-----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, Dm7AdjXndUQK0HdKekLYPC5lI+TxfzyeAm0tauxrEXWdAyJOAyqgZyt2pmMGOjsx R5tvDOV1LYKSzVlAK2PZ5A== 0000711642-00-000166.txt : 20000516 0000711642-00-000166.hdr.sgml : 20000516 ACCESSION NUMBER: 0000711642-00-000166 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INVESTORS INCOME PROPERTIES CENTRAL INDEX KEY: 0000830056 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 431542903 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17646 FILM NUMBER: 631903 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 29602 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 FIRST QUARTER 10-QSB FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-17646 UNITED INVESTORS INCOME PROPERTIES (Exact name of small business issuer as specified in its charter) Missouri 43-1483942 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO 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) UNITED INVESTORS INCOME PROPERTIES BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 2000
Assets Cash and cash equivalents $ 584 Receivables and deposits 51 Other assets 39 Investment properties: Land $ 1,522 Buildings and related personal property 9,358 10,880 Less accumulated depreciation (3,448) 7,432 Investment in joint venture 2 $ 8,108 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 35 Tenant security deposit liabilities 45 Accrued property taxes 24 Other liabilities 63 Partners' (Deficit) Capital General partner $ (52) Limited partners (61,063 units issued and outstanding) 7,993 7,941 $ 8,108
See Accompanying Notes to Financial Statements b) UNITED INVESTORS INCOME PROPERTIES STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended March 31, 2000 1999 Revenues: (Restated) Rental income $ 423 $ 415 Other income 28 35 Total revenues 451 450 Expenses: Operating 164 136 General and administrative 31 38 Depreciation 97 84 Property taxes 37 31 Total expenses 329 289 Income before equity in (loss) income of joint venture and discontinued operation 122 161 Equity in income of joint venture 11 9 Income from continuing operations 133 170 (Loss) income from discontinued operation (11) 11 Net income $ 122 $ 181 Net income allocated to general partner (1%) $ 1 $ 2 Net income allocated to limited partners (99%) 121 179 $ 122 $ 181 Per limited partnership unit: Income from continuing operations 2.16 2.75 (Loss) income from discontinued operation (0.18) 0.18 Net income $ 1.98 $ 2.93 Distributions per limited partnership unit $19.60 $ 2.50
See Accompanying Notes to Financial Statements c) UNITED INVESTORS INCOME PROPERTIES STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 61,063 $ -- $15,266 $15,266 Partners' (deficit) capital at December 31, 1999 61,063 $ (41) $ 9,069 $ 9,028 Distributions to partners -- (12) (1,197) (1,209) Net income for the three months ended March 31, 2000 -- 1 121 122 Partners' (deficit) capital at March 31, 2000 61,063 $ (52) $ 7,993 $ 7,941
See Accompanying Notes to Financial Statements d) UNITED INVESTORS INCOME PROPERTIES STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2000 1999 Cash flows from operating activities: Net income $ 122 $ 181 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income of joint venture (11) (9) Depreciation 97 100 Amortization of lease commissions -- 2 Change in accounts: Receivables and deposits 103 (51) Other assets (1) 2 Accounts payable (43) (14) Tenant security deposit liabilities 2 1 Accrued property taxes 24 16 Other liabilities (40) (19) Net cash provided by operating activities 253 209 Cash flows from investing activities: Property improvements and replacements (45) (57) Distributions from (advances to) joint venture 18 (3) Proceeds from sale of joint venture property 400 -- Net cash provided by (used in) investing activities 373 (60) Cash flows used in financing activities: Distributions to partners (1,209) -- Net (decrease) increase in cash and cash equivalents (583) 149 Cash and cash equivalents at beginning of period 1,167 928 Cash and cash equivalents at end of period $ 584 $ 1,077
See Accompanying Notes to Financial Statements e) UNITED INVESTORS INCOME PROPERTIES NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of United Investors Income Properties (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 United Investors Real Estate, Inc. (the "General Partner"), a Delaware corporation, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000, are not necessarily indicative of the results that may be expected for the fiscal 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 fiscal year ended December 31, 1999. 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 General Partner. The 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 - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the 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 for reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to affiliates of the General Partner during the three month periods ended March 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $ 23 $ 22 Reimbursement for services of affiliates (included in general and administrative expenses) 9 10 During the three months ended March 31, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Partnership's residential properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $23,000 and $22,000 for the three months ended March 31, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $9,000 and $10,000 for the three months ended March 31, 2000 and 1999, respectively. For acting as real estate broker in connection with the sale of Peachtree Corners Medical Building, the General Partner earned a real estate commission of approximately $21,000. The commission was accrued at March 31, 2000. However, this amount is not payable until the limited partners receive an amount equal to their adjusted capital investment and a cumulative distribution equal to an 8% annual return from the last additional closing date or, if greater, a 6% cumulative annual return from his date of admission to the Partnership. The net proceeds from the sale of Corinth Square in December 1999 were received by United Investors Income Properties II, an affiliated partnership in which the General Partner is also the sole General Partner. The Partnership's pro-rata share of the net proceeds from the Joint Venture sale was approximately $400,000. This amount was received in January 2000. AIMCO and its affiliates currently own 11,725 limited partnership units in the Partnership representing 19.201% 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 General Partner because of their affiliation with the General Partner. Note D - Investment in Corinth Square Joint Venture The Partnership had a 35% investment in Corinth Square Joint Venture ("Joint Venture") with United Investors Income Properties II, an affiliated partnership in which the General Partner is also the sole general partner. The Partnership reflects its interest in the Joint Venture utilizing the equity method, whereby the original investment is increased by advances to the Joint Venture and by the Partnership's share of the earnings of the Joint Venture. The investment is decreased by distributions from the Joint Venture and by the Partnership's share of losses of the Joint Venture. On December 30, 1999, the Joint Venture sold its only investment property, Corinth Square, to an unaffiliated third party. The net proceeds were received by United Investors Income Properties II, of which approximately $400,000 is the Partnership's pro-rata share. This amount was received by the Partnership in January 2000. Condensed balance sheet information of the Joint Venture at March 31, 2000, is as follows (in thousands): Assets Cash $ 6 Other assets 1 Total $ 7 Liabilities and Partners' Deficit Other liabilities $ -- Partners' deficit 7 Total $ 7 The condensed profit and loss statement of the Joint Venture for the three months ended March 31, 2000 and 1999, is summarized as follows (in thousands): 2000 1999 Revenue $ 12 $ 99 Costs and expenses -- (73) Income before gain on sale of property 12 26 Gain on sale of property 20 -- Net income $ 32 $ 26 Note E - Distributions During the three months ended March 31, 2000, the Partnership paid a distribution of cash generated from the sale of Peachtree Corners Medical Building and Corinth Square Joint Venture of approximately $1,003,000 (approximately $993,000 to the limited partners or $16.26 per limited partnership unit) and approximately $206,000 of cash generated from operations (approximately $204,000 to the limited partners or $3.34 per limited partnership unit). During the three months ended March 31, 1999, the Partnership declared a distribution of cash generated from operations of approximately $154,000 (approximately $153,000 to the limited partners or $2.50 per limited partnership unit), which was paid in April 1999. Note F - Discontinued Operation Peachtree Corners Medical Building was the last commercial property in the commercial segment of the Partnership. Due to the sale of this property in December 1999, the statement of operations for the three months ended March 31, 1999 has been restated and the (loss) income of this property has been classified as "(Loss) income from discontinued operation" for the three months ended March 31, 2000 and 1999. There were no revenues for this property and the Partnership realized a loss from discontinued operation of approximately $11,000 during the three months ended March 31, 2000. Revenues of this property were approximately $45,000 and the Partnership realized income from discontinued operation of approximately $11,000 for the three months ended March 31, 1999. Note G - Segment Reporting The Partnership had two reportable segments: residential properties and commercial property. The Partnership's residential segment consists of three apartment complexes one located in each of Mountlake Terrace, Washington; Atlanta, Georgia; and Medford, Oregon. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. The commercial property segment consisted of a medical building located in Atlanta, Georgia. On December 30, 1999, the commercial property held by the Partnership was sold to an unrelated party. Therefore, the commercial segment is reflected as discontinued operations. The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments 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. The Partnership's reportable segments are 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 month periods ended March 31, 2000 and 1999, is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segments.
2000 Residential Commercial Other Totals (discontinued) Rental income $ 423 $ -- $ -- $ 423 Other income 23 -- 5 28 Depreciation 97 -- -- 97 General and administrative expense -- -- 31 31 Loss from discontinued operation -- (11) -- (11) Equity in income of joint venture -- -- 11 11 Segment profit (loss) 148 (11) (15) 122 Total assets 7,960 -- 148 8,108 Capital expenditures for investment properties 45 -- -- 45
1999 Residential Commercial Other Totals (discontinued) Rental income $ 415 $ -- $ -- $ 415 Other income 27 -- 8 35 Depreciation 84 -- -- 84 General and administrative expense -- -- 38 38 Income from discontinued operation -- 11 -- 11 Equity in income of joint venture -- -- 9 9 Segment profit (loss) 191 11 (21) 181 Total assets 7,963 1,632 1,514 11,109 Capital expenditures for investment properties 57 -- -- 57
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 Partnership from time to time. The discussion of the Partnership'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 Partnership's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for each of the three months ended March 31, 2000 and 1999: Average Occupancy Property 2000 1999 Bronson Place Apartments 93% 98% Mountlake Terrace, Washington Meadow Wood Apartments 95% 93% Medford, Oregon Defoors Crossing Apartments 96% 94% Atlanta, Georgia The General Partner attributes the decreased occupancy at Bronson Place Apartments to increased competition from new construction in the Mountlake Terrace, Washington area. Results of Operations The Partnership realized net income of approximately $108,000 for the three months ended March 31, 2000, compared to net income of approximately $181,000 for the three months ended March 31, 1999. The decrease in net income is primarily due to an increase in total expenses at the Partnership's residential properties and, to a lesser extent, a decrease in income from the discontinued operation of Peachtree Corners Medical Building, as discussed below. Excluding the discontinued operation and the equity in (loss) income of the joint venture, the Partnership had income from continuing operations of approximately $122,000 for the three months ended March 31, 2000, compared to income of approximately $161,000 for the three months ended March 31, 1999. Income decreased due to an increase in total expenses slightly offset by a slight increase in total revenues. Total expenses increased for the three months ended March 31, 2000 primarily due to increased operating expenses and depreciation expense which was partially offset by decreased general and administrative expenses. Operating expenses increased due to an increase in advertising expense, manager salaries, and sewer expenses primarily at Bronson Place Apartments. Depreciation expense increased due to capital improvements completed during the past twelve months that are now being depreciated. General and administrative expense decreased due to a decrease in professional fees related to the oversight of the Partnership. Included in general and administrative expenses are reimbursements to the General Partner allowed under the Partnership Agreement associated with its management of the Partnership. 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. The slight increase in total revenues was due to increased rental income which was offset by decreased other income. Rental income increased primarily due to increased average rental rates at all of the Partnership's properties and improved occupancy at Meadow Wood and Defoors Crossing Apartments which more than offset the decrease in occupancy at Bronson Place Apartments. The decrease in other income is primarily due to decreased tenant charges at Bronson Place and Meadow Wood Apartments. The Partnership has a 35% investment in Corinth Square Joint Venture ("Joint Venture"). For the three months ended March 31, 2000, the Partnership realized equity in the loss of the Joint Venture property of approximately $3,000, and for the three months ended March 31, 1999, the Partnership realized equity in the income of the Joint Venture property of approximately $9,000. On December 30, 1999, the Joint Venture sold its only investment property, Corinth Square, to an unaffiliated third party. Peachtree Corners Medical Building was the last commercial property in the commercial segment of the Partnership. Due to the sale of this property in December 1999, the income of this property has been classified as "(Loss) income from discontinued operations" for the three months ended March 31, 2000 and 1999. There were no revenues for this property and the Partnership realized a loss from discontinued operation of approximately $11,000 during the three months ended March 31, 2000. Revenues of this property were approximately $45,000 and the Partnership realized income from discontinued operation of approximately $11,000 for the three months ended March 31, 1999. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the 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. 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 General Partner will be able to sustain such a plan. Liquidity and Capital Resources At March 31, 2000, the Partnership had cash and cash equivalents of approximately $584,000 compared to approximately $1,077,000 at March 31, 1999. Cash and cash equivalents decreased by approximately $583,000 from the Partnership's year ended December 31, 1999, due to approximately $1,209,000 of cash used in financing activities, which was partially offset by approximately $253,000 of cash provided by operating activities and approximately $373,000 of cash provided by investing activities. Cash provided by investing activities consisted primarily of proceeds from the sale of the Corinth Square Joint Venture property and, to a lesser extent, distributions received from the Joint Venture, which were partially offset by property improvements and replacements. Cash used in financing activities consisted of distributions paid to the partners. The Partnership invests its working capital reserves in money market 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 Partnership's properties are detailed below. Bronson Place During the three months ended March 31, 2000, the Partnership spent approximately $6,000 on capital improvements at Bronson Place Apartments, consisting primarily of building improvements and appliances. These improvements were funded from cash flow from operations. The Partnership evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $38,000, consisting primarily of carpet and vinyl replacements and plumbing upgrades. Additional improvements may be considered and will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Meadow Wood During the three months ended March 31, 2000, the Partnership spent approximately $35,000 on capital improvements at Meadow Wood Apartments, consisting primarily of carpet and vinyl replacements, appliances, and model furniture. These improvements were funded from cash flow from operations. The Partnership evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $63,000, consisting primarily of air conditioning unit replacement, appliances, and carpet and vinyl replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Defoors Crossing During the three months ended March 31, 2000, the Partnership spent approximately $4,000 on capital improvements at Defoors Crossing Apartments, consisting primarily of carpet and vinyl replacements. These improvements were funded from cash flow from operations. The Partnership evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $31,000, consisting primarily of appliances and carpet and vinyl replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as anticipated cash flow generated by the property. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. During the three months ended March 31, 2000, the Partnership paid a distribution of cash generated from the sale of Peachtree Corners Medical Building and the investment property owned by Corinth Square Joint Venture of approximately $1,003,000 (approximately $993,000 to the limited partners or $16.26 per limited partnership unit) and approximately $206,000 of cash generated from operations (approximately $204,000 to the limited partners or $3.34 per limited partnership unit). During the three months ended March 31, 1999, the Partnership declared a distribution of cash generated from operations of approximately $154,000 (approximately $153,000 to the limited partners or $2.50 per limited partnership unit), which was paid in April 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 the timing of financings and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital improvements to permit any additional 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 first quarter of calendar year 2000: Current Report on Form 8-K dated December 30, 1999 and filed January 12, 2000, disclosing the sales of Peachtree Corners Medical Building and Corinth Square Professional Building to unaffiliated parties. 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. UNITED INVESTORS INCOME PROPERTIES By: United Investors Real Estate, Inc. Its 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: EX-27 2 FIRST QUARTER 10-QSB
5 This schedule contains summary financial information extracted from UNITED INVESTORS INCOME PROPERTIES 2000 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000830056 UNITED INVESTORS INCOME PROPERTIES 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 584 0 51 0 0 0 10,880 (3,448) 8,108 0 0 0 0 0 7,941 8,108 0 451 0 0 329 0 0 0 0 0 0 0 0 122 1.98 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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