FORM 10-QSB.--QUARTERLY OR TRANSITIONAL 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 September 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)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 724
Restricted-tenant security deposits 53
Accounts receivable 12
Escrows for taxes 149
Other assets 65
Investment in joint venture 623
Investment properties:
Land $ 1,862
Buildings and related personal property 10,464
12,326
Less accumulated depreciation (2,899) 9,427
$11,053
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 20
Tenant security deposits 53
Accrued taxes 32
Other liabilities 35
Partners' Capital (Deficit)
General partner's $ (24)
Limited partners' (61,063 units
issued and outstanding) 10,937 10,913
$11,053
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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 450 $ 415 $1,297 $1,206
Other income 25 22 76 81
Total revenues 475 437 1,373 1,287
Expenses:
Operating 153 122 414 370
General and administrative 23 18 64 57
Maintenance 43 43 135 137
Depreciation 98 93 286 268
Property taxes 35 37 118 113
Total expenses 352 313 1,017 945
Equity in income of
joint venture 4 8 17 26
Net income $ 127 $ 132 $ 373 $ 368
Net income allocated to
general partner (1%) $ 1 $ 1 $ 4 $ 4
Net income allocated to
limited partners (99%) 126 131 369 364
$ 127 $ 132 $ 373 $ 368
Net income per limited
partnership unit $ 2.06 $ 2.15 $ 6.04 $ 5.96
<FN>
See Accompanying Notes to Financial Statements
</FN>
</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's 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 -- (5) (457) (462)
Net income for the nine months
ended September 30, 1997 -- 4 369 373
Partners' (deficit) capital at
September 30, 1997 61,063 $ (24) $ 10,937 $ 10,913
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
d) UNITED INVESTORS INCOME PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 373 $ 368
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in net income of joint venture (17) (26)
Depreciation 286 268
Amortization of lease commissions 5 4
Change in accounts:
Restricted cash (4) (3)
Accounts receivable (3) 1
Escrows for taxes (80) (62)
Other assets 15 (5)
Accounts payable 3 --
Tenant security deposit liabilities 4 3
Accrued taxes 32 18
Other liabilities 13 11
Net cash provided by operating activities 627 577
Cash flows from investing activities:
Property improvements and replacements (139) (125)
Distributions from joint venture 65 --
Net cash used in investing activities (74) (125)
Cash flows from financing activities:
Partners' distributions (462) (462)
Net cash used in financing activities (462) (462)
Net increase (decrease) in unrestricted cash and cash
equivalents 91 (10)
Unrestricted cash and cash equivalents at beginning
of period 633 637
Unrestricted cash and cash equivalents at end of period $ 724 $ 627
<FN>
See Accompanying Notes to Financial Statements
</FN>
</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 nine month periods ended September 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 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 nine month periods ended September 30,
1997 and 1996 (in thousands):
1997 1996
Property management fees (included in operating expense) $64 $61
Reimbursement for services of affiliates (included in
general and administrative and operating expenses) 30 24
Additionally, the Partnership paid $29,000 during the nine months ended
September 30, 1996 to an affiliate of the General Partner for lease commissions
related to new leases at the Partnership's commercial property. These lease
commissions, which are included in other assets, are amortized over the term of
the respective leases.
For the period of January 1, 1996 to August 31, 1997, the Partnership insured
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 quarters ended September 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Bronson Place Apartments
Mountlake Terrace, Washington 96% 93%
Meadow Wood Apartments
Medford, Oregon 92% 94%
Defoors Crossing Apartments
Atlanta, Georgia 94% 96%
Peachtree Corners Medical Building
Atlanta, Georgia 74% 56%
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 Partnership realized net income of $373,000 for the nine months ended
September 30, 1997, of which approximately $127,000 was income for the third
quarter. The net income for the corresponding periods of 1996 was approximately
$368,000 and approximately $132,000, respectively. The increase in net income
for the nine months ended September 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 were increased rental rates at
Bronson Place and Meadow Wood Apartments. The increase in rental income was
partially offset by increased operating and depreciation expenses. Operating
expenses increased during the three and nine month periods primarily 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.
Included in maintenance expense for the nine months ended September 30, 1997 is
approximately $10,000 of major repairs and maintenance comprised primarily of
swimming pool and exterior building repairs. Included in maintenance for the
nine months ended September 30, 1996 is approximately $21,000 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 September 30, 1997, the Partnership held unrestricted cash and cash
equivalents of $724,000 compared to $627,000 at September 30, 1996. Net cash
provided by operating activities increased due to increased rental income and a
decrease in other assets. Net cash used in investing activities decreased in
1997 due to cash distributions from the joint venture being received during the
nine months ended September 30, 1997, compared to no distributions in the nine
months ended September 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 approximately $462,000 were made during each of the nine month
periods ended September 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 September 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: November 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Income Properties 1997 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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 724
<SECURITIES> 0
<RECEIVABLES> 12
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,326
<DEPRECIATION> 2,899
<TOTAL-ASSETS> 11,053
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,913
<TOTAL-LIABILITY-AND-EQUITY> 11,053
<SALES> 0
<TOTAL-REVENUES> 1,373
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 373
<EPS-PRIMARY> 6.04<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
