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.........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
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1997
Assets
Cash:
Unrestricted $ 501
Restricted-tenant security deposits 81
Accounts receivable, net of allowance
of $55 15
Escrows for taxes and insurance 167
Restricted escrow 50
Other assets 141
Investment properties:
Land $ 1,979
Buildings and related personal property 15,100
17,079
Less accumulated depreciation (4,394) 12,685
$ 13,640
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 131
Tenant security deposits 81
Accrued taxes 106
Other liabilities 140
Mortgage notes payable 12,835
Partners' Capital (Deficit)
General partner $ (3)
Limited partners (39,297 units issued
and outstanding) 350 347
$ 13,640
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,
1997 1996
Revenues:
Rental income $ 725 $ 752
Other income 37 20
Total revenues 762 772
Expenses:
Operating 228 210
General and administrative 20 23
Maintenance 62 58
Depreciation 138 136
Interest 287 280
Property taxes 81 80
Total expenses 816 787
Net loss $ (54) $ (15)
Net loss allocated to general
partner (1%) $ (1) $ --
Net loss allocated to limited
partners (99%) (53) (15)
$ (54) $ (15)
Net loss per limited
partnership unit $(1.35) $ (.38)
See Accompanying Notes to Consolidated Financial Statements
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 Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 39,297 $ -- $ 9,824 $ 9,824
Partners' capital (deficit) at
December 31, 1996 39,297 $ (2) $ 403 $ 401
Net loss for the three months
ended March 31, 1997 -- (1) (53) (54)
Partners' capital (deficit) at
March 31, 1997 39,297 $ (3) $ 350 $ 347
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss $ (54) $ (15)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 138 136
Amortization of loan costs, lease commissions
and loan premiums (8) 17
Change in accounts:
Restricted cash (3) (3)
Accounts receivable 7 (5)
Escrows for taxes and insurance (52) (70)
Other assets (15) 12
Accounts payable 77 (14)
Tenant security deposit liabilities 2 2
Accrued property taxes 64 64
Other liabilities 10 (3)
Net cash provided by operating activities 166 121
Cash flows from investing activities:
Property improvements and replacements (19) (17)
Net cash used in investing activities (19) (17)
Cash flows from financing activities:
Payments of mortgage notes payable (45) (40)
Net cash used in financing activities (45) (40)
Net increase in cash 102 64
Cash at beginning of period 399 200
Cash at end of period $ 501 $ 264
Supplemental disclosure of cash flow information:
Cash paid for interest $ 288 $ 269
See Accompanying Notes to Consolidated Financial Statements
e) UNITED INVESTORS GROWTH PROPERTIES
NOTES TO CONSOLIDATED 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 (United Investors 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.
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 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
(dollar amounts in thousands)
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. Property management fees are included
in operating expenses.
The following payments were made to affiliates of the General Partner for the
three months ended March 31, 1997 and 1996 (in thousands):
1997 1996
Property management fees $ 39 $ 41
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 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 each of the three months ended March 31, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Terrace Royale Apartments
Bothell, Washington 96% 96%
Cheyenne Woods Apartments
North Las Vegas, Nevada 94% 98%
Greystone South Plaza Center
Lenexa, Kansas 78% 77%
Deerfield Apartments
Memphis, Tennessee 86% 99%
The decrease in occupancy at Deerfield and Cheyenne Woods is attributable to the
construction of new complexes in the local market.
The Partnership realized a net loss of $54,000 for the three months ended March
31, 1997, compared to a net loss of $15,000 for the three months ended March 31,
1996. The increase in net loss was attributable to a decrease in rental income
at Deerfield and Cheyenne Woods Apartments, due to decreases in occupancy.
Other income increased due to lease cancellation fees at the residential
properties. Operating expenses increased for the three months ended March 31,
1997, compared to the corresponding period of 1996 partially due to an increase
in utilities expense at Deerfield and Cheyenne Woods Apartments. Included in
maintenance expense is approximately $3,000 and $8,000 of major repairs and
maintenance for the three months ended March 31, 1997 and 1996, respectively,
related to clubhouse furniture and exterior building improvements.
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, 1997, the Partnership held unrestricted cash of $501,000 compared
to $264,000 at March 31, 1996. Net cash provided by operating activities
increased due to the collection of insurance proceeds at Terrace Royale
Apartments. The insurance proceeds were used to replace the carports damaged by
a snow storm at the property. Also attributing to the increase in net cash
provided by operating activities was a decrease in payments to tax and insurance
escrows.
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 as well as future maturing mortgage obligations and relating
refinancing expenses. Such assets are currently thought to be sufficient for any
near-term needs of the Partnership. The mortgage indebtedness of $12,835,000
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 during the
first three months of 1997 or 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, 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 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 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Growth Properties 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 501
<SECURITIES> 0
<RECEIVABLES> 70
<ALLOWANCES> 55
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,079
<DEPRECIATION> 4,394
<TOTAL-ASSETS> 13,640
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,835
0
0
<COMMON> 0
<OTHER-SE> 347
<TOTAL-LIABILITY-AND-EQUITY> 13,640
<SALES> 0
<TOTAL-REVENUES> 762
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 287
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (54)
<EPS-PRIMARY> (1.35)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
