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 0-10273
CONSOLIDATED CAPITAL PROPERTIES III
(Exact name of small business issuer as specified in its charter)
California 94-2653686
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 165
Receivables and deposits 320
Restricted escrows 172
Other assets 204
Investment properties:
Land $ 507
Buildings and related personal property 10,802
11,309
Less accumulated depreciation (7,675) 3,634
$ 4,495
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 63
Tenant security deposit liabilities 99
Accrued property taxes 84
Other liabilities 189
Mortgage notes payable 5,338
Partners' (Deficit) Capital
General partners $(1,841)
Limited partners (158,582 units issued and
outstanding) 563 (1,278)
$ 4,495
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 729 $ 727 $ 1,462 $ 1,421
Other income 65 62 115 110
Total revenues 794 789 1,577 1,531
Expenses:
Operating 343 358 713 734
General and administrative 108 57 173 144
Depreciation 140 118 277 223
Interest 107 84 222 169
Property taxes 43 45 94 91
Total expenses 741 662 1,479 1,361
Income from continuing operations 53 127 98 170
Income from discontinued operations -- 113 -- 221
Net income $ 53 $ 240 $ 98 $ 391
Net income allocated to general
partner (4%) $ 2 $ 10 $ 4 $ 16
Net income allocated to limited
partners (96%) 51 230 94 375
$ 53 $ 240 $ 98 $ 391
Per limited partnership unit:
Income from continuing operations $ 0.32 $ 0.77 $ 0.59 $ 1.03
Income from discontinued operations -- 0.68 -- 1.33
Net income $ 0.32 $ 1.45 $ 0.59 $ 2.36
Distributions per limited
partnership unit $ 2.64 $ -- $ 6.74 $ 12.48
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(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, 1999 158,582 $(1,828) $ 1,538 $ (290)
Distributions to partners -- (17) (1,069) (1,086)
Net income for the six months
ended June 30, 2000 -- 4 94 98
Partners' (deficit) capital
at June 30, 2000 158,582 $(1,841) $ 563 $ (1,278)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
CONSOLIDATED CAPITAL PROPERTIES III
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 $ 98 $ 391
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 277 223
Amortization of lease commissions and loan costs 16 15
Change in accounts:
Receivables and deposits (138) (78)
Other assets 6 3
Accounts payable (74) (4)
Tenant security deposit liabilities 2 9
Accrued property taxes 84 82
Other liabilities (70) (10)
Net cash provided by operating activities 201 631
Cash flows from investing activities:
Property improvements and replacements (349) (151)
Net deposits to restricted escrows (39) (14)
Net cash used in investing activities (388) (165)
Cash flows from financing activities:
Payment of loan costs (10) --
Payments on mortgage note payable (12) --
Distributions to partners (1,086) (1,985)
Net cash used in financing activities (1,108) (1,985)
Net decrease in cash and cash equivalents (1,295) (1,519)
Cash and cash equivalents at beginning of period 1,460 2,758
Cash and cash equivalents at end of period $ 165 $ 1,239
Supplemental disclosure of cash flow information:
Cash paid for interest $ 199 $ 154
At December 31, 1999, property improvements and replacements and accounts
payable were adjusted by approximately $167,000 for non-cash activity.
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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" 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 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 ConCap Equities, Inc. (the "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 fiscal 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 fiscal year ended December 31, 1999.
Consolidation
The Partnership's financial statements include the accounts of ConCap Village
Green Associates, Ltd. The Partnership owns a 99% interest in this partnership,
and it has the ability to control the major operating and financial policies of
this partnership. All inter-entity transactions have been eliminated.
Certain reclassifications have been made to the 1999 information to conform to
the 2000 presentation.
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 General Partner. The 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 - Discontinued Segment
On July 8, 1999, Professional Plaza, the only commercial property owned by the
Partnership, was sold to an unaffiliated third party. Due to the sale of this
property, the results of the commercial segment have been shown as "Income from
discontinued operations" for the three and six month periods ended June 30,
1999. Professional Plaza had total revenues of approximately $447,000 and income
from discontinued operations of approximately $221,000 for the six months ended
June 30, 1999. Professional Plaza had total revenues of approximately $218,000
and income from discontinued operations of approximately $113,000 for the three
months ended June 30, 1999.
Note D - 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 of the General Partner for property management services
based on a percentage of revenue; for a partnership management fee equal to 9%
of the total distributions made to limited partners from cash flow from
operations; and for reimbursements of certain expenses incurred by affiliates of
the General Partner on behalf of the Partnership.
The following amounts were paid or accrued to the General Partner or affiliates
during each of the six month periods ended June 30, 2000 and 1999, respectively:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 78 $ 76
Reimbursement for services of affiliates (included in
investment properties and general and
administrative expenses) 60 61
Partnership management fees (included in general and
administrative expenses) 41 15
During the six months ended June 30, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's residential properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$78,000 and $76,000 for the six months ended June 30, 2000 and 1999,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $60,000 and $61,000 for the
six months ended June 30, 2000 and 1999, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow from operations to be paid to the General
Partner for executive and administrative management services. Under this
provision of the Partnership Agreement, fees of approximately $41,000 and
$15,000 were paid to the General Partner during the six months ended June 30,
2000 and 1999, respectively.
AIMCO and its affiliates currently own 72,386.5 limited partnership units in the
Partnership representing 45.65% 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 45.65% of the outstanding units, AIMCO is in a position to
significantly 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 General Partner because of their
affiliation with the General Partner.
Note E - Distributions
During the six months ended June 30, 2000, the Partnership distributed
approximately $1,086,000 (approximately $1,069,000 to the limited partners or
$6.74 per limited partnership unit), of which approximately $436,000
(approximately $419,000 to the limited partners or $2.64 per limited partnership
unit) was attributable to cash flow from operations. Approximately $650,000
($4.10 per limited partnership unit) represented 1999 financing proceeds on West
Chase Apartments which was distributed entirely to the Limited Partners. During
the six months ended June 30, 1999, a cash distribution was paid totaling
approximately $1,985,000 (approximately $1,979,000 to the limited partners or
$12.48 per limited partnership unit) to the partners, of which approximately
$159,000 (approximately $153,000 to the limited partners or $0.96 per limited
partnership unit) was attributable to cash flow from operations and
approximately $1,826,000 ($11.52 per limited partnership unit) represented a
return of capital.
Note F - Financing of Investment Property
On December 1, 1999, the Partnership obtained financing on West Chase Apartments
in the amount of $1,150,000. The loan carries a stated interest rate of 7.87%
and matures on December 1, 2019. The Partnership received net proceeds from the
financing in the amount of approximately $1,124,000. The Partnership spent
approximately $29,000 on loan costs during the year ended December 31, 1999. The
Partnership spent approximately $10,000 on additional loan costs during the six
months ended June 30, 2000. These loan costs are included in other assets on the
consolidated balance sheet.
Note G - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership had two reportable segments:
residential properties and commercial properties. The Partnership's residential
property segment consists of three apartment complexes, one each in Orlando,
Florida; Altamonte Springs, Florida; and Lexington, Kentucky. The Partnership
rents apartment units to tenants for terms that are typically twelve months or
less. On July 8, 1999, the commercial property was sold to an unrelated party.
Therefore, the commercial segment is reflected as discontinued operations for
the 1999 period (see "Note C" for further discussion regarding the sale).
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 described in the Partnership's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments are investment properties that offer different
products and services. The reportable segments are each managed separately
because they provide distinct services with different 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 (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
Six months ended
June 30, 2000 Residential Other Totals
Rental income $ 1,462 $ -- $ 1,462
Other income 103 12 115
Interest expense 222 -- 222
Depreciation 277 -- 277
General and administrative expenses -- 173 173
Segment profit (loss) 259 (161) 98
Total assets 4,408 87 4,495
Capital expenditures for investment
Properties 182 -- 182
<PAGE>
Three months ended
June 30, 2000 Residential Other Totals
Rental income $ 729 $ -- $ 729
Other income 59 6 65
Interest expense 107 -- 107
Depreciation 140 -- 140
General and administrative expenses -- 108 108
Segment profit (loss) 155 (102) 53
Six months ended
June 30, 1999 Residential Commercial Other Totals
(discontinued)
Rental income $ 1,421 $ -- $ -- $ 1,421
Other income 90 -- 20 110
Interest expense 169 -- -- 169
Depreciation 223 -- -- 223
General and administrative
expenses -- -- 144 144
Income from discontinued
operations -- 221 -- 221
Segment profit (loss) 294 221 (124) 391
Total assets 4,332 1,394 650 6,376
Capital expenditures for
investment properties 151 -- -- 151
Three months ended
June 30, 1999 Residential Commercial Other Totals
(discontinued)
Rental income $ 727 $ -- $ -- $ 727
Other income 57 -- 5 62
Interest expense 84 -- -- 84
Depreciation 118 -- -- 118
General and administrative
expenses -- -- 57 57
Income from discontinued
operations -- 113 -- 113
Segment profit (loss) 179 113 (52) 240
Note H - 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 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 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 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 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 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.
<PAGE>
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 disclosure
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 discussions 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 three apartment complexes.
The following table sets forth the average occupancy of the properties for each
of the six month periods ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Ventura Landing Apartments 93% 93%
Orlando, Florida
Village Green Apartments 94% 94%
Altamonte Springs, Florida
West Chase Apartments 92% 95%
Lexington, Kentucky
The General Partner attributes the decrease in occupancy at West Chase
Apartments to increased competition in the apartment rental market in Lexington,
Kentucky.
Results of Operations
The Partnership's net income for the six months ended June 30, 2000 was
approximately $98,000 as compared to approximately $391,000 for the six months
ended June 30, 1999. The Partnership's net income for the three months ended
June 30, 2000, was approximately $53,000 as compared to net income of
approximately $240,000 for the three months ended June 30, 1999. The decrease in
net income for the three and six month periods ended June 30, 2000 is primarily
attributable to income from the discontinued operations of Professional Plaza of
approximately $113,000 and $221,000, respectively, included in net income for
the three and six months ended June 30, 1999. Professional Plaza was sold July
8, 1999, as discussed below.
Excluding the impact of the operations of Professional Plaza, the Registrant had
income from continuing operations of approximately $98,000 and $170,000 for the
six months ending June 30, 2000 and 1999, respectively. Excluding the impact of
the operations of Professional Plaza, the Registrant had income from continuing
operations of approximately $53,000 and $127,000 for the three months ending
June 30, 2000 and 1999, respectively. The decrease in income from continuing
operations for the three and six months ended June 30, 2000 was due to increased
total expenses partially offset by increased total revenues.
Total expenses for the three and six months ended June 30, 2000 increased
primarily due to an increase in depreciation, interest, and general and
administrative expenses, which was partially offset by a decrease in operating
expenses. Depreciation expense increased due to capital improvements completed
during the past twelve months which are now being depreciated. Interest expense
increased due to the financing of West Chase Apartments in December 1999.
General and administrative expenses increased due to increased partnership
management fees paid during the six months ended June 30, 2000, related to
increased distributions of cash from operations and increased professional fees.
Included in general and administrative expenses at both June 30, 2000 and 1999,
are management reimbursements to the General Partner allowed under the
Partnership Agreement. Costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are also included. Operating expenses
decreased primarily due to decreased contract services primarily at Ventura
Landing Apartments and decreased maintenance expenses at all of the
Partnership's residential properties.
Total revenues increased for the three and six month periods ended June 30, 2000
primarily due to an increase in rental income and, to a lesser extent, an
increase in other income. Rental income increased primarily due to increased
average rental rates at all of the Partnership's residential properties.
Occupancy at Village Green and Ventura Landing remained stable which more than
offset the decrease in occupancy at West Chase. In addition, concession expenses
decreased at all of the Partnership's residential properties. Other income
increased primarily due to increased lease cancellation fees at Ventura Landing
Apartments.
On July 8, 1999, Professional Plaza, the only commercial property owned by the
Partnership, was sold to an unaffiliated third party. Due to the sale of this
property, the results of the commercial segment have been shown as "Income from
discontinued operations" for the three and six month periods ended June 30,
1999. Professional Plaza had total revenues of approximately $447,000 and income
from discontinued operations of approximately $221,000 for the six months ended
June 30, 1999. Professional Plaza had total revenues of approximately $218,000
and income from discontinued operations of approximately $113,000 for the three
months ended June 30, 1999.
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 June 30, 2000, the Partnership held cash and cash equivalents of
approximately $165,000 compared to approximately $1,239,000 at June 30, 1999.
The decrease in cash and cash equivalents of approximately $1,295,000 from the
Partnership's year ended December 31, 1999, is due to approximately $388,000 of
cash used in investing activities and approximately $1,108,000 of cash used in
financing activities partially offset by approximately $201,000 of cash provided
by operating activities. Cash used in investing activities consisted primarily
of property improvements and replacements and, to a lesser extent, net deposits
to escrow accounts maintained by the mortgage lenders. Cash used in financing
activities consisted of distributions to the partners, and, to a lesser extent,
loan costs and payments on the mortgage note payable encumbering West Chase
Apartments. The Registrant invests its working capital reserves in a money
market account.
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.
Village Green
During the six months ended June 30, 2000, the Partnership completed
approximately $90,000 of capital improvements at Village Green Apartments
consisting primarily of parking lot improvements, light fixtures, carpet
replacement, exterior painting, and structural improvements. These improvements
were funded from cash provided by operations. The Partnership has evaluated the
capital improvement needs of the property for the year 2000. The amount budgeted
is approximately $124,000, consisting primarily of air conditioning unit
replacement, plumbing upgrades, and carpet replacements. Additional improvements
may be considered and will depend on the physical condition of the property as
well as replacement reserves and anticipated cash flow generated by the
property.
West Chase
During the six months ended June 30, 2000, the Partnership completed
approximately $22,000 of capital improvements at West Chase Apartments
consisting primarily of carpet and vinyl replacement and plumbing upgrades.
These improvements were funded from cash provided by operations. The Partnership
has evaluated the capital improvement needs of the property for the year 2000.
The amount budgeted is approximately $42,000, consisting primarily of appliances
and carpet and vinyl replacements. Additional improvements may be considered and
will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.
Ventura Landing
During the six months ended June 30, 2000, the Partnership completed
approximately $70,000 of capital improvements at Ventura Landing Apartments
consisting primarily of carpet and tile replacement and parking lot
improvements. The Partnership has evaluated the capital improvement needs of the
property for the year 2000. The amount budgeted is approximately $109,000,
consisting primarily of air conditioning unit replacement, plumbing upgrades,
and carpet replacements. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
The capital expenditures will be incurred only if cash is available from
operations or from Partnership reserves. To the extent that such budgeted
capital improvements are required, 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 at Village Green and Ventura Landing Apartments of $4,200,000
requires interest only payments with the principal balance due in November 2003.
On December 1, 1999, the Partnership obtained financing on West Chase Apartments
in the amount of $1,150,000 and the current balance of this mortgage is
approximately $1,138,000. Payments are due on the first day of each month until
the loan matures on December 1, 2019. The 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 may risk losing such properties through foreclosure.
During the six months ended June 30, 2000, the Partnership distributed
approximately $1,086,000 (approximately $1,069,000 to the limited partners or
$6.74 per limited partnership unit), of which approximately $436,000
(approximately $419,000 to the limited partners or $2.64 per limited partnership
unit) was attributable to cash flow from operations. Approximately $650,000
($4.10 per limited partnership unit) represented 1999 financing proceeds on West
Chase Apartments which was distributed entirely to the Limited Partners. During
the six months ended June 30, 1999, a cash distribution was paid totaling
approximately $1,985,000 (approximately $1,979,000 to the limited partners or
$12.48 per limited partnership unit) to the partners, of which approximately
$159,000 (approximately $153,000 to the limited partners or $0.96 per limited
partnership unit) was attributable to cash flow from operations and
approximately $1,826,000 ($11.52 per limited partnership unit) represented a
return of capital. 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, property sales, and/or refinancings. The
Partnership's distribution policy is reviewed on a semi-annual basis. There can
be no assurance, however, that the Partnership will generate sufficient funds
from operations after required capital expenditures to permit any additional
distributions to its partners during the remainder of 2000 or subsequent
periods.
<PAGE>
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 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 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 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 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 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.
<PAGE>
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.
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
