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, 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)
June 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 710
Restricted--tenant security deposits 51
Accounts receivable 18
Escrows for taxes 110
Other assets 53
Investment properties:
Land $ 1,862
Buildings and related personal property 10,196
12,058
Less accumulated depreciation (2,428) 9,630
Investment in Joint Venture 673
$11,245
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 20
Tenant security deposits 51
Accrued taxes 29
Other liabilities 73
Partners' Capital (Deficit)
General partner $ (23)
Limited partners (61,063
units issued and outstanding) 11,095 11,072
$11,245
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 Six Month Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 407 $ 365 $ 791 $ 734
Other income 31 23 59 52
Total revenues 438 388 850 786
Expenses:
Operating 132 124 248 234
General and administrative 23 19 39 36
Maintenance 47 64 94 102
Depreciation 88 85 175 170
Property taxes 38 37 76 78
Total expenses 328 329 632 620
Equity in income of
joint venture 12 8 18 19
Net income $ 122 $ 67 $ 236 $ 185
Net income allocated to
general partner (1%) $ 1 $ 1 $ 2 $ 2
Net income allocated to
limited partners (99%) 121 66 234 183
$ 122 $ 67 $ 236 $ 185
Net income per limited
partnership unit $ 1.98 $ 1.09 $ 3.83 $ 3.00
<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 61,063 $ -- $ 15,266 $ 15,266
Partners' capital (deficit)
December 31, 1995 61,063 $ (22) $ 11,166 $ 11,144
Partners' distributions (3) (305) (308)
Net income for the six months
ended June 30, 1996 -- 2 234 236
Partners' capital (deficit)
June 30, 1996 61,063 $ (23) $ 11,095 $ 11,072
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 236 $ 185
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (18) (19)
Depreciation 175 170
Amortization of lease commissions 2 --
Change in accounts:
Restricted cash (4) (4)
Accounts receivable (3) (3)
Escrows for taxes (62) (47)
Other assets (4) 31
Accounts payable 9 62
Tenant security deposit liabilities 4 2
Accrued taxes 29 28
Other liabilities 35 12
Net cash provided by operating activities 399 417
Cash flows from investing activities:
Property improvements and replacements (18) (20)
Distributions from joint venture -- 4
Net cash used in investing activities (18) (16)
Cash flows from financing activities:
Partners' distributions (308) (347)
Net cash used in financing activities (308) (347)
Net increase in cash and cash equivalents 73 54
Cash and cash equivalents at beginning of period 637 868
Cash and cash equivalents at end of period $ 710 $ 922
<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 six
month periods ended June 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 six months ended June 30, 1996 and 1995:
Six Months Ended
June 30,
1996 1995
(in thousands)
Property management fees $40 $38
Reimbursement for services of affiliates 16 15
Additionally, the Partnership paid $29,000 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 June 30, 1996 and 1995:
Average
Occupancy
Property
1996 1995
Bronson Place Apartments
Mountlake Terrace, Washington 93% 88%
Meadow Wood Apartments
Medford, Oregon 93% 91%
Defoors Crossing Apartments
Atlanta, Georgia 96% 98%
Peachtree Corners Medical Building
Atlanta, Georgia 49% 20%
The increase in occupancy at Bronson Place Apartments is due to increased
rental concessions throughout 1995 and increased marketing efforts including
periodical advertising which have resulted in new leases being signed. 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. At June 30, 1996, occupancy had increased to 70%.
The Partnership realized net income of $236,000 for the six months ended June
30, 1996, of which $122,000 was income for the second quarter. The net income
for the corresponding periods of 1995 was $185,000 and $67,000, respectively.
The increase in net income, for the six months ended June 30, 1996, was
primarily due to an increase in rental revenue resulting from increased rental
rates at all of the residential properties. Also contributing to the increased
rental revenue was the increase in occupancy at three of the Partnerships'
properties. Other income increased as a result of greater lease cancellation
fees at Defoors Crossing Apartments and higher parking fees at Meadow Wood
Apartments during the first six months of 1996.
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 June 30, 1996, the Partnership held unrestricted cash and cash equivalents
of $710,000 compared to $922,000 at June 30, 1995. Net cash provided by
operating activities decreased due to the 1995 cashflow being favorably impacted
by the release of $20,000 in excess cash from the tax escrow. These decreases
are partially offset by the increase in rental and other income discussed above.
Net cash used in financing activities decreased in 1996 due to a decrease in
distributions made to partners during the six months ended June 30, 1996,
compared to the six months ended June 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 $308,000 and $347,000 were made during the six months ended June 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 June 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: August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1996 Second 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 710
<SECURITIES> 0
<RECEIVABLES> 18
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,058
<DEPRECIATION> 2,428
<TOTAL-ASSETS> 11,245
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,072
<TOTAL-LIABILITY-AND-EQUITY> 11,245
<SALES> 0
<TOTAL-REVENUES> 850
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 632
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236
<EPS-PRIMARY> 3.83<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
