FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-19242
UNITED INVESTORS GROWTH PROPERTIES II
(Exact name of small business issuer as specified in its charter)
Missouri 43-1542902
(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 (803) 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
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents:
Unrestricted $ 495,509
Restricted-tenant security deposits 46,075
Escrows for taxes and insurance 36,439
Restricted escrow 62,450
Other assets 136,125
Investment properties:
Land $ 1,071,000
Buildings and related personal
property 6,923,414
7,994,414
Less accumulated depreciation ( 832,539) 7,161,875
Investment in joint venture 10,657
$7,949,130
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 13,252
Tenant security deposits 44,956
Accrued taxes 57,416
Other liabilities 51,375
Mortgage notes payable 5,063,231
Partners' Capital (Deficit)
General partner $ (11,638)
Limited partners (20,661 units issued
and outstanding) 2,730,538 2,718,900
$7,949,130
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
b) UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
Revenues:
Rental income $ 356,926 $350,830 $715,546 $686,098
Other income 20,400 12,996 37,648 30,050
Total revenues 377,326 363,826 753,194 716,148
Expenses:
Operating 92,645 86,575 171,748 160,829
General and administrative 17,331 16,765 32,557 28,003
Property management fees 18,350 17,916 36,848 36,093
Maintenance 48,052 33,491 64,363 55,799
Depreciation 71,224 68,373 141,247 136,148
Interest 117,917 119,140 236,150 238,569
Property taxes 34,425 26,129 61,369 50,669
Total expenses 399,944 368,389 $744,282 706,110
Equity in net loss of joint
venture (13,842) (16,030) (27,403) (33,877)
Net loss $ (36,460) $(20,593) $(18,491) $ (23,839)
Net loss allocated to general
partner (1%) $ (365) $ (206) $ (185) $ (238)
Net loss allocated to limited
partners (99%) (36,095) (20,387) (18,306) (23,601)
$ (36,460) $(20,593) $(18,491) $(23,839)
Net loss per limited
partnership unit $ (1.75) $ (.99) $ (.89) $ (1.14)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
c) UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 20,661 $ 100 $5,165,250 $5,165,350
Partners' capital (deficit)
at December 31, 1994 20,661 $(10,310) $2,862,046 $2,851,736
Partners' distributions -- (1,143) (113,202) (114,345)
Net loss for the six months
ended June 30, 1995 -- (185) (18,306) (18,491)
Partners' capital (deficit)
at June 30, 1995 20,661 $(11,638) $2,730,538 $2,718,900
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
d) UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $(18,491) $(23,839)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Equity in net loss of joint venture 27,403 33,877
Depreciation 141,247 136,148
Amortization of loan costs 11,677 11,677
Change in accounts:
Restricted cash (2,947) 1,990
Escrows for taxes and insurance (20,455) 13,491
Other assets (9,536) (8,688)
Accounts payable (10,294) (4,388)
Tenant security deposit liabilities 2,093 (1,990)
Accrued property taxes 30,921 (8,283)
Other liabilities 21,154 4,314
Net cash provided by operating
activities 172,772 154,309
Cash flows from investing activities:
Property improvements and replacements (30,853) (17,689)
Advances to joint venture (8,000) (16,480)
Deposits to restricted escrow (7,800) (9,100)
Net cash used in
investing activities (46,653) (43,269)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Partners' distributions $(114,345) $(63,026)
Payments on mortgage notes payable (29,103) (26,684)
Net cash used in financing
activities (143,448) (89,710)
Net (decrease) increase in cash (17,329) 21,330
Cash at beginning of period 512,838 511,312
Cash at end of period $ 495,509 $532,642
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 224,473 $226,392
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
6
<PAGE>
e) UNITED INVESTORS GROWTH PROPERTIES II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. 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, 1994.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Basis of Accounting
The financial statements include the Partnership's operating
division, Stone Ridge Apartments. The Partnership also owns a 99.99%
interest and is the sole general partner in Riverwalk Apartments Limited
Partnership ("Riverwalk"). An unaffiliated individual is the sole
limited partner. The Partnership consolidates its interest in Riverwalk
(whereby all accounts are included in the consolidated financial
statements of the Partnership with intercompany accounts being
eliminated). The minority interest of the limited partner is not
material. In addition, the Partnership owns a 40% interest in
Renaissance Village Associates ("Renaissance"). The Partnership reflects
its interest in Renaissance utilizing the equity method whereby the
original investment is increased by advances to Renaissance and the
Partnership's share of the earnings of Renaissance and decreased by
distributions from Renaissance and the Partnership's share of losses of
Renaissance.
Note C - Repurchase of Units
The partnership agreement for the Partnership contains a provision
which states that the General Partner shall purchase up to 10% of the
limited partnership Units outstanding at the fifth anniversary date of
the last Additional Closing Date. Any Limited Partner desiring to sell
all or any of his Units to the General Partner must submit a written
request to the General Partner beginning 30 days prior to the fifth
anniversary date.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of two apartment
complexes. The following table sets forth the average occupancy of the
properties for the six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Average
Occupancy
1995 1994
<S> <C> <C>
Riverwalk
Houston, Texas 98% 94%
Stone Ridge
Overland Park, Kansas 96% 98%
</TABLE>
The General Partner attributes the increase in occupancy at Riverwalk
to a reduction in the number of tenants purchasing homes due to
increasing interest rates and the strong competitive position of the
property resulting from the property's excellent curb appeal and
location.
The Partnership incurred a net loss of $18,491 for the six months
ended June 30, 1995, compared to a net loss of $23,839 for the
corresponding period in 1994. The net loss for the three months ended
June 30, 1995, was $36,460 compared to a net loss of $20,593 for the
three months ended June 30, 1994. The decrease in net loss was
primarily due to the increase in rental revenues at Riverwalk Apartments
due to the occupancy increase discussed above and increased rental
rates. Despite a drop in occupancy, rental revenues at Stone Ridge also
increased due to an increase in rental rates at the property. Partially
offsetting these revenue increases was an increase in insurance premiums
at both properties and an increase in maintenance expenses from swimming
pool repairs at Riverwalk. Riverwalk experienced higher real estate
taxes in 1995 due to a tax value assessment increase of approximately
$413,000 at the end of 1994.
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in expenses. 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, 1995, the Partnership had unrestricted cash of $495,509
compared to $512,838 at December 31, 1994. Net cash provided by
operating activities increased as a result of an increase in rental
revenues as discussed above. Net cash used in financing activities
increased due to increased partners' distributions made in the six
months ended June 30, 1995, compared to the corresponding period in
1994.
8
<PAGE>
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 property 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 $5,063,231 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. Cash
distributions of $154,853 were made during fiscal year 1994 and cash
distributions of $114,345 were made during the first six months of 1995.
9
<PAGE>
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, 1995.
10
<PAGE>
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 II
(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.
Controller and Principal
Accounting Officer
Date: August 10, 1995
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
United Investors Growth Properties II 1995 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 495,509
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 578,023
<PP&E> 7,994,414
<DEPRECIATION> 832,539
<TOTAL-ASSETS> 7,949,130
<CURRENT-LIABILITIES> 166,999
<BONDS> 5,063,231
<COMMON> 0
0
0
<OTHER-SE> 2,718,900
<TOTAL-LIABILITY-AND-EQUITY> 7,949,130
<SALES> 0
<TOTAL-REVENUES> 753,194
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 744,282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 236,150
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,491)
<EPS-PRIMARY> (.89)
<EPS-DILUTED> 0
</TABLE>
