FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
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, 1997
[ ] 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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 711
Restricted-tenant security deposits 51
Accounts receivable 10
Escrows for taxes and insurance 102
Other assets 69
Investment properties
Land $ 1,862
Buildings and related personal property 10,348
12,210
Less accumulated depreciation (2,707) 9,503
Investment in joint venture 628
$11,074
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 24
Tenant security deposits 51
Accrued taxes 24
Other liabilities 21
Partners' Capital (Deficit)
General partner $ (23)
Limited partners (61,063
units issued and outstanding) 10,977 10,954
$11,074
See Accompanying Notes to Financial Statements
b) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 414 $ 384
Other income 22 28
Total revenues 436 412
Expenses:
Operating 130 111
General and administrative 19 21
Maintenance 50 47
Depreciation 94 87
Property taxes 41 38
Total expenses 334 304
Equity in income of joint venture 4 6
Net income $ 106 $ 114
Net income allocated to general partners (1%) $ 1 $ 1
Net income allocated to limited partners (99%) 105 113
$ 106 $ 114
Net income per limited partnership unit $ 1.72 $ 1.85
See Accompanying Notes to 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 contributions 61,063 $ -- $ 15,266 $ 15,266
Partners' capital (deficit) at
December 31, 1996 61,063 $ (23) $ 11,025 $ 11,002
Partners' distributions (1) (153) (154)
Net income for the three months
ended March 31, 1997 -- 1 105 106
Partners' capital (deficit) at
March 31, 1997 61,063 $ (23) $ 10,977 $ 10,954
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 106 $ 114
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (4) (6)
Depreciation 94 87
Amortization of lease commissions 2 --
Change in accounts:
Restricted cash (2) (1)
Accounts receivable (1) (4)
Escrows for taxes (33) (41)
Other assets 14 12
Accounts payable 7 8
Tenant security deposit liabilities 2 2
Accrued taxes 24 22
Other liabilities (1) (1)
Net cash provided by operating activities 208 192
Cash flows from investing activities:
Property improvements and replacements (23) (8)
Distributions from joint venture 47 --
Net cash provided by (used in)
investing activities 24 (8)
Cash flows from financing activities:
Partners' distributions (154) (154)
Net cash used in financing activities (154) (154)
Net increase in cash and cash equivalents 78 30
Cash and cash equivalents at beginning of period 633 637
Cash and cash equivalents at end of period $ 711 $ 667
See Accompanying Notes to Financial Statements
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 Investor Real Estate, Inc.), 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, 1997, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1997. 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, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 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 to affiliates for 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
Insignia for the three months ended March 31, 1997 and 1996 (in thousands):
1997 1996
Property management fees $ 20 $ 20
Reimbursement for services of affiliates 9 8
Additionally, the Partnership paid $5,000 during the three months ended March
31, 1996 to an affiliate of the General Partner for lease commissions at the
Partnership's commercial property. These lease commissions are included in
other assets and amortized over the terms 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.
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 each of the three months ended March 31, 1997
and 1996:
Average
Occupancy
Property 1997 1996
Bronson Place Apartments
Mountlake Terrace, Washington 95% 94%
Meadow Wood Apartments
Medford, Oregon 90% 94%
Defoors Crossing Apartments
Atlanta, Georgia 87% 94%
Peachtree Corners Medical Building
Atlanta, Georgia 74% 36%
The increase in occupancy at Peachtree Corners Medical Building is due to
increased marketing efforts and property improvements made during the second and
third quarters of 1996, to attract quality long-term tenants. The decrease in
occupancy at Meadow Wood and Defoors Crossings Apartments is due to increased
competition and a favorable housing market in the local community.
The Partnership realized net income of $106,000 for the three months ended March
31, 1997 compared to $114,000 for the corresponding period of 1996. The decrease
in net income was due to increases in operating and depreciation expenses.
Operating expenses increased due to higher costs associated with utilities and
rental concessions. Depreciation expenses increased due to tenant improvements
related to the increase in occupancy at Peachtree, during the second and third
quarters of 1996. Also contributing to the decrease in net income is a decrease
in other income, specifically associated with lower lease cancellation fees at
Defoors Crossing Apartments. Mitigating the expense increases is an increase in
rental revenue attributable to increased occupancy at Peachtree Corners Medical
Building.
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, 1997, the Partnership held unrestricted cash of $711,000 compared
to $667,000 at March 31, 1996. Net cash provided by operating activities
increased due to increased rental income and a decrease in deposits to tax and
insurance escrows. Net cash provided by investing activities increased in 1997
due to cash distributions from the joint venture being received during the three
months ended March 31, 1997, compared to no distributions in the three months
ended March 31, 1996.
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 were made during the three months ended March 31, 1997 and
1996. 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, 1997.
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, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 711
<SECURITIES> 0
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,210
<DEPRECIATION> 2,707
<TOTAL-ASSETS> 11,074
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,954
<TOTAL-LIABILITY-AND-EQUITY> 11,074
<SALES> 0
<TOTAL-REVENUES> 436
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 334
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106
<EPS-PRIMARY> 1.72<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
