UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] 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 2-43162
URBAN IMPROVEMENT FUND LIMITED - 1972
(Exact name of registrant as specified in its charter)
California 95-6448384
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1201 Third Avenue, Suite 5400, Seattle, Washington 98101 3076
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code: (206) 622-9900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
BALANCE SHEETS
URBAN IMPROVEMENT FUND LIMITED - 1972
(A Limited Partnership)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1999 1998
Cash $ 417 $ 1,176
Due from affiliates -0- 15,335
Distribution receivable 1,658,635 32,335
Investments in and
advances to Local
Limited Partnerships
accounted for on the
equity method -0- -0-
Total Assets $1,659,052 $ 48,846
LIABILITIES AND PARTNERS' (DEFICIT)
Accounts payable $ 12,520 $ 18,200
Management fee payable 830,833 800,833
Payable to affiliates 547,568 558,586
Distribution payable 641 641
Total Liabilities 1,391,562 1,378,260
Partners' (Deficit):
General Partner - 5 Partnership
units authorized, issued and
outstanding 241 (1,142)
Limited Partners - 5,830
Partnership units authorized,
issued and outstanding 267,249 (1,328,272)
267,490 (1,329,414)
Total Liabilities and
Partners' (Deficit) $1,659,052 $ 48,846
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
CAPITALIZATION AND PARTNERS' (DEFICIT)
URBAN IMPROVEMENT FUND LIMITED - 1972
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1999 1998
General Partner Interest - 5
Partnership units issued and
outstanding $ 5,000 $ 5,000
Limited Partners' Interest - 5,830
Partnership units issued and
outstanding 5,830,000 5,830,000
Total 5,835,000 5,835,000
Offering Expenses (641,492) (641,492)
Distributions to partners (271,214) (271,214)
Accumulated loss through
December 31, 1998 (6,251,708) (6,251,708)
Gain for the nine-month period
ended September 30, 1999 1,596,904 -0-
(4,654,804) (6,251,708)
Partners' (deficit) at end
of period $ 267,490 $ (1,329,414)
</TABLE>
Unaudited. See accompanying notes
<PAGE>
STATEMENTS OF INCOME
URBAN IMPROVEMENT FUND LIMITED - 1972
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1999 1998 1999 1998
Revenues $ -0- $ 13 $ 417 $ 13
Cost and expenses:
Professional fees 5,000 3,175 15,000 9,525
Management fee 10,000 10,000 30,000 30,000
Other expenses -0- 34 136 851
15,000 13,209 45,136 40,376
Loss before equity in
loss of Local Limited
Partnerships (15,000) (13,196) (44,719) (40,363)
Equity in loss of Local
Limited Partnerships 1,658,635 (4,145) 1,641,623 11,839
Net income (loss) $1,643,635 $ (17,341) $1,596,904 $ 28,524
Allocation of Net Loss:
Net income (loss)
allocated to General
Partner $ 1,423 $ (15) $ 1,383 $ (25)
Net income (loss)
allocated to Limited
Partners 1,642,212 (17,326) 1,595,521 (28,499)
$1.643,635 $ (17,341) $1,596,904 $ (28,254)
Net loss allocated to
Limited Partners per
Limited Partnership
Unit (5,830 units out-
standing at September 30,
1999 and 1998) $ 282 $ 2 $ 274 $ (4)
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF CASH FLOWS
URBAN IMPROVEMENT FUND LIMITED - 1972
(A Limited Partnership)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1999 1998 1999 1998
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $ 1,643,635 $ (17,341) $ 1,596,904 $ (28,524)
Adjustments to reconcile
net income (loss) to net
cash used by operating
activities:
Equity in income of local
limited partnerships (1,658,635) 4,145 (1,641,623) (11,839)
Decrease (increase) in
distribution receivable (1,658,635) -0- (1,626,300) -0-
Decrease (increase) in
receivable from affiliates -0- 4,147 15,335 13,270
Increase (decrease) in
accounts payable, man-
agement fees payable and
payable to affiliates 14,850 13,175 13,302 9,524
Total adjustments (3,302,420) 21,467 (3,239,286) 10,955
Net cash used
by operating
activities (1,658,785) 4,126 (1,642,382) (17,569)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Distributions 1,619,610 -0- 1,627,556 23,369
Net advances paid to by
local limited partnerships 39,025 (4,145) 14,067 (11,530)
Net cash provided
by investing
activities 1,658,635 (4,145) 1,641,623 11,839
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (150) (19) (759) (5,730)
CASH BALANCE AT
BEGINNING OF PERIOD 567 1,536 1,176 7,247
CASH BALANCE AT
END OF PERIOD $ 417 $ 1,517 $ 417 $ 1,517
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 1999
URBAN IMPROVEMENT FUND LIMITED - 1972
(A Limited Partnership)
Note 1 - Organization - Urban Improvement Fund Limited (the Partnership) was
formed under the California Uniform Limited Partnership Act on February 22,
1972, for the principal purpose of investing in other limited partnerships
(Local Limited Partnerships), which own federal and state-assisted housing
projects. The Partnership issued 5,830 units of limited partnership interest
pursuant to a public offering of such units which terminated on December 31,
1972. The Partnership also issued five units of general partnership interest
to Interfinancial Real Estate Management Company (the General Partner). For
income tax and financial reporting purposes, profits and losses are allocated
.08659 percent to the General Partner and 99.91341 percent to the Limited
Partners.
Note 2 - Method of Accounting - Initial rent-up fees paid by the Partnership
to the General Partner, deducted when paid for income tax purposes, are
capitalized as acquisition costs of the Local Limited Partnerships for
financial reporting purposes. These costs and other costs of acquisition are
amortized using the straight-line method over the lives (fifteen to forty
years) of the Local Limited Partnership Properties. Amortization is
discontinued when the investment is reduced to zero.
Repayment of advances and cash distributions by the Local Limited Partnerships,
after the Partnership investment has been reduced to zero, are recognized as
income by the Partnership in the period received. Additional advances to Local
Limited Partnership, after an investment is reduced to zero, are recognized as
losses in the period paid.
<PAGE>
The unaudited interim financial statements furnished in this report reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All such
adjustments are of a normal recurring nature.
Taxes on Income
No provision for taxes on income is required since all taxable income or loss
of the Partnership is allocated to the partners for inclusion in their
respective tax returns.
Cash Equivalents
Marketable securities that are highly liquid and have maturities of three months
or less at the date of purchase are classified as cash equivalents.
Note 3 - Management of Urban Improvement Fund Limited
Under the terms of the Limited Partnership Agreement (as amended), the
Partnership is required to pay the General Partner an annual management fee
equal to three tenths of one percent of invested assets or $64,325 (the fee
will not be more than fifty percent of the Partnership's annual net cash flow
as defined, subject to an annual minimum of $40,000). This fee was not payable
during the first six years unless annual tax deductions plus cash distributions
aggregated $550 per unit on a cumulative basis. The required level of tax
deductions was not achieved; and, accordingly, the fee was not paid for those
years. However, fees of $240,000 were recorded as a liability to the General
Partner. Management fees totaling $590,833 for subsequent years have been
accrued to the General Partner because cash flow was not sufficient to pay the
fees. The Partnership will also pay the General Partner a liquidation fee for
the sale of projects.
<PAGE>
The General Partner of the partnership is a corporation in which Paul H. Pfleger
has a majority interest. Partnership Services, Inc. (PSI), another corporation
in which Paul H. Pfleger is a majority shareholder, has contracted with the
General Partner and the Partnership to provide certain management and other
services in any projects in which the Partnership has an interest. In addition,
as shown in the following table, PSI has become the General Partner in three of
the Local Limited Partnerships in which the Partnership has investments.
<TABLE>
<CAPTION>
<S> <C> <C>
Date PSI Became
Local Limited Partnership General Partner
(1) Alms Hill Apartments Limited December 1977
(2) Angeles Apartments Associates, No. 1 December 1975
(2) Angeles Apartments Associates, No. 2 December 1975
</TABLE>
(1) This property was sold through a resyndication during August 1984.
(2) These properties were sold on August 28, 1999.
Note 4 - Investments in Local Limited Partnerships - As of September 30, 1999
and 1998, the Partnership has investments in four active real estate Limited
Partnerships (Local Limited Partnerships), which are accounted for on the
equity method. The investment account represents the sum of the capital
investment, advances and unamortized costs of acquisition less the
Partnership's share of losses since the date of acquisition. The Partnership
discontinues recognizing losses and amortizing cost of acquisition under the
equity method when the investment in a particular Local Limited Partnership is
reduced to zero unless the Partnership intends to commit additional funds to
the Local Limited Partnership.
<PAGE>
The Partnership has an investment in one Limited Partnership that sold its
real estate during 1984. This Partnership (Alms Hill Apartments, Ltd.) holds
a note receivable for a portion of the sales proceeds.
The investment in Local Limited Partnerships is comprised of:
<TABLE>
<CAPTIONS>
<S> <C> <C>
September 30, 1999 December 31, 1998
Capital contributions $ 1,054,287 $ 1,054,287
Distributions (2,200,240) (572,684)
Equity in loss 972,519 (763,019)
Advances -0- 14,067
Unamortized costs of acquisitions 173,434 267,349
$ -0- $ -0-
</TABLE>
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The Partnership has followed the practice of investing available funds not
used in the purchase of properties or in operations into short-term
investments. Revenues resulted from such short-term investments. The
Partnership is dependent upon interest earned and the distributions and
repayment of advances from Local Limited Partners for cash flow.
Under the terms of the Limited Partnership Agreement (as amended), the
Partnership is required to pay the General Partner an annual management fee
equal to three tenths of one percent of invested assets or $64,325 (the fee
will not be more than fifty percent of the Partnership's annual net cash flow
as defined, subject to an annual minimum of $40,000). The Partnership recorded
management fee expense of $30,000 for the nine-month period ended September 30,
1999 and 1998
<PAGE>
The components of the Partnership's equity in net income (loss) of the local
limited partnership for September 30, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Three-Month For the Nine-month
Period Ended Period Ended
September 30, September 30,
1999 1998 1999 1998
Distributions received from
Partnership with zero
investment:
Lakewood Apartments $ -0- $ -0- $ 7,946 $ -0-
Angeles I 1,075,794 -0- 1,075,794 -0-
Angeles II 543,817 -0- 543,817 23,369
1,619,611 -0- 1,627,557 23,369
Repayment from (advances
to) Partnerships with
zero investment:
Angeles I 23,570 (4,145) 10,492 (11,530)
Angeles II 15,454 -0- 3,574 -0-
39,024 (4,145) 14,066 (11,530)
$1,658,635 $ (4,145) $1,641,623 $ 11,839
</TABLE>
Angeles I and Angeles II sold their real property on August 28, 1999. The
sale resulted in net proceeds to the Partnership of approximately $1,695,000
including the repayment of advances of $39,025.
<PAGE>
PART II - OTHER INFORMATION
Items 1 through 5 not applicable
Item 6 Exhibits and Reports on Form 8-K
a) None
b) The registrant has not filed a report on Form 8-K during the quarter
ending September 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
URBAN IMPROVEMENT FUND LIMITED - 1972
(Registrant)
By: Interfinancial Real Estate Management
Company, General Partner
Date December 7, 1999 Michael Fulbright
(Signature)
By: Michael Fulbright, Secretary
Date December 7, 1999 John M. Orehek
(Signature)
By: John M. Orehek, Senior Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 SEP-30-1999 DEC-31-1998
<CASH> 0 417 1,176
<SECURITIES> 0 0 0
<RECEIVABLES> 0 1,658,635 47,670
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 0 0 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 0 1,699,052 48,846
<CURRENT-LIABILITIES> 0 1,391,562 1,378,260
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 267,490 (1,329,414)
<TOTAL-LIABILITY-AND-EQUITY> 0 1,659,052 48,846
<SALES> 0 0 0
<TOTAL-REVENUES> 1,658,635 1,642,040 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 15,000 45,136 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 1,643,635 1,596,904 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 0 0 0
<EPS-BASIC> 1,643,635 1,596,904 0
<EPS-DILUTED> 0 0 0
</TABLE>
