-----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, P5fH/2AOddJylF/Ycj3Ok0zklWRV+/TL5nY0hZqTz8WH+ZJAErE5gleMivEgGbOX Mq1ppiofspgOl43cNncZ6A== 0000831663-97-000001.txt : 19970808 0000831663-97-000001.hdr.sgml : 19970808 ACCESSION NUMBER: 0000831663-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970807 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: 97653231 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 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 June 30, 1997 or [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from.........to......... 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)
June 30, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents: Unrestricted $ 10,389 $ 15,813 Restricted - tenant security deposits 456 432 Accounts receivable 458 416 Investments 105 109 Escrows for taxes and insurance 426 347 Restricted escrows 1,979 2,174 Other assets 1,084 1,059 Investment properties: Land 12,371 12,371 Building and related personal property 50,155 49,450 62,526 61,821 Less accumulated depreciation (14,016) (12,634) 48,510 49,187 $ 63,407 $ 69,537 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 330 $ 580 Tenant security deposits 456 434 Accrued taxes 296 183 Other liabilities 435 519 Mortgage notes payable 30,525 30,525 32,042 32,241 Partners' Capital (Deficit) General partner's (440) (443) Limited partners'(383,033 units outstanding) 31,805 37,739 31,365 37,296 $ 63,407 $ 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)
For the Three Months For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Revenues: Rental income $ 3,447 $ 3,221 $ 6,805 $ 6,232 Other income 329 209 719 450 Gain on casualty event (5) -- 16 -- Total revenues 3,771 3,430 7,540 6,682 Expenses: Operating 1,142 1,056 2,269 2,205 General and administrative 140 161 261 321 Maintenance 478 539 941 959 Depreciation 703 674 1,394 1,336 Interest 579 363 1,158 732 Property taxes 211 210 443 427 Total expenses 3,253 3,003 6,466 5,980 Net income $ 518 $ 427 $ 1,074 $ 702 Net income allocated to general partners (1%) $ 5 $ 4 $ 11 $ 7 Net income allocated to limited partners (99%) 513 423 1,063 695 $ 518 $ 427 $ 1,074 $ 702 Net income per limited partnership unit $ 1.34 $ 1.10 $ 2.78 $ 1.81 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's Partners' Total Original capital contributions 383,033 $ 1 $95,758 $95,759 Partners' (deficit) capital at December 31, 1995 383,033 $ (407) $43,868 $43,461 Distributions to partners -- (18) (4,302) (4,320) Net income for the six months ended June 30, 1996 -- 7 695 702 Partners' (deficit) capital at June 30, 1996 383,033 $ (418) $40,261 $39,843 Partners' (deficit) capital at December 31, 1996 383,033 $ (443) $37,739 $37,296 Distributions to partners -- (8) (6,997) (7,005) Net income for the six months ended June 30, 1997 -- 11 1,063 1,074 Partners' (deficit) capital at June 30, 1997 383,033 $ (440) $31,805 $31,365 See Accompanying Notes to Financial Statements
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1997 1996 Cash flows from operating activities: Net income $ 1,074 $ 702 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,394 1,336 Amortization of lease commissions and loan costs 71 28 Gain on casualty event (16) -- Loss on disposal of property 41 61 Change in accounts: Restricted cash (24) (5) Accounts receivable 77 137 Escrows for taxes and insurance (79) (139) Other assets (94) 58 Accounts payable (379) (323) Tenant security deposit liabilities 22 11 Accrued taxes 113 143 Other liabilities (84) 94 Net cash provided by operating activities 2,116 2,103 Cash flows from investing activities: Property improvements and replacements (732) (651) Deposits to restricted escrows (214) (12) Receipts from restricted escrows 409 299 Cash received from borrower on foreclosed property -- 74 Dividends received 4 -- Net cash used in investing activities (533) (290) Cash flows from financing activities: Payments on mortgage notes payable -- (93) Loan costs paid (2) (86) Distributions to partners (7,005) (4,320) Net cash used in financing activities (7,007) (4,499) Net decrease in cash and cash equivalents (5,424) (2,686) Cash and cash equivalents at beginning of period 15,813 9,871 Cash and cash equivalents at end of period $10,389 $ 7,185 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,098 $ 683 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 June 30, 1996, in connection with this transaction, the following accounts had been adjusted by the amounts noted (in thousands): Investment properties $ 4,326 Notes receivable (4,400) Casualty event At June 30, 1997, as a result of a fire at Lake Villa, investment properties, accounts receivable and accounts payable were adjusted $26,000, $119,000 and $129,000, 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 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-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. NOTE B - INVESTMENT PROPERTY ACQUIRED During 1995, the debtor stopped making note payments on the note secured by the South City Business Center. An affiliate of the General Partner was appointed receiver in September 1995, and the 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 six month periods ended June 30, 1997 and 1996. Property management fees of approximately $361,000 and $321,000 were paid to affiliates of the General Partner for the six months ending June 30, 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 $167,000 and $182,000 were paid to the General Partner and affiliates for the six months ended June 30, 1997 and 1996. Additionally, the Partnership paid $23,000 during each of the six month periods ended June 30, 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 are amortized over the term of the respective leases. 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 approximately $11,000,000, were greater than the reserve requirement of approximately $3,600,000 at June 30, 1997. NOTE E - DISTRIBUTIONS The Partnership made distributions of cash generated from operations of approximately $838,000 and $1,823,000 for the six months ended June 30, 1997 and 1996. The Partnership also made distributions of cash from surplus funds of approximately $6,161,000 and $2,497,000 for the six months ended June 30, 1997 and 1996. In April of 1997, the Partnership paid state withholding taxes of $6,000 for non-resident limited partners. This payment is reflected as a distribution to the limited partners. 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 six months ended June 30, 1997 and 1996: Average Occupancy Property 1997 1996 Cedar Rim Apartments 94% 92% Renton, Washington City Heights Apartments 95% 96% Seattle, Washington Corporate Center Office Complex 97% 94% Tampa, Florida Hidden Cove by the Lake Apartments 92% 92% Belleville, Michigan Lamplighter Park Apartments 95% 98% Belleview, Washington Park Capitol Apartments 98% 98% Salt Lake City, Utah Tamarac Village Apartments 94% 92% Denver, Colorado Williamsburg Manor Apartments 97% 95% Cary, North Carolina Sandpiper Apartments 95% 87% St. Petersburg, Florida South City Business Center 91% 86% Chula Vista, California The General Partner attributes the increase in occupancy at Corporate Center to current tenant expansions and several new tenants in previously vacant units. 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 $1,074,000 for the six months ended June 30, 1997 compared to $702,000 for the six months ended June 30, 1996. Net income for the three months ended June 30, 1997 was $518,000 compared to $427,000 for the three months ended June 30, 1996. The increase in net income for the six month period ended June 30, 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 increased cash balances. Total revenues were positively affected by South City's revenue for the full six months ended June 30, 1997 compared to the period from February 14, 1996, the date of South City's acquisition, to June 30, 1996. Also contributing to the increase in net income was a casualty gain of $16,000 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 due to a decrease in professional fees and expense reimbursements. Partially 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 $12,500,000 in November of 1996. Included in maintenance expenses for the six months ended June 30, 1997 is approximately $236,000 of major repairs and maintenance comprised primarily of exterior renovations, major landscaping, exterior painting and swimming pool repairs. For the six months ended June 30, 1996, approximately $391,000 of major repairs and maintenance comprised primarily of exterior building renovations, major landscaping, exterior painting and parking lot rehabilitation is included in maintenance expenses. 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 cash and cash equivalents of $10,389,000 compared to $7,185,000 at June 30, 1996. Net cash provided by operating activities increased primarily due to increased rental revenues and interest income, partially offset by increased interest payments, as discussed above. Net cash used in investing activities increased due to the funding of restricted escrows required by the November 1996 refinancing. Net cash used in financing activities increased due to increased distributions to partners during the six months ended June 30, 1997 compared to 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 notes payable of approximately $30,525,000 have maturity dates ranging from 2003 to 2005, 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 $7,005,000 and $4,320,000 were made to the partners during the six months ended June 30, 1997 and 1996, respectively. Future cash distributions will depend on the levels of net cash generated from operations or property sales, if any, 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 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 INSTITUTIONAL PROPERTIES/3 By: CONCAP EQUITIES, INC. Its General Partner By:/s/William H. Jarrard, Jr. William H. Jarrard, Jr. President By:/s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: August 7, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Institutional Properties/3 1997 Second Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000768890 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 1,000 6-MOS DEC-31-1997 JUN-30-1997 10,389 105 458 0 0 0 62,526 (14,016) 63,407 0 30,525 0 0 0 31,365 63,407 0 7,540 0 0 6,466 0 1,158 0 0 0 0 0 0 1,074 2.78 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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