-----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, MYociwcinyXvn3cOLOVDSBWHIgCOJjflU7OiVrkbWUuB84R7D0ZK005gtVYIscw8 KuhZQKx8tjZLWI/TcLdd3g== 0000353282-97-000001.txt : 19970421 0000353282-97-000001.hdr.sgml : 19970421 ACCESSION NUMBER: 0000353282-97-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970418 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: 97583380 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 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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) March 31, 1997 Assets Cash: Unrestricted $ 1,751 Restricted--tenant security deposits 133 Accounts receivable 20 Escrow for taxes 157 Restricted escrows 878 Other assets 257 Investment properties: Land $ 1,281 Buildings and related personal property 24,204 25,485 Less accumulated depreciation (13,516) 11,969 $15,165 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 52 Tenant security deposits 134 Accrued taxes 87 Other liabilities 365 Mortgage notes payable 8,401 Partners' Capital (Deficit) General partners $ (71) Limited partners (55,000 units issued and outstanding) 6,197 6,126 $15,165 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 March 31, 1997 1996 Revenues: Rental income $1,268 $1,202 Interest income 25 27 Other income 52 59 Total revenues 1,345 1,288 Expenses: Operating 464 431 General and administrative 44 56 Maintenance 172 165 Depreciation 228 223 Interest 193 196 Property taxes 90 82 Total expenses 1,191 1,153 Net income $ 154 $ 135 Net income allocated to general partners (1%) $ 2 $ 1 Net income allocated to limited partners (99%) 152 134 $ 154 $ 135 Net income per limited partnership unit $ 2.76 $ 2.44 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 three months ended March 31, 1997 2 152 154 Partners' (deficit) capital at March 31, 1997 55,000 $ (71) $ 6,197 $ 6,126 See Accompanying Notes to Consolidated Financial Statements d) SHELTER PROPERTIES III LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 154 $ 135 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 228 223 Amortization of discounts and loan costs 25 24 Change in accounts: Restricted cash 4 4 Accounts receivable 5 8 Escrows for taxes 112 60 Other assets (3) -- Accounts payable 2 (214) Tenant security deposit liabilities (3) (4) Accrued taxes (117) 27 Other liabilities (23) (66) Net cash provided by operating activities 384 197 Cash flows from investing activities: Property improvements and replacements (79) (134) Deposits to restricted escrows (9) (11) Receipts from restricted escrows - 7 Net cash used in investing activities (88) (138) Cash flows from financing activities: Payments on mortgage notes payable (54) (50) Net cash used in financing activities (54) (50) Net increase in cash 242 9 Cash and cash equivalents at beginning of period 1,509 1,294 Cash and cash equivalents at end of period $1,751 $1,303 Supplemental disclosure of cash flow information: Cash paid for interest $ 168 $ 172 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 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 month period ended March 31, 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). Three Months Ended March 31, 1997 1996 Net cash provided by operating activities $ 384 $ 197 Payments on mortgage notes payable (54) (50) Property improvements and replacements (79) (134) Change in restricted escrows, net (9) (4) Changes in reserves for net operating liabilities 23 185 Additional reserves (270) (200) Net cash used in operations $ (5) $ (6) In 1997 and 1996, the Corporate General Partner believed it to be in the best interest of the Partnership to reserve an additional $270,000 and $200,000, 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. Property management fees paid to affiliates of Insignia Financial Group, Inc., during 1997 and 1996, are included in operating expenses on the consolidated statement of operations and are reflected in the following table. The Corporate General Partner and its affiliates received reimbursements and fees as reflected in the following table (in thousands): Three Months Ended March 31, 1997 1996 Property management fees $ 66 $ 63 Reimbursement for services of affiliates 37 36 Due to general partner 185 185 Included in "reimbursements for services of affiliates" for 1997 is approximately $10,000 in reimbursements for construction oversight costs. 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 three months ended March 31, 1997 and 1996: Average Occupancy Property 1997 1996 Essex Park Apartments Columbia, South Carolina 95% 89% Colony House Apartments Murfreesboro, Tennessee 88% 93% North River Village Apartments Atlanta, Georgia 94% 96% Willowick Apartments Greenville, South Carolina 87% 93% The Corporate General Partner attributes the increase in occupancy at Essex Park Apartments to an improving local market along with rental concessions being offered. The Corporate General Partner attributes the decreases in occupancy at Colony House Apartments and Willowick Apartments due to increased competition caused by new construction of similar units within their respective markets. The Partnership's net income for the three months ended March 31, 1997, was approximately $154,000 versus approximately $135,000 for the corresponding period of 1996. The increase in net income is primarily attributable to an increase in rental income and a decrease in general and administrative expenses. The increase in rental income is due to increased rental rate at all of the four investment properties, which is partially offset by decreases in occupancies at three of the four investment properties. Included in maintenance expenses for 1997 is approximately $22,000 of major repairs and maintenance comprised of landscaping and construction oversight costs. 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 March 31, 1997, the Partnership had unrestricted cash of approximately $1,751,000 versus cash of approximately $1,303,000 at March 31, 1996. Net cash provided by operating activities increased due to the increases in net income as discussed above, accounts payable and a decrease in escrows for taxes. The decrease in escrows for taxes were offset by the decrease in accrued taxes due to the timing of the tax payments. The increase in accounts payable was due to the timing of payments to vendors. Net cash used in investing activities decreased due to a decrease in property improvements in the first quarter of 1997 versus the first quarter of 1996. Net cash used in financing activities for the first quarter of 1997 remained relatively consistent in comparison to the prior year's first quarter. 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 property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the partnership. The mortgage indebtedness of approximately $8,401,000, 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. Future cash distributions will depend on the levels of net cash generated from operations, property sales and the availability of cash reserves. No cash distributions were made in the three month period ended March 31, 1997 or 1996. The Managing General Partner anticipates making a distribution in the second quarter of 1997. 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 March 31, 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: April 18, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties III Ltd. 1997 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000353282 SHELTER REALTY III CORPORATION 1,000 3-MOS DEC-31-1997 MAR-31-1997 1,751 0 20 0 0 0 25,485 13,516 15,165 0 8,401 0 0 0 6,126 15,165 0 1,345 0 0 1,191 0 193 0 0 0 0 0 0 154 2.76 0 The Partnership has an unclassified balance sheet. Multiplier is 1.
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