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 March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-17645
UNITED INVESTORS GROWTH PROPERTIES
(Exact name of small business issuer as specified in its charter)
Missouri 43-1483928
(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 GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
Assets
Cash:
Unrestricted $ 264
Restricted-tenant security deposits 78
Accounts receivable, net of allowance
of $49 43
Escrows for taxes and insurance 198
Restricted escrow 118
Other assets 176
Investment properties:
Land $ 1,979
Buildings and related personal property 15,024
17,003
Less accumulated depreciation (3,842) 13,161
$ 14,038
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 34
Tenant security deposits 75
Accrued taxes 109
Other liabilities 98
Mortgage notes payable 13,003
Minority interest 65
Partners' Capital
General partner $ 1
Limited partners (39,297 units issued
and outstanding) 653 654
$ 14,038
See Accompanying Notes to Consolidated Financial Statements
b) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 752 $ 921
Other income 20 37
Total revenues 772 958
Expenses:
Operating 210 284
General and administrative 23 17
Maintenance 58 61
Depreciation 136 174
Interest 280 401
Property taxes 80 101
Total expenses 787 1,038
Minority interest in net
loss of joint venture -- 14
Net loss $ (15) $ (66)
Net loss allocated to general
partner (1%) $ -- $ (1)
Net loss allocated to limited
partners (99%) (15) (65)
$ (15) $ (66)
Net loss per limited
partnership unit $ (.38) $ (1.65)
See Accompanying Notes to Consolidated Financial Statements
c) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 39,297 $ -- $ 9,824 $ 9,824
Partners' capital at
December 31, 1995 39,297 $ 1 $ 668 $ 669
Net loss for the three months
ended March 31, 1996 -- -- (15) (15)
Partners' capital at
March 31, 1996 39,297 $ 1 $ 653 $ 654
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (15) $ (66)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Minority interest in net loss of
joint venture -- (14)
Depreciation 136 174
Amortization of loan costs, lease commissions,
loan premiums and intangible assets 17 30
Change in accounts:
Restricted cash (3) (3)
Accounts receivable (5) (11)
Escrows for taxes and insurance (70) (28)
Other assets 12 (8)
Accounts payable (14) (8)
Tenant security deposit liabilities 2 3
Accrued property taxes 64 22
Other liabilities (3) 6
Net cash provided by operating activities 121 97
Cash flows from investing activities:
Property improvements and replacements (17) (14)
Deposits to restricted escrows -- (5)
Net cash used in investing activities (17) (19)
Cash flows from financing activities:
Distributions from minority interest -- 8
Payments of mortgage notes payable (40) (45)
Net cash used in financing activities (40) (37)
Net increase in cash 64 41
Cash at beginning of period 200 247
Cash at end of period $ 264 $ 288
Supplemental disclosure of cash flow information:
Cash paid for interest $ 269 $ 384
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of United Investors
Growth 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, 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, 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, Terrace
Royale Apartments, Deerfield Apartments, and Greystone South Plaza Center.
During the second quarter of 1994, Cheyenne Woods Apartments was restructured
into a lower tier partnership, known as Cheyenne Woods United Investors, L.P.
("Cheyenne"), in which United Investors Growth Properties is the 99.99% limited
partner. Although legal ownership of the asset was transferred to a new entity,
United Investors Growth Properties retained substantially all economic benefits
from the property. The Partnership consolidates its interest in Cheyenne
(whereby all accounts of Cheyenne are included in the consolidated financial
statements of the Partnership with intercompany accounts being eliminated). In
addition, the Partnership owns a 60% interest in Renaissance Village Associates
("Renaissance"). The Partnership consolidates its interest in Renaissance
(whereby all accounts of the joint venture are included in the Partnership's
financial statements with intercompany accounts being eliminated). The minority
partners's share of the joint venture's net assets are reflected as minority
interest in the balance sheet of the Partnership. Earnings and losses
attributable to the minority partner's ownership of the joint venture are
reflected as a reduction or addition to net income of the Partnership. During
the third quarter of 1995, Renaissance Village Apartments was sold by
Renaissance.
Note C - Repurchase of Units
The partnership agreement for the Partnership 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 10% of
the limited partnership units and during the fourth quarter of 1995, the
transfer of 3,926 units was effected.
Note D - 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 and
for reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following payments were made to affiliates of the General Partner for the
three months ended March 31, 1996 and 1995, and were included in operating
expenses:
1996 1995
(in thousands)
Property management fees $41 $49
Reimbursement for services of affiliates 8 8
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 E - Sale of Investment Property
On August 30, 1995, Renaissance Village Apartments was sold to an unaffiliated
party, Kauri Investments, Ltd. The Partnership recognized a gain on the sale of
approximately $166,000. The minority interest share of this gain was
approximately $66,000. Currently, the joint venture is in the process of being
liquidated. Once all the remaining liabilities of the joint venture are
satisfied, any remaining assets of the joint venture will be distributed to the
joint venturers.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consists of three apartment complexes
and a retail center. The following table sets forth the average occupancy of
the properties for the three months ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Terrace Royale Apartments
Bothell, Washington 96% 94%
Cheyenne Woods Apartments
North Las Vegas, Nevada 98% 95%
Greystone South Plaza Center
Lenexa, Kansas 77% 81%
Deerfield Apartments
Memphis, Tennessee 99% 98%
The decrease in occupancy at Greystone South is due to the moveout in 1995 of
three tenants occupying approximately 6,900 square feet. This was partially
offset by three tenants occupying approximately 5,600 square feet moving into
the property in 1995.
The Partnership realized a net loss of $15,000 for the three months ended March
31, 1996, compared to a net loss of $66,000 for the three months ended March 31,
1995. The decrease in the net loss was primarily due to the sale of Renaissance
Village in August of 1995 which reduced interest expense for the Partnership
approximately $100,000. Also contributing to the decreased net loss was an
increase in rental revenues at the remaining properties resulting from increased
occupancy and rental rates.
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 expense. As part of this plan,
the General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, 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, 1996, the Partnership held unrestricted cash of approximately
$264,000 compared to $288,000 at March 31, 1995. Net cash provided by
operating activities increased due to decreased expenses and interest payments
resulting from the sale of Renaissance Village. Net cash used in financing
activities increased due to the absence of any distributions from the minority
interest of Renaissance Village in 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 various properties 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.
The mortgage indebtedness of $13,003,000 matures at various times with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales and the availability of cash reserves.
No cash distributions were made in 1995 or during the first three months of
1996.
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, 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 GROWTH 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 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Income Growth Properties 1996 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000831663
<NAME> UNITED INVESTORS GROWTH PROPERTIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 264
<SECURITIES> 0
<RECEIVABLES> 92
<ALLOWANCES> 49
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,003
<DEPRECIATION> 3,842
<TOTAL-ASSETS> 14,038
<CURRENT-LIABILITIES> 0
<BONDS> 13,003
0
0
<COMMON> 0
<OTHER-SE> 654
<TOTAL-LIABILITY-AND-EQUITY> 14,038
<SALES> 0
<TOTAL-REVENUES> 772
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 787
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 280
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
