FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from.........to.........
Commission file number 0-10273
CONSOLIDATED CAPITAL PROPERTIES III
(Name of small business issuer in its charter)
California 94-2653686
(State or other jurisdiction of (I.R.S. 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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $3,740,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. Market value
information for the Registrant's partnership interests is not available. Should
a trading market develop for these interests, it is the General Partner's belief
that the aggregate market value of the voting partnership's interest would not
exceed $25,000,000.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Consolidated Capital Properties III (the "Registrant" or "Partnership") was
organized on May 22, 1980, as a limited partnership under the California Uniform
Limited Partnership Act. On November 25, 1980, the Partnership registered with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933 (File No. 2-68018) and commenced a public offering for sale of $60,000,000
of Units, with the general partner's right to increase the offering to
$120,000,000. The Units represent equity interests in the Partnership and
entitle the holders thereof to participate in certain allocations and
distributions of the Partnership. The Partnership subsequently filed a Form 8-A
Registration Statement with the SEC and registered its units under the
Securities Exchange Act of 1934 (File No. 0-10273) in March 1982. The sale of
Limited Partnership Units closed on December 17, 1981, with 158,945 Units sold
at $500 each, or gross proceeds of $79,473,000 to the Partnership. At the
request of certain Limited Partners and in accordance with its Partnership
Agreement (herein so called), the Partnership has retired a total of 363 Units.
The Partnership gave no consideration for these units.
By the end of fiscal year 1985, approximately 71% of the proceeds raised had
been invested in twenty-eight properties. Of the remaining 29%, 11% was required
for organizational and offering expenses, sales commissions and acquisition
fees, and 18% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The principal place of business
for the Partnership and for the General Partner is One Insignia Financial Plaza,
Greenville, South Carolina 29602.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership was formed to acquire, own, operate and
ultimately dispose of income-producing real properties for the benefit of its
partners. At December 31, 1997, the Partnership owns four properties as
described in "Item 2 - Description of Property". Prior to 1997, the Partnership
disposed of twenty-six properties, two of which were reacquired through
foreclosure.
The real estate business is highly competitive. The Registrant's real property
investments are subject to competition from similar types of properties in the
vicinities in which they are located, and the Partnership is not a significant
factor in its industry. In addition, various limited partnerships have been
formed by related parties to engage in businesses which may be competitive with
the Registrant.
The Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an
affiliate of the General Partner. The property manager is responsible for the
day-to-day operations of each property. The General Partner has also selected
affiliates of Insignia to provide real estate advisory and asset management
services to the Partnership. As advisor, such affiliates provide all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing. For further
discussion of property and partnership management, see "Item 12".
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 Partnership 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
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
Upon the Partnership's formation in 1980, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner.
In 1988, through a series of transactions, Southmark Corporation ("Southmark")
acquired controlling interest in CCEC. In December 1988, CCEC filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990,
as part of CCEC's reorganization plan, CEI acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited
partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing
general partner in all 16 partnerships. The selection of CEI as the sole
managing general partner was approved by a majority of the Limited Partners in
the Partnership and in each of the Affiliated Partnerships pursuant to a
solicitation of the Limited Partners dated August 10, 1990. As part of this
solicitation, the Limited Partners also approved an amendment to the Partnership
Agreement to limit changes of control of the Partnership.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of Insignia
acquired an option (exercisable in whole or in part from time to time) to
purchase all of the stock of GII Realty, Inc. and, pursuant to a partial
exercise of such option, acquired 50.5% of that stock. As a part of the
Insignia Transaction, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity, and
Insignia acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the Insignia affiliate exercised the remaining
portion of its option to purchase all of the remaining outstanding capital stock
of GII Realty, Inc. As of December 31, 1997, Insignia Properties Trust ("IPT")
owns 100% of the outstanding stock of CEI. At December 31, 1997, Insignia
Properties L.P., an affiliate of Insignia, owned 39,644 Units of the
Partnership.
ITEM 2. DESCRIPTION OF PROPERTY
The Partnership originally acquired twenty-eight properties, of which twenty-
five were disposed of in years prior to 1996, and subsequently reacquired two of
these properties through foreclosure on notes receivable. One property was
relinquished through a foreclosure during 1996, thus, at December 31, 1997, the
Partnership held four income-producing properties, including one office building
and three apartment complexes.
The following table sets forth the Partnership's remaining investments in
properties:
Date of
Property Purchase Type of Ownership Use
Professional Plaza 03/03/81 Fee ownership Office Bldg. -
Office Building 79,000 sq.ft.
Salt Lake City, Utah
Ventura Landing Apartments 10/07/81 Fee ownership subject Apartment -
Orlando, Florida to first mortgage 184 units
Village Green Apartments 12/20/91 Fee ownership subject Apartment -
Altamonte Springs, to first mortgage 164 units
Florida
West Chase Apartments 09/17/90 Fee ownership Apartment -
Lexington, Kentucky 120 units
SCHEDULE OF PROPERTIES (IN THOUSANDS):
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
<S> <C> <C> <C> <C> <C>
Professional Plaza $ 4,299 $3,112 5-19 years S/L $ 1,556
Ventura Landing 4,998 4,314 5-19 years S/L 815
Village Green 2,742 1,107 3-15 years S/L 1,903
West Chase 2,170 1,091 5-15 years S/L 3,985
Totals $14,209 $9,624 $ 8,259
</TABLE>
See "Note A" of the Notes to Consolidated Financial Statements included in "Item
7" for a description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES (IN THOUSANDS):
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Ventura Landing $ 2,200 7.33% (1) 11/03 $2,200
Village Green 2,000 7.33% (1) 11/03 2,000
Totals $ 4,200 $4,200
(1) Interest only payments
During the second quarter of 1996, the Partnership entered into an interim
financing arrangement for both Ventura Landing and Village Green for $2,200,000
and $2,000,000, respectively. The previous Ventura Landing note of $3,200,000
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 required. As a result of the refinancings, the Partnership spent
approximately $20,000 and $201,000 on loan costs during the years ended December
31, 1997 and 1996, respectively.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average
Rental Rates (1) Occupancy
Property 1997 1996 1997 1996
Professional Plaza $10.80 $10.21 94% 97%
Ventura Landing 6,127 5,813 96% 95%
Village Green 6,126 5,910 95% 95%
West Chase 6,254 6,046 88% 93%
(1) The average annual rental rate for Professional Plaza is per square foot.
The rate is per unit for the apartment properties.
The decrease in occupancy at West Chase Apartments is attributable to
competition from recently built apartment complexes in the Lexington, Kentucky
area.
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. The Partnership's properties are subject to competition
from other properties in their area. The General Partner believes that the
Partnership's properties are adequately insured. The multifamily residential
properties' lease terms are one year or less. No residential tenant leases 10%
or more of the available rental space.
The following is a schedule of lease expirations at Professional Plaza for the
years 1998-2007:
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
(in thousands)
1998 16 25,980 $277 31.7%
1999 11 14,078 163 18.6%
2000 13 29,145 357 40.9%
2001 2 3,149 41 4.7%
2002 2 2,779 36 4.1%
2003-2007 0 0 0 0
The following schedule reflects information on tenants leasing 10% or more of
the leasable square footage for Professional Plaza at December 31, 1997:
Square Footage Annual Rent Per Lease
Nature of Business Leased Square Foot Expiration
Engineering Firm 8,620 $11.28 5/31/00
Mortgage Company 10,071 12.10 (1)
(1) The tenant leases two spaces with lease expiration dates of 3/31/98 and
11/30/00.
SCHEDULE OF REAL ESTATE TAXES (IN THOUSANDS) AND RATES:
1997 1997
Taxes Rate
Professional Plaza $45 1.3%
Ventura Landing 82 2.3%
Village Green 67 2.0%
West Chase 21 1.0%
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The General Partner of the Partnership believes that all
such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The unit holders of the Partnership did not vote on any matter during the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
SECURITY HOLDER MATTERS
(A) No established public trading market for the Partnership's Units exists
nor is one expected to develop.
(B) Title of Class Number of Unit Holders of Record
Limited Partnership Units 7,423 as of December 31, 1997
(C) In September of 1997, the Partnership paid distributions totaling
approximately $1,112,000 to the partners, of which approximately $435,000
was attributable to cash flow from operations and $677,000 represented a
return of capital. In April of 1997, the Partnership paid distributions
to the partners representing a return of capital totaling approximately
$1,150,000. In September of 1996, the Partnership paid distributions
attributable to cash flow from operations totaling approximately $368,000
to the partners. In April of 1996, the Partnership paid state withholding
taxes of $12,000 for non-resident limited partners. This payment is
reflected as a distribution to the Limited Partners. See also "Item 6 -
Management's Discussion and Analysis or Plan of Operations".
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income of $491,000 for the year ended December 31,
1997, compared to net income of $2,842,000 for the year ended December 31, 1996.
The decrease in net income is due primarily to the foreclosure of the Mountain
Plaza property during the third quarter of 1996. This foreclosure resulted in
an extraordinary gain on foreclosure in 1996 of $1,149,000, as well as a gain
recorded to increase the carrying value of Mountain Plaza assets to their
estimated market value of $1,820,000 (see "Note E" in the Notes to the
Consolidated Financial Statements).
Total revenues and expenses decreased primarily due to the foreclosure of
Mountain Plaza Apartments. Rental income for the remaining properties increased
primarily as a result of an increase in rental rates. Other income decreased
due to the foreclosure of Mountain Plaza and due to a decrease in interest
income. Interest income decreased as a result of lower average cash balances in
1997 compared to 1996. Depreciation expense decreased due to certain assets at
the remaining properties becoming fully depreciated in 1996. Interest expense
decreased due to the refinancing of the Ventura Landing note payable in 1996
which resulted in a lower interest rate and principal balance. This decrease was
partially offset by a new mortgage at Village Green (see "Note F" in the Notes
to Consolidated Financial Statements). The property taxes decreased due to the
payoff of a 1990 tax liability in 1996, of which approximately $45,000 was
unaccrued, in order to secure the new note payable at Village Green. General and
administrative expenses decreased for the year ended December 31, 1997, compared
to the year ended December 31, 1996, due to a decrease in professional fees and
expense reimbursements.
With respect to the remaining properties, operating expenses also decreased due
to a reduction in maintenance costs primarily due to a painting project
completed during 1996 at Ventura Landing. Included in maintenance expense for
the year ended December 31, 1997 is approximately $102,000 of major repairs and
maintenance comprised primarily of exterior building, tennis court, and parking
lot repairs. For the year ended December 31, 1996, approximately $222,000 of
major repairs and maintenance, comprised primarily of interior and exterior
building repairs, were included in maintenance expense.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each 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.
Liquidity and Capital Resources
As of December 31, 1997, the Partnership held cash and cash equivalents of
$2,038,000 compared to $3,603,000 at December 31, 1996. The net decrease in
cash and cash equivalents for the year ended December 31, 1997 was $1,565,000
compared to a net increase of $749,000 for the year ended December 31, 1996.
Net cash provided by operating activities increased primarily due to the
foreclosure of Mountain Plaza in 1996. During the year ended December 31, 1996,
the property had negative operating cash flow of approximately $79,000. Also
contributing to the increase in cash provided by operating activities was an
increase in rental income at the remaining properties and a decrease in cash
used for accounts payable due to the timing of payments. Net cash used in
investing activities decreased due to increased receipts from and fewer deposits
to restricted escrows as a result of the completion of capital projects required
by the 1996 refinancing. This decrease was partially offset by increased
property improvements and replacements. Net cash used in financing activities
increased primarily due to higher distributions to the partners in 1997 than in
1996. In addition, included in net cash provided by financing activities in 1996
were net proceeds received from the mortgage refinancings.
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 various properties 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 $4,200,000 matures November 1, 2003 with balloon
payments due at maturity, at which time the properties will either be refinanced
or sold. Distributions of approximately $2,262,000 and $380,000 were made to
the partners during 1997 and 1996, respectively. 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.
Year 2000
The Partnership is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The General Partner believes that with modifications
to existing software and conversions to new software, the Year 2000 Issue will
not pose significant operational problems for its computer systems. However,
if such modifications and conversions are not made, or are not completed
timely, the Year 2000 Issue could have a material impact on the operations of
the Partnership.
Other
Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance, or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this annual report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ITEM 7. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES III
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1997
Consolidated Statements of Operations - Years ended December 31, 1997
and 1996
Consolidated Statements of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1997 and
1996
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties III
We have audited the accompanying consolidated balance sheet of Consolidated
Capital Properties III as of December 31, 1997, and the related consolidated
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the two years in the period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by the Partnership's management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Consolidated Capital Properties III at December 31, 1997, and the consolidated
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
January 23, 1998
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1997
Assets
Cash and cash equivalents $ 2,038
Receivables and deposits 199
Restricted escrows 106
Other assets 315
Investment properties (Notes A and J):
Land $ 1,552
Buildings and related personal property 12,657
14,209
Less accumulated depreciation (9,624) 4,585
$ 7,243
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 139
Tenant security deposits payable 121
Other liabilities 144
Mortgage notes payable (Note F) 4,200
Partners' Capital (Deficit)
General partners' $ (1,924)
Limited partners' (158,945 units issued and
158,582 outstanding) 4,563 2,639
$ 7,243
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $3,482 $4,044
Other income 258 363
Gain on disposition of property (Note E) -- 1,820
Total revenues 3,740 6,227
Expenses:
Operating 1,985 2,365
General and administrative 281 360
Depreciation 426 842
Interest 339 646
Property taxes 218 321
Total expenses 3,249 4,534
Income before extraordinary item 491 1,693
Extraordinary gain on foreclosure (Note E) -- 1,149
Net income $ 491 $2,842
Net income allocated to general partners (4%) $ 20 $ 114
Net income allocated to limited partners (96%) 471 2,728
$ 491 $2,842
Net income per limited partnership unit:
Income before extraordinary item $ 2.97 $10.25
Extraordinary gain on foreclosure -- 6.95
Net income $ 2.97 $17.20
Distributions per limited partnership unit: $13.69 $ 2.30
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners' Partners' Total
<S> <C> <C> <C> <C>
Original capital contributions 158,945 $ 1 $79,473 $79,474
Partners' (deficit) capital
at December 31, 1995 158,636 $(1,952) $ 3,900 $ 1,948
Distributions paid -- (15) (365) (380)
Net income for the year ended
December 31, 1996 -- 114 2,728 2,842
Partners' (deficit) capital
at December 31, 1996 158,636 (1,853) 6,263 4,410
Abandonment of limited
partnership units (54) -- -- --
Distributions paid -- (91) (2,171) (2,262)
Net income for the year ended
December 31, 1997 -- 20 471 491
Partners' (deficit) capital
at December 31, 1997 158,582 $(1,924) $ 4,563 $ 2,639
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net income $ 491 $ 2,842
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on disposition of property -- (1,820)
Extraordinary gain on foreclosure -- (1,149)
Depreciation 426 842
Amortization of lease commissions
and loan costs 52 48
Change in accounts:
Receivables and deposits 53 54
Other assets (45) (16)
Accounts payable 25 (72)
Tenant security deposits 7 (8)
Accrued property taxes -- 3
Other liabilities (17) 77
Net cash provided by operating activities 992 801
Cash flows from investing activities:
Property improvements and replacements (391) (249)
Net receipts from (deposits to) restricted
escrows 116 (215)
Net cash used in investing activities (275) (464)
Cash flows from financing activities:
Payments on mortgage notes payable -- (33)
Repayment of mortgage notes payable -- (7,374)
Proceeds from mortgage notes payable -- 8,400
Payment of loan costs (20) (201)
Partners' distributions (2,262) (380)
Net cash (used in) provided by financing
activities (2,282) 412
Net (decrease) increase in cash and cash
equivalents (1,565) 749
Cash and cash equivalents at beginning of period 3,603 2,854
Cash and cash equivalents at end of period $ 2,038 $ 3,603
Supplemental disclosure of cash flow information:
Cash paid for interest $ 308 $ 636
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Consolidated Capital Properties III, a California limited partnership (the
"Partnership"), was formed on May 22, 1980, to acquire and operate commercial and
residential properties. As of December 31, 1997, the Partnership owns three
residential properties and one commercial property located in or near major urban
areas in the United States.
At the time of the Partnership's formation, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired controlling interest
in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the
United States Bankruptcy Code. As part of CCEC's reorganization plan, ConCap
Equities, Inc. (the "General Partner" or "CEI") acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited
partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing
general partner in all 16 partnerships. As part of the solicitation for approval
of CEI as general partner, the limited partners also approved the conversion of
CCMC from a general partner to a limited partner, thereby leaving CEI as the sole
general partner of the Partnership.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which an affiliate of Insignia Financial Group, Inc.
("Insignia") acquired an option (exercisable in whole or in part from time to
time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial
exercise of such option, acquired 50.5% of that stock. As part of the Insignia
Transaction, the Insignia affiliate also acquired all of the outstanding stock of
Partnership Services, Inc., an asset management entity, and an Insignia affiliate
acquired all of the outstanding stock of Coventry Properties, Inc., a property
management entity. In addition, confidentiality, non-competition, and standstill
arrangements were entered into between certain of the parties. Those
arrangements, among other things, prohibit GII Realty's former sole
shareholder from purchasing Partnership Units for a period of three years. On
October 24, 1995, the Insignia affiliate exercised the remaining portion of its
option to purchase all of the remaining outstanding stock of GII Realty, Inc. At
December 31, 1997, Insignia and affiliates own a total of 39,644 Units of the
Partnership.
Consolidation
The Partnership's financial statements include the accounts of ConCap Mountain
Plaza Associates, Ltd. (which was dissolved in 1996, see "Note E") and ConCap
Village Green Associates, Ltd. The Partnership owns a 99% interest in each of
the partnerships, and it has the ability to control the major operating and
financial policies of these partnerships. All intercompany transactions have
been eliminated.
Investment Properties
Investment properties are stated at cost. Acquisition fees are capitalized as a
cost of real estate. In accordance with "Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment
losses on long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amounts of
those assets.
Depreciation
Buildings and improvements are depreciated on the straight-line basis over an
estimated useful life of 3 to 19 years. Tenant improvements are depreciated
over the term of the lease.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with a maturity, when
purchased, of three months or less to be cash equivalents. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Tenant Security Deposits
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserve - As a result of the refinancing of Ventura
Landing Apartments and Village Green Apartments in 1996, the properties
deposited approximately $216,000 with the mortgage company to establish a
Capital Reserve designated for certain capital improvements. At December 31,
1997, this reserve totaled approximately $61,000.
Replacement Reserve - As a result of the 1996 refinancing, each property will
make monthly deposits to establish and maintain a Replacement Reserve
designated for repairs and replacements at the properties. At December 31,
1997, this reserve totaled approximately $45,000.
Fair Value of Financial Instruments
"SFAS No. 107, Disclosures about Fair Value of Financial Instruments", as
amended by "SFAS No. 119, Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value
is defined in the SFAS as the amount at which the instruments could be exchanged
in a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Lease Commissions
Lease commissions are capitalized and are amortized using the straight-line
method over the terms of the applicable leases. Unamortized lease commissions
of approximately $56,000 are included in other assets at December 31, 1997.
Loan Costs
Loan costs are capitalized and are amortized by the straight-line method as
interest expense over the terms of the related notes. Unamortized loan costs of
approximately $179,000 are included in other assets at December 31, 1997.
Rental Income
The Partnership leases its residential property under short-term operating
leases. Lease terms are generally one year or less in duration. The Partnership
expects that in the normal course of business these leases will be renewed or
replaced by other leases. Commercial property leases vary from one to five
years.
Income Taxes
No provision has been made in the financial statements for Federal income taxes.
Under current law, no Federal income taxes are paid directly by the Partnership,
however, the Partners are responsible for their respective shares of Partnership
net income or loss. The Partnership reports certain transactions differently
for tax than for financial statement purposes.
Allocation of Net Income and Net Loss
The Partnership Agreement provides for net income and net losses for both
financial and tax reporting purposes to be allocated 96% to the Limited Partners
and 4% to the General Partner.
Advertising Costs
Advertising costs of approximately $48,000 in 1997 and $60,000 in 1996 were
charged to expense as incurred and are included in operating expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Limited Partnership Agreement ("Partnership Agreement") provides for
payments to affiliates for property management services based on a percentage of
revenue; for a partnership management fee equal to 9% of the total distributions
made to the limited partners from cash flow from operations and for
reimbursements of certain expenses incurred by affiliates on behalf of the
Partnership. The following payments were paid to affiliates of the General
Partner during each of the years ended December 31, 1997 and 1996
(in thousands):
1997 1996
Property management fees (included in
operating expenses) $181 $207
Reimbursement for services of affiliates
including $4,000 and $10,000 of
construction service reimbursements in
1997 and 1996, respectively (included in
operating and general and administrative
expenses) 153 205
Partnership management fees (included in
general and administrative expenses) 38 32
Additionally, the Partnership paid approximately $42,000 and $33,000 during the
years ended December 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 are amortized
over the terms of the respective leases. The Partnership also paid approximately
$5,000 and $34,000 during the years ended December 31, 1997 and 1996,
respectively, to affiliates of Insignia for reimbursements of costs related to
the loan refinancings in November of 1996. These costs were capitalized as loan
costs and are being amortized over the terms of the respective loans.
For the period of January 1, 1996, to August 31, 1997, the Partnership insured
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 master policy. The
agent assumed the financial obligations to the affiliate of the General Partner
who received payments 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 - COMMITMENT
The Partnership modified its Partnership Agreement during 1995 to eliminate the
requirement that the Partnership maintain reserves equal to at least 5% of
invested capital as defined in the Partnership Agreement. Reserves, including
cash and cash equivalents of approximately $2,038,000 at December 31, 1997, were
deemed to be sufficient by the General Partner to fund the Partnership's
liquidity requirements in 1997.
NOTE D - DISTRIBUTIONS
In September of 1997, the Partnership paid distributions totaling approximately
$1,112,000 to the partners, of which approximately $435,000 was attributable to
cash flow from operations and $677,000 represented a return of capital. In
April of 1997, the Partnership paid distributions to the partners representing a
return of capital totaling approximately $1,150,000.
In September of 1996, the Partnership paid distributions attributable to cash
flow from operations, totaling approximately $368,000 to the partners. In April
of 1996, the Partnership paid state withholding taxes of $12,000 for
non-resident limited partners. This payment is reflected as a distribution to
the Limited Partners.
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 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 the 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.
The following noncash investing and financing amounts were recorded in the
consolidated financial statements for the year ended December 31, 1996 (in
thousands):
Net real estate (a) $ (544)
Net other liabilities 54
(490)
Debt discharged (b) 3,459
Total gain $ 2,969
Gain on disposition of real estate (c) $ 1,820
Extraordinary gain on foreclosure (d) 1,149
$ 2,969
(a) Amount is net of accumulated depreciation of approximately $4,400,000.
(b) Amount includes accrued interest.
(c) The gain on disposition of real estate represents the difference between
the carrying value of the real estate and the estimated fair value of
the property at disposition. The gain is included in "Gain on
disposition of property" in the accompanying consolidated financial
statements.
(d) The gain on extinguishment of debt represents the difference between the
estimated fair value of the property at foreclosure and the amount of
debt, including accrued interest, extinguished. The gain is reflected
as an extraordinary item in the accompanying consolidated financial
statements.
The 1996 results of operations for Mountain Plaza Apartments are summarized in
the following table (in thousands):
For the Period
From January 1 to
September 3, 1996
Revenues $ 716
Loss from operations (261)
NOTE F - MORTGAGE NOTES PAYABLE
The principal terms of the mortgage notes payable are as follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Interest Stated Balance
December 31, Only Interest Maturity Due At
Property 1997 Payment Rate Date Maturity
<S> <C> <C> <C> <C> <C>
Ventura Landing Apartments $2,200 $ 13 7.33% 11/03 $2,200
Village Green Apartments 2,000 12 7.33% 11/03 2,000
Totals $4,200 $ 25 $4,200
</TABLE>
During the second quarter of 1996, the Partnership entered into an interim
financing arrangement for both Ventura Landing and Village Green for $2,200,000
and $2,000,000, respectively. The previous Ventura Landing note of $3,200,000
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. As a result of the refinancings, the Partnership spent
approximately $20,000 and $201,000 on loan costs during the years ended
December 31, 1997 and 1996, respectively.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties.
NOTE G - OPERATING LEASES
The Partnership leases its residential properties under short-term operating
leases. Lease terms are generally one year or less in duration. The Partnership
expects that in the normal course of business these leases will be renewed or
replaced by other leases. Commercial office property leases vary from one to
five years. The future minimum rental payments at the Partnership's commercial
property to be received under operating leases that have initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1997, are as
follows (in thousands):
1998 $ 664
1999 525
2000 287
2001 63
2002 23
$1,562
For leases with scheduled rental increases, rental income is recognized on a
straight-line basis over the life of the applicable leases. There is no
assurance that this income will continue at the same level when the leases
expire.
NOTE H - LIMITED PARTNERSHIP UNITS
In 1996, the number of Limited Partnership Units decreased by 54 units due to
limited partners abandoning their units. In abandoning his or her Limited
Partnership Units, a limited partner relinquishes all right, title and interest
in the Partnership as of the date of abandonment. However, during the year of
abandonment, the Limited Partner will still be allocated his or her share of the
income or loss for that entire year. The loss per limited partnership unit in
the accompanying consolidated statements of operations is calculated based on
the number of units outstanding at the beginning of the year.
NOTE I - PARTNER TAX INFORMATION
The following is a reconciliation between net income as reported in the
consolidated financial statements and federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 1997 and 1996 (in thousands, except per unit data):
1997 1996
Net income as reported $ 491 $2,842
Add (deduct):
Deferred revenue and other liabilities 4 (157)
Depreciation differences (22) (103)
Accrued expenses (9) 28
Other 3 --
(Loss) gain on disposition/foreclosure -- (80)
Federal taxable income $ 467 $ 2,530
Federal taxable income per limited
partnership unit $ 2.82 $ 15.31
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets at December 31, 1997 (in thousands):
Net assets as reported $ 2,639
Differences in basis of assets and
liabilities:
Investment properties at cost 3,803
Accumulated depreciation (129)
Other assets and liabilities 119
Syndication costs 8,691
Net assets - tax basis $15,123
NOTE J - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(in thousands)
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Professional Plaza $ -- $1,045 $ 2,033 $1,221
Ventura Landing 2,200 282 3,754 962
Village Green 2,000 125 2,375 242
West Chase -- 100 1,702 368
Totals $4,200 $1,552 $ 9,864 $2,793
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Professional Plaza $1,045 $ 3,254 $ 4,299 $ 3,112 03/03/81 5-19
Ventura Landing 282 4,716 4,998 4,314 10/07/81 5-19
Village Green 125 2,617 2,742 1,107 12/20/91 3-15
West Chase 100 2,070 2,170 1,091 9/17/90 5-15
Totals $1,552 $12,657 $14,209 $ 9,624
</TABLE>
NOTE J - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (continued)
(in thousands)
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1997 1996
Investment Properties
Balance at beginning of year $ 13,818 $ 18,525
Property improvements 391 249
Dispositions through foreclosure -- (4,956)
Balance at End of Year $ 14,209 $ 13,818
Accumulated Depreciation
Balance at beginning of year $ 9,198 $ 12,767
Additions charged to expense 426 842
Accumulated depreciation on real estate foreclosed -- (4,411)
Balance at end of year $ 9,624 $ 9,198
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996 is approximately $18,012,000 and $17,621,000,
respectively. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1997 and 1996, is approximately $9,753,000 and
$9,306,000, respectively.
NOTE K - LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The General Partner of the Partnership believes that all
such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
There were no disagreements with Ernst & Young LLP regarding the 1997 and 1996
audits of the Partnership's financial statements.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant has no officers or directors. The General Partner manages and
controls the Registrant and has general responsibility and authority in all
matters affecting its business.
The names of the directors and executive officers of ConCap Equities Inc.
("CEI"), the Partnership's General Partner, their ages and the nature of all
positions with CEI presently held by them are set forth below. There are no
family relationships between or among any officers and directors.
Name Age Position
William H. Jarrard, Jr. 51 President and Director
Ronald Uretta 41 Vice President and
Treasurer
Martha L. Long 38 Controller
Robert D. Long, Jr. 30 Vice President
Daniel M. LeBey 32 Vice President and
Secretary
Kelley M. Buechler 40 Assistant Secretary
William H. Jarrard, Jr. has been President and Director of the General Partner
since December 1996. He has acted as Senior Vice President of Insignia
Properties Trust ("IPT"), parent of the General Partner, since May 1997. Mr.
Jarrard previously acted as Managing Director - Partnership Administration of
Insignia Financial Group, Inc. ("Insignia") from January 1991 through September
1997 and served as Managing Director - Partnership Administration and Asset
Management of Insignia from July 1994 until January 1996.
Ronald Uretta has been Vice President and Treasurer of the General Partner since
December 1996 and Insignia's Treasurer since January 1992. Since August 1996,
he has also served as Insignia's Chief Operating Officer. He has also served as
Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief
Financial Officer from January 1992 to August 1996.
Martha L. Long has been Controller of the General Partner since December 1996
and Senior Vice President - Finance and Controller of Insignia since January
1997. In June 1994, Ms. Long joined Insignia as its Controller, and was
promoted to Senior Vice President - Finance in January 1997. Prior to that
time, she was Senior Vice President and Controller of the First Savings Bank, in
Greenville, SC.
Robert D. Long, Jr. has been Vice President of the General Partner since January
2, 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P. ("MAE"), an
affiliate of Insignia, in September 1993. Since 1994 he has acted as Vice
President and Chief Accounting Officer of the MAE subsidiaries. Mr. Long was an
accountant for Insignia until joining MAE in 1993. Prior to joining Insignia,
Mr. Long was an auditor for the State of Tennessee and was associated with the
accounting firm of Harsman Lewis and Associates.
Daniel M. LeBey has been Vice President and Secretary of the General Partner
since January 29, 1998 and Insignia's Assistant Secretary since April 30, 1997.
Since July 1996 he has also served as Insignia's Associate General Counsel.
From September 1992 until June 1996, Mr. LeBey was an attorney with the law firm
of Alston & Bird LLP, Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the General Partner since
December 1994 and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
No direct compensation was paid or payable by the Partnership to directors or
officers for the year ended December 31, 1997, nor was any direct compensation
paid or payable by the Partnership to directors or officers of the General
Partner for the year ended December 31, 1997. The Partnership has no plans to
pay any such remuneration to any directors or officers of the General Partner in
the future. However, reimbursements and other payments have been made to the
Partnership's General Partner and its affiliates, as described in "Item 12."
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of January 1, 1998, no person was known to CEI
to own of record or beneficially more than five percent of the Units of the
Partnership.
Number of Percent
Name and Address Units Of Total
Insignia Properties, L.P. 39,644 25.00%
One Insignia Financial Plaza
Greenville, SC 29602
Insignia Properties, L.P. is an affiliate of Insignia (see "Item 1. Description
of Business").
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own
any Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of January 1, 1998, the following persons were known to CEI to be the
beneficial owners of more than 5 percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust 100,000 100%
One Insignia Financial Plaza
Greenville, SC 29602
Insignia Properties Trust is an affiliate of Insignia (see "Item 1 -
Description of Business").
There are no arrangements known to the General Partner, the operation of which
may, at a subsequent date, result in a change in control of the Partnership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the transactions described below, neither CEI nor any of its
directors, officers or associates, or any associates of any of them, has had any
interest in any other transaction to which the Partnership is a party.
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Limited Partnership Agreement ("Partnership Agreement") provides for
payments to affiliates for property management services based on a percentage of
revenue; for a partnership management fee equal to 9% of the total distributions
made to the limited partners from cash flow from operations and for
reimbursements of certain expenses incurred by affiliates on behalf of the
Partnership. The following payments were paid to affiliates of the General
Partner during each of the years ended December 31, 1997 and 1996
(in thousands):
1997 1996
Property management fees $181 $207
Reimbursement for services of affiliates 153 205
Partnership management fees 38 32
Additionally, the Partnership paid $42,000 and $33,000 during the years ended
December 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 are amortized over the terms of the
respective leases. The Partnership also paid approximately $5,000 and $34,000
during the years ended December 31, 1997 and 1996, respectively, to affiliates
of Insignia for reimbursements of costs related to the loan refinancings in
November of 1996. These costs were capitalized as loan costs and are being
amortized over the terms of the respective loans.
For the period of January 1, 1996, to August 31, 1997, the Partnership insured
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 master policy. The
agent assumed the financial obligations to the affiliate of the General Partner
who received payments 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.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed during the fourth quarter of 1997:
None.
SIGNATURES
In accordance with Section 13 or 15(d) 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.
Its General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: March 12, 1998
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/William H. Jarrard, Jr. President March 12, 1998
William H. Jarrard, Jr.
/s/Ronald Uretta Vice President/Treasurer March 12, 1998
Ronald Uretta
INDEX OF EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
3 Certificate of Limited Partnership, as
amended to date. (Incorporated by refer-
ence to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.1 Property Management Agreement No. 104
dated October 23, 1990, by and between the
the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30,
1990).
10.2 Property Management Agreement No. 204
dated October 23, 1990, by and between the
Partnership and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.3 Property Management Agreement No. 305
dated October 23, 1990, by and between the
Partnership and CCEC (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.4 Property Management Agreement No. 402
dated October 23, 1990, by and between the
Partnership and CCEC (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.5 Bill of Sale and Assignment dated October
23, 1990, by and between CCEC and ConCap
Services Company (Incorporated by reference
to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.6 Assignment and Assumption Agreement dated
October 23, 1990, by and between CCEC and
ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.7 Assignment and Agreement as to Certain
Property Management Services dated October
23, 1990, by and between CCMLP and ConCap
Capital Company (Incorporated by reference
to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.8 Assignment and Assumption Agreement dated
October 23, 1990, by and between CCMLP and
The Hayman Company (100 Series of Property
Management Contracts) (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.9 Assignment and Assumption Agreement dated
October 23, 1990, by and between CCMLP and
Horn-Barlow Companies (200 Series of Property
Management Contracts) (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.10 Assignment and Assumption Agreement dated
October 23, 1990, by and between CCMLP and
Metro ConCap, Inc. (300 Series of Property
Management Contracts) (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.11 Assignment and Assumption Agreement dated
October 23, 1990, by and between R&B Realty
Group (400 Series of Property Management
Contracts) (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.12 Assignment and Assumption of Property Manage-
ment Agreements dated August 1, 1991, by and
between R & B Arizona Management Company,
Inc. and R & B Apartment Management Company,
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended
December 31, 1991).
10.13 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partnership
and CCP III Associates, Ltd. (Property Management
Agreement No. 305). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.14 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partnership
and CCP III Associates, Ltd. (Property Management
Agreement No. 104). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.15 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partnership
and CCP III Associates, Ltd. (Property Management
Agreement No. 204). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.16 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between the
Partnership and Horn-Barlow Companies (the "Horn-
Barlow Construction Management Agreement").
(Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1991).
10.17 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partnership
and CCP III Associates, Ltd. (Horn-Barlow Construc-
tion Management Agreement). (Incorporated by refer-
ence to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.18 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and Metro ConCap, Inc. (the "Metro
Construction Management Agreement"). (Incorporated
by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.19 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partner-
ship and CCP III Associates, Ltd. (Metro Construc-
tion Management Agreement). (Incorporated by
reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.20 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and The Hayman Company (the
"Hayman Construction Management Agreement").
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1991).
10.21 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partner-
ship and CCP III Associates, Ltd. (Hayman
Construction Management Agreement). (Incor-
porated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1991).
10.22 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and R & B Apartment Management
Company, Inc. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended
December 31, 1991).
10.23 Investor Services Agreement dated October 23,
1990, by and between the Partnership and CCEC
(Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30,
1990).
10.24 Assignment and Assumption Agreement (Investor
Services Agreement) dated October 23, 1990, by
and between CCEC and ConCap Services Company
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1990).
10.25 Letter of Notice dated December 20, 1991, from
Partnership Services, Inc. ("PSI") to the Partnership
regarding the change in ownership and dissolution
of ConCap Services Company whereby PSI assumed
the Investor Services Agreement. (Incorporated by
reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.26 Financial Services Agreement dated October 23,
1990, by and between the Partnership and CCEC
(Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30,
1990).
10.27 Assignment and Assumption Agreement
(Financial Services Agreement) dated October
23, 1990, by and between CCEC and ConCap
Capital Company (Incorporated by reference
to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.28 Letter of Notice dated December 20, 1991,
from PSI to the Partnership regarding the
change in ownership and dissolution of ConCap
Capital Company whereby PSI assumed the
Financial Services Agreement. (Incorporated
by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.29 Property Management Agreement No. 416 dated
May 13, 1993, by and between the Partnership
and Coventry Properties, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
10.30 Assignment and Assumption Agreement
(Property Management Agreement No. 416)
dated May 13, 1993, by and between Coventry
Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1993).
10.31 Assignment and Agreement as to Certain
Property Management Services dated May 13,
1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
10.32 Property Management Agreement No. 418 dated
May 13, 1993, by and between the Partnership
and Coventry Properties, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
10.33 Assignment and Assumption Agreement
(Property Management Agreement No. 418)
dated May 13, 1993, by and between Coventry
Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1993).
10.34 Assignment and Agreement as to Certain
Property Management Services dated May 13,
1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.35 Property Management Agreement No. 426
dated June 30, 1993, by and between the
Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1993).
10.36 Assignment and Assumption Agreement
(Property Management Agreement No. 426)
dated June 30, 1993, by and between Coventry
Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1993).
10.37 Assignment and Agreement as to Certain
Property Management Services dated June 30,
1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
10.38 Property Management Agreement No. 510 dated
June 1, 1993, by and between the Partnership and
Coventry Properties, Inc.
10.39 Property Management Agreement No. 510A dated
August 18, 1993, by and between the Partnership
and Coventry Properties, Inc.
10.40 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993,
by and between Coventry Properties, Inc. and
Partnership Services, Inc.
10.41 Property Management Agreement No. 511 dated
June 1, 1993, by and between the Partnership and
Coventry Properties, Inc.
10.42 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993,
by and between Coventry Properties, Inc. and
Partnership Services, Inc.
10.43 Property Management Agreement No. 512 dated
June 1, 1993, by and between the Partnership and
Coventry Properties, Inc.
10.44 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993,
by and between Coventry Properties, Inc. and
Partnership Services, Inc.
10.45 Stock and Asset Purchase Agreement, dated
December 8, 1994 (the "Gordon Agreement"),
among MAE-ICC, Inc. ("MAE-ICC"), Gordon Realty
Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"),
and certain other parties. (Incorporated by
reference to Form 8-K dated December 8, 1994)
10.46 Exercise of the Option (as defined in the Gordon
Agreement), dated December 8, 1994, between MAE-
ICC and Gordon. (Incorporated by reference to
Form 8-K dated December 8, 1994)
10.47 Multifamily Note dated November 14, 1996 between
CCP III, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital,
A Division of Lehman Brothers Holdings Inc..
10.48 Multifamily Note dated November 14, 1996 between
CCP III, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital,
A Division of Lehman Brothers Holdings, Inc..
11 Statement regarding computation of Net
Income per Limited Partnership Unit
(Incorporated by reference to Note 1 of Item
8 - Financial Statements of this Form 10-K).
16.1 Letter, dated August 12, 1992, from Ernst
& Young to the Securities and Exchange
Commission regarding change in certifying
accountant. (Incorporated by reference to
Form 8-K dated August 6 1992).
16.2 Letter dated May 9, 1995 from the Registrant's
former independent accountant regarding its
concurrence with the statements made by the
Registrant regarding a change in the certifying
accountant. (Incorporated by reference to Form
8-K dated May 3, 1995)
19.1 Modified First Amended Plan of Reorganiza-
tion for CCP/III Associates, Ltd., dated and
filed March 24, 1992, in the United States
Bankruptcy Court for the Northern District
of Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.2 Modified First Amended Disclosure Statement
for the Modified First Amended Plan of Reor-
ganization for CCP/III Associates, Ltd., dated
and filed March 24, 1992, in the United States
Bankruptcy Court for the Northern District of
Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.3 First Modification to Modified First Amended
Plan of Reorganization for CCP/III Associates,
Ltd., dated and filed April 22, 1992, in the
United States Bankruptcy Court for the Northern
District of Texas, Dallas Division. (Incorporated
by reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.4 Second Modification to Modified First Amended
Plan of Reorganization for CCP/III Associates,
Ltd., dated and filed April 29, 1992, in the United
States Bankruptcy Court for the Northern District
of Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.5 Third Modification to Modified First Amended
Plan of Reorganization for CCP/III Associates,
Ltd., dated and filed April 29, 1992, in the United
States Bankruptcy Court for the Northern District
of Texas, Dallas Division. (Incorporated by refer-
ence to the Annual Report on Form 10-K for the
year ended December 31, 1992).
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Properties III 1997 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000317331
<NAME> CONSOLIDATED CAPITAL PROPERTIES III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,038
<SECURITIES> 0
<RECEIVABLES> 199
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,209
<DEPRECIATION> 9,624
<TOTAL-ASSETS> 7,243
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,200
0
0
<COMMON> 0
<OTHER-SE> 2,639
<TOTAL-LIABILITY-AND-EQUITY> 7,243
<SALES> 0
<TOTAL-REVENUES> 3,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,249
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 339
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 491
<EPS-PRIMARY> 2.97<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
