FORM 10-QSB.--QUARTERLY 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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-10273
CONSOLIDATED CAPITAL PROPERTIES III
(Exact name of small business issuer as specified in its charter)
California 94-2653686
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
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) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 3,720
Restricted-tenant security deposits 112
Accounts receivable 38
Escrows for taxes and insurance 99
Restricted escrows 242
Other assets 303
Investment properties:
Land $ 1,552
Buildings and related personal property 12,333
13,885
Less accumulated depreciation (9,300) 4,585
$ 9,099
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 32
Tenant security deposits 109
Accrued taxes 54
Other liabilities 142
Mortgage notes 4,200
Partners' Capital (Deficit)
General partner $ (1,847)
Limited partners (158,636 units
issued and outstanding) 6,409 4,562
$ 9,099
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 835 $ 1,085
Other income 74 105
Total revenues 909 1,190
Expenses:
Operating 343 444
General and administrative 65 81
Maintenance 110 143
Depreciation 101 229
Interest 84 161
Property taxes 54 84
Total expenses 757 1,142
Net income $ 152 $ 48
Net income allocated to general partner (4%) $ 6 $ 2
Net income allocated to limited partners (96%) 146 46
$ 152 $ 48
Net income per limited
partnership unit $ .92 $ .29
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 158,945 $ 1 $79,473 $79,474
Partners' capital (deficit) at
December 31, 1996 158,636 $(1,853) $ 6,263 $ 4,410
Net income for the three months
ended March 31, 1997 -- 6 146 152
Partners' capital (deficit)
at March 31, 1997 158,636 $(1,847) $ 6,409 $ 4,562
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 152 $ 48
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 101 229
Amortization of lease commissions and loan costs 11 9
Change in accounts:
Restricted cash 3 (12)
Accounts receivable 10 40
Escrows for taxes and insurance (10) (126)
Other assets 9 (4)
Accounts payable (82) (41)
Tenant security deposit liabilities (5) 4
Accrued taxes 54 78
Other liabilities (19) 3
Net cash provided by operating activities 224 228
Cash flows from investing activities:
Property improvements and replacements (67) (53)
Disposition of property -- 11
Deposits to restricted escrows (20) --
Receipts from restricted escrows -- 7
Net cash used in investing activities (87) (35)
Cash flows from financing activities:
Payments on notes payable -- (25)
Loan costs paid (20) --
Net cash used in financing activities (20) (25)
Net increase in cash and cash equivalents 117 168
Cash and cash equivalents at beginning of period 3,603 2,854
Cash and cash equivalents at end of period $3,720 $3,022
Supplemental disclosure of cash flow information:
Cash paid for interest $ 77 $ 154
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) CONSOLIDATED CAPITAL PROPERTIES III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties III ("The Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 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 the General Partner (ConCap Equities, Inc.), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
Consolidation
The Partnership's financial statements include the accounts of ConCap Mountain
Plaza Associates, Ltd. ("Mountain Plaza Associates) 1996 only, and ConCap
Village Green Associates, Ltd. ("Village Green Associates"), two majority-owned
limited partnerships. All intercompany transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents for purposes of reporting cash flows include cash on
hand, money market funds and certificates of deposit with original maturities of
three months or less.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTNERS
The Partnership has paid property management fees based on collected gross
rental revenues for property management services in each of the three months
ended March 31, 1997 and 1996. Property management fees of approximately
$44,000 and $55,000 were paid to affiliates of the General Partner for the three
months ended March 31, 1997 and 1996, respectively. These fees are included in
operating expenses.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $45,000 and $42,000 were paid to the General Partner and its
affiliates for the three months ended March 31, 1997 and 1996, respectively.
Additionally, the Partnership paid $1,000 and $9,000 during the three months
ended March 31, 1997 and 1996, respectively, to an affiliate of the General
Partner for lease commissions at the Partnership's commercial property. These
lease commissions are included in other assets and amortized over the term of
the respective leases.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the General Partner. An affiliate of the General
Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner who receives
payment on these obligations from the agent. The amount of the Partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
NOTE C - DISTRIBUTIONS
No distributions were made during the three months ended March 31, 1997 and
1996.
NOTE D - MORTGAGE NOTES PAYABLE
During the second quarter of 1996, the Partnership entered into an interim
financing arrangement for both Ventura Landing and Village Green for $2.2
million and $2 million, respectively. The previous Ventura Landing note of
$3.2 million was repaid at that time. The interest rate was 250 basis points
over the 30-day LIBOR, resulting in a total note rate of 8.00%. The loans
matured on August 1, 1996, with a 60-day extension option. The Partnership
exercised this option to convert the interim loans to fixed rate amortizing
loans with an interest rate equal to the Treasury Rate, as defined in the
financing agreement, plus 2.15%. Such converted loans would mature in ten years
with monthly payments of principal and interest based on a schedule which would
fully amortize the loans over a thirty year term. The Partnership, however,
continued seeking alternative long-term financing to obtain a lower interest
rate.
In November of 1996, these two properties obtained long-term refinancing.
Proceeds from this transaction totaled $4,200,000. The debt accrues interest at
a rate of 7.33% per year, matures on November 1, 2003, and requires balloon
payments at maturity for the full principal amount. Throughout the mortgage
term, interest only payments are made. Loan costs of $20,000 were incurred by
the properties as a result of the long-term refinancing during the three months
ended March 31, 1996, and are included in other assets on the balance sheet.
The entire amount of the Partnership's outstanding indebtedness of $4,200,000 is
scheduled to mature in November of 2003.
NOTE E - FORECLOSURE OF MOUNTAIN PLAZA APARTMENTS
On September 3, 1996, the lender foreclosed on Mountain Plaza Apartments. The
mortgage note payable had been in default since May 13, 1996. In the Managing
General Partner's opinion, it was not in the Partnership's best interest to
contest the foreclosure action. During the third quarter of 1996, the
Partnership recorded a gain on disposition of property of $1,820,000, to
increase the carrying value of the Mountain Plaza assets to their estimated
market value and an extraordinary gain on the foreclosure of $1,149,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of three apartment complexes and
one commercial property. The following table sets forth the average occupancy
of the properties for the three months ended March 31, 1997 and 1996:
Average Occupancy
1997 1996
Professional Plaza Office Building 95% 96%
Salt Lake City, UT
Ventura Landing Apartments 96% 93%
Orlando, FL
Village Green Apartments 92% 95%
Altamante Springs, FL
West Chase Apartments 86% 93%
Lexington, KY
The decrease in occupancy at West Chase Apartments is a result of increased
competition in the Lexington area. Several new apartment complexes were
completed in 1996 which gave potential residents the opportunity to rent luxury
apartments at extremely competitive rates. The increase in occupancy at Ventura
Landing Apartments is due to several exterior building improvements in 1996,
improving the appearance of the entire property.
The Partnership realized net income of $152,000 for the three months ended March
31, 1997, compared to net income of $48,000 for the three months ended March 31,
1996. The increase in net income is primarily due to the foreclosure of Mountain
Plaza Apartments in September 1996.
Total expenses decreased for the three months ended March 31, 1997 compared to
the corresponding period of 1996 due to the foreclosure of Mountain Plaza
Apartments. Depreciation expense also decreased due to many of the assets
acquired with the purchase of the partnership now being fully depreciated. The
decrease in interest expense was also impacted by the refinancing of the Ventura
Landing note payable which resulted in a lower interest rate and principle
balance. This decrease was mitigated by a new mortgage at Village Green
resulting from the refinancing. Also contributing to the decrease in
maintenance was a decrease in interior and exterior building repairs at West
Chase and Ventura Landing. Included in maintenance expense is approximately
$9,000 and $30,000 of major repairs and maintenance for the three months ended
March 31, 1997 and 1996, respectively. These expenses are comprised primarily
of exterior building repairs. General and administrative expenses decreased due
to a decrease in professional fees for the three months ended March 31, 1997
compared to the three months ended March 31, 1996.
Partially offsetting the decrease in expenses was a decrease in total revenue
for the three months ended March 31, 1997 compared to the corresponding period
of 1996 due to the foreclosure of Mountain Plaza Apartments.
As part of the ongoing business plan of the Partnership, the 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 Partnership from increases in expenses. As part of this
plan, the General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.
At March 31, 1997, the Partnership held cash and cash equivalents of $3,720,000,
compared to approximately $3,022,000 at March 31, 1996. Net cash used in
investing activities increased due to increased deposits to restricted escrows
and increased property improvements and replacements.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $4,200,000 matures at various times with balloon
payments due at maturity, at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, capital expenditure requirements, property sales and
the availability of cash reserves.
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 March 31, 1997.
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.
CONSOLIDATED CAPITAL PROPERTIES III
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: May 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Properties III 1997 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000317331
<NAME> CONSOLIDATED CAPITAL PROPERTIES III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,720
<SECURITIES> 0
<RECEIVABLES> 38
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 13,885
<DEPRECIATION> 9,300
<TOTAL-ASSETS> 9,099
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,200
0
0
<COMMON> 0
<OTHER-SE> 4,562
<TOTAL-LIABILITY-AND-EQUITY> 9,099
<SALES> 0
<TOTAL-REVENUES> 909
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 757
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> .92<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
