359,293 $11,339,349
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net income $185,246 $ 284,208
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in income of joint venture (18,960) (15,534)
Depreciation 170,399 168,650
Change in accounts:
Restricted cash (3,759) 3,978
Accounts receivable (3,477) (992)
Escrows for taxes (46,913) (67,506)
Other assets 30,345 5,669
Accounts payable 62,322 (2,343)
Tenant security deposit liabilities 1,480 (3,978)
Accrued taxes 28,371 25,736
Other liabilities 12,092 28,218
Net cash provided by operating
activities 417,146 426,106
Cash flows from investing activities:
Property improvements and replacements (19,887) (46,096)
Distributions from joint venture 4,276 36,050
Net cash used in
investing activities (15,611) (10,046)
See Accompanying Notes to Financial Statements
4
<PAGE>
UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from financing activities:
Partners' distributions $(347,194) $(460,131)
Net cash used in financing
activities (347,194) (460,131)
Net increase (decrease) in cash 54,341 (44,071)
Cash at beginning of period 867,995 991,551
Cash at end of period $ 922,336 $ 947,480
See Accompanying Notes to Financial Statements
5
<PAGE>
e) UNITED INVESTORS INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited 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
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, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. 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, 1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Basis of Accounting
The financial statements include the Partnership's operating
divisions, Bronson Place Apartments, Defoors Crossing Apartments, Meadow
Wood Apartments, and Peachtree Corners Medical Building. In addition,
the Partnership owns a 35% interest in Corinth Square Associates
("Corinth"). The Partnership reflects its interest in Corinth utilizing
the equity method whereby the original investment is increased by
advances to Corinth and the Partnership's share of earnings of Corinth.
The investment is decreased by distributions from Corinth and the
Partnership's share of losses of Corinth.
Note C - Repurchase of Units
The partnership agreement for the Partnership contains a provision
which states that the General Partner shall purchase up to 10% of the
limited partnership Units outstanding at the fifth anniversary date of
the last Additional Closing Date. Any Limited Partner desiring to sell
all or any of his Units to the General Partner must submit a written
request to the General Partner beginning 30 days prior to the fifth
anniversary date. As of the expiration of this period, the General
Partner has accepted repurchase notices and is in the process of
effecting the Unit transfers.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of three apartment
complexes and a commercial office building. The following table sets
forth the average occupancy of this property for the six months ended
June 30, 1995 and 1994:
Average
Occupancy
1995 1994
Bronson Place Apartments
Mountlake Terrace, Washington 88% 94%
Meadow Wood Apartments
Medford, Oregon 91% 90%
Defoors Crossing Apartments
Atlanta, Georgia 98% 98%
Peachtree Corners Medical Building
Atlanta, Georgia 20% 73%
The General Partner attributes the decrease in occupancy at Bronson
Place to the difficult market conditions encountered in the first six
months of 1995. In an attempt to increase occupancy and remain
competitive, management has increased rental concessions at this
property. At Peachtree Medical, occupancy decreased in 1994 as a result
of the move-out of two tenants occupying 75% of the property. At the
end of the second quarter of 1995, a third tenant moved out leaving the
building unoccupied. Management of Peachtree Medical is initiating a
more comprehensive marketing and maintenance program in order to
position the property to attract quality, long-term tenants. A new
lease agreement has been signed by a tenant who will occupy 23% of the
leasable space beginning in the third quarter of 1995.
The Partnership's net income for the six months ended June 30, 1995,
was $185,246, of which $66,992 was income for the second quarter. The
corresponding net income for 1994 was $284,208 and $123,738,
respectively. The decrease in net income for the six months ended June
30, 1995, was due to a decrease in rental revenue, resulting from the
occupancy decreases at Bronson Place and Peachtree Corners. Tenant
reimbursements also decreased in the first six months of 1995 due to a
decrease in reimbursable expenses resulting from the decrease in
occupancy at Peachtree Corners. Also contributing to the decrease in
net income was an increase in maintenance costs involving exterior
painting at Defoors Crossing and contract repairs at Peachtree. These
expense increases were partially offset by a decrease in property taxes
due to a reduced tax assessment on the Meadow Wood property. Also,
management fees were lower for the six months ended June 30, 1995, as a
direct result of the decrease in total revenues.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy
7
levels and protecting the Partnership from increases in expenses. 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 General Partner will be able to sustain
such a plan.
At June 30, 1995, the Partnership had unrestricted cash of $922,336
versus $867,995 at December 31, 1994. Net cash provided by operating
activities decreased primarily as a result of a decrease in rental
income and tenant reimbursements. Net cash used in investing activities
increased due to fewer distributions from the joint venture partially
offset by decreased capital expenditures for the six months ended June
30, 1995, compared to the corresponding period in 1994. Net cash used
in financing activities decreased as a result of a reduction in
partners' distributions paid.
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. 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 $882,021 were made during 1994
and cash distributions of $347,194 were made during the first six months
of 1995.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) 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, 1995.
9
<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.
UNITED INVESTORS INCOME PROPERTIES
(A Missouri Limited Partnership)
By: United Investors Real Estate, Inc., a
Delaware corporation, its General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 11, 1995
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
United Investors Income Properties' 1995 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 922,336
<SECURITIES> 0
<RECEIVABLES> 15,746
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,084,763
<PP&E> 11,897,722
<DEPRECIATION> 2,076,030
<TOTAL-ASSETS> 11,562,692
<CURRENT-LIABILITIES> 223,343
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 11,339,349
<TOTAL-LIABILITY-AND-EQUITY> 11,562,692
<SALES> 0
<TOTAL-REVENUES> 783,626
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 617,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185,246
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 0
</TABLE>
