-----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, UozJGwNXdrE+6gN/MJGSOHzNyWYxYMMH4fVJoJ5zQ067+mNhxWxIG3LpT3XH8DYH DcBp6u5faaRVcfeSlNPgkQ== 0000812564-98-000018.txt : 19980812 0000812564-98-000018.hdr.sgml : 19980812 ACCESSION NUMBER: 0000812564-98-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980811 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: SEC FILE NUMBER: 000-15656 FILM NUMBER: 98682588 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 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 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 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) (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 unit data) June 30, 1998 Assets Restricted cash $ 436 Receivables and deposits, net of $130 for doubtful accounts 601 Restricted escrows 267 Other assets 307 Investment properties: Land $ 6,534 Buildings and related personal property 26,857 33,391 Less accumulated depreciation (10,948) 22,443 $24,054 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 28 Tenant security deposit liabilities 120 Accrued property taxes 299 Other liabilities 476 Due to corporate general partner 554 Mortgage notes payable 20,857 Partners' Capital (Deficit) General partners $ (445) Depositary unit certificate holders (1,222,000 units issued and outstanding) 2,165 1,720 $24,054 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 Six Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Rental income $ 1,320 $ 1,259 $ 2,648 $ 2,625 Other income 50 43 98 85 Total revenues 1,370 1,302 2,746 2,710 Expenses: Operating 406 390 779 807 General and administrative 54 63 119 108 Depreciation 213 211 425 421 Interest 536 562 1,085 1,123 Property taxes 118 115 234 227 Total expenses 1,327 1,341 2,642 2,686 Net income (loss) $ 43 $ (39) $ 104 $ 24 Net income (loss) allocated to general partners (1%) $ -- $ -- $ 1 $ -- Net income (loss) allocated to depositary unit certificate holders (99%) 43 (39) 103 24 $ 43 $ (39) $ 104 $ 24 Net income (loss) per depositary unit certificate $ .03 $ (.03) $ .08 $ .02 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' (deficit) capital at December 31, 1997 1,222,000 $ (446) $ 2,062 $ 1,616 Net income for the six months ended June 30, 1998 -- 1 103 104 Partners' (deficit) capital at June 30, 1998 1,222,000 $ (445) $ 2,165 $ 1,720 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, 1998 1997 Cash flows from operating activities: Net income $ 104 $ 24 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 425 421 Amortization of lease commissions and software 7 28 Change in accounts: Restricted cash (104) (65) Receivables and deposits (170) (280) Other assets (1) (44) Accounts payable -- (34) Tenant security deposit liabilities (1) (2) Accrued property taxes 165 226 Due to Corporate General Partner 6 12 Other liabilities (45) 23 Net cash provided by operating activities 386 309 Cash flows from investing activities: Property improvements and replacements (85) (42) Deposits to restricted escrows -- (27) Net cash used in investing activities (85) (69) Cash flows from financing activities: Payments on mortgage notes payable (301) (240) Net cash used in financing activities (301) (240) 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 $1,065 $1,092 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 consolidated 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 six month periods ended June 30, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. 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, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 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 Corporate General Partner's ultimate parent company is Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Transactions between the Partnership and affiliates of the Corporate General Partner for the six months ended June 30, 1998 and 1997 were as follows: 1998 1997 (in thousands) Property management fees (included in operating expense) $147 $143 Reimbursement for services of affiliates, including approximately $1,000 and $3,000 of construction oversight reimbursements in 1998 and 1997, respectively (included in general and administrative and operating expenses) 58 50 Due to Corporate General Partner-- includes principal and accrued interest 554 536 For the period of January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Corporate General Partner with an 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 which placed the master policy. The agent assumed the financial obligations to the affiliate of the Corporate General Partner, which receives payment 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. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in September or October of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Corporate General Partner of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 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 six months ended June 30, 1998 and 1997: Average Occupancy 1998 1997 Twin Lakes Apartments Palm Harbor, Florida 92% 93% Governor's Park Apartments Little Rock, Arkansas 93% 90% The Gallery - Huntsville Huntsville, Alabama 93% 96% The Gallery - Knoxville Knoxville, Tennessee 88% 93% The Corporate General Partner attributes the increase in occupancy at Governor's Park to aggressive marketing and concession plans directed specifically to the medical professionals in the area. The Corporate General Partner attributes the decrease in occupancy at both The Gallery - Knoxville and The Gallery - Huntsville to the continuing vacancy of approximately 9,000 and 4,500 square feet of space respectively that was occupied during the six months ended June 30, 1997. Results of Operations The Partnership's net income for the three and six months ended June 30, 1998, was approximately $43,000 and $104,000, respectively as compared to approximately ($39,000) and $24,000, respectively for the three and six months ended June 30, 1997. The increase in net income is primarily attributable to an increase in rental and other income, and decreases in operating and interest expenses. Rental income increased due to the increase in occupancy at Governor's Park as discussed above and rental rate increases at Twin Lakes. Other income increased primarily due to increases in lease cancellation fees and corporate unit income at both Twin Lakes and Governor's Park Apartments. Operating expense decreased due to a decrease in amortization expense. Amortization expense decreased due to software becoming fully amortized in 1997 and a decrease in lease commissions as a result of a major tenant at The Gallery - - Knoxville moving out during 1997 at which time the remaining unamortized lease commission was expensed in 1997. Interest expense decreased for the three and six month periods due to a decrease in the principal balance of the mortgage note payable. Included in operating expense for the six months ended June 30, 1998 is approximately $12,000 of major repairs and maintenance comprised of construction services, major landscaping and window coverings. Included in operating expense for the six months ended June 30, 1997 is approximately $21,000 of major repairs and maintenance comprised primarily of golf carts, construction services, major landscaping and window coverings. 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 Based on the terms of the debt restructure, all cash is considered restricted. Net cash provided by operating activities increased primarily as a result of an increase in net income as discussed above and a smaller increase in receivables and deposits as compared to June 30, 1997. These increases were offset by a decrease in other liabilities and a smaller increase in accrued property taxes as compared to June 30, 1997. These changes are due to the timing of payments to vendors, the timing of rental collections and a decrease in accrued interest as a result of increased payments on the mortgage note payable throughout 1997 and 1998. Net cash used in investing activities increased due to an increase in property improvements and replacements, which was partially offset by a decrease in deposits to restricted escrows. Net cash used in financing activities increased as a result of an increase in principal payments on the mortgage note payable. Total principal and interest payments are based upon excess cash flows at the properties and are allocated first to accrued interest and the remainder to principal. Although excess cash flows were relatively consistent for the six months ended June 30, 1998 and 1997, the increase in principal payments is attributed to lower accrued interest; therefore, a larger portion of the payments are applied to principal. The Partnership has no material capital programs scheduled to be performed in 1998, 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 $20,857,000 requires a balloon payment on August 1, 2001, at which time the properties will either be refinanced or sold. 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. The Corporate General Partner is currently assessing the feasibility of marketing the Partnership's two commercial properties or refinancing the mortgage encumbering the Partnership's investment properties. Year 2000 The Partnership is dependent upon the Corporate General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Corporate General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 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: None filed during the quarter ended June 30, 1998. 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 Vice President and Treasurer Date: August 11, 1998 EX-27 2
5 This schedule contains summary financial information extracted from U.S. Realty Partners Limited Partnership 1998 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-31-1998 JUN-30-1998 0 0 601 130 0 0 33,391 (10,948) 24,054 0 20,857 0 0 0 1,720 24,054 0 2,746 0 0 2,642 0 1,085 0 0 0 0 0 0 104 .08 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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