FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT
Under Section 13 or 15(d)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended December 31, 1996
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-17645
UNITED INVESTORS GROWTH PROPERTIES
(Name of small business issuer in its charter)
Missouri 43-1483928
(State or other jurisdiction of (I.R.S. 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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $3,100,000.
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1996: Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is management's belief that such trading would
not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1.Portions of the Prospectus of Registrant dated June 13, 1988 (included in
Registration Statement, No. 33-21114, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
United Investors Growth Properties (the "Registrant" or Partnership"), a
Missouri Limited Partnership, was organized as a limited partnership under the
laws of the State of Missouri pursuant to a Certificate of Limited Partnership
filed on July 1, 1988, with the Missouri Secretary of State. The Registrant is
governed by an Agreement of Limited Partnership dated October 24, 1988. United
Investors Real Estate, Inc., a Delaware corporation, is the sole general partner
(the "General Partner") of the Registrant. The Registrant is engaged in the
business of acquiring and operating multifamily residential and commercial
properties and other income producing real estate. The Registrant has acquired
three multifamily residential properties and a retail center which includes
medical office space. In addition, the Partnership owned a 60% interest in a
joint venture which owned a multifamily residential property. During the third
quarter of 1995, this multifamily residential property was sold. (See "Note B"
of the Notes to Consolidated Financial Statements.) These properties are further
described in "Item 2" below and "Notes A and H" of the Notes to the Consolidated
Financial Statements included in "Item 7" of this report, which descriptions are
herein incorporated by reference.
Commencing on or about June 13, 1988, the Registrant began offering through
Waddell & Reed, Inc., a former affiliate of the Registrant (the "Selling
Agent"), up to a maximum of 80,000 Units of limited partnership interest (the
"Units") at $250 per Unit with a minimum required purchase of eight Units or
$2,000 (four Units or $1,000 for an Individual Retirement Account). Limited
partners (the "Limited Partners") are not required to make any additional
capital contributions. The Units were registered under the Securities Act of
1933, as amended (the "Act"), under Registration Statement No. 33-21114, which
Registration Statement was declared effective on June 13, 1988.
The offering of Units terminated June 13, 1990. Upon termination of the
offering, the Registrant had accepted subscriptions for 39,297 Units resulting
in Gross Offering Proceeds of $9,824,000.
A further description of the Partnership's business is included in
Management's Discussion and Analysis or Plan of Operation included in "Item 6"
of this Form 10-KSB.
The real estate business is highly competitive. The Registrant's real
property investments are subject to competition from similar types of properties
in the vicinities in which they are located and the Partnership is not a
significant factor in its industry. In addition, various limited partnerships
have been formed by related parties to engage in business which may be
competitive with the Registrant.
The Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an
affiliate of the General Partner. The property manager is responsible for the
day-to-day operations of each property. The General Partner has also selected
affiliates of Insignia to provide real estate advisory and asset management
services to the Partnership. As advisor, these affiliates provide all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing. For a further
discussion of property and partnership management, see "Item 12", which
descriptions are herein incorporated by reference.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Terrace Royale Apartments 11/01/88 Fee ownership subject Apartment
Bothell, Washington to first mortgage 80 units
Cheyenne Woods Apartments 04/18/89 Fee ownership subject Apartment
North Las Vegas, Nevada to first mortgage 160 units
Greystone South Plaza Center 11/27/89 Fee ownership subject Retail and
Lenexa, Kansas to first mortgage Medical Center
55,332 sq. ft.
Deerfield Apartments 10/24/90 Fee ownership subject Apartment
Memphis, Tennessee to first mortgage 136 units
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
<S> <C> <C> <C> <C> <C>
Terrace Royale $ 4,422 $1,183 5-40 yrs S/L $ 3,236
Cheyenne Woods 6,022 1,473 5-40 yrs S/L 4,591
Greystone South 2,113 577 5-40 yrs S/L 4,399
Deerfield 4,503 1,023 5-40 yrs S/L 3,449
Totals $17,060 $4,256 $15,675
</TABLE>
See "Note A" of the Notes to Consolidated Financial Statements included in
"Item 7" for a description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance At Stated Period Balance
December 31, Interest Amortized Maturity Due At
Property 1996 Rate (A) Date Maturity
Terrace Royale $ 2,552 8.50%(1) 20 years 11/98 $ 2,417
Cheyenne Woods 3,814 10.50% 35 years 05/99 3,751
Greystone South 3,605 8.00%(2) 10 years 12/99 3,605
Deerfield 2,716 9.15% 17 years 11/99 2,439
Total 12,687 $12,212
Deferred Interest 211
$12,898
(A) The mortgage loans on each of the properties mature at various times
with balloon payments due at maturity.
(1) The interest rate on the mortgage loan collateralized by the Terrace Royale
Apartments was fixed at an annual rate of 10% for the first five years
(through November 1993). The terms of the note were modified to reduce the
interest rate to 8.5% for the remaining five years.
(2) The mortgage loan collateralized by Greystone South requires monthly
payments of interest only to maturity and additional quarterly contingent
interest payments to be made equal to 50% of the net cash flow from
operations of Greystone South. Contingent interest payments of $2,000 and
$8,000 were made in 1996 and 1995, respectively. The interest rate
increases to 9% in 1997. Interest on the mortgage is computed using the
effective interest method at an imputed rate of 6.8%. The related deferred
interest is included in the mortgage notes payable balance.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
(dollar amounts in thousands)
Average Annual Average Annual
Rental Rates Occupancy
1996 1995 1996 1995
Terrace Royale Apts. $8,782/unit $8,550/unit 97% 94%
Cheyenne Woods Apts. 6,427/unit 6,427/unit 97% 97%
Deerfield Apts. 6,174/unit 5,838/unit 98% 98%
Greystone South Plaza 9.02/sq.ft. 9.49/sq.ft. 77% 80%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes and commercial buildings
in the localities in which they operate. The General Partner believes that all
of the properties are adequately insured. The multi-family residential
properties' lease terms are for one year or less. No residential or commercial
tenant leases 10% or more of the available rental space.
The following is a schedule of the lease expirations at Greystone South Plaza
for the years 1997-2006:
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
(in thousands)
1997 3 11,004 $ 84 21.9%
1998 2 3,900 36 9.5%
1999 6 11,360 92 24.2%
2000 1 1,800 14 3.8%
2001 2 4,800 57 15.1%
Thereafter 1 1,400 15 3.9%
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1996 1996
Taxes Rate
Terrace Royale $72 1.55%
Cheyenne Woods 64 2.97%
Greystone South 85 3.11%
Deerfield 87 6.25%
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is
not of a routine nature. The General Partner believes that all such pending or
outstanding litigation will be resolved without a material adverse effect upon
the business, financial condition, or operations of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1996 no
matters were submitted to a vote of Unit holders through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
At December 31, 1996, the number of holders of record of Limited Partnership
Units was 1,111. No public trading market has developed for the Units and it is
not anticipated that such a market will develop in the future.
Other than the liquidating distribution related to Renaissance Village (see
"Note B" of the Notes to Consolidated Financial Statements), no distributions
were made in 1996 or 1995. Future distributions will depend on the levels of
cash generated from operations and the availability of cash reserves.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
The Partnership's net loss for the year ended December 31, 1996, was $268,000
compared to $382,000 for the year ended December 31, 1995. The decrease in the
net loss was primarily due to an increase in rental income at all of the
properties. Rental income increased in 1996 due to an increase in occupancy and
rental rates at Terrace Royale and Deerfield compared to 1995.
The sale of Renaissance Village in August of 1995 resulted in the overall
decrease in rental revenue and total expenses. This property generated $524,000
in revenues and $664,000 in expenses during the year ending December 31, 1995.
(See "Note B" of the Notes to Consolidated Financial Statements). The
Partnership recognized a gain on sale of $165,000 in 1995. The minority
interest share of this gain was approximately $66,000.
Included in maintenance expense is approximately $43,000 of major repairs and
maintenance comprised primarily of major landscaping 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 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.
Liquidity and Capital Resources
At December 31, 1996, the Partnership held unrestricted cash of $399,000
compared to $200,000 at December 31, 1995. Net cash provided by operating
activities increased primarily due to decreased expenses and interest payments
(which more than offset the decreased revenues) resulting from the sale of
Renaissance Village as discussed above. Net cash provided by investing
activities decreased as a result of the non-recurring nature of the sale of
Renaissance Village in 1995. Net cash used in financing activities decreased due
to the impact of the repayment of the mortgage note payable on Renaissance
Village negatively impacting 1995 cash flows.
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 related
refinancing expenses. Such assets are currently thought to be sufficient for
any near-term needs of the Partnership. The mortgage indebtedness of
$12,898,000 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. Other than the liquidating
distribution related to Renaissance Village, no distributions were made in 1996
or 1995. The General Partner does not anticipate making any distributions in
1997.
ITEM 7. FINANCIAL STATEMENTS
UNITED INVESTORS GROWTH PROPERTIES
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheet - December 31, 1996
Consolidated Statements of Operations - Years ended December 31, 1996
and 1995
Consolidated Statements of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1996 and 1995
Consolidated Statements of Cash Flows - Years ended December 31, 1996 and
1995
Notes to Consolidated Financial Statements
INDEPENDENT AUDITORS' REPORT
The Partners
United Investors Growth Properties
(A Missouri Limited Partnership)
We have audited the accompanying consolidated balance sheet of United Investors
Growth Properties (A Missouri Limited Partnership) ("the Partnership") as of
December 31, 1996, and the related consolidated statements of operations,
changes in partners' capital (deficit), and cash flows for each of the two years
in the period ended December 31, 1996. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Partnership as of December 31,
1996, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
February 21, 1997
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash:
Unrestricted $ 399
Restricted-tenant security deposits 78
Accounts receivable, net of allowance of
$55 22
Escrows for taxes and insurance 115
Restricted escrow 50
Other assets 136
Investment properties (Notes A, C and H):
Land $ 1,979
Buildings and related personal property 15,081
17,060
Less accumulated depreciation (4,256) 12,804
$13,604
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 54
Tenant security deposits 79
Accrued taxes 42
Other liabilities 130
Mortgage notes payable (Note C) 12,898
Partners' Capital (Deficit) (Note D)
General partner $ (2)
Limited partners (39,297 units issued
and outstanding) 403 401
$13,604
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Year Ended December 31,
1996 1995
Revenues:
Rental income $ 3,000 $ 3,368
Other income 100 147
Gain on sale of investment property -- 165
Total revenues 3,100 3,680
Expenses:
Operating 937 1,136
General and administrative 73 75
Maintenance 285 312
Depreciation 550 652
Interest 1,219 1,504
Property taxes 308 366
Total expenses 3,372 4,045
Minority interest in net (income) loss
of joint venture (Note B) 4 (17)
Net loss (Note G) $ (268) $ (382)
Net (loss) income allocated to general
partner $ (3) $ 75
Net loss allocated to limited partners (265) (457)
$ (268) $ (382)
Net loss per limited partnership unit $ (6.74) $(11.61)
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(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, 1994 39,297 $ (74) $ 1,125 $ 1,051
Net income (loss) for the year
ended December 31, 1995 -- 75 (457) (382)
Partners' capital at
December 31, 1995 39,297 1 668 669
Net loss for the year ended
December 31, 1996 -- (3) (265) (268)
Partners' capital (deficit) at
December 31, 1996 39,297 $ (2) $ 403 $ 401
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
UNITED INVESTORS GROWTH PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (268) $ (382)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Minority interest in net income (loss)
of joint venture (4) 17
Depreciation 550 652
Amortization of loan costs, lease commissions,
loan premium and intangible assets 70 127
Gain on sale of property -- (165)
Change in accounts:
Restricted cash (3) 12
Accounts receivable 16 5
Escrows for taxes and insurance 13 (17)
Other assets 18 7
Accounts payable 6 (43)
Tenant security deposit liabilities 6 (14)
Accrued property taxes (3) (44)
Other liabilities 29 (52)
Net cash provided by operating activities 430 103
Cash flows from investing activities:
Property improvements and replacements (74) (93)
Deposits to restricted escrow -- (15)
Receipts from restricted escrow 68 --
Proceeds from sale of property -- 3,990
Net cash (used in) provided by
investing activities (6) 3,882
Cash flows from financing activities:
Distribution from minority interest -- 18
Liquidating distribution to minority interest (61) --
Payments of mortgage notes payable (164) (176)
Repayment of mortgage notes payable -- (3,874)
Net cash used in financing activities (225) (4,032)
Net increase (decrease) in cash 199 (47)
Cash at beginning of year 200 247
Cash at end of year $ 399 $ 200
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 1,120 $ 1,443
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: United Investors Growth Properties (the "Partnership"), a Missouri
Limited Partnership, was organized in July 1988, and the initial group of
limited partners was admitted on October 24, 1988. Additional partners were
admitted through June 1990.
The Partnership was formed to acquire and operate certain types of income-
producing real estate. United Investors Real Estate, Inc. (the "General
Partner") is the general partner. Effective December 31, 1992, 100% of the
General Partner's common stock was purchased by MAE GP Corporation, an affiliate
of Insignia Financial Group, Inc. ("Insignia").
Basis of accounting: The accompanying financial statements of the Partnership
are prepared on the accrual basis and, therefore, revenue is recorded as earned
and costs and expenses are recorded as incurred.
Cash:
Unrestricted - Unrestricted cash includes cash on hand and in banks and money
market funds.
Restricted cash - tenant security deposits - The Partnership requires
security deposits from lessees for the duration of the lease and such deposits
are considered restricted cash. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Income taxes: For income tax purposes, the Partnership reports revenue and
costs and expenses on the accrual method. No income tax provisions have
been shown in the accompanying statements of operations since the partners are
taxed individually.
Investment properties: During the first quarter of 1995, the Partnership
adopted "FASB No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover the assets' carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. The adoption of
"FASB No. 121" did not have a material effect on the Partnership's financial
statements.
Depreciation is computed using straight-line methods over estimated useful lives
of fifteen to forty years for buildings and improvements and five to twelve
years for furniture and fixtures. Commercial tenant improvements are
depreciated over the term of the lease.
Fair Value: In 1995, the Partnership implemented "Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
Partnership estimates the fair value of its fixed rate mortgages by discounted
cash flow analysis, based on estimated borrowing rates currently available to
the Partnership.
Principles of consolidation: The Partnership reflects its interest in
Renaissance Village utilizing full consolidation whereby all of the accounts of
the joint venture were included in the Partnership's financial statements (with
intercompany accounts being eliminated). The minority partners' share of the
joint ventures' assets and liabilities are reflected as a liability in the
balance sheet of the Partnership. Earnings and losses attributable to the
minority partners' ownership of the joint venture are reflected as a reduction
or addition to income in the statement of operations. 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.
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 the Partnership is the 99.99% limited partner. Although
legal ownership of the asset was transferred to a new entity, the Partnership
retained substantially all economic benefits from the property and the General
Partner of the new entity is owned by the Partnership and by the General Partner
of the Partnership. The Partnership reflects its interest in Cheyenne utilizing
full consolidation whereby all of the accounts of Cheyenne are included in the
consolidated financial statements of the Partnership (with intercompany accounts
being eliminated). The minority interest in the lower-tier partnership is not
material.
Other assets: Included in other assets are loan costs, deferred rental income
and leasing commissions which are amortized over the terms of the related notes
and leases, respectively.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was $31,000 and $34,000 for
the years ended December 31, 1996 and 1995, respectively.
Reclassifications: Certain reclassifications have been made to the 1995
information to conform to the 1996 presentation.
NOTE B - INVESTMENT IN JOINT VENTURE
The Partnership owned a 60% interest in Renaissance Village Associates
("Renaissance"), a joint venture with United Investors Growth Properties II, an
affiliated partnership, in which the General Partner is also the sole General
Partner.
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.
NOTE C - MORTGAGE NOTES PAYABLE
The principal terms of mortgage notes payable are as follows (dollar amounts in
thousands):
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1996 Interest Rate Date Maturity
Terrace Royale Apts. $ 2,552 $24 8.50% 11/98 $ 2,417
Cheyenne Woods Apts. 3,814 35 10.50% 05/99 3,751
Greystone South
Plaza Center 3,605 24 8.00% 12/99 3,605
Deerfield Apartments 2,716 28 9.15% 11/99 2,439
Total 12,687 $12,212
Deferred interest 211
$12,898
The mortgage notes payable are nonrecourse and are secured by a pledge of the
respective properties and by a pledge of revenues from operation of the
respective properties. The mortgage loans collateralized by the Terrace Royale
Apartments and Cheyenne Woods Apartments each contain clauses providing for
prepayment penalties of approximately 1% of the outstanding loan balance and
additional variable prepayment penalties depending on interest rates in effect
at the time of prepayment.
The mortgage loan collateralized by Greystone South Plaza Center requires
monthly installments of interest only to maturity and additional quarterly
contingent interest payments to be made equal to 50% of the net cash flow from
operations of Greystone South Plaza Center. Contingent interest payments of
$2,000 and $8,000 were made in 1996 and 1995, respectively. The interest rate
increases to 9% during 1997 and thereafter. As a result of the interest rate
increase, the monthly payment will increase to $27,000 in 1997. Interest on the
mortgage is computed using the effective interest method at an imputed rate of
6.8%. The related deferred interest is included in the mortgage notes payable
balance.
The estimated fair value of the Partnership's aggregate debt is approximately
$13,262,000. This value represents a general approximation of possible value
and is not necessarily indicative of the amounts the Partnership might pay in
actual market transactions.
Scheduled maturities of principal are as follows:
Years Ending December 31, (in thousands)
1997 $ 186
1998 2,607
1999 9,894
$12,687
NOTE D - PARTNERS' CAPITAL (DEFICIT)
ALLOCATIONS OF NET INCOME AND LOSS - In accordance with the partnership
agreement, net income and net loss (as defined in the Partnership agreement,
income or loss of the Partnership determined without regard to gain or loss from
sale) shall be allocated 1% to the General Partner and 99% to the limited
partners.
DISTRIBUTIONS - The partnership allocates distributions 1% to the General
Partner and 99% to the limited partners.
GAIN/LOSS FROM A SALE - Gain from a sale shall be allocated as follows:
(a) first to each partner who has a negative capital account, an amount equal to
(or in proportion to if less than) such partner's negative capital account
balance and (b) second, 99% to the limited partners and 1% to the General
Partner, until each limited partner has been allocated an amount equal to (or in
proportion to if less than) the excess, if any, of such limited partner's
adjusted capital investment over his capital account.
Loss from a sale shall be allocated as follows: (a) first to each partner who
has a positive capital account, an amount equal to (or in proportion to if less
than) such partner's positive capital account balance and (b) second, 99% to the
limited partners and 1% to the General Partner.
Anything in the Partnership Agreement to the contrary notwithstanding, the
interests of the General Partner, in the aggregate, in each material item of
income, gain, loss deduction and credit of the Partnership will be equal to at
least 1% of each item at all times during the existence of the Partnership.
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 E - 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 in 1996 and 1995:
1996 1995
(in thousands)
Property management fees $ 162 $ 180
Reimbursement for services of
affiliates 32 30
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 F - OPERATING LEASES
Tenants of Greystone South Plaza Center are responsible for their own utilities
and maintenance of their space, and payment of their proportionate share of
common area maintenance, utilities, insurance and real estate taxes. A portion
of the real estate taxes, insurance, and common area maintenance expenses are
paid directly by the Partnership. The Partnership is then reimbursed by the
tenants for their proportionate share.
The future minimum rental payments to be received under operating leases that
have initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1996, are as follows (in thousands):
Years Ending December 31,
1997 $ 224
1998 211
1999 130
2000 83
2001 52
Thereafter 42
$ 742
NOTE G - PARTNER TAX INFORMATION
The following is a reconciliation between net loss as reported in the
consolidated financial statements and federal taxable loss allocated to the
partners in the Partnership's tax return for the years ended December 31, 1996
and 1995 (in thousands, except per unit data):
1996 1995
Net loss as reported $ (268) $ (382)
Add (deduct):
Deferred revenue and other
liabilities 17 (716)
Depreciation differences (84) (71)
Accrued expenses 1 10
Nondeductible reserves and
allowances (10) 36
Federal taxable loss $ (344) $(1,123)
Federal taxable loss per limited
partnership unit $(8.68) $(28.30)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets at December 31, 1996 (in thousands):
Net assets as reported $ 401
Differences in basis of assets and
liabilities:
Investment properties at cost 3,206
Accumulated depreciation (335)
Other assets and liabilities 374
Syndication costs 1,362
Net assets - tax basis $ 5,008
NOTE H - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(dollar amount in thousands)
<TABLE>
<CAPTION>
Initial cost
To Partnership
Cost
Buildings Capitalized
and Related (Written Down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
Terrace Royale $ 2,552 $ 653 $ 3,496 $ 273
Cheyenne Woods 3,814 587 4,980 455
Greystone South 3,605 1,287 3,449 333
(2,956)
Deerfield 2,716 240 3,891 372
Totals $12,687 $ 2,767 $15,816 $(1,523)
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1996
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Terrace Royale $ 653 $ 3,769 $ 4,422 $ 1,183 1987-1988 11/01/88 5-40
Cheyenne Woods 587 5,435 6,022 1,473 1988 04/18/89 5-40
Greystone South 499 1,614 2,113 577 1985 11/27/89 5-40
Deerfield 240 4,263 4,503 1,023 1986 10/24/90 5-40
Totals $1,979 $15,081 $17,060 $ 4,256
</TABLE>
(dollar amounts in thousands)
Reconciliation of "Investment Properties and Accumulated Depreciation":
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995
<S> <C> <C>
Investment Properties
Balance at beginning of year $16,986 $21,513
Property improvements 74 93
Sale of Renaissance Village -- (4,620)
Balance at End of Year $17,060 $16,986
Accumulated Depreciation
Balance at beginning of year $ 3,706 $ 3,871
Amounts charged to expense 550 652
Sale of Renaissance Village -- (817)
Balance at End of Year $ 4,256 $ 3,706
</TABLE>
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996, is approximately $20,266,000. The accumulated
depreciation taken for Federal income tax purposes at December 31, 1996 is
approximately $4,591,000.
NOTE I - CONTINGENCIES
The Partnership is unaware of any pending or outstanding litigation that
is not of a routine nature. The General Partner of the Partnership
believes that all such pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition,
or operations of the Partnership.
ITEM 8.CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant has no officers or directors. The General Partner manages and
controls the Registrant and has general responsibility and authority in all
matters affecting its business.
The names of the directors and executive officers of United Investors Real
Estate, Inc. ("UIRE"), the Partnership's General Partner, as of December 31,
1996, their ages and the nature of all positions with UIRE presently held by
them are set forth below. There are no family relationships between or among
any officers and directors.
Name Age Position
Carroll D. Vinson 56 President, Director
Robert D. Long, Jr. 29 Controller, Principal
Accounting Officer
William H. Jarrard, Jr. 50 Vice President
John K. Lines 37 Secretary
Kelley M. Buechler 39 Assistant Secretary
Carroll D. Vinson has been President of the General Partner and Metropolitan
Asset Enhancement, L.P. ("MAE") subsidiaries since August 1994. Prior to that,
during 1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes & Co.
(regional CPA firm) and engaged in various other investment and consulting
activities. Briefly, in early 1993, Mr. Vinson served as President and Chief
Executive Officer of Angeles Corporation, a real estate investment firm. From
1991 to 1993, Mr. Vinson was employed by Insignia in various capacities
including Managing Director-President during 1991.
William H. Jarrard, Jr. has been Vice President of UIRE since December 1992
and Managing Director - Partnership Administration of Insignia since January
1991. Mr. Jarrard served as Managing Director - Partnership Administration and
Asset Management for Insignia from July 1994 until January 1996.
Robert D. Long, Jr. is Controller and Principal Accounting Officer of the
General Partner and MAE subsidiaries. Prior to joining MAE in February 1994, he
was an auditor for the State of Tennessee and was associated with the accounting
firm of Harshman Lewis and Associates. He is a graduate of the University of
Memphis.
John K. Lines has been Secretary of the General Partner and MAE subsidiaries
since August 1994 and General Counsel and Secretary of Insignia since July 1994.
From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and
Vice President of Ocwen Financial Corporation in West Palm Beach, Florida. From
October 1991 until April 1993, Mr. Lines was a Senior Attorney with Banc One
Corporation in Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was
employed as an associate with Squire Sanders & Dempsey in Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of the General Partner and MAE
subsidiaries and Assistant Secretary of Insignia. During the five years prior
to joining Insignia in 1991, she served in a similar capacity for U.S. Shelter.
ITEM 10. EXECUTIVE COMPENSATION
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as provided below, as of March, 1997, no person was known to by the
Registrant to be the beneficial owner of more than 5 percent (5%) of the Units
of the Partnership:
NAME AND ADDRESS NUMBER OF UNITS PERCENT OF TOTAL
United Investors Real Estate, Inc. 3,926 10%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1995, no distributions were made to the General Partner. For
a description of the distributions and the allocation of income and loss to
which the General Partner is entitled, reference is made to "Note D" of the
financial statements included in "Item 7" of this report.
The Registrant has property management agreements with affiliates of Insignia
pursuant to which such affiliates have assumed direct responsibility for day-to-
day management of the Partnership's properties. This service includes the
supervision of leasing, rent collection, maintenance, budgeting, employment of
personnel, payment of operating expenses, etc. Insignia's affiliates receive
property management fees equal to 5% of apartment revenues and 6% of commercial
revenues. During the twelve months ended December 31, 1996 and 1995, affiliates
of Insignia received approximately $162,000 and $180,000 of fees for property
management services, respectively.
Pursuant to Section 9(e) of the Registrant's Agreement of Limited Partnership,
the General Partner may be reimbursed by the Registrant for certain of its
administrative costs. The Partnership shall reimburse the General Partner or
its affiliates the actual cost of goods, materials, and services obtained from
unaffiliated parties. Administrative services performed by the General Partner
or its affiliates shall be reimbursed at cost; provided, however, that the
amounts charged do not exceed the lesser of (1) the actual cost of such
services, or (2) 90% of the amount which the Partnership would be required to
pay to an independent party for comparable services in the same geographic
location. During the years ended December 31, 1996 and 1995, affiliates of
Insignia received $32,000 and $30,000, respectively, of such reimbursements.
For a further discussion of payments made by the Registrant to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Registrant, see "Note E" of the Notes to Consolidated Financial
Statements included in "Item 7" of this report.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1996: None.
SIGNATURES
In accordance with Section 13 or 15(d) 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
Date: March 26, 1997
In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the Registrant and in the capacities and on the
date indicated.
/s/ Carroll D. Vinson President March 26, 1997
Carroll D. Vinson
/s/ Robert D. Long, Jr. Controller and March 26, 1997
Robert D. Long, Jr. Principal Accounting
Officer
INDEX TO EXHIBITS
EXHIBIT
1.0 Form of Dealer Manager Agreement between the General Partner and the
Dealer Manager, including Form of Soliciting Broker Agreement;
incorporated by reference to Exhibit 1 to Registrant's Amendment to
Registration Statement (File No. 33-21114) previously filed on June 9,
1988.
1.1 Amendment to Dealer Manager Agreement; incorporated by reference to
Exhibit 1.1 to Post-Effective Amendment No. 2 to Registrant's
Registration Statement previously filed on March 21, 1989.
4.1 Form of Subscription Agreement; incorporated by reference as part of
the Prospectus of Registrant contained in Registrant's Amendment to
Registration Statement previously filed on June 9, 1988.
4.2 Form of Agreement of Limited Partnership of Registrant; incorporated
by reference as part of the Prospectus of Registrant contained in
Registrant's Amendment to Registration Statement previously filed on
June 9, 1988.
4.3 Seventh Amendment to Agreement of Limited Partnership of Registrant;
incorporated by reference to Exhibit 4.3 to Registrant's Quarterly
Report on Form 10-Q previously filed on May 15, 1989.
4.4 Agreement of Joint Venture of Renaissance Village Associates dated
March 22, 1991 between United Investors Growth Properties (A Missouri
Limited Partnership) and United Investors Growth Properties II (A
Missouri Limited Partnership); incorporated by reference to Exhibit
4.4 to Registrant's Quarterly Report on Form 10-Q previously filed on
April 24, 1991.
10.1 Escrow Agreement among the Registrant, the General Partner, the Dealer
Manager, and Boston Safe Deposit & Trust Company; incorporated by
reference to Exhibit 10.1 to Registrant's Amendment to Registration
Statement previously filed on June 9, 1988.
10.1.1 Amendment to Escrow Agreement; incorporated by reference to Exhibit
10.1.1 to Registrant's Quarterly Report on Form 10-Q previously filed
on November 3, 1989.
10.2 Agreement of Purchase and Sale, dated June 9, 1988, with amendments
dated June 27, 1988 and July 5, 1988, respectively, between United
Investors Real Estate, Inc., as nominee for United Investors Growth
Properties, as purchaser, and Domion-Bothell Associates, as seller,
relating to Terrace Royale Apartments; incorporated by reference to
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q previously
filed on August 11, 1988.
10.3 Promissory Note, dated October 3, 1988, between United Investors Real
Estate, Inc., as nominee for United Investors Growth Properties, as
borrower, and Confederation Life Insurance Company, as lender;
incorporated by reference to Exhibit 10.1 to Registrant's Quarterly
Report on Form 10-Q previously filed on November 14, 1988.
10.4 Deed of Trust, dated October 3, 1988, between United Investors Real
Estate, Inc., as nominee for United Investors Growth Properties, as
grantor, and Confederation Life Insurance Company, as beneficiary;
incorporated by reference to Exhibit 10.2 to Registrant's Quarterly
Report on Form 10-Q previously filed on November 14, 1988.
10.5 Agreement of Purchase and Sale, dated October 31, 1988, between United
Investors Real Estate, Inc., as purchaser and Cheyenne Woods Limited
Partnership, as seller, relating to Cheyenne Woods Apartments;
incorporated by reference to Exhibit 10.5 to Post-Effective Amendment
No. 1 to Registrant's Registration Statement previously filed on
February 1, 1989.
10.6 Promissory Note and Deed of Trust with respect to the Permanent Loan
on Cheyenne Woods Apartments; incorporated by reference to Exhibit
10.6 to Registrant's Current Report on Form 8-K previously filed on
April 28, 1989.
10.7 Agreement of Purchase and Sale, between United Investors Growth
Properties (A Missouri Limited Partnership), as purchaser, and Central
Life Assurance Company, as seller, executed by the parties on August
11 and August 14, 1989, relating to Greystone South Plaza Center, and
amendments thereto; incorporated by reference to Exhibit 10.7 to
Registrant's Current Report on Form 8-K previously filed on December
12, 1989.
10.8 Promissory Note and First Mortgage and Security Agreement with respect
to the Permanent Loans on Greystone South Plaza Center; incorporated
by reference to Exhibit 10.8 to Registrant's Current Report on Form 8-
K previously filed on December 12, 1989.
10.8.1 Modification Agreement between United Investors Growth Properties and
Central Life Assurance Company with respect to the Permanent Loans on
Greystone South Plaza Center; incorporated by reference to Exhibit
10.8.1 to Registrant's Quarterly Report on Form 10-Q previously filed
on August 13, 1991.
10.9 Master Lease dated November 27, 1989 between United Investors Growth
Properties and Central Life Assurance Company; incorporated by
reference to Exhibit 10.9 to Registrant's Current Report on Form 8-K
previously filed on December 12, 1989.
10.9.1 Lease Termination Agreement between United Investors Growth Properties
and Central Life Assurance Company, with respect to the Master Lease
dated November 27, 1989; incorporated by reference to Exhibit 10.9.1
to Registrant's Quarterly Report on Form 10-Q previously filed on
November 12, 1991.
10.10 Agreement of Purchase and Sale, between United Investors Growth
Properties (A Missouri Limited Partnership), as purchaser, and
Deerfield Apartments Limited (A Tennessee Limited Partnership), as
seller, dated July 18, 1990, relating to Deerfield Apartments;
incorporated by reference to Exhibit 10.10 to Registrant's Quarterly
Report on Form 10-Q previously filed on August 15, 1990.
10.11 Promissory Note and Deed of Trust with respect to the Permanent Loan
on Deerfield Apartments; incorporated by reference to Exhibit 10.11 to
Registrant's Quarterly Report on Form 10-Q previously filed on
November 8, 1990.
10.12 Standby Loan Commitment with respect to the financing of Deerfield
Apartments; incorporated by reference to Exhibit 10.12 to Registrant's
Quarterly Report on Form 10-Q previously filed on November 8, 1990.
10.13 Agreement of Purchase and Sale, dated August 27, 1990, between United
Investors Real Estate, Inc., as purchaser, and Mueller Development
Company, as seller, relating to Renaissance Village Apartments, and
amendments thereto; incorporated by reference to Exhibit 10.2 to
Registrant's Post-Effective Amendment No. 1 Registration Statement
(File No. 33-34111) of United Investors Growth Properties II
previously filed on December 6, 1990.
10.13.1 Seventh and Eighth Amendments to Agreement of Purchase and Sale
between United Investors Real Estate, Inc., as purchaser, and Mueller
Development Company, as seller, relating to Renaissance Village
Apartments; incorporated by reference to Exhibit 10.13.1 to
Registrant's Quarterly Report on Form 10-Q previously filed on April
24, 1991.
10.14 Promissory Note and Deed of Trust with respect to the Permanent Loan
on Renaissance Village Apartments; incorporated by reference to
Exhibit 10.14 to Registrant's Quarterly Report on Form 10-Q previously
filed on April 24, 1991.
10.15 Stock Purchase Agreement dated December 4, 1992 showing the purchase
of 100% of the outstanding stock of United Investors Real Estate, Inc.
by MAE GP Corporation; incorporated by reference to Exhibit 10.15 to
Registrant's Current Report on Form 8-K previously filed on January
14, 1993.
10.16 Purchase and Sale Agreement, made as of the 19th of July 1995, by and
between Kauri Investments, Ltd., a Washington corporation, and
Renaissance Village Associates, JV, a Kansas joint venture.
10.17 Amendment to Purchase and Sale Agreement, made as of the 10th day of
August, 1995, by and between Kauri Investments, Ltd., a Washington
corporation, and Renaissance Village Associates, JV, as Kansas joint
venture.
16.1 Letter of KPMG Peat Marwick to the Securities and Exchange Commission
included herein pursuant to the requirements of Item 304 (a) (3) of
Regulation S-K; incorporated by reference to Exhibit 16.1 to
Registrant's Current Report on Form 8-K previously filed on October
22, 1990.
16.2 Letter of Mayer Hoffman McCann, the Registrant's former independent
accountant, regarding its concurrence with the statements made by the
Registrant is incorporated by reference to the exhibit filed with Form
8-K dated August 30, 1993.
27 Financial Data Schedule
99.1 Portions of Prospectus of Registrant dated June 13, 1988; incorporated
by reference to Exhibit 99.1 to Registrant's Report on Form 10-K
previously filed on March 6, 1991.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from United
Investors Growth Properties 1996 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000831663
<NAME> UNITED INVESTORS GROWTH PROPERTIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 399
<SECURITIES> 0
<RECEIVABLES> 77
<ALLOWANCES> 55
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,060
<DEPRECIATION> 4,256
<TOTAL-ASSETS> 13,604
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,898
0
0
<COMMON> 0
<OTHER-SE> 401
<TOTAL-LIABILITY-AND-EQUITY> 13,604
<SALES> 0
<TOTAL-REVENUES> 3,100
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,219
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (268)
<EPS-PRIMARY> (6.74)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
