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 0-19242
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: $1,615,000
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 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 of 1995,
the apartment complex owned by the 40% owned joint venture was sold (See "Note
B" of the Notes to 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 businesses 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
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:
(dollar amounts in thousands)
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
Riverwalk $4,105 $ 658 5-27.5 S/L $3,413
Stone Ridge 4,008 610 5-27.5 S/L 3,392
Totals $8,113 $1,268 $6,805
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 Balance
December 31, Interest Period Maturity Due At
Property 1996 Rate Amortized(a) Date Maturity
Riverwalk $2,641 9.250% 30 years 04/01/02 $2,465
Stone Ridge 2,332 8.375% 25 years 11/01/97 2,297
Total $4,973 $4,762
a) The mortgage loans on each of the properties mature at various times with
balloon payments due at maturity.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average Annual
Rental Rates (per unit) Occupancy
Property 1996 1995 1996 1995
Riverwalk $7,433 $7,230 96% 97%
Stone Ridge 7,387 6,969 96% 97%
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 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 tenant leases 10% or more of the available
rental space.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1996 1996
Taxes Rate
Riverwalk Apartments $67 2.34%
Stone Ridge Apartments 52 1.30%
ITEM 3. LEGAL PROCEEDINGS
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 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 563. 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
$138,000 and $206,000 for the years ended December 31, 1996 and 1995,
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 a net loss of $143,000 for the year ended December
31, 1996, compared to net income of $72,000 for the year ended December 31,
1995. The decrease in net income was due to the liquidation of the Renaissance
Village joint venture and increased maintenance and operating expenses mitigated
by increased revenues. The Partnership's investment in the joint venture
resulted in a $17,000 gain for the year ended December 31, 1995 compared to a
$4,000 loss for the corresponding period of 1996. The increase in other income
was due to increased furniture and appliance rentals related to the increase in
the volume of corporate unit rentals at Riverwalk and increased lease
cancellation fees at Stone Ridge. The increase in maintenance expenses is due
to exterior painting and siding projects at both Stone Ridge and Riverwalk
Apartments. Included in maintenance expense is approximately $181,000 of major
repairs and maintenance related to these projects. Operating expenses increased
due to additional costs incurred for concessions, advertising and corporate unit
rentals.
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 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.
Liquidity and Capital Resources
At December 31, 1996, the Partnership held unrestricted cash of $474,000
compared to $482,000 at December 31, 1995. Net cash provided by operating
activities decreased primarily due to the increased operating and maintenance
expenses discussed above. Net cash used in investing activities decreased due
to the $61,000 liquidating distribution received from the Renaissance joint
venture. Net cash used in financing activities decreased due to a decrease in
cash distributions to partners during the year ended December 31, 1996, compared
to the corresponding period of 1995.
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 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 $4,973,000 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. Cash distributions of $138,000 were made during 1996 compared to
$206,000 made during 1995. 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 1997.
ITEM 7. FINANCIAL STATEMENTS
UNITED INVESTORS GROWTH PROPERTIES II
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 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, 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 II
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 474
Restricted-tenant security deposits 43
Accounts receivable 9
Escrows for taxes and insurance 9
Restricted escrows 91
Other assets 88
Investment properties: (Notes A, C & G)
Land $ 1,071
Buildings and related personal property 7,042
8,113
Less accumulated depreciation (1,268) 6,845
$7,559
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 8
Tenant security deposits 43
Accrued taxes 41
Other liabilities 57
Mortgage notes payable (Note C) 4,973
Partners' Capital (Deficit) (Note D)
General partner $ (1)
Limited partners (20,661 units issued
and outstanding) 2,438 2,437
$7,559
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1996 1995
Revenues:
Rental income $1,497 $1,451
Other income 118 78
Casualty gain -- 17
Total revenues 1,615 1,546
Expenses:
Operating 483 420
General and administrative 68 65
Maintenance 291 130
Depreciation 302 286
Interest 465 471
Property taxes 145 119
Total expenses 1,754 1,491
Equity in net (loss) income of
joint venture (Note B) (4) 17
Net (loss) income (Note F) $ (143) $ 72
Net (loss) income allocated to general
partner (Note D) $ (1) $ 13
Net (loss) income allocated to limited
partners (Note D) (142) 59
$ (143) $ 72
Net (loss) income per limited partnership
unit $(6.83) $ 2.88
See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES II
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 20,661 $ -- $5,165 $5,165
Partners' capital (deficit)
at December 31, 1994 20,661 $ (10) $2,862 $2,852
Partners' distributions -- (2) (204) (206)
Net income for the year
ended December 31, 1995 -- 13 59 72
Partners' capital at
December 31, 1995 20,661 1 2,717 2,718
Partners' distributions -- (1) (137) (138)
Net loss for the year ended
December 31, 1996 -- (1) (142) (143)
Partners' capital (deficit) at
December 31, 1996 20,661 $ (1) $2,438 $2,437
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
UNITED INVESTORS GROWTH PROPERTIES II
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1996 1995
Cash flows from operating activities:
Net (loss) income $ (143) $ 72
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Equity in net loss (income) of joint venture 4 (17)
Depreciation 302 286
Amortization of loan costs 23 23
Casualty gain -- (17)
Change in accounts:
Restricted cash 2 (2)
Accounts receivable 4 (12)
Escrows for taxes and insurance 10 (3)
Other assets 3 --
Accounts payable -- (15)
Tenant security deposit liabilities (2) 2
Accrued property taxes 16 (1)
Other liabilities 7 20
Net cash provided by operating
activities 226 336
Cash flows from investing activities:
Property improvements and replacements (76) (119)
Advances to joint venture -- (18)
Liquidating distribution from joint venture 61 --
Deposits to restricted escrows (21) (16)
Insurance proceeds from casualty item -- 52
Net cash used in investing
activities (36) (101)
Cash flows from financing activities:
Partners' distributions (138) (206)
Payments on mortgage notes payable (60) (60)
Net cash used in financing
activities (198) (266)
Net decrease in cash and cash equivalents (8) (31)
Cash and cash equivalents at beginning of year 482 513
Cash and cash equivalents at end of year $ 474 $ 482
Supplemental disclosure of cash flow information:
Cash paid for interest $ 406 $ 448
See Accompanying Notes to Consolidated Financial Statements
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 (with intercompany accounts being
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
individually.
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 fifteen to 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 $19,000 and $12,000 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 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.
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. All the
remaining liabilities of the joint venture have been satisfied, and the
remaining assets of the joint venture were distributed to the joint venturers
with the Partnership receiving a liquidating distribution of $61,000 during
1996.
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
Riverwalk Apartments $2,641 $ 22 9.250% 04/01/02 $2,465
Stone Ridge Apartments 2,332 20 8.375% 11/01/97 2,297
Total $4,973 $ 42 $4,762
The estimated fair value of the Partnership's aggregate debt is approximately
$5,212,000. 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.
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 1% through maturity.
Scheduled maturities of principal are as follows:
Years Ending December 31, (in thousands)
1997 $2,360
1998 30
1999 32
2000 36
2001 40
Thereafter 2,475
$4,973
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. On February 14, 1997, the Partnership
paid a distribution to the partners of $35,000.
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.
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 property
management services based on a percentage of revenue 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 during each of the year ended December
31, 1996 and 1995.
1996 1995
(in thousands)
Property management fees $79 $75
Reimbursement for services of affiliates 32 30
In addition, affiliates of the General Partner were paid approximately $6,000
and $2,000 during 1996 and 1995, respectively for construction oversight costs
incurred in conjunction with the Partnership's capital improvement and major
repair projects.
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 (loss) income 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) income as reported $ (143) $ 72
Add (deduct):
Accrued expenses -- 1
Deferred revenue and other liabilities (9) (532)
Depreciation differences 3 (1)
Federal taxable loss $ (149) $ (460)
Federal taxable loss
per limited partnership unit $(7.13) $(22.03)
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 $ 2,437
Differences in basis of assets and liabilities:
Investment properties at cost (6)
Accumulated depreciation (34)
Deferred Revenue and other 41
Syndication costs 681
Net assets - tax basis $ 3,119
NOTE G - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Riverwalk $2,641 $ 646 $3,062 $ 443
(46)
Stone Ridge 2,332 425 3,265 318
Totals $4,973 $1,071 $6,327 $ 715
<TABLE>
<capiton>
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>
Riverwalk $ 646 $3,459 $4,105 $ 658 1985 03/31/92 5-27.5
Stone Ridge 425 3,583 4,008 610 1987 07/01/92 5-27.5
Totals $1,071 $7,042 $8,113 $1,268
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1996 1995
Investment Properties
Balance at beginning of year $8,037 $7,964
Property improvements 76 119
Disposals of property -- (46)
Balance at End of Year $8,113 $8,037
Accumulated Depreciation
Balance at beginning of year $ 966 $ 691
Depreciation expense 302 286
Disposals of property -- (11)
Balance at end of year $1,268 $ 966
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996, is $8,106,000. The accumulated depreciation taken for
Federal income tax purposes at December 31, 1996, is $1,301,000.
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,
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 or directors.
Name Age Position
Carroll D. Vinson 56 President, Director
William H. Jarrard, Jr. 50 Vice President
Robert D. Long, Jr. 29 Controller, Principal
Accounting Officer
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
As of March, 1997, 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 March, 1997, no Units were owned by the General Partner or any of its
officers and directors.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1995, the General Partner received distributions of $1,000
and $2,000, 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 Notes to Consolidated 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. During the years
ended December 31, 1996 and 1995, affiliates of Insignia received $79,000 and
$75,000 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 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 Notes to Consolidated 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 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 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 27, 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 27, 1997
Carroll D. Vinson
/s/ Robert D. Long, Jr. Controller and March 27, 1997
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 1996 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> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 474
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 8,113
<DEPRECIATION> 1,268
<TOTAL-ASSETS> 7,559
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,973
0
0
<COMMON> 0
<OTHER-SE> 2,437
<TOTAL-LIABILITY-AND-EQUITY> 7,559
<SALES> 0
<TOTAL-REVENUES> 1,615
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 465
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143)
<EPS-PRIMARY> (6.83)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
