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 September 30, 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)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 627
Restricted-tenant security deposits 50
Accounts receivable 14
Escrow for taxes 110
Other assets 52
Investment properties:
Land $ 1,862
Buildings and related personal property 10,303
12,165
Less accumulated depreciation (2,521) 9,644
Investment in Joint Venture 681
$11,178
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 11
Tenant security deposits 50
Accrued taxes 18
Other liabilities 49
Partners' Capital (Deficit)
General partner $ (22)
Limited partners (61,063 units
issued and outstanding) 11,072 11,050
$11,178
See Accompanying Notes to Financial Statements
b) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 415 $ 382 $1,206 $1,116
Other income 22 35 81 87
Total revenues 437 417 1,287 1,203
Expenses:
Operating 122 114 370 348
General and administrative 18 22 57 58
Maintenance 43 74 137 177
Depreciation 93 89 268 259
Property taxes 37 37 113 114
Total expenses 313 336 945 956
Equity in income of
joint venture 8 3 26 22
Net income $ 132 $ 84 $ 368 $ 269
Net income allocated to
general partner (1%) $ 1 $ 1 $ 4 $ 3
Net income allocated to
limited partners (99%) 131 83 364 266
$ 132 $ 84 $ 368 $ 269
Net income per limited
partnership unit $ 2.15 $ 1.35 $ 5.96 $ 4.36
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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 contributions 61,063 $ -- $ 15,266 $ 15,266
Partners' capital (deficit) at
December 31, 1995 61,063 $ (22) $ 11,166 $ 11,144
Partners' distributions (4) (458) (462)
Net income for the nine months
ended September 30, 1996 -- 4 364 368
Partners' capital (deficit) at
September 30, 1996 61,063 $ (22) $ 11,072 $ 11,050
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 368 $ 269
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (26) (22)
Depreciation 268 259
Amortization of lease commissions 4 --
Change in accounts:
Restricted cash (3) (1)
Accounts receivable 1 2
Escrows for taxes (62) (40)
Other assets (5) (2)
Accounts payable -- 36
Tenant security deposit liabilities 3 (5)
Accrued taxes 18 20
Other liabilities 11 13
Net cash provided by operating activities 577 529
Cash flows from investing activities:
Property improvements and replacements (125) (122)
Distributions from joint venture -- 4
Net cash used in investing activities (125) (118)
Cash flows from financing activities:
Partners' distributions (462) (501)
Net cash used in financing activities (462) (501)
Net decrease in cash and cash equivalents (10) (90)
Cash and cash equivalents at beginning of period 637 868
Cash and cash equivalents at end of period $ 627 $ 778
<FN>
See Accompanying Notes to 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 (United Investors Real Estate, Inc.), all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
nine month periods ended September 30, 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 reduced 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 to affiliates for property
management services based on a percentage of revenue and for reimbursement
of certain expenses incurred by affiliates on behalf of the Partnership.
Property management fees are included in operating expenses. The following
payments were made to affiliates of the General Partner for each of the nine
months ended September 30, 1996 and 1995:
Nine Months Ended
September 30,
1996 1995
(in thousands)
Property management fees $61 $58
Reimbursement for services of affiliates 24 23
Additionally, the Partnership paid $29,000 and $25,000 during the nine months
ended September 30, 1996 and 1995, respectively, to an affiliate of the General
Partner for lease commissions related to new leases at the Partnership's
commercial property. These lease commissions are included in other assets and
amortized over the term of the respective leases.
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's partnership agreement 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 September 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Bronson Place Apartments
Mountlake Terrace, Washington 93% 91%
Meadow Wood Apartments
Medford, Oregon 94% 91%
Defoors Crossing Apartments
Atlanta, Georgia 96% 98%
Peachtree Corners Medical Building
Atlanta, Georgia 56% 20%
The increase in occupancy at Meadow Wood Apartments is due to increased
resident retention efforts at the property. The increase in occupancy at
Peachtree Corners Medical Building is due to increased marketing efforts and
property improvements made to attract quality, long-term tenants. At September
30, 1996, occupancy had increased to 74%.
The Partnership realized net income of $368,000 for the nine months ended
September 30, 1996, of which $132,000 was net income for the third quarter. The
net income for the corresponding periods of 1995 was $269,000 and $84,000,
respectively. The increase in net income for the nine months ended September 30,
1996, was primarily due to an increase in rental income resulting from increased
rental rates at all of the residential properties. Also contributing to the
increased rental income was the increase in occupancy at three of the
Partnerships' properties. Net income also increased due to a decrease in
maintenance expenses resulting from exterior painting costs at Defoors Crossing
and Bronson Place during the third quarter of 1995.
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 September 30, 1996, the Partnership held unrestricted cash and cash
equivalents of $627,000 compared to $778,000 at September 30, 1995. Net cash
provided by operating activities increased as a result of the increase in rental
income discussed above. Net cash used in financing activities decreased in 1996
due to a decrease in distributions made to partners during the nine months ended
September 30, 1996, compared to the nine months ended September 30, 1995.
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 $462,000 and $501,000 were made during the nine months ended
September 30, 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 September 30, 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: November 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1996 Third 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 627
<SECURITIES> 0
<RECEIVABLES> 14
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,165
<DEPRECIATION> 2,521
<TOTAL-ASSETS> 11,178
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,050
<TOTAL-LIABILITY-AND-EQUITY> 11,178
<SALES> 0
<TOTAL-REVENUES> 1,287
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 945
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368
<EPS-PRIMARY> 5.96<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
