-----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, Q3cfbHs1FQ18+xEq9ELsym2jK58SK8KUqN94Jfx4QDetOke7k56YcJIbN7GIm8dr SrZfcxb8ssPWlO9NXAx9+g== 0000788955-96-000003.txt : 19961113 0000788955-96-000003.hdr.sgml : 19961113 ACCESSION NUMBER: 0000788955-96-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 000-15656 FILM NUMBER: 96658030 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 or [ ] 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.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) 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 . PART I - FINANCIAL INFORMATION ITEM 1.FINANCIAL STATEMENTS a) U.S. REALTY PARTNERS LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996 Assets Restricted cash $ 312 Accounts receivable 58 Escrow for taxes 508 Restricted escrows 213 Other assets 435 Investment properties: Land $ 6,534 Buildings and related personal property 26,602 33,136 Less accumulated depreciation ( 9,464) 23,672 $25,198 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 112 Tenant security deposits 125 Accrued taxes 393 Other liabilities 434 Due to corporate general partner 518 Mortgage notes payable 21,659 Partners' Capital (Deficit) General partners $ (443) Depositary unit certificate holders (2,444,000 units authorized; 1,222,000 units issued and outstanding) 2,400 1,957 $25,198 See Accompanying Notes to Financial Statements b) U.S. REALTY PARTNERS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,284 $ 1,281 $ 3,884 $ 3,695 Other income 41 39 114 125 Total revenues 1,325 1,320 3,998 3,820 Expenses: Operating 350 313 1,011 925 General and administrative 40 44 143 168 Maintenance 165 73 318 207 Depreciation 211 210 629 625 Interest 576 588 1,731 1,762 Property taxes 109 111 331 319 Total expenses 1,451 1,339 4,163 4,006 Net loss $ (126) $ (19) $ (165) $ (186) Net loss allocated to general partners (1%) $ (1) $ -- $ (2) $ (2) Net loss allocated to depositary unit certificate holders (99%) (125) (19) (163) (184) $ (126) $ (19) $ (165) $ (186) Net loss per Depositary Unit Certificate $ (.10) $ (.01) $ (.13) $ (.15) 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 Holders Total Original capital contributions 1,222,000 $ 2 $ 30,550 $ 30,552 Partners' capital (deficit) at December 31, 1995 1,222,000 $ (441) $ 2,563 $ 2,122 Net loss for the nine months ended September 30, 1996 (2) (163) (165) Partners' capital (deficit) at September 30, 1996 1,222,000 $ (443) $ 2,400 $ 1,957 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, 1996 1995 Cash flows from operating activities: Net loss $ (165) $ (186) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation 629 625 Amortization 43 43 Bad debt expense (34) 62 Change in accounts: Restricted cash 44 108 Accounts receivable (7) (45) Escrows for taxes (370) (300) Other assets 24 (8) Accounts payable 25 (13) Tenant security deposit liabilities (13) 15 Accrued taxes 331 252 Other liabilities 54 26 Net cash provided by operating activities 561 579 Cash flows from investing activities: Property improvements and replacements (159) (99) Deposits to restricted escrows (22) (17) Receipts from restricted escrows 21 27 Net cash used in investing activities (160) (89) Cash flows from financing activities: Payments on mortgage notes payable (401) (490) Net cash used in financing activities (401) (490) Net change in cash -- -- Cash at beginning of period -- -- Cash at end of period $ -- $ -- Supplemental disclosure of cash flow information: Cash paid for interest $1,676 $ 1,695 See Accompanying Notes to Financial Statements e) U.S. REALTY PARTNERS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of U.S. Realty Partners Limited Partnership (the "Partnership") 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, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. 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, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. NOTE B - 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 restructure in October of 1993. NOTE C - 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 payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Property management fees paid to affiliates of Insignia Financial Group, Inc. during each of the nine months ended September 30, 1996 and 1995, are included in operating expenses on the Consolidated Statement of Operations and are reflected in the following table. The Corporate General Partner and its affiliates received reimbursements and fees as reflected in the following table: Nine Months Ended September 30, 1996 1995 (in thousands) Property management fees $221 $210 Reimbursement for services of affiliates 68 57 Due to Corporate General Partner-- includes principal and accrued interest 518 494 NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES - CONTINUED Included in "reimbursements of services of affiliates" for 1996 are approximately $3,000 in reimbursements for construction oversight costs. The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Corporate General Partner, who receives payments on these obligations from the agent. The amount of the partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations is not significant. NOTE D - CONTINGENCY On March 29, 1994, Insignia Financial Group, Inc., an affiliate of the Corporate General Partner, was served with a complaint filed in the United States District Court, Eastern District of Kentucky and styled Kenneth Ogle, et. al., v. U.S. Shelter Corporation, et. al. The Corporate General Partner was a named defendant in such suit and was served with such complaint. Such complaint alleged, inter alia, that the Corporate General Partner engaged in a conspiracy to defraud limited partners in the Partnership, made certain material misstatements and omissions in the prospectus relating to the sale of limited partnership interests in the Partnership, and breached its fiduciary duties to a putative class of limited partners of the Partnership. The plaintiffs sought the certification by the court that the case may proceed as a class action. The case was dismissed with prejudice by the United States District Court for the Eastern District of Kentucky on April 25, 1996. Plaintiffs appealed the dismissal to the United States Court of Appeals for the Sixth Circuit. During the appeal process, the Partnership was notified that the parties had reached an agreement to withdraw the appeal. No payment by the Partnership has been or will be made as part of the discontinuation of the appeal. Except for the issue stated, the Registrant is unaware of any pending or outstanding litigation that is not of a routine nature. The Corporate General Partner of the Registrant believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION On April 1, 1993, the Partnership filed for protection under Chapter 11 of the Federal Bankruptcy Code. The filing was made due to the Partnership's inability to repay its secured debt as a result of a deficiency of funds necessary to retire debt to an insurance company. On April 23, 1993, the Partnership filed the Reorganization Plan (the "Plan") with the United States Bankruptcy Court for the District of South Carolina (the "Court"). The significant provision of the Plan was the refinancing of the secured debt which occurred on October 15, 1993. On July 23, 1993, the Court entered an order confirming the Partnership's Plan. On January 27, 1994, the Court closed the case. The Partnership's investment properties consist of two apartment complexes and two commercial shopping centers. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1996 and 1995: Average Occupancy Property 1996 1995 Twin Lakes Apartments Palm Harbor, Florida 95% 94% Governor's Park Apartments Little Rock, Arkansas 92% 96% The Gallery - Huntsville Huntsville, Alabama 94% 94% The Gallery - Knoxville Knoxville, Tennessee 96% 94% The Corporate General Partner attributes the decrease in occupancy at Governor's Park to residents purchasing homes. Additionally, Pulaski County is experiencing a decline in population growth as people are moving to surrounding counties because of cheaper housing and better school districts. The Partnership's net loss for the nine months ended September 30, 1996, was approximately $165,000, with the three months ended September 30, 1996, recording a net loss of approximately $126,000. The Partnership reported net losses of approximately $186,000 and $19,000 for the corresponding periods in 1995. The decrease in net loss for the nine month period is primarily due to a decrease in general and administrative expense and an increase in rental revenue. General and administrative expense decreased due to a decrease in professional fees, as the Partnership paid the final invoice related to the debt restructuring in the first quarter of 1995. Rental income increased as a result of rent increases and higher occupancy at Twin Lakes. Rental income also increased at Gallery Knoxville due to an increase in occupancy. Furthermore, the percentage rental income, which is rental income based on an agreed percentage of sales, from certain commercial tenants increased during the nine months ended September 30, 1996, at both Gallery Huntsville and Gallery Knoxville due to the increase in such sales. Increases in maintenance expense and operating expense were largely responsible for the increase in net loss for the three months ended September 30, 1996, compared to the corresponding period of 1995. The increase in maintenance expense was due to the completion of an exterior painting contract at Governor's Park and the installation and repair of gutters at Twin Lakes. Operating expense increased due to an increase in management fees due to the increase in revenues as well as an increase in concessions incurred at Twin Lakes in response to new competition. 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. Based on the terms of the debt structure, all cash is considered restricted. Cash flows provided by operating activities remained relatively stable for the nine months ended September 30, 1996, as compared to the same period in 1995. Net cash used in investing activities increased as a result of an increase in property improvements and replacements. Canopies at the Gallery Huntsville are being replaced, as the existing canopies have deteriorated due to age. Net cash used in financing activities decreased due to a decrease in principal payments in 1996 as the debt payments are calculated as a factor of the Partnership's cash flow which was reduced due to increased capital improvements. The Partnership has no material capital programs scheduled to be performed in 1996, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. 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 property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $21,659,000 requires a balloon payment on August 1, 2001, at which time the properties are expected to be refinanced or sold. The Corporate General Partner is currently assessing the feasibility of refinancing the mortgage encumbering the Partnership's investment properties. Pursuant to the loan agreement, no distributions can be made until all long-term debt is repaid. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 29, 1994, Insignia Financial Group, Inc., an affiliate of the Corporate General Partner, was served with a complaint filed in the United States District Court, Eastern District of Kentucky and styled Kenneth Ogle, et. al., v. U.S. Shelter Corporation, et. al. The Corporate General Partner was a named defendant in such suit and was served with such complaint. Such complaint alleged, inter alia, that the Corporate General Partner engaged in a conspiracy to defraud limited partners in the Partnership, made certain material misstatements and omissions in the prospectus relating to the sale of limited partnership interests in the Partnership, and breached its fiduciary duties to a putative class of limited partners of the Partnership. The plaintiffs sought the certification by the court that the case may proceed as a class action. The case was dismissed with prejudice by the United States District Court for the Eastern District of Kentucky on April 25, 1996. Plaintiffs appealed the dismissal to the United States Court of Appeals for the Sixth Circuit. During the appeal process, the Partnership was notified that the parties had reached an agreement to discontinue the appeal. No payment by the Partnership has been or will be made as part of the discontinuation of the appeal. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1996. 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/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: November 12, 1996 EX-27 2
5 This schedule contains summary financial information extracted from U.S. Realty Partners Limited Partnership 1996 Third 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 9-MOS DEC-31-1996 SEP-30-1996 0 0 58 0 0 0 33,136 9,464 25,198 0 21,659 0 0 0 1,957 25,198 0 3,998 0 0 4,163 0 1,731 0 0 0 0 0 0 (165) (.13) 0 Registrant has an unclassified balance sheet.
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