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 September 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___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 312
Receivables and deposits 370
Restricted escrows 123
Other assets 204
Investment properties:
Land $ 507
Buildings and related personal property 10,897
11,404
Less accumulated depreciation (7,815) 3,589
$ 4,598
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 47
Tenant security deposit liabilities 99
Accrued property taxes 132
Other liabilities 240
Mortgage notes payable 5,332
Partners' (Deficit) Capital
General partner $(1,840)
Limited partners (158,582 units issued and
outstanding) 588 (1,252)
$ 4,598
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 742 $ 722 $ 2,204 $ 2,143
Other income 64 57 179 167
Total revenues 806 779 2,383 2,310
Expenses:
Operating 373 362 1,086 1,096
General and administrative 111 128 284 272
Depreciation 140 116 417 339
Interest 108 85 330 254
Property taxes 48 46 142 137
Total expenses 780 737 2,259 2,098
Income from continuing operations 26 42 124 212
(Loss) income from discontinued
operations -- (46) -- 175
Gain on sale of discontinued
operations -- 2,161 -- 2,161
Net income $ 26 $ 2,157 $ 124 $ 2,548
Net income allocated to general
partner (4%) $ 1 $ 86 $ 5 $ 102
Net income allocated to limited
partners (96%) 25 2,071 119 2,446
$ 26 $ 2,157 $ 124 $ 2,548
Per limited partnership unit:
Income from continuing operations $0.16 $ 0.25 $ 0.75 $ 1.28
(Loss) income from discontinued
operations -- (0.27) -- 1.06
Gain on sale of discontinued
operations -- 13.08 -- 13.08
Net income $ 0.16 $ 13.06 $ 0.75 $ 15.42
Distributions per limited
partnership unit $ -- $ 26.71 $ 6.74 $ 39.19
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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 nine months
ended September 30, 2000 -- 5 119 124
Partners' (deficit) capital
at September 30, 2000 158,582 $(1,840) $ 588 $(1,252)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 124 $ 2,548
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 417 365
Amortization of lease commissions and loan costs 24 32
Gain on sale of discontinued operations -- (2,161)
Change in accounts:
Receivables and deposits (188) (151)
Other assets (2) 13
Accounts payable (90) (5)
Due to general partner -- 160
Tenant security deposit liabilities 2 (40)
Accrued property taxes 132 127
Other liabilities (19) 19
Net cash provided by operating activities 400 907
Cash flows from investing activities:
Net proceeds from sale of discontinued operations -- 3,426
Property improvements and replacements (444) (383)
Net withdrawals from (deposits to) restricted escrows 10 (33)
Net cash (used in) provided by investing activities (434) 3,010
Cash flows from financing activities:
Payment of loan costs (10) --
Payments on mortgage note payable (18) --
Distributions to partners (1,086) (2,204)
Net cash used in financing activities (1,114) (2,204)
Net (decrease) increase in cash and cash equivalents (1,148) 1,713
Cash and cash equivalents at beginning of period 1,460 2,883
Cash and cash equivalents at end of period $ 312 $ 4,596
Supplemental disclosure of cash flow information:
Cash paid for interest $ 298 $ 231
Supplemental disclosure of non-cash financing activity:
Distribution payable $ -- $ 4,048
At December 31, 1999, property improvements and replacements and accounts
payable were adjusted by approximately $167,000 for non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
CONSOLIDATED CAPITAL PROPERTIES III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties III (the "Partnership" 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 nine month periods ended September 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, located in Salt Lake City, Utah, was sold
to an unaffiliated third party for $3,600,000. After payment of closing
expenses, the net proceeds received by the Partnership were approximately
$3,426,000. For financial statement purposes, the sale of the property resulted
in a gain on sale of discontinued operations of approximately $2,161,000.
Professional Plaza was the only remaining commercial property owned by the
Partnership and represented one segment of the Partnership's operations. Due to
the sale of this property, the results of the commercial segment have been shown
as (loss) income from discontinued operations on the consolidated statement of
operations. Revenues of this property were approximately $425,000 for the nine
months ended September 30, 1999. Income from operations was approximately
$175,000 for the nine months ended September 30, 1999. For the three months
ended September 30, 1999 the property did not have any revenues and had a loss
from operations of approximately $46,000.
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 nine month periods ended September 30, 2000 and 1999,
respectively:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $117 $115
Reimbursement for services of affiliates (included in
investment properties and general and
administrative expenses) 136 96
Partnership management fees (included in general and
administrative expenses) 41 88
Real estate brokerage commission (included in due to
general partner and gain on sale of discontinued
operations) -- 108
During the nine months ended September 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
$117,000 and $115,000 for the nine months ended September 30, 2000 and 1999,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $136,000 and $96,000 for the
nine months ended September 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
$88,000 were paid or accrued to the General Partner during the nine months ended
September 30, 2000 and 1999, respectively. At September 30, 1999 approximately
$52,000 was owed to the General Partner and was included in "Due to general
partner". This amount was paid subsequent to September 30, 1999.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a commission equal to 3% of the aggregate disposition price of sold
properties. The Partnership paid a commission of $108,000 to the General Partner
related to the sale of Professional Plaza in 1999. This amount is subordinate to
the limited partners receiving their original capital contributions plus a
cumulative preferred return of 6% per annum of their adjusted capital
investment, as defined in the Partnership Agreement. If the limited partners
have not received these returns when the Partnership terminates, the General
Partner will return this amount to the Partnership.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 75,694.5 limited partnership
units in the Partnership representing 47.732% 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, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the General Partner. As a result of
its ownership of 47.732% 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 nine months ended September 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 nine months ended September 30, 1999, cash distributions were paid totaling
approximately $2,204,000 (approximately $2,189,000 to the limited partners or
$13.80 per limited partnership unit) to the partners, of which approximately
$378,000 (approximately $363,000 to the limited partners, $2.29 per limited
partnership unit) was attributable to cash flow from operations. Approximately
$1,826,000 ($11.51 per limited partnership unit) represented a return of
capital, all of which was paid to the limited partners. Subsequent to September
30, 1999, a distribution of approximately $4,048,000 (approximately $4,026,000
to the limited partners or $25.39 per limited partnership unit) was paid to the
partners, of which approximately $550,000 (approximately $528,000 to the limited
partners or $3.33 per limited partnership unit) was attributable to cash flows
from operations and approximately $3,498,000 ($22.06 per limited partnership
unit) represented sale proceeds from the sale of Professional Plaza, all of
which was paid to the limited partners.
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 nine
months ended September 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 nine month periods ended September 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.
<TABLE>
<CAPTION>
Three Months ended September 30, 2000 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 742 $ -- $ 742
Other income 62 2 64
Interest expense 108 -- 108
Depreciation 140 -- 140
General and administrative expenses -- 111 111
Segment profit (loss) 135 (109) 26
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30, 2000 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 2,204 $ -- $ 2,204
Other income 165 14 179
Interest expense 330 -- 330
Depreciation 417 -- 417
General and administrative expenses -- 284 284
Segment profit (loss) 394 (270) 124
Total assets 4,373 225 4,598
Capital expenditures for investment
properties 444 -- 444
</TABLE>
<TABLE>
<CAPTION>
Three Months ended September 30, 1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 722 $ -- $ -- $ 722
Other income 45 -- 12 57
Interest expense 85 -- -- 85
Depreciation 116 -- -- 116
General and administrative
expenses -- -- 128 128
(Loss) from discontinued
operations -- (46) -- (46)
Gain on sale of
discontinued operations -- 2,161 -- 2,161
Segment profit (loss) 158 2,115 (116) 2,157
</TABLE>
<TABLE>
<CAPTION>
Nine Months ended September 30, 1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 2,143 $ -- $ -- $ 2,143
Other income 135 -- 32 167
Interest expense 254 -- -- 254
Depreciation 339 -- -- 339
General and administrative
expenses -- -- 272 272
Income from discontinued
operations -- 175 -- 175
Gain on sale of discontinued
operations -- 2,161 -- 2,161
Segment profit (loss) 452 2,336 (240) 2,548
Total assets 4,558 111 3,895 8,564
Capital expenditures for
investment properties 341 42 -- 383
</TABLE>
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. ("Insignia") 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 is considering applications for lead counsel and has
currently scheduled a hearing on the matter for November 20, 2000. 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.
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 nine month periods ended September 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Ventura Landing Apartments 94% 94%
Orlando, Florida
Village Green Apartments 94% 95%
Altamonte Springs, Florida
West Chase Apartments 91% 94%
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 nine months ended September 30, 2000 was
approximately $124,000 as compared to approximately $2,548,000 for the nine
months ended September 30, 1999. The Partnership's net income for the three
months ended September 30, 2000, was approximately $26,000 as compared to net
income of approximately $2,157,000 for the three months ended September 30,
1999. The decrease in net income for the three and nine month periods ended
September 30, 2000 is primarily attributable to the gain on sale from the
discontinued operations of Professional Plaza of approximately $2,161,000 in
addition to the (loss) income from discontinued operations included in net
income for the three and nine months ended September 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 $124,000 and $212,000 for the
nine months ending September 30, 2000 and 1999, respectively. Excluding the
impact of the operations of Professional Plaza, the Registrant had income from
continuing operations of approximately $26,000 and $42,000 for the three months
ending September 30, 2000 and 1999, respectively. The decrease in income from
continuing operations for the three and nine months ended September 30, 2000 was
due to an increase in total expenses partially offset by an increase in total
revenues.
Total expenses for the three and nine months ended September 30, 2000 increased
primarily due to an increase in depreciation and interest expense. Depreciation
expense increased due to capital improvements completed during the past year
which are now being depreciated. Interest expense increased due to the financing
of West Chase Apartments in December 1999. Other expenses remained relatively
constant for both the three and nine months ended September 30, 2000.
Total revenues increased for the three and nine month periods ended September
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,
partially offset by a decrease in occupancy at West Chase Apartments and Village
Green Apartments. Other income increased primarily due to increased interest
income at all of the Partnership's residential properties.
On July 8, 1999, Professional Plaza, located in Salt Lake City, Utah, was sold
to an unaffiliated third party for $3,600,000. After payment of closing
expenses, the net proceeds received by the Partnership were approximately
$3,426,000. The sale of the property resulted in a gain on sale of discontinued
operations of approximately $2,161,000. Professional Plaza was the only
remaining commercial property owned by the Partnership and represented one
segment of the Partnership's operations. Due to the sale of this property, the
results of the commercial segment have been shown as (loss) income from
discontinued operations on the consolidated statement of operations. Revenues of
this property were approximately $425,000 for the nine months ended September
30, 1999. Income from operations was approximately $175,000 for the nine months
ended September 30, 1999. For the three months ended September 30, 1999 the
property did not have any revenues and had a loss from operations of
approximately $46,000.
Included in general and administrative expenses for both of the nine month
periods ended September 30, 2000 and 1999 are reimbursements to the General
Partner allowed under the Partnership Agreement. In addition, 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.
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 September 30, 2000, the Partnership held cash and cash equivalents of
approximately $312,000 compared to approximately $4,596,000 at September 30,
1999. The decrease in cash and cash equivalents of approximately $1,148,000 from
the Partnership's year ended December 31, 1999, is due to approximately $434,000
of cash used in investing activities and approximately $1,114,000 of cash used
in financing activities partially offset by approximately $400,000 of cash
provided by operating activities. Cash used in investing activities consisted
primarily of property improvements and replacements slightly offset by net
withdrawals from escrow accounts maintained by the mortgage lenders. Cash used
in financing activities consisted primarily 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 nine months ended September 30, 2000, the Partnership completed
approximately $129,000 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 and replacement reserves. The
Partnership has evaluated the capital improvement needs of the property for the
year 2000. The amount budgeted is approximately $199,000, consisting primarily
of structural improvements, 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 nine months ended September 30, 2000, the Partnership completed
approximately $21,000 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 nine months ended September 30, 2000, the Partnership completed
approximately $127,000 of budgeted and non-budgeted capital improvements at
Ventura Landing Apartments consisting primarily of carpet and tile replacement
and parking lot improvements. These improvements were funded from cash provided
by operations and replacement reserves. The Partnership has evaluated the
capital improvement needs of the property for the year 2000. The amount budgeted
is approximately $136,000, 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 $1,132,000. 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 nine months ended September 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 nine months ended September 30, 1999, cash distributions were paid totaling
approximately $2,204,000 (approximately $2,189,000 to the limited partners or
$13.80 per limited partnership unit) to the partners, of which approximately
$378,000 (approximately $363,000 to the limited partners, $2.29 per limited
partnership unit) was attributable to cash flow from operations. Approximately
$1,826,000 ($11.51 per limited partnership unit) represented a return of
capital, all of which was paid to the limited partners. Subsequent to September
30, 1999, a distribution of approximately $4,048,000 (approximately $4,026,000
to the limited partners or $25.39 per limited partnership unit) was paid to the
partners, of which approximately $550,000 (approximately $528,000 to the limited
partners or $3.33 per limited partnership unit) was attributable to cash flows
from operations and approximately $3,498,000 ($22.06 per limited partnership
unit) represented sale proceeds from the sale of Professional Plaza, all of
which was paid to the limited partners. 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.
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. ("Insignia") 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 is considering applications for lead counsel and has
currently scheduled a hearing on the matter for November 20, 2000. 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 September
30, 2000:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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: November 8, 2000
