10QSB 1 0001.txt QUARTER ENDING SEPTEMBER 30, 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 September 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) September 30, 2000
Assets Cash and cash equivalents $ 467 Receivables and deposits 287 Restricted escrows 138 Other assets 358 Investment properties: Land $ 2,123 Buildings and related personal property 15,800 17,923 Less accumulated depreciation (7,156) 10,767 $12,017 Liabilities and Partners' Deficit Liabilities Accounts payable $ 43 Tenant security deposit liabilities 64 Accrued property taxes 212 Other liabilities 176 Due to Corporate General Partner 612 Mortgage note payable 11,080 Partners' Deficit General partners $ (5) Depositary unit certificate holders (2,440,000 units authorized; 1,222,000 units issued and outstanding) (165) (170) $12,017 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 Nine Months Ended September 30, September 30, 2000 1999 2000 1999 Revenues: Rental income $ 753 $ 743 $ 2,247 $ 2,187 Other income 62 33 131 112 Total revenues 815 776 2,378 2,299 Expenses: Operating 279 294 854 828 General and administrative 55 59 149 153 Depreciation 136 118 405 348 Interest 207 135 439 842 Property taxes 77 126 206 185 Total expenses 754 732 2,053 2,356 Income (loss) from continuing operations 61 44 325 (57) (Loss) income from discontinued operations -- (57) -- 306 Gain on sale of discontinued operations -- 1,971 -- 4,672 Net income $ 61 $ 1,958 $ 325 $ 4,921 Net income allocated to general partners (1%) $ -- $ 20 $ 3 $ 49 Net income allocated to depositary unit certificate holders (99%) 61 1,938 322 4,872 $ 61 $ 1,958 $ 325 $ 4,921 Net income per depositary unit certificate: Income (loss) from continuing operations $ .05 $ .04 $ .26 $ (.05) (Loss) income from discontinued operations -- (.05) -- .25 Gain on sale of discontinued operations -- 1.60 -- 3.79 $ .05 $ 1.59 $ .26 $ 3.99 Distribution per depositary unit $ 5.76 $ -- $ 5.76 $ -- See Accompanying Notes to Financial Statements
c) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (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 Distributions to partners -- (12) (7,033) (7,045) Net income for the nine months ended September 30, 2000 -- 3 322 325 Partners' deficit at September 30, 2000 1,222,000 $ (5) $ (165) $ (170) See Accompanying Notes to Financial Statements
d) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2000 1999 Cash flows from operating activities: Net income $ 325 $ 4,921 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 405 457 Amortization of loan costs and lease commissions 1 4 Gain on sale of discontinued operations -- (4,672) Change in accounts: Restricted cash 512 96 Receivables and deposits (131) (338) Other assets (8) 76 Accounts payable (110) 16 Tenant security deposit liabilities 6 (60) Accrued property taxes 142 48 Due to Corporate General Partner 16 30 Other liabilities (345) (56) Net cash provided by operating activities 813 522 Cash flows from investing activities: Net proceeds from sale of investment property -- 16,004 Property improvements and replacements (406) (200) Net withdrawals from (deposits to) restricted escrows 145 (8) Net cash (used in) provided by investing activities (261) 15,796 Cash flows from financing activities: Payments on mortgage note payable (293) (443) Repayment of mortgage note payable (3,517) (15,875) Proceeds from mortgage note payable 11,080 -- Distribution to partners (7,045) -- Loan costs paid (310) -- Net cash used in financing activities (85) (16,318) Net increase in cash and cash equivalents 467 -- Cash and cash equivalents at beginning of period -- -- Cash and cash equivalents at end of period $ 467 $ -- Supplemental disclosure of cash flow information: Cash paid for interest $ 740 $ 848 See Accompanying Notes to Financial Statements
e) U.S. REALTY PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) September 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 nine month periods ended September 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 - Refinance of Partnership Debt On August 31, 2000, the Partnership refinanced its mortgage note payable with Continental Casualty Consultants with a new mortgage from GMAC. The refinancing replaced mortgage indebtedness of $3,517,000 with a rate of 10% which encumbered both of the Partnership's investment properties. The new mortgage for Governor's Park Apartments was for $3,800,000 at a rate of 7.93%. Payments of $31,619.38 are due on the first day of each month until the loan matures on September 1, 2020 at which time the loan will be fully amortized. The new mortgage for Twin Lakes Apartments was for $7,280,000 at a rate of 7.98%. Payments of $60,802.25 are due on the first day of each month until the loan matures on September 1, 2020 at which time the loan will be fully amortized. Capitalized loan costs of approximately $310,000 were incurred as a result of the refinancing. Prepayment penalties are required on both new mortgages if repaid prior to maturity. The Corporate General Partner received approximately $111,000 included in the capitalized loan costs as a 1% fee for its assistance in obtaining the refinancing in accordance with the terms of the Partnership Agreement. Note D - Reconciliation of Cash Flow The following is a reconciliation of the subtotal on the accompanying consolidated statements of cash flows captioned "net cash provided by operating activities" to "net cash provided by operations", as defined in the Partnership Agreement. However, "net cash used in operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity.
For the Nine Months Ended September 30, 2000 1999 (in thousands) Net cash provided by operating activities $ 813 $ 522 Payments on mortgage notes payable (293) (443) Property improvements and replacements (406) (200) Change in restricted escrows, net 145 (8) Changes in reserves for net operating liabilities (82) 188 Additional reserves (177) (59) Net cash provided by operations $ -- $ --
The Corporate General Partner reserved approximately $177,000 at September 30, 2000 to fund capital improvements and repairs at the Partnership's two investment properties. During the nine months ended September 30, 2000, the mortgage debt encumbering the Partnership's investment properties was refinanced as discussed above. For the nine months ended September 30, 1999 the Partnership considered 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 E - 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 September 30, 2000 and 1999. Revenues (losses) of these properties were approximately $(34,000) and $625,000 for the three and nine months ended September 30, 1999, respectively. No revenues from the properties were recorded during the three and nine months ended September 30, 2000. (Loss) income from discontinued operations was approximately $(57,000) and $306,000 for the three and nine months ended September 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 $1,971,000. 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 F - Distributions During the nine months ended September 30, 2000 the Partnership paid distributions of approximately $7,045,000 (approximately $7,033,000 to the limited partners or $5.76 per depositary unit) consisting of cash from operations of approximately $620,000 (approximately $608,000 to the limited partners or $0.50 per depositary unit) and cash from refinance proceeds all paid to the limited partners of approximately $6,425,000 (approximately $5.26 per depositary unit). No distributions were declared or paid during the nine months ended September 30, 1999. Note G - 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 nine months ended September 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $116 $114 Reimbursement for services of affiliates (included in general and administrative, operating expenses and investment properties) 63 61 Due to Corporate General Partner 612 590 Loan costs (included in other assets) 111 -- Real estate brokerage commissions (included in gain on sale of discontinued operations) -- 166 During the nine months ended September 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 $116,000 and $114,000 for the nine months ended September 30, 2000 and 1999, respectively. An affiliate of the Corporate General Partner received reimbursement of accountable administrative expenses amounting to approximately $63,000 and $61,000 for the nine months ended September 30, 2000 and 1999, respectively. In connection with both the sale of The Gallery - Knoxville and The Gallery - Huntsville the Corporate General Partner was entitled to a commission of 1% of the selling price. Accordingly, $93,000 was paid during April 1999 as a commission on the sale of The Gallery - Knoxville and $73,100 was paid during July 1999 as a commission on the sale of The Gallery - Huntsville. In connection with the refinancing of the debt encumbering the Partnership and its properties, the Corporate General Partner was entitled to a fee of 1% of new debt obtained. Accordingly, approximately $111,000 was paid during September 2000 (see Note C - Refinancing of Partnership debt). In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 733,745 limited partnership units in the Partnership representing 60.04% 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 which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of 60.04% of the outstanding units, AIMCO is in a position to influence all voting discussions 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 H - 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 nine month periods ended September 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 September 30, 2000 Residential Other Totals Rental income $ 753 $ -- $ 753 Other income 53 9 62 Interest expense 77 130 207 Depreciation 136 -- 136 General and administrative expense -- 55 55 Segment profit (loss) 247 (186) 61
Nine Months Ended September 30, 2000 Residential Other Totals Rental income $ 2,247 $ -- $ 2,247 Other income 108 23 131 Interest expense 77 362 439 Depreciation 405 -- 405 General and administrative expense -- 149 149 Segment profit (loss) 813 (488) 325 Total assets 11,929 88 12,017 Capital expenditures for investment properties 406 -- 406
Three Months Ended September 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 743 $ -- $ -- $ 743 Other income 26 -- 7 33 Interest expense -- -- 135 135 Depreciation 118 -- -- 118 General and administrative expense -- -- 59 59 Loss from discontinued operations -- (57) -- (57) Gain on sale of discontinued operations -- 1,971 -- 1,971 Segment profit (loss) 231 1,914 (187) 1,958
Nine months Ended September 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 2,187 $ -- $ -- $ 2,187 Other income 91 -- 21 112 Interest expense -- -- 842 842 Depreciation 348 -- -- 348 General and administrative expense -- -- 153 153 Income from discontinued operations -- 306 -- 306 Gain on sale of discontinued operations -- 4,672 -- 4,672 Segment profit (loss) 917 4,978 (974) 4,921 Total assets 10,758 77 1,336 12,171 Capital expenditures for investment properties 200 -- -- 200
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 nine months ended September 30, 2000 and 1999: Average Occupancy Property 2000 1999 Twin Lakes Apartments Palm Harbor, Florida 96% 97% Governor's Park Apartments Little Rock, Arkansas 95% 95% Results of Operations The Registrant's net income for the three and nine months ended September 30, 2000 was approximately $61,000 and $325,000, respectively, as compared to approximately $1,958,000 and $4,921,000 for the three and nine months ended September 30, 1999. The decrease in net income for the three and nine months ended September 30, 2000 is primarily attributable to the gain on sale of discontinued operations of approximately $2,701,000 and $1,971,000 realized on the sales of The Gallery - Knoxville and The Gallery - Huntsville, respectively. 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 Gallery - Huntsville was sold to an unaffiliated third party on July 2, 1999 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 proceeds from the sales of the properties 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 sales. Excluding the impact of the operations and sale of both commercial properties, the Registrant's income from continuing operations for the three and nine months ended September 30, 2000 was approximately $61,000 and $325,000 as compared to a net income (loss) from continuing operations of approximately $44,000 and $(57,000) for the three and nine months ended September 30, 1999. The increase in net income for the nine months ended September 30, 2000 is due primarily to a decrease in total expenses and, to a lesser extent, an increase in total revenues. 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 for the nine months ended September 30, 2000 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 both the three and nine months ended September 30, 2000 as a result of an increase in rental income and other 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. Other income increased as a result of an increase in interest income due to higher cash balances being maintained in the Partnership's interest bearing accounts. The increase in net income for the three months ended September 30, 2000 was primarily due to an increase in total revenues as discussed above which was partially offset by a slight increase in total expenses. Total expenses increased as a result of an increase in depreciation expense as discussed above and an increase in interest expense. Interest expense increased as a result of the refinancings of the Partnership's two investment properties during August 2000 as discussed below. General and administrative expenses remained relatively constant for the three and nine month periods ended September 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 At September 30, 2000, the Partnership had cash and cash equivalents of approximately $467,000. During the nine months ended September 30, 2000, the Partnership refinanced the mortgage encumbering the Registrant's investment properties as discussed below. At September 30, 1999 all of the Partnership's cash is restricted pursuant to the terms of the previous mortgage loan which encumbered the Partnership's properties. The increase in cash and cash equivalents of approximately $467,000 for the nine months ended September 30, 2000, from the Partnership's calendar year is due to approximately $813,000 of cash provided by operating activities which was partially offset by approximately $261,000 of cash used in investing activities and approximately $85,000 of cash used in financing activities. Cash used in investing activities consisted of property improvements and replacements which was partially offset by net withdrawals from restricted escrows. Cash used in financing activities consisted primarily of the repayment of the mortgage encumbering the Partnership's investment properties, distributions to the partners, loan costs, and payments of principle made on the mortgage encumbering the Partnership's investment properties, partially offset by the proceeds from the new loans obtained on the Partnership's investment properties. The Partnership invests its working capital reserves in money market accounts. On August 31, 2000, the Partnership refinanced its mortgage note payable with Continental Casualty Consultants with a new mortgage from GMAC. The refinancing replaced mortgage indebtedness of $3,517,000 with a rate of 10% which encumbered both of the Partnership's investment properties. The new mortgage for Governor's Park Apartments was for $3,800,000 at a rate of 7.93%. Payments of $31,619.38 are due on the first day of each month until the loan matures on September 1, 2020 at which time the loan will be fully amortized. The new mortgage for Twin Lakes Apartments was for $7,280,000 at a rate of 7.98%. Payments of $60,802.25 are due on the first day of each month until the loan matures on September 1, 2020 at which time the loan will be fully amortized. Capitalized loan costs of approximately $310,000 were incurred as a result of the refinancing. 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, appliances and major landscaping. The Partnership completed approximately $57,000 in capital expenditures at Governor's Park Apartments during the nine months ended September 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 covering and appliance replacement and major landscaping. The Partnership completed approximately $349,000 in capital expenditures at Twin Lake Apartments during the nine months ended September 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. To the extent that such capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are currently thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $11,080,000 bears interest at rates between 7.93% and 7.98% and are due to mature on September 1, 2020. During the nine months ended September 30, 2000 the Partnership paid distributions of approximately $7,045,000 (approximately $7,033,000 to the limited partners or $5.76 per depositary unit) consisting of cash from operations of approximately $620,000 (approximately $608,000 to the limited partners or $0.50 per depositary unit) and cash from refinance proceeds all paid to the limited partners of approximately $6,425,000 (approximately $5.26 per depositary unit). No distributions were declared or paid during the nine months ended September 30, 1999. The Partnership's distribution policy is reviewed on a quarterly basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and timing of the debt maturities, refinancing and/or sale of the properties. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit further distributions to its partners during the remainder of 2000 or subsequent periods. 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 September 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: November 13, 2000