-----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, SOUZuLIN+dAJGKgAkmWrISWPhNmiTi5ENVod6aZyi5kcQzoqpX4xNw1xosALtjkL jpRjrQgm1p2npXqqPSthtQ== 0000711642-01-000036.txt : 20010329 0000711642-01-000036.hdr.sgml : 20010329 ACCESSION NUMBER: 0000711642-01-000036 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINTHROP GROWTH INVESTORS I LP CENTRAL INDEX KEY: 0000722565 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042839837 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-13389 FILM NUMBER: 1582649 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: WINTHROP INCOME PROPERTIES I LTD PARTNERSHP DATE OF NAME CHANGE: 19840124 10KSB 1 0001.txt YEAR END DECEMBER 31, 2000 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) Form 10-KSB (Mark One) [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 from _________to _________ Commission file number 2-84760 WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP (Name of small business issuer in its charter) Massachusetts 04-2839837 (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) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (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 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 the 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. $11,776,000 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 Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or "Registrant") was organized under the Uniform Limited Partnership Act of the Commonwealth of Massachusetts on June 20, 1983 for the purpose of owning and leasing income-producing residential, commercial and industrial properties. The general partners of the Partnership are Two Winthrop Properties, Inc., a Massachusetts corporation (the "Managing General Partner"), and Linnaeus-Lexington Associates Limited Partnership. The Managing General Partner is wholly-owned by First Winthrop Corporation, a Delaware corporation ("First Winthrop"), the controlling entities of which are Winthrop Financial Associates, A Limited Partnership ("WFA"), and Apartment Investment and Management Company ("AIMCO"). See "Transfers of Control". The Partnership Agreement provides that the Partnership is to terminate on December 31, 2003 unless terminated prior to such date. The Partnership was initially capitalized with contributions of $1,000 from each of the general partners and $5,000 from the Initial Limited Partner. The Partnership, through its public offering of limited partner units ("Unit" or "Units"), sold 23,144 Units aggregating $23,144,000. An additional five Units were held by WFC Realty Co., Inc., a subsidiary of First Winthrop ("WFC Realty"). These five units were subsequently purchased by LON-WGI Associates LLC, an affiliate of First Winthrop, during the first quarter of 1997 for $275 per Unit (See "Transfers of Control" below). The Partnership is engaged in the business of operating and holding real estate properties for investment. The Partnership invested approximately $18,177,000 of the original offering proceeds (net of sales commissions and sales and organizational costs, but including acquisition fees and expenses) in four apartment complexes. Two of the properties were acquired in joint venture arrangements, one in a partnership arrangement and one directly. Subsequent to the acquisition, the joint venture arrangements were converted to limited partnerships. During 2000, the Partnership sold one of its investment properties (see "Item 7. Financial Statements - Note D - Sale of Investment Property"). For additional information with respect to the Partnership's properties see "Item 2. Description of Properties". The Partnership does not have any employees. Management and administrative services are provided by the Managing General Partner and by agents retained by the Managing General Partner. An affiliate of the Managing General Partner has been providing such property management services. 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 Managing 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 Managing General Partner, AIMCO and their respective 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 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. Transfers of Control On October 28, 1997, Insignia Financial Group, Inc. ("Insignia") acquired 100% of the Class B stock of First Winthrop, the sole shareholder of the Managing General Partner, as well as a 20.7% limited partnership interest in the Partnership. In connection with this transaction, the by-laws of the Managing General Partner were amended and restated and certain agreements were entered into between WFA and Insignia, the shareholders of First Winthrop. As result of these agreements, Insignia was granted the right to elect one director to the Managing General Partner's Board of Directors (the "Class B Director"). Further, a Residential Committee of the Board of Directors of the Managing General Partner was established, the members of which are to be appointed by the Class B Director. The Residential Committee is vested with the authority to elect officers and, together they have the right to cause the Managing General Partner to take such actions as it deemed necessary and advisable in connection with the activities of the Partnership. Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation. As a result, AIMCO acquired all of the rights of Insignia in and to the limited partnership interests and the rights granted to Insignia pursuant to the First Winthrop transaction. The Managing 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 investment properties:
Date of Type of Property Purchase Type of Ownership Use Ashton Ridge Apartments 12/84 Fee ownership subject Apartment Jacksonville, Florida to a first mortgage (1) 356 units Stratford Place Apartments 12/85 Fee ownership subject Apartment Gaithersburg, Maryland to a first mortgage (2) 350 units Stratford Village Apartments 02/86 Fee ownership subject Apartment Montgomery, Alabama to a first mortgage (3) 224 units
(1) Property is held by a Limited Partnership in which the Registrant owns a 99.9% interest. (2) Property is held by a Limited Partnership in which the Registrant owns a 99.98% interest. (3) Property is held by a Limited Partnership in which the Registrant owns a 100% interest. Schedule of Properties: Set forth below for each of the Partnership's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Ashton Ridge $13,381 $ 7,271 5-25 yrs S/L $ 4,304 Stratford Place 15,831 8,346 5-25 yrs S/L 5,520 Stratford Village 9,401 5,288 5-25 yrs S/L 2,765 Totals $38,613 $20,905 $12,589
See "Item 7. Financial Statements - Note A" for a description of the Partnership's depreciation policy. Schedule of Property Indebtedness: The following table sets forth certain information relating to the loans encumbering the Partnership's properties:
Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 2000 Rate Amortized Date Maturity (2) (in thousands) (in thousands) Ashton Ridge Apartments 1st Mortgage $ 6,070 7.31% 240 mos. 01/01/21 $ -- Stratford Place Apartments 1st Mortgage 8,888 8.23% (1) 07/01/06 7,739 Stratford Village Apartments 1st Mortgage 4,994 7.72% 360 mos. 11/01/24 -- Totals $19,952 $ 7,739
(1) The principal balance is being amortized over varying periods with a balloon payment due July 1, 2006. (2) See "Item 7. Financial Statements - Note F" for information with respect to the Partnership's ability to prepay these loans and other specific loan terms. On December 15, 2000, the Partnership refinanced the mortgage note payable on Ashton Ridge Apartments. The refinancing replaced mortgage indebtedness of approximately $4,071,000 with a new mortgage of $6,070,000. The mortgage was refinanced at a rate of 7.31% compared to the prior rate of 10.00%. Payments of principal and interest of approximately $48,000 are due on the first day of each month beginning February 1, 2001 until the loan matures on January 1, 2021 at which time the loan is scheduled to be fully amortized. Capitalized loan costs incurred for the refinancing were approximately $104,000. Schedule of Rental Rates and Occupancy: Average annual rental rates and occupancy for 2000 and 1999 for each property:
Average Annual Average Rental Rates Occupancy (per unit) Property 2000 1999 2000 1999 Ashton Ridge Apartments $ 6,696 $ 6,514 95% 92% Stratford Place Apartments 8,576 8,080 98% 97% Stratford Village Apartments 6,831 6,752 92% 93%
The increase in occupancy at Ashton Ridge Apartments is due to the completion of renovation projects at the property which enhanced the property's curb appeal. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other properties in the area. The Managing General Partner believes that all of the properties are adequately insured. Each property is an apartment complex which leases its units for lease terms of one year or less. No 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. Schedule of Real Estate Taxes and Rates: Real estate taxes and rates in 2000 for each property are as follows: 2000 2000 Billing Rate (in thousands) Ashton Ridge Apartments $ 145 2.03% Stratford Place Apartments 187 3.26% Stratford Village Apartments 56 3.45% Capital Improvements: Sunflower Apartments: The Partnership completed approximately $111,000 in capital expenditures at Sunflower Apartments as of December 31, 2000, consisting primarily of floor covering and appliance replacements, interior decoration and major landscaping. These improvements were funded from operating cash flow and replacement reserves. This property was sold on December 6, 2000. Ashton Ridge Apartments: The Partnership completed approximately $448,000 in capital expenditures at Ashton Ridge Apartments as of December 31, 2000, consisting primarily of floor covering and appliance replacements, air conditioning unit replacements, light fixture replacements, structural upgrades and plumbing improvements. These improvements were funded from operating cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount budgeted is expected to be $275 per unit or $97,900. 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. Stratford Place Apartments: The Partnership completed approximately $288,000 in capital expenditures at Stratford Place Apartments as of December 31, 2000, consisting primarily of plumbing replacements, structural upgrades, floor covering and appliance replacements, and water heater replacements. These improvements were funded from the Partnership's operating cash flow and reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount budgeted is expected to be $275 per unit or $96,250. 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. Stratford Village: The Partnership completed approximately $263,000 in capital expenditures at Stratford Village as of December 31, 2000, consisting primarily of floor covering and appliance replacements, plumbing improvements, roof replacements, and structural upgrades. These improvements were funded from the Partnership's operating cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount budgeted is expected to be $275 per unit or $61,600. 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 Partners During the quarter ended December 31, 2000, no matter was submitted to a vote of the unit holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Partnership's Equity and Related Partner Matters The Partnership, a publicly-held limited partnership, originally sold 23,149 Limited Partnership Units. As of December 31, 2000, the number of holders of Limited Partnership Units was 780 and the number of units outstanding was 23,139. Affiliates of the Managing General Partner owned approximately 8,693.25 Units or approximately 37.57% at December 31, 2000. There is no intention to sell additional Limited Partnership Units nor is there an established public trading market for these Units. The following table sets forth the distributions declared by the Partnership for the years ended December 31, 1999 and 2000 as well as for the subsequent period from January 1, 2001 to March 31, 2001: Distributions Per Limited Aggregate Partnership Unit 01/01/99 - 12/31/99 $ 490,000 (1) $ 21.18 01/01/00 - 12/31/00 4,578,000 (2) 197.85 01/01/01 - 03/31/01 3,085,000 (3) 130.13 (1) Distribution was made from cash from operations. The distribution was declared at December 31, 1999 and paid in January 2000. (2) Distributions consisted of approximately $3,700,000 (approximately $159.90 per limited partnership unit) from surplus cash due to proceeds from the sale of Sunflower Apartments and approximately $878,000 all paid to the limited partners (approximately $37.95 per limited partnership unit) from operations. (see "Item 6. Management's Discussion and Analysis or Plan of Operation" for further details). (3) Subsequent to December 31, 2000, distributions of approximately $2,340,000 or $101.13 per limited partnership unit consisting of refinancing proceeds from Ashton Ridge Apartments and approximately $745,000 (approximately $671,000 to the limited partners or $29.00 per limited partnership unit) from operations was declared and paid to the partners. 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 further distributions to its partners in the year 2001 or subsequent periods. In addition to its indirect ownership of the Managing General Partner interest in the Partnership, AIMCO and its affiliates owned 8,693.25 limited partnership units in the Partnership representing approximately 37.57% of the outstanding units at December 31, 2000. A number of these units were acquired in the First Winthrop transaction and pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. In this regard, on February 5, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $496.00 per Unit which price was higher than that being offered in a competing offer by a third party. Pursuant to this offer AIMCO acquired an additional 352 units resulting in its total ownership being increased to 9,045.25 units or 39.09% of the total outstanding units. 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 Managing 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 Managing General Partner because of their affiliation with the Managing 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 disclosure 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 Partnership's net income for the year ended December 31, 2000 was approximately $3,796,000 as compared to a net loss of approximately $38,000 for the year ended December 31, 1999. The increase in net income is primarily due to the gain realized on the sale of Sunflower Apartments partially offset by an increase in loss on early extinguishment of debt. The Partnership realized a gain on the sale of Sunflower Apartments of approximately $3,697,000 during the fourth quarter of 2000 (see "Item 7. Financial Statements - Note D - Sale of Investment Property"). Excluding the operations and the gain on sale of Sunflower Apartments, the Partnership's net income was approximately $41,000 for the year ended December 31, 2000 compared to a net loss of approximately $262,000 for the year ended December 31, 1999. The increase in net income was the result of an increase in total revenues partially offset by an increase in total expenses. The increase in total revenues was a result of an increase in rental income and other income. The increase in rental income is primarily attributable to the increase in average annual rental rates at all of the Partnership's investment properties and increased occupancy at Stratford Place Apartments and Ashton Ridge Apartments. These increases more than offset the slight decrease in occupancy at Stratford Village. Other income increased primarily due to an increase in miscellaneous income, late charges, cable television charges and lease cancellation fees. Total expenses for the year ended December 31, 2000 as compared to 1999 increased due to an increase in general and administrative expense, depreciation expense, and property tax expenses partially offset by a decrease in operating expense. Depreciation expense increased due to property improvements and replacements added in the last twelve months which are now being depreciated. Property tax expense increased due to the increase in assessment values by the taxing authorities for Ashton Ridge and Stratford Place which increased the tax rates and bills for 2000. Property tax expense also increased for the year ended December 31, 2000 due to a refund received during the first quarter of 1999 for Stratford Place Apartments. The decrease in operating expense was primarily due to a decrease in advertising expense and property expense. Advertising expense decreased due to a reduction in marketing efforts by the investment properties' employees due to the stabilization or increase in occupancy at the investment properties. Property expense decreased due to a decrease in water and sewer charges due to the installation of water conservation low flow toilets. General and administrative expenses increased primarily due to increased general partner reimbursements allowed under the Partnership Agreement and increased professional fees associated with managing the Partnership. In addition, 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. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing 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 Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At December 31, 2000, the Partnership had cash and cash equivalents of approximately $3,299,000 as compared to approximately $1,889,000 at December 31, 1999. The increase in cash and cash equivalents of approximately $1,410,000 for the year ended December 31, 2000 is due to approximately $4,898,000 of cash provided by investing activities and approximately $2,538,000 of cash provided by operating activities, which was partially offset by approximately $6,026,000 of cash used in financing activities. Cash provided by investing activities consisted of proceeds from the sale of Sunflower Apartments and net withdrawals from escrow accounts partially offset by property improvements and replacements. Cash used in financing activities consisted of payments of principal made on the mortgages encumbering the Partnership's properties, distributions paid to the partners, repayment of the mortgages as a result of the sale of Sunflower Apartments and repayment of the mortgage on Ashton Ridge Apartments partially offset by cash received on the refinance of the mortgage. The Partnership 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 Partnership 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 budgeted is expected to be $275 per unit or $255,750 for all of the Partnership's investment properties. The additional capital expenditures will be incurred only if cash is available from operations and 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. 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 $19,952,000 is amortized over varying periods with a balloon payment of approximately $7,739,000 due in July 2006. The Managing General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. On December 15, 2000, the Partnership refinanced the mortgage note payable on Ashton Ridge Apartments. The refinancing replaced mortgage indebtedness of approximately $4,071,000 with a new mortgage of $6,070,000. The mortgage was refinanced at a rate of 7.31% compared to the prior rate of 10.00%. Payments of principal and interest of approximately $48,000 are due on the first day of each month beginning February 1, 2001 until the loan matures on January 1, 2021 at which time the loan is scheduled to be fully amortized. Capitalized loan costs incurred for the refinancing were approximately $104,000. The Partnership repaid the existing mortgage note of approximately $4,071,000 and wrote off unamortized loan costs of approximately $110,000. During the year ended December 31, 2000, the Partnership paid a distribution to the limited partners from operations of approximately $490,000 ($21.18 per limited partnership unit) which had been declared and accrued at December 31, 1999. In addition, the Partnership declared and paid cash distributions to the limited partners from operations of approximately $878,000 ($37.95 per limited partnership unit). The Partnership also declared and paid a distribution of approximately $3,700,000 ($159.90 per limited partnership unit) from the sale of Sunflower Apartments during the year ended December 31, 2000. Subsequent to the year ended December 31, 2000, the Partnership paid a distribution all to the limited partners of approximately $2,340,000 ($101.13 per limited partnership unit) from the refinancing proceeds of Ashton Ridge Apartments. In addition, an operating distribution of approximately $745,000 (approximately $671,000 to the limited partners or $29.00 per limited partnership unit) was paid to the partners. In addition to its indirect ownership of the Managing General Partner interest in the Partnership, AIMCO and its affiliates owned 8,693.25 limited partnership units in the Partnership representing approximately 37.57% of the outstanding units at December 31, 2000. A number of these units were acquired in the First Winthrop transaction and pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. In this regard, on February 5, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $496.00 per Unit which price was higher than that being offered in a competing offer by a third party. Pursuant to this offer AIMCO acquired an additional 352 units resulting in its total ownership being increased to 9,045.25 units or 39.09% of the total outstanding units. 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 Managing 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 Managing General Partner because of their affiliation with the Managing General Partner. Item 7. Financial Statements WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP LIST OF FINANCIAL STATEMENTS Report of Independent Public Accountants - Arthur Andersen LLP 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 Report of Independent Public Accountants To the Partners of Winthrop Growth Investors 1 Limited Partnership: We have audited the accompanying consolidated balance sheet of Winthrop Growth Investors 1 Limited Partnership and its subsidiaries as of December 31, 2000, and the related consolidated statements of operations, changes in partners' (deficit) capital and cash flows for each of the two years in the period ended December 31, 2000. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 the Partnership's 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Winthrop Growth Investors 1 Limited Partnership and its subsidiaries as of December 31, 2000, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. /s/Arthur Andersen LLP Denver, Colorado January 28, 2001. WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 2000 Assets Cash and cash equivalents $ 3,299 Receivables and deposits 395 Restricted escrows 259 Other assets 1,024 Investment properties (Notes F and H) Land $ 2,391 Buildings and related personal property 36,222 38,613 Less accumulated depreciation (20,905) 17,708 $22,685 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 267 Tenant security deposit liabilities 150 Other liabilities 281 Mortgage notes payable (Note F) 19,952 Partners' (Deficit) Capital General partners $ (899) Limited partners (23,139 units issued and outstanding) 2,934 2,035 $22,685 See Accompanying Notes to Consolidated Financial Statements WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 2000 1999 Revenues: Rental income $ 7,646 $ 7,371 Other income 433 351 Gain on sale of investment property 3,697 -- Total revenues 11,776 7,722 Expenses: Operating 3,112 3,216 General and administrative 378 233 Depreciation 2,034 2,015 Interest 1,765 1,811 Property taxes 581 485 Total expenses 7,870 7,760 Income (loss) before extraordinary loss on early extinguishment of debt 3,906 (38) Extraordinary loss on early extinguishment of debt (110) -- Net income (loss) $ 3,796 $ (38) Net income (loss) allocated to general partners (10%) 380 (4) Net income (loss) allocated to limited partners (90%) 3,416 (34) Net income (loss) $ 3,796 $ (38) Per Limited Partnership Unit: Income (loss) before extraordinary loss on early extinguishment of debt $151.91 $ (1.47) Extraordinary loss on early extinguishment of debt (4.28) -- Net income (loss) per limited partnership unit $147.63 $ (1.47) Distributions per limited partnership unit $197.85 $ 21.18 See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 23,149 $ 2,000 $23,149 $25,149 Partners' (deficit) capital at December 31, 1998 23,139 $(1,275) $ 4,620 $ 3,345 Net loss for the year ended December 31, 1999 -- (4) (34) (38) Distributions to limited partners -- -- (490) (490) Partners' (deficit) capital at December 31, 1999 23,139 (1,279) 4,096 2,817 Net income for the year ended December 31, 2000 -- 380 3,416 3,796 Distributions to limited partners -- -- (4,578) (4,578) Partners' (deficit) capital at December 31, 2000 23,139 $ (899) $ 2,934 $ 2,035 See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 2000 1999 Cash flows from operating activities: Net income (loss) $ 3,796 $ (38) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 2,034 2,015 Amortization of loan costs and deferred costs 117 105 Gain on sale of investment property (3,697) -- Loss on disposal of property -- (49) Loss on early extinguishment of debt 110 -- Change in accounts: Receivables and deposits 279 36 Other assets (41) 73 Accounts payable 109 (39) Tenant security deposit liabilities (20) 25 Accrued property taxes (139) (154) Other liabilities (10) (1) Net cash provided by operating activities 2,538 1,973 Cash flows from investing activities: Proceeds from sale of investment property 6,318 -- Property improvements and replacements (1,567) (1,431) Net withdrawals from restricted escrows 147 295 Net insurance proceeds received -- 63 Net cash provided by (used in) investing activities 4,898 (1,073) Cash flows from financing activities: Loan costs paid (104) -- Proceeds from mortgage note payable 6,070 -- Payments on mortgage notes payable (291) (274) Repayments of mortgage notes payable (6,633) -- Distributions paid to limited partners (5,068) (600) Net cash used in financing activities (6,026) (874) Net increase in cash and cash equivalents 1,410 26 Cash and cash equivalents at beginning of period 1,889 1,863 Cash and cash equivalents at end of period $ 3,299 $ 1,889 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,748 $ 1,751 Supplemental disclosure of non-cash activity: Distribution payable $ -- $ 490 Property improvements and replacements included in accounts payable $ -- $ 457 See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP Notes to Consolidated Financial Statements December 31, 2000 Note A - Organization and Significant Accounting Policies Organization: Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or "Registrant") was organized on June 20, 1983 under the Uniform Limited Partnership Act of the Commonwealth of Massachusetts for the purpose of investing in income-producing residential, commercial and industrial real estate properties. The general partners of the Partnership are Two Winthrop Properties, Inc., a Massachusetts corporation (the "Managing General Partner"), and Linnaeus-Lexington Associates Limited Partnership. The Managing General Partner is wholly-owned by First Winthrop Corporation, the controlling entities of which are Winthrop Financial Associates, A Limited Partnership, and Apartment Investment and Management Company ("AIMCO") (see "Note B - Transfer of Control"). The Partnership Agreement provides that the Partnership will terminate December 31, 2003 unless terminated prior to such date. The Partnership, via its controlling interest in three partnerships and a trust, is the owner of three residential apartment complexes located in various parts of the United States. Uses 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. Principles of Consolidation: The consolidated statements of the Partnership include its 99%, 99.9% and 99.98% general partnership interests in DEK Associates, Meadow Wood Associates and Stratford Place Investors Limited Partnership, respectively. Additionally, the Partnership is the 100% beneficiary of the Stratford Village Realty Trust. All significant interpartnership balances have been eliminated. In addition, due to the cumulative minority interest loss exceeding minority interest capital, the Partnership recorded 100% of the income in 2000 and loss in 1999. Allocation of Profits and Losses and Cash Distributions: In accordance with the Partnership Agreement, profits and losses shall be allocated 10% to the general partners and 90% to the limited partners. The limited partners are entitled to a noncumulative quarterly priority cash distribution of 1.5% of their average Adjusted Capital Contribution, as defined, of cash available for distribution. The general partners would then be entitled to one-ninth of the amount distributed to the limited partners, with the balance allocated 90% to the limited partners and 10% to the general partners. Sales and refinancing proceeds are to be distributed according to the provisions of the Partnership Agreement. Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per limited partnership unit is computed by dividing the net income (loss) allocated to the limited partners by 23,139 units outstanding. 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 $765,000 at December 31, 2000 that are maintained by the affiliated management company on behalf of affiliated entities in a cash concentration account. 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. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Investment Properties: Investment properties, which consist of three apartment complexes, are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with "Statement of Financial Accounting Standards ("SFAS") 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. No adjustments for impairment of value were recorded in either of the years ended December 31, 2000 or 1999. Loan Costs: Loan costs of approximately $789,000, less accumulated amortization of approximately $379,000 are included in other assets and are being amortized on a straight-line basis over the lives of the respective loans. The amortization of loan costs is included in interest expense. Deferred Costs: Costs related to the acquisition of the properties of approximately $1,128,000, less accumulated amortization of approximately $690,000, are included in other assets and are being amortized over 25 years. Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the investment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used (1) for real property over 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 alternative depreciation system is used for depreciation of (1) real property over 40 years and (2) personal property additions over 5-20 years. 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 Managing General Partner's policy is to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred. Restricted Escrows: In relation to the mortgages at Stratford Place and Stratford Village, the mortgage lenders have required a "replacement reserve" for certain capital improvements. At December 31, 2000, the balance was approximately $259,000. Segment Reporting: Statement of Financial Standards ("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 Managing General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as currently presented. Advertising: Advertising costs of approximately $89,000 in 2000 and $106,000 in 1999 are charged to expense as incurred and are included in operating expense. 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 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. Note B - Transfer of Control On October 28, 1997, Insignia Financial Group, Inc. ("Insignia") acquired 100% of the Class B stock of First Winthrop, the sole shareholder of the Managing General Partner, as well as a 20.7% limited partnership interest in the Partnership. In connection with this transaction, the by-laws of the Managing General Partner were amended and restated and certain agreements were entered into between WFA and Insignia, the shareholders of First Winthrop. As result of these agreements, Insignia was granted the right to elect one director to the Managing General Partner's Board of Directors (the "Class B Director"). Further, a Residential Committee of the Board of Directors of the Managing General Partner was established, the members of which are to be appointed by the Class B Director. The Residential Committee is vested with the authority to elect officers and, together they have the right to cause the Managing General Partner to take such actions as it deemed necessary and advisable in connection with the activities of the Partnership. Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation. As a result, AIMCO acquired all of the rights of Insignia in and to the limited partnership interests and the rights granted to Insignia pursuant to the First Winthrop transaction. The Managing 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 - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Managing General Partner and affiliates during the years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in $410 $383 operating expenses) Reimbursement for services of affiliates (included in investment properties, operating expenses and general and administrative expenses) 250 162 During the years ended December 31, 2000 and 1999, affiliates of the Managing General Partner were entitled to 5% of gross receipts from all of the Partnership's investment properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $410,000 and $383,000 during the years ended December 31, 2000 and 1999, respectively. An affiliate of the Managing General Partner received reimbursements of accountable administrative expenses amounting to approximately $250,000 and $162,000 for the years ended December 31, 2000 and 1999, respectively. In addition to its indirect ownership of the Managing General Partner interest in the Partnership, AIMCO and its affiliates owned 8,693.25 limited partnership units in the Partnership representing approximately 37.57% of the outstanding units at December 31, 2000. A number of these units were acquired in the First Winthrop transaction and pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. In this regard, on February 5, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $496.00 per Unit which price was higher than that being offered in a competing offer by a third party. Pursuant to this offer AIMCO acquired an additional 352 units resulting in its total ownership being increased to 9,045.25 units or 39.09% of the total outstanding units. 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 Managing 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 Managing General Partner because of their affiliation with the Managing General Partner. Note D - Sale of Investment Property On December 6, 2000, Sunflower Apartments was sold to an unaffiliated third party for approximately $6,900,000. After closing costs and expenses related to the sale, the net proceeds received by the Partnership were approximately $6,318,000. The Partnership realized a gain on the sale of investment property of approximately $3,697,000 during the fourth quarter of 2000. The following unaudited pro forma information reflects the operations of the Partnership for the years ended December 31, 2000 and 1999, as if Sunflower had been sold on January 1, 1999 (in thousands): 2000 1999 (Unaudited) (Unaudited) Revenues $ 6,662 $ 6,217 Expenses (6,511) (6,479) Loss on early extinguishment of debt (110) -- Net income (loss) $ 41 $ (262) Net income (loss) per limited partnership unit $ 1.59 $(10.19) Note E - Refinancing of Mortgage Notes Payable On December 15, 2000, the Partnership refinanced the mortgage note payable on Ashton Ridge Apartments. The refinancing replaced mortgage indebtedness of approximately $4,071,000 with a new mortgage of $6,070,000. The mortgage was refinanced at a rate of 7.31% compared to the prior rate of 10.00%. Payments of principal and interest of approximately $48,000 are due on the first day of each month beginning February 1, 2001 until the loan matures on January 1, 2021 at which time the loan is scheduled to be fully amortized. Capitalized loan costs incurred for the refinancing were approximately $104,000. Note F - Mortgage Notes Payable The principle terms of the mortgage notes payable are as follows:
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 2000 Interest Rate Date Maturity (in thousands) (in thousands) Ashton Ridge Apartments 1st Mortgage $ 6,070 $ 48 7.31% 01/01/21 $ -- Stratford Place Apartments 1st Mortgage 8,888 75 8.23% 07/01/06 7,739 Stratford Village Apartments 1st Mortgage 4,994 38 7.72% 11/01/24 -- $19,952 $ 161 $ 7,739
The mortgage notes payable are non-recourse and are secured by pledge of the respective apartment properties and by pledge of revenues from the respective apartment properties. The mortgages encumbering Stratford Place Apartments and Ashton Ridge Apartments properties are subject to a prepayment penalty if the loan is paid prior to maturity. Further, the Partnership's investment properties may not be sold subject to existing indebtedness. Scheduled principal payments of mortgage notes payable subsequent to December 31, 2000, are as follows (in thousands): 2001 $ 375 2002 417 2003 451 2004 488 2005 527 Thereafter 17,694 $19,952 Note G - Income Taxes No provision for income taxes is made in the consolidated financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners. The following is a reconciliation of reported net income (loss) and Federal taxable loss (in thousands, except per unit data): 2000 1999 Net income (loss) - financial statements $ 3,796 $ (38) Differences resulted from: Depreciation and amortization (328) (25) Other 58 (62) Net income (loss) - income tax method $ 3,526 $ (125) Taxable loss per limited partnership unit outstanding after giving effect to the allocation to the general partner $ (4.86) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): Net assets as reported $ 2,035 Land and buildings 131 Accumulated depreciation (5,249) Other (797) Net liabilities - Federal tax basis $(3,880) Note H - Real Estate and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Buildings Cost And Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition (in thousands) (in thousands) Ashton Ridge Apartments $ 6,070 $ 690 $ 8,988 $ 3,703 Stratford Place Apartments 8,888 1,368 11,978 2,485 Stratford Village Apartments 4,994 333 7,918 1,150 Totals $19,952 $ 2,391 $28,884 $ 7,338
Gross Amount At Which Carried At December 31, 2000 (in thousands)
Buildings And Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years (in thousands) Ashton Ridge Apartments $ 690 $12,691 $13,381 $ 7,271 12/84 5-25 Stratford Place Apartments 1,368 14,463 15,831 8,346 12/85 5-25 Stratford Village Apartments 333 9,068 9,401 5,288 02/86 5-25 Totals $ 2,391 $36,222 $38,613 $20,905
Reconciliation of Real Estate and Accumulated Depreciation: Years Ended December 31, 2000 1999 (in thousands) Real Estate Balance at beginning of year $46,656 $44,801 Property improvements 1,110 1,888 Property dispositions (9,153) (33) Balance at end of year $38,613 $46,656 Accumulated Depreciation Balance at beginning of year $25,403 $23,407 Additions charged to expense 2,034 2,015 Property dispositions (6,532) (19) Balance at end of year $20,905 $25,403 The aggregate cost of the real estate for Federal income tax purposes at December 31, 2000 and 1999 is approximately $38,744,000 and $47,785,000, respectively. Accumulated depreciation for Federal income tax purposes at December 31, 2000 and 1999, is approximately $26,155,000 and $30,192,000 respectively. Note I - Distributions During the year ended December 31, 2000, the Partnership paid a distribution to the limited partners from operations of approximately $490,000 ($21.18 per limited partnership unit) which had been declared and accrued at December 31, 1999. In addition, the Partnership declared and paid cash distributions to the limited partners from operations of approximately $878,000 ($37.95 per limited partnership unit). The Partnership also declared and paid a distribution of approximately $3,700,000 ($159.90 per limited partnership unit) from the sale of Sunflower Apartments during the year ended December 31, 2000. Subsequent to the year ended December 31, 2000, the Partnership paid a distribution all to the limited partners of approximately $2,340,000 ($101.13 per limited partnership unit) from the refinancing proceeds of Ashton Ridge Apartments. In addition, an operating distribution of approximately $745,000 (approximately $671,000 to the limited partners or $29.00 per limited partnership unit) was paid to the partners. Note J - 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 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Effective December 8, 1999, the Registrant dismissed its prior Independent Auditors, Imowitz Koenig & Co., LLP ("Imowitz") and retained as its new Independent Auditors, Arthur Andersen LLP. Imowitz's Independent Auditors' Report on the Registrant's financial statements for the calendar year ended December 31, 1998 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change Independent Auditors was approved by the Managing General Partner's directors. During the calendar year ended 1998 and through December 8, 1999, there were no disagreements between the Registrant and Imowitz on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which disagreements if not resolved to the satisfaction of Imowitz, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. Effective December 8, 1999, the Registrant engaged Arthur Andersen LLP as its Independent Auditors. During the last two calendar years and through December 8, 1999, the Registrant did not consult Arthur Andersen LLP regarding any of the matters or events set forth in Item 304 (a)(2)(i) and (ii) of Regulation S-B. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act. Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or "Registrant") has no officers or directors. Two Winthrop Properties, Inc. (the "Managing General Partner") manages and controls substantially all of the Partnership's affairs and has general responsibility and ultimate authority in all matters affecting its business. As of December 31, 2000, the names of the directors and executive officers of the Managing General Partner their ages and the nature of all positions held by each of them, are as follows: Name Age Position Patrick J. Foye 43 Vice President - Residential and Director Martha L. Long 41 Senior Vice President and Controller-Residential Michael L. Ashner 48 Chief Executive Officer and Director Peter Braverman 49 Executive Vice President and Director Patrick J. Foye has been Executive Vice President and Director of the Managing General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of Apartment Investment and Management Company ("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 Managing 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. Michael L. Ashner has been the Chief Executive Officer of Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing General Partner since January 15, 1996. From June 1994 until January 1996, Mr. Ashner was a Director, President and Co-chairman of National Property Investors, Inc., a real estate investment company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI Property Management Corporation ("NPI Management") from April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital Corporation, a firm which has organized and administered real estate limited partnerships. Peter Braverman has been a Vice President of WFA and the Managing General Partner since January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice President of NPI and NPI Management. From June 1991 until March 1994, Mr. Braverman was President of the Braverman Group, a firm specializing in management consulting for the real estate and construction industries. From 1988 to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach Corporation, a publicly traded, international real estate and construction firm. 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 Managing General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the Managing 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 Managing 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 Managing 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 Managing 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 Managing 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 Managing General Partner has reappointed Arthur Andersen 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 of $27,000 and non-audit services (principally tax-related) of $11,200. Item 10. Executive Compensation The Partnership did not pay any remuneration to the officers or directors of the Managing General Partner during the year ended December 31, 2000. Item 11. Security Ownership of Certain Beneficial Owners and Management Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units of the Registrant as of December 31, 2000. Entity Number of Units Percentage Insignia Financial Group, Inc. 4,872.34 21.06% (an affiliate of AIMCO) AIMCO Properties LP 3,820.91 16.51% (an affiliate of AIMCO) Insignia Financial Group, Inc. is indirectly ultimately controlled by AIMCO. Its business address is 55 Beattie Place, Greenville, SC 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 Managing General Partner owns any Units of the Partnership of record or beneficially. Item 12. Certain Relationships and Related Transactions The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Managing General Partner and affiliates during the years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees $410 $383 Reimbursement for services of affiliates 250 162 During the years ended December 31, 2000 and 1999, affiliates of the Managing General Partner, were entitled to 5% of gross receipts from all of the Partnership's investment properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $410,000 and $383,000 during the years ended December 31, 2000 and 1999, respectively. An affiliate of the Managing General Partner received reimbursements of accountable administrative expenses amounting to approximately $250,000 and $162,000 for the years ended December 31, 2000 and 1999, respectively. In addition to its indirect ownership of the Managing General Partner interest in the Partnership, AIMCO and its affiliates owned 8,693.25 limited partnership units in the Partnership representing approximately 37.57% of the outstanding units at December 31, 2000. A number of these units were acquired in the First Winthrop transaction and pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. In this regard, on February 5, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $496.00 per Unit which price was higher than that being offered in a competing offer by a third party. Pursuant to this offer AIMCO acquired an additional 352 units resulting in its total ownership being increased to 9,045.25 units or 39.09% of the total outstanding units. 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 Managing 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 Managing General Partner because of their affiliation with the Managing General Partner. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: The Exhibits listed on the accompanying Index to Exhibits are filed as part of this Annual Report and incorporated in this Annual Report as set forth in said index. (b) Reports on Form 8-K filed during the fourth quarter of calendar year 2000: Current Report on Form 8-K dated December 6, 2000 and filed on December 19, 2000 in connection with the sale of Sunflower Apartments on December 6, 2000. Current Report on Form 8-K dated December 22, 2000 and filed on January 31, 2001 in connection with the refinancing of the debt encumbering Ashton Ridge Apartments. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP By: Two Winthrop Properties, Inc. Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Vice President - Residential By: /s/Martha L. Long Martha L. Long Vice President and Controller - Residential Date: March 28, 2001 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf by the registrant and in the capacities and on the date indicated. /s/Patrick J. Foye Vice President - Residential Date: March 28, 2001 Patrick J. Foye and Director /s/Martha L. Long Vice President and Date: March 28, 2001 Martha L. Long Controller - Residential WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP Exhibit Index Exhibit Number Description of Exhibit 2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between AIMCO and IPT; incorporated by reference to the Registrant's Current Report on Form 8-K, dated October 1, 1998. 3 Amended and Restated agreement of Limited Partnership of Winthrop Growth Investors I Limited Partnership dated as of May 11, 1984. 3(a) Amendment to Amended and Restated Agreement of Limited Partnership dated August 23, 1995. 10 (a) Documents related to Sunflower Apartments property 10 (b) Documents relating to Meadow Wood Apartments property in Jacksonville, Florida 10 (c) Documents relating to Stratford Village Apartments property in Montgomery, Alabama 10 (d) Amendment Number One to the Joint Venture Agreement of DEK Associates Joint Venture, dated October 7, 1988 (Sunflower) 10 (e) Meadow Wood Winthrop Associates Limited Partnership Certificate and Agreement filed on December 1, 1988 10 (f) Management Agreement between Winthrop Management and Meadow Wood dated February 1, 1990 10 (g) Management Agreement between Stratford Place and Winthrop Management dated January 1, 1990 10 (h) Management Agreement between Sunflower and Winthrop Management dated April 1, 1990 16 (i) Letter dated September 19, 1996 from Arthur Andersen LLP 16.1 (i) Letter dated December 14, 1999, from Imowitz Koenig & Co., LLP regarding its concurrence with the statements made by the Registrant. 17 Purchase and Sale Contract between Registrant and Breunig Realty Group, Inc. for sale of Sunflower Apartments effective December 3, 2000 17.1 First Addendum to Purchase and Sale Contract 17.2 Second Addendum to Purchase and Sale Contract 17.3 Third Addendum to Purchase and Sale Contract 17.4 Fourth Addendum to Purchase and Sale Contract 17.5 Fifth Addendum to Purchase and Sale Contract 18 Multifamily Mortgage, assignment of rents, and security agreement for refinancing of Meadow Wood Apartments 18.1 Financing Statement - Exhibit B for Meadow Wood Associates 18.2 Multifamily Note - Exhibit C for Meadow Wood Associates 18.3 Limited Guaranty - Meadow Wood Associates 18.4 Consolidation, Extension and Modification Agreement - Meadow Wood Associates 18.5 Replacement Reserve Agreement 99 Supplementary information required pursuant to Section 9.4 of the Partnership Agreement. (a) Filed as an exhibit to the Registrant's Registration Statement on Form S-11, File No. 2-84760, and incorporated herein by reference. (b) Files as an exhibit to the Registrant's Current Report on Form 8-K dated March 17, 1986, and incorporated herein by reference. (c) Filed as an exhibit to the Registrant's Annual Report on Form 8-K for the year ended December 31, 1989, and incorporated here in by reference. (d) Filed as an exhibit to the Registrant's Current Report on Form 8-K filed on September 6, 1995, and incorporated herein by reference. (e) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated here in by reference. (f) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, and incorporated herein by reference. (g) Filed as an exhibit to the Registrant's Current Report on Form 8-K dated September 19, 1996, and incorporated herein by reference. (h) Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the year ended December 31, 1998, and incorporated herein by reference. (i) Filed as an exhibit to the Registrant's Current Report on Form 8-K dated December 10, 1999, and incorporated herein by reference. Exhibit 99 Supplementary Information Required Pursuant to Section 9.4 of the Partnership Agreement (Unaudited) 1. Statement of Cash Available for Distribution: Three Months Ended Year Ended December 31, 2000 December 31, 2000 (in thousands) Net income $3,633 $ 3,796 Add: Amortization expense 30 117 Depreciation expense 447 2,034 Less cash to reserves (410) (1,369) Cash available for distribution $ 3,700 $ 4,578 Distributions allocated to limited partners $ 3,700 $ 4,578 2. Fees and other compensation paid or accrued by the Partnership to the general partners, or their affiliates, during the year ended December 31, 2000: Entity Receiving Form of Compensation Compensation Amount General Partners Interest in Cash Available for Distribution $ -- Affiliates of the Property Management Fee $ 410 Managing General Partner Affiliates of the Reimbursement for Services $ 250 Managing General Partner -----END PRIVACY-ENHANCED MESSAGE-----