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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
Commission file number 33-17577
U.S. Realty Income Partners L.P.
(Exact name of registrant as specified in its charter)
Delaware 62-1331754
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
P. O. Box 58006, Nashville, Tennessee 37205
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code (615)665-5959
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NOT APPLICABLE NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
NOT APPLICABLE
(Title of class)
Indicate by check mark whether the registrant (1) has 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part II of this Form 10-K or any
amendment to this Form 10-K. Yes X No
The aggregate sales price of the limited partnership interests subscribed
for by non-affiliates was $4,858,000 at March 24, 2003. There is no public
market for these interests.
U.S. REALTY INCOME PARTNERS L.P.
2002 FORM 10-K ANNUAL REPORT
INDEX
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of Limited Partners. . . . . . 4
PART II
Item 5. Market for the Registrant's Limited Partnership
Interests and Related Limited Partner Matters. . . . . . . . . 5
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 6
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . 12
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . 13
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and Related Transactions . . . . . . . . 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Certification of Principal Executive Officer and Chief Financial
Officer under Securities Exchange Act Rules 13a-14 and 15d-14 . . . . . 19
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated November 30, 1987, as
supplemented through December 1998 and filed pursuant to Rule 424(b), are
hereby incorporated by reference.
PART 1
Item 1. Business
U.S. Realty Income Partners L.P. (the "Partnership") is a Delaware limited
partnership formed in 1987 for the purpose of acquiring, operating, holding and
ultimately disposing of existing income producing residential and commercial
real estate properties. The Partnership sold $4,858,000 limited partnership
interests (the "Units") through November 30, 1989, when it terminated its
public offering (the "Offering") pursuant to a Registration Statement on Form
S-11 under the Securities Act of 1933, as amended, which Offering registered
20,000 Units. The Partnership began admitting limited partners on May 15, 1988.
The principal investment objectives of the Partnership are: (i)
preservation and protection of capital; (ii) long-term capital appreciation;
(iii) distribution of current cash flow, some of which may not be subject to
federal income taxes in the early years of the Partnership's operations; (iv)
build-up of equity through reduction of mortgage indebtedness on Partnership
properties; (v) a diversified real estate portfolio; and (vi) federal income
tax deductions during the initial years of the Partnership's operations which
may be used to offset income from the Partnership and possibly other passive
sources.
The Partnership is managed by the general partner of the Partnership
Vanderbilt Realty Joint Venture (the "General Partner"). Vanderbilt Realty
Associates, Inc., acts as the managing partner of the General Partner. The
General Partner has the responsibility for the initial selection, evaluation
and negotiation of the investments for the Partnership. In making the
Partnership's investments, the General Partner considered various real property
and financial factors, including the condition and use of the property, the
prospects for long-range liquidity, income-producing capacity, long-term
appreciation and income tax considerations. In addition, the General Partner
considers the possible effect of shortages of materials, supplies and energy
sources. As of December 31, 1992, the Partnership had fully invested the
proceeds raised in its offering through the purchase of two properties through
joint venture arrangements.
The Partnership invested in property only if one or more of the following
conditions were met: (1) during the period of at least one year preceding the
purchase, the property generated (or would have generated if leases currently
in existence had been in effect) cash flow in an amount estimated to be
consistent with the Partnership's objectives; or (2) for a period of at least
two years, the projection of income from the property based on executed leases
or other appropriate guarantees indicates the Partnership should obtain from
the property cash flow consistent with its investment objectives.
The Partnership has no employees. The General Partner and its affiliates
are permitted to perform services for the Partnership for a competitive fee and
have done so.
The business of the Partnership is not seasonal and the Partnership does
no foreign or export business.
A presentation of information about industry segments is not applicable
because the Partnership operates solely in the real estate industry.
Item 2. Properties.
In October 1988, the Partnership acquired a 66.67% interest in a Tennessee
joint venture known as Bellevue Plaza Partners owning as its primary asset an
improved shopping center located in Nashville, Tennessee. The joint venture
interest was acquired for a purchase price of $1,500,000. Please refer to
Supplement No. 2 dated October 26, 1988 for additional information concerning
the acquisition of this joint-venture interest which supplement is incorporated
herein by reference.
In November 1988, the Partnership acquired a 50% ownership interest in a
joint venture known as DR/US West End General Partnership, a Virginia general
partnership (the "DR/US Joint Venture"). The DR/US Joint Venture owned an
office building located in Nashville, Tennessee. See Supplement No. 3 dated
November 29, 1988 for additional information concerning this property which
supplement is incorporated herein by reference. The Partnership purchased its
interest for an initial contribution of $900,000. In order to retain its 50%
interest, the Partnership contributed an additional $1,035,000 to the DR/US
Joint Venture by August 1989. In 1991, an additional $150,000 was contributed
as part of a Chapter 11 reorganization. In 1995, the DR/US Joint Venture
contributed its equity position in the office building to Daniels Southeast
Venture. See "Liquidity and Capital Resources".
In 2000 and 2001, Daniels Southeast Venture sold all its buildings and
distributed $1,700,000 to the Partnership.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the Limited Partners during the fourth
quarter ended December 31, 2002.
PART II
Item 5. Market for the Registrant's Limited Partnership Interests and Related
Limited Partner Matters.
At December 31, 2002, the Partnership had admitted Limited Partners
holding 4,858 Units.
The Partnership does not currently intend to list the Units on a national
securities exchange, and there is no public market for the Units. If a public
market for the Units does not develop, the Partnership may, in the sole
discretion of the General Partner, repurchase Units under certain
circumstances, as set forth in the Partnership's prospectus. At the request of
a limited partner, other than a resident of the State of California, who wishes
to sell all or a part of the Limited Partner's Units, the General Partner may
assist such Limited Partner in locating a purchaser, within the limit of
applicable laws and regulations. Neither the General Partner nor the
Partnership is obligated to redeem or repurchase Units.
Item 6. Selected Financial Data.
U.S. Realty Income Partners L.P.
(a Delaware limited partnership)
Year Ended December 31,____
2002 2001 2000__
Selected Income Statement Data:
Rental Income $947,192 $ 878,254 $ 862,317
Interest Income 11,174 42,325 28,372
Interest Expense 268,903 282,025 294,906
Operating Expense 258,157 263,419 246,590
Income from Joint Venture 21,746 1,456,737 397,437
Net Income $ 112,064 $1.524.183 $ 444,443
Net Income Per
Limited Partnership Interest $ 21.91 $ 298.06 $ 86.91
U.S. Realty Income Partners L.P.
(a Delaware limited partnership)
Year Ended December 31,__
2002 2001 2000__
Selected Balance Sheet Data:
Property and Improvements-Net $3,277,537 $3,364,773 $3,515,073
Investments in Joint Venture -- -- 1,000
Notes Payable 3,557,481 3,743,183 3,915,764
Cash Distributions to Limited
Partners 200,000 1,300,000 400,000
Cash Distributions per Limited
Partnership Interest 41.17 267.60 82.34
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing elsewhere in this annual
report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
As of December 31, 2002, the Partnership had raised $4,858,000 in funds
from Limited Partners. The Partnership's offering terminated in November 1989.
During 1988 the Partnership purchased interests in two joint ventures
located in Nashville, Tennessee.
Bellevue
In October 1988, the Partnership acquired a 66.67% interest in a Tennessee
joint venture known as Bellevue Plaza Partners holding as its primary asset a
shopping center located in Nashville, Tennessee ("Bellevue")which was renovated
in 1988. The Bellevue property is currently 100% leased. Lease rent from the
tenants amounts to approximately $64,000 per occupancy month. In addition, the
tenants pay common area maintenance charges of $7,200 per month for a total of
$71,200 per month.
On July 1,1999, the joint venture obtained a $4,150,000 first mortgage
loan on this property from an unaffiliated lender. The mortgage bears interest
at a rate of 7.25% per annum and requires monthly installments of principal and
interest of $37,656. The loan fully amortizes over 15 years. After paying off
Mass Mutual, the partnership had enough cash to pay for the improvements made
to the T. J. Maxx space. These funds had previously been advanced by T. J. Maxx
to the Partnership. This resulted in T. J. Maxx beginning monthly rental
payments in November of 1999. T. J. Maxx/Marshalls moved into the center in
November 1999 as planned. They occupy 28,300 square feet. Due to the
refinancing, payments from T. J. Maxx has increased the gross cash flow from
the center by approximately $50,000 a year over the previous tenant.
DR/US West End
In November 1988, the Partnership acquired a 50% ownership interest in a
joint venture known as DR/US West End General Partnership (the "Joint Venture")
which owns an office building located in Nashville, Tennessee.
Properties in Raleigh, NC
These properties consist of one 110,000 sq. ft. building (Center 98) and four
50,000 sq. ft. buildings (Park). These buildings are operating according to
schedule. Prudential Life Insurance Company has funded the Partnership with
approximately $7,280,000 to build a garage and a new 55,600 sq. ft. building
which was completed at the end of 1998. Approximately 95% of this space has
been leased. The new parking garage will have 178 spaces.
During early second quarter 1999, the partners of the Prudential/Daniel Office
Venture decided to investigate the potential for a sale of the entire
portfolio. In April 1999 representatives of the partners toured the properties
and each partner submitted an independent list of potential brokerage firms
that could handle the sale of a $50 million portfolio located in Raleigh and
Nashville. After the review of these lists, the partners reduced the list to
three qualified groups: Trammell Crow Company, Cushman & Wakefield and
Rockwood Realty Associates. All three groups made presentations and were
interviewed in Atlanta on May 12, 1999. All three firms were asked to make
site visits and to value the portfolio. Based on such indicators as current
work load/listings, national focus, regional market knowledge, past performance
and pricing, Rockwood was selected on June 16, 1999.
During June and throughout July 1999, Rockwood did an exhaustive review of the
properties and of the Raleigh and Nashville markets. Introductory letters were
distributed t a list of 257 national, regional and local prospective
purchasers. Forty-eight groups responded to the introductory letter, executed
confidentially agreements and then received the sales package prepared by
Rockwood with a portfolio price of $57,000,000. During the month of September
on-site property inspections were coordinated for all of the interested
purchasers. A call for offers was set for August 31. Rockwood received seven
offers, two of which were for just Nashville or Raleigh. The balance of the
six were for the entire portfolio. The offers ranged from $43,000,000 to
$51,500,000 for the portfolio. After analyzing the offers, the Lord Baltimore
Group was selected in late September at a price of $51,500,000. Lord
Baltimore's investment committee rejected the purchase due to single market
exposure in Raleigh of 370,000 square feet (the Somerset Properties). The next
highest offer for the entire portfolio was $49,400,000. However, the
individual offers from two different prospective purchasers totaled $50,500,000
and accordingly, the partnership accepted an offer for Raleigh at $38,250,000
from Drucker and Faulk and for Nashville at $12,250,000 from Highwoods
Properties. Both of the purchasers agreed on these prices, but failed to
execute a purchase contract and terminated their respective interest during the
month of November.
During December and January 2000, Rockwood re-contacted the remaining
prospective purchasers who had make offers, as well as other groups who were
initially interested but did not make offers. In 2000, the 3310 Office
Building was sold to a private investor for $12,200,000. The Partnership
received $397,000 from the sale with an additional $70,000 placed in reserve.
In the spring of 2001 the office buildings in Raleigh, North Carolina were
sold. Our share of the net proceeds was $1,300,000 and this was distributed in
September of 2001.
Liquidity and Capital Resources
At December 31, 2002, the partnership had $814,043 in cash and cash
equivalents. This represents 16.76% of capital raised. The Partnership had
established a working capital reserve of 5% of the gross proceeds of the
offering. After May 15, 1990, the Partnership's Prospectus provided that the
working capital reserve could be reduced to 3% of capital raised depending upon
the Partnership's experience with its properties. The working capital was
reduced to allow the Partnership to pay costs associated with the DR/US
refinancing. In the event such reserves are insufficient to satisfy
unanticipated costs the Partnership will be required to borrow additional funds
to meet such costs. The General Partner does not anticipate having to borrow
for working capital reserves in 2003.
The General Partner had deemed it advisable not to make any cash
distributions since May 1990. In December 2000, the General Partner made a
cash distribution of $400,000 to the Limited Partners. This represented the
proceeds from the sale of the 3310 Office Building held in the PruDan
partnership. In September 2001, the General Partner made a cash distribution
of $1,300,000 to the Limited Partners. This represented the proceeds from the
sale of the remaining properties held in the PruDan Partnership. In December
2003, the General Partner made a cash distribution of $200,000 to the Limited
Partners. This represented proceeds from operating cash flow and excess funds
from the sale of the PruDan properties in 2001.
On November 1, 1988, for an initial investment of $900,000, the Partnership
acquired a 50% interest in the DR/US West End General Partnership (the "DR/US
Joint Venture"), a Tennessee general partnership formed to own and operate a
commercial office building in Nashville, Tennessee (the "3310 Office
Building").
In view of the expiration of the lease for the largest tenant of the 3310
Office Building and the maturity of the senior debt on the property, the DR/US
Joint Venture began to consider future plans for the 3310 Office Building as
well as a sale of the property and discussed possible alternatives with third
parties, including the Prudential Life Insurance Company of America
("Prudential").
Effective August 1995, the DR/US Joint Venture contributed all of its
assets to a newly formed limited partnership, the Daniel S.E. Limited
Partnership, a Virginia limited partnership (the US/Daniel Venture"). The
US/Daniel Venture then contributed its assets to a newly-formed limited
liability company known as Prudential/Daniel Office Venture, LLC, (the "PruDan
L.L.C"). The members of PruDan LLC are the US/Daniel Venture and Prudential.
The assets of PruDan LLC consisted of: (1) the 3310 Office Building, a
107,000 square foot office building in Nashville, Tennessee; (2) the Somerset
Park Business Center, a 108,113 square foot six-story office building located
in Raleigh, North Carolina; and (3) Somerset Park, 207,326 square feet in four
two-story office building located in Raleigh, North Carolina (items 2 and 3 are
collectively referred to as the "Somerset Buildings"). The assets of PruDan
LLC reflected indirect capital contributions from the Partnership, Daniel
Realty Company ("DRC") and First Daniel Realty Development Corporation
(collective, with DRC, "Daniel") and Prudential valued at $1,361,445,
$2,131,055 and $31,432,500, respectively, or equity interests of 3.9%, 6.1% and
90.0%, respectively. The Partnership's capital contribution consisted of its
interest in the assets of the DR/US Joint Venture, principally the 3310 Office
Building. Daniel's capital contribution consisted of its interest in the assets
of the DR/US Joint Venture (valued at $355,600) and is interest in the Somerset
Buildings (valued at $1,775,455). Prudential's capital contribution consisted
of payoff of $7,537,955 of debt on the 3310 Office Building, plus $120,000 for
a new roof repair escrow, purchasing Metropolitan Life Insurance's interest in
the Somerset Buildings, payoff of debt on the Somerset Buildings, and
transactions costs including due diligence, closing costs, and fees for
professional services (legal and accounting) totalling 1.5% of the transaction.
In reaching the decision to contribute the Partnership's interest in the
DR/US Joint Venture to the PruDan LLC, the General Partners considered a number
of factors:
(1) The 3310 Office Building was subject to a first mortgage loan with
a principal debt balance at June 30, 1995 of $6,634,502, bearing
interest at 9%, and scheduled to mature in April 1997.
(2) A single tenant, Gresham & Smith ("G&S"), occupied 45.9% of the
space in the 3310 Office Building providing base annual lease
income of $932,000 pursuant to a lease scheduled to terminate in
October, 1998, less than nineteen months after maturity of the debt
on the property. This lease has been terminated.
(3) Based on its present projections, the DR/US Joint Venture estimated
that all of the existing cash flow between now and the year 2000
would be required to pay the debt expense and establish a reserve
necessary to find a replacement tenant for G&S or to make necessary
tenant improvements. The General Partners estimate that
approximately $1,200,000 could be required to make necessary
improvements to secure new tenants.
In making these considerations, the General Partners considered two
alternatives to the formation of the PruDan LLC; refinancing and sale of the
3310 Office Building. With the uncertainty surrounding the G&S lease, it was
unlikely that another lender would be willing to make a loan. G&S would not
commit to extend their lease at this time and even if a new loan could be
procured, it is unlikely that there would be sufficient proceeds to pay off the
existing debt. The mortgage problem created by the timing of the G&S lease
expiration also served to increase the difficulty in a sale of the property.
For these reasons, the General Partners believe the PruDan LLC presented the
most viable option for the Partnership.
The General Partners believed the Partnership's investment in the PruDan
LLC accomplished the following objectives:
(1) Eliminated the mortgage problem created by the expiration of the
G&S lease by retiring all debt on the 3310 Office Building;
(2) Reduced the direct risk to the Partnership involving the potential
expiration of the G&S lease and the potential loss of cash flow.
(3) Establishment of a strong working relationship with Prudential, an
entity with significant capital resources.
(4) Diversification of risk from single asset, single location to
multiple assets in different locations; and
(5) Access to cash flow from Bellevue Plaza formerly used for debt
service on the 3310 Office Building and now available for
distribution to the Partnership's limited partners.
These objectives were accomplished without requiring any additional debt or the
need for capital contributions from the Partnership's limited partners.
The operational results of the Partnership for the years ended December
31, 2002, 2001 and 2000 are summarized below:
Year Ended December 31, 2002:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL__
Revenues $ 948,119 $ 31,993 $ 980,112
Operating Expenses 190,000 68,157 258,157
Interest 268,903 - 268,903
Depreciation & Amort. 251,231 10,429 261,660
710,134 78,586 788,720
Net Operating Income (Loss) 237,985 ( 46,593) 191,392
Partnership Share 66 2/3% 100%
Partnership Net Income (Loss) $ 158,657 ($ 46,593) $ 112,064
Partnership Cash Flow $ 203,119 ($ 36,164) $ 166,955
Year Ended December 31, 2001:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL
Revenues $ 881,890 $ 1,495,426 $2,377,316
Operating Expenses 230,599 32,820 263,419
Interest 282,025 - 282,025
Depreciation & Amort. __227,459 ___32,961 __260,420
740,083 65,781 805,864
Net Operating Income 141,807 1,429,645 1,571,452
Partnership Share 66 2/3% 100%
Partnership Net Income $ 94,538 $1,429,645 $1,524,183
Partnership Cash Flow $ 188,690 $1,462,606 $1,651,296
Year Ended December 31, 2000:
JOINT VENTURE
BELLEVUE PARTNERSHIP TOTAL
Revenues $868,846 $ 419,280 $1,288,126
Operating Expenses 187,715 58,875 246,590
Interest 294,906 - 294,906
Depreciation & Amort. 244,526 10,428 254,954
727,147 69,303 796,450
Net Operating Income 141,699 349,977 491,676
Partnership Share 66 2/3% 100%
Partnership Net Income $ 94,466 $ 349,977 $ 444,443
Partnership Cash Flow $ 142,160 ($ 360,405) $ 502,565
The Partnership has utilized the proceeds of the offering as set forth
under "Estimated Use of Proceeds of the Offering," in the Partnership's
Prospectus to acquire, operate and hold for investment existing income
producing residential and commercial real estate properties. Since the proceeds
of the offering are less than the maximum amount the Partnership was unable to
diversify its investments to the extent initially desired.
The Partnership has established a working capital reserve of 5% of the
gross proceeds of the offering. After May 15, 1990 the Partnership's
Prospectus provided that the working capital reserve could be reduced to 3%
depending upon the Partnership's experience with its properties. At December
31, 2002, the Partnership had $814,043 in cash and cash equivalents. This
represents 16.76% of capital raised. In the event such reserves are
insufficient to satisfy unanticipated costs, the Partnership will be required
to borrow additional funds to meet such costs.
Due to the ongoing commitments with the lenders on the Joint Venture, the
General Partner had deemed it advisable not to make any cash distributions
since May 1990. In December 2000, the General Partner distributed $400,000 to
the Limited Partners. This represented the proceeds from the sale of the 3310
Office Building that was a part of the PruDan partnership. In September 2001,
the General Partner distributed $1,300,000 to the Limited Partners. This
represented the proceeds from the sale of the remaining properties held in the
PruDan Partnership. In December 2002, the General Partner distributed $200,000
to the Limited Partners. This represented operating cash flow and the
remaining funds from the sale of the PruDan properties.
Item 8. Financial Statements and Supplementary Data.
See Index to Financial Statements on Page F-l of Form 10-K for Financial
Statements and Financial Statement schedules, where applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Partnership.
The General Partner of the Partnership is Vanderbilt Realty Joint Venture,
a Tennessee general partnership. The constituent partners of Vanderbilt Realty
Joint Venture are Vanderbilt Realty Associates, Inc., a Tennessee corporation
wholly owned by Mr. Robert Bond Miller, and American Financial Planners Group,
Inc., a New York corporation. The Partnership is managed by the General
Partner through Miller & Associates, Inc., an Affiliate of the General Partner.
The following persons are the principal representatives of the constituent
partners of the General Partner and are responsible for the day-to-day
operations of the Partnership:
Name Age
Robert Bond Miller 67
Donald R. Zoch 46
Lee Rosenberg 49
Robert Bond Miller. Mr. Miller serves as President of Vanderbilt Realty
Associates, Inc., and Miller & Associates, Inc. Prior to establishing Miller &
Associates, Inc., he served as President of Jacques-Miller, Inc., which he co-
founded in 1969. During this tenure, Jacques-Miller, Inc., and its affiliates
acquired over 165 properties valued in excess of $600 million and raised a
total of $350 million in capital from 15,500 investors.
From 1965 to 1968, Mr. Miller was in charge of the Nashville office of
Blair, Follin, Allen & Walker, where he was responsible for sales and
installation of fringe benefit programs, including life, disability and health
insurance plans. Previously he was associated with Massachusetts Mutual Life
Insurance Co., from 1960 to 1965, during which time he became a Life Member of
the Million Dollar Roundtable and earned the Chartered Life Underwriter
designation. A founding member of the International Association of Financial
Planners (IAFP), he established the organization's Nashville Chapter and served
as its first President.
Mr. Miller received a Bachelor of Science degree in Aeronautics from St.
Louis University. Following graduation, he served three years in the U.S. Air
Force, receiving his honorable discharge as a first lieutenant.
Donald R. Zoch. Mr. Zoch is an executive officer of American Financial
Planners Group, Inc. Mr. Zoch has lectured extensively in this field and is a
Certified Financial Planner, Registered Investment Advisor and is licensed with
the National Association of Security Dealers, Inc. ("NASD"). Zoch & Zoch
Financial Group, Inc. has been active in the financial planning field since
1975; Mr. Zoch was an Adjunct Professor at the College of Financial Planning in
New Jersey and received a Bachelor of Arts degree in Business from Catholic
University of America, Washington, D.C.
Lee Rosenberg. Mr. Rosenberg is an executive officer of American
Financial Planners Group, Inc. and has more than 16 years experience in
financial planning Mr. Rosenberg has been a partner in ARS Financial Services,
Inc., Valley Stream, New York, a firm specializing in personal financing
planning for more than five years. He is a Certified Financial Planner,
Registered Investment Advisor and is licensed with the NASD, and is currently a
member and serves on the Board of Directors of the Long Island Society of the
Institute of Certified Financial Planners as well as being a Director of the
New York Chapter of National Speakers Association.
Mr. Rosenberg received a Bachelor of Arts degree in Business from Brooklyn
University, Brooklyn, New York.
There are no family relationships among executive officers and directors.
Miller & Associates, Inc.
Miller & Associates, Inc. was formed in 1986 by four individuals who were
officers of Jacques-Miller, Inc., a Tennessee corporation, which acts as a
general partner in real estate limited partnerships. Three of these four
individuals are no longer affiliated with Miller & Associates, Inc. Mr. Robert
Bond Miller is the sole shareholder of Miller & Associates, Inc.
Mr. Miller, the president of Miller & Associates, Inc. served as president
of Jacques-Miller,Inc., a company he co-founded in 1969. In addition, Mr.
Miller served as a general partner of Jacques-Miller Associates, an affiliate
of Jacques-Miller, Inc., which entity served as a general partner of various
investment partnerships sponsored by Jacques-Miller, Inc.
Item 11. Executive Compensation.
The Partnership is required to pay certain fees, make distributions and
allocate a share of the profits and losses of the Partnership to the General
Partner. See pages 11 to 13 of the Prospectus of the Partnership, which pages
are incorporated herein by reference, for a discussion of the compensation
payable to the General Partner and its Affiliates, as well as Note G to the
Financial Statements included herein.
The General Partner and its Affiliates may not be reimbursed by the
Partnership for its overhead costs or expenses, and no overhead costs or
expenses of the General Partner or its Affiliates can be allocated to or paid
by the Partnership. However, direct costs may be reimbursed, including
employee time spent on Partnership matters. The foregoing reimbursements of
expenses will be made regardless of whether any distributions of Operating Cash
Flow are made to the Limited Partners.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Limited Partners were admitted beginning May 15, 1988 and admissions
ceased in November 1989, at which time the Partnership's offering terminated.
As of this date, the Partnership is not aware of any person or group who has
subscribed for more than 5% of the outstanding Units.
(b) The officers and directors of the general partners of the General
Partner of the Partnership as a group have subscribed for the following Units:
Amount of Class Beneficial Ownership Percent of Class
Units of Limited
Partnership Interest None 0%
No officer or director of the general partners of the General Partner
possesses a right to acquire beneficial ownership of additional Units other
than those noted above.
Item 13. Certain Relationships and Related Transactions.
The Partnership is subject to various conflicts of interest arising out of
its relationship with the General Partner and its Affiliates. All agreements
and arrangements, including those relating to compensation, between the
Partnership and the General Partner and its Affiliates are not the result of
arm's-length negotiations.
Affiliates of the General Partner have been general partners or managers
of other limited partnerships or groups of investors, which have invested in
real properties. In addition, the General Partner and its Affiliates have and
continue to form and manage or advise additional public and private real estate
investment entities. The General Partner and its Affiliates will have
conflicts of interest in allocating management time, services and functions
between various existing partnerships and any future partnerships which they
may organize or serve, as well as other business ventures in which they are
involved. Miller & Associates, Inc., which, for a property management fee, may
perform property management services for Partnership properties, and may also,
in the future, solicit outside property management accounts.
Many of the officers and directors of the constituent partners of the
General Partner are also officers and directors of one or more entities (many
of which are affiliated with the General Partner) which engage in the
development, brokerage, sale, operation or management of real estate.
The General Partner and its Affiliates do intend to sponsor privately
offered real estate partnerships although it is not anticipated that the
investment objectives of such partnerships will be the same as those of the
Partnership.
The General Partner has certain interests in the Operating Cash Flow, Net
Sale or Refinancing Proceeds and profits and losses of the Partnership.
Because the timing and amount of Operating Cash Flow, Net Sale or Refinancing
Proceeds and profits and losses of the Partnership received by, or allocated
to, the Limited Partners may be affected by decisions of the General Partner,
including the timing of a sale of any of the Partnership properties, the
establishment and maintenance of reasonable reserves, the timing of
expenditures, the level of mortgage amortization and other matters, the General
Partner may have a conflict of interest with respect to such determinations.
Where conflicts arise from anticipated transactions with Affiliates of the
General Partner, the limitations described below have been adopted.
While the Partnership will make no loans to the General Partner or its
Affiliates, the Partnership may borrow money from the General Partner or its
Affiliates but only on terms as to interest rate, security, fees and other
charges at least as favorable to the Partnership as that changed by
unaffiliated lending institutions in the same locality on comparable loans for
the same purpose.
The General Partners and its Affiliates are not prohibited from providing
services to, and otherwise dealing or doing business with, persons who deal
with the Partnership, although there are no present arrangements with respect
to any such services. However, no rebates or "give-ups" may be received by the
General Partner or any of its Affiliates, nor may the General Partner or any
such Affiliates participate in any reciprocal business arrangement which would
have the effect of circumventing any of the provisions of the Agreement.
Zoch & Zoch Financial Group, Inc., a broker-dealer affiliated with the
General Partner, acted as Selling Agent in the offering but did not receive
selling commissions.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Financial Statements and Schedules
(See index of financial statements filed with this annual report included in
Item 8.)
(3) Exhibits
(a) Restated Limited Partnership Agreement of the Partnership
is hereby incorporated by reference to the Prospectus of
the Partnership dated November 30, 1987, as filed with
the Securities and Exchange Commission, File No. 33-17577,
as supplemented December 28, 1987, October 26, 1988, and
November 29, 1988.
(b) Annual Report
(c) Certification of Principal Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
(b) The following reports on Form 8-K were filed since the beginning of
the last quarter of the period covered by this report:
DATE
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
U.S. REALTY INCOME PARTNERS L.P.
By: Vanderbilt Realty Joint Venture
the General Partner
By: Vanderbilt Realty Associates, Inc.
its Managing General Partner
By: _/s/Robert Bond Miller
Robert Bond Miller
President, Director, Chief
Executive Officer, Chief Financial
Officer and Chief Accounting
Officer
March 24, 2003
Certification of Principal Executive Officer and Chief Financial Officer Under
Securities Exchange Act Rules 13a-14 and 15d-14
I, Robert Bond Miller, certify that:
1) I have reviewed this Annual Report on Form 10-K of U.S. Realty Income
Partners, LP;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3) Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as, and for, the periods presented in
this annual report;
4) I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the Registrant and I have:
1. Designed such disclosure controls and procedures to ensure that
material information relating to the Registrant is made known to
us by others, particularly during the period in which this
annual report is being prepared;
2. Evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report ("Evaluation Date"); and
3. Presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
5) I have disclosed, based on my most recent evaluation, to the
Registrant's auditors:
1. All significant deficiencies in the design and operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal contols; and
2. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6) I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of
the most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
By: /s/Robert Bond Miller___
March 24, 2003 Robert B. Miller
President, Director, Chief Executive
Officer, Chief Financial Officer and
Chief Accounting Officer
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