-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P78BlPgfjt67aRmMIe4ZWjQaD+svONYvYOoBAI5HsRXinYtHOXlUy3rp5qZn5ZMM zmfO4B8TTfLZvGke2cyBCA== 0000711642-01-000063.txt : 20010402 0000711642-01-000063.hdr.sgml : 20010402 ACCESSION NUMBER: 0000711642-01-000063 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INVESTORS GROWTH PROPERTIES CENTRAL INDEX KEY: 0000831663 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 431483928 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-17645 FILM NUMBER: 1585849 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 0001.txt YEAR ENDED DECEMBER 31, 2000 FORM 10-KSB--Annual or Transitional Report Under Section 13 or 15(d) Form 10-KSB [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, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period _________to _________ Commission file number 0-17645 UNITED INVESTORS GROWTH PROPERTIES (Name of small business issuer in its charter) Missouri 43-1483928 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer's telephone number 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 Interests (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. $2,844,000 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, 2000. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Description of Business United Investors Growth Properties (the "Registrant" or "Partnership"), a Missouri Limited Partnership, was organized as a limited partnership under the laws of the State of Missouri on July 1, 1988. The Partnership is governed by an Agreement of Limited Partnership dated October 24, 1988. United Investors Real Estate, Inc., a Delaware corporation, is the sole general partner (the "General Partner" or "UIRE") of the Partnership. UIRE was wholly-owned by MAE GP Corporation ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is a subsidiary of Apartment Investment and Management Company ("AIMCO"). Thus the General Partner is a now wholly-owned subsidiary of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2018 unless terminated prior to such date. The Partnership's primary business is to operate and hold existing real estate properties for investment. The Partnership acquired three multifamily residential properties and a retail center which included medical office space. In addition, the Partnership owned a 60% interest in a joint venture which owned a multifamily residential property. During the third quarter of 1995, the joint venture property was sold. During the fourth quarter of 1998, the commercial property was foreclosed on by the lender holding the mortgage encumbering the property. The three remaining properties at December 31, 2000, are further described in "Item 2. Description of Properties" below. Cheyenne Woods Apartment was sold on January 3, 2001. Commencing on or about June 13, 1988, the Partnership offered pursuant to a Registration Statement filed with the Securities and Exchange Commission, 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). Since its initial offering, the Registrant has not received, nor are limited partners required to make, additional capital contributions. The offering of Units terminated June 13, 1990. Upon termination of the offering, the Partnership had accepted subscriptions for 39,297 Units resulting in Gross Offering Proceeds of $9,824,000. The Registrant has no employees. Management and administrative services are provided by the General Partner and by agents retained by the General Partner. An affiliate of the General Partner has been providing such property management services for the years ended December 31, 2000 and 1999. The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the General Partner in such market area, could have a material effect on the rental market for the apartments at the Partnership's properties and the rents that may be charged for such apartments. While the General Partner and its affiliates own and/or control a significant number of apartment units in the United States, such units represent an insignificant percentage of total apartment units in the United States and competition for the apartments is local. Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership's control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership. The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site. A further description of the Partnership's business is included in "Management's Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form 10-KSB. Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Item 2. Description of Properties: The following table sets forth the Partnership's investments in properties:
Date of Property Purchase Type of Ownership Use Terrace Royale Apartments 11/01/88 Fee ownership subject Apartment Bothell, Washington to first mortgage (1) 80 units Cheyenne Woods Apartments (2) 04/18/89 Fee ownership subject Apartment North Las Vegas, Nevada to first mortgage (1) 160 units Deerfield Apartments 10/24/90 Fee ownership subject Apartment Memphis, Tennessee to first mortgage (1) 136 units
(1) Property is held by a limited liability company in which the Registrant owns a 100% interest. (2) Property was sold on January 3, 2001. See "Item 7. Financial Statements - Note J" for information on the sale. Schedule of Properties: Set forth below for each of the Registrant's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
Gross Carrying Accumulated Useful Federal Property Value Depreciation Life Method Tax Basis (in thousands) (in thousands) Terrace Royale Apartments $ 4,641 $ 1,786 5-40 yrs S/L $ 2,858 Cheyenne Woods Apartments 6,448 2,370 5-40 yrs S/L 4,021 Deerfield Apartments 4,984 1,820 5-40 yrs S/L 3,022 Totals $16,073 $ 5,976 $ 9,901
See "Note A" of the consolidated financial statements included in "Item 7. Financial Statements" for a description of the Partnership's depreciation policy and "Note I - Change in Accounting Principle". Schedule of Property Indebtedness: The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 2000 Rate Amortized Date Maturity (1) (in thousands) (in thousands) Terrace Royale Apartments $ 3,334 6.51% 20 yrs 02/19 $ -- Cheyenne Woods Apartments 3,728 7.67% 30 yrs 09/07 3,360 Deerfield Apartments 3,489 7.34% 30 yrs 12/04 3,303 Total $10,551 $ 6,663
(1) See "Item 7. Financial Statements - Note C" for information with respect to the Registrant's ability to prepay these loans and other specific details about the loans. Rental Rates and Occupancy: Average annual rental rates and occupancy for 2000 and 1999 for each property: Average Annual Average Rental Rate Occupancy (per unit) Property 2000 1999 2000 1999 Terrace Royale Apartments $10,805 $10,544 95% 95% Cheyenne Woods Apartments 6,987 6,755 93% 90% Deerfield Apartments 7,037 6,704 95% 95% The General Partner attributes the increase in occupancy at Cheyenne Woods Apartments to the market improving slightly in the North Las Vegas area along with an improvement in the curb appeal of the property. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties 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 properties are apartment complexes which lease their units for terms of one year or less. No residential tenant leases 10% or more of the available rental space. All of the properties are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age. Real Estate Taxes and Rates: Real estate taxes and rates in 2000 for each property were: 2000 2000 Billing Rate (in thousands) Terrace Royale Apartments $ 76 1.44% Cheyenne Woods Apartments 64 3.35% Deerfield Apartments 111 6.91% Capital Expenditures: Terrace Royale Apartments During the year ended December 31, 2000, the Partnership completed approximately $81,000 of capital improvements at Terrace Royale Apartments, consisting primarily of floor covering replacements, major structural improvements, recreation facility upgrades, appliances, and plumbing upgrades. These improvements were funded from cash flow from operations. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $275 per unit or $22,000. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Cheyenne Woods Apartments During the year ended December 31, 2000, the Partnership completed approximately $72,000 of capital improvements at Cheyenne Woods Apartments, consisting primarily of floor covering replacements, appliances, air conditioning improvements, swimming pool improvements, plumbing upgrades, and other interior building improvements. These improvements were funded from cash flow from operations and from the property's replacement reserves. The Partnership recorded an impairment loss of $56,000 during the year ended December 31, 2000 relating to this property. This property was sold on January 3, 2001. Deerfield Apartments During the year ended December 31, 2000, the Partnership completed approximately $102,000 of capital expenditures at Deerfield Apartments, consisting primarily of plumbing upgrades, floor covering and appliance replacements, structural improvements, and other interior building improvements. These improvements were funded from property replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $275 per unit or $37,400. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Item 3. Legal Proceedings The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 4. Submission of Matters to a Vote of Security Holders During the quarter ended December 31, 2000, 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 The Partnership, a publicly held limited partnership, offered and sold 39,297 limited partnership units aggregating $9,824,000. The Partnership currently has 882 holders on record owning an aggregate of 39,287 Units. Affiliates of the General Partner owned 11,915 units or 30.33% at December 31, 2000. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. The following table sets forth the distributions made by the Partnership for the years ended December 31, 1999 and 2000 and subsequent to December 31, 2000: Distributions Per Limited Aggregate Partnership Unit 01/01/99 - 12/31/99 $750,000 (1) $18.91 01/01/00 - 12/31/00 $400,000 (1) $10.08 Subsequent to 12/31/00 $495,000 (2) $12.47 (1) Distribution was made from refinance proceeds (see "Item 6" for further details). (2) Distribution was made from operations and sale proceeds (see "Item 6" for further details. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners in the year 2001 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 11,915 limited partnership units in the Partnership representing 30.33% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Item 6. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-KSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-KSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Registrant's net loss for the year ended December 31, 2000 was approximately $298,000 compared to a net loss of approximately $162,000 for the year ended December 31, 1999. (See "Note E" of the consolidated financial statements in "Item 7. Financial Statements" for a reconciliation of these amounts to the Registrant's Federal taxable loss). The increase in net loss was primarily due to an increase in total expenses which was partially offset by an increase in total revenues and a decrease in cumulative effect of a change in accounting principle. Excluding the 1999 cumulative effect on prior years of a change in accounting principle, and the 2000 impairment loss on Cheyenne Woods Apartments, the Partnership had a net loss of approximately $242,000 for the year ended December 31, 2000, compared to a net loss of approximately $258,000 for the year ended December 31, 1999. The decrease in net loss was primarily due to an increase in total revenues, which was partially offset by an increase in total expenses. Total expenses increased due to an increase in depreciation, operating, property tax, and general and administrative expenses, which were partially offset by a decrease in interest expense. Depreciation expense increased due to property improvements and replacements placed into service during the current year. The increase in operating expense is due to an increase in advertising and property expenses. Advertising expenses increased as a result of property management's intensified marketing efforts to increase occupancy at the investment properties and an increase in referral fees at Deerfield Apartments. Advertising expense increased at Terrace Royale Apartments due to the advertisement of employment needs at the property. Property expenses increased due to an increase in employee salaries and related benefits at Deerfield Apartments and Terrace Royale Apartments. Property tax expense increased due to the timing of the receipt of tax bills during 2000 and 1999 which affected the calculations of the appropriate tax accruals for the properties. Interest expense decreased due to the reduction of principal balance on the properties' mortgages and refinancing the mortgage encumbering Terrace Royale Apartments. General and administrative expenses increased primarily due to an increase in professional fees associated with managing the Partnership. Included in general and administrative expense at both December 31, 2000 and 1999, are management reimbursements to the General Partner allowed under the Partnership Agreement. Costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Total revenues increased for the year ended December 31, 2000 due to an increase in rental income and other income. Rental income increased for the year ended December 31, 2000 due to an increase in average annual rental rates at all properties and an increase in occupancy at Cheyenne Woods. Other income increased due to enforcement of late and cancellation fee policies at all three investment properties. The increase in other income was partially offset by a decrease in interest income due to lower average cash balances maintained in interest bearing accounts. Effective January 1, 1999, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping. The Partnership believes that this accounting principle change is preferable because it provides a better matching of expenses with the related benefit of the expenditures and it is consistent with industry practice and the policies of the General Partner. The effect of the change in 1999 was to decrease net loss by approximately $42,000 ($1.07 per limited partnership unit). The cumulative effect adjustment of approximately $96,000 is the result of applying the aforementioned change in accounting principle retroactively and is included in income for 1999. The accounting principle change will not have an effect on cash flow, funds available for distribution or fees payable to the General Partner and affiliates. 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, 2000, the Registrant had cash and cash equivalents of approximately $488,000 as compared to approximately $774,000 at December 31, 1999. The decrease in cash and cash equivalents of approximately $286,000 from the Registrant's year ended December 31, 1999, is due primarily to approximately $574,000 of cash used in financing activities and approximately $145,000 of cash used in investing activities which was partially offset by approximately $433,000 of cash provided by operating activities. Cash used in financing activities consisted of payments of principal made on the mortgages encumbering the Registrant's properties and a distribution to partners. Cash used in investing activities consisted primarily of property improvements and replacements which was partially offset by net withdrawals from escrow accounts maintained by the mortgage lenders. The Registrant invests its working capital reserves in money market accounts. 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 properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, and local legal and regulatory requirements. The Partnership is currently evaluating the capital improvement needs of the properties for the upcoming year. The minimum amount to be budgeted is expected to be $275 per unit or $59,400 for the Partnership's two remaining properties (see below). Additional improvements may be considered and will depend on the physical condition of the properties as well as replacement reserves and anticipated cash flow generated by the properties. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. On January 29, 1999, the Partnership refinanced the mortgage encumbering Terrace Royale Apartments. The refinancing replaced indebtedness of approximately $2,397,000 with a new mortgage in the amount of $3,500,000 at an interest rate of 6.51%. The interest rate on the old mortgage was 13.5%, under the forebearance agreement in effect at the time of the refinancing. Payments are due on the first day of each month until the loan matures on February 1, 2019. Total capitalized loan costs were approximately $108,000. The Partnership's current assets are thought to be sufficient for any near term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $10,551,000 has maturity dates ranging from December 2004 to February 2019 with balloon payments due at maturity for the mortgages encumbering Cheyenne Woods Apartments and Deerfield Apartments. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced and/or sold for a sufficient amount, the Partnership may risk losing such properties through foreclosure. A cash distribution of approximately $400,000 (approximately $396,000 to the limited partners or $10.08 per limited partnership unit) was made during the year ended December 31, 2000 from the refinancing proceeds at Terrace Royale Apartments. A cash distribution of approximately $750,000 (approximately $743,000 to the limited partners or $18.91 per limited partnership unit) was made during the year ended December 31, 1999 consisting of the remaining net proceeds of the mortgage refinancing at Deerfield Apartments and a portion of the net proceeds from the refinancing at Terrace Royale Apartments. Subsequent to December 31, 2000 the Partnership distributed approximately $298,000 (approximately $295,000 to limited partners or $7.51 per limited partnership unit) from the sale proceeds of Cheyenne Woods Apartments and approximately $197,000 (approximately $195,000 to limited partners or $4.96 per limited partnership unit from operations). Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings, and/or property sales. The Registrant's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Registrant will generate sufficient funds from operations after required capital expenditures to permit any distributions to its partners in 2001 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 11,915 limited partnership units in the Partnership representing 30.33% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Subsequent Event On January 3, 2001, Cheyenne Woods Apartments was sold to an unaffiliated third party for approximately $4,200,000 with the purchaser assuming the mortgage encumbering the property which had an outstanding balance of approximately $3,728,000 at the time of the sale. After payment of closing expenses, the net sales proceeds received by the Partnership were approximately $352,000. For financial statement purposes, the sale resulted in a loss of approximately $56,000. For the year ended December 31, 2000 an impairment loss of approximately $56,000 was recorded related to this transaction. Additionally, the Partnership anticipates recognizing a loss on early extinguishment of debt associated with the assumption of the mortgage which is comprised of the write off of unamortized loan costs. Item 7. Financial Statements UNITED INVESTORS GROWTH PROPERTIES LIST OF FINANCIAL STATEMENTS Independent Auditors' Report Consolidated Balance Sheet - December 31, 2000 Consolidated Statements of Operations - Years ended December 31, 2000 and 1999 Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended December 31, 2000 and 1999 Consolidated Statements of Cash Flows - Years ended December 31, 2000 and 1999 Notes to Consolidated Financial Statements Independent Auditors' Report The Partners United Investors Growth Properties We have audited the accompanying consolidated balance sheet of United Investors Growth Properties (the "Partnership") as of December 31, 2000, and the related consolidated statements of operations, changes in partners' (deficit) capital and cash flows for each of the years in the two year period then ended. These consolidated 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 auditing standards generally accepted in the United States of America. 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 2000, and the results of its operations and its cash flows for each of the years in the two year period then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note I to the financial statements, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping effective January 1, 1999. /s/KPMG LLP Greenville, South Carolina February 12, 2001 UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 2000
Assets Cash and cash equivalents $ 488 Receivables and deposits 83 Restricted escrows 74 Other assets 246 Investment property held for sale 4,078 Investment properties (Notes C, F and J): Land $ 893 Buildings and related personal property 8,732 9,625 Less accumulated depreciation (3,606) 6,019 $10,988 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 39 Tenant security deposit liabilities 77 Accrued property taxes 42 Other liabilities 150 Mortgage notes payable (Note C) 10,551 Partners' (Deficit) Capital General partner $ (4) Limited partners (39,287 units issued and outstanding) 133 129 $10,988 See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 2000 1999 Revenues: Rental income $ 2,653 $2,539 Other income 191 182 Total revenues 2,844 2,721 Expenses: Operating 1,191 1,144 General and administrative 156 139 Depreciation 672 612 Interest 796 836 Property taxes 271 248 Impairment loss on property held for sale (Note J) 56 -- Total expenses 3,142 2,979 Loss before cumulative effect of a change in accounting principle (298) (258) Cumulative effect on prior years of a change in accounting for the cost of exterior painting and major landscaping (Note I) -- 96 Net loss $ (298) $ (162) Net loss allocated to general partner (1%) $ (3) $ (2) Net loss allocated to limited partners (99%) (295) (160) $ (298) $ (162) Per limited partnership unit: Loss before cumulative effect of a change in accounting principle $(7.51) $(6.49) Cumulative effect on prior years of a change in accounting principle for the cost of exterior painting and major landscaping -- 2.42 Net loss $ (7.51) $(4.07) Distributions per limited partnership unit $ 10.08 $18.91 See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 39,297 $ -- $ 9,824 $ 9,824 Partners' capital at December 31, 1998 39,287 $ 12 $ 1,727 $ 1,739 Distribution to partners -- (7) (743) (750) Net loss for the year ended December 31, 1999 -- (2) (160) (162) Partners' capital at December 31, 1999 39,287 3 824 827 Distributions to partners -- (4) (396) (400) Net loss for the year ended December 31, 2000 -- (3) (295) (298) Partners' (deficit) capital at December 31, 2000 39,287 $ (4) $ 133 $ 129 See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 2000 1999 Cash flows from operating activities: Net loss $ (298) $ (162) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 672 612 Impairment loss on property held for sale 56 -- Amortization of loan costs, lease commissions, and loan premiums, net 31 30 Cumulative effect on prior years of change in accounting principle -- (96) Change in accounts: Receivables and deposits 122 (28) Other assets (4) 27 Accounts payable (122) 66 Tenant security deposit liabilities 1 4 Accrued property taxes (5) 2 Other liabilities (20) 33 Net cash provided by operating activities 433 488 Cash flows from investing activities: Property improvements and replacements (255) (496) Net withdrawals from (deposits to) restricted escrows 110 (2) Net cash used in investing activities (145) (498) Cash flows from financing activities: Payments on mortgage note payable (174) (154) Payoff of mortgage note payable -- (2,397) Proceeds from debt refinancing -- 3,500 Loans costs paid -- (108) Distributions to partners (400) (750) Net cash (used in) provided by financing activities (574) 91 Net (decrease) increase in cash and cash equivalents (286) 81 Cash and cash equivalents at beginning of year 774 693 Cash and cash equivalents at end of year $ 488 $ 774 Supplemental disclosure of cash flow information: Cash paid for interest $ 766 $ 805 See Accompanying Notes to Consolidated Financial Statements
UNITED INVESTORS GROWTH PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 Note A - Organization and Significant Accounting Policies Organization: United Investors Growth Properties (the "Partnership" or "Registrant"), a Missouri Limited Partnership, was organized in July 1988, and the initial group of limited partners was admitted on October 24, 1988. Additional partners were admitted through June 1990. The Partnership was formed to operate and hold 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 ("MAE GP"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is a subsidiary of Apartment Investment and Management Company ("AIMCO"). Thus the General Partner is now a wholly-owned subsidiary of AIMCO. Principles of Consolidation: The consolidated financial statements includes all the accounts of the Partnership and its three 100% owned limited liability companies, Terrace Royale, L.L.C., Cheyenne Woods United Investors, L.L.C., and Deerfield Apartments, L.L.C. Although legal ownership of the respective asset remains with these entities, the Partnership retains all economic benefits from the properties. As a result, the Partnership consolidates its interest in these three entities, whereby all accounts are included in the consolidated financial statements of the Partnership with all inter-entity accounts being eliminated. Cash and Cash Equivalents: Includes cash on hand, in banks and money market accounts. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances include approximately $430,000 at December 31, 2000 that are maintained by the affiliated management company on behalf of affiliated entities in cash concentration accounts. Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. Deposits are refunded when the tenant vacates, provided the tenant has not damaged the space and is current on rental payments. Restricted Escrows: Replacement reserve accounts were established in 1997 with the refinancing proceeds for Cheyenne Woods Apartments and Deerfield Apartments. A repair escrow was established in 1999 with the refinancing proceeds from Terrace Royale Apartments. Cheyenne Woods Apartments and Deerfield Apartments make monthly deposits to establish and maintain a Replacement Reserve designated to cover necessary repairs and replacements of existing improvements at the property. The reserve account balance at December 31, 2000, was approximately $74,000 which includes interest. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, the General Partner's policy is to offer rental concessions during periods of declining occupancy or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred. Investment Properties: Investment properties consist of three apartment properties and are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with Statement of Financial Accounting Standards ("SFAS") Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Costs of apartment properties that have been permanently impaired have been written down to appraisal value. During the fourth quarter of 2000, the Partnership determined that Cheyenne Woods Apartments located in North Las Vegas, Neveda, with a carrying value of $4,134,000 was impaired and accordingly recorded an impairment loss of $56,000 for the year ended December 31, 2000 related to Cheyenne Woods Apartments. The fair value was based upon the sales price received for the property upon its January 3, 2001 sale date. No adjustments for impairment of value were recorded in the year ended December 31, 1999. Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the apartment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used (1) for real property over 15 years for additions prior to March 16, 1984, 18 years for additions after March 15, 1984, and before May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1, 1987, and (2) for personal property over 5 years for additions prior to January 1, 1987. As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property additions over 27 1/2 years and (2) personal property additions over 5 years. Effective January 1, 1999, the Partnership changed its method of accounting to capitalize the costs of exterior painting and major landscaping (Note I). Allocations of Profits, Gains and Losses: Allocation 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: 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. 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. Third, 99% to the limited partners and 1% to the General Partner, until each limited partner has received a 10% per annum preferred return on their adjusted capital investment or, if greater, a 6% cumulative annual return. Fourth, the balance will be allocated 85% to the limited partners and 15% to the General Partner. The interest 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. Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments to maturity, approximates its carrying balance. Loan costs: Loan costs of approximately $313,000, less accumulated amortization of approximately $92,000, are included in other assets and are being amortized on a straight-line basis over the life of the loans. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Advertising: The Partnership expenses the cost of advertising as incurred. Advertising costs of approximately $96,000 and $69,000 for the years ended December 31, 2000 and 1999, respectively, were charged to operating expense as incurred. Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. The General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Mortgage Notes Payable
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At 2000 Interest Rate Date Maturity Property (in thousands) (in thousands) Terrace Royale Apartments $ 3,334 $ 26 6.51% 02/19 $ -- Cheyenne Woods Apartments 3,728 27 7.67% 09/07 3,360 Deerfield Apartments 3,489 25 7.34% 12/04 3,303 Total $10,551 $ 78 $ 6,663
The mortgage notes payable are nonrecourse and are secured by pledge of the respective properties and by pledge of revenues from operation of the respective properties. The mortgage notes collateralized by the Terrace Royale Apartments, Cheyenne Woods Apartments, and Deerfield Apartments each contain clauses providing for prepayment penalties if the loans are repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness. On January 29, 1999, the Partnership refinanced the mortgage encumbering Terrace Royale Apartments. The refinancing replaced indebtedness of approximately $2,397,000 with a new mortgage in the amount of $3,500,000 at an interest rate of 6.51%. The interest rate on the old mortgage was 13.5%, under the forbearance agreement in effect at the time of the refinancing. Payments are due on the first day of each month until the loan matures on February 1, 2019. Total capitalized loan costs were approximately $108,000. Scheduled principal payments of the mortgage notes payable subsequent to December 31, 2000 are as follows (in thousands): 2001 $ 186 2002 199 2003 214 2004 3,527 2005 188 Thereafter 6,237 $10,551 Note D - 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the General Partner and affiliates during the years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $144 $137 Reimbursement for services of affiliates (included in operating, and general and administrative expenses) 56 50 During the years ended December 31, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties as compensation for providing property management services. The Registrant paid to such affiliates approximately $144,000 and $137,000 for the years ended December 31, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $56,000 and $50,000 for the years ended December 31, 2000 and 1999, respectively. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 11,915 limited partnership units in the Partnership representing 30.33% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note E - Income Tax The following is a reconciliation between net loss as reported in the consolidated financial statements and Federal taxable loss allocated to the partners in the Partnership's tax return for the years ended December 31, 2000 and 1999 (in thousands, except per unit data): 2000 1999 Net loss as reported $ (298) $ (162) Add (deduct): Deferred revenue and other liabilities (1) -- Depreciation differences (52) (11) Cumulative effect on prior year of change in accounting principle -- (96) Accrued expenses -- -- Nondeductible reserves and allowances 3 -- Other 59 -- Federal taxable loss $ (289) $ (269) Federal taxable loss per limited partnership unit $ (7.28) $ (6.77) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets at December 31, 2000 (in thousands): Net assets as reported $ 129 Differences in basis of assets and liabilities: Accumulated depreciation (189) Other assets and liabilities 125 Syndication costs 1,362 Cost of property (96) Net assets - tax basis $1,331 Note F - Real Estate and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Buildings Net Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition (in thousands) (in thousands) Terrace Royale Apartments $ 3,334 $ 653 $ 3,496 $ 492 Cheyenne Woods Apartments 3,728 587 4,980 881 Deerfield Apartments 3,489 240 3,891 853 Totals $10,551 $ 1,480 $12,367 $ 2,226
Gross Amount At Which Carried At December 31, 2000 (in thousands) Buildings And Related Personal Accumulated Date of Date Depreciable Description Land Property Total Depreciation Construction Acquired Life-Years (in thousands) Terrace Royale Apartments $ 653 $ 3,988 $ 4,641 $ 1,786 1987-1988 11/01/88 5-40 Cheyenne Woods Apartments 587 5,861 6,448 2,370 1988 04/18/89 5-40 Deerfield Apartments 240 4,744 4,984 1,820 1986 10/24/90 5-40 Totals $ 1,480 $14,593 $16,073 $ 5,976
Reconciliation of "Real Estate and Accumulated Depreciation": Years Ended December 31, 2000 1999 (in thousands) Investment Properties Balance at beginning of year $15,874 $15,282 Property improvements 255 496 Impairment loss on property held for sale (56) -- Cumulative effect on prior years of change in accounting principle -- 96 Balance at end of year $16,073 $15,874 Accumulated Depreciation Balance at beginning of year $ 5,304 $ 4,692 Additions charged to expense 672 585 Cumulative effect on prior years of change in accounting principle -- 27 Balance at end of year $ 5,976 $ 5,304 The aggregate cost of the real estate for Federal income tax purposes at December 31, 2000 and 1999, is approximately $16,067,000 and $15,779,000, respectively. The accumulated depreciation taken for Federal income tax purposes is approximately $6,166,000 and $5,442,000 at December 31, 2000 and 1999, respectively. Note G - Distributions A cash distribution of approximately $400,000 (approximately $396,000 to the limited partners or $10.08 per limited partnership unit) was made during the year ended December 31, 2000 from refinancing proceeds at Terrace Royale Apartments. A cash distribution of approximately $750,000 (approximately $743,000 to the limited partners or $18.91 per limited partnership unit) was made during the year ended December 31, 1999. This distribution represented the remaining net proceeds from the mortgage refinancing at Deerfield and a portion of the net proceeds from the mortgage refinancing at Terrace Royale Apartments. Subsequent to December 31, 2000 the Partnership distributed approximately $298,000 (approximately $295,000 to limited partners or $7.51 per limited partnership unit) from the sale proceeds of Cheyenne Woods Apartments and approximately $197,000 (approximately $195,000 to limited partners or approximately $4.96 per limited partnership unit) from operations. Note H - Legal Proceedings The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Note I - Change in Accounting Principle Effective January 1, 1999, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping. The Partnership believes that this accounting principle change is preferable because it provides a better matching of expenses with the related benefit of the expenditures and it is consistent with industry practice and the policies of the General Partner. The effect of the change in 1999 was to decrease net loss by approximately $42,000 ($1.06 per limited partnership unit). The cumulative effect adjustment of approximately $96,000 is the result of applying the aforementioned change in accounting principle retroactively and is included in income for 1999. The accounting principle change will not have an effect on cash flow, funds available for distribution or fees payable to the General Partner and affiliates. Note J - Subsequent Event/Impairment Loss - Sale of Cheyenne Woods On January 3, 2001, Cheyenne Woods Apartments was sold to an unaffiliated third party for approximately $4,200,000 with the purchaser assuming the mortgage encumbering the property which had an outstanding balance of approximately $3,728,000 at the time of the sale. After payment of closing expenses, the net sales proceeds received by the Partnership were approximately $352,000. For financial statement purposes, the sale resulted in a loss of approximately $56,000. For the year ended December 31, 2000 an impairment loss of approximately $56,000 was recorded related to this transaction. Additionally, the Partnership anticipates recognizing a loss on early extinguishment of debt associated with the assumption of the mortgage which is comprised of the write off of unamortized loan costs. The following unaudited pro forma information reflects the operations of the Partnership for the years ended December 31, 2000 and 1999, as if Cheyenne Woods had been sold on January 1, 1999 (in thousands): 2000 1999 Revenues $ 1,788 $ 1,756 Expenses 1,937 1,856 Net income $ (149) $ (100) Net income per Limited Partnership Unit $ (3.75) $ (2.52) These pro forma results are not necessarily reflective of the results that actually would have occurred if the sale had been in effect as of the periods presented or what may be achieved in the future. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act United Investors Growth Properties (the "Registrant" or "Partnership") has no officers or directors. United Investors Real Estate, Inc. ("UIRE" or the "General Partner") manages and controls the Partnership and has general responsibility and authority in all matters affecting its business. The names of the directors and executive officers of UIRE, their ages and the nature of all positions with UIRE presently held by them are set forth below. There are no family relationships between or among any officers and directors. Name Age Position Patrick J. Foye 43 Executive Vice President and Director Martha L. Long 41 Senior Vice President and Controller Patrick J. Foye has been Executive Vice President and Director of the General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham University Law School. Martha L. Long has been Senior Vice President and Controller of the General Partner since October 1998 as a result of the acquisition of Insignia Financial Group, Inc. As of February 2001, Ms. Long was also appointed head of the service business for AIMCO. From June 1994 until January 1997, she was the Controller for Insignia, and was promoted to Senior Vice President - Finance and Controller in January 1997, retaining that title until October 1998. From 1988 to June 1994, Ms. Long was Senior Vice President and Controller for The First Savings Bank, FSB in Greenville, South Carolina. One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act. The executive officers and director of the General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the General Partner. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the executive officers and director of the General Partner reviewed the audited financial statements with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The executive officers and director of the General Partner reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Partnership's accounting principles and such other matters as are required to be discussed with the Audit Committee or its equivalent under generally accepted auditing standards. In addition, the Partnership has discussed with the independent auditors the auditors' independence from management and the Partnership including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non-audit services with the auditors' independence. The executive officers and director of the General Partner discussed with the Partnership's independent auditors the overall scope and plans for their audit. In reliance on the reviews and discussions referred to above, the executive officers and director of the General Partner has approved the inclusion of the audited financial statements in the Form 10-KSB for the year ended December 31, 2000 for filing with the Securities and Exchange Commission. The General Partner has reappointed KPMG LLP as independent auditors to audit the financial statements of the Partnership for the current fiscal year. Fees for the last fiscal year were annual audit services of approximately $41,000 and non-audit services (principally tax-related) of approximately $20,000. Item 10. Executive Compensation Neither the director nor the officers received any remuneration from the Partnership during the year ended December 31, 2000. Item 11. Security Ownership of Certain Beneficial Owners and Management Except as provided below as of December 31, 2000, no affiliate of the General Partner or no person was known by the Partnership to be the beneficial owner of more than 5 percent (5%) of the Units of the Partnership: Entity Number of Units Percentage of Total AIMCO Properties LP 7,979 20.31% (an affiliate of AIMCO) United Investors Real Estate, Inc. 3,926 9.99% (the General Partner and an affiliate of AIMCO) Insignia Properties LP 10 .03% (an affiliate of AIMCO) Insignia Properties LP and United Investors Real Estate, Inc. are indirectly ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, South Carolina, 29602. AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business address is 2000 South Colorado Boulevard, Denver, Colorado 80222. No director or officer of the General Partner owns any Units. Item 12. Certain Relationships and Related Transactions 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the General Partner and affiliates during the years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees $144 $137 Reimbursement for services of affiliates 56 50 During the years ended December 31, 2000 and 1999, affiliates of the General partner were entitled to receive 5% of gross receipts from all of the Registrant's residential properties as compensation for providing property management services. The Registrant paid to such affiliates approximately $144,000 and $137,000 for the years ended December 31, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $56,000 and $50,000 for the years ended December 31, 2000 and 1999, respectively. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 11,915 limited partnership units in the Partnership representing 30.33% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K filed in the fourth quarter of calendar year 2000: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Partnership caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNITED INVESTORS GROWTH PROPERTIES By: United Investors Real Estate, Inc. Its General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: March 30, 2001 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Partnership and in the capacities and on the date indicated. /s/Patrick J. Foye Executive Vice President Date: March 30, 2001 Patrick J. Foye and Director /s/Martha L. Long Senior Vice President Date: March 30, 2001 Martha L. Long and Controller UNITED INVESTORS GROWTH PROPERTIES INDEX TO EXHIBITS Exhibit 1.0 Form of Dealer Manager Agreement between the General Partner and the Dealer Manager, including Form of Soliciting Broker Agreement; incorporated by reference to Exhibit 1 to Partnership's Amendment to Registration Statement (File No. 33-21114) previously filed on June 9, 1988. 1.1 Amendment to Dealer Manager Agreement; incorporated by reference to Exhibit 1.1 to Post-Effective Amendment No. 2 to Partnership's Registration Statement previously filed on March 21, 1989. 2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between AIMCO and IPT; incorporated by reference to Exhibit 2.1 filed with Registrant's Current Report on Form 8-K dated October 1, 1998. 4.1 Form of Subscription Agreement; incorporated by reference as part of the Prospectus of Partnership contained in Partnership's Amendment to Registration Statement previously filed on June 9, 1988. 4.2 Form of Agreement of Limited Partnership of Partnership; incorporated by reference as part of the Prospectus of Partnership contained in Partnership's Amendment to Registration Statement previously filed on June 9, 1988. 4.3 Seventh Amendment to Agreement of Limited Partnership of Partnership; incorporated by reference to Exhibit 4.3 to Partnership's Quarterly Report on Form 10-Q previously filed on May 15, 1989. 4.4 Agreement of Joint Venture of Renaissance Village Associates dated March 22, 1991 between United Investors Growth Properties (A Missouri Limited Partnership) and United Investors Growth Properties II (A Missouri Limited Partnership); incorporated by reference to Exhibit 4.4 to Partnership's Quarterly Report on Form 10-Q previously filed on April 24, 1991. 10.1 Escrow Agreement among the Partnership, the General Partner, the Dealer Manager, and Boston Safe Deposit & Trust Company; incorporated by reference to Exhibit 10.1 to Partnership's Amendment to Registration Statement previously filed on June 9, 1988. 10.1.1 Amendment to Escrow Agreement; incorporated by reference to Exhibit 10.1.1 to Partnership's Quarterly Report on Form 10-Q previously filed on November 3, 1989. 10.2 Agreement of Purchase and Sale, dated June 9, 1988, with amendments dated June 27, 1988 and July 5, 1988, respectively, between United Investors Real Estate, Inc., as nominee for United Investors Growth Properties, as purchaser, and Domion-Bothell Associates, as seller, relating to Terrace Royale Apartments; incorporated by reference to Exhibit 10.1 to Partnership's Quarterly Report on Form 10-Q previously filed on August 11, 1988. 10.3 Promissory Note, dated October 3, 1988, between United Investors Real Estate, Inc., as nominee for United Investors Growth Properties, as borrower, and Confederation Life Insurance Company, as lender; incorporated by reference to Exhibit 10.1 to Partnership's Quarterly Report on Form 10-Q previously filed on November 14, 1988. 10.4 Deed of Trust, dated October 3, 1988, between United Investors Real Estate, Inc., as nominee for United Investors Growth Properties, as grantor, and Confederation Life Insurance Company, as beneficiary; incorporated by reference to Exhibit 10.2 to Partnership's Quarterly Report on Form 10-Q previously filed on November 14, 1988. 10.5 Agreement of Purchase and Sale, dated October 31, 1988, between United Investors Real Estate, Inc., as purchaser, and Cheyenne Woods Limited Partnership, as seller, relating to Cheyenne Woods Apartments; incorporated by reference to Exhibit 10.5 to Post-Effective Amendment No. 1 to Partnership's Registration Statement previously filed on February 1, 1989. 10.6 Promissory Note and Deed of Trust with respect to the Permanent Loan on Cheyenne Woods Apartments; incorporated by reference to Exhibit 10.6 to Partnership's Current Report on Form 8-K previously filed on April 28, 1989. 10.7 Agreement of Purchase and Sale, between United Investors Growth Properties (A Missouri Limited Partnership), as purchaser, and Central Life Assurance Company, as seller, executed by the parties on August 11 and August 14, 1989, relating to Greystone South Plaza Center, and amendments thereto; incorporated by reference to Exhibit 10.7 to Partnership's Current Report on Form 8-K previously filed on December 12, 1989. 10.8 Promissory Note and First Mortgage and Security Agreement with respect to the Permanent Loans on Greystone South Plaza Center; incorporated by reference to Exhibit 10.8 to Partnership's Current Report on Form 8-K previously filed on December 12, 1989. 10.8.1 Modification Agreement between United Investors Growth Properties and Central Life Assurance Company with respect to the Permanent Loans on Greystone South Plaza Center; incorporated by reference to Exhibit 10.8.1 to Partnership's Quarterly Report on Form 10-Q previously filed on August 13, 1991. 10.9 Master Lease dated November 27, 1989 between United Investors Growth Properties and Central Life Assurance Company; incorporated by reference to Exhibit 10.9 to Partnership's Current Report on Form 8-K previously filed on December 12, 1989. 10.9.1 Lease Termination Agreement between United Investors Growth Properties and Central Life Assurance Company, with respect to the Master Lease dated November 27, 1989; incorporated by reference to Exhibit 10.9.1 to Partnership's Quarterly Report on Form 10-Q previously filed on November 12, 1991. 10.10Agreement of Purchase and Sale, between United Investors Growth Properties (a Missouri limited partnership), as purchaser, and Deerfield Apartments Limited (A Tennessee Limited Partnership), as seller, dated July 18, 1990, relating to Deerfield Apartments; incorporated by reference to Exhibit 10.10 to Partnership's Quarterly Report on Form 10-Q previously filed on August 15, 1990. 10.11Promissory Note and Deed of Trust with respect to the Permanent Loan on Deerfield Apartments; incorporated by reference to Exhibit 10.11 to Partnership's Quarterly Report on Form 10-Q previously filed on November 8, 1990. 10.12Standby Loan Commitment with respect to the financing of Deerfield Apartments; incorporated by reference to Exhibit 10.12 to Partnership's Quarterly Report on Form 10-Q previously filed on November 8, 1990. 10.13Agreement 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 Partnership's Post-Effective Amendment No. 1 Registration Statement (File No. 33-34111) of United Investors Growth Properties II previously filed on December 6, 1990. 10.13.1 Seventh and Eighth Amendments to Agreement of Purchase and Sale between United Investors Real Estate, Inc., as purchaser, and Mueller Development Company, as seller, relating to Renaissance Village Apartments; incorporated by reference to Exhibit 10.13.1 to Partnership's Quarterly Report on Form 10-Q previously filed on April 24, 1991. 10.14Promissory Note and Deed of Trust with respect to the Permanent Loan on Renaissance Village Apartments; incorporated by reference to Exhibit 10.14 to Partnership's Quarterly Report on Form 10-Q previously filed on April 24, 1991. 10.15Stock Purchase Agreement dated December 4, 1992 showing the purchase of 100% of the outstanding stock of United Investors Real Estate, Inc. by MAE GP Corporation; incorporated by reference to Exhibit 10.15 to Partnership's Current Report on Form 8-K previously filed on January 14, 1993. 10.16Purchase 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. (Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1995.) 10.17Amendment 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. (Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1995.) 10.18Multifamily Note dated August 7, 1997, by and between Cheyenne Woods, L.L.C., a South Carolina limited liability company, and Green Park Financial Limited Partnership, a District of Columbia Limited Partnership (Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1995.) 10.19Promissory Note dated November 20, 1997, by and between Deerfield Apartments, L.L.C., a South Carolina limited liability company and Lehman Brothers Holdings, Inc., a Delaware corporation. 10.20Promissory Note dated January 29, 1999, by and between AIMCO Terrace Royale, L.L.C., a South Carolina limited liability company and GMAC Commercial Mortgage Corporation, a California Corporation. 10.21Purchase and Sale Contract between Registrant and Cheyenne Woods Apartments, LLC, a Nevada limited liability company (Filed on January 12, 2001). 16 Letter dated November 11, 1998 from the Registrant's former independent accountants regarding its concurrence with the statements made by the Registrant; incorporated by reference to Exhibit C filed with the Registrant's Current Report on Form 8-K dated September 23, 1998. 99.1 Portions of Prospectus of Partnership dated June 13, 1988; incorporated by reference to Exhibit 99.1 to Partnership's Report on Form 10-K previously filed on March 6, 1991. -----END PRIVACY-ENHANCED MESSAGE-----