-----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, Y2MHIRQ2YvyzPpq0iZe0h/XuRNpFPOeOH4ZLqlBpyziZOB3G6LL6bGIe8ha78sn/ Hutkq1rbashvXbvxqx7Dog== 0000950115-94-000166.txt : 19940525 0000950115-94-000166.hdr.sgml : 19940525 ACCESSION NUMBER: 0000950115-94-000166 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRI BUSINESS PROPERTIES FUND LTD III CENTRAL INDEX KEY: 0000769635 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94529516 BUSINESS ADDRESS: STREET 1: C\O METRIC MANAGEMENT INC STREET 2: 950 TOWER LN CITY: FOSTER CITY STATE: CA ZIP: 94404 BUSINESS PHONE: 4153787000 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 March 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 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CONSOLIDATED BALANCE SHEETS March 31, September 30, 1994 1993 (Unaudited) (Audited) Assets Cash and cash equivalents $ 10,298,000 $ 5,088,000 Cash investments - 3,467,000 Accounts and interest receivable - net 771,000 1,814,000 Inventories and operating supplies 36,000 533,000 Prepaid expenses and other assets 176,000 434,000 Real Estate: Real estate 47,956,000 110,924,000 Accumulated depreciation (14,630,000) (30,459,000) Allowance for impairment of value - (14,348,000) ------------ ------------ Net real estate 33,326,000 66,117,000 Deferred financing costs - net 97,000 158,000 ------------ ------------ Total assets $ 44,704,000 $ 77,611,000 ------------ ------------ ------------ ------------ Liabilities and Partners' Equity (Deficiency) Accounts payable $ 972,000 $ 1,466,000 Accrued interest 123,000 966,000 Accrued property taxes 211,000 1,779,000 Payable to affiliate of joint venture partner - 1,581,000 Due to unconsolidated joint venture 149,000 147,000 Other liabilities 578,000 1,467,000 Note payable to affiliate of joint venture partner - 2,500,000 Notes payable 22,946,000 51,799,000 ------------ ------------ Total liabilities 24,979,000 61,705,000 ------------ ------------ Minority interest in joint ventures - (444,000) ------------ ------------ Partners' equity (deficiency): General partners (1,947,000) (2,014,000) Limited partners (109,027 units outstanding at March 31, 1994 and September 30, 1993) 21,672,000 18,364,000 ------------ ------------ Total partners' equity 19,725,000 16,350,000 ------------ ------------ Total liabilities and partners' equity $ 44,704,000 $ 77,611,000 ------------ ------------ ------------ ------------ See notes to consolidated financial statements. 2 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Consolidated Statements of Operations (Unaudited) For the Six Months Ended March 31, 1994 March 31, 1993 Revenues: Room revenue $ 12,945,000 $ 12,510,000 Food and beverage revenue 2,593,000 2,998,000 Other operating revenues 955,000 957,000 Interest and other income 130,000 86,000 Gain on sale of joint venture interests 1,467,000 - ------------ ----------- Total revenues 18,090,000 16,551,000 ------------ ----------- Expenses: Room expenses 3,098,000 3,332,000 Food and beverage expenses 2,331,000 2,876,000 Other operating expenses 6,653,000 7,643,000 Depreciation 878,000 1,696,000 Interest 942,000 2,539,000 Equity in unconsolidated joint venture's operations 152,000 622,000 General and administrative 257,000 198,000 ------------ ----------- Total expenses 14,311,000 18,906,000 ------------ ----------- Income (loss) before minority interest in joint ventures' operations 3,779,000 (2,355,000) Minority interest in joint ventures' operations (404,000) 401,000 ------------ ----------- Net income (loss) $ 3,375,000 $(1,954,000) ------------ ----------- ------------ ----------- Net income (loss) per limited partnership assignee unit $ 30 $ (18) ------------ ----------- ------------ ----------- See notes to consolidated financial statements. 3 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 1994 March 31, 1993 Revenues: Room revenue $ 6,016,000 $ 6,404,000 Food and beverage revenue 816,000 1,117,000 Other operating revenues 418,000 470,000 Interest and other income 76,000 42,000 Gain on sale of joint venture interests 1,467,000 - ----------- ----------- Total revenues 8,793,000 8,033,000 ----------- ----------- Expenses: Room expenses 1,406,000 1,626,000 Food and beverage expenses 832,000 1,222,000 Other operating expenses 3,189,000 3,838,000 Depreciation 492,000 741,000 Interest 435,000 1,270,000 Equity in unconsolidated joint venture's operations 46,000 246,000 General and administrative 132,000 105,000 ----------- ----------- Total expenses 6,532,000 9,048,000 ----------- ----------- Income (loss) before minority interest in joint ventures' operations 2,261,000 (1,015,000) Minority interest in joint ventures' operations 41,000 372,000 ----------- ----------- Net income (loss) $ 2,302,000 $ (643,000) ----------- ----------- ----------- ----------- Net income (loss) per limited partnership unit assignee $ 21 $ (6) ----------- ----------- ----------- ----------- See notes to consolidated financial statements. 4 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Consolidated Statements of Partners' Equity (Deficiency) (Unaudited) For the Six Months Ended March 31, 1994 General Limited Partners Partners Total Balance - October 1, 1993 $ (2,014,000) $ 18,364,000 $ 16,350,000 Net income 67,000 3,308,000 3,375,000 ------------ ------------ ------------ Balance - March 31, 1994 $ (1,947,000) $ 21,672,000 $ 19,725,000 ------------ ------------ ------------ ------------ ------------ ------------ See notes to consolidated financial statements. 5 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended March 31, 1994 March 31, 1993 Operating Activities: Net income (loss) $ 3,375,000 $(1,954,000) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 939,000 1,717,000 Minority interest in joint ventures' operations 404,000 (401,000) Gain on sale of joint venture interests (1,467,000) - Equity in unconsolidated joint venture's operations 152,000 622,000 Changes in operating assets and liabilities: Accounts and interest receivable 1,043,000 (81,000) Inventories and operating supplies 497,000 27,000 Prepaid expenses and other assets 258,000 75,000 Accounts payable, accrued expenses and other liabilities (3,794,000) 1,116,000 ------------ ----------- Net cash provided by operating activities 1,407,000 1,121,000 ------------ ----------- Investing Activities: Net proceeds from sale of joint venture interests 34,332,000 - Properties and improvements additions (912,000) (932,000) Unconsolidated joint venture contributions (150,000) - Proceeds from cash investments 5,842,000 1,486,000 Purchase of cash investments (2,375,000) (1,983,000) ------------ ----------- Net cash provided by (used in) investing activities 36,737,000 (1,429,000) ------------ ----------- Financing Activities: Satisfaction of payables to affiliate of joint venture partner (4,081,000) - Satisfaction of notes payable (28,731,000) - Notes payable principal payments (122,000) (9,000) ------------ ----------- Net cash (used in) financing activities (32,934,000) (9,000) ------------ ----------- Increase (Decrease) in Cash and Cash Equivalents 5,210,000 (317,000) Cash and Cash Equivalents at Beginning of Period 5,088,000 5,223,000 ------------ ----------- Cash and Cash Equivalents at End of Period $ 10,298,000 $ 4,906,000 ------------ ----------- ------------ ----------- Supplemental Disclosure of Cash Flow Information: Interest paid in cash during the period $ 875,000 $ 1,755,000 ------------ ----------- ------------ ----------- See notes to consolidated financial statements. 6 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 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, 1993. Certain balance sheet accounts have been reclassified in order to conform to the current period. The financial information contained herein is unaudited. However, 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 six and three months ended March 31, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. 2. Transactions with Related Parties NPI Equity Investments II, Inc. received reimbursement of administrative expenses amounting to $21,000 during the period ended March 31, 1994. These reimbursements are primarily included in general and administrative expenses. 3. Gain on Sale of Joint Venture Interests On March 7, 1994 the Partnership sold its 60 percent interest in the Park Hyatt Water Tower Associates Joint Venture, which owned the Park Hyatt Hotel, located in Chicago, Illinois. The sales price of $5,831,000 is comprised of the following: (1) the assumption of the purchase money note payable in the amount of $2,500,000, (2) accrued and unpaid interest of $1,581,000 assumed by the buyer, and (3) cash of $1,750,000. The sale resulted in a gain of approximately $543,000. The Partnership had recorded a provision for impairment of value of $6,985,000 during fiscal year 1992. On March 15, 1994 the Partnership sold its 65 percent interest in the Washington Park Hotel Associates Joint Venture, which owned the Radisson Park Terrace Hotel, located in Washington, D.C. for $1,455,000 in cash. The sale resulted in a gain of approximately $924,000. The Partnership had recorded a provision for impairment of value of $7,363,000, of which $2,755,000 was recognized in fiscal year 1990 and the remaining $4,608,000 was recognized in fiscal year 1992. 7 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Investment in Unconsolidated Joint Venture The following are the condensed balance sheets as of March 31, 1994 and September 30, 1993 and condensed statements of operations for the six and the three months ended March 31, 1994 and 1993 of the unconsolidated joint venture: MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED BALANCE SHEETS March 31, September 30, 1994 1993 (Unaudited) (Audited) Assets Cash and cash equivalents $ 798,000 $ 302,000 Restricted cash 1,036,000 739,000 Accounts receivable 1,318,000 1,132,000 Net property and improvements 34,139,000 34,778,000 Deferred financing costs 14,000 45,000 Other assets 256,000 257,000 ------------ ------------ Total assets $ 37,561,000 $ 37,253,000 ------------ ------------ ------------ ------------ Liabilities and partners' equity Accounts payable and accrued liabilities $ 4,169,000 $ 3,854,000 Note payable 34,000,000 34,000,000 ------------ ------------ Total liabilities 38,169,000 37,854,000 ------------ ------------ Minority interest in joint venture (311,000) (308,000) ------------ ------------ Partners' equity: MRI BPF, Ltd. II (148,000) (146,000) MRI BPF, Ltd. III (149,000) (147,000) ------------ ------------ Total liabilities and partners' equity $ 37,561,000 $ 37,253,000 ------------ ------------ ------------ ------------ 8 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Investment in Unconsolidated Joint Venture (Continued) MRI BUSINESS PROPERTIES COMBINED FUND NO. 1 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) For the Six Months Ended March 31, 1994 March 31, 1993 Revenues $ 10,152,000 $ 8,974,000 Expenses 10,759,000 10,218,000 ------------ ------------ Loss before minority interest in joint venture operations (607,000) (1,244,000) Minority interest in joint venture operations 303,000 - ------------ ------------ Net loss $ (304,000) $ (1,244,000) ------------ ------------ ------------ ------------ Allocation of net loss: MRI BPF, Ltd. II $ (152,000) $ (622,000) MRI BPF, Ltd. III (152,000) (622,000) ------------ ------------ Net loss $ (304,000) $ (1,244,000) ------------ ------------ ------------ ------------ For the Three Months Ended March 31, 1994 March 31, 1993 Revenues $ 5,024,000 $ 4,580,000 Expenses 5,210,000 5,071,000 ------------ ------------ Loss before minority interest in joint venture operations (186,000) (491,000) Minority interest in joint venture operations 95,000 - ------------ ------------ Net loss $ (91,000) $ (491,000) ------------ ------------ ------------ ------------ Allocation of net loss: MRI BPF, Ltd. II $ (45,000) $ (245,000) MRI BPF, Ltd. III (46,000) (246,000) ------------ ------------ Net loss $ (91,000) (491,000) ------------ ------------ ------------ ------------ 9 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 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. Fund Liquidity and Capital Resources All of the Fund's properties are hotels. The Fund receives hotel operating revenues and is responsible for operating expenses, capital improvements and debt service payments under mortgage obligations. The Fund uses working capital reserves provided from any undistributed cash flow from operations and sales proceeds as its primary source of liquidity. During the first half of fiscal year 1994, all of the Fund's hotels generated positive cash flow. To preserve working capital reserves required for necessary capital improvements to properties and provide resources for debt restructuring, cash distributions remained suspended during the first half of fiscal year 1994. The Managing General Partner will evaluate future cash distributions based on the capital needs of the Fund. The level of liquidity based upon cash and cash equivalents experienced a $5,210,000 increase at March 31, 1994, as compared to September 30, 1993. The Fund's $36,737,000 from investing activities and $1,407,000 from operating activities was only partially offset by $32,934,000 from financing activities. Net cash provided by operating activities increased during the first half of fiscal 1994, as compared to 1993, due to the disposition of the Fund's interest in the Park Hyatt Water Tower Associates Joint Venture and the Washington Park Hotel Associates Joint Venture. Cash provided by investing activities consisted of $34,332,000 of net proceeds from the sale of the Fund's joint venture interests and $3,467,000 of cash from the liquidation of the Fund's investments. These funds were used for $912,000 of capital improvements at the properties and to provide $150,000 of funds to the Holiday Inn Crowne Plaza for continuing property improvements. Financing activities consisted of $122,000 of note payable principal payments, $4,081,000 in satisfaction of payables to an affiliate of the joint venture partner and $28,731,000 in satisfaction of notes payable. Mortgage principal payments increased due to the Fund'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. Working capital reserves are being invested in money market accounts or repurchase agreements secured by United States Treasury obligations. It is the opinion of the Managing General Partner 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 1994 and the foreseeable future. Balloon payments on mortgages encumbering the Fund's properties are due from October 1996 to October 1997. Management is confident that there will be sufficient cash flow generated by the remaining properties to continue operations, in the event that any of the properties are lost through foreclosure. The Managing General Partner believes that each property generates sufficient cash flow to allow all mortgages to be refinanced in an orderly fashion. 10 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Fund 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 the Fund's remaining properties and the markets in which such properties are located and on the sales price of the remaining properties. In this regard, it is anticipated at this time that some of the remaining properties will be held longer than originally expected. Real Estate Market The income and expenses of operating the properties owned by the Fund are subject to factors outside of the Fund's control, such as over-supply of similar properties resulting from over-building, increases in unemployment or 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 the Fund. 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. The Fund 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 the Fund. Results of Operations Six Months Ended March 31, 1994 vs. March 31, 1993 Operating results, before the minority interest in joint venture operations, improved by $6,134,000 for the six months ended March 31, 1994, as compared to 1993, due to an increase in revenues of $1,539,000 and a decrease in expenses of $4,595,000. Operating results improved primarily due to the sale of the Fund's joint venture interests. With respect to the remaining properties, operating results improved by $1,297,000 for the six months ended March 31, 1994, as compared to 1993, due to a $575,000 increase in revenues and a $722,000 decrease in expenses. Revenues increased by $1,539,000 for the six months ended March 31, 1994, primarily due to the gain on the sale of the Fund's joint venture interests. With respect to the remaining properties, revenue increased by $575,000 due to increases in room revenue of $495,000, other operating revenue of $31,000 and interest and other income of $49,000. 11 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Six Months Ended March 31, 1994 vs. March 31, 1993 (Continued) Room revenue increased at all of the Fund's remaining properties. The largest increases were at the Embassy Suites and the Residence Inn - Sacramento properties, primarily due to increased occupancy coupled with a slight increase in average daily room rate at the Fund's Embassy Suites property. The Fund's Residence Inn - Orlando had a slight increase in room revenue due to the increase in average daily room rate, which was only partially offset by the decline in occupancy. Other operating revenue increased primarily due to increased telephone revenue at the Fund's Residence Inn - Orlando property. Interest income increased due to an increase in average working capital reserves available for investment. Expenses decreased by $4,595,000 for the six months ended March 31, 1994, as compared to 1993, primarily due to the sale of the Fund's joint venture interests. With respect to the remaining properties, expenses decreased by $722,000. The increase in room expenses of $82,000, general and administrative of $59,000 and other operating expenses of $167,000 were more that offset by decreases in depreciation of $314,000, interest of $246,000, and equity in unconsolidated joint venture operations of $470,000. Room expenses increased primarily at the Fund's Embassy Suites and Residence Inn - - - Sacramento properties, which was attributable to increased room occupancy at the hotels. General and administrative expenses increased primarily due to costs associated with the management transition. Other operating expenses increased slightly primarily at the Fund's Embassy Suites and Residence Inn - Sacramento properties. Depreciation decreased due to a portion of the Fund's assets becoming fully depreciated during the prior year coupled with an over estimate of expense for the first quarter of fiscal 1993. Interest expense decreased primarily due to the reduction in the interest rate on the loan encumbering the Fund's Residence Inn - Orlando property from 10% to 6.5%. The loss from the Fund's unconsolidated joint venture (Holiday Inn Crowne Plaza) decreased due to improved operations at the hotel. Three Months Ended March 31, 1994 vs. March 31, 1993 Operating results, before the minority interest in joint venture operations, improved by $3,276,000 for the three months ended March 31, 1994, as compared to 1993, due to an increase in revenues of $760,000 and a decrease in expenses of $2,516,000. Operating results improved primarily due to the sale of the Fund's joint venture interests. With respect to the remaining properties, operating results increased by approximately $772,000 for the three months ended March 31, 1994, as compared to 1993, due to a $622,000 increase in revenues and a $150,000 decrease in expenses. Revenues increased by $760,000 for the three months ended March 31, 1994, due to the gain on the sale of the Fund's joint venture interests. With respect to the remaining properties, revenues increased by approximately $622,000 due to increases in room revenue of $562,000, other operating revenue of $20,000 and interest and other income of $40,000. 12 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Three Months Ended March 31, 1994 vs. March 31, 1993 (Continued) Room revenue increased at all of the Fund's remaining properties. The largest increases were at the Embassy Suites and the Residence Inn - Sacramento properties primarily due to increased occupancy coupled with a slight increase in average daily room rate at the Fund's Embassy Suites property. Other operating revenue increased primarily due to increased telephone revenue at the Fund's Residence Inn - Orlando property. Interest income increased due to an increase in average working capital reserves available for investment. Expenses decreased by $2,516,000 for the three months ended March 31, 1994, as compared to 1993, primarily due to the sale of the Fund's joint venture interests. With respect to the remaining properties, expenses decreased by approximately $150,000. The increases in room expenses of $85,000, general and administrative expenses of $27,000 and other operating expenses of $197,000 were more than offset by decreases in depreciation of $54,000, interest of $205,000 and equity in unconsolidated joint ventures operations of $200,000. Room expenses increased primarily at the Fund's Embassy Suites and Residence Inn - - - Sacramento, which was attributable to the increased room occupancy at the hotels. General and administrative expenses increased primarily due to costs associated with the management transition. Other operating expenses increased primarily at the Fund's Embassy Suites and Residence Inn - Sacramento properties. Depreciation decreased due to a portion of the Fund's assets becoming fully depreciated in the prior years. Interest expense decreased primarily due to the reduction in the interest rate on the loan encumbering the Fund's Residence Inn - Orlando property from 10% to 6.5%. The loss from the Fund's unconsolidated joint venture (Holiday Inn Crowne Plaza) decreased due to improved operations at the hotel. Unconsolidated Joint Venture Operations (MRI BPF Combined Fund No. 1) Operating results, prior to minority interests, improved by $637,000 for the first half of fiscal 1994 as revenues increased by $1,178,000 and expenses increased by $541,000. The large increase in revenue is attributable to both higher occupancy and higher average room rates. In addition, under the terms of the joint venture agreement, the loss from the Holiday Inn Crowne Plaza was allocated in different proportions during the first half of fiscal 1994, as compared to 1993. This, combined with improved operations, resulted in a smaller loss being allocated to the Fund. 13 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Properties A description of the hotel properties in which the Fund has an ownership interest, together with occupancy and room rate data, follows: MRI BUSINESS PROPERTIES FUND, LTD. III OCCUPANCY AND ROOM RATE SUMMARY
Average Average Occupancy Rate (%) Daily Room Rate ($) ----------------------- --------------------------- Six Months Three Months Six Months Three Months Date Ended Ended Ended Ended of March 31, March 31, March 31, March 31, Name and Location Rooms Purchase 1994 1993 1994 1993 1994 1993 1994 1993 - - ----------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ---- Holiday Inn Crowne Plaza (1) Atlanta, Georgia 492 03/86 72 63 76 70 89.78 82.72 92.03 84.63 Embassy Suites - Tempe Tempe, Arizona 224 12/86 85 80 90 87 88.06 85.50 96.77 92.34 Residence Inn - Orlando Orlando, Florida 176 09/87 71 72 84 87 84.16 77.22 89.41 77.53 Residence Inn - Sacramento, California 176 09/87 83 75 87 76 77.53 76.55 77.59 77.46 Radisson Park Terrace Hotel (2) Washington, D.C. 219 09/86 72 66 69 70 87.52 87.61 88.53 89.42 Park Hyatt Hotel (3) Chicago, Illinois 255 12/86 63 55 53 47 149.37 147.44 141.24 140.28
(1) The Fund 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) The Fund sold its 65% interest in this property on March 15, 1994. (3) The Fund sold its 60% interest in this property on March 7, 1994. 14 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1994 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. The following reports on Form 8-K were required to be filed during the quarter covered by this report: Item Date of numbers report reported Description ------------- -------- ---------------------- March 7, 1994 2,7 Disposition of Assets. March 15, 1994 2,7 Disposition of Assets. 15 of 16 MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 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 ----------------------------------- ARTHUR N. QUELER Executive Vice President (Principal Financial and Accounting Officer) and Director NPI 16 of 16 -----END PRIVACY-ENHANCED MESSAGE-----