-----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, QlzzEEIC8hNHcq9Qk87vMsGoudoh21Dqt8wQOI3aFHdRrmxSzKQxPTxJhYPSVPe7 m2mth04a7yKQgf2RDaV6oA== 0000720460-97-000013.txt : 19971110 0000720460-97-000013.hdr.sgml : 19971110 ACCESSION NUMBER: 0000720460-97-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 SROS: NONE 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-17645 FILM NUMBER: 97709650 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FIANACIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-17645 UNITED INVESTORS GROWTH PROPERTIES (Exact name of small business issuer as specified in its charter) Missouri 43-1483928 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 369 Restricted-tenant security deposits 87 Accounts receivable, net of allowance of $58 20 Escrows for taxes and insurance 118 Restricted escrow 50 Other assets 218 Investment properties: Land $ 1,979 Buildings and related personal property 15,150 17,129 Less accumulated depreciation (4,673) 12,456 $13,318 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 28 Tenant security deposits 87 Accrued taxes 108 Other liabilities 137 Mortgage notes payable, $3,764 in default (Note E) 12,763 Partners' Capital (Deficit) General partner's $ (4) Limited partners' (39,297 units issued and outstanding) 199 195 $13,318 See Accompanying Notes to Consolidated Financial Statements b) UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $ 767 $ 762 $2,238 $2,253 Other income 32 25 107 74 Total revenues 799 787 2,345 2,327 Expenses: Operating 280 243 763 700 General and administrative 22 17 63 56 Maintenance 59 75 201 224 Depreciation 141 139 417 412 Interest 270 304 844 914 Property taxes 80 74 241 237 Total expenses 852 852 2,529 2,543 Minority interest in net loss of joint venture -- -- -- 4 Net loss before extraordinary loss $ (53) $ (65) $ (184) $ (212) Extraordinary loss on debt refinancing (22) -- (22) -- Net loss $ (75) $ (65) $ (206) $ (212) Net loss allocated to general partner (1%) $ (1) $ (1) $ (2) $ (2) Net loss allocated to limited partners (99%) (74) (64) (204) (210) $ (75) $ (65) $ (206) $ (212) Net loss before extraordinary loss per limited partnership unit $(1.33) $(1.63) $(4.64) $(5.34) Extraordinary loss per limited partnership unit (.55) -- (.55) -- Net loss per limited partnership unit $(1.88) $(1.63) $(5.19) $(5.34) See Accompanying Notes to Consolidated Financial Statements
c) UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 39,297 $ -- $ 9,824 $ 9,824 Partners' (deficit) capital at December 31, 1996 39,297 $ (2) $ 403 $ 401 Net loss for the nine months ended September 30, 1997 -- (2) (204) (206) Partners' (deficit) capital at September 30, 1997 39,297 $ (4) $ 199 $ 195 See Accompanying Notes to Consolidated Financial Statements
d) UNITED INVESTORS GROWTH PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net loss $ (206) $ (212) Adjustments to reconcile net loss to net cash provided by operating activities: Minority interest in net loss of joint venture -- (4) Depreciation 417 412 Amortization of loan costs, lease commissions and loan premium (22) 52 Extraordinary loss on debt refinancing 22 -- Change in accounts: Restricted cash (9) (7) Accounts receivable 2 17 Escrows for taxes and insurance (3) 6 Other assets (47) (16) Accounts payable (26) (5) Tenant security deposit liabilities 8 9 Accrued property taxes 66 43 Other liabilities 7 13 Net cash provided by operating activities 209 308 Cash flows from investing activities: Property improvements and replacements (69) (59) Receipts from restricted escrows -- 68 Net cash (used in) provided by investing activities (69) 9 Cash flows from financing activities: Liquidating distribution to minority interest -- (61) Repayment of mortgage notes payable (133) (125) Payoff of mortgage note principal (3,800) -- Proceeds from debt refinancing 3,850 -- Loan costs (87) -- Net cash used in financing activities (170) (186) Net (decrease) increase in unrestricted cash and cash equivalents (30) 131 Unrestricted cash and cash equivalents at beginning of period 399 200 Unrestricted cash and cash equivalents at end of period $ 369 $ 331 Supplemental disclosure of cash flow information: Cash paid for interest $ 883 $ 873 See Accompanying Notes to Consolidated Financial Statements
e) UNITED INVESTORS GROWTH PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of United Investors Growth Properties (the "Partnership"), have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of United Investors Real Estate, Inc. (the "General Partner"), a Delaware corporation, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - BASIS OF ACCOUNTING During 1994, Cheyenne Woods Apartments was restructured into a lower tier partnership, known as Cheyenne Woods United Investors, L.P. During the third quarter of 1997 Cheyenne Woods United Investors, L.P. was restructured into a limited liability company known as Cheyenne Woods United Investors, L.L.C. ("Cheyenne"). United Investors Growth Properties owns 100% of the new entity. Although legal ownership of the asset was transferred to a new entity, United Investors Growth Properties retained all economic benefits from the property. The Partnership consolidates its interest in Cheyenne (whereby all accounts of Cheyenne are included in the consolidated financial statements of the Partnership with intercompany accounts being eliminated). In addition, the Partnership owned a 60% interest in Renaissance Village Associates ("Renaissance"). During the third quarter of 1995, Renaissance Village Apartments was sold. During the second quarter of 1996, a final distribution was made to the joint ventures and the joint venture was liquidated. (see "Note D" of the Notes to Consolidated Financial Statements). NOTE C - 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 and for reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to affiliates of the General Partner for the nine months ended September 30, 1997 and 1996 (in thousands): 1997 1996 Property management fees (included in operating expenses) $119 $123 Reimbursement for services of affiliates (included in general and administrative expenses) 34 24 For the period of January 1, 1996 to August 31, 1997, the Partnership insured 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 payments 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 D - SALE OF INVESTMENT PROPERTY On August 30, 1995, Renaissance Village Apartments was sold to an unaffiliated party, Kauri Investments, Ltd. The Partnership recognized a gain on the sale of approximately $165,000. The minority interest share of this gain was approximately $66,000. The joint venture was liquidated during the second quarter of 1996 with the Partnership retaining approximately $92,000 and the minority interest holder receiving approximately $61,000 as liquidating distributions. NOTE E - MORTGAGE NOTE PAYABLE, IN DEFAULT The Partnership's mortgage note payable for Greystone South Plaza Center of approximately $3,764,000, net of loan premium, is currently in technical default. The note calls for interest only payments each month with the interest rate increasing from 8% to 9% on January 1, 1997. Due to the property's limited cash flow, the mortgage payment has been paid at 8% rather than 9% during the first nine months of 1997. The unpaid interest has been accrued for financial reporting purposes. The lender has not notified the Partnership of any intent to foreclose on the property. NOTE F - REFINANCING AND EXTRAORDINARY LOSS On August 8, 1997, the Partnership refinanced the mortgage encumbering Cheyenne Woods Apartments. The refinancing replaced indebtedness of approximately $3,800,000 with a new mortgage in the amount of $3,850,000 at an interest rate of 7.67%. Interest on the old mortgage was 10.5%. Payments are due on the first day of each month until the loan matures on September 1, 2007. Total capitalized loan costs were approximately $87,000 at September 30, 1997. The Partnership recognized an extraordinary loss in the amount of approximately $22,000 due to the write off of unamortized loan costs. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of three apartment complexes and a retail center. The following table sets forth the average occupancy of the properties for the nine month periods ended September 30, 1997 and 1996: Average Occupancy Property 1997 1996 Terrace Royale Apartments Bothell, Washington 94% 97% Cheyenne Woods Apartments North Las Vegas, Nevada 95% 98% Greystone South Plaza Center Lenexa, Kansas 80% 77% Deerfield Apartments Memphis, Tennessee 88% 98% The General Partner attributes the occupancy decrease at Deerfield to recently built new units in the market and road construction in front of the apartment complex. The road construction was completed in 1997 and the General Partner anticipates occupancy will increase as a result. Physical occupancy had improved to 95% at September 30, 1997. The occupancy decrease at Terrace Royale relates to rental increases during the past 12 months. The decreased occupancy at Cheyenne Woods is due to increased competition due to the recent completion of new apartment units in the local market. The Partnership realized a net loss of approximately $206,000 for the nine months ended September 30, 1997, compared to a net loss of approximately $212,000 for the corresponding period of 1996. The net loss for the three months ended September 30, 1997, was approximately $75,000 compared to a net loss of approximately $65,000 for the three months ended September 30, 1996. Included in net loss for the three and nine months ended September 30, 1997, is an extraordinary loss of $22,000. The extraordinary loss is a result of the refinancing as discussed in "Item 1 - Note F - Refinancing and Extraordinary Loss." The decrease in the loss before extraordinary loss for the three and nine months ended September 30, 1997 is primarily attributable to increased other income and decreased interest expense in 1997. Other income increased primarily due to increased lease cancellation fees at the residential properties. Interest expense decreased due to a reduction in interest on the Greystone mortgage note. Included in interest expense for Greystone for the nine months ended September 30, 1996, was a catch up of deferred interest on the Greystone mortgage related to the increasing interest rate, as required by the mortgage note. Also contributing to the decrease in interest expense was the Cheyenne Woods mortgage note being refinanced with an interest rate equal to 7.67% compared to the previous rate of 10.5% during the third quarter of 1997. These changes were partially offset by increased operating expenses at Cheyenne Woods and Deerfield. Included in maintenance expense for the nine months ended September 30, 1997, is approximately $15,000 of major repairs and maintenance comprised primarily of exterior building repairs and landscaping. Included in maintenance expense for the nine months ended September 30, 1996 is approximately $45,000 of major repairs and maintenance comprised primarily of exterior building repairs and landscaping. 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 expense. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. At September 30, 1997, the Partnership had unrestricted cash and cash equivalents of $369,000 compared to $331,000 at September 30, 1996. Net cash provided by operating activities decreased primarily due to increased lease commissions paid during 1997 and a decrease in accounts payable related to the timing of payments. Net cash used in investing activities increased primarily due to a decrease in receipts from restricted escrows. Net cash used in financing activities decreased primarily due to proceeds received from refinancing the mortgage note payable for Cheyenne Woods. 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 $12,763,000 matures at various times with balloon payments due at maturity before which time the properties will either be refinanced or sold. Currently the mortgage note payable for Greystone South Plaza Center of approximately $3,674,000 net of loan premium, is currently in technical default. The note calls for interest only payments each month with the interest rate increasing from 8% to 9% on January 1, 1997. Due to the property's limited cash flow, the mortgage payment has been paid at 8% rather than 9% during the first nine months of 1997. As a result, this property could be lost through foreclosure. However, the lender has not notified the Partnership of its intent to foreclose on the property. If the lender did foreclose on Greystone, the General Partner anticipates that the Partnership's liquidity would not be significantly impacted, as the property has operated at approximately break even on a cash flow basis during 1996 and 1997. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. No cash distributions were made in 1996 or during the first nine months of 1997. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: See Exhibit Index contained herein. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1997. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNITED INVESTORS GROWTH PROPERTIES By: United Investors Real Estate, Inc. Its General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: November 7, 1997 UNITED INVESTORS GROWTH PROPERTIES EXHIBIT INDEX Exhibit Number Description of Exhibit 10.18 Multifamily 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. 27 Financial Data Schedule. EX-27 2
5 This schedule contains summary financial information extracted from United Investors Growth Properties 1997 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000831663 UNITED INVESTORS GROWTH PROPERTIES 1,000 9-MOS DEC-31-1997 SEP-30-1997 369 0 78 58 0 0 17,129 4,673 13,318 0 12,763 0 0 0 195 13,318 0 2,345 0 0 2,529 0 844 0 0 0 0 (22) 0 (206) (5.19) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.18 3 Exhibit 10.18 MULTIFAMILY NOTE US $3,850,000.00 Las Vegas, Nevada August 7, 1997 FOR VALUE RECEIVED, the undersigned promise to pay GREEN PARK FINANCIAL LIMITED PARTNERSHIP, a District of Columbia limited partnership or order, the principal sum of Three Million Eight Hundred and Fifty Thousand and 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.67 percent per annum. The principal and interest shall be payable at 7500 Old Georgetown Road, Suite 800, Bethesda, Maryland 20814-6133, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Twenty-seven Thousand Three Hundred Sixty Nine and 34/100 Dollars (US $27,369.34) on the first day of each month beginning October 1, 1997, (herein "amortization commencement date") until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on September 1, 2007. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. If any installment under this Note is not received by the holder hereof within five (5) calendar days after the installment is due, the undersigned shall pay to the holder hereof a late charge of five (5) percent of such installment, such late charge to be immediately due and payable without demand by the holder hereof. If any installment under this Note remains past due for thirty (30) calendar days or more, the outstanding principal balance of this Note shall bear interest during the period in which the undersigned is in default at a rate of 11.67 percent per annum, or, if such increased rate of interest may not be collected from the undersigned under applicable law, then at the maximum increased rate of interest, if any, which may be collected from the undersigned under applicable law. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of August 7, 1997 hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located. The Addendum to Multifamily Note, of even date herewith, attached hereto, is incorporated herein by this reference. In the event of any inconsistency between the terms of this Note and the Addendum to Multifamily Note, the term of the Addendum to Multifamily Note shall govern. CHEYENNE WOODS, L.L.C., a South Carolina limited liability company By: United Investors Growth Properties (A Missouri Limited Partnership) its Managing Member By: United Investors Real Estate, Inc., a Delaware corporation, its General Partner By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President PAY TO THE ORDER OF __________________________________ WITHOUT RECOURSE GREEN PARK FINANCIAL LIMITED PARTNERSHIP a District of Columbis limited partnership By: WALKER & DUNLOP GP, LLC a Delaware limited liability company, Managing General Partner By: /s/Mary Ellen Slavinskas Name:Mary Ellen Slavinskas Title:Vice President -----END PRIVACY-ENHANCED MESSAGE-----