-----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, P0KXSP+cPWPRebOkzpfphtflt9pDS/+LE/9jE6PPSAK1WQoIhRpPtyc6nklMZuSy 13WkBcQRr+wUqzBZ1vqnQQ== 0000711642-00-000122.txt : 20000509 0000711642-00-000122.hdr.sgml : 20000509 ACCESSION NUMBER: 0000711642-00-000122 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US REALTY PARTNERS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000788955 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS [6510] IRS NUMBER: 570814502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-15656 FILM NUMBER: 622024 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 FIRST QUARTER OF 2000 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-15656 U.S. REALTY PARTNERS LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) South Carolina 57-0814502 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) U.S. REALTY PARTNERS LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) (in thousands, except per unit data) March 31, 2000 Assets Restricted cash $ 677 Receivables and deposits 248 Other assets 61 Investment properties: Land $ 2,123 Buildings and related personal property 15,534 17,657 Less accumulated depreciation (6,882) 10,775 $11,761 Liabilities and Partners' Capital Liabilities Accounts payable $ 81 Tenant security deposit liabilities 55 Accrued property taxes 132 Other liabilities 490 Due to Corporate General Partner 602 Mortgage note payable 3,707 Partners' Capital General partners $ 5 Depositary unit certificate holders (2,440,000 units authorized; 1,222,000 units issued and outstanding) 6,689 6,694 $11,761 See Accompanying Notes to Financial Statements b) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended March 31, 2000 1999 Revenues: (restated) Rental income $ 759 $ 715 Other income 37 36 Total revenues 796 751 Expenses: Operating 275 284 General and administrative 44 50 Depreciation 131 115 Interest 119 398 Property taxes 62 6 Total expenses 631 853 Income (loss) from continuing operations 165 (102) (Loss) income from discontinued operations (21) 191 Gain on sale of discontinued operations -- 2,794 Net income $ 144 $2,883 Net income allocated to general partners (1%) $ 1 $ 29 Net income allocated to depositary unit certificate holders (99%) 143 2,854 $ 144 $2,883 Net income per depositary unit certificate: Income (loss) from continuing operations $ .13 $ (.08) Income from discontinued operations (.01) .15 Gain on sale of discontinued operations -- 2.27 $ .12 $ 2.34 See Accompanying Notes to Financial Statements
c) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (in thousands, except unit data)
Depositary Depositary Unit Unit General Certificate Certificates Partners Partners Total Original capital contributions 1,222,000 $ 2 $30,550 $30,552 Partners' capital at December 31, 1999 1,222,000 $ 4 $ 6,546 $ 6,550 Net income for the three months ended March 31, 2000 -- 1 143 144 Partners' capital at March 31, 2000 1,222,000 $ 5 $ 6,689 $ 6,694 See Accompanying Notes to Financial Statements
d) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2000 1999 Cash flows from operating activities: Net income $ 144 $ 2,883 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 131 178 Amortization of lease commissions and software -- 2 Gain on sale of discontinued operations (2,794) Change in accounts: Restricted cash (165) 187 Receivables and deposits (92) (216) Other assets (20) 101 Accounts payable (140) (6) Tenant security deposit liabilities (3) (41) Accrued property taxes 62 (112) Due to Corporate General Partner 6 18 Other liabilities (31) (19) Net cash (used in) provided by operating activities (108) 181 Cash flows from investing activities: Net proceeds from sale of investment property -- 9,002 Property improvements and replacements (72) (29) Net withdrawals from (deposits to) restricted escrows 283 (3) Net cash provided by investing activities 211 8,970 Cash flows from financing activities: Payments on mortgage note payable (103) (246) Repayment of mortgage note payable -- (8,905) Net cash used in financing activities (103) (9,151) Net change in cash and cash equivalents -- -- Cash and cash equivalents at beginning of period -- -- Cash and cash equivalents at end of period $ -- $ -- Supplemental disclosure of cash flow information: Cash paid for interest $ 97 $ 402 At March 31, 2000 property improvements and replacements and accounts payable were adjusted by approximately $68,000 for non-cash activity. See Accompanying Notes to Financial Statements
e) U.S. REALTY PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) March 31, 2000 Note A - Basis of Presentation The accompanying unaudited financial statements of U.S. Realty Partners 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. In the opinion of U.S Realty I Corporation (the "Corporate 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, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999. Certain reclassifications have been made to the 1999 financial statements to conform with the 2000 presentation. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Corporate General Partner. The Corporate General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Reconciliation of Cash Flows The Partnership considers all cash to be restricted for tenant security deposits and for the purpose of the deposit of Net Cash Flow, as defined by the debt restructuring in October of 1993. Note D - Discontinued Operations The Gallery - Knoxville and The Gallery - Huntsville were the only two commercial properties owned by the Partnership and represented one segment of the Partnership's operations. Both of these properties were sold during 1999 and accordingly the results of the commercial segment have been shown as (loss) income from discontinued operations and gain on sale of discontinued operations as of March 31, 2000 and 1999. Revenues of these properties were approximately $419,000 for the three months ended March 31, 1999. No revenues from the properties were recorded during the three months ended March 31, 2000. (Loss) income from discontinued operations was approximately $(21,000) and $191,000 for the three months ended March 31, 2000 and 1999, respectively. On February 1, 1999, The Gallery - Knoxville, located in Knoxville, Tennessee, was sold to an unaffiliated third party for $9,300,000. After closing expenses of approximately $298,000, the net proceeds received by the Partnership were approximately $9,002,000. The Partnership was required to use the net proceeds from the sale of the property to pay down the mortgage encumbering the Partnership's properties. The sale of the property resulted in a gain on sale of investment property of approximately $2,794,000. Note E - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following were paid or accrued to the Corporate General Partner and its affiliates during the three months ended March 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $ 39 $ 37 Reimbursement for services of affiliates (included in general and administrative, operating expenses and investment properties) 24 29 Due to Corporate General Partner 602 578 During the three months ended March 31, 2000 and 1999, affiliates of the Corporate General Partner were entitled to receive 5% of gross receipts from both of the Registrant's residential properties for providing property management services. The Registrant paid to such affiliates approximately $39,000 and $37,000 for the three months ended March 31, 2000 and 1999, respectively. An affiliate of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $24,000 and $29,000 for the three months ended March 31, 2000 and 1999, respectively. AIMCO and its affiliates currently own 475,380 limited partnership units in the Partnership representing 38.90% of the outstanding units. 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 make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of 38.90% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Corporate General Partner because of their affiliation with the Corporate General Partner. Note F - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consists of two apartment complexes located in Arkansas and Florida. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. The commercial property segment consisted of a shopping center located in Alabama, which was sold on July 2, 1999 and a shopping center in Tennessee which was sold on February 1, 1999. As a result of the sale of both commercial properties during 1999, the commercial segment is shown as discontinued operations. Measurement of segment profit and loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those of the Partnership as described in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers. Segment information for the three months ended March 31, 2000 and 1999 is shown in the tables below. The "Other" column includes partnership administration related items and income and expense not allocated to the reportable segment.
2000 Residential Commercial Other Totals (discontinued) (in thousands) Rental income $ 759 $ -- $ -- $ 759 Other income 29 -- 8 37 Interest expense -- -- 119 119 Depreciation 131 -- -- 131 General and administrative expense -- -- 44 44 Loss from discontinued operations -- (21) -- (21) Segment profit (loss) 320 (21) (155) 144 Total assets 10,999 -- 762 11,761 Capital expenditures for investment properties 140 -- -- 140
1999 Residential Commercial Other Totals (discontinued) (in thousands) Rental income $ 715 $ -- $ -- $ 715 Other income 29 -- 7 36 Interest expense -- -- 398 398 Depreciation 115 -- -- 115 General and administrative expense -- -- 50 50 Income from discontinued operations -- 191 -- 191 Gain on sale of discontinued operations -- 2,794 -- 2,794 Segment profit (loss) 339 2,985 (441) 2,883 Total assets 10,920 5,398 844 17,162 Capital expenditures for investment properties 29 -- -- 29
Item 2. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussions of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 2000 and 1999: Average Occupancy Property 2000 1999 Twin Lakes Apartments Palm Harbor, Florida 97% 96% Governor's Park Apartments Little Rock, Arkasas 98% 94% The Corporate General Partner attributes the increase in occupancy at Governor's Park Apartments to improved conditions in the apartment industry in the Little Rock area. Results of Operations The Registrant's net income for the three months ended March 31, 2000 was approximately $144,000 as compared to approximately $2,883,000 for the three months ended March 31, 1999. The decrease in net income is primarily attributable to the gain on sale of discontinued operations of approximately $2,794,000 realized during the three months ended March 31, 1999 on the sale of The Gallery - Knoxville. The Gallery - Knoxville was sold to an unaffiliated third party on February 1, 1999 for $9,300,000. After closing expenses of approximately $298,000 the net proceeds received by the Partnership were approximately $9,002,000. The Partnership was required to use the proceeds from the sale of the property to pay down the mortgage encumbering the Partnership's properties. The decrease in net income is also attributable to a decrease in income from discontinued operations as a result of the above mentioned sale in addition to the sale of the Partnership's remaining commercial property, The Gallery - Huntsville, on July 1, 1999. Excluding the impact of the operations and sale of both commercial properties, the Registrant's net income for the three months ended March 31, 2000 was approximately $165,000 as compared to a net loss of approximately $102,000 for the three months ended March 31, 1999. The increase in net income was attributable to an increase in total revenues and a decrease in total expenses. Total revenues increased due to an increase in rental income at the Partnership's investment properties. The increase in rental income was attributable to an increase in average rental rates combined with an increase in occupancy at both Twin Lakes Apartments and Governor's Park Apartments. The decrease in total expenses was primarily attributable to a decrease in interest expense. Interest expense decreased as a result of the pay down of the mortgage encumbering the Partnership's investment properties, with the net proceeds from the sale of The Gallery - Knoxville and The Gallery - Huntsville as noted above. The decrease in interest expense was partially offset by an increase in depreciation and property tax expense. Depreciation expense increased as a result of capital improvements performed at both residential properties in 1999. Property tax expense increased as a result of an adjustment to the accrual for property tax expense during 1999 as a result of prior overaccruals. Operating and general and administrative expense remained relatively constant. Included in general and administrative expenses for the three months ended March 31, 2000 and 1999 are management reimbursements to the Corporate General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. Liquidity and Capital Resources All of the Partnership's cash is restricted pursuant to the terms of the mortgage loan encumbering the Partnership's properties. At March 31, 2000 the Partnership had approximately $677,000 of restricted cash from continuing operations as compared to approximately $512,000 of restricted cash from both continuing and discontinued operations at December 31, 1999. The Partnership had approximately $108,000 of cash used in operating activities and approximately $103,000 of cash used in financing activities which was offset by approximately $211,000, of cash provided by investing activities. Cash used in financing activities consisted of payments on the mortgage encumbering the properties. Cash provided by investing activities consisted primarily of cash received from restricted escrows partially offset by property improvements and replacements. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the various properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, State, and local, legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Governor's Park Apartments The Partnership has budgeted, but is not limited to, $300 per unit or $46,200 for capital improvements during the current year consisting primarily of floor covering, appliance and major landscaping. The Partnership completed approximately $16,000 in capital expenditures at Governor's Park Apartments during the three months ended March 31, 2000, consisting primarily of major landscaping, and floor covering and appliance replacements. These improvements were funded with cash from operations. Also included in capital expenditures for the three month period ended March 31, 2000, was an adjustment for $68,000 for fencing. Twin Lake Apartments The Partnership has budgeted, but is not limited to, approximately $455,000 for capital improvements during the current year consisting primarily of roof and structural improvements, floor and appliance replacement and major landscaping. The Partnership completed approximately $124,000 in capital expenditures at Twin Lake Apartments during the three months ended March 31, 2000, consisting primarily of roof replacements, floor covering replacement and drapery/blind replacements. These improvements were funded with cash from operations. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. The total mortgage indebtedness of $3,707,000 requires a balloon payment on August 1, 2001. The Corporate General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. Pursuant to the loan agreement, Net Cash Flow of the Partnership is required to be paid to the mortgage holder on a monthly basis to reduce accrued interest and principal. No distributions can be made until all long-term debt is repaid. PART II - OTHER INFORMATION 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 filed during the quarter ended March 31, 2000: None. 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. U.S. REALTY PARTNERS LIMITED PARTNERSHIP By: U.S. Realty I Corporation Corporate General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: May 8, 2000 EX-27 2 FIRST QUARTER 10-QSB
5 US Realty Partners Limited PartnershipPARTNERSHIP NAME 2000 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000788955 US Realty Partners Limited Partnership 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 677 0 248 0 0 0 17,657 (6,882) 11,761 0 3,707 0 0 0 6,694 11,761 0 796 0 0 631 0 119 0 0 0 0 0 0 144 0.12 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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