-----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, Hdu52tXlj6tduUu0if01NR6LQcpIxdh7ARHDAOw2bvvxgEItzvHPTVcBzDvf83/w AJu0T0I00LXZRmhGQwyrow== 0000759859-98-000013.txt : 19980515 0000759859-98-000013.hdr.sgml : 19980515 ACCESSION NUMBER: 0000759859-98-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INVESTORS INCOME PROPERTIES CENTRAL INDEX KEY: 0000830056 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 431483942 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17646 FILM NUMBER: 98621542 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA 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 (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, 1998 [ ] TRANSITION REPORT PURSUANT TO 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 (IRS 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) UNITED INVESTORS INCOME PROPERTIES BALANCE SHEET (Unaudited) March 31, 1998 (in thousands, except unit data) Assets Cash and cash equivalents $ 772 Receivables and deposits 182 Other assets 75 Investment properties: Land $ 1,862 Buildings and related personal property 10,544 12,406 Less accumulated depreciation (3,097) 9,309 Investment in joint venture 621 $10,959 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 9 Tenant security deposit liabilities 53 Accrued property taxes 24 Other liabilities 35 Partners' Capital (Deficit) General partner's $ (24) Limited partners' (61,063 units issued and outstanding) 10,862 10,838 $10,959 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, 1998 1997 Revenues: Rental income $ 421 $ 408 Other income 28 22 Total revenues 449 430 Expenses: Operating 158 174 General and administrative 22 19 Depreciation 99 94 Property taxes 37 41 Total expenses 316 328 Equity in net income of joint venture 2 4 Net income $ 135 $ 106 Net income allocated to general partner (1%) $ 1 $ 1 Net income allocated to limited partners (99%) 134 105 $ 135 $ 106 Net income per limited partnership unit $ 2.19 $ 1.72 Distributions per limited partnership unit $ 2.50 $ 2.50 See Accompanying Notes to Financial Statements c) UNITED INVESTORS INCOME PROPERTIES STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 61,063 $ -- $15,266 $15,266 Partners' (deficit) capital at December 31, 1997 61,063 $ (24) $10,881 $10,857 Partners' distributions -- (1) (153) (154) Net income for the three months ended March 31, 1998 -- 1 134 135 Partners' (deficit) capital at March 31, 1998 61,063 $ (24) $10,862 $10,838 See Accompanying Notes to Financial Statements
d) UNITED INVESTORS INCOME PROPERTIES STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 135 $ 106 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income of joint venture (2) (4) Depreciation 99 94 Amortization of lease commissions 2 2 Change in accounts: Receivables and deposits (26) (36) Other assets 18 14 Accounts payable (3) 7 Tenant security deposit liabilities 2 2 Accrued property taxes 24 24 Other liabilities (11) (1) Net cash provided by operating activities 238 208 Cash flows from investing activities: Property improvements and replacements (40) (23) Distributions from joint venture -- 47 Net cash (used in) provided by investing activities (40) 24 Cash flows from financing activities: Partners' distributions (154) (154) Net cash used in financing activities (154) (154) Net increase in cash and cash equivalents 44 78 Cash and cash equivalents at beginning of period 728 633 Cash and cash equivalents at end of period $ 772 $ 711 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") 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, 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 fiscal year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - INVESTMENT IN JOINT VENTURE The Partnership owns a 35% interest in Corinth Square ("Corinth"), a joint venture with United Investors Income Properties II, an affiliated partnership in which the General Partner is also the sole general partner. The joint venture owns a 24,000 square foot medical office building located in Prairie Village, Kansas. The Partnership reflects its interest in its joint venture property 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. 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. Prior to February 25, 1998, the General Partner was a wholly-owned subsidiary of MAE GP Corporation ("MAE GP"), an affiliate of Insignia Financial Group ("Insignia"). Effective February 25, 1998, MAE GP was merged into Insignia Properties Trust ("IPT"), which is an affiliate of Insignia. Thus the General Partner is now a wholly-owned subsidiary of IPT. The partnership agreement provides for payments to affiliates for property management services based on a percentage of revenue 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 for the three months ended March 31, 1998 and 1997 (in thousands): 1998 1997 Property management fees (included in operating expenses) $ 21 $ 20 Reimbursement for services of affiliates (included in general and administrative and operating expenses) 8 9 For the period from January 1, 1997, to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an insurer unaffiliated with the General Partner. An affiliate of the 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner which received payments on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter 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 General Partner of the Partnership. NOTE D - INVESTMENT IN CORINTH SQUARE JOINT VENTURE The Partnership owns a 35% interest in Corinth, a joint venture with United Investors Income Properties II, an affiliated partnership, in which the General Partner is also the sole general partner. Corinth is accounted for using the equity method of accounting (see Note B). The condensed balance sheet of Corinth at March 31, 1998, is summarized as follows (in thousands): Assets Commercial property, net $1,701 Other assets 126 Total $1,827 Liabilities and Partners' Capital Liabilities $ 54 Partners' capital 1,773 Total $1,827 Condensed statements of operations of Corinth for the three months ended March 31, 1998 and 1997, are as follows (in thousands): 1998 1997 Revenue $ 89 $ 82 Costs and expenses 85 68 Net income $ 4 $ 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of three apartment complexes and a commercial office building. The following table sets forth the average occupancy of the properties for each of the three month periods ended March 31, 1998 and 1997: Average Occupancy Property 1998 1997 Bronson Place Apartments Mountlake Terrace, Washington 96% 95% Meadow Wood Apartments Medford, Oregon 83% 90% Defoors Crossing Apartments Atlanta, Georgia 92% 87% Peachtree Corners Medical Building Atlanta, Georgia 74% 74% The General Partner attributes the decreased occupancy at Meadow Wood Apartments to softening market conditions. Beginning in the fourth quarter of 1997, rents were decreased on one bedroom units, which suffered the highest vacancy. As a result, physical occupancy had increased to 92% by the end of April. The increase in occupancy at DeFoors Crossing is a result of favorable local market conditions and the use of concessions. Management continues to monitor and adjust rental rates at all properties to maximize total revenue. The Partnership realized net income of $135,000 for the three month period ended March 31, 1998, compared to net income of $106,000 for the three month period ended March 31, 1997. The increase in net income is primarily attributable to increased rental income and decreased operating expenses. Rental income increased as a result of increased rental rates at Bronson Place and increased occupancy at DeFoors Crossing. The decreased operating expense was primarily due to reduced normal maintenance expenses at Bronson Place. Also contributing to the decrease in operating expense was a decrease in major repairs and maintenance. Included in operating expense for the three month period ended March 31, 1997 is approximately $4,000 of major repairs and maintenance comprised primarily of swimming pool repairs. No major repairs and maintenance expenses were incurred during the three month period ended March 31, 1998. 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 expenses. 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. At March 31, 1998, the Partnership had cash and cash equivalents of approximately $772,000 compared to approximately $711,000 at March 31, 1997. The net increase in cash and cash equivalents for the three month period ended March 31, 1998 was $44,000 compared to $78,000 for the three month period ended March 31, 1997. Net cash provided by operating activities increased due to the increased revenues and decreased operating expenses for the three month period ended March 31, 1998, as discussed above. Net cash used in investing activities increased primarily due to distributions being received from the joint venture during 1997. Net cash used in financing activities remained constant. 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. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. Distributions to partners of $154,000 were made during the three month periods ended March 31, 1998 and 1997. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. The General Partner anticipates that the Partnership will continue to make cash distributions as property operations permit throughout 1998. Year 2000 The Partnership is dependent upon the 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 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) 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 March 31, 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. UNITED INVESTORS INCOME PROPERTIES By: United Investors Real Estate, Inc. Its General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President and Director By: /s/ Robert D. Long, Jr. Robert D. Long, Jr. Vice President and Chief Accounting Officer Date: May 14, 1998 EX-27 2
5 This schedule contains summary financial information extracted from United Investors Income Properties 1998 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-31-1998 MAR-31-1998 772 0 0 0 0 0 12,406 3,097 10,959 0 0 0 0 0 10,838 10,959 0 449 0 0 316 0 0 0 0 0 0 0 0 135 2.19 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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