-----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, Fi5TZEZuuxF7xVxdj5lrGDndgiT7EmHP2dmOrzYFj/fAFSIgsm+ufjbaz7NeU5lv Ara/7XVf7LlvtLY6b8nSmg== 0000889812-95-000647.txt : 19951119 0000889812-95-000647.hdr.sgml : 19951119 ACCESSION NUMBER: 0000889812-95-000647 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GROWTH HOTEL INVESTORS CENTRAL INDEX KEY: 0000769129 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] 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: 95589899 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DR NW STREET 2: SUITE 370 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: 5665 NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 FORMER COMPANY: FORMER CONFORMED NAME: MRI BUSINESS HOTEL INVESTORS 85 DATE OF NAME CHANGE: 19850819 10-Q 1 QUARTERLY REPORT 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 September 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission file number 0-15347 Growth Hotel Investors, a California Limited Partnership (Exact name of Registrant as specified in its charter) California 94-2964750 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328 (Address principal executive office) (Zip Code) Registrant's telephone number, including area code (770) 916-9090 N/A Former name, former address and fiscal year, if changed since last report. Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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_____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution securities under a plan confirmed by a court. Yes X No _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding each of the issuer's classes common stock, as the latest practicable date _____________________. 1 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets September 30, December 31, 1995 1994 ------------- ------------ Assets Cash and cash equivalents $ 5,319,000 $ 4,899,000 Restricted cash 263,000 335,000 Deferred costs 759,000 52,000 Accounts receivable and other assets 414,000 205,000 Investment in unconsolidated joint venture 8,623,000 8,487,000 Real Estate: Real estate 23,066,000 21,904,000 Accumulated depreciation (8,501,000) (7,984,000) ----------- ----------- Real estate, net 14,565,000 13,920,000 ----------- ----------- Total assets $29,943,000 $27,898,000 =========== =========== Liabilities and Partners' Equity Accounts payable and other liabilities $ 571,000 $ 697,000 Notes payable 7,630,000 7,655,000 ----------- ----------- Total liabilities 8,201,000 8,352,000 ----------- ----------- Minority interest in consolidated joint ventures 83,000 48,000 ----------- ----------- Partners' Equity (Deficit): General partner (1,017,000) (1,171,000) Limited partners (36,932 units outstanding at September 30, 1995 and December 31, 1994) 22,676,000 20,669,000 ----------- ----------- Total partners' equity 21,659,000 19,498,000 ----------- ----------- Total liabilities and partners' equity $29,943,000 $27,898,000 =========== =========== See notes to consolidated financial statements. 2 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Consolidated Statements of Operations For the Nine Months Ended September 30, September 30, 1995 1994 ------------- ------------- Revenues: Hotel operations $6,207,000 $6,052,000 Equity in unconsolidated joint venture's operations 1,732,000 1,629,000 Interest and other revenue 159,000 153,000 ---------- ---------- Total revenues 8,098,000 7,834,000 ---------- ---------- Expenses: Hotel operations 3,637,000 3,751,000 Interest 615,000 751,000 Depreciation 518,000 465,000 General and administrative 307,000 469,000 ---------- ---------- Total expenses 5,077,000 5,436,000 ---------- ---------- Income from operations before minority interest in joint ventures' operations and extraordinary item 3,021,000 2,398,000 Minority interest in joint ventures' operations (35,000) (26,000) ---------- ---------- Income before extraordinary item 2,986,000 2,372,000 Extraordinary item: Gain on extinguishment of debt - 605,000 ---------- ---------- Net income $2,986,000 $2,977,000 ========== ========== Net income per limited partnership assignee unit: Net income before extraordinary item $ 75.19 $ 59.73 Extraordinary item - 15.24 ---------- ---------- Net income $ 75.19 $ 74.97 ========== ========== Cash distributions per limited partnership assignee unit $ 20.85 $ 20.01 ========== ========== See notes to consolidated financial statements. 3 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Consolidated Statements of Operations For the Three Months Ended September 30, September 30, 1995 1994 ------------- ------------- Revenues: Hotel operations $2,362,000 $2,218,000 Equity in unconsolidated joint venture's operations 708,000 671,000 Interest and other revenue 53,000 24,000 ---------- ---------- Total revenues 3,123,000 2,913,000 ---------- ---------- Expenses: Hotel operations 1,303,000 1,276,000 Interest 206,000 180,000 Depreciation 185,000 155,000 General and administrative 108,000 163,000 ---------- ---------- Total expenses 1,802,000 1,774,000 ---------- ---------- Income from operations before minority interest in joint ventures' operations and extraordinary item 1,321,000 1,139,000 Minority interest in joint ventures' operations (13,000) (5,000) ---------- ---------- Net income $1,308,000 $1,134,000 ========== ========== Net income per limited partnership assignee unit $ 32.93 $ 28.57 ========== ========== See notes to consolidated financial statements. 4 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Consolidated Statements of Cash Flows For the Nine Months Ended September 30, September 30, 1995 1994 ------------- ------------- Operating Activities: Net income $2,986,000 $2,977,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 585,000 477,000 Minority interest in joint ventures' operations 35,000 26,000 Equity in unconsolidated joint venture's operations (1,732,000) (1,629,000) Gain on extinguishment of debt - (605,000) Deferred income (38,000) (38,000) Deferred costs paid (775,000) - Changes in operating assets and liabilities: Accounts receivable and other assets (209,000) (35,000) Accounts payable and other liabilities (88,000) (12,000) ---------- ---------- Net cash provided by operating activities 764,000 1,161,000 ---------- ---------- Investing Activities: Additions to real estate (1,162,000) (258,000) Decrease in restricted cash 72,000 80,000 Unconsolidated joint venture distributions 1,596,000 220,000 Proceeds from cash investments - 3,169,000 ---------- ---------- Cash provided by investing activities 506,000 3,211,000 ---------- ---------- Financing Activities: Satisfaction of note payable - (2,030,000) Notes payable principal payments (25,000) (21,000) Cash distributions to partners (825,000) (794,000) ---------- ---------- Cash (used in) financing activities (850,000) (2,845,000) ---------- ---------- Increase in Cash and Cash Equivalents 420,000 1,527,000 Cash and Cash Equivalents at Beginning of Period 4,899,000 2,122,000 ---------- ---------- Cash and Cash Equivalents at End of Period $5,319,000 $3,649,000 ========== ========== Supplemental Disclosure of Cash Flow Information: Interest paid in cash during the period $ 615,000 $ 789,000 ========== ========== Supplemental Disclosure on Non-Cash Investing and Financing Activities: Foreclosure of property in 1994 - See Note 5 See notes to consolidated financial statements. 5 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying consolidated financial statements, footnotes and discussions should be read in conjunction with the consolidated financial statements, related footnotes and discussions contained in the Partnership's Annual Report for the year ended December 31, 1994. Certain balance sheet accounts have been reclassified in order to conform to the current period. The financial information contained herein is unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. All adjustments are of a normal recurring nature, except for as described in Note 5. At September 30, 1995, the Partnership had approximately $2,315,000 invested in overnight purchase agreements. The results of operations for the nine and three months ended September 30, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. On August 17, 1995, the stockholders of National Property Investors, Inc. ("NPI, Inc."), the sole shareholder of NPI Equity Investments II, Inc. ("NPI Equity"), the managing general partner of Fox Realty Investors, the general partner of the Partnership's general partner, entered into an agreement to sell to IFGP Corporation, an affiliate of Insignia Financial Group, Inc. ("Insignia"), all of the issued and outstanding stock of NPI, Inc. The sale of the stock is subject to the satisfaction of certain conditions and is scheduled to close in January 1996. 2. Transactions with Related Parties Affiliates of the Managing General Partner ("MGP") received reimbursements of administrative expenses amounting to $90,000 and $104,000 during the nine months ended September 30, 1995 and 1994, respectively. These reimbursements are primarily included in general and administrative expenses. An affiliate of MGP was paid a $1,000 fee, during the nine months ended September 30, 1994, relating to a successful real estate tax appeal on a property owned by the unconsolidated joint venture. This fee is included in operating expenses. In accordance with the Partnership Agreement, the general partner receives cash distributions as follows: (1) a Partnership management incentive not to exceed ten percent, determined on a cumulative, noncompounded basis, of cash from operations available for distribution (as defined in the Partnership Agreement) distributed to partners, and (2) a continuing interest representing a two percent share of cash distributions, after allocation of the Partnership management incentive. A portion of the Partnership management incentive is subordinated to certain cash distributions to the limited partners. Cash distributions to the general partner for the nine months ended September 30, 1995 and 1994 are as follows: 1995 1994 ---- ---- Partnership management incentive $40,000 $40,000 Continuing interest 15,000 15,000 ------- ------- Total $55,000 $55,000 ======= ======= 6 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Transactions with Related Parties (Continued) In addition to the fees paid to the general partner and affiliates as set forth above, the Partnership has agreements with affiliates of its joint venture partners, which provide for the management and operation of the joint venture properties. Fees paid pursuant to these agreements are generally based on a percentage of gross revenues from operations of the properties and were $61,000 and $67,000 for the nine months ended September 30, 1995 and 1994. These fees are included in operating expenses. 3. Restricted Cash Restricted cash at September 30, 1995 and December 31, 1994 represents the amount maintained by certain properties pursuant to the related notes payable agreements to meet future capital requirements. 4. Amendment to Services Agreement The Partnership paid $775,000 in January 1995 to MMI amending their services agreement to provide for a reduction in the monthly asset management fee from $29,750 to $5,500, the elimination of fees payable to MMI for its assistance in refinancings and sales of properties owned by the Partnership and provides the Partnership with the ability to terminate MMI's services at will. The buyout of the service contract is being amortized over the remaining term of the service agreement of 10 years. For the nine months ended September 30, 1995, approximately $58,000 has been amortized and is included in general and administrative expenses. 5. Extraordinary Item - Gain on Extinguishment of Debt On April 4, 1994, the Hampton Inn - Elk Grove Village was disposed of through foreclosure for $3,550,000 to the holder of the deed of trust on the property. The disposition value is comprised of the note payable of $2,772,000, plus $778,000 of net liabilities, including $260,000 of accrued interest, $444,000 of accrued property taxes and $74,000 of other liabilities. At the date of disposition of the Hampton Inn - Elk Grove, the net carrying value of the property, after provision for impairment, was $2,945,000. As a result of the disposition of this property through foreclosure, the Partnership recognized an extraordinary gain on extinguishment of debt of $605,000 in the second quarter of 1994. Since the appointment of a receiver, on February 4, 1994, accounting records for Elk Grove have not been available to the Partnership. The results of operations for Elk Grove included in the financial statements are through February 4, 1994. 6. Subsequent Event On October 2, 1995, the Partnership entered into an agreement pursuant to which it was granted an option to acquire its joint venture partner's interest in the Hampton Inn - Aurora for an aggregate purchase price of $150,000. This option is exercisable from February 2, 1996 through October 2, 1996. In connection with this transaction, the land was transferred to the Partnership and the joint venture partner as tenants in common and then leased back to the Partnership. 7 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Investment in Unconsolidated Joint Venture The following are the condensed balance sheets as of September 30, 1995 and December 31, 1994 and condensed statements of operations for the nine and three months ended September 30, 1995 and 1994 for Registrant's investment in the Combined Fund, which is reported under the equity method of accounting. GROWTH HOTEL INVESTORS COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS September 30, December 31, 1995 1994 ------------- ------------ Cash and cash equivalents $ 3,355,000 $ 2,953,000 Restricted cash 576,000 1,988,000 Deferred costs and other assets 1,346,000 1,244,000 Real Estate: Real estate 87,242,000 94,793,000 Accumulated depreciation (26,272,000) (34,108,000) ----------- ----------- Real estate, net 60,970,000 60,685,000 ----------- ----------- Total assets $66,247,000 $66,870,000 =========== =========== Liabilities and Partners' Equity Accounts payable and other liabilities $ 1,095,000 $ 1,250,000 Due to an affiliate of the joint venture partner 511,000 646,000 Notes payable 40,939,000 41,361,000 ----------- ----------- Total liabilities 42,545,000 43,257,000 ----------- ----------- Minority interest in consolidated joint venture (4,088,000) (3,746,000) ----------- ----------- Commitments and Contingencies Partners' Equity: GHI 8,623,000 8,487,000 GHI II 19,167,000 18,872,000 ----------- ----------- Total partners' equity 27,790,000 27,359,000 ----------- ----------- Total liabilities and partners' equity $66,247,000 $66,870,000 =========== =========== 8 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Investment in Unconsolidated Joint Venture (Continued) GROWTH HOTEL INVESTORS COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, September 30, 1995 1994 ------------- ------------- Revenues $28,489,000 $26,532,000 Expenses 23,030,000 21,860,000 ----------- ----------- Income before minority interest in joint venture's operations 5,459,000 4,672,000 Minority interest in joint venture's operations 1,000 461,000 ----------- ----------- Net income $ 5,460,000 $ 5,133,000 =========== =========== Allocation of income: GHI $ 1,732,000 $ 1,629,000 GHI II 3,728,000 3,504,000 ----------- ----------- Net income $ 5,460,000 $ 5,133,000 =========== =========== For the Three Months Ended September 30, September 30, 1995 1994 ------------- ------------- Revenues $10,149,000 $ 9,529,000 Expenses 8,220,000 7,569,000 ----------- ----------- Income before minority interest in joint venture's operations 1,929,000 1,960,000 Minority interest in joint venture's operations 305,000 154,000 ----------- ----------- Net income $ 2,234,000 $ 2,114,000 =========== =========== Allocation of income: GHI $ 708,000 $ 671,000 GHI II 1,526,000 1,443,000 ----------- ----------- Net income $ 2,234,000 $ 2,114,000 =========== =========== 9 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This item should be read in conjunction with the Consolidated Financial Statements and other Items contained elsewhere in this Report. Liquidity and Capital Resources All of Registrant's properties are hotels. Registrant receives hotel operating revenues and is responsible for operating expenses, administrative expenses, capital improvements and debt service payments. Registrant uses working capital reserves provided from any undistributed cash flow from operations as its primary source of liquidity. For the long term, cash from operations will remain Registrant's primary source of liquidity. All of Registrant's properties generated positive cash flow during the nine months ended September 30, 1995. Additionally, Registrant's investment in the unconsolidated joint venture distributed $1,596,000 to Registrant under the terms of the joint venture agreement. In the second quarter, Registrant distributed to the holders of limited partnership units $20.85 per unit ($770,000 in total) and $55,000 to the general partner. The level of liquidity based upon cash and cash equivalents experienced a $420,000 increase at September 30, 1995, as compared to December 31, 1994. The increase consisted of $764,000 provided by operating activities and $506,000 provided by investing activities which were partially offset by $825,000 of cash distributed to the partners and $25,000 of notes payable principal payments (financing activities). Cash provided by investing activities consisted of $1,596,000 of distributions received from the unconsolidated joint venture and a $72,000 decrease in restricted cash which were partially offset by $1,162,000 of improvements to real estate at all of Registrant's properties. Guest room renovations consisted of $315,000 at Registrant's Hampton Inn - Albuquerque, $142,000 at the Hampton Inn - Aurora, $366,000 at the Hampton Inn - Brentwood and $339,000 at the Hampton Inn - Syracuse properties. Registrant's cash provided by operating activities during the nine months ended September 30, 1995, was partially offset by the $775,000 paid to MMI to amend their services agreement to provide for a reduction in their monthly asset management fee from $29,750 to $5,500, the elimination of fees payable to MMI for its assistance in the refinancing and sales of properties owned by Registrant and provides Registrant with the ability to terminate MMI's services at will. In order to remain competitive, the unconsolidated joint venture expects to spend approximately $5,000,000 to upgrade its hotels during the next twelve to eighteen months. The improvements will be funded from working capital reserves and restricted cash. All other increases and decreases in certain assets and liabilities are the result of the timing of the receipt and payment of various operating activities. Working capital reserves are invested in money market accounts and repurchase agreements secured by United States Treasury obligations. The managing general partner believes that, if market conditions remain relatively stable, cash flow from operations, when combined with working capital reserves, will be sufficient to fund essential capital improvements and debt service payments during the next twelve months and the foreseeable future. The first mortgage encumbering Registrant's Hampton Inn - Brentwood property matures in January 1996, at which time a balloon payment of approximately $2,185,000 will be due. Registrant expects to pay off the mortgage on or prior to the maturity date from working capital reserves. If the mortgage is not paid off, Registrant will be required to extend, refinance or sell the property at the maturity date of the mortgage. Although management is confident that this mortgage can be replaced or paid off, if the mortgage is not extended, refinanced, paid off, 10 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources (Continued) or the property is not sold, the property could be lost through foreclosure. If the property is lost through foreclosure, Registrant would incur a loss of approximately $1,477,000. Management believes that there will be sufficient cash flow generated by the remaining properties to continue operations in the event that the property is lost through foreclosure. In addition, Registrant's unconsolidated joint venture has balloon payments due in 1996 of $40,275,000 and Registrant's remaining properties have balloon payments due in 1997 of $5,412,000. The managing general partner believes, however, that each property generates sufficient cash flow to allow all mortgages to be refinanced or satisfied in an orderly fashion. On October 2, 1995, Registrant entered into an agreement pursuant to which it was granted an option to acquire its joint venture partner's interest in the Hampton Inn - Aurora for an aggregate price of $150,000. This option is exercisable from February 2, 1996 through October 2, 1996. On August 17, 1995, the stockholders of NPI, Inc., the sole shareholder of NPI Equity, agreed to sell to Insignia all of the issued and outstanding stock of NPI, Inc. The consummation of this transaction is subject to the satisfaction of certain conditions (including, third party consents and other conditions not within the control of the parties to the agreement) and is scheduled to close in January 1996. Upon closing, it is expected that Insignia will elect new officers and directors of NPI Equity. The Managing General Partner does not believe these transactions will have a significant effect on Registrant's liquidity or results of operation. Real Estate Market The income and expenses of operating the properties owned by Registrant are subject to factors outside of Registrant's control, such as over-supply of similar properties resulting from over-building, increases in unemployment, population shifts or changes in patterns or needs of users. Expenses, such as local real estate taxes and miscellaneous expenses, are subject to change and cannot always be reflected in room rate increases due to market conditions. In addition, there are risks inherent in owning and operating lodging facilities because such properties are management and labor intensive and especially susceptible to the impact of economic and other conditions outside the control of Registrant. 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. Registrant 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 still owned by Registrant. Results of Operations Nine Months Ended September 30, 1995 vs. September 30, 1994 Operating results, before minority interest in joint ventures and the extraordinary item, improved by $623,000 during the nine months ended September 30, 1995, as compared to 1994, due to an increase in revenues of $264,000 and a decrease in expenses of $359,000. Operating results improved at all of Registrant's properties. In addition, Registrant's Hampton Inn - Elk Grove property, which had been 11 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Nine Months Ended September 30, 1995 vs. September 30, 1994 (Continued) generating losses, was lost to foreclosure during the 1994 period. With respect to the remaining properties, operating results, before minority interest in joint ventures, improved by $369,000 due to an increase in revenues of $429,000, which was partially offset by an increase in expenses of $60,000. With respect to the remaining properties, revenues from hotel operations increased by $326,000, for the nine months ended September 30, 1995, as compared to 1994, primarily due to increased average daily room rates at all of Registrant's hotels, which was partially offset by a decrease in occupancy at the Hampton Inn - Syracuse and the Hampton Inn - Brentwood properties. Occupancy at Registrant's Hampton Inn - Albuquerque and Hampton Inn - Aurora properties remained relatively constant. Equity from unconsolidated joint venture operations improved by $103,000 during the nine months ended September 30, 1995, as compared to 1994, primarily due to improved hotel operating revenues at all the joint venture properties, except the Hampton Inn - San Antonio hotel. Interest and other revenue remained relatively constant. Expenses declined by $359,000 for the nine months ended September 30, 1995, as compared to 1994, due to the disposition of Registrant's Hampton Inn - Elk Grove property during 1994. With respect to the remaining properties, expenses increased $60,000, due to increases in hotel operation expenses of $94,000 and depreciation expense of $53,000, which were partially offset by a decrease in interest expense of $87,000. In addition, general and administrative expenses declined by $162,000. Hotel operating expenses increased primarily due to increased repairs and maintenance at Registrant's Hampton Inn - Brentwood and slight increases in advertising and marketing expenses at Registrant's Hampton Inn - Aurora. Depreciation expense increased due to fixed asset additions. Interest expense declined primarily due to the satisfaction of the note encumbering Registrant's Syracuse property in May 1994, coupled with amortization of mortgage principal balances. General and administrative expenses declined by $162,000 due to a decrease in asset management costs associated with the amendment of Registrant's services agreement in January 1995 and a decrease in reimbursed expenses, which were partially offset by amortization of the cost of the buy-out of the services agreement. Three Months Ended September 30, 1995 vs. September 30, 1994 Operating results, before minority interest in joint ventures improved by $182,000 during the three months ended September 30, 1995, as compared to 1994, due to an increase in revenues of $210,000 which was partially offset by an increase in expenses of $28,000. Revenues increased $210,000 during the three months ended September 30, 1995, as compared to 1994, due to increases in revenues from hotel operations of $144,000, increase in equity from unconsolidated joint venture's operations of $37,000 and interest and other revenues of $29,000. The increase in revenues from hotel operations is due to increased average daily rates at all of Registrant's properties, which was partially offset by a decline in occupancy. Interest income increased due to an increase in average working capital reserves available for investment and increased interest rates. Equity from the unconsolidated joint venture operations improved during the three months ended September 30, 1995 as compared to 1994 due to improved operations. 12 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Three Months Ended September 30, 1995 vs. September 30, 1994 (Continued) Expenses increased $28,000 during the three months ended September 30, 1995, as compared to 1994, due to increases in hotel operations of $27,000, interest expense of $26,000 and depreciation of $30,000, which were partially offset by a decrease in general and administrative expenses of $55,000. Hotel operating expenses increased primarily due to increased repairs and maintenance at Registrant's Hampton Inn - Brentwood hotel and slight increases in advertising and marketing expenses at Registrant's Hampton Inn - - Aurora hotel. Interest expense increased due to an under accrual of interest expense at Registrant's Hampton Inn - Aurora at September 30, 1994, which was partially offset by amortization of mortgage principal balances. Depreciation expense increased due to the effect of fixed asset additions. General and administrative expense declined due to a decrease in asset management costs associated with the amendment of Registrant's services agreement in January 1995, which was partially offset by amortization of the cost of the buy-out of the services agreement. Unconsolidated Joint Venture Operations (Growth Hotel Investors Combined Fund No. 1) Nine Months Ended September 30, 1995 vs September 30, 1994 Operating results, prior to minority interests in joint venture operations, improved $787,000 for the nine months ended September 30, 1995, as compared to 1994, due to an increase in revenues of $1,957,000 which was partially offset by an increase in expenses of $1,170,000. Revenues increased at all of the joint venture properties, except the Hampton Inn - San Antonio property, due to higher average daily room rates at all of the joint venture's properties. Occupancy remained relatively stable on an overall basis throughout the portfolio. The largest increases in revenues were at Registrant's Hampton Inn - Atlanta-Roswell, Chapel Hill, Nashville, Greensboro, Greenville and North Little Rock joint venture properties. The increase in operating expenses was consistent with the increase in revenues. Under the terms of the joint venture agreement, the income from the Combined Fund was allocated in different proportions during the nine months ended September 30, 1995, as compared to 1994. Three Months Ended September 30, 1995 vs September 30, 1994 Operating results, prior to minority interests in joint venture operations declined $31,000 for the three months ended September 30, 1995, as compared to 1994 due to an increase in expenses of $651,000 which was partially offset by an increase in revenues of $620,000. Revenues increased at all of the joint venture properties, except the Hampton Inn - San Antonio property. The increase in revenue is attributable to higher average daily room rates at all of the joint venture's properties. Occupancy remained relatively stable on an overall basis throughout the portfolio. The largest increases in revenues were at Registrant's Hampton Inn - Memphis - Poplar, Mountain Brook, Chapel Hill and Greensboro joint venture properties. Expenses increased by $651,000 due to the increase in revenues and depreciation of recent improvements to properties. 13 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Three Months Ended September 30, 1995 vs September 30, 1994 (Continued) Under the terms of the joint venture agreement, the income from the Combined Fund was allocated in different proportions during the three months ended September 30, 1995, as compared to 1994. Properties A description of the hotel properties in which Registrant has an ownership interest during the period covered by this Report, together with occupancy and room rate data, follows: GROWTH HOTEL INVESTORS, a California Limited Partnership OCCUPANCY AND ROOM RATE SUMMARY
Average Average Occupancy Rate (%) Daily Room Rate($) ---------------------------- ------------------------------------- Nine Months Three Months Nine Months Three Months Date Ended Ended Ended Ended of September 30, September 30, September 30, September 30, Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994 - ----------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ---- Growth Hotel Investors: Hampton Inn-Syracuse 117 12/85 64 72 77 81 54.82 50.25 57.54 54.27 East Syracuse, New York Hampton Inn-Brentwood 114 12/85 83 87 90 91 60.89 54.10 65.19 54.67 Nashville, Tennessee Hampton Inn-Aurora 132 12/86 82 80 87 88 56.84 52.02 60.49 54.70 Aurora, Colorado Hampton Inn-Albuquerque North 125 04/87 84 85 88 95 54.99 51.68 56.86 52.26 Albuquerque, New Mexico Growth Hotel Investors Combined Fund No. 1: Hampton Inn-Memphis-I40 East 117 12/86 82 85 87 90 53.20 49.81 54.46 51.26 Memphis, Tennessee Hampton Inn-Columbia-West 121 12/86 85 85 83 86 54.05 50.78 54.50 51.57 West Columbia, South Carolina Hampton Inn-Spartanburg 112 12/86 72 72 76 78 47.27 42.70 48.80 43.04 Spartanburg, South Carolina Hampton Inn-Little Rock-North 123 12/86 82 78 86 88 48.64 45.65 49.96 45.62 North Little Rock, Arkansas Hampton Inn-Amarillo 116 12/86 78 80 89 93 51.14 48.20 55.55 52.35 Amarillo, Texas
14 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Properties (Continued)
Average Average Occupancy Rate (%) Daily Room Rate($) ---------------------------- ------------------------------------- Nine Months Three Months Nine Months Three Months Date Ended Ended Ended Ended of September 30, September 30, September 30, September 30, Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994 - ----------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ---- Hampton Inn-Greenville 123 12/86 81 81 83 83 52.10 47.30 52.82 47.96 Greenville, South Carolina Hampton Inn-Charleston-Airport 125 12/86 79 83 78 84 53.70 50.29 53.62 50.47 North Charleston, South Carolina Hampton Inn-Memphis-Poplar 126 12/86 86 88 90 90 64.34 59.77 64.55 61.41 Memphis, Tennessee Hampton Inn-Greensboro 121 12/86 89 89 90 92 57.54 50.76 57.45 50.67 Greensboro, North Carolina Hampton Inn-Birmingham 123 12/86 84 85 85 86 58.42 54.95 59.81 55.89 Birmingham, Alabama Hampton Inn-Atlanta-Roswell 129 03/87 84 83 84 87 58.43 54.18 60.33 54.80 Roswell, Georgia Hampton Inn-Chapel Hill 122 03/87 88 82 94 86 55.90 50.14 57.01 51.82 Chapel Hill, North Carolina Hampton Inn-Dallas-Richardson 130 03/87 78 77 77 76 50.39 46.74 50.52 46.76 Richardson, Texas Hampton Inn-Nashville-Briley 120 03/87 90 89 95 96 61.98 56.77 63.38 58.91 Parkway Nashville, Tennessee Hampton Inn-San Antonio-Northwest 123 06/87 67 76 72 78 58.85 58.53 59.97 62.04 San Antonio, Texas Hampton Inn-Madison Heights 126 12/87 73 73 81 81 53.56 51.27 54.03 51.15 Madison Heights, Michigan Hampton Inn-Mountain Brook 131 12/87 79 82 87 83 57.95 54.98 59.50 55.05 Birmingham, Alabama Hampton Inn-Northlake 130 09/88 82 78 87 85 54.39 52.48 55.53 52.56 Atlanta, Georgia
(1) Property was foreclosed upon by the lender. See Item 1, note 5. 15 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2. NPI, Inc. Stock Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2 to Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 1995. (b) Report on Form 8-K On August 24, 1995, Registrant filed a Current Report on Form 8-K with the Securities and Exchange Commission with respect to the sale of the stock of NPI, Inc. (Item 1, Change in Control). 16 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership SIGNATURE 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, a California Limited Partnership By: MONTGOMERY REALTY COMPANY - 85, Its General Partner By: FOX REALTY INVESTORS, Its General Partner By: NPI Equity Investments II, Inc., Managing Partner /S/ ARTHUR N. QUELER ---------------------------------- Secretary/Treasurer and Director (Principal Financial Officer) 17 of 18 GROWTH HOTEL INVESTORS - FORM 10-Q - SEPTEMBER 30, 1995 a California Limited Partnership EXHIBIT INDEX Exhibit Page No. - ------- -------- 2. NPI, Inc. Stock Purchase Agreement * dated August 17, 1995 * Incorporated by reference to Exhibit 2 to Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 1995. 18 of 18 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from Growth Hotel Investors and is qualified in its entirety by reference to such financial statements. 1 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 5,582,000 0 414,000 0 0 0 23,066,000 (8,501,000) 29,943,000 0 7,630,000 0 0 0 21,659,000 29,943,000 0 7,939,000 0 4,155,000 0 0 615,000 2,986,000 0 2,986,000 0 0 0 2,986,000 75.19 75.19 Cash includes restricted cash of $263,000. Total receivables includes other assets of $134,000.
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