-----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, D8CKOXU34ULDaH45APDO6A/TlBEIgzInfqxUIq8NE50Yf2U1fGmkkNo5HgxZT56e Foy6puXl+Z3OUo5L7SHvKQ== 0000719184-97-000002.txt : 19970520 0000719184-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000719184-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3 CENTRAL INDEX KEY: 0000768890 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942940208 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14187 FILM NUMBER: 97607136 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29802 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended by Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [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 Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from.........to......... (Amended by Exch Act Rel No. 312905. eff 4/26/93.) Commission file number 0-14187 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 (Exact name of registrant as specified in its charter) California 94-2940208 (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) Registrant's telephone number (864) 239-1000 Indicate by check mark whether the registrant (1) has 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) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 BALANCE SHEET (in thousands, except unit data)
March 31, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents: Unrestricted $ 16,693 $ 15,813 Restricted - tenant security deposits 440 432 Accounts receivable 396 416 Investments 109 109 Escrows for taxes and insurance 408 347 Restricted escrows 1,944 2,174 Other assets 1,033 1,059 Investment properties: Land 12,371 12,371 Building and related personal property 49,902 49,450 62,273 61,821 Less accumulated depreciation (13,313) (12,634) 48,960 49,187 $ 69,983 $ 69,537 Liabilities and Partners' Capital (Deficit) Liabilities Mortgage notes payable $ 30,525 $ 30,525 Accounts payable 429 580 Tenant security deposits 446 434 Accrued taxes 308 183 Other liabilities 423 519 32,131 32,241 Partners' Capital (Deficit) General partner (437) (443) Limited partners (383,033 units outstanding) 38,289 37,739 37,852 37,296 $ 69,983 $ 69,537 Note: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Financial Statements
b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues: Rental income $ 3,358 $ 3,011 Interest and other income 390 241 Gain on casualty event 21 -- Total revenues 3,769 3,252 Expenses: Operating 1,127 1,149 General and administrative 121 160 Maintenance 463 420 Depreciation 691 662 Interest 579 369 Property taxes 232 217 Total expenses 3,213 2,977 Net income $ 556 $ 275 Net income allocated to general partners (1%) $ 6 $ 3 Net income allocated to limited partners (99%) 550 272 $ 556 $ 275 Net income per limited partnership unit $ 1.44 $ .71 See Accompanying Notes to Financial Statements c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 383,033 $ 1 $95,758 $95,759 Partners' capital (deficit) at December 31, 1995 383,033 $ (407) $43,868 $43,461 Distributions to partners -- (18) (4,302) (4,320) Net income for the three months ended March 31, 1996 -- 3 272 275 Partners' capital (deficit) at March 31, 1996 383,033 $ (422) $39,838 $39,416 Partners' capital (deficit) at December 31, 1996 383,033 $ (443) $37,739 $37,296 Net income for the three months ended March 31, 1997 -- 6 550 556 Partners' capital (deficit) at March 31, 1997 383,033 $ (437) $38,289 $37,852 See Accompanying Notes to Financial Statements
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 556 $ 275 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 691 662 Amortization of lease commissions and loan costs 34 14 Gain on casualty event (21) -- Loss on disposal of property 41 61 Change in accounts: Restricted cash (8) (4) Accounts receivable 155 139 Escrows for taxes and insurance (61) (58) Other assets (4) 58 Accounts payable (291) (320) Tenant security deposit liabilities 12 6 Accrued taxes 125 159 Other liabilities (96) 81 Net cash provided by operating activities 1,133 1,073 Cash flows from investing activities: Property improvements and replacements (475) (368) Deposits to restricted escrows (101) (7) Receipts from restricted escrows 331 188 Cash received from borrower on foreclosed property -- 74 Net cash used in investing activities (245) (113) Cash flows from financing activities: Loan costs paid (8) (27) Payments on mortgage notes payable -- (45) Distributions to partners -- (4,320) Net cash used in financing activities (8) (4,392) Net increase (decrease) in cash and cash equivalents 880 (3,432) Cash and cash equivalents at beginning of period 15,813 9,871 Cash and cash equivalents at end of period $16,693 $ 6,439 Supplemental disclosure of cash flow information: Cash paid for interest $ 549 $ 358 See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CASH FLOW (Continued) (Unaudited) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY Acquisition On February 14, 1996, Consolidated Capital Institutional Properties/3 foreclosed on South City Business Center, the investment property collateralizing the note receivable between Consolidated Capital Institutional Properties/3 and Lincoln South City Business Center Limited Partnership. As of March 31, 1996, in connection with this transaction, the following accounts had been adjusted by the amounts noted (dollar amounts in thousands): Receipt of cash $ 74 Investment properties 4,326 Notes receivable 4,400 Casualty event At March 31, 1997, as a result of a fire at Lake Villa, investment properties, accounts receivable and accounts payable were adjusted $26,000, $135,000 and $140,000, respectively for non-cash activity. e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Consolidated Capital Institutional Properties/3 (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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, 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-K for the fiscal year ended December 31, 1996. Presentation of Accounts Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. Investments Investments consisting primarily of commercial paper with original maturities of more than ninety days, are considered to be held-to-maturity securities. NOTE B - INVESTMENT PROPERTY ACQUIRED During 1995, it was determined that the note secured by the South City Business Center was impaired. Accordingly, during 1995, the Partnership recorded a write-down to adjust the note balance to the estimated net realizable value of the collateral. Foreclosure proceedings were completed on February 14, 1996, at which time the Partnership assumed operations at the property. The estimated net realizable value at the time of acquisition was $4,400,000 including cash of $74,000 which the partnership received along with the South City assets of approximately $4,326,000. NOTE C - RELATED PARTY TRANSACTIONS The Partnership has paid property management fees based on collected gross rental revenues for property management services in each of the three months ended March 31, 1997 and 1996. Property management fees of approximately $177,000 and $161,000 were paid to affiliates of the General Partner for the three months ending March 31, 1997 and 1996, respectively. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with administration of Partnership activities. Reimbursements for services of affiliates of approximately $88,000 and $83,000 were paid to the General Partner and affiliates for the three months ended March 31, 1997 and 1996. Additionally, the Partnership paid $16,000 and $7,000 during the three month periods ended March 31, 1997 and 1996, to an affiliate of the General Partner for lease commissions at the Partnership's commercial properties. These lease commissions are included in other assets and amortized over the term of the respective leases. The Partnership also paid $20,000 and $3,000 to affiliates of the general partner for the three months ended March 31, 1997 and 1996, respectively, for reimbursement of construction oversight costs related to major property improvement and repair projects at the Partnership's investment properties. 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 agent assumed the financial obligations to the affiliate of the 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 General Partner by virtue of the agent's obligations is not significant. NOTE D - COMMITMENT The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined in the Partnership Agreement. Cash, tenant security deposits and investments, totaling $17,242,000 were greater than the reserve requirement of approximately $3,939,000 at March 31, 1997. NOTE E - SUBSEQUENT EVENT On April 2, 1997, the Partnership paid a distribution of $838,000 from operations and $6,161,000 from surplus funds. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Partnership's investment properties consist of eight apartment complexes and two commercial properties. The following table sets forth the average occupancy of the properties for each of the three months ended March 31, 1997 and 1996: Average Occupancy Property 1997 1996 Cedar Rim Apartments 94% 91% Renton, Washington City Heights Apartments 95% 96% Seattle, Washington Corporate Center Office Complex 96% 96% Tampa, Florida Hidden Cove by the Lake Apartments 94% 89% Belleville, Michigan Lamplighter Park Apartments 93% 98% Belleview, Washington Park Capitol Apartments 99% 99% Salt Lake City, Utah Tamarac Village Apartments 93% 89% Denver, Colorado Williamsburg Manor Apartments 97% 95% Cary, North Carolina Sandpiper Apartments 94% 83% St. Petersburg, Florida South City Business Center 89% 83% Chula Vista, California The General Partner attributes the increase in occupancy at Hidden Cove to unusually low occupancy during the first quarter of 1996 due to management's efforts in early 1996 to increase resident qualification standards in order to reduce unit damages and delinquencies. By the first quarter of 1997, occupancy has stabilized. The decrease in occupancy at Lamplighter Park is due to fire damage to twelve units that has negatively impacted 1997 occupancy levels. Occupancy levels at the property are expected to increase once the damaged units are repaired. The increase in occupancy at Tamarac Apartments is attributed to property improvements and increased leasing efforts combined with a strong local economy. The occupancy increase at Sandpiper is due to interior and exterior renovations and improved market conditions. South City Business Center's occupancy increase is due to a stronger local market in 1997. The Partnership realized net income of $556,000 for the three months ended March 31, 1997, compared to $275,000 for the three months ended March 31, 1996. The increase in net income for the three month period ended March 31, 1997 is primarily attributable to increased rental income resulting from improved occupancy and increased rental rates at several properties. In addition, interest and other income increased as a result of increased tenant charges at various properties as well as greater interest earned on higher levels of invested funds. Total revenues were positively affected by South City's revenue for the full three months ended March 31, 1997, compared to the period from February 14, 1996, the date of South City's acquisition, to March 31, 1996. Also contributing to the increase in net income was a casualty gain of $21,000 relating to fire damage at Hidden Cove by The Lake Apartments. The January fire damaged ten units in one building at the complex. General and administrative expenses decreased for the three months ended March 31, 1997 compared to the corresponding period in 1996 due to lower professional fees. Offsetting these changes was an increase in interest expense. The increase in interest expense is due primarily to the refinancing of Tamarac Village and Lamplighter Park and new debt on Hidden Cove, Cedar Rim and City Heights, whose debt balances increased approximately $12.5 million in November of 1996. Included in maintenance expenses for the three months ended March 31, 1997, is approximately $127,000 of major repairs and maintenance comprised primarily of exterior renovations, major landscaping and exterior painting. For the three months ended March 31, 1996, approximately $101,000 of major repairs and maintenance comprised primarily of exterior building renovations, major landscaping and parking lot rehabilitation is included in maintenance expenses. On February 14, 1996, the Partnership foreclosed on South City Business Center, the investment property collateralizing the note receivable between the Partnership and Lincoln South City Business Center Limited Partnership at which time the Partnership assumed operations of the property. The estimated net realizable value at the time of acquisition was $4,400,000 including cash of $74,000 which the partnership received along with the South City assets of approximately $4,326,000. 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, 1997, the Partnership held unrestricted cash of approximately $16,693,000 compared to approximately $6,439,000 at March 31, 1996. Net cash provided by operating activities increased primarily due to increased rental revenues and interest income, offset by increased interest payments as discussed above. Net cash used in investing activities increased primarily due to increased property improvements and replacements in 1997. Net cash used in financing activities decreased primarily because there were no distributions to partners during the three months ended March 31, 1997. 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 notes payable of approximately $30,525,000 have maturity dates ranging from 1997 to 2007, at which time the individual properties will be refinanced or sold. The mortgage notes payable are nonrecourse and are secured by pledges of the respective properties. All notes require prepayment penalties if repaid prior to maturity and prohibit resale of the properties subject to existing indebtedness. Distributions of approximately $4,320,000 were made to the partners during the three months ended March 31, 1996. On April 2, 1997, the Partnership paid a distribution of $838,000 from operations and $6,161,000 from surplus funds. 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 an exhibit to 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. CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 By: CONCAP EQUITIES, INC. General Partner By:/s/William H. Jarrard, Jr. William H. Jarrard, Jr. President By:/s/Ronald Uretta Ronald Uretta Vice President/Treasurer Date: May 15, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Institutional Properties/3 1997 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000768890 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 1,000 3-MOS DEC-31-1997 MAR-31-1997 16,693 109 396 0 0 0 62,273 13,313 69,983 0 30,525 0 0 0 37,852 69,983 0 3,769 0 0 3,213 0 579 0 0 0 0 0 0 556 1.44 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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