-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ie8BFLmpaiejHu9xxF5EO/MJJOPjiaC1tp4ETTDPfH9WlmcSMvfxDQixmr4/flqv fMaTrK3nBmvryfGJkj7n0A== 0000889812-95-000025.txt : 19950515 0000889812-95-000025.hdr.sgml : 19950515 ACCESSION NUMBER: 0000889812-95-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 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: 95510068 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DRIVE NW STREET 2: SUITE 370 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: 5665 NORTHSIDE DRIVE NW STREET 2: SUITE 370 CITY: ATLANTA STATE: GA ZIP: 30328 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1994 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 0-15348 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 Identification No.) incorporation or organization) 5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (404) 916-9090 N/A Former name, former address and fiscal year, if changed since last report. Indicate by check mark whether 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 / / APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes / / No / / APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date __________________. 1 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets December 31, September 30, 1994 1994 (Unaudited) (Audited) -------------- -------------- Assets Cash and cash equivalents $ 4,223,000 $ 4,045,000 Accounts receivable and other assets 580,000 791,000 Real Estate: Real estate 48,639,000 48,352,000 Accumulated depreciation (15,823,000) (15,432,000) -------------- -------------- Real estate, net 32,816,000 32,920,000 -------------- -------------- Total assets $ 37,619,000 $ 37,756,000 ============== ============== Liabilities and Partners' Equity Accounts payable and other liabilities $ 855,000 $ 1,240,000 Due to unconsolidated joint venture 422,000 339,000 Notes payable 15,722,000 15,791,000 -------------- -------------- Total liabilities 16,999,000 17,370,000 -------------- -------------- Partners' Equity: General partners (deficit) (1,928,000) (1,933,000) Limited partners equity (109,027 assignee units outstanding at December 31, 1994 and September 1994) 22,548,000 22,319,000 -------------- -------------- Total partners' equity 20,620,000 20,386,000 -------------- -------------- Total liabilities and partners' equity $ 37,619,000 $ 37,756,000 ============== ============== See notes to consolidated financial statements. 2 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Consolidated Statements of Operations (Unaudited)
For the Three Months Ended December 31, December 31, 1994 1993 Revenues: Room revenue $ 3,225,000 $ 6,929,000 Food and beverage revenue - 1,777,000 Other operating revenue 232,000 537,000 Interest 43,000 54,000 -------------- -------------- Total revenues 3,500,000 9,297,000 -------------- -------------- Expenses: Room expenses 802,000 1,692,000 Food and beverage expenses - 1,499,000 Other operating expenses 1,612,000 3,464,000 Depreciation 391,000 386,000 Interest 255,000 507,000 Equity in unconsolidated joint venture's 83,000 106,000 operations General and administrative 123,000 125,000 -------------- -------------- Total expenses 3,266,000 7,779,000 -------------- -------------- Income before minority interest in joint ventures' operations 234,000 1,518,000 Minority interest in joint ventures' operations - (445,000) -------------- -------------- Net income $ 234,000 $ 1,073,000 ============== ============== Net income per limited partnership assignee unit $ 2 $ 10 ============== ==============
See notes to consolidated financial statements. 3 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Consolidated Statement of Partners' Equity (Deficit) (Unaudited) For the Three Months Ended December 31, 1994
General Limited Total Partners' Partners' Partners' (Deficit) Equity Equity -------------- -------------- -------------- Balance - October 1, 1994 $ (1,933,000) $ 22,319,000 $ 20,386,000 Net income 5,000 229,000 234,000 -------------- -------------- -------------- Balance - December 31, 1994 $ (1,928,000) $ 22,548,000 $ 20,620,000 ============== ============== ==============
See notes to consolidated financial statements. 4 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended December 31, December 31, Operating Activities: 1994 1993 -------------- -------------- Net income $ 234,000 $ 1,073,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 398,000 393,000 Minority interest in joint ventures' operations - 445,000 Equity in unconsolidated joint venture's 83,000 106,000 operations Changes in operating assets and liabilities: Accounts receivable and other assets 204,000 131,000 Accounts payable and other liabilities (385,000) (843,000) -------------- -------------- Net cash provided by operating activities 534,000 1,305,000 -------------- -------------- Investing Activities: Properties and improvements additions (287,000) (788,000) Unconsolidated joint venture contributions - (150,000) Proceeds from cash investments - 2,380,000 Purchase of cash investments - (2,376,000) -------------- -------------- Net cash (used in) investing activities (287,000) (934,000) -------------- -------------- Financing Activities: Notes payable principal payments (69,000) (4,000) -------------- -------------- Cash (used in) financing activities (69,000) (4,000) -------------- -------------- Increase in Cash and Cash Equivalents 178,000 367,000 Cash and Cash Equivalents at Beginning of Period 4,045,000 5,088,000 -------------- -------------- Cash and Cash Equivalents at End of Period $ 4,223,000 $ 5,455,000 ============== ============== Supplemental Disclosure of Cash Flow Information: Interest paid in cash during the period $ 248,000 $ 602,000 ============== ==============
See notes to consolidated financial statements. 5 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying consolidated financial statements, footnotes and discussions should be read in conjunction with the consolidated financial statements, related footnotes and discussions contained in the Partnership's Annual Report for the year ended September 30, 1994. Certain accounts have been reclassified in order to conform to the current period. The financial information contained herein is unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. All adjustments are of a normal recurring nature. The results of operations for the three months ended December 31, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. 2. Transactions with Related Parties Affiliates of the Managing General Partner ("MGP") received reimbursements of administrative expenses amounting to $39,000 during the three months ended December 31, 1994. These reimbursements are primarily included in general and administrative expenses. MGP was paid a fee of $26,383 relating to a successful real estate tax appeal on the Partnership's Embassy Suites - Tempe hotel during the three months ended December 31, 1994. The tax appeal fee is included in operating expenses. 6 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment in Unconsolidated Joint Venture The following are the condensed balance sheets as of December 31, 1994 and September 30, 1994 and condensed statements of operations for the three months ended December 31, 1994 and 1993 of the unconsolidated joint venture: MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS
December 31, September 30, 1994 1994 (Unaudited) (Audited) -------------- -------------- Assets Cash and cash equivalents $ 691,000 $ 561,000 Restricted cash 258,000 564,000 Accounts receivable and other assets 1,386,000 1,323,000 Real Estate: Real estate 62,970,000 62,898,000 Accumulated depreciation (16,735,000) (16,335,000) Allowance for impairment of value (11,962,000) (11,962,000) -------------- -------------- Real estate, net 34,273,000 34,601,000 -------------- -------------- Total assets $ 36,608,000 $ 37,049,000 ============== ============== Liabilities and Partners' Deficiency Accounts payable and other liabilities $ 2,436,000 $ 2,320,000 Due to affiliates 1,872,000 2,095,000 Note payable 34,000,000 34,000,000 -------------- -------------- Total liabilities 38,308,000 38,415,000 -------------- -------------- Minority interest in joint venture (856,000) (689,000) -------------- -------------- Partners' Deficiency: MRI BPF, LTD. II (422,000) (338,000) MRI BPF, LTD. III (422,000) (339,000) -------------- -------------- Total partners' deficiency (844,000) (677,000) -------------- -------------- Total liabilities and partners' deficiency $ 36,608,000 $ 37,049,000 ============== ==============
7 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment in Unconsolidated Joint Venture (Continued) MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended December 31, December 31, 1994 1993 -------------- -------------- Revenues $ 4,871,000 $ 5,128,000 Expenses 5,205,000 5,549,000 -------------- -------------- Loss before minority interest in joint venture operations (334,000) (421,000) Minority interest in joint venture operations 167,000 208,000 -------------- -------------- Net loss $ (167,000) $ (213,000) ============== ============== Allocation of net loss: MRI BPF, Ltd. II $ (84,000) $ (107,000) MRI BPF, Ltd. III (83,000) (106,000) -------------- -------------- Net loss $ (167,000) $ (213,000) ============== ==============
The three months ended December 31, 1993 contained fourteen weeks. 8 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This item should be read in conjunction with the Consolidated Financial Statements and other Items contained elsewhere in this Report. Liquidity and Capital Resources All of Registrant's properties are hotels. Registrant receives hotel operating revenues and is responsible for operating expenses, administrative expenses, capital improvements and debt service payments. Registrant uses working capital reserves provided from any undistributed cash flow from operations and sales proceeds as its primary source of liquidity. During the three months ended December 31, 1994, all of Registrant's hotels generated positive cash flow. Guest room renovations continue at the Holiday Inn Crowne Plaza. During the three months ended December 31, 1994, $72,000 was spent on room renovations. Management anticipates spending an additional $900,000 to complete the renovations. The renovations will be funded by working capital and replacement reserves (restricted cash). To preserve working capital reserves required for necessary capital improvements to properties and provide resources for debt restructuring, cash distributions remained suspended during the three months ended December 31, 1994. The Managing General Partner will evaluate future cash distributions based on the capital needs of Registrant. The level of liquidity based upon cash and cash equivalents experienced a $178,000 increase at December 31, 1994, as compared to September 30, 1994. Registrant's $534,000 from operating activities was only partially offset by $287,000 of fixed asset purchases (investing activities) and $69,000 of note principal payments (financing activities). Net cash provided by operating activities declined at December 31, 1994, as compared to 1993, primarily due to the disposition of Registrant's joint venture interests during the second quarter of fiscal year ended September 30, 1994, which was only partially offset by improved operations at Registrant's remaining properties. Mortgage principal payments increased primarily due to Registrant's Residence Inn, Orlando property loan, which started principal amortization during November 1993. All other increases (decreases) in certain assets and liabilities are the result of the timing of receipt and payment of various operating activities. During the first quarter of 1995, DeForest Ventures I L.P. acquired 26,730 limited partnership units or 24.5% of total limited partnership units of Registrant. The purchase is not expected to have an impact on the operations or liquidity of Registrant. Working capital reserves are invested in money market accounts and repurchase agreements secured by United States Treasury obligations. At December 31, 1994, Registrant had approximately $2,740,000 invested in overnight repurchase agreements earning 5.25% per annum. The Managing General Partner believes that, if market conditions remain relatively stable, cash flow from operations, when combined with working capital reserves, will be sufficient to fund essential capital improvements and debt service payments in 1995 and the foreseeable future. Balloon payments on mortgages encumbering Registrant's properties are due in September 1997 and October 1997. The mortgage encumbering Registrant's unconsolidated joint venture, the Holiday Inn Crowne Plaza, matures in July 1995. The mortgage agreement provides an option to extend the maturity date to June 1999. The new interest rate on the loan, if extended, would be approximately 12%. The Managing General Partner believes that each property generates sufficient cash flow to allow all mortgages to be refinanced in an orderly fashion. 9 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources (Continued) At this time, it appears that the investment objective of capital growth will not be attained and that a significant portion of invested capital will not be returned to investors. The extent to which invested capital is returned to investors is dependent upon the performance of Registrant's remaining properties and the markets in which such properties are located and on the sales price of the remaining properties. Real Estate Market The income and expenses of operating the properties owned by Registrant are subject to factors outside of Registrant's control, such as over-supply of similar properties resulting from over-building, increases in unemployment, population shifts or changes in patterns or needs of users. Expenses, such as local real estate taxes and miscellaneous expenses, are subject to change and cannot always be reflected in room rate increases due to market conditions. In addition, there are risks inherent in owning and operating lodging facilities because such properties are management and labor intensive and especially susceptible to the impact of economic and other conditions outside the control of Registrant. There have been, and it is possible there may be other Federal, state and local legislation and regulations enacted relating to the protection of the environment. Registrant is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties still owned by Registrant. Results of Operations Three Months Ended December 31, 1994 vs. December 31, 1993 Operating results, before the minority interest in joint venture operations declined by $1,284,000, for the three months ended December 31, 1994, as compared to 1993, due to a decrease in revenues of $5,797,000 and expenses of $4,513,000. Operating results declined due to the sale of Registrant's joint venture interests. With respect to the remaining properties, operating results improved by $227,000, for the three months ended December 31, 1994, as compared to 1993, due to increases in revenues of $258,000 and expenses of $31,000. The $258,000 increase in revenues is attributable to increases in room revenue of $232,000, other operating revenue of $21,000 and interest income of $5,000 at Registrant's remaining properties. Room revenue increased at all of Registrant's remaining properties, except for the Residence Inn - Sacramento, which declined primarily due to a decrease in occupancy. The largest increase was at Registrant's Residence Inn - Orlando property, due to a significant increase in occupancy which was only partially offset by a slight decline in average daily room rates. Other operating revenues increased due to slight increases in other income at Registrant's Embassy Suites - Tempe and Residence Inn - Orlando properties. Interest income remained relatively constant, as the decline in average working capital available for investment was offset by higher interest rates. 10 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Three Months Ended December 31, 1994 vs. December 31, 1993 (Continued) The $31,000 increase in expenses at Registrant's remaining properties is attributable to increases in room expenses of $12,000, other operating of $279,000 and depreciation of $5,000, which was only partially offset by decreases in interest expense of $240,000, general and administrative expenses of $2,000 and equity in unconsolidated joint venture operations of $23,000. Other operating expenses increased primarily at Registrant's Embassy Suites and Residence Inn - Orlando properties. Interest expense decreased primarily due to the reduction in the interest on the loan encumbering Registrant's Residence Inn - - Orlando property (from 10% to 6.5%) and Registrant prepaying on June 2, 1994, in full satisfaction, the note encumbering Registrant's Embassy Suites property. The loss from Registrant's unconsolidated joint venture property (the Holiday Inn Crowne Plaza) decreased due to improved operations at the hotel. Room expenses, general and administrative expenses and depreciation expense remained relatively constant. Unconsolidated Joint Venture Operations (MRI BPF Combined Fund No. 1) Three Months Ended December 31, 1994 vs. December 31, 1993 Operating results remained relatively constant during the thirteen week comparative period, due to increased occupancy and room rates, which were offset by increased expenses. Properties A description of the hotel properties in which Registrant has an ownership interest during the period covered by this Report, together with occupancy and room rate data, follows: MRI BUSINESS PROPERTIES FUND, LTD. III OCCUPANCY AND ROOM RATE SUMMARY
Average Average Occupancy Rate (%) Daily Room Rate ($) ------------------ ------------------ Three months Three months Date Ended Ended of December 31, December 31, Name and Location Rooms Purchase 1994 1993 1994 1993 - ----------------- ----- -------- ---- ---- ---- ---- Holiday Inn Crowne Plaza (1) Atlanta, Georgia 492 03/86 71 68 89.20 87.53
11 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Properties (Continued)
Average Average Occupancy Rate (%) Daily Room Rate ($) ------------------ ------------------ Three months Three months Date Ended Ended of December 31, December 31, Name and Location Rooms Purchase 1994 1993 1994 1993 - ----------------- ----- -------- ---- ---- ---- ---- Embassy Suites - Tempe Tempe, Arizona 224 12/86 74 79 91.77 79.34 Residence Inn - Orlando Orlando, Florida 176 09/87 71 57 76.41 78.90 Residence Inn - Sacramento, California 176 09/87 74 78 78.37 77.47 Radisson Park Terrace Hotel (2) Washington, D.C. 219 09/86 - 74 - 86.51 Park Hyatt Hotel (3) Chicago, Illinois 255 12/86 - 72 - 157.49
(1) Registrant and an affiliated partnership, MRI Business Properties Fund, Ltd. II, own the hotel through a joint venture which has a 50 percent interest in this property. (2) Registrant sold its 65% interest in this property on March 15, 1994. (3) Registrant sold its 60% interest in this property on March 7, 1994. 12 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K On October 12, 1994, a Current Report on Form 8-K was filed with the Securities and Exchange Commission to provide for the sale by National Property Investors, Inc. ("NPI"), the parent of NPI Equity Investments II, Inc., of one-third of its stock to an affiliate of Apollo Real Estate Advisors, L.P. ("Apollo"). In addition, the 8-K disclosed the acquisition by affiliates of Apollo and NPI of (I) the stock in the general partners of DeForest Ventures I L.P. ("DeForest") and DeForest Ventures II L.P. ("DeForest II") and (ii) a limited partnership interest in DeForest and DeForest II. 13 of 14 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - DECEMBER 31, 1994 SIGNATURE 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/ARTHUR N. QUELER -------------------------------------------------- ARTHUR N. QUELER Executive Vice President, Treasurer, Secretary and Director (Principal Financial and Accounting Officer) 14 of 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from MRI Business Properties Fund, Ltd. III and is qualified in its entirety by reference to such financial statements. 1 3-MOS SEP-30-1995 OCT-01-1994 DEC-31-1994 4,223,000 0 580,000 0 0 0 48,639,000 (15,823,000) 37,619,000 0 15,722,000 0 0 0 20,620,000 37,619,000 0 3,457,000 0 2,805,000 0 0 255,000 234,000 0 234,000 0 0 0 234,000 2 2 Accounts receivable includes other assets of $228,000.
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