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 0-17645
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)
(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 GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 428
Restricted-tenant security deposits 84
Accounts receivable, net of allowance
of $55 30
Escrows for taxes and insurance 104
Restricted escrow 50
Other assets 163
Investment properties:
Land $ 1,979
Buildings and related personal property 15,124
17,103
Less accumulated depreciation (4,532) 12,571
$13,430
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 81
Tenant security deposits 84
Accrued taxes 91
Other liabilities 132
Mortgage notes payable 12,772
Partners' Capital (Deficit)
General partner's $ (3)
Limited partners' (39,297 units issued
and outstanding) 273 270
$13,430
See Accompanying Notes to Consolidated Financial Statements
b) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED 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 $ 746 $ 739 $1,471 $1,491
Other income 38 29 75 49
Total revenues 784 768 1,546 1,540
Expenses:
Operating 255 247 483 457
General and administrative 21 16 41 39
Maintenance 80 91 142 149
Depreciation 138 137 276 273
Interest 287 330 574 610
Property taxes 80 83 161 163
Total expenses 861 904 1,677 1,691
Minority interest in net
loss of joint venture -- 4 -- 4
Net loss $ (77) $ (132) $ (131) $ (147)
Net loss allocated to
general partner (1%) $ (1) $ (1) $ (1) $ (1)
Net loss allocated to
limited partners (99%) (76) (131) (130) (146)
$ (77) $ (132) $ (131) $ (147)
Net loss per limited
partnership unit $(1.93) $(3.33) $(3.31) $(3.72)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED 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 39,297 $ -- $ 9,824 $ 9,824
Partners' (deficit) capital at
December 31, 1996 39,297 $ (2) $ 403 $ 401
Net loss for the six months
ended June 30, 1997 -- (1) (130) (131)
Partners' (deficit) capital at
June 30, 1997 39,297 $ (3) $ 273 $ 270
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED 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 loss $ (131) $ (147)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Minority interest in net loss of
joint venture -- (4)
Depreciation 276 273
Amortization of loan costs, lease commissions
and loan premiums (15) 36
Change in accounts:
Restricted cash (6) (5)
Accounts receivable (8) 17
Escrows for taxes and insurance 11 (32)
Other assets (38) 9
Accounts payable 27 (2)
Tenant security deposit liabilities 5 7
Accrued property taxes 49 49
Other liabilities 2 (3)
Net cash provided by operating activities 172 198
Cash flows from investing activities:
Property improvements and replacements (43) (38)
Receipts from restricted escrows -- 68
Net cash (used in) provided by
investing activities (43) 30
Cash flows from financing activities:
Liquidating distribution to minority interest -- (61)
Payments of mortgage notes payable (91) (82)
Loan costs paid (9) --
Net cash used in financing activities (100) (143)
Net increase in unrestricted cash and cash equivalents 29 85
Unrestricted cash and cash equivalents at beginning
of period 399 200
Unrestricted cash and cash equivalents at end of period $ 428 $ 285
Supplemental disclosure of cash flow information:
Cash paid for interest $ 593 $ 584
<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 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, Terrace
Royale Apartments, Deerfield Apartments, and Greystone South Plaza Center.
During 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 owned a 60% interest in Renaissance Village Associates
("Renaissance"). During the third quarter of 1995, Renaissance Village
Apartments was sold. During the second quarter of 1996, a final distribution
was made to the joint venturers and the joint venture was liquidated. (see "Note
D" of the Notes to Consolidated Financial Statements).
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 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
six months ended June 30, 1997 and 1996 (in thousands):
1997 1996
Property management fees (included in
operating expenses) $79 $82
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.
NOTE D - 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 $165,000. The minority interest share of this gain was
approximately $66,000 The joint venture was liquidated during the second quarter
of 1996 with the Partnership retaining approximately $92,000 and the minority
interest holder receiving approximately $61,000 as liquidating distributions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment complexes and
a retail center. The following table sets forth the average occupancy of the
properties for the six month periods ended June 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Terrace Royale Apartments
Bothell, Washington 94% 96%
Cheyenne Woods Apartments
North Las Vegas, Nevada 95% 98%
Greystone South Plaza Center
Lenexa, Kansas 78% 77%
Deerfield Apartments
Memphis, Tennessee 86% 98%
The General Partner attributes the occupancy decrease at Deerfield to road
construction in front of the apartment complex. The road construction was
completed in 1997 and the General Partner anticipates occupancy will increase as
a result. At June 30, 1997, occupancy had increased to 93%.
The Partnership realized a net loss of approximately $131,000 for the six months
ended June 30, 1997, compared to a net loss of approximately $147,000 for the
corresponding period of 1996. The net loss for the three months ended June 30,
1997, was approximately $77,000 compared to a net loss of approximately $132,000
for the three months ended June 30, 1996. The decrease in the net loss is
attributable to increased other income and decreased interest expense in 1997.
Other income increased primarily due to lease cancellation fees at the
residential properties. Interest expense decreased due to a reduction in
interest on the Greystone mortgage note.
Included in operating expense for the six months ended June 30, 1997, is
approximately $13,000 of major repairs and maintenance comprised primarily of
exterior building repairs and landscaping. Included in operating expense for
the six months ended June 30, 1996 is approximately $36,000 of major repairs and
maintenance comprised primarily of exterior building repairs and landscaping.
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 June 30, 1997, the Partnership had unrestricted cash and cash equivalents of
$428,000 compared to $285,000 at June 30, 1996. Net cash provided by operating
activities decreased primarily due to increased lease commission payments during
1997. Net cash provided by investing activities decreased primarily due to no
restricted escrow receipts in 1997 compared to $68,000 in 1996. Net cash used in
financing activities decreased due to a liquidating distribution being made to
the minority interest in 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 $12,772,000 matures at various times with balloon
payments due at maturity before 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 1996 or during the first six
months of 1997.
Currently, the General Partner is negotiating to refinance the mortgage note
payable encumbering Cheyenne Woods. The current note has an interest rate of
10.50% and is scheduled to mature May of 1999. As a result of the refinancing,
$9,000 of loan costs have been paid during the six months ended June 30, 1997.
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 GROWTH 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 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Growth Properties 1997 Second 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 428
<SECURITIES> 0
<RECEIVABLES> 85
<ALLOWANCES> 55
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,103
<DEPRECIATION> 4,532
<TOTAL-ASSETS> 15,430
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,772
0
0
<COMMON> 0
<OTHER-SE> 270
<TOTAL-LIABILITY-AND-EQUITY> 13,430
<SALES> 0
<TOTAL-REVENUES> 1,546
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,677
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 574
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131)
<EPS-PRIMARY> (3.31)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
