FORM 10-KSB--Annual or Transitional Report
Under Section 13 or 15(d)
(As last amended by 34-31905, eff. 4/26/93)
[X] Annual Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995
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 0-19242
UNITED INVESTORS GROWTH PROPERTIES II
(Name of small business issuer in its charter)
Missouri 43-1542902
(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. $1,529,037
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, 1995. 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 18, 1990 (included in
Registration Statement, No. 33-34111 of Registrant) are incorporated by
reference into Parts I and III.
PART I
Item 1. Description of Business
United Investors Growth Properties II (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 March 23, 1990, with the Missouri Secretary of State. The Registrant
is governed by an Agreement of Limited Partnership dated February 22, 1991.
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
a 40% interest in a joint venture which owned an apartment complex; a 99.99%
interest in a limited partnership which owns a second apartment complex; and a
100% interest in a third apartment complex. During the third quarter, the
apartment complex owned by the 40% owned joint venture was sold (See Note B to
the Consolidated Financial Statements). These properties are further described
in "Item 2" below.
Commencing on or about June 18, 1990, the Registrant began offering through
United Investors Equity Services, 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.
33-34111, which Registration Statement was declared effective on June 18, 1990.
The offering was extended beyond the initial termination date of June 18, 1992.
On October 26, 1992, the General Partner terminated the extended offering
period. Upon termination of the offering, the Registrant had accepted
subscriptions for 20,661 Units resulting in Gross Offering Proceeds of
$5,165,250.
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"). 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
Purchase Type of Ownership Use
Riverwalk Apartments 03/31/92 General Partnership Apartment
Houston, TX interest 104 units
Stone Ridge Apartments 07/01/92 Fee ownership subject Apartment
Overland Park, KS to first mortgage. 106 units
Schedule of Properties:
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Federal
Property Value Depreciatio Life Method Tax Basis
<S> <C> <C> <C> <C> <C>
Riverwalk Apartments $4,060,341 $503,437 5-27.5 S/L $3,521,766
Stone Ridge Apartments 3,976,741 463,096 5-27.5 S/L 3,503,777
Totals $8,037,082 $966,533 $7,025,543
</TABLE>
See Note A of the consolidated financial statements included in "Item 7" for
a description of the Partnership's depreciation policy.
Schedule of Mortgages:
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1995 Rate Amortized(a) Date Maturity
<S> <C> <C> <C> <C> <C>
Riverwalk Apartments $2,663,937 9.250% 30 years 04/01/02 $2,464,741
Stone Ridge Apartments 2,368,900 8.375% 25 years 11/01/97 2,297,058
Total $5,032,837 $4,761,799
<FN>
(a) The mortgage loans on each of the properties mature at various times with
balloon payments due at maturity.
</TABLE>
Schedule of Rental Rates and Occupancy:
Average Annual
Rental Rates Average Annual
(per unit) Occupancy
Property 1995 1994 1995 1994
Riverwalk Apartments $7,230 $6,980 97% 95%
Stone Ridge Apartments 6,969 6,581 97% 98%
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 in the area. 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 tenant leases 10% or more of the available rental space.
Schedule of Real Estate Taxes and Rates:
1995 1995
Taxes Rate
Riverwalk Apartments $63,987 2.44%
Stone Ridge Apartments 50,590 1.38%
Item 3. Legal Proceedings
The Registrant is unaware of any pending or outstanding litigation that is
not of a routine nature. The General Partner of the Registrant 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, 1995, 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
As of December 31, 1995, the number of holders of record of Limited
Partnership Units was 562. No public trading market has developed for the
Units, and it is not anticipated that such a market will develop in the future.
The Partnership made distributions of cash generated from operations of
$206,151 and $154,853 for the twelve months ended December 31, 1995 and 1994,
respectively. 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 realized net income of $72,369 for the year ended December
31, 1995, compared to a net loss of $638,928 for the year ended December 31,
1994. The increase in net income is primarily due to the increase in equity in
net income of the joint venture. During the third quarter of 1995, Renaissance
Village was sold with the Partnership's share of the gain recognized being
approximately $66,000 (See Note B in the Notes to Consolidated Financial
Statements in "Item 7"). In 1994, the Partnership recognized a loss of $544,885
resulting from a write-down of the carrying value of Renaissance Village.
Rental revenues increased for the year ending December 31, 1995, compared to the
corresponding period of 1994 as a result of increased rental rates at both of
the Partnership's properties. Further contributing to the increase in net
income was a casualty gain on replacement of roofs of $17,407. During the
fourth quarter of 1995, Riverwalk Apartments replaced all of the roofs as a
result of wind and hail damages. The old roofs, which were not fully
depreciated, were written off. The Partnership received insurance proceeds of
$52,505. Other income increased due to higher earnings related to short term
certificates of deposit throughout 1995. Partially offsetting these increases in
revenue was an increase in general and administrative expenses due to increased
general partner expense reimbursements in 1995.
The General Partner continues to monitor the rental market environment in
each location of its properties to assess the feasibility of increasing rents
and maintaining or increasing occupancy levels to protect the Partnership from
increases in expense. The General Partner expects to be able, at a minimum, to
continue protecting the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, rental concessions and rental reductions needed to
offset softening market conditions could affect the ability to sustain this
plan.
Liquidity and Capital Resources
At December 31, 1995, the Partnership held unrestricted cash of $482,107
compared to $512,838 at December 31, 1994. Net cash provided by operating
activities increased primarily as a result of the revenue and other income
increases discussed above. Net cash used in investing activities decreased as a
result of reduced advances to the joint venture in 1995. Net cash used in
financing activities increased due to an increase in partners' distributions
made in the twelve months ended December 31, 1995, compared to the twelve months
ended December 31, 1994.
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 loans on each of the
properties mature 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,
refinancings, property sales, and the availability of cash reserves.
Distributions of $206,151 were made during 1995 compared to $154,853 made in
1994. The distributions were made from cash generated by property operations.
The General Partner of the Partnership anticipates that the Partnership will
continue to make cash distributions as property operations permit throughout
1996.
Item 7. Financial Statements
UNITED INVESTORS GROWTH PROPERTIES II
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheet - December 31, 1995
Consolidated Statements of Operations - Years ended December 31, 1995
and 1994
Consolidated Statements of Changes in Partners Capital/(Deficit) -
Years ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1995
and 1994
Notes to Consolidated Financial Statements
INDEPENDENT AUDITORS' REPORT
The Partners
United Investors Growth Properties II
(A Missouri Limited Partnership)
We have audited the accompanying consolidated balance sheet of United Investors
Growth Properties II (A Missouri Limited Partnership) ("the Partnership") as of
December 31, 1995, 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, 1995. 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,
1995, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/S/DELOITTE & TOUCHE LLP
Greenville, South Carolina
February 21, 1996
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED BALANCE SHEET
December 31, 1995
Assets
Cash and cash equivalents:
Unrestricted $ 482,107
Restricted-tenant security deposits 44,756
Accounts receivable 13,267
Escrows for taxes and insurance 19,409
Restricted escrow 70,250
Other assets 113,903
Investment properties: (Notes A & G)
Land $ 1,071,000
Buildings and related personal property 6,966,082
8,037,082
Less accumulated depreciation ( 966,533) 7,070,549
Investment in joint venture (Note B) 64,982
$7,879,223
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 8,215
Tenant security deposits 44,756
Accrued taxes 25,295
Other liabilities 50,166
Mortgage notes payable 5,032,837
Partners' Capital
General partner $ 539
Limited partners (20,661 units issued
and outstanding) 2,717,415 2,717,954
$7,879,223
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
1995 1994
Revenues:
Rental income $1,451,362 $1,385,025
Other income 77,675 67,281
Total revenues 1,529,037 1,452,306
Expenses:
Operating 344,647 332,728
General and administrative 65,511 54,316
Property management fees 75,022 72,485
Maintenance 130,290 134,665
Depreciation 285,923 274,968
Interest 471,008 475,955
Property taxes 118,596 109,364
Total expenses 1,490,997 1,454,481
Equity in net income (loss) of
joint venture (Note B) 16,922 (636,753)
Casualty gain 17,407 --
Net income (loss) (Note F) $ 72,369 $ (638,928)
Net income (loss) allocated to general
partner (Note D) $ 12,911 $ (6,389)
Net income (loss) allocated to limited
partners (Note D) 59,458 (632,539)
$ 72,369 $ (638,928)
Net income (loss) per limited partnership
unit $ 2.88 $ (30.62)
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL/(DEFICIT)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 20,661 $ 100 $5,165,250 $5,165,350
Partners' (deficit) capital
at December 31, 1993 20,661 $ (2,373) $3,647,890 $3,645,517
Partners' distributions -- (1,548) (153,305) (154,853)
Net loss for the year
ended December 31, 1994 -- (6,389) (632,539) (638,928)
Partners' (deficit) capital at
December 31, 1994 20,661 (10,310) 2,862,046 2,851,736
Partners' distributions -- (2,062) (204,089) (206,151)
Net income for the year ended
December 31, 1995 -- 12,911 59,458 72,369
Partners' capital at
December 31, 1995 20,661 $ 539 $2,717,415 $2,717,954
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 72,369 $ (638,928)
Adjustments to reconcile net income (loss) to
net cash provided by operating
activities:
Equity in net (income) loss of joint venture (16,922) 636,753
Depreciation 285,923 274,968
Amortization of loan costs 23,354 23,354
Casualty gain (17,407) --
Change in accounts:
Restricted cash (1,628) 1,280
Accounts receivable (12,107) 861
Escrows for taxes and insurance (3,425) 39,145
Other assets (151) (1,121)
Accounts payable (15,331) 12,511
Tenant security deposit liabilities 1,893 (1,545)
Accrued property taxes (1,200) (32,457)
Other liabilities 19,945 4,292
Net cash provided by operating
activities 335,313 319,113
Cash flows from investing activities:
Property improvements and replacements (119,301) (44,433)
Advances to joint venture (18,000) (46,850)
Deposits to restricted escrow (15,600) (16,900)
Insurance proceeds from casualty item 52,505 --
Net cash used in investing
activities (100,396) (108,183)
Cash flows from financing activities:
Partners' distributions (206,151) (154,853)
Payments on mortgage notes payable (59,497) (54,551)
Net cash used in financing
activities (265,648) (209,404)
Net (decrease) increase in cash (30,731) 1,526
Cash at beginning of year 512,838 511,312
Cash at end of year $ 482,107 $ 512,838
Supplemental disclosure of cash flow information:
Cash paid for interest $ 447,655 $ 452,601
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
UNITED INVESTORS GROWTH PROPERTIES II
Notes to Consolidated Financial Statements
December 31, 1995
Note A - Organization and Significant Accounting Policies
Organization: United Investors Growth Properties II (the "Partnership"), a
Missouri Limited Partnership, was organized in March 1990, with the initial
group of limited partners being admitted on February 22, 1991. Additional
partners were admitted each month thereafter through October 1992.
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 and cash equivalents:
Unrestricted: Unrestricted cash and cash equivalents includes cash on hand
and in banks and money market funds and certificates of deposit with original
maturities of three months or less.
Restricted cash-tenant security deposits: The Partnership requires security
deposits from lessees for the duration of the lease with such deposits being
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.
Investment in limited partnership: The Partnership owns a 99.99% interest and is
the sole general partner in Riverwalk Apartments Limited Partnership (A Missouri
Limited Partnership) ("Riverwalk"), a 104 unit apartment complex located in
Houston, Texas. An unaffiliated individual is the sole limited partner. The
Partnership reflects its interest in Riverwalk utilizing full consolidation
whereby all of the accounts of Riverwalk are included in the consolidated
financial statements of the Partnership (intercompany accounts are eliminated).
The minority interest of the limited partner is not material.
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
in their individual capacities.
Note A - Organization and Significant Accounting Policies (continued)
Investment properties: During 1995, the Partnership adopted FASB Statement 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 had no effect on
the Partnership's financial statements.
Depreciation is computed using straight-line methods over estimated useful lives
of twenty-seven and one half years for buildings and improvements and five to
seven years for furniture and fixtures.
Other assets: Included in other assets are loan costs which are amortized over
the terms of the related notes.
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.
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 the value. The
carrying amount of the Partnership's cash and cash equivalents approximates fair
value due to short-term maturities. 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.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was $12,478 and $14,921 for
the years ended December 31, 1995 and 1994, respectively.
Reclassifications: Certain reclassifications have been made to the 1994
information to conform to the 1995 presentation.
Note B - Investment In Joint Venture
The Partnership owns a 40% interest in Renaissance Village Associates, a joint
venture with United Investors Growth Properties, an affiliated partnership in
which the General Partner is also the sole General Partner. The joint venture
owned a 124 unit apartment complex located in Seattle, Washington.
Note B - Investment In Joint Venture (continued)
On August 30, 1995, Renaissance Village Apartments was sold to an unaffiliated
party, Kauri Investments, Ltd. The Partnership's share of the gain recognized
on the sale of the joint venture's property was approximately $66,000. In 1994,
the Partnership recognized a loss of $544,885 for its share of a write-down of
the carrying value of Renaissance to reduce the property's carrying value to its
then estimated fair value. Currently, the joint venture is in the process of
being liquidated. Once all the remaining liabilities of the joint venture are
satisfied, the remaining assets held by the joint venture will be distributed to
the joint venturers.
Condensed balance sheet information of Renaissance Village Associates at
December 31, 1995, is as follows:
December 31,
1995
Assets
Total Assets $162,455
Liabilities and Partners' Capital
Total liabilities --
Partners' capital 162,455
Total $162,455
Condensed state of operations information of Renaissance Village Associates for
the years ended December 31, 1995 and 1994, is as follows:
Years Ended December 31,
1995 1994
Revenue $ 524,219 $ 769,515
Costs and Expenses (647,498) (999,185)
Gain on disposition of property 165,584 --
Provision for value impairment -- (1,362,212)
Net Income (Loss) $ 42,305 $(1,591,882)
In arriving at estimates of fair value for real estate assets, numerous factors
are considered, including market evaluations of the assets. Prior to the
implementation of FASB No. 121, the primary factor in determining the estimated
fair value of the properties was the net operating income of each property
capitalized at a rate deemed reasonable for the type of property adjusted for
market conditions, physical condition of the property and other factors to
assess whether any permanent impairment in value had occurred. During
interim periods, the Partnership reviewed property operations specifically
to assess whether any events (such as major tenant move outs, structural
problems, or market events) had transpired which would cause the
Partnership to conclude that a permanent impairment in value had occurred.
Adjustments to these estimates might have been necessary in the event that
future economic conditions, including occupancy and leasing rates, operating
costs, interests rates, the terms and availability of financing and other
relevant factors varied significantly from those assumed in earlier estimates.
Due to continuing poor occupancy levels existing in spite of the Partnership's
efforts to increase occupancy by rental concessions, the General Partner
concluded that a permanent impairment in value of Renaissance Village had
occurred. Based on the General Partners' assessment of fair value, a write-down
of $1,362,212 was recorded as of December 31, 1994.
Note C - Mortgage Notes Payable
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
<S> <C> <C> <C> <C> <C>
Riverwalk Apartments $2,663,937 $22,541 9.250% 04/01/02 $2,464,741
Stone Ridge Apartments 2,368,900 19,721 8.375% 11/01/97 2,297,058
Total $5,032,837 $42,262 $4,761,799
</TABLE>
The estimated fair value of the Partnership's aggregate debt is approximately
$5,191,000. This value represents a general approximation of possible value and
is not necessarily indicative of the amounts the Partnership may pay in actual
market transactions.
The mortgage notes payable are nonrecourse and are secured by pledge of the
respective properties and by pledge of revenue from operations of the respective
rental properties. The mortgage loan collateralized by Riverwalk Apartments
contains a clause providing for a prepayment penalty of not less than 1% of the
outstanding balance of the mortgage and possible additional amounts depending on
interest rates in effect at the time of prepayment. The mortgage loan
collateralized by Stone Ridge Apartments may be extended for an additional 5
years subject to the property meeting certain ratios as defined in the note.
The loan is also subject to a prepayment penalty of 2% through October 31, 1996,
decreasing to 1% through maturity.
Note C - Mortgage Notes Payable (continued)
Scheduled maturities of principal are as follows:
Years Ending December 31,
1996 $ 59,267
1997 2,359,922
1998 29,983
1999 32,877
2000 36,051
Thereafter 2,514,737
$5,032,837
Note D - Partners' Capital
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.
Note D - Partners' Capital (continued)
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.
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.
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The partnership agreement provides for payments to affiliates for services
(based on a percentage of revenue) and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments
were made to affiliates of Insignia in 1995 and 1994:
1995 1994
Property management fees $75,022 $72,485
Reimbursement for services of affiliates 30,000 20,000
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
payment 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 - Partner Tax Information
The following is a reconciliation between net income (loss) as reported in the
consolidated financial statements and federal taxable loss allocated to the
partners in the Partnership's information return for the years ended December
31, 1995 and 1994:
1995 1994
Net income (loss) as reported $ 72,369 $(638,928)
Add (deduct):
Accrued expenses 1,000 5,500
Deferred revenue and other liabilities (531,816) 542,484
Depreciation differences (1,262) (2,928)
Federal taxable loss $(459,709) $ (93,872)
Federal taxable loss
per limited partnership unit $ (22.03) $ (4.50)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities at December 31, 1995:
Net assets as reported $2,717,954
Differences in basis of assets and liabilities:
Investment properties at cost (6,476)
Accumulated depreciation (38,530)
Deferred Revenue and other 52,056
Syndication costs 681,086
Net assets - tax basis $3,406,090
Note G - Investment Properties and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
Riverwalk Apartments
Houston, TX $2,663,937 $ 646,000 $3,061,500 $398,621
(45,780)
Stone Ridge Apartments
Overland Park, KS 2,368,900 425,000 3,265,150 286,591
Totals $5,032,837 $1,071,000 $6,326,650 $639,432
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1995
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>
Riverwalk Apartments $ 646,000 $3,414,341 $4,060,341 $503,437 1985 03/31/92 5-27.5
Stone Ridge 425,000 3,551,741 3,976,741 463,096 1987 07/01/92 5-27.5
Totals $1,071,000 $6,966,082 $8,037,082 $966,533
</TABLE>
Note G - Investment Properties and Accumulated Depreciation (continued)
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1995 1994
Investment Properties
Balance at beginning of year $7,963,561 $7,919,128
Property improvements 119,301 44,433
Disposals of property (45,780) --
Balance at End of Year $8,037,082 $7,963,561
Accumulated Depreciation
Balance at beginning of year $ 691,292 $ 416,324
Depreciation expense 285,923 274,968
Disposals of property (10,682) --
Balance at end of year $ 966,533 $ 691,292
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1995, is $8,030,606. The accumulated depreciation taken for
Federal income tax purposes at December 31, 1995, is $1,005,063.
Note H - Contingencies
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. Management 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 and 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,
1995, 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 or directors.
Name Age Position
Carroll D. Vinson 55 President, Director
Robert D. Long, Jr. 28 Controller, Principal
Accounting Officer
William H. Jarrard, Jr. 49 Vice President
John K. Lines 36 Secretary
Kelley M. Buechler 38 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. From 1986 to 1990, Mr.
Vinson was President and Director of U.S. Shelter Corporation, a real estate
services company, which sold substantially all of its assets to Insignia in
December 1990.
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.
William H. Jarrard, Jr. is Vice President of the General Partner and MAE
subsidiaries and Managing Director - Partnership Administration of Insignia.
During the five years prior to joining Insignia in 1991, he served in a similar
capacity for U.S. Shelter. He was previously associated with the accounting
firm, Ernst and Whinney, for eleven years. Mr. Jarrard is a graduate of the
University of South Carolina and a certified public accountant.
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.
Ms. Buechler is a graduate of the University of North Carolina.
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
As of February, 1996, no person was known by the Registrant to be the
beneficial owner of more than five percent of the outstanding Units of the
Registrant.
As of February, 1996, no Units were owned by the General Partner or any of
its officers and directors.
Item 12. Certain Relationships and Related Transactions
During 1995 and 1994, the General Partner received distributions of $2,062
and $1,548, respectively. 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 a 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 affiliates received property management fees
equal to 5% of apartment reserves. During the twelve months ended December 31,
1995, and 1994, affiliates of Insignia received $75,022 and $72,485 in fees for
property management, 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.
For a further description 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 financial statements included as
part 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 1995: 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 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
Date: March 14, 1996
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 14, 1996
Carroll D. Vinson
/s/ Robert D. Long, Jr. Controller and March 14, 1996
Robert D. Long, Jr. Principal Accounting
Officer
INDEX TO EXHIBITS
Exhibit
1 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 Amendment No. 1 to
Registrant's Registration Statement (File No. 33-34111) previously
filed on June 8, 1990.
3 Certificate of Limited Partnership and Amendment thereto;
incorporated by reference to Exhibit 3 to Amendment No. 1 to
Registrant's Registration Statement previously filed on June 8,
1990.
4.1 Form of Subscription Agreement; incorporated by reference to Exhibit
4.1 to Amendment No. 1 to Registrant's Registration Statement
previously filed on June 8, 1990.
4.2 Agreement of Limited Partnership of Registrant dated February 22,
1991; incorporated by reference to Exhibit 4.2 to Registrant's
Report on Form 10-K previously filed on March 7, 1991.
4.2.1 Amended and Restated Agreement of Limited Partnership of Registrant
dated June 1, 1992; incorporated by reference to Exhibit 4.2.1 to
Registrant's Form 8-K, amending Registrant's Form 10-Q filed with
the Commission on May 15, 1992 previously filed on June 22, 1992.
4.3 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 4.3 to Registrant's Quarterly Report on Form 10-Q previously
filed on April 24, 1991.
10.1 Escrow Agreement among the Registrant, the Dealer Manager, and
United Missouri Bank of Kansas City, N.A.; incorporated by reference
to Exhibit 10.1 to Amendment No. 1 to Registrant's Registration
Statement previously filed on June 8, 1990.
10.1.1 Form of Amendment to Escrow Agreement; incorporated by reference to
Exhibit 10.1.1 to Amendment No. 5 to Registrant's Registration
Statement previously filed on February 24, 1992.
10.2 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 Amendment No. 1 to Registrant's Registration
Statement previously filed on December 6, 1990.
10.2.1 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 10.2.1 to
Registrant's Quarterly Report on Form 10-Q previously filed on April
24, 1991.
10.3 Agreement of Joint Venture of Renaissance Village Associates dated
March 22, 1991; incorporated by reference to Exhibit 10.3 to
Amendment No. 3 to Registrant's Registration Statement previously
filed on April 10, 1991.
10.4 Promissory Note and Deed of Trust with respect to the Permanent Loan
on Renaissance Village Apartments; incorporated by reference to
Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q
previously filed on April 24, 1991.
10.5 Agreement of Purchase and Sale, dated January 9, 1992, between
United Investors Real Estate, Inc., as purchaser, and Normandy 104
Associates, Ltd., as seller, relating to Riverwalk Apartments, and
first and second amendments thereto; incorporated by reference to
Exhibit 10.5 to Amendment No. 5 to Registrant's Registration
Statement previously filed on February 24, 1992.
10.5.1 Third Amendment to the Agreement of Purchase and Sale, dated January
9, 1992 between United Investors Real Estate, Inc., as purchaser,
and Normandy 104 Associates, Ltd., as seller, relating to Riverwalk
Apartments; incorporated by reference to Exhibit 10.5.1 to
Registrant's Current Report on Form 8-K previously filed on April
13, 1992.
10.6 Promissory Note and Deed of Trust with respect to the Permanent Loan
on Riverwalk Apartments; incorporated by reference to Exhibit 10.6
to Registrant's Current Report on Form 8-K previously filed on April
13, 1992.
10.7 Agreement of Limited Partnership of Riverwalk Associates, L.P., (a
Missouri Limited Partnership), dated March 23, 1992, between United
Investors Growth Properties II and Scott Wise; incorporated by
reference to Exhibit 10.7 to Registrant's Current Report on Form 8-K
previously filed on April 13, 1992.
10.8 Real Estate Sale Agreement between United Investors Real Estate,
Inc., as purchaser, and The Travelers Insurance Company, as seller,
relating to Stone Ridge Apartments; incorporated by reference to
Exhibit 10.8 to Amendment No. 9 to Registrant's Registration
Statement previously filed on June 1, 1992.
10.10 Promissory Note with respect to the General Partner loan on Stone
Ridge Apartments; incorporated by reference to Exhibit 10.10 to
Registrant's Quarterly Report on Form 10-Q previously filed on
August 12, 1992.
10.11 Permanent Loan Commitment with respect to Stone Ridge Apartments;
incorporated by reference to Exhibit 10.11 to Registrant's Quarterly
Report on Form 10-Q previously filed on August 12, 1992.
10.12 Mortgage, Security Agreement and Fixture Filing with respect to the
Permanent Loan on Stone Ridge Apartments; incorporated by reference
to Exhibit 10.12 to Registrant's Quarterly Report on Form 10-Q
previously filed on November 12, 1992.
10.13 Mortgage Note with respect to the Permanent Loan on Stone Ridge
Apartments.
10.14 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
10.14 to Registrant's Current Report on Form 8-K previously filed on
December 31, 1992.
10.15 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.
10.16 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, a Kansas joint
venture.
16.1 Letter of KPMG Peat Marwick to the Securities and Exchange
Commission pursuant to the requirement 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 Registrant's Prospectus dated June 18, 1990;
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 II 1995 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000862114
<NAME> UNITED INVESTORS GROWTH PROPERTIES II
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 482,107
<SECURITIES> 0
<RECEIVABLES> 13,267
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 8,037,082
<DEPRECIATION> 966,533
<TOTAL-ASSETS> 7,879,223
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,032,837
0
0
<COMMON> 0
<OTHER-SE> 2,717,954
<TOTAL-LIABILITY-AND-EQUITY> 7,879,223
<SALES> 0
<TOTAL-REVENUES> 1,529,037
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,490,997
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 471,008
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,369
<EPS-PRIMARY> 2.88
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
