-----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, Q7XQ9WBbNr1Br2uwCattlDvtDLMTUG3gKpf+1gOPSaEz2/t443D0aWUcRP2QEL3M SHZnvq4lyT0jcE0w0CrXNg== 0000812187-97-000008.txt : 19970804 0000812187-97-000008.hdr.sgml : 19970804 ACCESSION NUMBER: 0000812187-97-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 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: 97650242 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 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 June 30, 1997 [ ] 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) (in thousands, except unit data) June 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 2,850 Restricted-tenant security deposits 115 Accounts receivable 18 Escrows for taxes and insurance 144 Restricted escrows 114 Other assets 326 Investment properties: Land $ 1,552 Buildings and related personal property 12,418 13,970 Less accumulated depreciation (9,405) 4,565 $ 8,132 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 38 Tenant security deposits 115 Accrued taxes 108 Other liabilities 156 Mortgage notes payable 4,200 Partners' Capital (Deficit) General partner's $(1,889) Limited partners' (158,636 units issued and outstanding) 5,404 3,515 $ 8,132 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 Six Months Ended June 30, June 30, 1997 1996 1997 1996 Revenues: Rental income $ 845 $1,061 $1,680 $2,146 Other income 59 91 133 196 Total revenues 904 1,152 1,813 2,342 Expenses: Operating 344 464 687 908 General and administrative 60 116 125 197 Maintenance 151 176 261 319 Depreciation 106 232 207 461 Interest 86 212 170 373 Property Taxes 54 128 108 212 Total expenses 801 1,328 1,558 2,470 Net income (loss) $ 103 $ (176) $ 255 $ (128) Net income (loss) allocated to general partner (4%) $ 4 $ (7) $ 10 $ (5) Net income (loss) allocated to limited partners (96%) 99 (169) 245 (123) Net income (loss) $ 103 $ (176) $ 255 $ (128) Net income (loss) per limited partnership unit $ .62 $(1.07) $ 1.54 $ (.78) 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's Partners' Total Original capital contributions 158,945 $ 1 $79,473 $79,474 Partners' (deficit) capital at December 31, 1996 158,636 $(1,853) $ 6,263 $ 4,410 Distributions paid -- (46) (1,104) (1,150) Net income for the six months ended June 30, 1997 -- 10 245 255 Partners' (deficit) capital at June 30, 1997 158,636 $(1,889) $ 5,404 $ 3,515 See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months Ended June 30, 1997 1996 Cash flows from operating activities: Net income (loss) $ 255 $ (128) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 207 461 Amortization of lease commissions and loan costs 24 21 Change in account: Restricted cash -- 4 Accounts receivable 30 78 Escrows for taxes and insurance (55) (140) Other assets (28) 11 Accounts payable (76) (125) Tenant security deposit liabilities 1 4 Accrued taxes 108 135 Other liabilities (5) 123 Net cash provided by operating activities 461 444 Cash flows from investing activities: Property improvements and replacements (152) (85) Receipts from restricted escrows 147 7 Deposits to restricted escrows (39) -- Net cash used in investing activities (44) (78) Cash flows from financing activities: Payments on mortgage notes payable -- (33) Repayment of mortgage notes payable -- (3,174) Proceeds from mortgage notes payable -- 4,200 Payment of loan costs (20) (135) Partners' distributions (1,150) (12) Net cash (used in) provided by financing activities (1,170) 846 Net (decrease) increase in unrestricted cash and cash equivalents (753) 1,212 Unrestricted cash and cash equivalents at beginning of period 3,603 2,854 Unrestricted cash and cash equivalents at end of period $ 2,850 $ 4,066 Supplemental disclosure of cash flow information: Cash paid for interest $ 154 $ 260 [FN] See Accompanying Notes to Consolidated Financial Statements [/TABLE] 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 and six month periods ended June 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. Consolidation The Partnership's financial statements include the accounts of ConCap Mountain Plaza Associates, Ltd. (which was dissolved in 1996, see "Note E") and ConCap Village Green Associates, Ltd., two majority-owned limited partnerships. All intercompany transactions have been eliminated. 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 six month periods ended June 30, 1997 and 1996. Property management fees of approximately $88,000 and $113,000 were paid to affiliates of the General Partner for the six months ended June 30, 1997 and 1996, respectively. These fees are included in operating expenses. 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. No fees were paid or accrued under this provision of the Partnership Agreement to affiliates of the General Partner during the six months ended June 30, 1997, and June 30, 1996. 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 $71,000 and $98,000 were paid to the General Partner and its affiliates for the six months ended June 30, 1997 and 1996, respectively. The Partnership insures 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 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 April of 1997, the General Partner declared and paid distributions, representing a return of capital, totaling approximately $1,150,000 to the partners. NOTE D - 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 $2,200,000 and $2,000,000, respectively. The previous Ventura Landing note of $3,200,000 was repaid at that time. The interest rate was 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 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, however, continued seeking alternative long-term financing to obtain a lower interest rate. In November of 1996, these two properties obtained long-term refinancing. Proceeds from this transaction totaled $4,200,000. The debt accrues interest at a rate of 7.33% per year, matures on November 1, 2003, and requires balloon payments at maturity for the full principal amount. Throughout the mortgage term, interest only payments are made. Loan costs of approximately $215,000 have been incurred by the properties as a result of the long-term refinancing. Loan costs are included in other assets on the balance sheet and are amortized as interest expense over the term of the mortgage notes. NOTE E - 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 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 remaining 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 six months ended June 30, 1997 and 1996: Average Occupancy 1997 1996 Professional Plaza Office Building Salt Lake City, UT 95% 96% Ventura Landing Apartments Orlando, FL 96% 95% Village Green Apartments Altamante Springs, FL 92% 95% West Chase Apartments Lexington, KY 87% 92% The decrease in occupancy at West Chase Apartments is a result of increased competition in the Lexington area. Several new apartment complexes were completed in 1996 which gave potential residents the opportunity to rent luxury apartments at extremely competitive rates. The Partnership realized net income of $255,000 for the six months ended June 30, 1997, compared to a net loss of $128,000 for the corresponding period of 1996. The Partnership's net income for the three months ended June 30, 1997 was $103,000 compared to a net loss of $176,000 for the three months ended June 30, 1996. Rental and other income decreased primarily due to the foreclosure of Mountain Plaza Apartments in September of 1996. With respect to the remaining properties, rental revenues increased due to increased rental rates at Ventura Landing. Total expenses decreased primarily due to the foreclosure of Mountain Plaza Apartments. Also contributing to the decrease in depreciation expense was certain assets at Ventura Landing becoming fully depreciated in 1996. The decrease in interest expense was also impacted by the refinancing of the Ventura Landing note payable which resulted in a lower interest rate and principle balance. This decrease was partially offset by a new mortgage at Village Green. General and administrative expenses decreased due to a decrease in professional fees and expense reimbursements for the six months ended June 30, 1997 compared to the six months ended June 30, 1996. Property taxes decreased as a result of the payoff of a 1990 tax liability in 1996, of which $45,000 was unaccrued, in order to secure the new note payable at Village Green. Included in maintenance expense for the six months ended June 30, 1997 is approximately $41,000 of major repairs and maintenance comprised primarily of exterior and major tennis court repairs. For the six months ended June 30, 1996, approximately $75,000 of major repairs and maintenance comprised primarily of interior and exterior repairs is included in maintenance expense. 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 June 30, 1997, the Partnership held unrestricted cash and cash equivalents of $2,850,000 compared to $4,066,000 at June 30, 1996. Net cash used in investing activities decreased due to increased receipts from restricted escrows partially offset by increased property improvements and replacements. Net cash used in financing activities increased due to higher distributions to the partners in 1997 than in 1996. 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 at November 1, 2003, with balloon payments due at maturity, at which time the encumbered 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. During 1997, the Partnership distributed approximately $1,150,000. The General Partner is planning to make a distribution in the third quarter of 1997. 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: None filed during the quarter ended June 30, 1997. SIGNATURES In accordance with the requirements 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. 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: August 1, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties III 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000317331 CONSOLIDATED CAPITAL PROPERTIES III 1,000 6-MOS DEC-31-1997 JUN-30-1997 2,850 0 18 0 0 0 13,970 9,405 8,132 0 4,200 0 0 0 3,515 8,132 0 1,813 0 0 1,558 0 170 0 0 0 0 0 0 255 1.54 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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