FORM 10-QSB - QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] 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 0-10255
SHELTER PROPERTIES I
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0707398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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)
SHELTER PROPERTIES I
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except per unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 318
Receivables and deposits 313
Restricted escrows 635
Other assets 230
Investment properties:
Land $ 1,428
Buildings and related personal property 20,418
21,846
Less accumulated depreciation (15,300) 6,546
$ 8,042
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 96
Tenant security deposit liabilities 152
Accrued property taxes 75
Other liabilities 310
Mortgage notes payable 11,196
Partners' Deficit
General partners $ (63)
Limited partners (15,000 units issued and
outstanding) (3,724) (3,787)
$ 8,042
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
b)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 1,317 $ 1,285 $ 2,629 $ 2,570
Other income 103 64 180 122
Total revenues 1,420 1,349 2,809 2,692
Expenses:
Operating 536 495 1,060 998
General and administrative 52 39 101 94
Depreciation 197 148 381 305
Interest 233 237 466 474
Property taxes 73 73 150 142
Total expenses 1,091 992 2,158 2,013
Net income $ 329 $ 357 $ 651 $ 679
Net income allocated
to general partners (1%) $ 3 $ 4 $ 6 $ 7
Net income allocated
to limited partners (99%) 326 353 645 672
$ 329 $ 357 $ 651 $ 679
Net income per limited
partnership unit $ 21.73 $ 23.53 $ 43.00 $ 44.80
Distribution per limited
partnership unit $ 79.00 $ -- $112.00 $ 66.00
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 15,000 $ 2 $15,000 $15,002
Partners' deficit at
December 31, 1999 15,000 $ (52) $(2,689) $(2,741)
Distributions to partners -- (17) (1,680) (1,697)
Net income for the six months
ended June 30, 2000 -- 6 645 651
Partners' deficit at
June 30, 2000 15,000 $ (63) $(3,724) $(3,787)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 651 $ 679
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 381 305
Amortization of discounts and loan costs 44 46
Change in accounts:
Receivables and deposits (15) (22)
Other assets (8) (40)
Accounts payable (46) (60)
Tenant security deposit liabilities 5 8
Accrued property taxes 27 27
Other liabilities (11) 20
Net cash provided by operating activities 1,028 963
Cash flows from investing activities:
Property improvements and replacements (549) (287)
Net (deposits to) withdrawals from restricted escrows (134) 191
Net cash used in investing activities (683) (96)
Cash flows from financing activities:
Payments on mortgage notes payable (78) (72)
Distributions to partners (1,697) (1,000)
Net cash used in financing activities (1,775) (1,072)
Net decrease in cash and cash equivalents (1,430) (205)
Cash and cash equivalents at beginning of period 1,748 1,682
Cash and cash equivalents at end of period $ 318 $ 1,477
Supplemental disclosure of cash flow information:
Cash paid for interest $ 421 $ 428
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
SHELTER PROPERTIES I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
Properties I (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 310(b) of
Regulation S-B. 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 Shelter Realty I Corporation (the
"Corporate 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, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 1999.
Principles of Consolidation
The Registrant's financial statements include all of the accounts of the
Registrant and its 99.99% owned partnership. The general partner of the
consolidated partnership is Shelter Realty I Corporation. Shelter Realty I
Corporation may be removed by the Registrant; therefore, the consolidated
partnership is controlled and consolidated by the Registrant. All significant
interpartnership transactions have been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Corporate General Partner. The Corporate General Partner does not believe
that this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash provided by operations", as defined in the Partnership
Agreement. However, "net cash provided by operations" should not be considered
an alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
For the Six Months Ended
June 30,
(in thousands)
2000 1999
Net cash provided by operating activities $ 1,028 $ 963
Payments on mortgage notes payable (78) (72)
Property improvements and replacements (549) (287)
Change in restricted escrows, net (134) 191
Changes in reserves for net operating
liabilities 48 67
Additional reserves (210) (562)
Net cash provided by operations $ 105 $ 300
At June 30, 2000 and 1999, the Corporate General Partner reserved an additional
$210,000 and $562,000, respectively, to fund continuing capital improvements and
repairs at the Partnership's four investment properties.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Corporate General Partner and affiliates during the six
months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in
operating expenses) $142 $135
Reimbursement for services of affiliates
(included in operating and general and
administrative expense and investment properties) 61 61
Due to Corporate General Partner 101 101
Due from affiliates -- 18
During the six months ended June 30, 2000 and 1999, affiliates of the Corporate
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $142,000 and $135,000 for the
six months ended June 30, 2000 and 1999, respectively.
An affiliate of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $61,000 for both
the six months ended June 30, 2000 and 1999.
During 1992, a liability of approximately $101,000 was incurred to the Corporate
General Partner for sales commissions earned. Pursuant to the Partnership
Agreement, this liability can not be paid until certain levels of return are
received by the limited partners. As of June 30, 2000, the level of return to
the limited partners has not been met.
AIMCO and its affiliates currently own 10,289 limited partnership units in the
Partnership representing 68.59% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 68.59% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Corporate General Partner because of their
affiliation with the Corporate General Partner.
Note E - Distributions
Cash distributions from operations of approximately $1,697,000 ($1,680,000 of
which was paid to the limited partners, $112.00 per limited partnership unit)
and approximately $1,000,000 ($990,000 of which was paid to the limited
partners, $66.00 per limited partnership unit) were made to the partners during
the six months ended June 30, 2000 and 1999, respectively.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of four apartment complexes
located in Georgia (2), Virginia, and South Carolina. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three and six month periods ended June 30, 2000 and
1999 is shown in the tables below. The "Other" column includes partnership
administration related items and income and expense not allocated to the
reportable segment.
Three Months Ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 1,317 $ -- $ 1,317
Other income 101 2 103
Interest expense 233 -- 233
Depreciation 197 -- 197
General and administrative expense -- 52 52
Segment profit (loss) 379 (50) 329
Six Months Ended June 30, 2000 Residential Other Totals
(in thousands)
Rental income $ 2,629 $ -- $ 2,629
Other income 176 4 180
Interest expense 466 -- 466
Depreciation 381 -- 381
General and administrative expense -- 101 101
Segment profit (loss) 748 (97) 651
Total assets 8,011 31 8,042
Capital expenditures for investment
properties 549 -- 549
Three Months Ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 1,285 $ -- $ 1,285
Other income 59 5 64
Interest expense 237 -- 237
Depreciation 148 -- 148
General and administrative expense -- 39 39
Segment profit (loss) 391 (34) 357
Six Months Ended June 30, 1999 Residential Other Totals
(in thousands)
Rental income $ 2,570 $ -- $ 2,570
Other income 110 12 122
Interest expense 474 -- 474
Depreciation 305 -- 305
General and administrative expense -- 94 94
Segment profit (loss) 761 (82) 679
Total assets 8,319 540 8,859
Capital expenditures for investment
properties 287 -- 287
Note G - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Corporate General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The
Corporate General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the six months ended June 30, 2000 and 1999:
Average
Occupancy
Property 2000 1999
Quail Hollow Apartments
West Columbia, South Carolina 90% 93%
Windsor Hills Apartments
Blacksburg, Virginia 94% 96%
Heritage Pointe Apartments
(Formerly Rome Georgian Apartments)
Rome, Georgia 93% 93%
Stone Mountain West Apartments
Stone Mountain, Georgia 95% 96%
The Corporate General Partner attributes the decrease in occupancy at Quail
Hollow Apartments to increased competition in the local market.
Results of Operations
The Registrant's net income for the three and six months ended June 30, 2000 was
approximately $329,000 and $651,000, respectively, as compared to approximately
$357,000 and $679,000, respectively, for the three and six months ended June 30,
1999. The decrease in net income was due to an increase in total expenses which
was partially offset by an increase in total revenues. The increase in total
revenues was due to an increase in both rental income and other income. Rental
income increased as a result of an increase in the average annual rental rates
at all four of the Registrant's investment properties which was partially offset
by a decrease in occupancy at Quail Hollow Apartments, Stone Mountain West
Apartments, and Windsor Hills Apartments. Other income increased due to an
increase in interest income at all four investment properties and an increase in
telephone rebates and late charge income at Quail Hollow Apartments and Stone
Mountain West Apartments.
Total expenses increased primarily due to an increase in operating and
depreciation expense. The increase in operating expense was attributable to an
increase in water and sewer expense at Quail Hollow Apartments, Windsor Hills
Apartments, and Stone Mountain West Apartments, and an increase in employee
salaries and related employee benefits at each of the investment properties.
Depreciation expense increased at all of the Registrant's properties due to an
increase in depreciable assets placed into service. The increase in total
expense was partially offset by a slight decrease in interest expense.
General and administrative expense increased due to a increase in general
partner reimbursements allowed under the Partnership Agreement. Also included in
general and administrative expense were costs associated with the quarterly and
annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement.
As part of the ongoing business plan of the Registrant, the Corporate General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Registrant from increases in expenses. As part of this
plan, the Corporate General Partner attempts to protect the Registrant 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
Corporate General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 2000, the Partnership had cash and cash equivalents of approximately
$318,000 compared to approximately $1,477,000 at June 30, 1999. The decrease in
cash and cash equivalents for the six months ended June 30, 2000 from the
Partnership's year ended December 31, 1999 was approximately $1,430,000. This
decrease is due to approximately $1,775,000 of cash used in financing activities
and approximately $683,000 of cash used in investing activities partially offset
by approximately $1,028,000 of cash provided by operating activities. Cash used
in financing activities consisted of distributions to partners and, to a lesser
extent, principal payments made on the mortgages encumbering the Registrant's
investment properties. Cash used in investing activities consisted of property
improvements and replacements and net deposits to restricted escrows maintained
by the mortgage lenders. The Registrant invests its working capital reserves in
money market accounts.
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 properties to adequately maintain the physical
assets and other operating needs of the Registrant and to comply with Federal,
state and local legal and regulatory requirements. Capital improvements planned
for each of the Registrant's properties are detailed below.
Quail Hollow Apartments
The Partnership has budgeted approximately $520,000 for capital improvements at
Quail Hollow Apartments consisting primarily of exterior painting, floor
covering and appliance replacements, and exterior building improvements. During
the six months ended June 30, 2000, the Partnership spent approximately $329,000
on budgeted and nonbudgeted improvements consisting primarily of appliances,
roof replacements, exterior painting, and exterior building improvements. These
improvements were funded from operating cash flow and replacement reserves.
Heritage Pointe Apartments
The Partnership has budgeted approximately $93,000 for capital improvements at
Heritage Pointe Apartments consisting primarily of plumbing upgrades, floor
covering and appliance replacements and air conditioning upgrades. During the
six months ended June 30, 2000, the Partnership spent approximately $41,000
consisting primarily of plumbing upgrades, appliances and floor covering
replacements. These improvements were funded from operating cash flow.
Stone Mountain West Apartments
The Partnership has budgeted approximately $166,000 for capital improvements at
Stone Mountain West Apartments consisting primarily of floor covering, appliance
replacements, parking area upgrades and air conditioning unit replacements.
During the six months ended June 30, 2000, the Partnership spent approximately
$150,000 on budgeted and nonbudgeted improvements consisting primarily of major
landscaping, floor covering replacements and appliances. These improvements were
funded from operating cash flow.
Windsor Hills Apartments
The Partnership has budgeted approximately $155,000 for capital improvements at
Windsor Hills Apartments consisting primarily of structural improvements, floor
covering and appliance replacements, and air conditioning unit replacements.
During the six months ended June 30, 2000, the Partnership spent approximately
$29,000 consisting primarily of floor covering and appliance replacements. These
improvements were funded from operating cash flow.
The additional capital improvements will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $11,196,000, net of discount, is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
November 1, 2003. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such properties through foreclosure.
Cash distributions from operations of approximately $1,697,000 ($1,680,000 of
which was paid to the limited partners, $112.00 per limited partnership unit)
and approximately $1,000,000 ($990,000 of which was paid to the limited
partners, $66.00 per limited partnership unit) were made to the partners during
the six months ended June 30, 2000 and 1999, respectively. The Registrant's
distribution policy is reviewed on a semi-annual basis. Future cash
distributions will depend on the levels of net cash generated from operations,
the availability of cash reserves, and the timing of debt maturities,
refinancings, and/or property sales. There can be no assurance; however, that
the Registrant will generate sufficient funds from operations to permit further
distributions to its partners during the remainder of 2000 or subsequent
periods. Distributions may be further restricted by the requirement to deposit
net operating income (as described in the mortgage notes) into a Reserve Account
until the Reserve Account is funded in an amount equal to $300 to $325 per
apartment unit for Quail Hollow, Stone Mountain West and Heritage Pointe for a
total of $151,800 to $164,500. The mortgage agreement stipulates a minimum
reserve of $400 per apartment unit at Windsor Hills for a total of $120,000. As
of June 30, 2000 the Partnership had deposits of approximately $494,000 in its
Reserve Accounts.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Corporate General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The
Corporate General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
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 filed during the quarter ended June 30, 2000:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES I
By: Shelter Realty I Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President and Director
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: August 11, 2000
