-----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, WFmB7RSOrFI/s6pB5YEqWYSEqOoIvhzxumO6Vq6j7B9Jk8ImLCXJFGKSaKQ8aT1u Srqe4LiG0B7AUQxvuWx8WA== 0000790882-97-000002.txt : 19970515 0000790882-97-000002.hdr.sgml : 19970515 ACCESSION NUMBER: 0000790882-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GROWTH HOTEL INVESTORS CENTRAL INDEX KEY: 0000769129 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 942964750 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15347 FILM NUMBER: 97604306 BUSINESS ADDRESS: STREET 1: 1 INSIGNIA FINANCIAL PLAZA PO BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: 1 INSIGNIA FINANCIAL PLAZA PO BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: MRI BUSINESS HOTEL INVESTORS 85 DATE OF NAME CHANGE: 19850819 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report (As last amended by 34-32231, eff. 6/3/93.) U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1997 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... Commission file number 0-15347 GROWTH HOTEL INVESTORS (Exact name of registrant as specified in its charter) California 94-2964750 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's phone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports ), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) GROWTH HOTEL INVESTORS CONSOLIDATED BALANCE SHEET (in thousands, except unit data) March 31, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents $ 4,260 $ 4,644 Restricted cash 298 268 Deferred costs 631 652 Accounts receivable and other assets 246 189 Investment in unconsolidated joint venture 7,988 7,767 Investment properties: Land 3,098 3,098 Buildings and related personal property 22,018 21,479 25,116 24,577 Less accumulated depreciation (9,941) (9,675) 15,175 14,902 Total assets $ 28,598 $ 28,422 Liabilities and Partners' Equity (Deficit) Accounts payable and other liabilities $ 445 $ 523 Notes payable 5,403 5,412 Minority interest in joint ventures 27 42 Partners' Equity (Deficit): General partner (946) (965) Limited partners' (36,932 units outstanding at March 31, 1997 and December 31, 1996) 23,669 23,410 Total partners' equity 22,723 22,445 Total liabilities and partners' equity $ 28,598 $ 28,422 Note: The balance sheet at December 31, 1996, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See Notes to Consolidated Financial Statements b) GROWTH HOTEL INVESTORS CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues: Hotel operations $ 1,689 $ 1,624 Equity in unconsolidated joint venture operations 221 486 Interest income 47 32 Total revenues 1,957 2,142 Expenses: Hotel operations 1,166 1,141 Interest 149 169 Depreciation 265 208 General and administrative 113 175 Total expenses 1,693 1,693 Net income before minority interest in joint ventures' operations 264 449 Minority interest in joint ventures' operations 14 3 Net income $ 278 $ 452 Net income allocated to general partners $ 19 $ 31 Net income allocated to limited partners 259 421 Net income $ 278 $ 452 Net income per limited partnership unit $ 7.00 $ 11.39 See Notes to Consolidated Financial Statements c) GROWTH HOTEL INVESTORS CONSOLIDATED STATEMENT OF PARTNERS' EQUITY (Unaudited) (in thousands, except unit data) Limited General Limited Partnership Partners' Partners' Total Units Deficit Equity Equity Original capital contributions 36,932 $ -- $36,932 $36,932 Partners' (deficit) equity at December 31, 1996 36,932 $ (965) $23,410 $22,445 Net income for the three months ended March 31, 1997 19 259 278 Partners' (deficit) equity at March 31, 1997 36,932 $ (946) $23,669 $22,723 See Notes to Consolidated Financial Statements d) GROWTH HOTEL INVESTORS CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands, except for unit data) Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 278 $ 452 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and Amortization 286 230 Equity in unconsolidated joint venture operations (221) (486) Minority interest in joint ventures' operations (14) (3) Change in accounts: Accounts receivables and other assets (57) (101) Accounts payable and other liabilities (78) 39 Net cash provided by operating activities 194 131 Cash flows from investing activities: Properties and improvements and replacements (540) (186) Restricted cash decrease (30) (8) Net cash used in investing activities (570) (194) Cash flows from financing activities: Notes payable principal payments (8) (4) Net cash used in financing activities (8) (4) Net decrease in cash and cash equivalents (384) (67) Cash and cash equivalents at beginning of period 4,644 3,600 Cash and cash equivalents at end of period $ 4,260 $ 3,533 Supplemental information: Interest paid $ 114 $ 123 See Notes to Consolidated Financial Statements e) GROWTH HOTEL INVESTORS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of NPI Realty Management Corporation 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 month period ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - 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 payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of the Managing General Partner were charged to expense in 1997 and 1996: For the Three Months Ended March 31, 1997 1996 (in thousands) Reimbursement for services of affiliates (primarily included in general and administrative expenses) $37 $73 NOTE C - INVESTMENT IN UNCONSOLIDATED JOINT VENTURE The following are the condensed balance sheet as of March 31, 1997, and December 31, 1996, and condensed statements of operations for the three months ended March 31, 1997 and 1996 for the Partnership's investment in Growth Hotel Investors Combined Fund No. 1 (the "Combined Fund"), which is reported under the equity method of accounting. GROWTH HOTEL INVESTORS COMBINED FUND NO. I CONDENSED BALANCE SHEETS (in thousands) March 31 December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents $ 3,254 $ 2,228 Restricted cash -- 3 Deferred costs and other assets 1,442 1,108 Investment Properties Land 10,369 10,369 Buildings and related personal property 80,732 79,891 Less: Accumulated depreciation (32,465) (31,400) Investment properties, net 58,636 58,860 Total assets $ 63,332 $ 62,199 Liabilities and Partners' Equity Accounts payable and other liabilities $ 2,086 $ 1,337 Due to an affiliate of the joint venture partner 543 827 Notes payable 40,022 40,185 Minority interest in consolidated joint venture (5,101) (5,268) Partners' Equity GHI 7,988 7,767 GHI II 17,794 17,351 Total partners' equity 25,782 25,118 Total Liabilities and Partners' Equity $ 63,332 $ 62,199 Note: The balance sheet at December 31, 1996, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues $ 8,566 $ 8,778 Expenses (7,735) (7,441) Income before minority interest in joint venture's operations 831 1,337 Minority interest in joint venture's operations (167) 195 Net income $ 664 $ 1,532 Allocation of net income: GHI $ 221 $ 486 GHI II 443 1,046 Net income $ 664 $ 1,532 NOTE D - SALES OF PROPERTIES As required by the settlement of the class action lawsuit brought in connection with the tender offer made by Devon Associates (discussed in Item 3 of the Partnership's Annual Report on Form 10-K, for the period ending December 31, 1996), the Partnership and GHI II, the Partnership's joint venture partner in the Combined Fund properties, marketed all of their properties for sale. In this regard, the Partnership and Growth Hotel Investors II ("GHI II"), an affiliated partnership, retained Bear, Stearns & Co. Inc. to assist in the marketing of such properties. As of March 14 1997, the Partnership, the Combined Fund, the joint ventures in which the Partnership has a controlling interest (collectively the "Sellers"), GHI II, and the joint ventures in which GHI II has a controlling interest, and Equity Inns Partnership, L.P. (the "Buyer") entered into certain purchase and sale agreements pursuant to which the Buyer agreed to purchase from these entities the twenty-two hotels described herein as well as six additional hotels owned directly or indirectly by GHI II for an aggregate purchase price of $182 million, subject to adjustment. The purchase and sale agreements were amended on May 1, 1997, to change the purchase price to $169,000,000, to extend the study periods listed in various sections of the agreements, and to provide for reimbursement to the Sellers for up to $4,000,000 of work in progress or completed. If the sale is consummated at the above stated price, the Managing General Partner estimates that the Partnership will receive net proceeds from the sale of approximately $34,478,000. The closing of these sales, which is anticipated to occur during the second quarter of 1997, is subject to many conditions including, favorable completion by the Buyer of its due diligence review and the Partnership and GHI II receiving consent to the sale from their respective limited partners holding a majority of the outstanding limited partnership interests in the Partnership and GHI II, respectively. It is anticipated that a proxy statement further detailing the transaction will be forwarded to the limited partners shortly. Accordingly, there can be no assurance that the sale will be consummated with the Buyer or any other potential buyer. The Managing General Partner plans to satisfy all existing debt of the Partnership and liquidate the partnership upon the sale of the investment properties. If the sale does not consummate as planned, the Managing General Partner plans to negotiate extensions for those encumbrances which will mature in 1997. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INVESTMENT PROPERTIES: A description of the hotel properties in which the Partnership has an ownership interest, together with occupancy and room rate data follows: Average Average Daily Occupancy Rate Room Rate For Quarter Ended For Quarter Ended March 31, March 31, Name and Location 1997 1996 1997 1996 Growth Hotel Investors I: Hampton Inn-Syracuse 43% 44% $59.75 $57.32 East Syracuse, New York Hampton Inn-Brentwood 66% 76% 68.35 66.24 Nashville, Tennessee Hampton Inn-Aurora 69% 68% 60.04 59.75 Aurora, Colorado Hampton Inn-Albuquerque North 67% 55% 54.34 55.78 Albuquerque, New Mexico Growth Hotel Investors Combined Fund No. 1: Hampton Inn-Memphis I40 East 68% 65% 56.26 53.20 Memphis, Tennessee Hampton Inn-Columbia-West 68% 73% 59.50 58.96 West Columbia, South Carolina Hampton Inn-Spartanburg 51% 54% 52.00 51.61 Spartanburg, South Carolina Hampton Inn-Little Rock, North 68% 64% 54.97 51.37 North Little Rock, Arkansas Hampton Inn-Amarillo 55% 59% 49.12 49.70 Amarillo, Texas Hampton Inn-Greenville 72% 76% 59.85 $ 57.79 Greenville, South Carolina Hampton Inn-Charleston-Airport 66% 74% 58.35 53.57 North Charleston, South Carolina Hampton Inn-Memphis-Poplar 78% 79% 69.34 67.95 Memphis, Tennessee Hampton Inn-Greensboro 70% 77% 64.49 63.42 Greensboro, North Carolina Hampton Inn-Birmingham 75% 71% 61.57 60.51 Birmingham, Alabama Hampton Inn-Atlanta-Roswell 59% 75% 63.34 63.36 Roswell, Georgia Hampton Inn-Chapel Hill 79% 81% 64.93 60.29 Chapel Hill, North Carolina Hampton Inn-Dallas-Richardson 73% 78% 59.60 55.60 Richardson, Texas Hampton Inn-Nashville- 71% 67% 66.65 64.66 Briley Parkway Nashville, Tennessee Hampton Inn-San Antonio-Northwest 54% 54% 56.03 55.87 San Antonio, Texas Hampton Inn-Madison Heights 68% 69% 63.88 57.38 Madison Heights, Michigan Hampton Inn-Mountain Brook 75% 77% 64.30 60.78 Birmingham, Alabama Hampton Inn-Northlake 66% 78% 61.63 60.22 Atlanta, Georgia The Managing General Partner attributes the increase in occupancy at Hampton Inn - - Albuquerque to a renovation project in the prior year. The decrease in occupancy at Hampton Inn - Brentwood is attributable to the construction of new hotels in the area. The Partnership's net income for the three months ended March 31, 1997, was approximately $278,000 as compared to $452,000 for the corresponding period of 1996. The decrease in net income is primarily due to a decrease in income from the Partnership's unconsolidated joint venture and an increase in depreciation expense. The decrease in income from the Partnership's unconsolidated joint venture is due to decreases in revenues due to decreases in occupancy at thirteen of the joint venture's eighteen properties. The decrease in occupancy at the Hampton Inn - Amarillo, Greensboro, Greenville and Dallas-Richardson properties is due to the construction of new hotels in the area. The decrease in occupancy at the Hampton Inn - Atlanta-Roswell and Northlake properties is due to an increase in hotels in the area and to the loss of the pre-Olympic guests as a major source of business. The Hampton Inn - Charleston had a decrease in occupancy due to ongoing renovations that are needed so the hotel can be more competitive with the new hotels in their market. The decrease in occupancy at the Hampton Inn - Columbia is due to a new highway bypass that re- routed traffic away from the hotel. Offsetting these decreases were increases in occupancy at four of the joint venture's eighteen properties. The increase in occupancy at the Hampton Inn - Birmingham, Little Rock, and Nashville - Briley properties is due to renovation projects in the prior year. The increase in depreciation expense is due to the purchase of assets in 1996 and 1997 related to renovations at the Partnership's properties. Offsetting the above decreases to revenue was an increase in interest income and decreases in general and administrative expenses and interest expense. The increase in interest income is due to an increase in interest-bearing reserves. The decrease in general and administrative expenses is due to a decrease in expense reimbursements in 1997. Increased expense reimbursements in 1996 were attributable to the combined transition efforts of the Greenville, South Carolina, and Atlanta, Georgia, administrative offices during the year-end close, preparation of the 1995 10-K and tax return (including the limited partner K-1s), and transition of asset management responsibilities to the new administration. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the hotel market environment of its investment properties to assess the feasibility of increasing rates, 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 rates and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of concessions and room rate reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At March 31, 1997, the Partnership had unrestricted cash of approximately $4,260,000 as compared to approximately $3,533,000 at March 31, 1996. Net cash provided by operating activities increased primarily as a result of the decrease in receivables and other assets due to the timing of receipts from guests and which was offset by the change in accounts payable and other liabilities due to the timing of payments. Net cash used in investing activities increased due to an increase in property improvements and replacements due to the current product improvement plan. Net cash used in financing activities increased due to the amortization of debt at the Hampton Inn - Aurora. The Partnership has no material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. As required by the settlement of the class action lawsuit brought in connection with the tender offer made by Devon Associates (discussed in Item 3 of the Partnership's Annual Report on Form 10-K, for the period ending December 31, 1996), the Partnership and GHI II, the Partnership's joint venture partner in the Combined Fund properties, marketed all of their properties for sale. In this regard, the Partnership and Growth Hotel Investors II ("GHI II"), an affiliated partnership, retained Bear, Stearns & Co. Inc. to assist in the marketing of such properties. As of March 14 1997, the Partnership, the Combined Fund, the joint ventures in which the Partnership has a controlling interest (collectively the "Sellers"), GHI II, and the joint ventures in which GHI II has a controlling interest, and Equity Inns Partnership, L.P. (the "Buyer") entered into certain purchase and sale agreements pursuant to which the Buyer agreed to purchase from these entities the twenty-two hotels described herein as well as six additional hotels owned directly or indirectly by GHI II for an aggregate purchase price of $182 million, subject to adjustment. The purchase and sale agreements were amended on May 1, 1997, to change the purchase price to $169,000,000, to extend the study periods listed in various sections of the agreements, and to provide for reimbursement to the Sellers for up to $4,000,000 of work in progress or completed. If the sale is consummated at the above stated price, the Managing General Partner estimates that the Partnership will receive net proceeds from the sale of approximately $34,478,000. The closing of these sales, which is anticipated to occur during the second quarter of 1997, is subject to many conditions including, favorable completion by the Buyer of its due diligence review and the Partnership and GHI II receiving consent to the sale from their respective limited partners holding a majority of the outstanding limited partnership interests in the Partnership and GHI II, respectively. It is anticipated that a proxy statement further detailing the transaction will be forwarded to the limited partners shortly. Accordingly, there can be no assurance that the sale will be consummated with the Buyer or any other potential buyer. The Managing General Partner plans to satisfy all existing debt of the Partnership and liquidate the partnership upon the sale of the investment properties. If the sale does not consummate as planned, the Managing General Partner plans to negotiate extensions for those encumbrances which will mature in 1997. If the sale of the hotel properties is not consummated, 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. The mortgage indebtedness of approximately $5,403,000 includes mortgages with maturity dates in 1997. The mortgage encumbering the Hampton Inn-Albuquerque total approximately $2,375,000 matured on May 1, 1997. The Managing General Partner has been successful in extending the mortgage to August 1, 1997. The mortgages encumbering the Partnership's unconsolidated joint venture, total approximately $40,022,000 at March 31, 1997. Two of the mortgages, Hampton Inn-Mountain Brook and Hampton Inn-Northlake, mature on August 1, 1997. The unconsolidated joint venture's remaining mortgages of approximately $35,136,000 mature on July 1, 1997. There were no distributions during the three months ended March 31, 1996 or 1997. Future cash distributions will depend on the levels of cash generated from operations, property sales and the availability of cash reserves. On February 15, 1996, Devon Associates, a New York general partnership, commenced a tender offer (the "Offer") for up to 15,000 of the outstanding Units at a purchase price of $705.00 per Unit. Devon Associates acquired 13,396 units with respect to this offer. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GROWTH HOTEL INVESTORS By: MONTGOMERY REALTY COMPANY 85, its general partner By: NPI REALTY MANAGEMENT CORP. MANAGING GENERAL PARTNER /s/William H. Jarrard, Jr. President and Director /s/Ronald Uretta Principal Financial Officer and Principal Accounting Date: May 14, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Growth Hotel Investors 1997 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000769129 GROWTH HOTEL INVESTORS 1,000 3-MOS DEC-31-1997 MAR-31-1997 4,260 0 0 0 0 0 25,116 (9,941) 28,598 0 5,403 0 0 0 22,723 28,598 0 1,957 0 1,693 0 0 149 0 0 0 0 0 0 278 7.00 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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