-----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, R86ukMYXODgyAClGdXrb85tGfVUyicnUBulBxIXvgPdjfk3XbaHq8s8hYzbVfJDM mCkdb+hnxn/oCnwCHjod0w== 0000711642-05-000634.txt : 20051114 0000711642-05-000634.hdr.sgml : 20051111 20051114141308 ACCESSION NUMBER: 0000711642-05-000634 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051114 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13389 FILM NUMBER: 051199910 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 10QSB 1 wgi.txt WGI UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _________to _________ Commission file number 2-84760 WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP (Exact name of small business issuer as specified 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) (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 ___ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes __ No X_ PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 2005
Assets Cash and cash equivalents $ 1,434 Receivables and deposits 75 Other assets 225 Investment property: Land $ 690 Buildings and related personal property 14,472 15,162 Less accumulated depreciation (10,471) 4,691 $ 6,425 Liabilities and Partners' Capital Liabilities Accounts payable $ 51 Tenant security deposit liabilities 34 Accrued property taxes 177 Other liabilities 34 Mortgage note payable 5,308 Partners' Capital General partners $ 25 Limited partners (23,139 units issued and outstanding) 796 821 $ 6,425 See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Nine Months Ended September 30, Ended September 30, 2005 2004 2005 2004 (Restated) (Restated) Revenues: Rental income $ 647 $ 580 $ 1,909 $ 1,741 Other income 78 51 200 185 Total revenues 725 631 2,109 1,926 Expenses: Operating 312 371 802 833 General and administrative 30 31 132 121 Depreciation 159 170 486 523 Interest 99 102 300 309 Property tax 59 56 181 167 Casualty loss (Note E) 10 12 10 12 Total expenses 669 742 1,911 1,965 Income (loss) from continuing operations 56 (111) 198 (39) Income (loss) from discontinued operations (Notes A and D) 105 62 (34) 137 Gain on sale of discontinued operations (Note D) -- -- 22,064 -- Net income (loss) $ 161 $ (49) $22,228 $ 98 Net income (loss) allocated to general partners $ 16 $ (5) $ 225 $ 10 Net income (loss) allocated to limited partners 145 (44) 22,003 88 $ 161 $ (49) $22,228 $ 98 Per limited partnership unit: Income (loss) from continuing operations $ 2.16 $ (4.32) $ 7.70 $ (1.52) Income (loss) from discontinued operations 4.11 2.42 (2.55) 5.32 Gain on sale of discontinued operations -- -- 945.76 -- Net income (loss) $ 6.27 $ (1.90) $950.91 $ 3.80 Distributions per limited partnership unit $ 58.34 $ -- $822.20 $ -- See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 23,149 $ 2 $23,149 $23,151 Partners' deficit at December 31, 2004 23,139 $ (196) $(2,182) $(2,378) Distributions to partners -- (4) (19,025) (19,029) Net income for the nine months ended September 30, 2005 -- 225 22,003 22,228 Partners' capital at September 30, 2005 23,139 $ 25 $ 796 $ 821 See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income $22,228 $ 98 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 674 1,081 Amortization of loan costs and deferred costs 30 38 Bad debt expense, net 39 105 Gain on sale of discontinued operations (22,064) -- Loss on early extinguishment of debt 283 -- Casualty (gain) loss (124) 12 Change in accounts: Receivables and deposits 244 (220) Other assets 166 (46) Accounts payable (114) 4 Tenant security deposit liabilities (135) (2) Accrued property taxes 177 223 Other liabilities (173) (60) Net cash provided by operating activities 1,231 1,233 Cash flows from investing activities: Net proceeds from sale of discontinued operations 28,052 -- Property improvements and replacements (962) (302) Insurance proceeds received 155 -- Net withdrawals from (deposits to) restricted escrows 198 (30) Net cash provided by (used in) investing activities 27,443 (332) Cash flows from financing activities: Payments on mortgage notes payable (251) (305) Repayment of mortgage note payable (8,008) -- Prepayment penalties (260) -- Distributions paid to partners (19,029) -- Advances from general partner 90 -- Repayment of advances from general partner (90) -- Net cash used in financing activities (27,548) (305) Net increase in cash and cash equivalents 1,126 596 Cash and cash equivalents at beginning of period 308 885 Cash and cash equivalents at end of period $ 1,434 $ 1,481 Supplemental disclosure of cash flow information: Cash paid for interest $ 633 $ 849 Supplemental disclosure of non-cash activity: Property improvements and replacements included in accounts payable $ 14 $ 63 Included in property improvements and replacements for the nine months ended September 30, 2005 are approximately $23,000 of improvements, which were included in accounts payable at December 31, 2004. See Accompanying Notes to Consolidated Financial Statements
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or "Registrant") 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. The general partner of the Partnership is AIMCO/Winthrop Growth Investors I, GP, LLC, a Delaware limited liability company ("AIMCO GP" or the "Managing General Partner"), a wholly-owned subsidiary of AIMCO Properties, L.P., an affiliate of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004. On September 30, 2004, AIMCO/Winthrop Growth Investors I GP, LLC, a Delaware limited liability company acquired the general partner interests in the Partnership from Linnaeus-Lexington Associates Limited Partnership and Two Winthrop Properties, Inc. ("Two Winthrop") for an aggregate cash consideration of $1,023,000. Prior to the transfer of the general partner interests to AIMCO/GP, AIMCO/NHP Properties, Inc. ("AIMCO/NHP"), also an affiliate of AIMCO held 100% of the voting rights with respect to the Class B stock of FWC, which provided AIMCO/NHP with the right to elect one director to the board of directors of Two Winthrop. That one director had the power to appoint the sole member of the Residential Committee of Two Winthrop's board of directors. The Residential Committee was vested with the authority to elect certain officers, and subject to certain limitations, the Residential Committee and its appointed officers had the right to cause the managing general partner of the Partnership to take such actions as it deemed necessary and advisable in connection with the activities of the Partnership. Accordingly, although ownership of the general partner interests was transferred, the effective control of the day-to-day management of the Partnership remains vested in an affiliate of AIMCO. As used herein, the term "Managing General Partner" shall mean Two Winthrop, with respect to matters occurring prior to September 30, 2004 and AIMCO GP for matters occurring from and after September 30, 2004. As a result of the sale of Stratford Place Apartments to a third party during the nine months ended September 30, 2005 and in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the accompanying consolidated statements of operations for the three and nine months ended September 30, 2004 have been restated as of January 1, 2004 to reflect the operations of Stratford Place Apartments as income from discontinued operations of approximately $62,000 and $137,000 for the three and nine months ended September 30, 2004, respectively, including revenues of approximately $859,000 and $2,500,000, respectively. Note B - Transactions with Affiliated Parties The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $170,000 and $219,000 during the nine months ended September 30, 2005 and 2004, respectively, which is included in operating expenses and income (loss) from discontinued operations. Affiliates of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $175,000 and $89,000 for the nine months ended September 30, 2005 and 2004, respectively which is included in general and administrative expenses and investment property. The portion of these reimbursements included in investment property are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $89,000 and $4,000 for the nine months ended September 30, 2005 and 2004, respectively. The construction management service fees are calculated based on a percentage of certain additions to investment property. During the nine months ended September 30, 2005 and in accordance with the Partnership Agreement, an affiliate of the Managing General Partner advanced the Partnership approximately $90,000 to fund the payment of real estate taxes at Ashton Ridge Apartments. Interest was charged at the prime rate plus 2% (8.75% at September 30, 2005) and was less than $1,000 for the nine months ended September 30, 2005. The advance and associated accrued interest was repaid by the Partnership during the same period. The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the nine months ended September 30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $37,000 and $72,000, respectively, for insurance coverage and fees associated with policy claims administration. Note C - Supplementary Information Required Pursuant to Section 9.4 of the Partnership Agreement Statement of cash available for distribution for the three and nine months ended September 30, 2005 (in thousands): Three Months Nine Months Ended Ended September 30, September 30, 2005 2005 Net income $ 161 $22,228 Add: Amortization expense 5 30 Depreciation expense 159 674 Cash from (to) reserves 1,025 (3,903) Cash available for distribution $ 1,350 $ 19,029 Distributions allocated to Limited Partners $ 1,350 $ 19,025 Note D - Sale of Investment Property On May 17, 2005, the Partnership sold Stratford Place Apartments, located in Gaithersburg, Maryland, to a third party for $29,000,000. After payment and accrual of closing costs, the net sales proceeds received by the Partnership were approximately $28,052,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $8,008,000. The sale resulted in a gain on sale of investment property of approximately $22,064,000 during the nine months ended September 30, 2005. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $283,000 as a result of prepayment penalties paid and the write off of unamortized loan costs, which is included in income (loss) from discontinued operations. Included in income (loss) from discontinued operations for the three months ended September 30, 2005 and 2004 are results of the property's operations of approximately $105,000 and $62,000, respectively, including revenues of approximately $105,000 and $859,000, respectively. Included in income (loss) from discontinued operations for the nine months ended September 30, 2005 and 2004 are results of the property's operations of approximately ($34,000) and $137,000, respectively, including revenues of approximately $1,338,000 and $2,500,000 respectively. Note E - Casualty Events During the nine months ended September 30, 2005 there was a casualty gain of approximately $100,000 recorded for Stratford Place Apartments related to damages to the property caused by a fire on January 12, 2005. This gain was the result of the receipt of insurance proceeds of approximately $121,000, partially offset by the write off of undepreciated fixed assets of approximately $21,000 and is included in income (loss) from discontinued operations. During the nine months ended September 30, 2005 there was a casualty gain of approximately $34,000 recorded for Stratford Place Apartments related to damages to the property caused by a flood on February 1, 2005. This gain was the result of the receipt of insurance proceeds of approximately $34,000 and is included in income (loss) from discontinued operations. In 2004, Ashton Ridge Apartments experienced damage from hurricane Jeanne. The Partnership estimated total damage costs of approximately $199,000, which the Partnership did not expect to be covered by insurance proceeds. The Partnership recorded a casualty loss of approximately $12,000 related to this event in the nine months ended September 30, 2004. In 2004, the Partnership estimated total cleanup costs from this hurricane would be approximately $20,000. In addition, it estimated clean up costs of approximately $51,000 related to hurricane Frances in 2004. During the nine months ended September 30, 2005, the Partnership revised the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $56,000. This income is included in operating expenses. During the nine months ended September 30, 2005, the Partnership recorded a casualty loss of approximately $10,000 related to these events. This loss was the result of the write off of undepreciated assets of approximately $10,000. Note F - Contingencies AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business. Environmental Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property. Mold The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the Managing General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the Managing General Partner believes that these measures will minimize the effects that mold could have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership's consolidated financial condition or results of operations. SEC Investigation The Central Regional Office of the United States Securities and Exchange Commission (the "SEC") continues its formal investigation relating to certain matters. Although the staff of the SEC is not limited in the areas that it may investigate, AIMCO believes the areas of investigation have included AIMCO's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, capitalization of payroll and certain other costs, tax credit transactions, and tender offers for limited partnership interests. AIMCO is cooperating fully. AIMCO is not able to predict when the investigation will be resolved. AIMCO does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 2. Management's Discussion and Analysis or Plan of Operation The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The Partnership's investment property consists of one apartment complex. The following table sets forth the average occupancy of the property for the nine months ended September 30, 2005 and 2004: Average Occupancy 2005 2004 Ashton Ridge Apartments Jacksonville, Florida 95% 90% The Property attributes the increase in occupancy at Ashton Ridge Apartments to improved market conditions. The Partnership's financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, the interest rate on the mortgage loan, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment property 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, the Managing General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership's financial results. Results of Operations The Partnership's net income for the three and nine months ended September 30, 2005 was approximately $161,000 and $22,228,000, respectively, compared to net (loss) income of approximately ($49,000) and $98,000 for the three and nine months ended September 30, 2004, respectively. The increase in net income for the three months ended September 30, 2005 is due to increases in income from continuing operations and discontinued operations. The increase in net income for the nine months ended September 30, 2005 is due to the gain on sale of Stratford Place Apartments, an increase in income from continuing operations, partially offset by a decrease in income from discontinued operations. On May 17, 2005, the Partnership sold Stratford Place Apartments, located in Gaithersburg, Maryland, to a third party for $29,000,000. After payment and accrual of closing costs, the net sales proceeds received by the Partnership were approximately $28,052,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $8,008,000. The sale resulted in a gain on sale of investment property of approximately $22,064,000 during the nine months ended September 30, 2005. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $283,000 as a result of prepayment penalties paid and the write off of unamortized loan costs, which is included in income (loss) from discontinued operations. Included in income (loss) from discontinued operations for the three months ended September 30, 2005 and 2004 are results of the property's operations of approximately $105,000 and $62,000, respectively, including revenues of approximately $105,000 and $859,000, respectively. Included in income (loss) from discontinued operations for the nine months ended September 30, 2005 and 2004 are results of the property's operations of approximately ($34,000) and $137,000, respectively, including revenues of approximately $1,338,000 and $2,500,000 respectively. As a result of the sale of Stratford Place Apartments and in accordance with Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the accompanying consolidated statements of operations for the three and nine months ended September 30, 2004 have been restated as of January 1, 2004 to reflect the operations of Stratford Place Apartments as income from discontinued operations. The increase in income from discontinued operations for the three months ended September 30, 2004 is due to casualty gains recorded due to insurance proceeds received for two casualties that occurred at Stratford Place Apartments prior to its sale as discussed below. The decrease in income from discontinued operations for the nine months ended September 30, 2005 is due to primarily to the loss on early extinguishment of debt recorded as a result of the sale as discussed above. The Partnership recognized income from continuing operations of approximately $56,000 and $198,000 for the three and nine months ended September 30, 2005, respectively, compared to loss from continuing operations of approximately $111,000 and $39,000 for the corresponding periods in 2004. The increase in income from continuing operations for the three and nine months ended September 30, 2005 is due to increases in total revenues and decreases in total expenses. Total revenues increased for the three and nine months ended September 30, 2005 due to increases in rental and other income. Rental income increased for both periods due to an increase in occupancy, an increase in the average rental rate and a decrease in bad debt expense at Ashton Ridge Apartments. Other income increased for the three and nine months ended September 30, 2005 primarily due to an increase in resident utility reimbursements and an increase in interest income due to higher average cash balances in interest bearing accounts partially offset by a decrease in lease cancellation fees. Total expenses decreased for the three and nine months ended September 30, 2005 due to decreases in operating and depreciation expense. The decrease in total expenses for the nine months ended September 30, 2005 was partially offset by increases in general and administrative and property tax expenses. General and administrative expenses remained relatively constant for the three months ended September 30, 2005. Operating expenses decreased for the three and nine months ended September 30, 2005 primarily due to a decrease in maintenance expenses. The decrease in operating expenses for the nine months ended September 30, 2005 was partially offset by an increase in property expense. Maintenance expense decreased for the three and nine months ended September 30, 2005 primarily due to a reduction of the estimated cleanup costs related to Hurricane Jeanne and Frances at Ashton Ridge Apartments (as discussed below). The decrease in maintenance expenses for the nine months ended September 30, 2005 was partially offset by an increase in contract services. Property expense increased for the nine months ended September 30, 2005 due to increases in courtesy patrol costs, commissions and referral fees and utilities at Ashton Ridge Apartments. Depreciation expense decreased for the three and nine months ended September 30, 2005 due to assets becoming fully depreciated in 2004 at Ashton Ridge Apartments. Property tax expense increased for the nine months ended September 30, 2005 due to an increase in the property's assessed value. During the nine months ended September 30, 2005 there was a casualty gain of approximately $100,000 recorded for Stratford Place Apartments related to damages to the property caused by a fire on January 12, 2005. This gain was the result of the receipt of insurance proceeds of approximately $121,000, partially offset by the write off of undepreciated fixed assets of approximately $21,000 and is included in income (loss) from discontinued operations. During the nine months ended September 30, 2005 there was a casualty gain of approximately $34,000 recorded for Stratford Place Apartments related to damages to the property caused by a flood on February 1, 2005. This gain was the result of the receipt of insurance proceeds of approximately $34,000 and is included in income (loss) from discontinued operations. In 2004, Ashton Ridge Apartments experienced damage from hurricane Jeanne. The Partnership estimated total damage costs of approximately $199,000, which the Partnership did not expect to be covered by insurance proceeds. The Partnership recorded a casualty loss of approximately $12,000 related to this event in the nine months ended September 30, 2004. In 2004, the Partnership estimated total cleanup costs from this hurricane would be approximately $20,000. In addition, it estimated clean up costs of approximately $51,000 related to hurricane Frances in 2004. During the nine months ended September 30, 2005, the Partnership revised the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $56,000. This income is included in operating expenses. During the nine months ended September 30, 2005, the Partnership recorded a casualty loss of approximately $10,000 related to these events. This loss was the result of the write off of undepreciated assets of approximately $10,000. The increase in general and administrative expenses for the nine months ended September 30, 2005 was primarily due to an increase in the costs associated with the annual audit required by the Partnership Agreement. Also included in general and administrative expenses are costs of services included in the management reimbursements to the Managing General Partner as allowed under the Partnership Agreement and costs associated with the quarterly and annual communications with investors and regulatory agencies. Liquidity and Capital Resources At September 30, 2005, the Partnership had cash and cash equivalents of approximately $1,434,000 compared to approximately $1,481,000 at September 30, 2004. Cash and cash equivalents increased approximately $1,126,000 since December 31, 2004 due to approximately $1,231,000 of cash provided by operating activities and approximately $27,443,000 of cash provided by investing activities, partially offset by approximately $27,548,000 of cash used in financing activities. Cash provided by investing activities consisted of proceeds from the sale of Stratford Place Apartments, receipts from escrow accounts maintained by the mortgage lenders and insurance proceeds, partially offset by property improvements and replacements. Cash used in financing activities consisted of principal payments made on the mortgages encumbering the Partnership's investment properties, repayment of the mortgage note payable as a result of the sale of Stratford Place Apartments, prepayment penalties paid, distributions to partners and repayments of advances from affiliates, partially offset by advances from affiliates. The Partnership invests its working capital reserves in interest bearing 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 property 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 Managing General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. Capital improvements planned for the Partnership's property are detailed below. Ashton Ridge Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $614,000 of capital improvements at Ashton Ridge Apartments consisting primarily of floor covering and air conditioning unit replacements, roof replacement, wood replacement, interior and exterior painting, major landscaping, fencing, structural improvements and reconstruction of damages to the property caused by Hurricane Jeanne. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Stratford Place Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $339,000 of capital improvements at Stratford Place Apartments consisting primarily of floor covering, window and appliance replacements and reconstruction of damages to the property caused by a fire at the property in January 2005 and a flood in February 2005 (see discussion in "Results of Operations"). These improvements were funded from insurance proceeds, operating cash flow and replacement reserves. The property was sold to a third party on May 17, 2005. Capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected in the short term. The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering Ashton Ridge Apartments of approximately $5,308,000 has a maturity date of January 2021 at which time the loan is scheduled to be fully amortized. The Partnership distributed the following amounts during the nine months ended September 30, 2005 and 2004 (in thousands except per unit data):
Per Per Nine Months Limited Nine Months Limited Ended Partnership Ended Partnership September 30, 2005 Unit September 30, 2004 Unit Sale (1) $ 19,029 $ 822.20 $ -- $ --
(1) From the sale proceeds of Stratford Place Apartments in May 2005. Future cash distributions will depend on the level of cash generated from operations, availability of cash reserves and the timing of debt maturity, refinancing and/or property sale. The Partnership's cash available for distribution is reviewed on a monthly 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 during 2005 or subsequent periods. Other In addition to its indirect ownership of the general partner interests in Partnership, AIMCO and its affiliates owned 10,984.25 limited partnership units (the "Units") in the Partnership representing 47.47% of the outstanding Units at September 30, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that would include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 47.47% of the outstanding units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder. Critical Accounting Policies and Estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Impairment of Long-Lived Assets The investment property is recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of the property may be impaired, the Partnership will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property. Real property investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership's investment property. These factors include, but are not limited to, changes in the national, regional and local economic climate; local conditions, such as an oversupply of multifamily properties; competition from other available multifamily property owners and changes in market rental rates. Any adverse changes in these factors could cause impairment of the Partnership's asset. Revenue Recognition The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants. ITEM 3. Controls and Procedures (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with this case will be material to the Partnership's overall operations. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS See Exhibit Index Attached. 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: AIMCO/Winthrop Growth Investors I, GP, LLC Managing General Partner By: /s/Martha L. Long Martha L. Long Senior Vice President By: /s/Stephen B. Waters Stephen B. Waters Vice President Date: November 14, 2005 WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP Exhibit Index Exhibit Number Description of Exhibit 3.1 Amended and Restated Agreement of Limited Partnership of Winthrop Growth Investors I Limited Partnership dated May 11, 1984 (included as an exhibit to the Partnership's Registration Statement on Form S-11, File No. 2-84760 and incorporated herein by reference). 3.2 Amendment to Amended and Restated Agreement of Limited Partnership dated August 23, 1985 (Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). 3.3 Amendment to the Amended and Restated Agreement of Limited Partnership, dated November 20, 2003, filed as an exhibit to the Registrant's Current Report on Form 8-K dated December 3, 2003 and incorporated herein by reference. 3.4 Amendment to Amended and Restated Agreement of Limited Partnership, dated September 30, 2004, filed as an exhibit to the Registrant's Current Report on Form 8-K dated September 30, 2004 and filed on October 5, 2004, incorporated herein by reference. 3.5 Certificate of Amendment to the Second Amended and Restated Certificate of Limited Partnership of Winthrop Growth Investors 1 Limited Partnership, filed as an exhibit to the Registrant's Current Report on Form 8-K dated September 30, 2004 and filed on October 5, 2004, incorporated herein by reference. 10.1 Replacement Reserve Agreement, filed as exhibit 10.20 to the Registrant's Current Report on Form 8-K dated December 22, 2000, and incorporated herein by reference. 10.2 Purchase Agreement between Linnaeus-Lexington Associates Limited Partnership and AIMCO/Winthrop Growth Investors 1 GP, LLC, dated September 30, 2004, filed as exhibit 10.22 to the Registrant's Current Report on Form 8-K dated September 30, 2004 and filed on October 5, 2004, incorporated herein by reference. 10.3 Assignment and Assumption of General Partner Interest in Winthrop Growth Investors 1 Limited Partnership, dated September 30, 2004, filed as exhibit 10.23 to the Registrant's Current Report on Form 8-K dated September 30, 2004 and filed on October 5, 2004, incorporated herein by reference. 10.4 Assignment and Assumption of General Partner Interest in Winthrop Growth Investors 1 Limited Partnership, dated September 30, 2004, filed as exhibit 10.24 to the Registrant's Current Report on Form 8-K dated September 30, 2004 and filed on October 5, 2004, incorporated herein by reference. 10.5 Purchase and Sale Contract between Stratford Place Investors Limited Partnership, a Delaware limited partnership, as Seller, and FF Realty LLC, a Delaware limited liability company, as Purchaser, effective February 28, 2005 filed as exhibit 10.5 to the Registrant's Current Report on Form 8-K dated February 28, 2005 and filed on March 4, 2005 and incorporated herein by reference. 10.6 First Amendment to Purchase and Sale Contract between Stratford Place Investors Limited Partnership, a Delaware limited partnership, as Seller, and FF Realty LLC, a Delaware limited liability company, as Purchaser, dated March 30, 2005; filed as Exhibit 10.6 to the Registrant's Current Report on Form 8-K dated May 17, 2005 and filed on May 20, 2005, incorporated herein by reference. 10.7 Second Amendment to Purchase and Sale Contract between Stratford Place Investors Limited Partnership, a Delaware limited partnership, as Seller, and FF Realty LLC, a Delaware limited liability company, as Purchaser, dated April 28, 2005; filed as Exhibit 10.7 to the Registrant's Current Report on Form 8-K dated May 17, 2005 and filed on May 20, 2005, incorporated herein by reference. 31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 31.1 CERTIFICATION I, Martha L. Long, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth Investors I Limited Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2005 /s/Martha L. Long Martha L. Long Senior Vice President of AIMCO/Winthrop Growth Investors I, GP, LLC, equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Stephen B. Waters, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Winthrop Growth Investors I Limited Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2005 /s/Stephen B. Waters Stephen B. Waters Vice President of AIMCO/Winthrop Growth Investors I, GP, LLC, equivalent of the chief accounting officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Winthrop Growth Investors I Limited Partnership (the "Partnership"), for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Martha L. Long Name: Martha L. Long Date: November 14, 2005 /s/Stephen B. Waters Name: Stephen B. Waters Date: November 14, 2005 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----