UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1995
OR
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: 0-11769
HUTTON/CONAM REALTY INVESTORS 3
(Exact name of registrant as specified in its charter)
California 13-3176625
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 World Financial Center, 29 Floor, New York, NY 10285
(Address of principal executive offices) (Zip Code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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
Consolidated Balance Sheets
February 28, November 30,
Assets 1995 1994
Investments in real estate:
Land $ 7,220,465 $ 7,220,465
Buildings and improvements 26,561,032 26,508,961
33,781,497 33,729,426
Less- accumulated depreciation (10,904,099) (10,629,776)
22,877,398 23,099,650
Cash and cash equivalents 4,134,496 4,213,148
Restricted cash 96,205 57,980
Other assets, net of accumulated amortization of
$87,914 in 1995 and $77,160 in 1994 218,435 242,868
Total Assets $ 27,326,534 $ 27,613,646
Liabilities and Partners' Capital
Liabilities:
Mortgages payable $ 11,563,617 $ 11,598,519
Distribution payable 222,222 311,111
Accounts payable and accrued expenses 169,688 137,709
Due to general partners and affiliates 38,388 38,007
Security deposits 158,147 161,667
Total Liabilities 12,152,062 12,247,013
Partners' Capital (Deficit):
General Partners (792,730) (773,514)
Limited Partners 15,967,202 16,140,147
Total Partners' Capital 15,174,472 15,366,633
Total Liabilities and
Partners' Capital $ 27,326,534 $ 27,613,646
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended February 28, 1995
General Limited
Partners Partners Total
Balance at December 1, 1994 $ (773,514) $ 16,140,147 $ 15,366,633
Net income 3,006 27,055 30,061
Cash distributions (22,222) (200,000) (222,222)
Balance at February 28, 1995 $ (792,730) $ 15,967,202 $ 15,174,472
Consolidated Statements of Operations
For the three months ended February 28, 1995 and 1994
Income 1995 1994
Rental $ 1,069,833 $ 1,013,392
Interest 54,273 35,688
Total Income 1,124,106 1,049,080
Expenses
Property operating 511,550 406,959
Depreciation and amortization 285,077 281,967
Interest 264,640 267,699
General and administrative 32,778 38,677
Total Expenses 1,094,045 995,302
Net Income $ 30,061 $ 53,778
Net Income Allocated:
To the General Partners $ 3,006 $ 5,378
To the Limited Partners 27,055 48,400
$ 30,061 $ 53,778
Per limited partnership unit
(80,000 outstanding) $.34 $.61
Consolidated Statements of Cash Flows
For the three months ended February 28, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 30,061 $ 53,778
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 285,077 281,967
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Fundings to restricted cash (64,454) (31,761)
Release of restricted cash to
property operations 26,229 23,888
Other assets 13,679 53,629
Accounts payable and accrued expenses 31,979 29,004
Due to general partners and affiliates 381 4,036
Security deposits (3,520) 3,300
Net cash provided by operating activities 319,432 417,841
Cash Flows from Investing Activities:
Additions to real estate (52,071) (26,465)
Net cash used for investing activities (52,071) (26,465)
Cash Flows from Financing Activities:
Mortgage borrowings -- 5,500,000
Mortgage principal payments (34,902) (4,437,435)
Distributions (311,111) (2,622,222)
Refund of deposit on mortgage refinancing -- 55,000
Mortgage fees -- (50,473)
Net cash used for financing activities (346,013) (1,555,130)
Net decrease in cash and cash equivalents (78,652) (1,163,754)
Cash and cash equivalents at beginning
of period 4,213,148 5,775,115
Cash and cash equivalents at end of period $ 4,134,496 $ 4,611,361
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 264,640 $ 267,699
Notes to Consolidated Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments consisting of only
normal recurring accruals which are, in the opinion of management, necessary to
present a fair statement of financial position as of February 28, 1995 and the
results of operations, changes in partners' capital and cash flows for the
three months then ended. Results of operations for the period are not
necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal 1994, and no material
contingencies exist which would require disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At February 28, 1995, the Partnership had cash and cash equivalents of
$4,134,496, which were invested in both affiliated and unaffiliated money
market funds. The Partnership also maintains a restricted cash balance, which
totaled $96,205 at February 28, 1995, representing real estate tax escrows
required under the terms of the Autumn Heights and Skyline Village loans. The
Partnership expects sufficient cash to be generated from operations to meet its
current operating expenses.
On July 15, 1995, the loan secured by Country Place II, in the amount
$2,900,075, will mature. The General Partners previously determined that it
would be in the Partnership's best interests to pay-off this loan at maturity
due to the likely principal paydown and significant expenses associated with a
refinancing. As a result of improving market conditions, the General Partners
are currently marketing some of the properties for sale and recently entered
into preliminary negotiations with an institutional buyer to sell Country Place
II. There can be no assurance, however, that the sale will be completed or
that any particular price for the property can be obtained. Should the sale
close prior to the July 15, 1995 maturity date, net sale proceeds will first be
applied to repay the loan and the balance will be distributed to the Limited
Partners as a return of capital. In addition, the General Partners will likely
return reserves held specifically against the Country Place Village II loan. If
the sale does not occur or closes after July 15, 1995 the Partnership's
reserves will be used to repay the loan.
The General Partners declared a cash distribution of $2.50 per Unit for the
quarter ended February 28, 1995, which was paid to investors on April 18, 1995.
The level and timing of future distributions will be reviewed on a quarterly
basis by the General Partners.
Results of Operations
Partnership operations for the three months ended February 28, 1995 resulted in
net income of $30,061, compared with net income of $53,778 for the
corresponding period in fiscal 1994. After adding back depreciation and
amortization, both non-cash expenses, and subtracting mortgage amortization,
operations generated cash flow of $280,236 for the three months ended February
28, 1995, compared with cash flow of $309,525 for the corresponding period in
fiscal 1994. The decrease in net income and cash flow for the three months
ended February 28, 1995 is primarily attributable to an increase in property
operating expenses, partially offset by an increase in rental income.
Rental income for the three months ended February 28, 1995 totalled $1,069,833,
compared with $1,013,392 for the corresponding period in fiscal 1994. The
increase reflects higher rental income at all of the Partnership's properties
during 1995, particularly Autumn Heights, due to increased rental rates, as
well as augmented revenue derived from renting furniture and appliances.
Total expenses for the three months ended February 28, 1995 were $1,094,045,
compared with $995,302 for the corresponding period in fiscal 1994. The
increase in total expenses is due primarily to an increase in property
operating expenses, in particular repair and maintenance expenses, which
increased at all of the Partnership's properties. The largest increase was at
Autumn Heights, reflecting the cost of painting the building's exteriors. Real
estate taxes and rental administrative expenses also increased at all of the
Partnership's properties.
For the three months ended February 28, 1995 and 1994, average occupancy levels
at each of the properties were as follows:
Three Months Ended
February 28,
Property 1995 1994
Autumn Heights 96% 97%
Ponte Vedra Beach Village II 94% 93%
Skyline Village 97% 98%
Country Place Village II 95% 96%
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits: None
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the three month period covered by this
report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 3
BY: RI 3-4 Real Estate Services, Inc.
General Partner
Dated: April 13, 1995
BY: /S/ Paul L. Abbott
Name: Paul L. Abbott
Title: Director, President, Chief Executive Officer
and Chief Financial Officer
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