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 March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from.........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 (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) UNITED INVESTORS INCOME PROPERTIES
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 667
Restricted--tenant security deposits 48
Accounts receivable 19
Escrows for taxes 89
Other assets 39
Investment properties:
Land $ 1,862
Buildings and related personal property 10,186
12,048
Less accumulated depreciation ( 2,340) 9,708
Investment in Joint Venture 662
$11,232
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 19
Tenant security deposits 49
Accrued taxes 23
Other liabilities 37
Partners' Capital (Deficit)
General partner $ (22)
Limited partners (61,063
units issued and outstanding) 11,126 11,104
$11,232
See Accompanying Notes to Consolidated Financial Statements
b) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 384 $ 369
Other income 28 29
Total revenues 412 398
Expenses:
Operating 116 110
General and administrative 16 17
Maintenance 47 38
Depreciation 87 85
Property taxes 38 41
Total expenses 304 291
Equity in income of joint venture 6 11
Net income $ 114 $ 118
Net income allocated to general partner (1%) $ 1 $ 1
Net income allocated to limited partners (99%) 113 117
$ 114 $ 118
Net income per limited partnership unit $ 1.85 $1.92
See Accompanying Notes to Consolidated Financial Statements
c) UNITED INVESTORS INCOME PROPERTIES
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital 61,063 $ -- $ 15,266 $ 15,266
Partners' capital (deficit)
December 31, 1995 $61,063 $ (22) $ 11,166 $ 11,144
Partners' distributions (1) (153) (154)
Net income for the three
ended March 31, 1996 -- 1 113 114
Partners' capital (deficit)
March 31, 1996 $61,063 $ (22) $ 11,126 $ 11,104
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 114 $ 118
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (6) (11)
Depreciation 87 85
Change in accounts:
Restricted cash (1) (4)
Accounts receivable (4) (5)
Escrows for taxes (41) (27)
Other assets 12 6
Accounts payable 8 (1)
Tenant security deposit liabilities 2 (2)
Accrued taxes 22 14
Other liabilities (1) (5)
Net cash provided by operating activities 192 168
Cash flows from investing activities:
Property improvements and replacements (8) (9)
Distributions from joint venture -- 1
Net cash used in investing activities (8) (8)
Cash flows from financing activities:
Partners' distributions (154) (193)
Net cash used in financing activities (154) (193)
Net increase (decrease) in cash and cash equivalents 30 (33)
Cash and cash equivalents at beginning of period 637 868
Cash and cash equivalents at end of period $ 667 $ 835
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) UNITED INVESTORS INCOME PROPERTIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of United Investors Income
Properties ("The Partnership") 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 month period ended March 31, 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 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 - 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 Corinth
earnings. The investment is decreased by distributions from Corinth and the
Partnership's share of Corinth losses.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and
its affiliates for the management and administration of all partnership
activities. The Partnership Agreement provides for payments (included in
operating expenses) to affiliates for services (based on a percentage of
revenue) and for reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. Expense reimbursements are included in general and
administrative expenses. The following payments were made to affiliates of
Insignia for the three months ended March 31, 1996 and 1995:
Note C - Transactions with Affiliated Parties (continued)
Three Months Ended
March 31,
(in thousands)
1996 1995
Property management fees $20 $19
Reimbursement for services of affiliates 8 8
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
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 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 General
Partner by virtue of the agent's obligations is not significant.
Note D - 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 and become a limited partner with respect to such units.
Pursuant to this provision, the General Partner accepted repurchase notices
representing approximately 1.5% of the limited partnership units and during the
third quarter of 1995 the transfer of 950 units was effected.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment complexes
and a commercial office building. The following table sets forth the average
occupancy of the properties for the quarters ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Bronson Place Apartments
Mountlake Terrace, Washington 94% 88%
Meadow Wood Apartments
Medford, Oregon 94% 94%
Defoors Crossing Apartments
Atlanta, Georgia 94% 97%
Peachtree Corners Medical Building
Atlanta, Georgia 36% 25%
The increase in occupancy at Bronson Place Apartments is due to increased
rental concessions in prior periods and increased marketing efforts. The
increase in occupancy at Peachtree Corners Medical Building is due to increased
marketing efforts and maintenance improvements made to attract quality, long-
term tenants. The decrease in occupancy at Defoors Crossing Apartments is due
to increased rental rates and tenants purchasing homes in the lower interest
rate environment.
The Partnership's net income for the three months ended March 31, 1996 was
approximately $114,000 compared to $118,000 for the corresponding period of
1995. The decrease in net income was due to increases in operating and
maintenance expenses. Operating expenses increased due to increased insurance
premiums related to additional coverages. Maintenance expense increased due to
a parking lot project at Defoors Crossing Apartments and the cleaning of the
parking lot at Peachtree Corners Medical Building. Also contributing to the
lower net income was a decrease in equity income of joint venture due to the
decrease in rental income resulting from the lower occupancy and increased
operating expense resulting from higher utility costs associated with the harsh
winter at the Corinth Square Apartment (the "Joint Venture Investment").
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment properties to assess
the feasibility of increasing rents, maintaining or increasing occupancy 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 March 31, 1996, the Partnership held unrestricted cash and cash
equivalents of $667,000 compared to $835,000 at March 31, 1995. Net cash
provided by operating activities increased primarily due to increased rental
income and the timing of property tax payments. Net cash used in financing
activities decreased in 1996 due to a decrease in distributions made to partners
during the three months ended March 31, 1996, compared to the three months ended
March 31, 1995.
The Partnership has no material capital programs scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve account.
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. Distributions to
partners of $154,000 and $193,000 were made during the first quarter of 1996 and
1995, respectively. Future cash distributions will depend on the levels of net
cash generated from operations, property sales and the availability of cash
reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 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.
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.
Robert D. Long, Jr.
Vice President/CAO
Date: May 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1996 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000830056
<NAME> UNITED INVESTORS INCOME PROPERTIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 667
<SECURITIES> 0
<RECEIVABLES> 19
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,048
<DEPRECIATION> 2,340
<TOTAL-ASSETS> 11,232
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,104
<TOTAL-LIABILITY-AND-EQUITY> 11,232
<SALES> 0
<TOTAL-REVENUES> 412
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
