-----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, MZsALfy2ih4zZC72+NlMSXlJ5EevSpglc5RjBe/8uWplhRPI9jq6ArDrQYLKFx/c 07Mb5aN5uWcod5s1oExndQ== /in/edgar/work/0000711642-00-000281/0000711642-00-000281.txt : 20001109 0000711642-00-000281.hdr.sgml : 20001109 ACCESSION NUMBER: 0000711642-00-000281 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES III CENTRAL INDEX KEY: 0000317331 STANDARD INDUSTRIAL CLASSIFICATION: [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: 755715 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 0001.txt QUARTER ENDING SEPTEMBER 30, 2000 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 September 30, 2000 [ ] 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 (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO 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) (in thousands, except unit data) September 30, 2000
Assets Cash and cash equivalents $ 312 Receivables and deposits 370 Restricted escrows 123 Other assets 204 Investment properties: Land $ 507 Buildings and related personal property 10,897 11,404 Less accumulated depreciation (7,815) 3,589 $ 4,598 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 47 Tenant security deposit liabilities 99 Accrued property taxes 132 Other liabilities 240 Mortgage notes payable 5,332 Partners' (Deficit) Capital General partner $(1,840) Limited partners (158,582 units issued and outstanding) 588 (1,252) $ 4,598 See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Nine Months Ended September 30, Ended September 30, 2000 1999 2000 1999 Revenues: Rental income $ 742 $ 722 $ 2,204 $ 2,143 Other income 64 57 179 167 Total revenues 806 779 2,383 2,310 Expenses: Operating 373 362 1,086 1,096 General and administrative 111 128 284 272 Depreciation 140 116 417 339 Interest 108 85 330 254 Property taxes 48 46 142 137 Total expenses 780 737 2,259 2,098 Income from continuing operations 26 42 124 212 (Loss) income from discontinued operations -- (46) -- 175 Gain on sale of discontinued operations -- 2,161 -- 2,161 Net income $ 26 $ 2,157 $ 124 $ 2,548 Net income allocated to general partner (4%) $ 1 $ 86 $ 5 $ 102 Net income allocated to limited partners (96%) 25 2,071 119 2,446 $ 26 $ 2,157 $ 124 $ 2,548 Per limited partnership unit: Income from continuing operations $0.16 $ 0.25 $ 0.75 $ 1.28 (Loss) income from discontinued operations -- (0.27) -- 1.06 Gain on sale of discontinued operations -- 13.08 -- 13.08 Net income $ 0.16 $ 13.06 $ 0.75 $ 15.42 Distributions per limited partnership unit $ -- $ 26.71 $ 6.74 $ 39.19 See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (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, 1999 158,582 $(1,828) $ 1,538 $ (290) Distributions to partners -- (17) (1,069) (1,086) Net income for the nine months ended September 30, 2000 -- 5 119 124 Partners' (deficit) capital at September 30, 2000 158,582 $(1,840) $ 588 $(1,252) 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, 2000 1999 Cash flows from operating activities: Net income $ 124 $ 2,548 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 417 365 Amortization of lease commissions and loan costs 24 32 Gain on sale of discontinued operations -- (2,161) Change in accounts: Receivables and deposits (188) (151) Other assets (2) 13 Accounts payable (90) (5) Due to general partner -- 160 Tenant security deposit liabilities 2 (40) Accrued property taxes 132 127 Other liabilities (19) 19 Net cash provided by operating activities 400 907 Cash flows from investing activities: Net proceeds from sale of discontinued operations -- 3,426 Property improvements and replacements (444) (383) Net withdrawals from (deposits to) restricted escrows 10 (33) Net cash (used in) provided by investing activities (434) 3,010 Cash flows from financing activities: Payment of loan costs (10) -- Payments on mortgage note payable (18) -- Distributions to partners (1,086) (2,204) Net cash used in financing activities (1,114) (2,204) Net (decrease) increase in cash and cash equivalents (1,148) 1,713 Cash and cash equivalents at beginning of period 1,460 2,883 Cash and cash equivalents at end of period $ 312 $ 4,596 Supplemental disclosure of cash flow information: Cash paid for interest $ 298 $ 231 Supplemental disclosure of non-cash financing activity: Distribution payable $ -- $ 4,048 At December 31, 1999, property improvements and replacements and accounts payable were adjusted by approximately $167,000 for non-cash activity. 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" or "Registrant") 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 and nine month periods ended September 30, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000. 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, 1999. Consolidation The Partnership's financial statements include the accounts of ConCap Village Green Associates, Ltd. The Partnership owns a 99% interest in this partnership, and it has the ability to control the major operating and financial policies of this partnership. All inter-entity transactions have been eliminated. Certain reclassifications have been made to the 1999 information to conform to the 2000 presentation. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Discontinued Segment On July 8, 1999, Professional Plaza, located in Salt Lake City, Utah, was sold to an unaffiliated third party for $3,600,000. After payment of closing expenses, the net proceeds received by the Partnership were approximately $3,426,000. For financial statement purposes, the sale of the property resulted in a gain on sale of discontinued operations of approximately $2,161,000. Professional Plaza was the only remaining commercial property owned by the Partnership and represented one segment of the Partnership's operations. Due to the sale of this property, the results of the commercial segment have been shown as (loss) income from discontinued operations on the consolidated statement of operations. Revenues of this property were approximately $425,000 for the nine months ended September 30, 1999. Income from operations was approximately $175,000 for the nine months ended September 30, 1999. For the three months ended September 30, 1999 the property did not have any revenues and had a loss from operations of approximately $46,000. Note D - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. 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 amounts were paid or accrued to the General Partner or affiliates during each of the nine month periods ended September 30, 2000 and 1999, respectively: 2000 1999 (in thousands) Property management fees (included in operating expenses) $117 $115 Reimbursement for services of affiliates (included in investment properties and general and administrative expenses) 136 96 Partnership management fees (included in general and administrative expenses) 41 88 Real estate brokerage commission (included in due to general partner and gain on sale of discontinued operations) -- 108 During the nine months ended September 30, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Registrant's residential properties as compensation for providing property management services. The Registrant paid to such affiliates approximately $117,000 and $115,000 for the nine months ended September 30, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $136,000 and $96,000 for the nine months ended September 30, 2000 and 1999, respectively. 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 approximately $41,000 and $88,000 were paid or accrued to the General Partner during the nine months ended September 30, 2000 and 1999, respectively. At September 30, 1999 approximately $52,000 was owed to the General Partner and was included in "Due to general partner". This amount was paid subsequent to September 30, 1999. Pursuant to the Partnership Agreement, the General Partner is entitled to receive a commission equal to 3% of the aggregate disposition price of sold properties. The Partnership paid a commission of $108,000 to the General Partner related to the sale of Professional Plaza in 1999. This amount is subordinate to the limited partners receiving their original capital contributions plus a cumulative preferred return of 6% per annum of their adjusted capital investment, as defined in the Partnership Agreement. If the limited partners have not received these returns when the Partnership terminates, the General Partner will return this amount to the Partnership. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 75,694.5 limited partnership units in the Partnership representing 47.732% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 47.732% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note E - Distributions During the nine months ended September 30, 2000, the Partnership distributed approximately $1,086,000 (approximately $1,069,000 to the limited partners or $6.74 per limited partnership unit), of which approximately $436,000 (approximately $419,000 to the limited partners or $2.64 per limited partnership unit) was attributable to cash flow from operations. Approximately $650,000 ($4.10 per limited partnership unit) represented 1999 financing proceeds on West Chase Apartments which was distributed entirely to the limited partners. During the nine months ended September 30, 1999, cash distributions were paid totaling approximately $2,204,000 (approximately $2,189,000 to the limited partners or $13.80 per limited partnership unit) to the partners, of which approximately $378,000 (approximately $363,000 to the limited partners, $2.29 per limited partnership unit) was attributable to cash flow from operations. Approximately $1,826,000 ($11.51 per limited partnership unit) represented a return of capital, all of which was paid to the limited partners. Subsequent to September 30, 1999, a distribution of approximately $4,048,000 (approximately $4,026,000 to the limited partners or $25.39 per limited partnership unit) was paid to the partners, of which approximately $550,000 (approximately $528,000 to the limited partners or $3.33 per limited partnership unit) was attributable to cash flows from operations and approximately $3,498,000 ($22.06 per limited partnership unit) represented sale proceeds from the sale of Professional Plaza, all of which was paid to the limited partners. Note F - Financing of Investment Property On December 1, 1999, the Partnership obtained financing on West Chase Apartments in the amount of $1,150,000. The loan carries a stated interest rate of 7.87% and matures on December 1, 2019. The Partnership received net proceeds from the financing in the amount of approximately $1,124,000. The Partnership spent approximately $29,000 on loan costs during the year ended December 31, 1999. The Partnership spent approximately $10,000 on additional loan costs during the nine months ended September 30, 2000. These loan costs are included in other assets on the consolidated balance sheet. Note G - Segment Information Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consists of three apartment complexes, one each in Orlando, Florida; Altamonte Springs, Florida; and Lexington, Kentucky. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. On July 8, 1999, the commercial property was sold to an unrelated party. Therefore, the commercial segment is reflected as discontinued operations for the 1999 period (see "Note C" for further discussion regarding the sale). Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those described in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segments are investment properties that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers. Segment information for the three and nine month periods ended September 30, 2000 and 1999, is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segment.
Three Months ended September 30, 2000 Residential Other Totals Rental income $ 742 $ -- $ 742 Other income 62 2 64 Interest expense 108 -- 108 Depreciation 140 -- 140 General and administrative expenses -- 111 111 Segment profit (loss) 135 (109) 26
Nine Months ended September 30, 2000 Residential Other Totals Rental income $ 2,204 $ -- $ 2,204 Other income 165 14 179 Interest expense 330 -- 330 Depreciation 417 -- 417 General and administrative expenses -- 284 284 Segment profit (loss) 394 (270) 124 Total assets 4,373 225 4,598 Capital expenditures for investment properties 444 -- 444
Three Months ended September 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 722 $ -- $ -- $ 722 Other income 45 -- 12 57 Interest expense 85 -- -- 85 Depreciation 116 -- -- 116 General and administrative expenses -- -- 128 128 (Loss) from discontinued operations -- (46) -- (46) Gain on sale of discontinued operations -- 2,161 -- 2,161 Segment profit (loss) 158 2,115 (116) 2,157
Nine Months ended September 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 2,143 $ -- $ -- $ 2,143 Other income 135 -- 32 167 Interest expense 254 -- -- 254 Depreciation 339 -- -- 339 General and administrative expenses -- -- 272 272 Income from discontinued operations -- 175 -- 175 Gain on sale of discontinued operations -- 2,161 -- 2,161 Segment profit (loss) 452 2,336 (240) 2,548 Total assets 4,558 111 3,895 8,564 Capital expenditures for investment properties 341 42 -- 383
Note H - 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, its General Partner and several of their affiliated partnerships and corporate entities. The action 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 of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosure contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussions of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for each of the nine month periods ended September 30, 2000 and 1999: Average Occupancy Property 2000 1999 Ventura Landing Apartments 94% 94% Orlando, Florida Village Green Apartments 94% 95% Altamonte Springs, Florida West Chase Apartments 91% 94% Lexington, Kentucky The General Partner attributes the decrease in occupancy at West Chase Apartments to increased competition in the apartment rental market in Lexington, Kentucky. Results of Operations The Partnership's net income for the nine months ended September 30, 2000 was approximately $124,000 as compared to approximately $2,548,000 for the nine months ended September 30, 1999. The Partnership's net income for the three months ended September 30, 2000, was approximately $26,000 as compared to net income of approximately $2,157,000 for the three months ended September 30, 1999. The decrease in net income for the three and nine month periods ended September 30, 2000 is primarily attributable to the gain on sale from the discontinued operations of Professional Plaza of approximately $2,161,000 in addition to the (loss) income from discontinued operations included in net income for the three and nine months ended September 30, 1999. Professional Plaza was sold July 8, 1999, as discussed below. Excluding the impact of the operations of Professional Plaza, the Registrant had income from continuing operations of approximately $124,000 and $212,000 for the nine months ending September 30, 2000 and 1999, respectively. Excluding the impact of the operations of Professional Plaza, the Registrant had income from continuing operations of approximately $26,000 and $42,000 for the three months ending September 30, 2000 and 1999, respectively. The decrease in income from continuing operations for the three and nine months ended September 30, 2000 was due to an increase in total expenses partially offset by an increase in total revenues. Total expenses for the three and nine months ended September 30, 2000 increased primarily due to an increase in depreciation and interest expense. Depreciation expense increased due to capital improvements completed during the past year which are now being depreciated. Interest expense increased due to the financing of West Chase Apartments in December 1999. Other expenses remained relatively constant for both the three and nine months ended September 30, 2000. Total revenues increased for the three and nine month periods ended September 30, 2000 primarily due to an increase in rental income, and to a lesser extent, an increase in other income. Rental income increased primarily due to increased average rental rates at all of the Partnership's residential properties, partially offset by a decrease in occupancy at West Chase Apartments and Village Green Apartments. Other income increased primarily due to increased interest income at all of the Partnership's residential properties. On July 8, 1999, Professional Plaza, located in Salt Lake City, Utah, was sold to an unaffiliated third party for $3,600,000. After payment of closing expenses, the net proceeds received by the Partnership were approximately $3,426,000. The sale of the property resulted in a gain on sale of discontinued operations of approximately $2,161,000. Professional Plaza was the only remaining commercial property owned by the Partnership and represented one segment of the Partnership's operations. Due to the sale of this property, the results of the commercial segment have been shown as (loss) income from discontinued operations on the consolidated statement of operations. Revenues of this property were approximately $425,000 for the nine months ended September 30, 1999. Income from operations was approximately $175,000 for the nine months ended September 30, 1999. For the three months ended September 30, 1999 the property did not have any revenues and had a loss from operations of approximately $46,000. Included in general and administrative expenses for both of the nine month periods ended September 30, 2000 and 1999 are reimbursements to the General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. 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. Liquidity and Capital Resources As of September 30, 2000, the Partnership held cash and cash equivalents of approximately $312,000 compared to approximately $4,596,000 at September 30, 1999. The decrease in cash and cash equivalents of approximately $1,148,000 from the Partnership's year ended December 31, 1999, is due to approximately $434,000 of cash used in investing activities and approximately $1,114,000 of cash used in financing activities partially offset by approximately $400,000 of cash provided by operating activities. Cash used in investing activities consisted primarily of property improvements and replacements slightly offset by net withdrawals from escrow accounts maintained by the mortgage lenders. Cash used in financing activities consisted primarily of distributions to the partners, and, to a lesser extent, loan costs and payments on the mortgage note payable encumbering West Chase Apartments. The Registrant invests its working capital reserves in a money market account. 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 properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Village Green During the nine months ended September 30, 2000, the Partnership completed approximately $129,000 of capital improvements at Village Green Apartments consisting primarily of parking lot improvements, light fixtures, carpet replacement, exterior painting, and structural improvements. These improvements were funded from cash provided by operations and replacement reserves. The Partnership has evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $199,000, consisting primarily of structural improvements, air conditioning unit replacement, plumbing upgrades, and carpet replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. West Chase During the nine months ended September 30, 2000, the Partnership completed approximately $21,000 of capital improvements at West Chase Apartments consisting primarily of carpet and vinyl replacement and plumbing upgrades. These improvements were funded from cash provided by operations. The Partnership has evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $42,000, consisting primarily of appliances and carpet and vinyl replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Ventura Landing During the nine months ended September 30, 2000, the Partnership completed approximately $127,000 of budgeted and non-budgeted capital improvements at Ventura Landing Apartments consisting primarily of carpet and tile replacement and parking lot improvements. These improvements were funded from cash provided by operations and replacement reserves. The Partnership has evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $136,000, consisting primarily of air conditioning unit replacement, plumbing upgrades, and carpet replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are required, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness at Village Green and Ventura Landing Apartments of $4,200,000 requires interest only payments with the principal balance due in November 2003. On December 1, 1999, the Partnership obtained financing on West Chase Apartments in the amount of $1,150,000 and the current balance of this mortgage is approximately $1,132,000. Payments are due on the first day of each month until the loan matures on December 1, 2019. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant may risk losing such properties through foreclosure. During the nine months ended September 30, 2000, the Partnership distributed approximately $1,086,000 (approximately $1,069,000 to the limited partners or $6.74 per limited partnership unit), of which approximately $436,000 (approximately $419,000 to the limited partners or $2.64 per limited partnership unit) was attributable to cash flow from operations. Approximately $650,000 ($4.10 per limited partnership unit) represented 1999 financing proceeds on West Chase Apartments which was distributed entirely to the limited partners. During the nine months ended September 30, 1999, cash distributions were paid totaling approximately $2,204,000 (approximately $2,189,000 to the limited partners or $13.80 per limited partnership unit) to the partners, of which approximately $378,000 (approximately $363,000 to the limited partners, $2.29 per limited partnership unit) was attributable to cash flow from operations. Approximately $1,826,000 ($11.51 per limited partnership unit) represented a return of capital, all of which was paid to the limited partners. Subsequent to September 30, 1999, a distribution of approximately $4,048,000 (approximately $4,026,000 to the limited partners or $25.39 per limited partnership unit) was paid to the partners, of which approximately $550,000 (approximately $528,000 to the limited partners or $3.33 per limited partnership unit) was attributable to cash flows from operations and approximately $3,498,000 ($22.06 per limited partnership unit) represented sale proceeds from the sale of Professional Plaza, all of which was paid to the limited partners. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, property sales, and /or refinancings. The Partnership's distribution policy is reviewed on a semi-annual basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit any additional distributions to its partners during the remainder of 2000 or subsequent periods. 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, its General Partner and several of their affiliated partnerships and corporate entities. The action 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 of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K filed during the quarter ended September 30, 2000: None. 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/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: November 8, 2000 EX-27 2 0002.txt THIRD QUARTER 10-QSB
5 This schedule contains summary financial information extracted from CONSOLIDATED CAPITAL PROPERTIES III 2000 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-31-2000 JUL-01-2000 SEP-30-2000 312 0 370 0 0 0 11,404 7,815 4,598 0 5,332 0 0 0 (1,252) 4,598 0 2,383 0 0 2,259 0 330 0 0 0 0 0 0 124 0.75 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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