FORM 10-QSB.--QUARTERLY 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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-15675
DAVIDSON GROWTH PLUS, L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 52-1462866 (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) (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 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) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
March 31, 1997
Assets Cash and cash equivalents: Unrestricted $ 1,033 Restricted-tenant security deposits 107 Accounts receivable 4 Escrows for taxes and insurance 188 Restricted escrows 453 Other assets 358 Investment properties: Land $ 4,650 Buildings and related personal property 18,948 23,598 Less accumulated depreciation (8,570) 15,028 $17,171 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 42 Tenant security deposits 107 Accrued taxes 114 Other liabilities 180 Subordinated management fee 75 Mortgage notes payable 12,119 285 Minority Interest Partners' Capital (Deficit) General partners $ (691) Limited partners (28,371.75 units 4,940 4,249 issued and outstanding) $17,171
See Accompanying Notes to Consolidated Financial Statements
b) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Three Months Ended March 31, 1997 1996 Revenues: Rental income $1,243 $1,216 Other income 57 62 Total revenues 1,300 1,278 Expenses: Operating 365 379 General and administrative 46 56 Maintenance 119 180 Depreciation 192 185 Interest 267 271 Property taxes 115 110 Subordinated partnership management fee 8 6 Total expenses 1,112 1,187 Minority interest in net (21) (14) income of joint venture Net income $ 167 $ 77 Net income allocated to general partners (3%) $ 5 $ 2 Net income allocated to limited partners (97%) 162 75 $ 167 $ 77 Net income per limited partnership unit $ 5.71 $ 2.63
See Accompanying Notes to Consolidated Financial Statements
c) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 28,371.75 $ 1 $28,376 $28,377 Partners' capital (deficit) at December 31, 1996 28,371.75 $ (686) $ 5,127 $ 4,441 Distributions to partners -- (10) (349) (359) Net income for the three months ended March 31, 1997 -- 5 162 167 Partners' capital (deficit) at March 31, 1997 28,371.75 $ (691) $ 4,940 $ 4,249 See Accompanying Notes to Consolidated Financial Statements
d) DAVIDSON GROWTH PLUS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 167 $ 77 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 192 185 Amortization of discounts and loan costs 25 25 Minority interest in net income of joint venture 21 14 Change in accounts: Restricted cash 1 (2) Accounts receivable (1) 5 Escrows for taxes and insurance 56 46 Accounts payable 9 26 Tenant security deposit liabilities (1) 2 Accrued taxes (50) (52) Other liabilities (22) 23 Accrued subordinated partnership management fee 8 6 Net cash provided by operating activities 405 355 Cash flows from investing activities: Property improvements and replacements (28) (56) Deposits to restricted escrows (4) (5) Receipts from restricted escrows -- 4 Net cash used in investing activities (32) (57) Cash flows from financing activities: Payments on mortgage notes payable (54) (50) Distributions to partners (359) (360) Distributions to minority partner (35) (7) Net cash used in financing activities (448) (417) Net decrease in cash and cash equivalents (75) (119) Cash and cash equivalents at beginning of period 1,108 1,161 Cash and cash equivalents at end of period $1,033 $1,042 Supplemental disclosure of cash flow information: Cash paid for interest $ 242 $ 246 See Accompanying Notes to Consolidated Financial Statements
e) DAVIDSON GROWTH PLUS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements 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 the Managing General Partner, 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, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
Affiliates of Insignia Financial Group, Inc. ("Insignia") own the controlling ownership interest in the Partnership's Managing General Partner, with certain affiliates of Insignia providing property management and asset management services to the Partnership.
The following payments were made to Insignia and its affiliates during the three months ended March 31, 1997 and 1996:
1997 1996 (in thousands) Property management fees $ 65 $ 63 Reimbursement for services of affiliates 32 30
The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing 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 Managing 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 Managing General Partner by virtue of the agent's obligations is not significant.
The Partnership Agreement provides for the Managing General Partner to receive a fee for managing the affairs of the Partnership. The fee is 2% of adjusted cash from operations, as defined in the partnership agreement, and is payable only after the Partnership has distributed, to the limited partners, adjusted cash from operations in any year equal to 10% of the limited partners adjusted invested capital as defined in the partnership agreement. Unpaid subordinated partnership management fees at March 31, 1997, were $75,000, of which $8,000 relates to the three months ending March 31, 1997.
On December 8, 1995, an affiliate of the Managing General Partner, DGP Acquisition, L.L.C., ("DGP Acquisition"), distributed an offer to purchase up to 11,349 Limited Partner Units (the "Tender Offer") for a cash price of $240 per Unit to Limited Partners of record as of October 1, 1995. The Tender Offer, which originally expired on January 8, 1996, was extended to January 16, 1996. Approximately 254 Limited Partners holding approximately 2,049 Units (7.22% of total Units) accepted the Tender Offer and sold their units to DGP Acquisition for an aggregate sales price of approximately $492,000. As of January 1997, there were 2,829 holders of record owning approximately 28,372 Units.
On August 29, 1996, the Limited Partnership Agreement was amended to remove Davidson Diversified Properties, Inc. ("DDPI") as Managing General Partner and admit Davidson Growth Plus GP Corporation ("DGPGP"), an affiliate, as Managing General Partner in the place and stead of DDPI effective as of that date.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1997 and 1996:
Average Occupancy 1997 1996 The Fairway Apartments Plano, Texas 96% 98% The Village Apartments Brandon, Florida 98% 98% Brighton Crest Apartments Marietta, Georgia 91% 96%
The decrease in occupancy at Brighton Crest Apartments is attributable to tenants vacating the property to purchase homes in a favorable local housing market.
The Partnership realized net income of approximately $167,000 for the three months ended March 31, 1997, compared to net income of approximately $77,000 for the three months ended March 31, 1996. The increase in net income for the three month period ended March 31, 1997, is primarily attributable to a decrease in maintenance expense at each of the Partnership's properties. The decrease in maintenance expense at The Village Apartments was due to decreases in parking lot repairs and major landscaping related to tree trimming and removal. The decrease in maintenance expense at The Fairway Apartments was due to a decrease in foundation repairs at two of its apartment buildings. Brighton Crest's maintenance expense decreased as a result of decreased landscaping expense.
Included in maintenance expense is approximately $25,000 of major repairs and maintenance comprised primarily of plumbing fixture replacement and sewer repairs.
As part of the ongoing business plan of the Partnership, the Managing 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 expense. As part of this plan, the Managing 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 Managing General Partner will be able to sustain such a plan.
The Partnership held unrestricted cash of approximately $1,033,000 at March 31, 1997, compared to unrestricted cash of approximately $1,042,000 for the corresponding period of 1996. Net cash provided by operating activities increased primarily due to an increase in rental income combined with decreases in operating and maintenance expenses. Net cash used in investing activities decreased due to a decrease in property improvements and replacements. Net cash used in financing activities increased primarily due to increased distributions to the minority interest holder.
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 $12,119,000, net of discount, is amortized over 21 years to approximately 29 years with balloon payments due in 2002 and 2003 at which time the individual properties will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. Cash distributions of $359,000 and $360,000 were made to the partners for the quarters ended March 31, 1997, and 1996, respectively. Cash distributions of $35,000 and $7,000 were paid to the minority interest holder during the quarters ended March 31, 1997 and 1996, respectively.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: None.
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, 1997.
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.
DAVIDSON GROWTH PLUS L.P.
BY: DAVIDSON GROWTH PLUS GP CORPORATION
Managing General Partner
BY: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President BY: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer DATE: May 7, 1997
|This schedule contains summary financial information extracted from Davidson Growth Plus L.P. 1997 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing.|
|NAME: DAVIDSON GROWTH PLUS L.P.|
|PERIOD TYPE||3 MOS|
|FISCAL YEAR END||DEC 31 1997|
|PERIOD END||MAR 31 1997|
|CURRENT ASSETS||0 1|
|CURRENT LIABILITIES||0 1|
|TOTAL LIABILITY AND EQUITY||17,171|
|EPS PRIMARY||5.71 2|
|1||Registrant has an unclassified balance sheet.|
|2||Multiplier is 1.|