-----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, AQEdy7T87yeKWykarg3bUvuoebuyUGOcBeSAgZj7/+NMx0azT0jh25UoVx5fYxGZ myM1w+u3gUeMy6hiievbUQ== 0000769635-96-000001.txt : 19960816 0000769635-96-000001.hdr.sgml : 19960816 ACCESSION NUMBER: 0000769635-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRI BUSINESS PROPERTIES FUND LTD III CENTRAL INDEX KEY: 0000769635 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 942969782 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15348 FILM NUMBER: 96612095 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ PO BOX 1089 STREET 2: C/O INSIGNIA FINANCIAL GROUP INC CITY: GREENVILLE STATE: SC ZIP: 29602 MAIL ADDRESS: STREET 1: C/O IINSIGNIA FINANCIAL GROUP 14TH FL STREET 2: ONE INSIGNIA FINANCIAL PLZ CITY: GREENVILLE STATE: SC ZIP: 29062 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report (As last amended in 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 June 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... (Amended by Exchange Act Rel. No. 312905, eff. 4/26/93.) Commission file number 0-15348 MRI BUSINESS PROPERTIES FUND, LTD. III (Exact name of registrant as specified in its charter) California 94-2969782 (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 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) MRI BUSINESS PROPERTIES FUND, LTD. III CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION (Unaudited) (in thousands) June 30, 1996
Assets Cash and cash equivalents $ 428 Other assets 540 Accounts receivable 171 Total assets 1,139 Liabilities Accrued expenses 188 Estimated costs during the period of liquidation 15 203 Net assets in liquidation $ 936 See Notes to Consolidated Financial Statements
a) MRI BUSINESS PROPERTIES FUND, LTD. III CONSOLIDATED BALANCE SHEET (in thousands, except unit data) September 30, 1995
ASSETS Cash and cash equivalents $ 2,904 Accounts receivable and other assets 448 Due from affiliate 220 Real Estate: Real estate 30,343 Accumulated depreciation (9,585) Real estate, net 20,758 Total assets $ 24,330 LIABILITIES AND PARTNERS' EQUITY Accounts payable and other liabilities $ 634 Due to unconsolidated joint venture 618 Notes payable 15,578 Commitments and Contingencies Partners' Equity: General partners (276) Limited partners (109,027 assignee units outstanding at September 30, 1995) 7,776 Total partners' equity 7,500 Total liabilities and partners' equity $ 24,330 See Notes to Consolidated Financial Statements
b) MRI BUSINESS PROPERTIES FUND, LTD. III CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION (Unaudited) (in thousands) June 30, 1996
Net assets in liquidation $ 906 at March 31, 1996 Changes in net assets in liquidation attributed to: Decrease in cash (356) Increase in other assets 540 Increase in accrued expenses (170) Decrease in estimated costs during the period of liquidation 16 Net assets in liquidation at June 30, 1996 $ 936 See Notes to Consolidated Financial Statements
c) MRI BUSINESS PROPERTIES FUND, LTD. III CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Nine Months Ended Ended June 30, June 30, 1995 1995 Revenues: Room revenue $ 3,601 $ 11,060 Other operating revenues 229 703 Interest 70 165 Equity in unconsolidated joint venture's operations 14 -- Total revenues 3,914 11,928 Expenses: Room expenses 865 2,503 Other operating expenses 1,491 4,672 Interest 253 762 Depreciation 391 1,173 Equity in unconsolidated joint venture's operations -- 93 General and administrative 115 349 Total expenses 3,115 9,552 Net income $ 799 $ 2,376 Net income allocated to general partners $ 16 $ 48 Net income allocated to limited partners 783 2,328 $ 799 $ 2,376 Net income per limited partnership unit $ 7.18 $ 21.35 See Notes to Consolidated Financial Statements
d) MRI BUSINESS PROPERTIES FUND, LTD. III CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended June 30, 1995 Cash flows from operating activities: Net income $ 2,376 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,194 Equity in unconsolidated joint venture's operations 93 Change in accounts: Accounts receivable and other assets 42 Accounts payable, other liabilities and due to an affiliate of the joint venture partner (111) Net cash provided by operating activities 3,594 Cash flows from investing activities: Property improvements and replacements (794) Unconsolidated joint venture distributions (170) Cash used in investing activities (964) Cash flows from financing activities: Mortgage principal payments (210) Cash used in financing activities (210) Net increase in cash and cash equivalents 2,420 Cash and cash equivalents at beginning of period 4,045 Cash and cash equivalents at end of period $ 6,465 Supplemental information: Interest paid $ 741 See Notes to Consolidated Financial Statements
e) MRI BUSINESS PROPERTIES FUND, LTD. III NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information under the liquidation basis of accounting 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 NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner"), all adjustments considered necessary for a fair presentation on the liquidation basis have been included. 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 September 30, 1995. The balance sheet at September 30, 1995, was derived from audited financial statements at such date. During the first two quarters of fiscal 1996, the Partnership sold its remaining properties. As a result, the Partnership changed its basis of accounting as of March 31, 1996, to a liquidation basis. Consequently, assets have been valued at their estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based on the estimates as of the date of the financial statements. The consolidated statement of net assets in liquidation as of June 30, 1996, includes approximately $15,000 of costs, net of income, that the Managing General Partner estimates will be incurred during the period of liquidation, based on the assumption that the liquidation process will be completed by September 30, 1996. These costs include anticipated legal fees, administrative expenses, and mailing costs. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. Note B - Transactions with Affiliated Parties MRI Business Properties Fund, Ltd. III (the "Partnership") has no employees and is dependent on its general partners and 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 transactions with affiliates of Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc.("NPI"), and affiliates of NPI were charged to expense in 1996 and 1995:
For the Nine Months Ended June 30, 1996 1995 Reimbursement for services of affiliates $ 75,000 $140,000 (included in general and administrative expenses)
An affiliate of the Managing General Partner was paid a fee of $10,000 relating to a successful real estate tax appeal on the Partnership's Residence Inn-Sacramento Hotel during the nine months ended June 30, 1995. In addition, an affiliate of NPI was paid a fee of $26,000 relating to a successful real estate tax appeal on the Partnership's Embassy Suites-Tempe Hotel during the nine months ended June 30, 1995. The general partner of the Partnership is Montgomery Realty Company-85 ("Montgomery"), a general partnership, and the associate general partner is MRI Associates, Ltd. III ("MRI"), a limited partnership. Fox Realty Investors ("FRI") is the managing general partner of Montgomery and a general partner of MRI. Pursuant to a series of transations which closed during the first half of 1996, affiliates of Insignia acquired control of NPI Equity, the managing general partner of FRI. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity. Note C - Investment in Unconsolidated Joint Venture The following are the condensed balance sheets as of June 30, 1996, and September 30, 1995, and condensed statements of operations for each of the nine months ended June 30, 1996 and 1995, of the unconsolidated joint venture: MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS (in thousands)
June 30, September 30, 1996 1995 (Unaudited) Assets Cash and cash equivalents $ 231 $ 887 Restricted cash -- 958 Accounts receivable and other assets -- 1,321 Real Estate: Real estate -- 63,148 Accumulated depreciation -- (17,952) Allowance for impairment of value -- (11,962) Real estate, net -- 33,234 Total assets $ 231 $ 36,400 Liabilities and Partners' Deficiency Accounts payable and other liabilities $ -- $ 1,805 Due to affiliates 231 3,069 Note payable -- 34,000 Total liabilities 231 38,874 Minority interest in joint venture -- (1,238) Partners' Deficiency: MRI BPF, Ltd. II -- (618) MRI BPF, Ltd. III -- (618) Total partners' deficiency -- (1,236) Total liabilities and partners' deficiency $ 231 $ 36,400 Note: The balance sheet at September 30, 1995, was derived from audited financial statements at such date.
Note C - Investment in Unconsolidated Joint Venture (continued) MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands)
For the Nine Months Ended June 30, June 30, 1996 1995 Revenues $ 4,017 $ 15,730 Gain on sale of hotel 9,755 -- Total revenues 13,772 15,730 Expenses 2,553 16,102 Income (loss) before minority interest in joint venture operations 11,219 (372) Minority interest in joint venture operations (5,107) 186 Net income (loss) $ 6,112 $ (186) Allocation of net income (loss): MRI BPF, Ltd. II $ 3,056 $ (93) MRI BPF, Ltd. III 3,056 (93) Net income (loss) $ 6,112 $ (186) For the Three Months Ended June 30, June 30, 1996 1995 Revenues $ 2 $ 5,608 Expenses 17 5,551 (Loss) income before minority interest in joint venture's operations (15) 57 Minority interest in joint venture's operations -- (29) Net (loss) income $ (15) $ 28 Allocation of net (loss) income: MRI BPF, Ltd. II $ (8) $ 14 MRI BPF, Ltd. III (7) 14 Net (loss) income $ (15) $ 28
Note D - Sale of Investment Properties On October 19, 1995, the Partnership's Residence Inn - Orlando Property was sold to an unaffiliated third party for $10,100,000. After satisfaction of the mortgage loan of $7,985,000 (including accrued interest) and closing costs, the Partnership received approximately $1,900,000. The Partnership recorded a provision for loss on sale of the property of $800,000 during the 1995 fiscal year. The Partnership has recognized a gain on sale of the property of $5,000. On December 1, 1995, the Combined Fund sold the Holiday Inn Crowne Plaza property to an unaffiliated third party for $44,000,000. After satisfaction of the mortgage note of $34,000,000, closing costs and other expenses, the joint venture received approximately $8,900,000. In accordance with the July 7, 1995, agreement, the Combined Fund received $5,000,000. The Partnership's share of net proceeds, after expenses, was $2,445,000. The Partnership has recognized a gain on sale of $2,694,000. The Combined Fund had previously recorded an approximate $11,900,000 provision for impairment of value in 1991 and 1992. A former joint venture partner may be required to contribute certain funds to the Partnership in accordance with the joint venture agreement. The amount of contribution, if any, is not determinable at this time. On January 12, 1996, the Partnership sold its remaining property, Residence Inn - Sacramento, to an unaffiliated third party for $14,400,000. After satisfaction of the mortgage loan of $7,691,000 (including accrued interest) and closing costs, the Partnership received approximately $6,600,000. For financial statement purposes the Partnership recognized a gain on sale of approximately $3,560,000 during the second quarter of fiscal 1996. Note E - Distributions In January 1996, the Partnership distributed $12,867,000 ($118.02 per limited partnership assignee unit) and $263,000 to the limited partners and the general partners, respectively. The funds were primarily provided by the proceeds from the sale of the Partnership's properties and joint venture interest. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As of March 31, 1996, the Partnership adopted the liquidation basis of accounting. As described in "Item 1, Notes to Financial Statements, Note D", the Partnership sold its remaining properties during the first two quarters of fiscal year 1996. The aggregate sales price for its properties was $68,500,000. After satisfaction of existing mortgages, closing costs and amounts distributed to the Partnership's joint venture partners, net proceeds received by the Partnership were approximately $10,945,000. The Partnership recorded a gain of $5,000 on the sale of the Residence Inn - Orlando Hotel, a gain of $3,560,000 on the sale of the Residence Inn - Sacramento Hotel and a gain of $2,694,000 on the sale of its unconsolidated joint venture property, the Holiday Inn Crowne Plaza. The Partnership distributed $12,867,000 to the limited partners ($118.02 per limited partnership assignee unit) and $263,000 to the general partners in January 1996. The funds were primarily provided by proceeds from the sale of the Parntership's properties. Since these were the Partnership's last remaining properties, the Partnership expects to be terminated in 1996 after collection of receivables, payment of outstanding liabilities and a final distribution to the partners. For the three months ended June 30, 1996, the Partnership recorded a net increase in net assets in liquidation of approximately $30,000. The Partnership recorded an increase in other assets related to the requirement under Section 444 of the Internal Revenue Code to deposit funds with the Internal Revenue Service due to its fiscal year end of September 30. This deposit of $540,000 with the Internal Revenue Service will be refunded upon termination of the Partnership. The Partnership also recognized an increase in accrued expenses during the three months ended June 30, 1996, related to state withholding taxes due to Illinois and the District of Columbia of approximately $171,000. The Partnership's original investment objective of capital growth will not be attained. Accordingly, a significant portion of invested capital will not be returned to the limited partners. Upon termination of the Partnership, the general partners may be required to contribute approximately $1,000,000 to the Partnership in accordance with the partnership agreement. 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, 1996. SIGNATURES Pursuant to 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. MRI BUSINESS PROPERTIES FUND, LTD. III By: MONTGOMERY REALTY COMPANY 85, A California General Partnership, its managing general partner By: FOX REALTY INVESTORS, A California General Partnership, its managing general partner By: NPI EQUITY INVESTMENTS II, INC., A Florida Corporation, its managing partner /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director /s/ Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: August 14, 1996 EX-27 2
5 This schedule contains summary financial information extracted from MRI Business Properties Fund Ltd. III 1996 Third Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000769635 MRI BUSINESS PROPERTIES FUND LTD III 1,000 6-MOS SEP-30-1996 JUN-30-1996 428 0 171 0 0 0 0 0 1,139 0 0 0 0 0 936 1,139 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 The Registrant has an unclassified statement of net assets in liquidation. The Registrant has changed to the liquidation basis of accounting. Multiplier is 1.
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