-----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, RxUSbmWecoPeUDTvaxmL2Tra+TEVcRAQt/JBPJlKziDz6ROckw6ZAMD44mzKi9mp Wj2LEZlCKA69fo4VmU7+vA== 0000317331-96-000005.txt : 19961106 0000317331-96-000005.hdr.sgml : 19961106 ACCESSION NUMBER: 0000317331-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES III CENTRAL INDEX KEY: 0000317331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942653686 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10273 FILM NUMBER: 96654436 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391591 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period.........to......... Commission file number 0-10273 CONSOLIDATED CAPITAL PROPERTIES III (Exact name of small business issuer as specified in its charter) California 94-2653686 (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) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996
Assets Cash and cash equivalents: Unrestricted $3,730 Restricted-tenant security deposits 114 Accounts receivable 33 Escrows for taxes and insurance 278 Other assets 253 Investment properties: Land $ 1,552 Buildings and related personal property 12,157 13,709 Less accumulated depreciation (9,028) 4,681 $9,089 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 15 Tenant security deposits 114 Accrued taxes 165 Other liabilities 211 Mortgage notes payable 4,200 Partners' Capital (Deficit) General partner $(1,854) Limited partners (158,636 units and outstanding) issued and outstanding) 6,238 4,384 $9,089 See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,025 $ 1,044 $ 3,171 $ 3,127 Other income 93 88 289 373 Total revenues 1,118 1,132 3,460 3,500 Expenses: Operating 394 462 1,309 1,359 General and Administrative 112 133 302 527 Maintenance 168 184 487 502 Depreciation 211 280 672 831 Interest 187 296 560 721 Property Taxes 71 77 283 253 Total expenses 1,143 1,432 3,613 4,193 Gain on disposition of property (Note F) 1,820 -- 1,820 -- Extraordinary gain on foreclosure (Note F) 1,149 -- 1,149 -- Net income (loss) $ 2,944 $ (300) $ 2,816 $ (693) Net income (loss) allocated to general partners (4%) $ 118 $ (12) $ 113 $ (28) Net income (loss) allocated to limited partners (96%) 2,826 (288) 2,703 (665) Net income (loss) $ 2,944 $ (300) $ 2,816 $ (693) Net income (loss) per weighted average limited partnership unit: Income (loss) before extraordinary item $ 10.86 $ (1.82) $ 10.09 $ (4.19) Extraordinary gain 6.95 -- 6.95 -- Net income (loss) $ 17.81 $ (1.82) $ 17.04 $ (4.19) See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 158,945 $ 1 $79,473 $79,474 Partners' capital (deficit) at December 31, 1995 158,636 $(1,952) $ 3,900 $ 1,948 Distributions Paid -- (15) (365) (380) Net income for the nine months ended September 30, 1996 -- 113 2,703 2,816 Partners' capital (deficit) at September 30, 1996 158,636 $(1,854) $ 6,238 $ 4,384 See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net income (loss) $ 2,816 $ (693) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on repayment of mortgage notes payable -- 99 Gain on disposition of property (1,820) -- Extraordinary gain on foreclosure (1,149) -- Depreciation 672 831 Amortization of discounts, lease commissions and loan costs 38 43 Change in accounts: Restricted cash 9 (9) Accounts receivable 72 41 Escrows for taxes and insurance (201) (88) Other assets (11) (8) Accounts payable (171) 106 Tenant security deposits liabilities (8) 1 Accrued taxes 168 154 Other liabilities 127 115 Net cash provided by operating activities 542 592 Cash flows from investing activities: Property improvements and replacements (140) (176) Deposits to restricted escrows -- (7) Receipts from restricted escrows 7 -- Purchase of investments -- (15,273) Proceeds from sale of investments -- 18,292 Repayment of notes receivable -- 2,316 Net cash (used in) provided by investing activities (133) 5,152 Cash flows from financing activities: Payments on mortgage notes payable (33) (167) Repayment of mortgage notes payable (3,174) (1,592) Proceeds from mortgage notes payable 4,200 -- Payment of loan costs (146) -- Partners' distributions (380) (1,428) Net cash provided by (used in) financing activities 467 (3,187) Net increase in cash and cash equivalents 876 2,557 Cash and cash equivalents at beginning of period 2,854 2,090 Cash and cash equivalents at end of period $ 3,730 $ 4,647 Supplemental disclosure of cash flow information: Cash paid for interest $ 553 $ 530 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) (in thousands) SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES Foreclosure During the third quarter of 1996, Mountain Plaza Apartments was foreclosed upon by the lender. In connection with this foreclosure, the following accounts were adjusted by the non-cash amounts noted below. 1996 Accounts receivable $ (15) Other assets (106) Investment properties (2,364) Accrued taxes 34 Other liabilities 141 Mortgage notes payable 3,459 Gain on foreclosure of property $ 1,149 See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL PROPERTIES III NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Consolidated Capital Properties III ("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 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 and nine month periods ended September 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. 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, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Consolidation The Partnership's financial statements include the accounts of ConCap Mountain Plaza Associates, Ltd. ("Mountain Plaza Associates), CCP III Associates, Ltd. ("CCP III Associates") and ConCap Village Green Associates, Ltd. ("Village Green Associates"), three wholly-owned limited partnerships. All intercompany transactions have been eliminated. Cash and Cash Equivalents Cash and cash equivalents for purposes of reporting cash flows include cash on hand, money market funds and certificates of deposit with original maturities of three months or less. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has paid property management fees based on collected gross rental revenues for property management services in each of the nine months ended September 30, 1996 and 1995. In late December 1994, an affiliate of the General Partner assumed day-to-day property management responsibilities for all of the Partnership's properties. Property management fees of approximately $162,000 and $166,000 were paid to affiliates of the General Partner for the nine months ended September 30, 1996 and 1995, respectively. These fees are included in operating expenses. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES (CONTINUED) The Limited Partnership Agreement ("Partnership Agreement") provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow from operations to be paid to the General Partner for executive and administrative management services. Under this provision of the Partnership Agreement, fees of $32,000 were paid to affiliates of the General Partner during the nine months ended September 30, 1996. No fees were paid or accrued under this provision of the Partnership Agreement during the nine months ended September 30, 1995. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $148,000 and $234,000 were paid to the General Partner and affiliates for the nine months ended September 30, 1996 and 1995, respectively. Additionally, the Partnership paid $23,000 and $5,000 during the nine months ended September 30, 1996 and 1995, respectively, to an affiliate of the General Partner for lease commissions at the Partnership's commercial property. These lease commissions are included in other assets and amortized over the term of the respective leases. In July 1995, the Partnership began insuring its properties under a master policy through an agency and 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 current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner who receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. NOTE C - DISTRIBUTIONS In September of 1996, the General Partner declared and paid distributions attributable to cash flow from operations, totalling approximately $368,000 to the partners. In April of 1996, the Partnership paid state withholding taxes of $12,000 for non-resident limited partners. This payment is reflected as a distribution to the Limited Partners. In January of 1995, the General Partner declared and paid distributions representing a return of capital totalling approximately $1.4 million or $9.00 per Unit to the Limited Partners. NOTE D - REPAYMENT OF NOTE RECEIVABLE In October of 1988, the Partnership accepted a $2.1 million note receivable in connection with the sale of the Columns of Castleton Apartments. The note was scheduled to mature in June of 1996. In March of 1995, the Partnership received the outstanding principal balance of approximately $2.3 million, which represents the original principal balance plus unpaid interest, in settlement of the borrower's liability under the note agreement. NOTE E - REFINANCE OF MORTGAGE NOTES PAYABLE During the second quarter of 1996, the Partnership entered into an interim financing arrangement for both Ventura Landing and Village Green for $2.2 million and $2 million, respectively. The previous Ventura Landing note of $3.2 million was repaid at that time. The interest rate is 250 basis points over the 30-day LIBOR, resulting in a total note rate of 8.00%. The loans matured on August 1, 1996, with a 60-day extension option. The Partnership exercised this option and extended the maturity of the loans to October 1, 1996. On September 30, 1996, the Partnership requested and was granted an additional extension of the maturity of the loans to November 15, 1996. The Partnership has the option to convert the interim loans to fixed rate amortizing loans with an interest rate equal to the Treasury Rate, as defined in the financing agreement, plus 2.15%. Such converted loans would mature in ten years with monthly payments of principal and interest based on a schedule which would fully amortize the loans over a thirty year term. The Partnership is, however, seeking alternative long- term financing to obtain a lower interest rate. NOTE F - FORECLOSURE OF MOUNTAIN PLAZA APARTMENTS On September 3, 1996, the lender foreclosed on Mountain Plaza Apartments. The mortgage note payable had been in default since May 13, 1996. In the Managing General Partner's opinion, it was not in the Partnership's best interest to contest the foreclosure action. During the third quarter of 1996, the Partnership recorded a gain on disposition of property of $1,820,000, to increase the carrying value of the Mountain Plaza assets to their estimated market value and an extraordinary gain on the foreclosure of $1,149,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of three apartment complexes and one commercial property. The following table sets forth the average occupancy of the properties for each of the nine months ended September 30, 1996 and 1995: Average Occupancy 1996 1995 Professional Plaza Office Building 97% 96% Salt Lake City, UT Ventura Landing Apartments 95% 91% Orlando, FL Village Green Apartments 95% 92% Altamante Springs, FL West Chase Apartments 93% 90% Lexington, KY The increase in occupancy at the Ventura Landing Apartments is the result of increased traffic at the property and referrals from current tenants. The increase in occupancy at the Village Green Apartments resulted from lease concessions being offered to new tenants. Concessions were necessary to remain competitive in the market. The increase in occupancy at the West Chase Apartments is the result of a resident retention program with concessions offered for renewing a twelve month lease. The Partnership realized net income of $2,816,000 for the nine months ended September 30, 1996, of which $2,944,000 was net income for the third quarter. The corresponding net losses for the comparable periods in 1995 were $693,000 and $300,000, respectively. The increase in net income for both the three and nine month periods ended September 30, 1996, is primarily due to the foreclosure of Mountain Plaza Apartments in September of 1996. This foreclosure resulted in an extraordinary gain on foreclosure in 1996 of $1,149,000, as well as a gain recorded to increase the carrying value of the Mountain Plaza assets to their estimated market value of $1,820,000. The decrease in other income is attributable to the absence of interest income from the Columns of Castleton note receivable which was collected in March of 1995. Depreciation, interest, and general and administrative expenses decreased for the nine months ended September 30, 1996, compared to the nine months ended September 30, 1995. The decrease in depreciation expense is attributable to many of the assets acquired with the purchase of the partnership now being fully depreciated and the write-off of the Mountain Plaza assets resulting from the foreclosure. Interest expense decreased as a result of the retirement of notes payable secured by Village Green Apartments and Professional Plaza Office Building in August 1995. The interest expense decrease resulting from these items was partially offset by the refinancing of the Ventura Landing note payable, a new mortgage note payable secured by Village Green Apartments, and default interest on the mortgage note payable secured by Mountain Plaza Apartments which was foreclosed upon during the third quarter of 1996. General and administrative expenses decreased for the nine months ended September 30, 1996, compared to the nine months ended September 30, 1995, due to non-recurring legal, printing and postage costs associated with the Partnership's required responses to various tender offers during 1995. The decrease in general and administrative expenses was also affected by decreased expense reimbursements related to the combined efforts of the Dallas and Greenville partnership administration staffs during the transition period in the first quarter of 1995. The costs related to the transition efforts in 1995 were incurred to minimize any disruption in the year-end reporting function including the financial reporting and K-1 preparation and distribution. The increase in property taxes resulted from the payoff of a 1990 tax liability of $168,000, of which $68,000 was underaccrued, in order to secure the new note payable at Village Green Apartments. 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. 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 General Partner will be able to sustain such a plan. At September 30, 1996, the Partnership held cash and cash equivalents of $3,730,000 compared to $4,647,000 at September 30, 1995. Net cash provided by operating activities decreased primarily due to increased funding of tax escrow accounts and the payments of accounts payable on Mountain Plaza. Net cash used in investing activities increased due to the final collection of the Columns of Castleton note receivable in March of 1995 which favorably impacted 1995's cash flows. In addition, net proceeds from sales of long-term investments were reduced in 1996 due to the Partnership investing primarily in short-term cash equivalents. Net cash provided by financing activities increased due to cash received from the refinancing of the Village Green Apartments and Ventura Landing Apartments during the second quarter of 1996. The partners amended the Partnership Agreement in the fourth quarter of 1995 to modify the requirement that the Partnership maintain reserves equal to at least 5% of invested capital to instead require reserves in an amount deemed reasonable and prudent by the General Partner. 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 $4,200,000 matures at various times with balloon payments due at maturity, at which time the properties will either be refinanced or sold. Distribution of approximately $380,000 and $1,428,000 were made to the partners during the nine months ended September 30, 1996 and 1995, respectively. Future cash distributions will depend on the levels of net cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. On January 20, 1995, an affiliate of the General Partner, Insignia CCP III Acquisition, L.L.C., closed an offer to purchase Units (the "Tender Offer") for a cash price of $50.00 per Unit to Limited Partners of record as of December 15, 1994. Approximately 2,260 Limited Partners holding 36,882 Units (23.24% of total Units) accepted the Tender Offer and sold their Units to Insignia CCP III Acquisition, L.L.C. effective January 20, 1995, for an aggregate sales price of approximately $1.8 million. 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 A Form 8-K dated September 3, 1996, was filed reporting the disposition of Mountain Plaza Apartments. 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. CONSOLIDATED CAPITAL PROPERTIES III By: CONCAP EQUITIES, INC. General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President By: /s/ Robert D. Long, Jr. Vice President/CAO Date: November 5, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties III 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000317331 CONSOLIDATED CAPITAL PROPERTIES III 1,000 9-MOS DEC-31-1996 SEP-30-1996 3,730 0 33 0 0 0 13,709 9,028 9,089 0 4,200 0 0 0 4,384 9,089 0 3,460 0 0 3,613 0 560 0 0 0 0 1,149 0 2,816 17.04 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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