-----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, Kn3OVt4evzslja+38tOOAXqRMhJ05PztSK1WVnjmJrAeJno5K76tci4ktbTwC0mx 2SV59AN366PMi/KQ3ZgAnA== /in/edgar/work/20000814/0000711642-00-000253/0000711642-00-000253.txt : 20000921 0000711642-00-000253.hdr.sgml : 20000921 ACCESSION NUMBER: 0000711642-00-000253 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US REALTY PARTNERS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000788955 STANDARD INDUSTRIAL CLASSIFICATION: [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: 698369 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 0001.txt SECOND QUARTER 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 June 30, 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) June 30, 2000
Assets Restricted cash $ 684 Receivables and deposits 328 Other assets 46 Investment properties: Land $ 2,123 Buildings and related personal property 15,717 17,840 Less accumulated depreciation (7,020) 10,820 $11,878 Liabilities and Partners' Capital Liabilities Accounts payable $ 14 Tenant security deposit liabilities 54 Accrued property taxes 199 Other liabilities 526 Due to Corporate General Partner 598 Mortgage note payable 3,673 Partners' Capital General partners $ 7 Depositary unit certificate holders (2,440,000 units authorized; 1,222,000 units issued and outstanding) 6,807 6,814 $11,878 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 Six Months Ended June 30, June 30, 2000 1999 2000 1999 Revenues: Rental income $ 735 $ 730 $ 1,494 $ 1,444 Other income 32 42 69 79 Total revenues 767 772 1,563 1,523 Expenses: Operating 279 250 575 534 General and administrative 50 44 94 94 Depreciation 138 115 269 230 Interest 113 309 232 707 Property taxes 67 51 129 59 Total expenses 647 769 1,299 1,624 Income (loss) from continuing operations 120 3 264 (101) Income from discontinued operations -- 170 -- 363 (Loss) gain on sale of discontinued operations -- (93) -- 2,701 Net income $ 120 $ 80 $ 264 $ 2,963 Net income (loss) allocated to general partners (1%) $ 1 $ 1 $ 3 $ 30 Net income allocated to depositary unit certificate holders (99%) 119 79 261 2,933 $ 120 $ 80 $ 264 $ 2,963 Net income per depositary unit certificate: Income (loss) from continuing operations $ .10 $ -- $ .21 $ (.08) Income from discontinued operations -- .14 -- .29 (Loss) gain on sale of discontinued operations -- (.08) -- 2.19 $ .10 $ .06 $ .21 $ 2.40 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 six months ended June 30, 2000 -- 3 261 264 Partners' capital at June 30, 2000 1,222,000 $ 7 $ 6,807 $ 6,814 See Accompanying Notes to Financial Statements
d) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 2000 1999 Cash flows from operating activities: Net income $ 264 $ 2,963 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 269 230 Investment in discontinued operations -- 130 Gain on sale of discontinued operations -- (2,701) Change in accounts: Restricted cash (172) 120 Receivables and deposits (172) (346) Other assets (5) (14) Accounts payable (139) (6) Tenant security deposit liabilities (4) (8) Accrued property taxes 129 58 Due to Corporate General Partner 2 24 Other liabilities 5 (46) Net cash provided by operating activities 177 404 Cash flows from investing activities: Net proceeds from sale of investment property -- 8,909 Property improvements and replacements (323) (71) Net withdrawals from (deposits to) restricted escrows 283 (6) Net cash (used in) provided by investing activities (40) 8,832 Cash flows from financing activities: Payments on mortgage note payable (137) (331) Repayment of mortgage note payable -- (8,905) Net cash used in financing activities (137) (9,236) 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 $ 189 $ 704 See Accompanying Notes to Financial Statements
e) U.S. REALTY PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 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 and six month periods ended June 30, 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 income from discontinued operations and gain (loss) on sale of discontinued operations as of June 30, 2000 and 1999. Revenues of these properties were approximately $240,000 and $659,000 for the three and six months ended June 30, 1999, respectively. No revenues from the properties were recorded during the three and six months ended June 30, 2000. Income from discontinued operations was approximately $170,000 and $363,000 for the three and six months ended June 30, 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 $391,000, the net proceeds received by the Partnership were approximately $8,909,000. 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 $2,701,000. In connection with the sale, a commission of approximately $93,000 was paid to the Corporate General Partner in accordance with the terms of the Partnership Agreement. On July 2, 1999, The Gallery - Huntsville, located in Huntsville, Alabama, was sold to an unaffiliated third party for $7,310,000. After closing expenses of approximately $215,000, the net proceeds received by the Partnership were approximately $7,095,000. 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 $1,968,000. In connection with the sale, a commission of approximately $73,100 was paid to the Corporate General Partner in accordance with the Partnership Agreement. 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid or accrued to the Corporate General Partner and its affiliates during the six months ended June 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $ 77 $ 78 Reimbursement for services of affiliates (included in general and administrative, operating expenses and investment properties) 42 38 Due to Corporate General Partner 598 584 During the six months ended June 30, 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 $77,000 and $78,000 for the six months ended June 30, 2000 and 1999, respectively. An affiliate of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $42,000 and $38,000 for the six months ended June 30, 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. 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 or 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 and six month periods ended June 30, 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 (in thousands). Three Months Ended June 30, 2000 Residential Other Totals Rental income $ 735 $ -- $ 735 Other income 26 6 32 Interest expense -- 113 113 Depreciation 138 -- 138 General and administrative expense -- 50 50 Segment profit (loss) 277 (157) 120 Six Months Ended June 30, 2000 Residential Other Totals Rental income $ 1,494 $ -- $ 1,494 Other income 55 14 69 Interest expense -- 232 232 Depreciation 269 -- 269 General and administrative expense -- 94 94 Segment profit (loss) 566 (302) 264 Total assets 11,367 511 11,878 Capital expenditures for investment properties 323 -- 323
Three Months Ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 730 $ -- $ -- $ 730 Other income 35 -- 7 42 Interest expense -- -- 309 309 Depreciation 115 -- -- 115 General and administrative expense -- -- 44 44 Income from discontinued operations -- 170 -- 170 (Loss) on sale of discontinued operations -- (93) -- (93) Segment profit (loss) 349 77 (346) 80
Six Months Ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 1,444 $ -- $ -- $ 1,444 Other income 65 -- 14 79 Interest expense -- -- 707 707 Depreciation 230 -- -- 230 General and administrative expense -- -- 94 94 Income from discontinued operations -- 363 -- 363 Gain on sale of discontinued operations -- 2,701 -- 2,701 Segment profit (loss) 686 3,064 (787) 2,963 Total assets 10,865 5,326 963 17,154 Capital expenditures for investment properties 71 -- -- 71
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 operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 2000 and 1999: Average Occupancy Property 2000 1999 Twin Lakes Apartments Palm Harbor, Florida 96% 96% Governor's Park Apartments Little Rock, Arkansas 96% 94% Results of Operations The Registrant's net income for the three and six months ended June 30, 2000 was approximately $120,000 and $264,000, respectively, as compared to approximately $80,000 and $2,963,000 for the three and six months ended June 30, 1999. The decrease in net income for the six months ended June 30, 2000 is primarily attributable to the gain on sale of discontinued operations of approximately $2,701,000 realized 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 $391,000 the net proceeds received by the Partnership were approximately $8,909,000. 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 2, 1999. Excluding the impact of the operations and sale of both commercial properties, the Registrant's income from continuing operations for the three and six months ended June 30, 2000 was approximately $120,000 and $264,000 as compared to a net income (loss) from continuing operations of approximately $3,000 and $(101,000) for the three and six months ended June 30, 1999. The increase in net income is due primarily to a decrease in total expenses for the three and six months ended June 30, 2000 and, to a lesser extent, an increase in total revenue for the six months ended June 30, 2000. Total expenses decreased primarily due to a decrease in interest expense. Interest expense decreased as a result of the reduction 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 total expenses was partially offset by increases in operating, depreciation, and property tax expenses. The increase in operating expense is due primarily to increases in salaries and related employee benefits and to an increase in repairs and maintenance at the Partnership's residential properties. Depreciation expense increased as a result of recent capital improvements performed at both of the Partnership's investment properties. 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. Total revenues increased for the six months ended June 30, 2000 as a result of an increase in rental income. The increase in rental income is due primarily to an increase in the average rental rates at both of the Partnership's residential properties and to an increase in occupancy at Governor's Park Apartments. The increase in total revenue for the six months ended June 30, 2000, was partially offset by a decrease in other income. The decrease in other income is due primarily to decreases in lease cancellation fees and deposit forfeitures at Twin Lakes Apartments. Total revenue remained relatively constant for the three months ended June 30, 2000. General and administrative expenses remained relatively constant for the three and six month periods ended June 30, 2000. Included in general and administrative expenses are management reimbursements to the Corporate General Partner allowed under the Partnership Agreement. 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 June 30, 2000, the Partnership had approximately $684,000 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 $137,000 of cash used in financing activities and approximately $40,000 of cash used in investing activities, which was offset by approximately $177,000 of cash provided by operating activities. Cash used in financing activities consisted of payments on the mortgage encumbering the Registrant's properties. Cash used in investing activities consisted of property improvements and replacements, which was partially offset by withdrawals from restricted escrow 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 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, approximately $113,700 for capital improvements during the current year consisting primarily of floor covering, appliance and major landscaping. The Partnership completed approximately $27,000 in capital expenditures at Governor's Park Apartments during the six months ended June 30, 2000, consisting primarily of major landscaping, floor covering and appliance replacements. These improvements were funded with cash from operations. Twin Lakes 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 $296,000 in capital expenditures at Twin Lake Apartments during the six months ended June 30, 2000, consisting primarily of roof replacements, floor covering replacement, drapery/blind replacements and other building improvements. 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 $3,673,000 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 June 30, 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: August 11, 2000 EX-27 2 0002.txt SECOND QUARTER 10-QSB
5 This schedule contains summary financial information extracted from U.S. Realty Partners Limited Partnership 2000 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000788955 U.S. Realty Partners Limited Partnership 1,000 6-MOS DEC-31-2000 APR-01-2000 JUN-30-2000 684 0 328 0 0 0 17,840 7,020 11,878 0 3,673 0 0 0 6,814 11,878 0 1,563 0 0 1,299 0 232 0 0 0 0 0 0 264 0.21 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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