-----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, QRPnJ/UGJFI1mQQbbCOgOhukU9u7TzFF6KKq3Bx0wKUERcVKq1QkqA3nqYVtgRRK Dcb4u8in9vpsbPXbxJ5wuw== 0000317331-98-000001.txt : 19980504 0000317331-98-000001.hdr.sgml : 19980504 ACCESSION NUMBER: 0000317331-98-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980430 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: SEC FILE NUMBER: 000-10273 FILM NUMBER: 98606483 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 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 SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from.........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) (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) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED BALANCE SHEET (Unaudited) March 31, 1998 (in thousands, except unit data) Assets Cash and cash equivalents $ 2,202 Receivables and deposits 250 Restricted escrows 94 Other assets 296 Investment properties: Land $ 1,552 Buildings and related personal property 12,740 14,292 Less accumulated depreciation (9,735) 4,557 $ 7,399 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 34 Tenant security deposits payable 127 Accrued property taxes 56 Other liabilities 136 Mortgage notes payable 4,200 Partners' Capital (Deficit) General partners' $ (1,916) Limited partners' (158,582 units issued and outstanding) 4,762 2,846 $ 7,399 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 March 31, 1998 1997 Revenues: Rental income $ 908 $ 826 Other income 54 74 Total revenues 962 900 Expenses: Operating 441 444 General and administrative 62 65 Depreciation 111 101 Interest 85 84 Property taxes 56 54 Total expenses 755 748 Net income $ 207 $ 152 Net income allocated to general partners (4%) $ 8 $ 6 Net income allocated to limited partners (96%) 199 146 $ 207 $ 152 Net income per limited partnership unit $ 1.25 $ .92 Limited partnership units outstanding 158,582 158,636 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 Partners' Partners' Total Original capital contributions 158,945 $ 1 $79,473 $79,474 Partners' (deficit) capital at December 31, 1997 158,582 $(1,924) $ 4,563 $ 2,639 Net income for the three months ended March 31, 1998 -- 8 199 207 Partners' (deficit) capital at March 31, 1998 158,582 $(1,916) $ 4,762 $ 2,846 See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 207 $ 152 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 111 101 Amortization of lease commissions and loan costs 14 11 Change in accounts: Receivables and deposits (51) 3 Other assets 5 9 Accounts payable (105) (82) Tenant security deposits payable 6 (5) Accrued property taxes 56 54 Other liabilities (8) (19) Net cash provided by operating activities 235 224 Cash flows from investing activities: Property improvements and replacements (83) (67) Net receipts from (deposits to) restricted escrows 12 (20) Net cash used in investing activities (71) (87) Cash flows from financing activities: Loan costs paid -- (20) Net cash used in financing activities -- (20) Net increase in cash and cash equivalents 164 117 Cash and cash equivalents at beginning of period 2,038 3,603 Cash and cash equivalents at end of period $2,202 $3,720 Supplemental disclosure of cash flow information: Cash paid for interest $ 77 $ 77 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 ConCap Equities, Inc. (the "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, 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 consolidated 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. Consolidation The consolidated financial statements of the Partnership include its 99% limited partnership interest in ConCap Village Green Associates, Ltd. The Partnership may remove the General Partner of this lower tier, therefore, the partnership is controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. Minority interest is immaterial and not shown separately in the financial statements. NOTE B - TRANSACTIONS WITH AFFILIATED PARTNERS The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The General Partner is wholly-owned by Insignia Properties Trust ("IPT"), which is an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Limited Partnership Agreement ("Partnership Agreement") provides for payments to affiliates of the General Partner for property management services based on a percentage of revenue; for a partnership management fee equal to 9% of the total distributions made to limited partners from cash flow from operations; and for reimbursements of certain expenses incurred by affiliates of the General Partner on behalf of the Partnership. The following payments were paid to affiliates of the General Partner during each of the three months ended March 31, 1998 and 1997 (in thousands): 1998 1997 Property management fees (included in operating expenses) $ 47 $ 44 Reimbursement for services of affiliates including approximately $2,000 of construction service reimbursements in both 1998 and 1997 (included in operating and general and administrative expenses) 38 45 Additionally, the Partnership paid approximately $3,000 and $1,000 during the three months ended March 31, 1998 and 1997, 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 are amortized over the terms of the respective leases. The Partnership also paid approximately $5,000 during the three months ended March 31, 1997 to affiliates of Insignia for reimbursements of costs related to the loan refinancings in November of 1996. These costs were capitalized as loan costs and are being amortized over the terms of the respective loans. For the period 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 payment 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. 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 the three months ended March 31, 1998 and 1997: Average Occupancy 1998 1997 Professional Plaza Office Building 95% 95% Salt Lake City, UT Ventura Landing Apartments 95% 96% Orlando, FL Village Green Apartments 99% 92% Altamante Springs, FL West Chase Apartments 87% 86% Lexington, KY The low occupancy at West Chase Apartments is a result of competition from several new apartment complexes completed in the Lexington area in 1996 and 1997. The increase in occupancy at Village Green Apartments is due to several exterior and interior building improvements in 1997, improving the appearance of the entire property. The Partnership realized net income of $207,000 for the three months ended March 31, 1998, compared to net income of $152,000 for the three months ended March 31, 1997. The increase in net income is primarily due to increased rental revenue due to rental rate increases at all of the properties except West Chase, as well as an occupancy increase at Village Green. Total expenses remained stable for the three months ended March 31, 1998 compared to the corresponding period in 1997. Included in operating expense is approximately $5,000 and $9,000 of major repairs and maintenance for the three months ended March 31, 1998 and 1997, respectively. The expenses for 1998 are comprised primarily of exterior building repairs and landscaping. The 1997 expenses are comprised primarily of exterior building repairs. As part of the ongoing business plan of the Partnership, the 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 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 March 31, 1998, the Partnership held cash and cash equivalents of $2,202,000, compared to approximately $3,720,000 at March 31, 1997. The net increase in cash and cash equivalents for the three months ended March 31, 1998 is $164,000 compared to a net increase of $117,000 for the three months ended March 31, 1997. Net cash provided by operating activities increased primarily due to increased rental revenue, as discussed above. Partially offsetting this increase to cash was an increase in receivables and deposits for the first quarter of 1998 compared to the first quarter of 1997. Net cash used in investing activities decreased due to increased receipts from restricted escrows. Net cash used in financing activities decreased due to loan costs incurred in 1997 related to the 1996 debt refinancing. 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. The mortgage indebtedness of $4,200,000 matures on November 1, 2003 with balloon payments due at maturity, at which time the properties will either be refinanced or sold. 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. 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 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates, as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The General Partner was only recently served with the complaint, which it believes to be without merit, and intends to vigorously defend the action. 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. CONSOLIDATED CAPITAL PROPERTIES III By: CONCAP EQUITIES, INC. Its General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: April 30, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties III 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000317331 CONSOLIDATED CAPITAL PROPERTIES III 1,000 3-MOS DEC-31-1998 MAR-31-1998 2,202 0 0 0 0 0 14,292 9,735 7,399 0 4,200 0 0 0 2,846 7,399 0 962 0 0 755 0 85 0 0 0 0 0 0 207 1.25 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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