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 0-10260
SHELTER PROPERTIES III LIMITED PARTNERSHIP
(Name of small business issuer in its charter)
South Carolina 57-0718508
(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. $5,567,000
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 Corporate General
Partner's belief that the aggregate market value of the voting Partnership
interests would not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated September 2, 1981 (included
in Registration Statement, No. 2-72567, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Shelter Properties III Limited Partnership (the "Registrant" or the
"Partnership") is engaged in the business of acquiring, operating and holding
real properties for investment. The Registrant acquired five existing apartment
properties and subsequently sold one property in June 1986.
Commencing September 2, 1981, the Registrant offered through E. F. Hutton &
Company Inc. ("Hutton") up to 54,800 Units of Limited Partnership Interest (the
"Units") at $500 per Unit with a minimum purchase of 10 Units ($5,000) or 3
Units ($1,500) for an Individual Retirement Account. An additional 200 Units
were purchased by the Corporate General Partner. Limited partners are not
required to make any additional capital contributions.
The Units were registered under the Securities Act of 1933 pursuant to
Registration Statement No. 2-72567 (the "Registration Statement"). Reference is
made to the Prospectus of Registrant dated September 2, 1981, (the "Prospectus")
contained in said Registration Statement, which is incorporated herein by
reference thereto.
The offering terminated on March 22, 1982. Upon termination of the offering,
the Registrant had accepted subscriptions for 55,000 Units, including 200 Units
purchased by the Corporate General Partner, for an aggregate of $27,500,000.
The Registrant invested approximately $21,000,000 of such proceeds in five
existing apartment properties and thereby completed its acquisition program at
approximately the expenditure level estimated in the Prospectus. Funds not
expended because they are held as reserves have been invested by the Registrant,
in accordance with the policy described in the Prospectus, in U.S. Government
securities or other highly liquid, short-term investments where there is
appropriate safety of principal.
During June 1986, the Partnership sold River Parkway Apartments in Atlanta,
Georgia. The remaining four properties continue to be held by the Partnership.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
The Registrant has no employees. Management and administrative services are
performed by Shelter Realty III Corporation, the Corporate General Partner, and
by Insignia Residential Group, L.P., an affiliate of Insignia Financial Group,
Inc. ("Insignia"), the ultimate parent company of the Corporate General Partner.
Pursuant to a management agreement between them, Insignia Residential Group,
L.P. provides property management services to the Registrant.
The real estate business in which the Partnership is engaged is highly
competitive and the Partnership is not a significant factor in this industry.
The Registrant's properties are subject to competition from similar properties
in the vicinity in which the properties are located. In addition, various
limited partnerships have been formed by the General Partners and/or their
affiliates to engage in business which may be competitive with the Registrant.
ITEM 2.DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Essex Park Apartments 10/29/81 Fee ownership subject Apartment
Columbia, South Carolina to first and second 323 units
mortgages
Colony House Apartments 10/31/81 Fee ownership subject Apartment
Murfreesboro, Tennessee to first and second 194 units
mortgages
North River Village Apartments 04/21/82 Fee ownership subject Apartment
Atlanta, Georgia to first and second 133 units
mortgages
Willowick Apartments 06/30/82 Fee ownership subject Apartment
Greenville, South Carolina to first and second 180 units
mortgages
SCHEDULE OF PROPERTIES:
(in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Essex Park Apartments $ 9,928 $ 5,443 5-36 S/L $1,579
Colony House Apartments 5,733 3,180 5-36 S/L 666
North River Village Apartments 5,663 3,129 5-32 S/L 922
Willowick Apartments 4,556 2,477 5-32 S/L 675
Totals $25,880 $14,229 $3,842
See "Note A" of the financial statements included in "Item 7" for a description
of the partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Essex Park Apartments
1st mortgage $3,116 7.60% (1) 11/15/02 $2,552
2nd mortgage 109 7.60% none 11/15/02 109
Colony House Apartments
1st mortgage 2,323 7.60% (1) 11/15/02 1,903
2nd mortgage 81 7.60% none 11/15/02 81
North River Village
1st mortgage 1,652 7.83% (2) 10/15/03 1,489
2nd mortgage 54 7.83% none 10/15/03 54
Willowick Apartments
1st mortgage 1,217 7.60% (1) 11/15/02 997
2nd mortgage 43 7.60% none 11/15/02 43
8,595
Less unamortized
present value discounts (319)
Total $ 8,276
(1) The principal balance is being amortized over 257 months with a balloon
payment due November 15, 2002.
(2) The principal balance is being amortized over 344 months with a balloon
payment due October 15, 2003.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
(dollar amounts in thousands)
Average Annual Average Annual
Rental Rates Occupancy
Property 1997 1996 1997 1996
Essex Park $6,084 $5,874 95% 94%
Colony House 7,470 7,285 90% 92%
North River Village 8,826 8,385 91% 96%
Willowick 5,688 5,560 92% 93%
The Corporate General Partner attributes the decrease in occupancy at North
River Village Apartments to increased competition as a result of newly
constructed units which are also offering concessions. Also contributing to the
decrease in occupancy is increased crime rates in the area, which is causing
residents to move to gated complexes.
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The
Corporate General Partner believes that all of the properties are adequately
insured. The multi-family residential properties' lease terms are for one year
or less. No residential tenant leases 10% or more of the available rental
space.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1997 1997
Billing Rate
Essex Park $116 27.11%
Colony House 97 5.63%
North River Village 66 3.95%
Willowick 67 30.63%
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The Corporate 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
During the year ended December 31, 1997, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
PARTNER MATTERS
As of December 31, 1997, there was minimal trading of the Units in the secondary
market establishing a high and low value of $208 and $175, respectively, per
Unit quoted in the October/November 1997 edition of The Partnership Spectrum.
There are 2,117 holders of record owning an aggregate of 55,000 Units of which
at December 31, 1997, Insignia Properties, L.P., an affiliate of Insignia, owned
18,549 units. No public trading market has developed for the Units, and it is
not anticipated that such a market will develop in the future.
Cash distributions of approximately $700,000 and $250,000 were declared and paid
in the years ended December 31, 1997 and 1996, respectively. A distribution of
$500,000 was made during the first quarter of 1998. Future cash distributions
will depend on the levels of net cash generated from operations, refinancings,
property sales and the availability of cash reserves. Distributions may also be
restricted by the requirement to deposit net operating income (as defined in the
mortgage note) into the Reserve Account until the Reserve Account is funded an
amount equal to $1,000 per apartment unit for Colony House, Essex Park, and
Willowick and $400.00 per apartment unit for North River Village.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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's net income as shown in the financial statements for the year
ended December 31, 1997, was approximately $491,000 versus net income of
approximately $413,000 for 1996, (see "Note D" of the financial statements for a
reconciliation of these amounts to the Partnership's federal taxable income
(loss). The increase in net income is primarily attributable to an increase in
rental income and other income. The increase in rental income is due to
increases in average rental rates at all investment properties within the
Partnership. These rental rate increases have been slightly offset by a
decrease in occupancy at all of the investment properties except for Essex Park
Apartments which has increased in comparison to the prior year. The increase in
other income is the result of increased cash balances in interest bearing bank
accounts and increased interest rates. The increase in other income is also
attributable to utility fees being passed on to the tenants and the receipt of a
tax refund from North River Village's taxing authority pertaining to the 1996
tax year.
Partially offsetting the increase in net income are increases in operating
expenses and property taxes. The increase in operating expenses is partially
due to increases in concessions at all properties in an effort to increase
occupancy and an increase in utilities at North River Apartments. The increase
in utilities at North River Apartments is a result of the property having
several major leaks that have been repaired. These increases in operating
expenses are partially offset by a decrease in maintenance expenses. The
decrease in maintenance is attributable to a decrease in exterior building
improvements at Colony House and Essex Park. These expenditures performed in
1996 were related to an effort to improve curb appeal and increase traffic.
Property taxes increased for the year ended December 31, 1997 at Essex Park due
to a 1996 appeal being lost which resulted in a tax payment for 1996 in 1997.
Property taxes also increased at Willowick due to an increase in assessed value.
Partially offsetting these increases in property taxes was a decrease in taxes
at North River due to a decrease in assessed value as a result of a 1996 tax
appeal.
Included in operating expense for the year ended December 31, 1997 is
approximately $127,000 of major repairs and maintenance comprised primarily of
tennis court repairs, exterior building improvements, major landscaping,
exterior painting and window coverings. Included in operating expense for the
year ended December 31, 1996 is approximately $209,000 of major repairs and
maintenance comprised primarily of interior and exterior building improvements,
tennis court repairs, and major landscaping.
As part of the ongoing business plan of the Partnership, the Corporate 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 Corporate 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 Corporate General Partner will be able to sustain
such a plan.
Liquidity and Capital Resources
At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $1,624,000 compared to approximately $1,509,000 at December 31,
1996. The net increase in cash and cash equivalents for the years ended
December 31, 1997 and 1996 is $115,000 and $215,000, respectively. Net cash
provided by operating activities increased due to the increase in net income as
discussed above, an increase in accounts payable due to the timing of payments
to vendors, and a decrease in receivables and deposits due to a reduction in
required tax and insurance escrows. Partially offsetting the increase in net
cash provided by operating activities was a decrease in accrued property taxes.
The decrease in accrued property taxes was due to part of 1996 taxes being paid
in January 1997 as a result of tax appeals, and all of the 1997 taxes being paid
in December 1997. Net cash used in investing activities decreased primarily as
result of a decrease in property improvements and replacements in 1997. Net
cash used in financing activities increased due to an increase in distributions
to Partners in 1997 as compared to 1996.
The Partnership has no material capital programs scheduled to be performed in
1998, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve 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 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 approximately $8,276,000, net of discount, is
amortized over varying periods with required balloon payments ranging from
November 15, 2002, to October 15, 2003, at which time the individual properties
will either be sold or refinanced. Cash distributions of approximately $700,000
and $250,000 were paid during the years ended December 31, 1997 and 1996,
respectively. A distribution of $500,000 was made during the first quarter of
1998. Future cash distributions will depend on the levels of net cash generated
from operations, refinancings, property sales and the availability of cash
reserves.
Year 2000
The Partnership is dependent upon the Corporate 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 Corporate 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
SHELTER PROPERTIES III LIMITED PARTNERSHIP
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
Shelter Properties III Limited Partnership
We have audited the accompanying consolidated balance sheet of Shelter
Properties III Limited Partnership 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 Shelter
Properties III Limited Partnership 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
SHELTER PROPERTIES III LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1997
Assets
Cash and cash equivalents $ 1,624
Receivables and deposits 229
Restricted escrows 906
Other assets 244
Investment properties:
Land $ 1,281
Buildings and related personal property 24,599
25,880
Less accumulated depreciation (14,229) 11,651
$14,654
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 117
Tenant security deposit liabilities 120
Other liabilities 378
Mortgage notes payable 8,276
Partners' Capital (Deficit)
General partners $ (75)
Limited partners (55,000 units
issued and outstanding) 5,838 5,763
$14,654
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES III LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $5,140 $5,036
Other income 427 341
Total revenues 5,567 5,377
Expenses:
Operating 2,790 2,727
General and administrative 207 205
Depreciation 941 923
Interest 762 776
Property taxes 376 333
Total expenses 5,076 4,964
Net income $ 491 $ 413
Net income allocated to general partners (1%) $ 5 $ 4
Net income allocated to limited partners (99%) 486 409
$ 491 $ 413
Net income per limited partnership unit $ 8.84 $ 7.43
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES III LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 55,000 $ 2 $27,500 $27,502
Partners' (deficit) capital
at December 31, 1995 55,000 $(77) $ 5,886 $ 5,809
Distributions to partners -- -- (250) (250)
Net income for the year
ended December 31, 1996 -- 4 409 413
Partners' (deficit) capital
at December 31, 1996 55,000 (73) 6,045 5,972
Distributions to partners -- (7) (693) (700)
Net income for the year
ended December 31, 1997 -- 5 486 491
Partners' (deficit) capital
at December 31, 1997 55,000 $(75) $ 5,838 $ 5,763
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES III LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
1997 1996
Cash flows from operating activities:
Net income $ 491 $ 413
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 941 923
Amortization of discounts and loan costs 95 94
Change in accounts:
Receivables and deposits 202 (76)
Other assets (19) (7)
Accounts payable 67 (221)
Tenant security deposit liabilities (17) (4)
Accrued property taxes (204) 149
Other liabilities (10) (69)
Net cash provided by operating activities 1,546 1,202
Cash flows from investing activities:
Property improvements and replacements (474) (507)
Deposits to restricted escrows (37) (26)
Net cash used in investing activities (511) (533)
Cash flows from financing activities:
Payments on mortgage notes payable (220) (204)
Partners' distributions (700) (250)
Net cash used in financing activities (920) (454)
Net increase in cash and cash equivalents 115 215
Cash and cash equivalents at beginning of year 1,509 1,294
Cash and cash equivalents at end of year $ 1,624 $ 1,509
Supplemental disclosure of cash flow information:
Cash paid for interest $ 666 $ 681
See Accompanying Notes to Consolidated Financial Statements
SHELTER PROPERTIES III LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Shelter Properties III Limited Partnership (the "Partnership" or
"Registrant") was organized as a limited partnership under the laws of the State
of South Carolina pursuant to a Certificate and Agreement of Limited Partnership
filed May 15, 1981. The general partner responsible for management of the
Partnership's business is Shelter Realty III Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner of
the Partnership, N. Barton Tuck, Jr., is effectively prohibited by the
Partnership's Partnership Agreement (the "Partnership Agreement") from
participating in the management of the Partnership. The Corporate General
Partner is an indirect subsidiary of Insignia Financial Group, Inc.
("Insignia"). The directors and officers of the Corporate General Partner also
serve as executive officers of Insignia. The Partnership Agreement terminates
December 31, 2021. The Partnership commenced operations on October 29, 1981,
and completed its acquisition of apartment properties on June 30, 1982. The
Partnership operates four apartment properties located in the South. Insignia
Properties, L.P., an affiliate of Insignia owned 18,549 units of the Partnership
at December 31, 1997.
Principles of Consolidation: The financial statements include all the accounts
of the Partnership and its one 99.99% owned partnership. The General Partner of
the consolidated partnership is Shelter Realty III Corporation. Shelter Realty
III Corporation may be removed by the Registrant; therefore, the consolidated
partnership is controlled and consolidated by the Registrant. All significant
interpartnership balances have been eliminated.
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 financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated between general and limited partners in accordance with the provisions
of the Partnership Agreement. The Partnership Agreement provides that net cash
from operations means revenue received less operating expenses paid, adjusted
for certain specified items which primarily include mortgage payments on debt,
property improvements and replacements not previously reserved, and the effects
of other adjustments to reserves. In the following notes to financial
statements, whenever "net cash from operations" is used, it has the
aforementioned meaning. The following is a reconciliation of the subtotal in
the accompanying statements of cash flows captioned "net cash provided by
operating activities" to net cash used by operations, as defined in the
Partnership Agreement (in thousands). However, "net cash used by operations"
should not be considered an alternative to net income as an indicator of the
Partnership's operating performance or to cash flows as a measure of liquidity.
Years Ended December 31,
(in thousands)
1997 1996
Net cash provided by operating activities $1,546 $1,202
Property improvements and replacements (474) (507)
Payments on mortgage notes payable (220) (204)
Changes in reserves for net operating
liabilities (19) 228
Changes in restricted escrows, net (37) (26)
Additional operating reserves (296) (700)
Net cash provided by (used in) by operations $ 500 $ (7)
The Corporate General Partner believes it to be in the best interest of the
Partnership to reserve an additional $296,000 and $700,000 at December 31, 1997
and 1996, respectively, to fund continuing capital improvements of its
investment properties. Distributions made from reserves no longer considered
necessary by the general partners are considered to be additional net cash from
operations for allocation purposes. During the years ended December 31, 1997 and
1996, the Corporate General Partner made distributions of approximately $700,000
and $250,000 respectively. A distribution of $500,000 was made during the first
quarter of 1998.
The Partnership Agreement provides that 99% of distributions of net cash from
operations are allocated to the limited partners until they receive net cash
from operations for such fiscal year equal to 7% of their adjusted capital
values (as defined in the Partnership Agreement), at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners for such fiscal year. Thereafter, the general partners will be
allocated 10% of any distributions of remaining net cash from operations for
such fiscal year.
All distributions of distributable net proceeds (as defined in the Partnership
Agreement) from property dispositions and refinancings will be allocated to the
limited partners until each limited partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value, less any prior distributions of net cash from operations and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1%
of the selling prices of properties sold where they acted as a broker, and then
the limited partners will be allocated 85% of any remaining distributions of
distributable net proceeds and the general partners will receive 15%.
Distributions may be restricted by the requirement to deposit net operating
income (as defined in the mortgage note) into the Reserve Accounts until the
Reserve Accounts are fully funded.
Undistributed Net Proceeds from Refinancing: Undistributed net proceeds of
approximately $185,000 are payable to the general partners once certain levels
of return are received by the limited partners. (See "Note C").
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the Partnership Agreement.
For any fiscal year, to the extent that profits, not including gains from
property dispositions, do not exceed distributions of net cash from operations,
such profits are allocated in the same manner as such distributions. In any
fiscal year in which profits, not including gains from property disposition,
exceed distributions of net cash from operations, such excess is treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and is allocated together with, and in the same manner as, that portion
of gain described in the second sentence of the following paragraph.
Any gain from property dispositions attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property over the Partnership's adjusted basis in the property shall be
allocated to each partner having a negative capital account balance, to the
extent of such negative balance. The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and shall be allocated to the general partners to the extent that
general partners would have received distributable net proceeds in connection
therewith and the balance shall be allocated to the limited partners. However,
the interest of the general partners will be equal to at least 1% of each gain
at all times during the existence of the Partnership.
All losses, including losses attributable to property dispositions, are
allocated 99% to the limited partners and 1% to the general partners.
Accordingly, net income as shown in the statements of operations and changes in
partners' capital (deficit) for 1997 and 1996 were allocated 99% to the limited
partners and 1% to the general partners. Net income per limited partnership
unit for 1997 and 1996 was computed as 99% of net income divided by 55,000 units
outstanding.
Other Reserves: The general partners may designate a portion of cash generated
from operations as "other reserves" in determining net cash from operations.
The general partners designated as other reserves an amount equal to the net
liabilities related to the operations of apartment properties during the current
fiscal year that are expected to require the use of cash during the next fiscal
year. The decrease in other reserves during 1997 was approximately $19,000 and
the increase in 1996 was approximately $228,000, which amounts were determined
by considering changes in the balances of receivables and deposits, accounts
payable, tenant security deposit liabilities, and accrued taxes and other
liabilities. At this time, the Corporate General Partner expects to continue to
adjust other reserves based on the net change in the aforementioned account
balances. During 1997 and 1996, the Corporate General Partner reserved an
additional $296,000 and $700,000, respectively, for expected capital
improvements.
Restricted Escrows:
Capital Improvement Account - At the time of the refinancing of North River
Village Apartments in 1993, approximately $546,000 of the refinancing proceeds
were designated for a "capital improvement escrow" for certain capital
improvements. At December 31, 1997, the balance remaining in the escrow for
this property was approximately $15,000. Upon completion of the scheduled
property improvements, any excess funds will be returned for property
operations.
Reserve Account - In addition to the Capital Improvement Account, a general
reserve account was established with the refinancing proceeds for each mortgaged
property. These funds were established to cover necessary repairs and
replacements of existing improvements, debt service, out of pocket expenses
incurred for ordinary and necessary administrative tasks, and payment of real
property taxes and insurance premiums. In connection with the 1992 refinancing,
the Partnership is required to deposit net operating income (as defined in the
mortgage note) from Colony House Apartments, Essex Park Apartments and Willowick
Apartments to the respective reserve account until they equal $1,000 per
apartment unit or $698,000 in total. The balance at December 31, 1997, for these
three properties is approximately $760,000, including interest earned on these
funds. In connection with the 1993 refinancing of North River Village, a
reserve account was established and fully funded at $400 per apartment unit or
approximately $53,000 in total. The balance at December 31, 1997, was
approximately $61,000, including interest earned on these funds.
Escrows for Taxes: All escrow funds are designated for the payment of real
estate taxes and are held by the Partnership. These funds totaled approximately
$70,000 at December 31, 1997 and are included in receivables and deposits.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984, and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of
the Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
additions over 27 1/2 years and (2) personal property additions over 7 years.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, which is included in operating expenses, was approximately
$94,000 and $83,000 for the years ended December 31, 1997 and 1996,
respectively.
Loan Costs: Loan costs of approximately $408,000 less accumulated amortization
of approximately $195,000 are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Cash and Cash Equivalents: Includes cash on hand and in banks, money market
funds and Certificates of Deposit with original maturities less than 90 days.
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.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the Corporate General Partner's policy is to offer rental concessions
during particularly slow months or in response to heavy competition from other
similar complexes in the area. Concessions are charged to expense as incurred.
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. For the years ended December 31, 1997 and
1996, no adjustments for impairment of value were recorded.
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.
Reclassifications: Certain reclassifications have been made to the 1996
information to conform to the 1997 presentation.
NOTE B - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows (in thousands,
except monthly payment):
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity
Essex Park Apartments
1st mortgage $ 3,116 $27,812 7.60% 11/15/02 $2,552
2nd mortgage 109 690 7.60% 11/15/02 109
Colony House Apartments
1st mortgage 2,323 20,736 7.60% 11/15/02 1,903
2nd mortgage 81 515 7.60% 11/15/02 81
North River Village
1st mortgage 1,652 12,654 7.83% 10/15/03 1,489
2nd mortgage 54 349 7.83% 10/15/03 54
Willowick Apartments
1st mortgage 1,217 10,862 7.60% 11/15/02 997
2nd mortgage 43 270 7.60% 11/15/02 43
8,595 $73,888
Less unamortized
present value discounts (319)
Total $ 8,276
The Partnership exercised interest rate buy-down options when the debt was
refinanced, reducing the stated rates from 8.76% to 7.60% and 8.13% to 7.83% in
1992 and 1993, respectively. The fee for the interest rate reduction amounted
to approximately $575,000 and is being amortized as a loan discount on the
interest method over the life of the loans. The discount fee is reflected as a
reduction of the mortgage notes payable and increases the effective rates of the
debt to 8.76% and 8.13%, respectively.
The mortgage notes payable are non-recourse and are secured by pledge of all of
the Partnership's apartment properties and by pledge of revenues from the
apartment properties. All of the notes require prepayment penalties if repaid
prior to maturity.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1997, are as follows (in thousands):
1998 $ 238
1999 256
2000 277
2001 299
2002 5,957
Thereafter 1,568
$8,595
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following amounts were paid or
accrued to the Corporate General Partner and affiliates in 1997 and 1996 (in
thousands):
For the Years Ended
December 31,
1997 1996
Property management fees (included in operating expenses) $272 $265
Reimbursement for services of affiliates, including
approximately $13,000 and $5,000 of construction
oversight reimbursements in 1997 and 1996,
respectively, (included in investment properties,
general and administrative and operating expenses) 140 131
Due to General Partner 185 185
Due from General Partner 11 11
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 Corporate General Partner. An affiliate of the Corporate 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 Corporate General Partner, who receives payment on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Corporate General Partner by
virtue of the agent's obligations is not significant.
On September 26, 1997, an affiliate of the General Partner purchased Lehman
Brothers Class "D" subordinated bonds of SASCO, 1992-M1. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Essex Park Apartments, Colony House Apartments and Willowick
Apartments owned by the Partnership.
NOTE D - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
loss (in thousands, except per unit data):
1997 1996
Net income as reported $ 491 $ 413
Add (deduct):
Amortization of present
value discounts (1) (4)
Depreciation differences 336 (452)
Change in prepaid rental 42 (52)
Other (16) (37)
Federal taxable income (loss) $ 852 $ (132)
Federal taxable income (loss) per
limited partnership unit $15.34 $(2.37)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 5,763
Land and buildings 3,086
Accumulated depreciation (10,896)
Syndication fees 3,246
Other 248
Net assets - tax basis $ 1,447
NOTE E - REAL ESTATE AND ACCUMULATED DEPRECIATION
Investment Properties
(in thousands)
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Essex Park Apartments
Columbia, South Carolina $3,225 $ 473 $ 7,406 $2,049
Colony House Apartments
Murfreesboro, Tennessee 2,404 183 4,408 1,142
North River Village Apts.
Atlanta, Georgia 1,706 336 4,085 1,242
Willowick Apartments
Greenville, South Carolina 1,260 289 3,563 704
Totals $8,595 $1,281 $19,462 $5,137
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
(in thousands)
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Essex Park Apartments
Columbia, South Carolina $ 473 $ 9,455 $ 9,928 $ 5,443 1973 10/29/81 5-36
Colony House Apartments
Murfreesboro, Tennessee 183 5,550 5,733 3,180 1970-1972 10/30/81 5-36
North River Village Apartments
Atlanta, Georgia 336 5,327 5,663 3,129 1969 04/21/82 5-32
Willowick Apartments
Greenville, South Carolina 289 4,267 4,556 2,477 1974 06/30/82 5-32
Totals $1,281 $24,599 $25,880 $14,229
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation:"
Years Ended December 31,
1997 1996
Investment Properties
Balance at beginning of year $25,406 $24,903
Property improvements 474 507
Disposals of property -- (4)
Balance at end of year $25,880 $25,406
Accumulated Depreciation
Balance at beginning of year $13,288 $12,368
Additions charged to expense 941 923
Disposals of property -- (3)
Balance at end of year $14,229 $13,288
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, are $28,966,139 and $28,492,000, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1997 and 1996, are $25,124,342 and $24,519,000, respectively.
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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 Individual and Corporate
General Partners are as follows:
Individual General Partner - N. Barton Tuck, Jr., age 59, is the Individual
General Partner of the Registrant. Mr. Tuck is Chairman of GolfSouth Management,
Inc. Until August 1990, he served as Chairman and Chief Executive Officer of
U.S. Shelter Corporation ("Shelter"), the former parent of AmReal Corporation
(parent of the Corporate General Partner of the Partnership). For six years
prior to 1966, Mr. Tuck was employed in Greenville, South Carolina by the
certified public accounting firm of S.D. Leidesdorf & Company. From 1966 to
1970, he was a registered representative with the investment banking firm of
Harris Upham & Co., Inc. in Greenville, South Carolina. Since 1970, Mr. Tuck has
been engaged in arranging equity investments for individuals and partnerships.
Mr. Tuck is a graduate of the University of North Carolina. Mr. Tuck has
delegated to the Corporate General Partner all of his authority, as a general
partner of the Partnership, to manage and control the Partnership and its
business and affairs.
Corporate General Partner - The names and ages of, as well as the positions and
offices held by, the executive officers and directors of Shelter Realty III
Corporation are set forth below. There are no family relationships between or
among any officers or directors.
NAME OF INDIVIDUAL POSITION AGE
William H. Jarrard, Jr. President/Director 51
Ronald Uretta Vice President/Treasurer 41
Martha L. Long Controller 38
Daniel M. LeBey Vice President/Secretary 32
Robert D. Long, Jr. Vice President 30
Kelley M. Buechler Assistant Secretary 40
William H. Jarrard, Jr. has been President and Director of the Corporate General
Partner since August 1994. He has acted as Senior Vice President of Insignia
Properties Trust ("IPT"), parent of the Corporate General Partner since May
1997. Mr. Jarrard previously acted as Managing Director - Partnership
Administration of 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 Corporate General
Partner since August 1994 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 Corporate 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, South Carolina.
Robert D. Long, Jr. has been Vice President of the Corporate 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 Corporate 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 Corporate General Partner
since June 1996 and Assistant Secretary of Insignia since January 1991.
ITEM 10. EXECUTIVE COMPENSATION
Neither the Individual General Partner nor any of the directors and officers of
the Corporate General Partner received any remuneration from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1997.
Number
Entity of Units Percentage
Insignia Properties, L.P. 18,549 33.73%
Insignia Properties, L.P. is an affiliate of Insignia. (See Item 1).
No director or officer of the Corporate General Partner owns any Units. The
Corporate General Partner owns 200 Units as required by the terms of the
partnership agreement governing the Partnership. The Individual General Partner
owns 4 limited partnership units.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Individual General Partner and the Corporate General Partner collectively
received distributions of $7,000 from operations as General Partner during the
year ended December 31, 1997. For a description of the share of cash
distributions from operations, if any, to which the general partners are
entitled, reference is made to the material contained in the Prospectus under
the heading PROFITS AND LOSSES AND CASH DISTRIBUTIONS.
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The Partnership has a property
management agreement with Insignia Residential Group, L.P. pursuant to which
Insignia Residential Group, L.P. has assumed direct responsibility for day-to-
day management of the Partnership's properties. This service includes the
supervision of leasing, rent collection, maintenance, budgeting, employment of
personnel, payment of operating expenses, etc. Insignia Residential Group, L.P.
receives a property management fee equal to 5% of apartment revenues. The
following amounts were paid or accrued to the Corporate General Partner and
affiliates in 1997 and 1996 (in thousands):
For the Years Ended
December 31,
1997 1996
Property management fees $272 $265
Reimbursement for services of affiliates, including
approximately $13,000 and $5,000 of construction
oversight reimbursements in 1997 and 1996, respectively 140 131
Due to General Partner 185 185
Due from General Partner 11 11
For a more detailed description of the management fee that Insignia Management
Group, L.P. is entitled to receive, see the material contained in the Prospectus
under the heading CONFLICTS OF INTEREST - Property Management Services.
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 Corporate General Partner. An affiliate of the Corporate 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 Corporate General Partner, who receives payment on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Corporate General Partner by
virtue of the agent's obligations is not significant.
On September 26, 1997, an affiliate of the General Partner purchased Lehman
Brothers Class "D" subordinated bonds of SASCO, 1992-M1. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Essex Park Apartments, Colony House Apartments and Willowick
Apartments owned by the Partnership.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as part of this report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 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.
SHELTER PROPERTIES III LIMITED PARTNERSHIP
By: Shelter Realty III Corporation
Corporate General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President/Director
Date: March 5, 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. Date: March 5, 1998
William H. Jarrard, Jr.
President/Director
/s/Ronald Uretta Date: March 5, 1998
Ronald Uretta
Vice President/Treasurer
EXHIBIT INDEX
Exhibit
3 See Exhibit 4(a)
4 (a) Amended and Restated Certificate and Agreement of Limited Partnership
[included as Exhibit A to the Prospectus of Registrant dated September
2, 1981 contained in Amendment No. 1 to Registration Statement No. 2-
72567, of Registrant filed September 2, 1981 (the "Prospectus") and
incorporated herein by reference].
(b) Subscription Agreements and Signature Pages [Filed with Amendment No. 1
of Registration Statement No. 2-72567, of Registrant and incorporated
herein by reference].
(c) Real Estate Note and Deed to Secure Debt and Security Agreement between
Pacific Mutual Life Insurance Company and Shelter Properties III to
acquire North River Village Apartments.*
(d) Modification Agreement between Citibank, N.A. and Southern Associates
Limited Partnership and a Title to Real Estate between Southern
Associates Limited Partnership and Shelter Properties III to acquire
Essex Park Apartments.*
*Filed as Exhibit 4(c) and 4(d), respectively, to Form 10-K of
Registrant for year ended December 31, 1987 and incorporated herein by
reference.
10(i) Contract related to acquisition of properties.
(a) Purchase Agreement dated July 1, 1981 and First Addendum to Purchase
Agreement dated August 4, 1981 between Colony House of Murfreesboro and
U. S. Shelter Corporation to purchase Colony House Apartments.**
(b) Purchase Agreement dated July 31, 1981, between Southern Associated
Limited Partnership and U. S. Shelter Corporation to purchase Essex Park
Apartments.**
**Filed as Exhibits 12(a) and 12(b), respectively, to Amendment No. 1 of
Registration Statement, No. 2-72567, of Registrant filed September 2,
1981 and incorporated herein by reference.
(c) Purchase Agreement dated December 3, 1981 between Plantation Company of
Georgia and Shelter Properties III to purchase River Parkway Apartments.
[Filed with form 8-K of Registrant dated November 30, 1981 and
incorporated herein by reference.]
(d) Purchase Agreement dated April 15, 1982 between North River Village
Joint Venture (a partnership) and U.S. Shelter Corporation to purchase
North River Village Apartments. [Filed with Form 8-K of Registrant
dated April 21, 1982 and incorporated herein by reference.]
(e) Purchase Agreement dated May 14, 1982 between Lincoln Willowick
Greenville Associates and U.S. Shelter Corporation to purchase Willowick
Apartments. [Filed with Form 8-K of Registrant dated May 14, 1982 and
incorporated herein by reference.]
(f) Contract dated June 12, 1986, between Shelter Properties III and Thomas
J. Gochberg, William T. Bozarth and Michael J. Weinburger, as Trustees
of Security Capital Real Estate Fund to sell River Parkway Apartments.
[Filed as Exhibit 10(f) to Form 10-K of Registrant for year ended
December 31, 1987 and incorporated herein by reference.]
(ii) Form of Management Agreement with U.S. Shelter Corporation subsequently
assigned to Shelter Management Group, L.P. (now known as Insignia
Management Group, L.P.) [filed with Amendment No. 1 to Registration
Statement, No. 2-72567 of Registrant and incorporated herein by
reference].
(iii) Contracts related to refinancing of debt:
(a) First Deeds of Trust and Security Agreements dated October 28, 1992
between Shelter Properties III Limited Partnership and Wesley D. Turner
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Colony House, Essex
Park and Willowick. ***
(b) Second Deeds of Trust and Security Agreements dated October 28, 1992
between Shelter Properties III Limited Partnership and Wesley D. Turner
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Colony House, Essex
Park and Willowick. ***
(c) First Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties III Limited Partnership and Wesley D. Turner
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Colony House, Essex
Park and Willowick. ***
(d) Second Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties III Limited Partnership and Wesley D. Turner
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Colony House, Essex
Park and Willowick. ***
(e) First Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties III Limited Partnership and Wesley D. Turner (Trustee) and
First Commonwealth Realty Credit Corporation, relating to the following
properties: Colony House, Essex Park and Willowick. ***
(f) Second Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties III Limited Partnership and Wesley D. Turner (Trustee) and
First Commonwealth Realty Credit Corporation, relating to the following
properties: Colony House, Essex Park and Willowick. ***
***Filed as Exhibits 10(iii)(a) through (f), respectively, to Form 10KSB
of Registrant for year ended December 31, 1992 and incorporated herein
by reference.
(g) First Deed to Secure Debt and Security Agreement dated September 30,
1993 between North River Village III Limited Partnership and Lexington
Mortgage Company, a Virginia corporation receiving North River Village.
****
(h) Second Deed to Secure Debt and Security Agreement dated September 30,
1993 between North River Village III Limited Partnership and Lexington
Mortgage Company, a Virginia corporation receiving North River Village.
****
(i) First Assignment of Leases and Rents dated September 30, 1993 between
North River Village III Limited Partnership and Lexington Mortgage
Company, a Virginia corporation receiving North River Village. ****
(j) Second Assignment of Leases and Rents dated September 30, 1993 between
North River Village III Limited Partnership and Lexington Mortgage
Company, a Virginia corporation receiving North River Village. ****
(k) First Real Estate Note dated September 30, 1993 between North River
Village III Limited Partnership and Lexington Mortgage Company, a
Virginia corporation, relating to North River Village. ****
(l) Second Real Estate Note dated September 30, 1993 between North River
Village III Limited Partnership and Lexington Mortgage Company, a
Virginia corporation, relating to North River Village. ****
****Filed as Exhibit 10 (iii) (a) through (f) of Form 10QSB for quarter
ended September 30, 1993, and incorporated herein by reference.
22 Subsidiaries of the Registrant
27 Financial Data Schedule
99 (a) Prospectus of Registrant dated September 2, 1981 [included in
Registration Statement No. 2-72567, of Registrant] and incorporated
herein by reference.
(b) Agreement of Limited Partnership for North River Village III Limited
Partnership between Shelter III GP Limited Partnership and Shelter
Properties III Limited Partnership entered into April 30, 1992. [Filed
as Exhibit 28(b) to Form 10KSB of Registrant for year ended December 31,
1992 and incorporated herein by reference.]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Shelter Properties III Limited Partnership 1997 Year-End 10-KSB and is
qualified in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000353282
<NAME> Shelter Properties III Limited Partnership
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,624
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,880
<DEPRECIATION> 14,229
<TOTAL-ASSETS> 14,654
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 8,276
0
0
<COMMON> 0
<OTHER-SE> 5,763
<TOTAL-LIABILITY-AND-EQUITY> 14,654
<SALES> 0
<TOTAL-REVENUES> 5,567
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,076
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 762
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 491
<EPS-PRIMARY> 8.84<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
