-----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, N/gnZXkIu6grADbv3TsNnA2rhEUApbvRiYmGnKtRv/Eb4O7Wa9FvqXvsEezvzQ3X NV7hHlLSBQecfzN+PHX87Q== 0000319723-97-000002.txt : 19970730 0000319723-97-000002.hdr.sgml : 19970730 ACCESSION NUMBER: 0000319723-97-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970729 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES III LTD PARTNERSHIP CENTRAL INDEX KEY: 0000353282 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 570718508 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10260 FILM NUMBER: 97646724 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O 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 UNITED STATES 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 June 30, 1997 or [ ] 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 0-10260 SHELTER PROPERTIES III LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) South Carolina 57-0718508 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza 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) SHELTER PROPERTIES III LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEET (in thousands, except unit data) (Unaudited) June 30, 1997 Assets Cash: Unrestricted $ 2,016 Restricted--tenant security deposits 137 Accounts receivable 36 Escrow for taxes 250 Restricted escrows 887 Other assets 283 Investment properties: Land $ 1,281 Buildings and related personal property 24,286 25,567 Less accumulated depreciation (13,748) 11,819 $15,428 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 74 Tenant security deposits 138 Accrued taxes 175 Other liabilities 364 Mortgage notes payable 8,360 Partners' Capital (Deficit) General partners $ (70) Limited partners (55,000 units issued and outstanding) 6,387 6,317 $15,428 See Accompanying Notes to Consolidated Financial Statements b) SHELTER PROPERTIES III LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 1997 1996 1997 1996 Revenues: Rental income $1,288 $1,279 $2,556 $2,481 Interest income 32 24 57 51 Other income 112 58 164 117 Total revenues 1,432 1,361 2,777 2,649 Expenses: Operating 491 476 955 907 General & administrative 58 56 102 112 Maintenance 180 228 352 393 Depreciation 232 227 460 450 Interest 191 194 384 390 Property taxes 89 80 179 162 Total expenses 1,241 1,261 2,432 2,414 Net income $ 191 $ 100 $ 345 $ 235 Net income allocated to general partners (1%) $ 1 $ 1 $ 3 $ 2 Net income allocated to limited partners (99%) 190 99 342 233 $ 191 $ 100 $ 345 $ 235 Net income per limited partnership unit $ 3.45 $ 1.79 $ 6.21 $ 4.23 See Accompanying Notes to Consolidated Financial Statements c) SHELTER PROPERTIES III LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands, except unit data) (Unaudited) Limited Partnership General Limited Units Partners Partners Total Original capital contributions 55,000 $ 2 $27,500 $27,502 Partners' (deficit) capital at December 31, 1996 55,000 $ (73) $ 6,045 $ 5,972 Net income for the six months ended June 30, 1997 -- 3 342 345 Partners' (deficit) capital at June 30, 1997 55,000 $ (70) $ 6,387 $ 6,317 See Accompanying Notes to Consolidated Financial Statements d) SHELTER PROPERTIES III LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Six Months Ended June 30, 1997 1996 Cash flows from operating activities: Net income $ 345 $ 235 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 460 450 Amortization of discounts and loan costs 49 47 Change in accounts: Restricted cash -- 3 Accounts receivable (11) 3 Escrows for taxes 19 (30) Other Assets (40) -- Accounts payable 24 (220) Tenant security deposit liabilities 1 (3) Accrued taxes (29) 107 Other liabilities (24) (58) Net cash provided by operating activities 794 534 Cash flows from investing activities: Property improvements and replacements (161) (230) Deposits to restricted escrows (18) (19) Receipts from restricted escrows -- 9 Net cash used in investing activities (179) (240) Cash flows from financing activities: Payments on mortgage notes payable (108) (100) Distributions paid -- (250) Net cash used in financing activities (108) (350) Net increase (decrease) in cash 507 (56) Cash and cash equivalents at beginning of period 1,509 1,294 Cash and cash equivalents at end of period $2,016 $1,238 Supplemental disclosure of cash flow information: Cash paid for interest $ 335 $ 343 See Accompanying Notes to Consolidated Financial Statements e) SHELTER PROPERTIES III LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Shelter Properties III Limited Partnership (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 Article 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 Shelter Realty III Corporation (the "Corporate 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 financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - RECONCILIATION OF CASH FLOWS The following is a reconciliation of the subtotal on the accompanying statements of cash flows captioned "net cash provided by operating activities" to "net cash used in operations," as defined in the partnership agreement. However, "net cash used in operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity (amounts in thousands): Six Months Ended June 30, 1997 1996 Net cash provided by operating activities $ 794 $ 534 Payments on mortgage notes payable (108) (100) Property improvements and replacements (161) (230) Change in restricted escrows, net (18) (10) Changes in reserves for net operating liabilities 60 198 Additional reserves (567) (395) Net cash used in operations $ -- $ (3) In 1997 and 1996, the Corporate General Partner believed it to be in the best interest of the Partnership to reserve an additional $567,000 and $395,000, respectively, to fund continuing capital improvements and maintenance items at the four properties. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid or accrued to the Corporate General Partner and affiliates in 1997 and 1996 (in thousands): Six Months Ended June 30, 1997 1996 Property management fees (included in operating expenses) $135 $130 Reimbursement for services of affiliates (included in general and administrative and operating expenses) 60 67 Due to general partner 185 185 The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate 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 Corporate General Partner, who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations is not significant. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of four apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1997 and 1996: Average Occupancy Property 1997 1996 Essex Park Apartments Columbia, South Carolina 95% 92% Colony House Apartments Murfreesboro, Tennessee 88% 93% North River Village Apartments Atlanta, Georgia 92% 96% Willowick Apartments Greenville, South Carolina 90% 95% The Corporate General Partner attributes the increase in occupancy at Essex Park Apartments to concessions being offered to both new tenants and those renewing their leases. The decrease in occupancy at Colony House Apartments is due to increased competition resulting from the construction of 1,500 additional units in the Murfreesboro area and passing utility costs on to the tenants. The decrease in occupancy at North River Village Apartments is due to increased competition as a result of newly constructed units which are also offering concessions. The Corporate General Partner attributes the decrease in occupancy at Willowick Apartments to increased competition resulting from the construction of over 2,500 units in the Greenville area in the past year. The Partnership's net income for the three and six month periods ended June 30, 1997, was approximately $191,000 and $345,000, respectively, compared to net income of approximately $100,000 and $235,000, respectively, for the same periods of 1996. The increase in net income is primarily due to increases in rental income, interest income and other income for both the three and six month periods. Also attributing to the increase in net income is the decrease in general and administrative and maintenance expenses. The increase in rental income is a result of increased rental rates at all of the investment properties within the partnership. These rental rate increases have been slightly offset by a decrease in occupancy at all of the investment properties except for Essex Park Apartments which has increased in comparison to the prior year. The increase in interest income has resulted from increased cash balances in interest bearing bank accounts and increased interest rates. The increase in other income is due to utility fees being passed on to the tenants and the receipt of a tax refund from North River Village's taxing authority pertaining to the 1996 tax year. The decrease in maintenance expense is attributable to a decrease in exterior building improvements at both Colony House and Essex Park. These expenditures performed in 1996 were related to an effort to improve curb appeal and increase traffic. Offsetting the increase in net income was the increase in property tax expense at North River Village Apartments due to an increase in the assessed value by the taxing authority. Included in maintenance expenses for 1997 is approximately $34,000 of major repairs and maintenance comprised of landscaping, construction oversight costs, window coverings and pool repairs. In 1996 maintenance expenses included approximately $61,000 of major repairs and maintenance comprised of exterior building repairs and improvements, landscaping, pool repairs, parking lot repairs and new window coverings. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rent, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Corporate 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 Corporate General Partner will be able to sustain such a plan. At June 30, 1997 the Partnership had unrestricted cash of approximately $2,016,000 compared to approximately $1,238,000 at June 30, 1996. Net cash provided by operating activity increased primarily as a result of an increase in net income as discussed above, an increase in accounts payable due to the timing of payments to vendors and a decrease in tax escrows. These increases were offset by an increase in accounts receivable resulting from the timing of collections from tenants and decreases in accrued taxes due to the timing of tax payments. Net cash used in investing activities decreased as a result of decreases in cash used to purchase property improvements and replacements and a decrease in receipts from restricted escrows. Net cash used in financing activity decreased due to a decrease in distributions during the six month period ended June 30, 1997. The Partnership has no material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve 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 Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $8,360,000, net of discount, is amortized over varying periods. In addition, the mortgage notes require balloon payments ranging from November 15, 2002, to October 15, 2003, at which time the properties will either be refinanced or sold. No cash distributions were made in the six month period ended June 30, 1997. During the six month period ended June 30, 1996, a cash distribution of $250,000 was paid. The Corporate General Partner anticipates making a distribution in the third quarter of 1997. Future cash distributions will depend on the levels of net cash generated from operations, property sales, and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as part of 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 Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHELTER PROPERTIES III LIMITED PARTNERSHIP By: Shelter Realty III Corporation Corporate General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: July 29, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties III Limited Partnership 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000353282 SHELTER PROPERTIES III LIMITED PARTNERSHIP 1,000 6-MOS DEC-31-1997 JUN-30-1997 2,016 0 36 0 0 0 25,567 13,748 15,428 0 8,360 0 0 0 6,317 15,428 0 2,777 0 0 2,432 0 384 0 0 0 0 0 0 345 6.21 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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