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
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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)
(864) 239-1000
(Issuer's telephone number)
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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 735
Restricted-tenant security deposits 56
Accounts receivable 8
Escrow for taxes and insurance 115
Other assets 67
Investment in Joint Venture 626
Investment properties:
Land $ 1,862
Buildings and related personal property 10,390
12,252
Less accumulated depreciation (2,801) 9,451
$11,058
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 8
Tenant security deposits 56
Accrued taxes 29
Other liabilities 25
Partners' Capital (Deficit)
General partner's $ (24)
Limited partners' (61,063 units
issued and outstanding) 10,964 10,940
$11,058
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 Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 433 $ 407 $ 847 $ 791
Other income 29 31 51 59
Total revenues 462 438 898 850
Expenses:
Operating 131 137 261 248
General and administrative 22 18 41 39
Maintenance 42 47 92 94
Depreciation 94 88 188 175
Property taxes 42 38 83 76
Total expenses 331 328 665 632
Equity in income of
joint venture 9 12 13 18
Net income $ 140 $ 122 $ 246 $ 236
Net income allocated to
general partner (1%) $ 1 $ 1 $ 2 $ 2
Net income allocated to
limited partners (99%) 139 121 244 234
$ 140 $ 122 $ 246 $ 236
Net income per limited
partnership unit $ 2.28 $ 1.98 $ 4.00 $ 3.83
<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' (deficit) capital at
December 31, 1996 61,063 $ (23) $ 11,025 $ 11,002
Partners' distributions -- (3) (305) (308)
Net income for the six months
ended June 30, 1997 -- 2 244 246
Partners' (deficit) capital at
June 30, 1997 61,063 $ (24) $ 10,964 $ 10,940
<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,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 246 $ 236
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (13) (18)
Depreciation 188 175
Amortization of lease commissions 3 2
Change in accounts:
Restricted cash (7) (4)
Accounts receivable 1 (3)
Escrows for taxes (46) (62)
Other assets 15 (4)
Accounts payable (9) 9
Tenant security deposit liabilities 7 4
Accrued taxes 29 29
Other liabilities 3 35
Net cash provided by operating activities 417 399
Cash flows from investing activities:
Property improvements and replacements (65) (18)
Distributions from joint venture 58 --
Net cash used in investing activities (7) (18)
Cash flows from financing activities:
Partners' distributions (308) (308)
Net cash used in financing activities (308) (308)
Net increase in unrestricted cash and cash equivalents 102 73
Unrestricted cash and cash equivalents at beginning
of period 633 637
Unrestricted cash and cash equivalents at end of period $ 735 $ 710
<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 United Investors Real Estate, Inc. (the "General Partner"), a
Delaware corporation, 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, 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 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 services based
on a percentage of revenue and for reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to
affiliates of Insignia for each of the six month periods ended June 30, 1997 and
1996 (in thousands):
Six Months Ended
June 30,
1997 1996
Property management fees (included in operating
expenses) $42 $40
Reimbursement for services of affiliates
(included in general and administrative expenses) 16 16
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 the six months ended June 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Bronson Place Apartments
Mountlake Terrace, Washington 95% 93%
Meadow Wood Apartments
Medford, Oregon 91% 93%
Defoors Crossing Apartments
Atlanta, Georgia 92% 96%
Peachtree Corners Medical Building
Atlanta, Georgia 74% 49%
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 $246,000 for the six months ended June
30, 1997, of which approximately $140,000 was income for the second quarter.
The net income for the corresponding periods of 1996 was approximately $236,000
and approximately $122,000, respectively. The increase in net income, for the
six months ended June 30, 1997, was primarily due to an increase in rental
revenue resulting from the increase in occupancy at Peachtree Corners. Also
contributing to the increased rental revenue was increased rental rates at all
of the residential properties. The increase in rental income was partially
offset by increased operating and depreciation expenses and decreased other
income. Operating expenses increased during the six month period due to
advertising and rental concessions at Defoors Crossing, which were incurred in
an effort to increase occupancy at the property. Depreciation expenses
increased primarily due to tenant improvements at Peachtree during the second
and third quarters of 1996. Other income decreased due to fewer lease
cancellation fees being earned at Defoors Crossing Apartments in 1997.
Included in maintenance expense for the six months ended June 30, 1997 is
approximately $5,000 of major repairs and maintenance comprised primarily of
swimming pool repairs. Included in maintenance for the six months ended June
30, 1996 is approximately $16,000 of major repairs and maintenance comprised
primarily of parking lot and exterior building repairs.
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, 1997, the Partnership held unrestricted cash and cash equivalents of
$735,000 compared to $710,000 at June 30, 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 six months ended June 30, 1997, compared to no distributions
in the six months ended June 30, 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 $308,000 were made during each of the six month periods ended June
30, 1997 and 1996, 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, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNITED INVESTORS INCOME PROPERTIES
By: United Investors Real Estate, Inc.,
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 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 735
<SECURITIES> 0
<RECEIVABLES> 8
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,252
<DEPRECIATION> 2,801
<TOTAL-ASSETS> 11,058
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,940
<TOTAL-LIABILITY-AND-EQUITY> 11,058
<SALES> 0
<TOTAL-REVENUES> 898
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246
<EPS-PRIMARY> 4.00<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
