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Total # of Pages: 43
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1995
-----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from None to None
Commission file number 0-11502
BOETTCHER WESTERN PROPERTIES III LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 84-0911344
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
828 17th Street, Denver, Colorado 80202
- ------------------------------------------ ---------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 628-8000
---------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
None None
- ------------------------------- ---------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. / /
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. X Yes No
----- -----
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INDEX
<TABLE>
<CAPTION>
PART I Page
------ ----
<S> <C> <C>
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Holders
of Limited Partnership Interests 8
PART II
-------
Item 5. Market of the Registrant's Limited Partnership Interests and
Related Limited Partner Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 33
PART III
--------
Item 10. Directors and Executive Officers of the Registrant 33
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain Beneficial Owners and Management 35
Item 13. Certain Relationship and Related Transactions 36
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 37
SIGNATURES 42
</TABLE>
2
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PART I
Item 1. BUSINESS
General
Boettcher Western Properties III Ltd. (the "Partnership") was organized
in March 1983 as a Colorado limited partnership. The Partnership's primary
business is to own and operate income-producing properties. At September 30,
1995, the Partnership owned and operated one multifamily apartment property
located in Texas ("La Risa Apartments") and one shopping center located in
California ("Venetian Square Shopping Center"), both of which are being held
for sale (the "Properties"). The Properties are more fully described in Item 2
as contained in this report.
The Partnership, as of September 30, 1995, did not directly employ any
persons; it is, however, a party to a Management Agreement with Boettcher
Properties, Ltd. (the "Managing Agent"). Under the terms of the Management
Agreement, the Managing Agent is responsible for the day-to-day operations of
the Partnership, and operating and managing its investments. All regular
employees rendering service on behalf of the Partnership are employees of
Boettcher Properties, Ltd. or its affiliates. The Properties are owned
directly by the Partnership and are managed by independent, third-party
property managers who perform daily property management services.
The General Partners of the Partnership are Boettcher Properties, Ltd.
and Boettcher 1983 Associates, Ltd. (the "General Partners"), both Colorado
limited partnerships. The Managing General Partner of the Partnership is
Boettcher Properties, Ltd. (the "Managing General Partner") and the Associate
General Partner is Boettcher 1983 Associates, Ltd. (the "Associate General
Partner"). With limited exceptions, the General Partners of the Partnership
have exclusive control over the business of the Partnership, which powers are
exercised only by the Managing General Partner.
For the fiscal year ended September 30, 1995, gross rents and tenant
reimbursements generated by the Partnership's income-producing properties
represented 96% of total Partnership revenue. Monthly rental income is derived
from tenant leases at the Properties. Lease terms for the multifamily
apartment property are short-term and typically vary from month-to-month
tenancy up to twelve months tenancy. Commercial leases for the Partnership's
shopping center contain longer lease terms, which vary from one year up to five
years for most tenants and up to twenty-five years for major anchor tenants.
Commercial leases permit the pass through by the owner of taxes, insurance and
common area operating costs to the tenants.
3
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Competition
The Partnership faces active competition in all aspects of its
business. In its operating stage, the Partnership competes with entities which
own properties similar in type to those owned by the Partnership. The ability
of the Partnership to compete with these entities depends on many factors,
including the location, size, condition of its facilities and the availability
of similar facilities. When comparable space is available in a general
location, the Partnership competes through rental rates and lease terms, among
other variables. Now that the Properties are held for sale, the Partnership is
competing with other income-producing properties for prospective purchasers.
While no statistical information is currently available to delineate the
Partnership's competitive position, many of its competitors are believed to
have assets and revenues greater than those of the Partnership.
Cash Reserves and Debt Maturities
The Partnership is required under its Partnership Agreement to maintain
cash reserves of not less than 3% of aggregate capital contributions for normal
repairs, replacements, working capital and other contingencies. As of
September 30, 1995, the Partnership had cash reserves of $836,140, while the
required minimum amount was $660,000. The Partnership intends to apply cash
flow generated from Partnership operations in fiscal 1996, if any, to maintain
minimum required cash reserves, including any additional reserves deemed
necessary by the Managing General Partner to cover potential remediation costs
of the petroleum contamination at Venetian Square Shopping Center discussed
below under "Other Factors" and in Note 7 to the Financial Statements contained
in Item 8 of this report. Thereafter, the Partnership intends to pay the
Managing General Partner all unpaid cash advances made to the Partnership, all
unpaid administrative reimbursements and all deferred fees earned by the
Managing General Partner, which total $33,645, $23,148 and $1,470,598,
respectively, as of September 30, 1995.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1996. However, there can be no
assurances that the Partnership will sell the Properties in 1996. The Managing
General Partner believes that these sales will provide net proceeds to the
Partnership after the payment of sales costs, closing costs and mortgages
payable; however, the sales transactions may include both cash at closing and
deferred payments to the Partnership. The ability of the Partnership to sell
Venetian Square Shopping Center may be adversely affected by the potential
remediation costs of the petroleum contamination at the property as described
below under "Other Factors". The Partnership intends to apply net sales
proceeds to establish and maintain the Partnership's minimum required cash
reserves, as necessary, including any additional reserves to cover potential
remediation costs. Thereafter, the Partnership intends to pay amounts owed to
the Managing General Partner, and to make distributions to limited partners.
The Partnership has entered into listing agreements with unrelated real estate
brokerage firms to act as exclusive selling agents for the Properties. These
investments are classified as properties held for sale at September 30, 1995
and 1994.
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Other Factors
Seasonal weather conditions do not have a material impact on the
operations of the Properties, although the usage of water, gas, electricity and
the attendant expense may vary according to the particular season and
geographic location.
Federal, state and local laws and regulations, which have been enacted
or adopted regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment do not presently have a
material effect on the operations of any of the Properties nor on the capital
expenditures, earnings or competitive position of the Partnership and no
material effect is anticipated in the future, subject to the environmental
assessment which is currently underway at Venetian Square Shopping Center and
the potential remediation costs payable by the Partnership.
Environmental site assessments have been and are currently being
performed on a parcel of land adjacent to and part of Venetian Square Shopping
Center. This parcel of land had previously been operated as a card-lock
fueling station containing underground fuel storage tanks. In fiscal 1992,
these underground fuel storage tanks were excavated and removed from this
parcel of land, at which time leakage of petroleum contaminants was discovered.
The Partnership has been advised that groundwater contamination has also
occurred and the Partnership is in the process of determining the method, cost
and timing of required soil and groundwater remediation measures. For
additional discussion of this matter, refer to Note 7 to the Financial
Statements as contained in Item 8 of this report.
Other federal, state and local laws and regulations, including
requirements of the Americans with Disabilities Act, may require that the
Partnership incur capital expenditures to ensure compliance. At this time, it
is not anticipated that these capital expenditures will materially affect the
Partnership's cash flows.
Although rent control measures have not been introduced in the areas in
which the Properties are located, no assurances can be given that rent control
measures will not be adopted in the future.
The Tax Reform Act of 1986 resulted in reduced tax benefits for
purchasers of real estate. To offset the loss of such benefits, purchasers may
negotiate lower prices when acquiring properties to achieve yields comparable
to those that resulted from the combination of cash flow and tax benefits
available prior to the Tax Reform Act of 1986. In addition, the value of tax
losses allocated to individual limited partners has been significantly reduced
due to passive loss limitations and reduced tax rates.
The business of the Partnership to date has involved only one industry
segment; accordingly, all information required by Item 101(b) of Regulation S-K
is included in the Financial Statements as contained in Item 8 of this report.
The Partnership has no foreign operations.
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Item 2. PROPERTIES
At September 30, 1995, the Partnership owned and operated one
multifamily apartment property and one shopping center, both of which are being
held for sale, as more fully described below:
Name and Location General Character of Property
La Risa Apartments 33-building, 254-unit multifamily apartment property
800 Babock Road containing approximately 183,896 square feet of net
San Antonio, Texas rentable area on approximately 9.7 acres of land.
Venetian Square Shopping
Center 3-building shopping center containing
4555 North Pershing Avenue approximately 117,107 square feet of net rentable
Stockton, California area on approximately 9.2 acres of land.
As stated above, at September 30, 1995, the Partnership has classified
both of the Properties as properties held for sale.
For information regarding the indebtedness to which each of the
Properties is subject, see Notes 3 and 6 to the Financial Statements as
contained in Item 8 of this report.
On June 6, 1994, the Partnership sold the land, related improvements
and personal property of Los Compadres, La Paz and Maryland Villa Apartments
(the "Arizona Properties") as described in more detail in Management's
Discussion and Analysis of Financial Condition and Results of Operations as
contained in Item 7 of this report and Note 2 to the Financial Statements as
contained in Item 8 of this report.
On September 9, 1994, a foreclosure sale was held regarding the
SouthCenter Plaza Shopping Center ("SouthCenter Plaza"), resulting in the loss
of the Partnership's investment in SouthCenter Plaza, as more fully discussed
in Note 2 to the Financial Statements as contained in Item 8 of this report.
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Average and weighted average occupancies and weighted average effective
rental rates generated by the Properties in fiscal 1995, 1994, and 1993 were as
follows:
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Qtr Qtr Qtr Qtr Fiscal Fiscal Fiscal
Apartments 1995 1995 1995 1995 1995 1994 1993
- ---------- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
La Risa 93% 93% 94% 95% 94% 96% 97%
Los Compadres N/A N/A N/A N/A N/A 97%(3) 95%
La Paz N/A N/A N/A N/A N/A 96%(3) 91%
Maryland Villa N/A N/A N/A N/A N/A 96%(3) 96%
Weighted average
occupancy N/A N/A N/A N/A N/A 95%(3) 95%
Weighted average
effective rental
rate per unit
per month $440 437 433 433 436 500(3) 481
Commercial
- ----------
Venetian Square
Shopping Center 91% 91% 91% 91% 91% 95% 93%
Retail - Average
effective rental rate(1) $9.16 7.88 8.38 8.74 8.54 8.57 8.59
SouthCenter Plaza N/A N/A N/A N/A N/A 37%(4) 41%
Office - Average
effective
rental rate(2) N/A N/A N/A N/A N/A $12.16(4) 13.77
</TABLE>
(1) These rates are "triple net". In addition to this base rent, tenants
pay their pro rata share of taxes, insurance and common area
maintenance expenses at the property.
(2) These rates are "full service". In addition to this base rent,
tenants pay only their pro rata share of taxes, insurance and common
area maintenance expenses at the property in excess of the expenses
incurred at the property during the tenant's initial year of
occupancy.
(3) These computations give effect to the sale of the Arizona Properties
on June 6, 1994.
(4) Averages computed through date of foreclosure.
Item 3. LEGAL PROCEEDINGS
The Partnership is not a party to, nor are the
Properties the subject of, any material pending legal proceedings.
7
<PAGE> 8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF HOLDERS OF LIMITED
PARTNERSHIP INTERESTS
There have been no matters submitted to a vote of holders of
Limited Partnership Interests (the "Units") during the fiscal year which is
covered by this report.
8
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PART II
Item 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED
LIMITED PARTNER MATTERS
At September 30, 1995, 22,000 Units were outstanding and held by 2,220
limited partners.
The Units have limited transferability. There is no public market for
the Units and it is not expected that any will develop. There are significant
restrictions relating to the transferability of Units, including the
requirement that the Managing General Partner consent to any transfer and to
any transferee becoming a substituted limited partner, which consent may be
granted or withheld at the sole discretion of the Managing General Partner. In
addition, restrictions on transfers may be imposed by federal and state
securities laws.
On June 22, 1994, a distribution of $2,750,000 ($125/Unit) was made to
limited partners from the net proceeds of the sale of the Arizona Properties.
The Managing General Partner intends to apply cash flow generated from
Partnership operations in fiscal 1996, if any, to maintain the Partnership's
minimum required cash reserves, as necessary, including any additional reserves
to cover potential remediation costs. Thereafter, the Partnership intends to
pay amounts owed to the Managing General Partner and make distributions to the
limited partners.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1996. However, there can be no
assurances that the Partnership will sell the Properties in 1996. The Managing
General Partner believes that these sales will provide net proceeds to the
Partnership after the payment of sales costs, closing costs and mortgages
payable; however, the sales transactions may include both cash at closing and
deferred payments to the Partnership. The ability of the Partnership to sell
Venetian Square Shopping Center may be adversely affected by the potential
remediation costs of the petroleum contamination at the property. The
Partnership intends to apply net sales proceeds to establish and maintain the
minimum required cash reserves, as necessary, including any additional reserves
to cover potential remediation costs. Thereafter, the Partnership intends to
pay amounts owed to the Managing General Partner and to make distributions to
limited partners.
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Item 6. SELECTED FINANCIAL DATA
BOETTCHER WESTERN PROPERTIES III LTD.
SELECTED FINANCIAL DATA(a)
As of or For the Year Ended September 30,
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total Revenue $2,508,536 4,521,349 5,191,770 5,446,898 5,199,034
Operating loss(c) (146,895) (492,317) (1,391,737) (1,156,958) (876,997)
Gain (loss) on sale
or disposition of
real estate investments - 1,441,887 (154,321) - -
------------- ----------- ------------ ------------ -----------
Net earnings (loss) (146,895) 949,570 (1,546,658) (1,156,958) (876,997)
Per Unit:(b)
Earnings (loss) (6.68) 42.73 (69.60) (52.06) (39.46)
Cash
Distribution - 0 - 125.00 - 0 - - 0 - - 0 -
Total assets 11,665,669 11,895,397 25,694,558 26,406,983 27,051,634
Mortgages
payable 7,153,781 7,339,842 18,075,625 18,135,094 18,166,405
</TABLE>
(a) The above selected financial data should be read in conjunction with
the Financial Statements and related Notes as contained in Item 8 of
this report.
(b) Per Unit data is based upon the 22,000 weighted average Units
outstanding during each fiscal year.
(c) The Partnership is evaluating the remediation of petroleum
contaminated soil and groundwater on a parcel of land adjacent to and
part of the Venetian Square Shopping Center. The contamination
resulted from a leaking underground storage tank which was part of a
card-lock fueling station operated at Venetian Square Shopping Center
from 1979 through 1990. The Partnership has spent approximately
$405,000 to date in evaluating the remediation program. Amounts
expended were primarily for the evaluation of the contamination in
order to determine the method, cost and timing of required soil and
groundwater remediation measures to be implemented in the future.
Management is unable at this time to estimate the amount of additional
remediation expense that may be incurred. Due to groundwater
contamination, the Partnership may incur significant additional
remediation costs. Accordingly, the Financial Statements contained in
Item 8 of this report do not include any adjustments that reflect the
results of the ultimate resolution of this uncertainty. For
additional information, refer to Note 7 to the Financial Statements
contained in Item 8 of this report.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
1995 as compared to 1994:
September 30, 1995 marked the close of the Partnership's twelfth year
of operations. The Partnership continues to own and operate one multifamily
apartment property located in Texas (La Risa Apartments) and one shopping
center located in California (Venetian Square Shopping Center), both of which
are being held for sale as of September 30, 1995.
For the fiscal year ended September 30, 1995, the Partnership
generated total revenue of $2,508,536, and incurred total expenses of
$2,655,431, resulting in an operating loss of $146,895. The Partnership's
fiscal 1995 operating loss decreased $345,422 (70%) when compared with fiscal
1994. Due to the gain on sale of Los Compadres, La Paz and Maryland Villa
Apartments (the "Arizona Properties"), the Partnership generated net earnings
of $949,570 in fiscal 1994. Total revenue decreased, primarily rental and
other income, and total expenses decreased in all categories, primarily due to
the sale of the Arizona Properties. A summary of the Partnership's operations
and period-to-period comparisons is presented below.
When making period-to-period comparisons, the exclusion of the Arizona
Properties and SouthCenter Plaza's operations from the prior fiscal year's
results allows for a more meaningful analysis of the operations of the
Partnership's remaining investments. For comparison purposes only, the Arizona
Properties and SouthCenter Plaza's results of operations have been excluded
from fiscal 1994 results of operations in the table below.
<TABLE>
<CAPTION>
Pro Amount
Actual Forma of %
1995 1994 Change Change
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Total revenue $2,509 2,493 16 1%
Total expenses 2,656 2,814 (158) (6)%
-------- ------ -----
Operating loss $(147) (321) 174
====== ===== ====
</TABLE>
Based upon the actual and pro forma amounts presented above, total
revenue generated by the Partnership, excluding the Arizona Properties and
SouthCenter Plaza, amounted to $2,508,536 in fiscal 1995, representing an
increase of $15,761 (1%) compared with fiscal 1994. The Partnership's
properties generated rental income of $2,145,948 in fiscal 1995, which
represents a decrease of $8,055 when compared with fiscal 1994. La Risa
Apartments achieved a weighted average occupancy of 94% and a weighted average
effective rental rate per unit per month of $436, representing a decrease of 2%
and an increase of $11, respectively, when compared with fiscal 1994. Rental
income from Venetian Square Shopping Center decreased $37,803 (4%) in fiscal
1995 when compared with fiscal 1994. At Venetian Square Shopping Center,
average occupancy decreased 4% in fiscal 1995 and the average effective rental
rate decreased $.03 when compared with fiscal 1994. For additional information
on the average occupancies and average effective rental rates for the
Partnership's Properties, refer to the table provided in Item 2 as contained in
this report. Other income increased $19,220 (27%) in fiscal 1995 when compared
with fiscal 1994, primarily the result of increased interest earned by the
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Partnership.
Based upon the actual and pro forma amounts provided above, total
expenses, incurred by the Partnership amounted to $2,655,431 in fiscal 1995, a
decrease of $158,270 (6%) when compared with fiscal 1994. The largest
component of this decrease is the $113,308 (38%) decrease in fees and
reimbursements to the managing general partner in fiscal 1995 when compared
with fiscal 1994. This decrease is primarily the result of the elimination of
the accrual of deferred acquisition fees related to the Arizona Properties in
June, 1994. Property tax expense decreased $15,296 (6%) in fiscal 1995 when
compared to fiscal 1994, primarily due to lower taxes assessed in 1995 on La
Risa Apartments. Repairs and maintenance expense decreased $21,003 (7%) in
fiscal 1995 when compared to fiscal 1994 mainly due to roof and parking lot
repairs completed at Venetian Square Shopping Center in fiscal 1994.
Environmental expense was $72,136 for fiscal 1995, an increase of $24,405 (51%)
over fiscal 1994, representing costs associated with the continued evaluation
of the soil and groundwater remediation at Venetian Square Shopping Center.
1994 as compared to 1993:
For the fiscal year ended September 30, 1994, the Partnership
generated total revenue of $4,521,349, and incurred total expenses of
$5,013,666, resulting in an operating loss of $492,317. The Partnership's
fiscal 1994 operating loss decreased $899,420 (65%) when compared with fiscal
1993. A gain on the sale of Arizona Properties, in the amount of $1,441,887,
was recorded in the third quarter of fiscal 1994 as more fully discussed in
Note 2 to the Financial Statements as contained in Item 8 of this report. Due
to the gain on sale of real estate investments, the Partnership generated net
earnings of $949,570 in fiscal 1994. Total revenue decreased, primarily rental
and other income, and total expenses decreased in all categories, primarily due
to the sale of the Arizona Properties. A summary of the Partnership's
operations and period-to-period comparisons is presented below.
When making period-to-period comparisons, the exclusion of the Arizona
Properties and SouthCenter Plaza's operations from the fiscal 1994 and 1993
results allows for a more meaningful analysis of the operations of the
Partnership's remaining investments. For comparison purposes only, the Arizona
Properties and SouthCenter Plaza's results of operations have been excluded in
both fiscal 1994 and 1993 in the table below.
<TABLE>
<CAPTION>
Pro Pro Amount
Forma Forma of %
1994 1993 Change Change
--------- ------- ------ ------
<S> <C> <C> <C> <C>
Total revenue $2,493 2,369 124 5%
Total expenses 2,814 3,039 (225) (7)%
--------- -------- -----
Operating loss $ (321) (670) 349
======== ===== ====
</TABLE>
Based upon the pro forma amounts presented above, total revenue
generated by the Partnership, excluding the Arizona Properties and SouthCenter
Plaza, amounted to $2,492,791, representing an increase of $123,868 (5%)
compared with fiscal 1993. The Partnership's properties generated rental
income of $2,154,003 in fiscal 1994, which represents an increase of $96,312
(5%) when compared with fiscal 1993. La Risa Apartments achieved a weighted
average occupancy of 96% and a weighted average effective rental rate per unit
per month of
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<PAGE> 13
$425, representing a decrease of 1% and an increase of $19, respectively, when
compared with fiscal 1993. Rental income from Venetian Square Shopping Center
increased $12,564 (1%) in fiscal 1994 when compared with fiscal 1993. At
Venetian Square Shopping Center, average occupancy increased 2% in fiscal 1994
and the average effective rental rate decreased $.02 when compared with fiscal
1993. For additional information on the average occupancies and average
effective rental rates for the Partnership's Properties, refer to the table
provided in Item 2 as contained in this report. Tenant reimbursement income
generated by Venetian Square Shopping Center increased $11,502 (5%) in fiscal
1994 when compared with fiscal 1993, representing the collection of fiscal 1993
tenant reimbursements in fiscal 1994. Other income increased $16,053 (29%) in
fiscal 1994 when compared with fiscal 1993, primarily the result of increased
interest earned by the Partnership and increased other income due to the
increased occupancy at La Risa Apartments.
Based upon the pro forma amounts provided above, total expenses,
excluding the Arizona Properties and SouthCenter Plaza, incurred by the
Partnership amounted to $2,813,701 in fiscal 1994, a decrease of $225,506 (7%)
when compared with fiscal 1993. The largest component of this decrease is the
$202,268 decrease in environmental expense associated with the remediation of
petroleum contamination at Venetian Square Shopping Center as more fully
discussed below and in Note 7 to the Financial Statements contained in Item 8
of this report. Property tax expense increased $21,342 (9%) in fiscal 1994,
primarily the result of increased property tax assessments at La Risa
Apartments. Fees and reimbursements to the managing general partner decreased
$73,891 (20%) in fiscal 1994 when compared with fiscal 1993. This decrease is
primarily the result of the suspension of the accrual for deferred acquisition
fees associated with SouthCenter Plaza since May 27, 1993 (the date the
foreclosure proceeding was initiated) and the elimination of the accrual of
deferred acquisition fees related to the Arizona Properties beginning June 6,
1994. Repairs and maintenance increased $50,229 (22%) in fiscal 1994. This
increase is primarily the result of roof repairs, parking lot repairs, and
increased security expense at Venetian Square Shopping Center. Utilities
expense decreased $6,423 (5%) in fiscal 1994 when compared with fiscal 1993,
primarily the result of decreased electricity at Venetian Square Shopping
Center and decreased water consumption at La Risa Apartments.
Liquidity and Capital Resources
Combined cash and cash equivalent balances, which represent
Partnership reserves, were $836,140 at September 30, 1995, representing an
increase of $141,312 when compared with fiscal 1994 year-end balances. Net
cash provided by operating activities in fiscal 1995 amounted to $507,250. The
most significant change in assets and liabilities in fiscal 1995 relates to an
increase in payable to managing general partner relating to operations of
$92,977. This increase represents the deferral of fees and reimbursements
earned by the Managing General Partner in fiscal 1995. At September 30, 1995
the payable to managing general partner totalled $1,527,391. Other significant
changes in assets and liabilities included accounts receivable and other assets
which decreased $42,186 in fiscal 1995. This decrease is primarily the result
of the partial collection and write-off of rents receivable related to a former
tenant at Venetian Square Shopping Center.
Net cash used by investing activities in fiscal 1995 amounted to
$126,273, the result of additions to real estate investments of $113,549 and
deferred leasing costs of $12,724. Capital improvements completed at La Risa
in fiscal 1995 included unit carpet, unit upgrades and appliance replacement as
required. The Partnership's fiscal 1995 deferred leasing costs include
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<PAGE> 14
costs related to tenant finish and lease commissions associated with new
tenants and the renewal of existing tenants at Venetian Square Shopping Center.
Net cash used by financing activities amounted to $239,665 in fiscal
1995, comprised of reductions in mortgage principal of $194,912 and an increase
in debt issuance costs of $78,398. The increase in debt issuance costs is the
result of fees paid by the Partnership in order to extend the mortgages payable
secured by both the La Risa Apartments and Venetian Square Shopping Center.
The Partnership is required under its Partnership Agreement to
maintain cash reserves of not less than 3% of aggregate capital contributions
(or $660,000) for normal repairs, replacements, working capital and other
contingencies. As of September 30, 1995, the Partnership had $836,140 in cash
reserves. The Partnership intends to apply cash flow generated from
Partnership operations in fiscal 1996, if any, to maintain minimum required
cash reserves, including any additional reserves deemed necessary by the
Managing General Partner to cover potential remediation costs of the petroleum
contamination at Venetian Square Shopping Center as discussed below.
Thereafter, the Partnership intends to pay the Managing General Partner all
unpaid cash advances made to the Partnership, all unpaid administrative
reimbursements and all deferred fees earned by the Managing General Partner,
which total $33,645, $23,148 and $1,470,598 respectively, as of September 30,
1995.
To the knowledge of the Managing General Partner, all Properties are
in good physical condition. In fiscal 1996, other than the resurfacing of the
parking lot at Venetian Square Shopping Center which is budgeted at $100,000,
there are no material tenant finish costs and/or lease commissions planned at
the Partnership's Properties in fiscal 1996.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1996. However, there can be no
assurances that the Partnership will sell the Properties in 1996. The
Partnership has entered into listing agreements with unrelated real estate
brokerage firms to act as exclusive selling agents for the remaining
properties. The Managing General Partner believes that both of these sales
will provide net proceeds to the Partnership after the payment of sales costs,
closing costs and mortgages payable; however, these sales transactions may
include both cash at closing and deferred payments to the Partnership. The
ability of the Partnership to sell Venetian Square Shopping Center may be
adversely affected by the potential remediation costs of the petroleum
contamination at the property. The Partnership intends to apply net sales
proceeds to maintain the Partnership's minimum required cash reserves, as
necessary, including any additional reserves to cover potential remediation
costs. Thereafter, the Partnership intends to pay amounts owed to Managing
General Partner and to make distributions to limited partners.
On December 29, 1994, the Partnership entered into a second loan
extension agreement with MBL Life Assurance Corporation (MBL) to extend the
mortgage payable for La Risa Apartments through January 1, 1996 under similar
terms and conditions as the original loan agreement. Under the agreement, the
Partnership paid a loan extension fee to MBL of $37,100 (1% of the outstanding
mortgage payable balance as of January 1, 1995). Subsequent to September 30,
1995, the Partnership entered into negotiations with MBL to obtain an
additional
14
<PAGE> 15
extension of the mortgage payable. An additional extension of this loan would
facilitate the Partnership's efforts to sell the property in 1996, with a
portion of the sale proceeds being utilized to pay all principal and interest
owed to MBL at that time. There can be no assurances that the Managing General
Partner will be able to obtain such an extension. If the Partnership is
unable to obtain an extension, the mortgage payable for La Risa Apartments
will be due and payable on January 1, 1996. In this circumstance, if the
Partnership does not pay off the mortgage, the Partnership will be in default,
entitling MBL to exercise its available remedies, including foreclosure of the
property.
In October 1995, the Partnership entered into an agreement with Great
West Life Assurance Company (Great West) to extend the maturity date of the
first mortgage payable secured by Venetian Square Shopping Center to October 1,
1997. Under the agreement, the Partnership paid an extension fee of $20,000.
The interest rate on the loan was increased from 9 1/2% to 10 1/2% and the
monthly principal and interest payment was increased from $37,683 to $39,098.
The Partnership is evaluating the remediation of petroleum
contaminated soil and groundwater on a parcel of land adjacent to and part of
the Venetian Square Shopping Center. The contamination resulted from a leaking
underground storage tank which was part of a card-lock fueling station operated
on the site. The Partnership has been advised that groundwater contamination
has also occurred and the Partnership is in the process of determining the
method, cost and timing of required soil and groundwater remediation measures.
The Partnership has spent approximately $405,000 to date in evaluating the
remediation program. Management is unable at this time to estimate the extent
of additional expenses that may be incurred. Due to groundwater contamination,
the Partnership may incur significant additional remediation costs.
Accordingly, the Financial Statements contained in Item 8 of this report do not
include any adjustments that reflect the results of the ultimate resolution of
this uncertainty. See Note 7 to the Financial Statements contained in Item 8
of this report for a more detailed discussion of this situation.
15
<PAGE> 16
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Financial Statements of the Partnership are included
herein:
Independent Auditors' Report 17
Balance Sheets - September 30, 1995 and 1994 18
Statements of Operations -
Years ended September 30, 1995, 1994 and 1993 19
Statements of Partners' Capital (Deficit) -
Years ended September 30, 1995, 1994 and 1993 20
Statements of Cash Flows -
Years ended September 30, 1995, 1994 and 1993 21
Notes to Financial Statements 23
16
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
THE PARTNERS
BOETTCHER WESTERN PROPERTIES III LTD.:
We have audited the accompanying balance sheets of Boettcher Western Properties
III Ltd. (a limited partnership) as of September 30, 1995 and 1994, and the
related statements of operations, partners' capital (deficit), and cash flows
for each of the years in the three-year period ended September 30, 1995. 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Boettcher Western Properties
III Ltd. as of September 30, 1995 and 1994, and the results of its operations
and its cash flows for each of the years in the three-year period ended
September 30, 1995, in conformity with generally accepted accounting
principles.
As discussed more fully in Note 7 to the financial statements, management of
the Partnership has determined that one of the Partnership's real estate
properties has environmental contamination. Management is evaluating the
extent of such contamination and the remediation of the property and has
accrued certain remediation costs. However, management is currently unable to
determine the full extent of the remediation measures and the related total
cost. Accordingly, the financial statements do not include any additional
adjustments, if any, relating to the ultimate outcome of this uncertainty.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 22, 1995
17
<PAGE> 18
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
September 30, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------ --------------- -------------
<S> <C> <C>
Real estate investments, at gross cost
Properties held for sale $16,346,743 16,233,194
Less discount on related debt (1,192,518) (1,192,518)
----------- -----------
15,154,225 15,040,676
Less accumulated depreciation (4,833,753) (4,382,580)
----------- -----------
10,320,472 10,658,096
Cash and cash equivalents at cost,
which approximates market value 836,140 694,828
Accounts receivable and other assets 187,545 229,731
Property tax and other escrow deposits 111,511 88,318
Debt issuance costs, net of accumulated
amortization of $154,874 and
$92,900, respectively 35,647 19,224
Deferred leasing costs, net of accumulated
amortization of $427,988 and
$383,878, respectively 174,354 205,740
----------- -----------
$11,665,669 11,895,937
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $7,162 and $16,013, respectively $7,153,781 7,339,842
Payable to managing general partner 1,527,391 1,400,769
Accounts payable and accrued expenses 322,420 335,727
Property taxes payable 140,902 141,246
Tenants' deposits 70,533 77,710
Unearned rental income 19,728 22,677
Accrued interest payable 33,685 33,842
----------- -----------
Total liabilities 9,268,440 9,351,813
----------- -----------
Commitments and contingencies
Partners' capital (deficit):
General partners (126,310) (124,841)
Limited partners 2,523,539 2,668,965
----------- -----------
Total partners' capital 2,397,229 2,544,124
----------- -----------
$11,665,669 11,895,937
=========== ===========
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 19
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Operations
Years Ended September 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Revenue: 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Rental income $2,145,948 4,086,966 4,764,674
Tenant reimbursements for
common area charges,
insurance and taxes 271,087 266,507 257,107
Other income 91,501 167,876 169,989
---------- ---------- ----------
2,508,536 4,521,349 5,191,770
---------- ---------- ----------
Expenses:
Interest, including amortization
of debt discount and debt
issuance costs 807,298 1,573,953 2,170,134
Depreciation 451,174 743,200 1,020,712
Property taxes 255,633 405,541 434,613
Fees and reimbursements to
managing general partner 186,893 300,201 374,092
Other management fees 108,667 186,873 217,603
Salaries of on-site property
managers 156,975 325,533 380,658
Repairs and maintenance 260,913 544,863 579,110
Utilities 121,150 487,701 699,447
Other administrative 234,592 398,069 457,138
Environmental costs 72,136 47,732 250,000
---------- ---------- ----------
2,655,431 5,013,666 6,583,507
---------- ---------- ----------
Operating loss (146,895) (492,317) (1,391,737)
Provision for loss on SouthCenter Plaza -- -- (154,921)
Gain on sale of real estate investments -- 1,441,887 --
---------- ---------- ----------
Net earnings (loss) $(146,895) 949,570 (1,546,658)
========== ========== ==========
Net earnings (loss)
per limited partnership unit $(6.61) 42.73 (69.60)
====== ===== ======
Weighted average number of limited
partnership units outstanding 22,000 22,000 22,000
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 20
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Partners' Capital (Deficit)
Years Ended September 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Total
General Limited partners'
partners partners capital
---------------- --------------- ---------------
<S> <C> <C> <C>
Capital (deficit) at
October 1, 1993 $(118,870) 6,010,082 5,891,212
Net loss (15,467) (1,531,191) (1,546,658)
---------- ---------- ----------
Capital (deficit) at
September 30, 1993 (134,337) 4,478,891 4,344,554
Distribution to limited partners -- (2,750,000) (2,750,000)
Net earnings 9,496 940,074 949,570
--------- ---------- ----------
Capital (deficit) at
September 30, 1994 (124,841) 2,668,965 2,544,124
Net loss (1,469) (145,426) (146,895)
--------- ---------- ----------
Capital (deficit) at
September 30, 1995 $(126,310) 2,523,539 2,397,229
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
20
<PAGE> 21
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Years Ended September 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $(146,895) 949,570 (1,546,658)
Adjustments to reconcile
net earnings (loss)
to net cash provided (used) by
operating activities:
Depreciation and amortization 566,109 1,011,424 1,362,277
Provision for loss on
SouthCenter Plaza -- -- 154,921
Gain on sale of real estate
investments -- (1,441,887) --
Change in operating assets and liabilities:
(Increase) decrease in accounts
receivable and other assets 42,186 (26,670) (27,220)
Increase in property tax and
other escrow deposits (23,193) (2,513) (4,828)
Increase (decrease) in payable to
managing general partner
relating to operations 92,977 (618,152) 374,092
Increase (decrease) in accounts payable
and accrued expenses (13,307) (135,110) 191,851
Increase (decrease) in property
taxes payable (344) (74,205) 39,835
Decrease in tenants' deposits (7,177) (36,041) (2,547)
Decrease in unearned rental income (2,949) (23,025) (4,520)
Increase (decrease) in accrued
interest payable (157) (488) 278,549
--------- --------- ---------
Net cash provided (used) by
operating activities 507,250 (397,097) 815,752
--------- --------- ---------
</TABLE>
(continued)
21
<PAGE> 22
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Years Ended September 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from investing activities:
Additions to real estate investments $(113,549) (196,960) (291,413)
Deferred leasing costs (12,724) (167,729) (80,703)
Net proceeds from sale of real
estate investments -- 11,658,327 --
Cash loss relating to foreclosing of
SouthCenter Plaza -- (11,674) --
--------- ----------- -----------
Net cash provided (used)
by investing activities (126,273) 11,281,964 (372,116)
--------- ----------- -----------
Cash flows from financing activities:
Advances from (payments to)
managing general partner 33,645 (30,900) 16,442
Payments of mortgage principal (194,912) (7,762,052) (243,325)
Increase in debt issuance costs (78,398) (128,594) (76,456)
Distributions to limited partners -- (2,750,000) --
--------- ----------- -----------
Net cash provided (used) by
financing activities (239,665) 10,671,546 (303,339)
--------- ----------- -----------
Net increase in cash and equivalents 141,312 213,321 140,297
Cash and cash equivalents at beginning of year 694,828 481,507 341,210
--------- ----------- -----------
Cash and cash equivalents at end of year $ 836,140 694,828 481,507
========= =========== ===========
Supplemental disclosure of cash flow information:
Interest paid in cash during the year $ 736,630 1,349,719 1,506,939
========= =========== ===========
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 23
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(1) Significant Accounting Principles
Organization and Allocation of Income and Losses
Boettcher Western Properties III Ltd. (the Partnership) is a limited
partnership formed on March 18, 1983 for the purpose of investing in
improved and unimproved real property. Limited Partnership Interests
(Units) were sold through a public offering and currently 22,000 Units
at $1,000 per Unit are outstanding.
The managing general partner of the Partnership is Boettcher
Properties, Ltd. (BPL), and the associate general partner is Boettcher
1983 Associates, Ltd.
The Partnership Agreement provides for the net operating income of the
Partnership to be allocated as follows: (i) to the limited partners
to the extent necessary to satisfy the 8% Current Distribution
Preference, as defined (an amount equal to 8% of the daily average
aggregate adjusted capital contributions of the limited partners) and
(ii) 1% of the remainder to the General Partners and 99% to the
limited partners. Net operating losses are allocated 1% to the
General Partners and 99% to the limited partners.
The Partnership Agreement provides for net capital income from the
sale or other disposition of Partnership properties to be allocated on
a cumulative basis as follows: (i) 1% to the General Partner and 99%
to the limited partners to the extent of depreciation deductions taken
from the inception of the Partnership, (ii) to the limited partners to
the extent necessary to satisfy the Net Proceeds Distribution
Preference, as defined (an amount equal to the sum of limited partner
capital contributions not yet returned and any unsatisfied 8% current
Distribution Preference from prior periods) and (iii) 25% of the
remainder to the General Partners and 75% to the limited partners.
Net capital loss is allocated 1% to the General Partners and 99% to
the limited partners.
Deferred Leasing Costs
Costs associated with the leasing of the Partnership's shopping center
and office building are deferred and amortized over the life of the
related leases. These costs are comprised of lease commissions and
construction costs related to the buildout of tenant space.
Income Taxes
No provision has been made for federal income taxes, as the taxable
income (loss) is reported by the partners rather than the Partnership.
The Partnership reports certain transactions differently for tax and
financial statement purposes, primarily depreciation and debt
discount.
23
<PAGE> 24
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
A reconciliation of net earnings (loss) per the accompanying financial
statements and Partnership's tax return is shown in the table below. Results of
operations for the year ended September 30, 1995 as shown in the financial
statements is actual. However, the Partnership's tax return for December 31,
1995 has not been prepared; therefore, the reconciling items for 1995 are
estimates by management.
<TABLE>
<CAPTION>
1995 1994 1993
------------ --------------- -----------------
(unaudited)
<S> <C> <C> <C>
Net earnings (loss) per financial statements $(146,895) 949,570 (1,546,658)
Fiscal to calendar year net difference (29,600) 143,901 71,331
Tax depreciation in excess of depreciation
for financial statement purposes (600,000) (655,164) (571,597)
Debt discount amortization not deducted
tax purposes 65,000 64,851 165,606
Rental revenue reported in different years
for tax and financial statement purposes (1,000) (2,520) (6,847)
Environmental costs not deducted for
tax purposes (11,000) (11,030) 250,000
Provision for estimated loss on operating
property not deducted for tax purposes -- -- 148,157
Difference in net gain on sale of real estate
investments for tax and financial statements -- 3,370,263 --
---------- ---------- -----------
Net earnings (loss) for income tax purposes $ (723,495) 3,859,871 (1,489,908)
========== ========== ===========
</TABLE>
Real Estate Investments
Properties held for sale are recorded at the lower of cost or fair market value
based upon independent appraised values.
Buildings and improvements are depreciated using the straight-line method over
an estimated useful life of 30 years. Equipment and furnishings are
depreciated using the straight-line method over an estimated useful life of 5
years. Renewals and betterments are capitalized, and repairs and maintenance
are charged to operations as incurred.
24
<PAGE> 25
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(1) Continued
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, cash and cash equivalents
include highly liquid debt instruments purchased with an original
maturity of three months or less. Cash and cash equivalents are
comprised of the following as of September 30:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Money Market Fund $721,050 598,914
Operating Cash 115,090 95,914
-------- -------
Cash and Cash Equivalents $836,140 694,828
======== =======
</TABLE>
Debt Issuance Costs and Debt Discount
Costs incurred in arranging financing, such as loan origination fees,
commitment fees and extension fees, are deferred and amortized using
the level-interest-yield method over the term of the related debt or
the extension period.
Debt discount is amortized to interest expense using the
level-interest-yield method over the term of the related debt.
Reclassification
Certain prior year amounts have been reclassified to conform with
fiscal 1995 financial statement presentation.
(2) Real Estate Investments
Mortgages assumed in connection with the acquisition of the
Partnership's properties were discounted using an equivalent market
rate of interest as of the date of acquisition. For financial
statement purposes, the resulting discount is deducted from the
original cost basis of the related real estate investment property,
thereby resulting in a reduction of depreciation expense over the life
of the assets.
As of September 30, 1995, the market value of the Partnership's
properties held for sale exceeds cost, based upon independent
appraised values or preliminary offers to purchase the properties.
25
<PAGE> 26
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(2) Continued
The cost of the Partnership's real estate investments and related
accumulated depreciation, debt discount and allowance for loss are as
follows:
September 30, 1995
<TABLE>
<CAPTION>
Properties Land and Buildings and Equipment and Less discount Property balance,
Held for Sale improvements improvements furnishings Total on related debt net of discount
------------- ------------ ------------- ------------- ----- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
La Risa Apts $1,620,095 5,277,131 761,940 7,659,166 (414,111) 7,245,055
Venetian
Square 1,802,853 6,884,724 -- 8,687,577 (778,407) 7,909,170
---------- ----------- -------- ----------- ---------- ----------
3,422,948 12,161,855 761,940 16,346,743 (1,192,518) 15,154,225
---------- ----------- -------- ----------- ========== ==========
Less discount on
related debt (266,170) (915,373) (10,975) (1,192,518)
---------- ----------- -------- -----------
3,156,778 11,246,482 750,965 15,154,225
---------- ----------- -------- -----------
Less accumulated
depreciation (42,470) (4,277,520) (513,763) (4,833,753)
---------- ---------- --------- -----------
$3,114,308 6,968,962 237,202 10,320,472
========== ============ ========= ===========
September 30, 1994
------------------
La Risa Apts $1,620,095 5,277,131 648,391 7,545,617 (414,111) 7,131,506
Venetian
Square 1,802,853 6,884,724 -- 8,687,577 (778,407) 7,909,170
---------- ----------- -------- ----------- ---------- ----------
3,422,948 12,161,855 648,391 16,233,194 (1,192,518) 15,040,676
---------- ----------- -------- ----------- ========== ==========
Less discount on
related debt (266,170) (915,373) (10,975) (1,192,518)
---------- ----------- -------- -----------
3,156,778 11,246,482 637,416 15,040,676
---------- ----------- -------- -----------
Less accumulated
depreciation (39,474) (3,902,638) (440,468) (4,382,580)
---------- ----------- -------- -----------
$3,117,304 7,343,844 196,948 10,658,096
========== =========== ======== ===========
</TABLE>
Disposition of Real Estate Investments
Sale of Arizona Properties
On June 6, 1994, the Partnership sold the land, related improvements
and personal property of Los Compadres, La Paz and Maryland Villa
apartments (the Arizona Properties) for cash. The net proceeds to the
Partnership, before proration of operating income and expenses related
to the Arizona Properties, were as follows:
26
<PAGE> 27
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
<TABLE>
<S> <C>
Total of contract sales prices 11,911,480
Less costs of sale -
Sales commission (195,729)
Title, legal fees, and other (51,894)
Mortgage payoff (7,653,598)
Security deposit liability (42,755)
-----------
Net Proceeds $ 3,967,504
===========
The net proceeds from closing were utilized as follows:
Distribution to Limited Partners ($125/unit) $ 2,750,000
Reduce payable to Boettcher Properties, Ltd.,
the Managing General Partner 1,000,000
Addition to Partnership cash reserves 217,504
-----------
$ 3,967,504
===========
</TABLE>
SouthCenter Plaza
On May 6, 1994, the Superior Court of Washington for King County
issued an order granting the foreclosure of the mortgage secured by
the SouthCenter Plaza property. A foreclosure sale was held on
September 9, 1994, and the first mortgagor was the only bidder at the
sale and became the owner of the property subject to a one-year
redemption period. The sale resulted in the loss of the Partnership's
investment in SouthCenter Plaza. The Partnership recorded a provision
for loss on operating property in fiscal 1993 equal to the excess of
the net book value of SouthCenter Plaza over the related mortgage
payable as of September 30, 1993.
27
<PAGE> 28
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(3) Mortgages Payable
Mortgages payable at September 30 are secured by real estate
investment properties and are comprised of the following:
<TABLE>
<CAPTION>
1995:
-----
Unamortized Balance
debt net of Interest Monthly Due
Property Principal discount discount rate payment date
-------- --------- -------- -------- -------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
La Risa $3,682,141 -- 3,682,141 10.625% 35,698 1/96(b)
Venetian Square
First 3,445,069 3,445,069 10.50% 39,098 10/97(e)
Second 33,733 (7,162)(a) 26,571 6.75%(c) 1,144(d) 4/98
---------- ------ ---------
$7,160,943 (7,162) 7,153,781
========== ======= =========
1994:
-----
La Risa $3,717,238 -- 3,717,238 10.625%
Venetian Square
First 3,594,572 (6,272)(a) 3,588,300 9.50%
Second 44,045 (9,741)(a) 34,304 6.75%(c)
---------- ------- ---------
$7,355,855 (16,013) 7,339,842
========== ======= =========
</TABLE>
All mortgages payable are secured solely by the respective properties
and are nonrecourse to the Partnership.
(a) Discount was based on market interest rate at the time of purchase of
12.5%.
(b) The Partnership extended the mortgage payable to January 1, 1996.
See note 6 for additional information.
(c) Average rate of bond issue.
(d) Paid semiannually in April and December.
(e) The Partnership extended the mortgage payable to October 1, 1997.
See note 6 for additional information.
28
<PAGE> 29
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(3) Continued
Aggregate maturities of principal payments for the five fiscal years
ending September 30, 2000 and thereafter are as follows:
<TABLE>
<S> <C>
1996 $3,807,045
1997 3,347,083
1998 6,815
1999 --
2000 --
----------
$7,160,943
==========
</TABLE>
For additional discussion of the Partnership's mortgages payable refer
to note 6.
(4) Transactions with Related Parties
BPL is the Managing Agent of the Partnership and is paid an annual fee
for its services. The annual fee is comprised of a property
management fee and a deferred acquisition fee. The property
management fee is equal to 5% of gross receipts from the Properties,
less management fees paid to others. The property management fee
earned by BPL amounted to $15,734, $38,635 and $41,830 for the years
ended September 30, 1995, 1994, and 1993, respectively. The deferred
acquisition fee is an annual fee equal to the sum of 2% of average
daily invested capital plus 1/2 of 1% of average daily liquid capital,
as defined. The deferred acquisition fee is payable for a maximum of
15 years and is limited in the aggregate to payments having a
discounted value equal to 14% of gross limited partner capital
contributions. Payments made over the 15-year period will be
discounted at 10% per year from the date of payment to May 2, 1983 in
determining whether the limit has been reached. Payments are limited
in the aggregate to $3,080,000. Since inception, the total discounted
deferred acquisition fee earned by the Managing General Partner is
approximately $2,224,000. The annual deferred acquisition fee earned
by BPL amounted to $140,364, $230,978 and $301,740 for the years ended
September 30, 1995, 1994, and 1993, respectively.
The Partnership also reimburses BPL for its allocable share of
salaries of nonmanagement and nonsupervisory personnel providing
accounting, investor reporting and communications, and legal services
to the Partnership and allowable expenses related to the maintenance
and repair of data processing equipment used for or by the
Partnership. The amount due to BPL for such reimbursements for the
years ended September 30, 1995, 1994, and 1993 amounted to $30,795,
$30,588 and $30,522, respectively.
29
<PAGE> 30
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(5) Future Rental Income
Aggregate base rental income relating to long-term noncancellable
leases for the Venetian Square Shopping Center for the five fiscal
years ending September 30, 2000 and thereafter is as follows:
<TABLE>
<S> <C>
1996 $ 806,436
1997 759,799
1998 565,373
1999 384,156
2000 1,212,391
----------
Thereafter $4,179,542
==========
</TABLE>
Certain other leases related to the Partnership's multifamily
apartment property are short term and cancelable upon notice by either
party and, accordingly, are not included in the above amounts.
(6) Liquidity and Debt Maturities
The Partnership is required under its Partnership Agreement to
maintain cash reserves of not less than 3% of aggregate capital
contributions for normal repairs, replacements, working capital and
other contingencies. As of September 30, 1995, the Partnership had
cash reserves of $836,140, while the required minimum amount was
$660,000.
During fiscal 1995, the payable to managing general partner increased
$126,622 to a total of $1,527,391 as of September 30, 1995. This
increase is the result of the accrual of fees and reimbursements
earned by the Managing General Partner in fiscal 1995 and cash
advances received from the Managing General Partner during fiscal 1995
totalling $92,977 and $33,645, respectively. The Managing General
Partner intends to apply cash flow generated from Partnership
operations in fiscal 1996, if any, to maintain the minimum required
cash reserves, as necessary, including any additional reserves to
cover remediation costs at Venetian Square Shopping Center.
Thereafter, the Partnership intends to pay the Managing General
Partner all unpaid cash advances made to the Partnership, all unpaid
administrative reimbursements and all deferred fees earned by the
Managing General Partner.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1996. However, there can
be no assurances that the Partnership will sell such Properties in
1996. As of September 30, 1995 and 1994, the remaining real estate
investments are classified as properties held for sale. The
Partnership has entered into listing agreements with unrelated real
estate brokerage firms to act as exclusive selling agents for the
properties. The Managing General Partner believes that both of these
sales will provide net proceeds to the Partnership after the payment
of sales costs, closing costs and mortgages payable; however, these
sales transactions may include both cash at closing and deferred
payments to the Partnership. The ability of the Partnership to sell
Venetian Square Shopping Center may be adversely affected by the
potential remediation costs of the petroleum contamination of the
property. The Partnership
30
<PAGE> 31
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
intends to apply net sales proceeds to maintain the Partnership's
minimum required cash reserves, as necessary, including any additional
reserves to cover potential remediation costs. Thereafter, the
Partnership intends to pay amounts owed to the Managing General
Partner and to make distributions to limited partners.
During fiscal 1995 the Partnership entered into a loan extension
agreement with MBL Life Assurance Corporation ("MBL") to extend the
mortgage payable for La Risa Apartments through January 1, 1996 under
similar terms and conditions as the original loan agreement. An
additional extension of this loan would facilitate the Partnership's
efforts to sell the property in 1996, with a portion of the sales
proceeds being utilized to pay all principal and interest owed to MBL
at that time. There can be no assurances that the Managing General
Partner will be able to obtain such an extension. If the Partnership
is unable to obtain an extension, the mortgage payable for La Risa
Apartments will be due and payable on January 1, 1996. In this
circumstance, if the Partnership does not pay off the mortgage, the
Partnership will be in default, entitling MBL to exercise its
available remedies, including foreclosure of the property.
Subsequent to September 30, 1995, the Partnership entered into a
letter agreement with Great West Life Assurance Company (Great West)
to extend the maturity date of the first mortgage payable secured by
Venetian Square Shopping Center to October 1, 1997. Under the
agreement, the Partnership was obligated to pay a $20,000 fee, the
interest rate was increased to 10.5% and the monthly payment was
increased to $39,098 effective October 1, 1995.
31
<PAGE> 32
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
September 30, 1995, 1994 and 1993
(7) Environmental Contingency
From approximately 1979 through 1990 a card-lock fueling station had
been operated on a parcel of land adjacent to and a part of Venetian
Square Shopping Center. In 1990, operation of the fueling station
ceased, and in fiscal 1991 the Partnership determined that it would be
permanently closed. In compliance with the California and San Joaquin
County environmental regulatory requirements, the Partnership
contracted with an environmental engineering firm to perform Phase I
and Phase II environmental site assessments on this specific parcel of
land. The results of those site assessments suggested that the site
may contain petroleum contaminants. In fiscal 1992, the Partnership
contracted for the excavation and removal of the three underground
fuel storage tanks located on this parcel of land. Upon excavation
and removal of those underground fuel storage tanks, leakage of
petroleum contaminants was discovered through performance of soil and
groundwater tests. The Partnership retained California legal counsel
and contracted with an environmental engineering firm (EEF) to perform
further site analysis and to determine the proximate cause and extent
of any contaminants. In the first quarter of fiscal 1993, the
Partnership received the Preliminary Site Assessment report (the PSA)
from the EEF detailing the results of its Phase II soil and
groundwater sampling and analysis, as well as the EEF's recommendation
for further action. In working with the San Joaquin County Public
Health Services/Environmental Health Division (San Joaquin), the
Partnership received approval to proceed with quarterly groundwater
monitoring of the site for a term of one year which was completed as
of December 31, 1993. An Evaluation of Remedial Alternatives For
Petroleum Hydrocarbon Impacted Soil (the Report) was submitted to San
Joaquin for further review and comments. San Joaquin notified the
Partnership that the remedial alternative consisting primarily of soil
vapor extraction complies with regulatory requirements and requested
that the Partnership submit a work plan to the regulatory agency which
will include the proposed actions and proposed schedule for
implementation and operation of the soil vapor extraction system.
However, the Partnership has been advised that groundwater
contamination has also occurred and the Partnership is in the process
of determining the method, cost and timing of required soil and
groundwater remediation measures. The Partnership has spent
approximately $405,000 to date in evaluating the remediation program.
Management is unable at this time to estimate the full extent of
additional expenses that may be incurred. Due to groundwater
contamination, the Partnership may incur significant additional
remediation costs. Accordingly, the accompanying financial statements
do not include any adjustments that reflect the results of the
ultimate resolution of this uncertainty.
The Partnership has contacted all previous and current insurance
companies which have underwritten insurance coverages for Venetian
Square. The Partnership intends to determine with these insurance
companies the extent of the Partnership insurance coverage, if any,
related to the environmental matters at Venetian Square. There can be
no assurances that any insurance coverage will be available to the
Partnership related to these matters.
32
<PAGE> 33
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements with
accountants on any matter of accounting principles or practices on financial
statement disclosure or auditing scope or procedure.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have directors or executive officers.
The general partner of the Partnership's Managing General Partner and Associate
General Partner is BPL Holdings, Inc. (BPL Holdings), a Delaware corporation.
During fiscal 1995, the ultimate parent company of BPL Holdings (Kemper
Securities Holdings, Inc.) experienced a change in ownership, whereby it became
a wholly-owned subsidiary of EVEREN Capital Corporation and changed its name to
EVEREN Securities Holdings, Inc. (ESHI). EVEREN Securities, Inc. is a
wholly-owned subsidiary of ESHI. These changes have had no impact on the
day-to-day operations of BPL Holdings. The following is a list of the
directors and officers of BPL Holdings.
Present Position and Principal Occupation and
Name and Age Affiliation During the Last 5 years or More
Janet L. Reali Director, President and Principal Executive Officer
Age: 44 of BPL Holdings,Inc.
Ms. Reali was elected Executive Vice President
and Secretary of EVEREN Capital Corporation in May
1995. Since December 1993 she has been Executive Vice
President, Corporate Counsel and Corporate Secretary of
EVEREN Securities, Inc. She was became a
Director and the President of BPL Holdings, Inc. in
May 1995. She was Senior Vice President and Associate
General Counsel of EVEREN Securities, Inc. from July
1991 to December 1993. Before joining EVEREN
Securities, Inc., she was a partner in the Chicago
law firm of Keck, Mahin & Cate.
Stanley R. Fallis Director of BPL Holdings, Inc.
Age: 54 Mr. Fallis graduated from the University of Idaho
with a BS degree in accounting. Mr. Fallis also
obtained an MBA degree from the University of Utah.
Mr. Fallis is a Certified Public Accountant and
practiced public accounting for six years. Mr. Fallis
has been associated with Boettcher & Co. for 18 years
and is currently Senior Executive Vice President and
Chief Financial Officer as well as Director of
Administration of EVEREN Securities, Inc.
Daniel D. Williams Director and Vice President of BPL Holdings, Inc.
Age: 44 Mr. Williams became a Director and Vice President of
BPL Holdings, Inc. in May 1995. Mr. Williams was
elected Senior Executive Vice
33
<PAGE> 34
President, Treasurer and Chief Financial Officer
of EVEREN Capital Corporation in May 1995. Since April
1995 he has been Senior Executive Vice President and
Chief Financial Officer of EVEREN Securities, Inc. From
January 1994 to April 1995, Mr. Williams was Executive
Vice President and Director of Finance and
Administration and from January 1991 to January 1994 he
was Senior Vice President and Director of Accounting of
EVEREN Securities, Inc. Prior thereto, he was
Executive Vice President, Treasurer and Chief
Financial Officer of Boettcher & Co.
Kelly J. Stradinger Vice President and Secretary of BPL Holdings, Inc.
Age: 36 Mr. Stradinger joined BPL in 1983 as Assistant
Controller for the syndicated public real estate
partnerships. Mr. Stradinger is currently in charge of
asset management for all syndicated partnerships where
BPL or an affiliate is the general partner. He is also
a Vice President of EVEREN Securities, Inc., and
Director of Leasing for the facilities management
department. Mr. Stradinger graduated from Western
Michigan University with a Bachelor of Business
Administration in Accounting and successfully
completed the Certified Public Accountant exam.
Thomas M. Mansheim Director and Treasurer of BPL Holdings, Inc.
Age: 38 (Principal Financial and Accounting Officer of the
Partnership)
Mr. Mansheim joined BPL in 1984 and is currently
a Senior Vice President with EVEREN Securities, Inc.
He became a Director and the Treasurer of BPL Holdings,
Inc. Mr. Mansheim is a Certified Public Accountant and
from 1980 to 1984 was employed with KPMG Peat Marwick.
Mr. Mansheim graduated from the University of Colorado
with a Bachelor of Science degree in business
administration.
There is no family relationship among the officers or directors of BPL
Holdings or any of its affiliates.
34
<PAGE> 35
Item 11. EXECUTIVE COMPENSATION
The Partnership, as an entity, does not have any directors or
executive officers. The information required by Item 402 of Regulation S-K
relating to amounts owed by the Partnership to the Managing General Partner and
its affiliates for services rendered during the fiscal year ended September 30,
1995 is presented below. Reference is also made to Note 4 to Financial
Statements as contained in Item 8 of this report for a description of related
parties.
<TABLE>
<CAPTION>
Total
Capacities in Which Cash Deferral Fees
Name of Entity Compensation was Earned Paid of Fees Earned
- -------------- ----------------------- ---- ------- ------
<S> <C> <C> <C> <C>
Boettcher
Properties, Ltd. Deferred Acquisition Fee $ -- 140,364 140,364
Boettcher
Properties, Ltd. Property Management Fee 6,267 9,467 15,734
Boettcher Reimbursement of direct general
Properties, Ltd. and administrative expenses 15,294 15,501 30,795
</TABLE>
No form of non-cash remuneration was paid by the Partnership. See
Item 13 below with respect to a description of certain transactions of the
General Partners and their affiliates with the Partnership.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
To the knowledge of the Partnership, no person or group owns of record
or beneficially more than 5% of the outstanding Units.
The Partnership has no directors or executive officers. To the
knowledge of the Partnership, no directors or officers of the Managing General
Partner or its affiliates own any Units.
There exists no arrangement, known to the Partnership, the operation
of which may at a subsequent date result in a change in control of the
Partnership.
35
<PAGE> 36
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no directors or executive officers. The
information required by Item 404 of Regulation S-K is set forth in Item 11.
Executive Compensation as contained in this report.
The Partnership has a Management Agreement with the Managing General
Partner pursuant to which the Managing General Partner is responsible for
performing the day-to-day investment and administrative operations of the
Partnership and supervising the management and operation of the Partnership's
properties. For such services and for services rendered in connection with the
acquisition of the Partnership's properties, the Managing General Partner is
entitled to receive annual fees comprised of a Deferred Acquisition Fee and a
Property Management Fee as more fully discussed in Note 4 to the Financial
Statements as contained in Item 8 of this report. The Managing General Partner
earns such fees for services provided to the Partnership pursuant to the
Management Agreement and not by reason of its Partnership interest. The
Managing General Partner earned a Deferred Acquisition Fee of $140,364 and a
Property Management Fee of $15,734 for the fiscal year ended September 30,
1995.
Pursuant to the Partnership Agreement, the Managing General Partner
may be reimbursed by the Partnership for certain of its costs, including
reimbursements for its allocable share of salaries of nonmanagement and
nonsupervisory personnel providing accounting, investor reporting and
communications and legal services to the Partnership, and the maintenance and
repair of data processing equipment used for or by the Partnership. Pursuant
to such provision, for services provided during the fiscal year ended September
30, 1995, the Managing General Partner is entitled to receive reimbursements
aggregating $30,795.
The Partnership Agreement provides for the net operating income or
loss of the Partnership to be allocated as follows: (i) to the limited
partners to the extent necessary to satisfy the 8% Current Distribution
Preference, as defined (an amount equal to 8% of the daily average aggregate
adjusted capital contributions of the limited partners) and (ii) 1% of the
remainder to the General Partners and 99% to the limited partners. Net
operating losses are allocated 1% to the General Partners and 99% to the
limited partners.
The Partnership Agreement provides for net capital income from the
sale or other disposition of Partnership properties to be allocated on a
cumulative basis as follows: (i) 1% to the General Partners and 99% to the
limited partners to the extent of depreciation deductions taken from the
inception of the partnership, (ii) to the limited partners to the extent
necessary to satisfy the Net Proceeds Distribution Preference, as defined (an
amount equal to the sum of limited partner capital contributions not yet
returned and any unsatisfied 8% current Distribution Preference from prior
periods) and (iii) 25% of the remainder to the General Partners and 75% to the
limited partners. Net capital loss is allocated 1% to the General Partners and
99% to the limited partners.
36
<PAGE> 37
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) (1) Financial Statements
The following Financial Statement of the Partnership
are included herein:
Independent Auditors' Report
Balance Sheets - September 30, 1995 and 1994
Statements of Operations -
Years ended September 30, 1995, 1994 and 1993
Statements of Partners' Capital (Deficit) -
Years ended September 30, 1995, 1994 and 1993
Statements of Cash Flows -
Years ended September 30, 1995, 1994 and 1993
Notes to Financial Statements
(2) Financial Statement Schedule
Independent Auditor's Report
Schedule III - Real Estate and Accumulated
Depreciation - September 30, 1995
Schedules, other than the one listed, are omitted
for the reason that they are inapplicable or
equivalent information has been included elsewhere
herein.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant
during the last quarter of the fiscal year covered by
this report.
37
<PAGE> 38
(c) Exhibits
Number Exhibit
------ -------
4 Limited Partnership Agreement of Registrant(1)
10.1 Management Agreement (1)
10.2 La Risa Apartments Purchase and Sale
Agreement (2)
10.3 Venetian Square Shopping Center Purchase and
Sale Agreement(2)
10.4 Southcenter Office Building Purchase and Sale
Agreement (2)
10.5 La Paz Apartments Purchase and Sale Agreement(3)
10.6 Maryland Villa Apartments Purchase and Sale
Agreement (3)
10.7 Los Compadres Apartments Purchase and Sale
Agreement (3)
10.8 Loan Extension Agreement for Los Compadres
Apartments dated August 27, 1993 (5)
10.9 Letter Agreement for Loan Extension for Los
Compadres Apartments dated as of December 17,
1993 (5)
10.10 Loan Extension Agreement for La Paz Apartments
dated August 27, 1993 (5)
10.11 Letter Agreement for Loan Extension for La Paz
Apartments dated as of December 17, 1993 (5)
10.12 Loan Extension Agreement for Maryland Villa
Apartments dated August 27, 1993 (5)
10.13 Letter Agreement for Loan Extension for
Maryland Villa Apartments dated as of December
17, 1993 (5)
10.14 Los Compadres Apartments Purchase and Sale
Agreement dated January 11, 1994 (6)
10.15 La Paz Apartments Purchase and Sale Agreement
dated January 11, 1994 (6)
10.16 Maryland Villa Apartments Purchase and Sale
Agreement dated January 11, 1994 (6)
10.17 First Amendment to Purchase and Sale Agreements
for Los Compadres, La Paz and Maryland Villa
Apartments dated February 18, 1994 (6)
27 Financial Data Schedule
38
<PAGE> 39
(c) Exhibits (continued)
Number Exhibit
------ -------
28.1 Complaint for Judicial Foreclosure of
Mortgage Dated May 27, 1993 (4)
28.2 Motion for Appointment of Receiver Dated May
27, 1993 (4)
28.3 Objection to Order to Show Cause Dated June
3, 1993 (4)
28.4 Order Appointing Receiver in Aid of
Foreclosure Dated June 7, 1993(4)
28.5 Motion for Order of Default, Order of Summary
Judgement, and Entry of Judgement of
Foreclosure of Mortgage Dated August 10, 1993(5)
28.6 Second Extension and Modification Agreement
dated December 28, 1994
(1) Incorporated by reference to Exhibit No. 3.1
and Exhibit 10 to Amendment No. 2 to Form
S-11 Registration Statement filed May 2, 1983
- File No. 2-82570.
(2) Incorporated by reference to Registrant's
Reports on Form 8-K dated October 18, 1983,
December 9, 1983 and April 27, 1984,
respectively.
(3) Incorporated by reference to Registrant's
Report on Form 8-K dated October 16, 1984.
(4) Incorporated by reference to Registrant's
Report on Form 8-K dated June 7, 1993.
(5) Incorporated by reference to Registrant's
Report on Form 10-K dated September 30, 1993.
(6) Incorporated by reference to Registrant's
Report on Form 8-K dated February 18, 1994.
(7) Incorporated by reference to Registrant's
Report on Form 10-Q dated February 13, 1995.
39
<PAGE> 40
INDEPENDENT AUDITORS' REPORT
THE PARTNERS
BOETTCHER WESTERN PROPERTIES III LTD.:
Under date of November 22, 1995, we reported on the balance sheets of Boettcher
Western Properties III Ltd. (a limited partnership) as of September 30, 1995
and 1994, and the related statements of operations, partners' capital
(deficit), and cash flows for each of the years in the three-year period ended
September 30, 1995, as contained in the Partnership's annual report on Form
10-K for the year 1995. In connection with our audits of the aforementioned
financial statements, we also audited the related financial statement Schedule
III - Real Estate and Accumulated Depreciation. This financial statement
schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audit.
In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
The audit report on the financial statements of Boettcher Western Properties
III Ltd. referred to above contains an explanatory paragraph that states that
management of the Partnership has determined that one of the Partnership's real
estate properties has environmental contamination. Management is evaluating
the extent of such contamination and the remediation of the property and has
accrued certain remediation costs. However, management is currently unable to
determine the full extent of the remediation measures and the related total
cost. Accordingly, the financial statements do not include any additional
adjustments, if any, relating to the ultimate outcome of this uncertainty.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 22, 1995
40
<PAGE> 41
BOETTCHER WESTERN PROPERTIES III, LTD.
(A Limited Partnership)
SCHEDULE III - Real Estate and Accumulated Depreciation
September 30, 1995
<TABLE>
<CAPTION>
Costs capitalized
PROPERTIES Initial cost (a) and (b Subsequent to acquisition
---------- -------------------------------------------------------------------------------------------
Land and Buildings Equipment Land and Buildings Equipment
Mortgage improve- and and improve- and and
Payable (b) ments Improvements Furnishings ments Improvements Furnishings
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENTS:
La Risa
San Antonio, Texas $3,682,141 1,521,826 4,720,400 113,546 - 251,864 637,419
SHOPPING CENTER:
Venetian Square
Stockton, California 3,471,640 1,591,361 5,719,350 - 43,591 554,868 -
---------- --------- --------- ------- ------ ------- -------
Balances at
September 30, 1995 $7,153,781 3,113,187 10,439,750 113,546 43,591 806,732 637,419
</TABLE>
Notes:
(a) La Risa and Venetian Square were purchased during the period ended
September 30, 1984.
(b) Net of debt discount.
(c) Reconciliation of the total amount at which real estate was carried:
<TABLE>
<CAPTION>
Balance at September 30,
------------------------
1995 1994
---- ----
<S><C>
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . $15,040,676 $34,504,544
Additions during period:
Acquistions through foreclosure . . . . . . . . . 0 0
Other acquisitions. . . . . . . . . . . . . . . . 0 0
Improvements, etc.. . . . . . . . . . . . . . . . $113,549 $196,960
Other (describe). . . . . . . . . . . . . . . . . 0 0
-------- --------
113,549 196,960
---------- ----------
15,154,225 34,701,504
Deductions during period:
Cost of real estate sold. . . . . . . . . . . . . 0 19,660,828
Other (describe). . . . . . . . . . . . . . . . . 0 0
-------- ----------
0 19,660,828
---------- ----------
Balance at close of period. . . . . . . . . . . . . . . . . . . . . $15,154,225 $15,040,676
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross amount at close Life on which
PROPERTIES of period (a) and (b) depr. is computed
---------- ----------------------------------------------------------------------------------------------------------
Land and Buildings Equipment Date of Date of Buildings Equipment
improve- and and Accumulated construc- acquisi- and and
ments Improvements Furnishings Total depreciation tion tion Improvements Furnishings
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
APARTMENTS:
La Risa
San Antonio, Texas 1,521,826 4,972,264 750,965 7,245,055 (2,445,457) 1972 18-Oct-83 30 years 5 years
SHOPPING CENTER:
Venetian Square
Stockton, California 1,634,952 6,274,218 - 7,909,170 (2,388,296) 1979 09-Dec-83 30 years 5 years
--------- --------- ------- --------- -----------
Balances at
September 30, 1995 3,156,778 11,246,482 750,965 15,154,225 (4,833,753)
========= ========== ======= ========== ===========
</TABLE>
<TABLE>
<S><C>
(c) Reconciliation (continued)
Reconciliation of the total amount of accumulated depreciation:
Balance at September 30,
------------------------
1995 1994
---- ----
Balance at beginning of period . . . . . . . . . . . . . . ($4,382,580) ($9,609,356)
Additions during period:
Depreciation expense . . . . . . . . . . ($451,174) ($743,200)
Other (describe). . . . . . . . . . . . 0 0
--------- ---------
(451,174) (743,200)
---------- -----------
(4,833,754) (10,352,556)
Deductions during period:
Cost of real estate sold. . . . . . . . 0 (5,969,976)
Other (describe). . . . . . . . . . . . 0 0
--------- ----------
0 (5,969,976)
----------- -----------
Balance at close of period. . . . . . . . . . . . . . . . ($4,833,754) ($4,382,580)
=========== ===========
</TABLE>
(d) No item of real estate investment has been written down or
reserved against.
(e) The aggregate cost for Federal income tax purposes at
September 30, 1995 is $16,346,743.
(f) No intercompany profits are included in the total of column E.
See accompanying independent auditors' report.
<PAGE> 42
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.
BOETTCHER WESTERN PROPERTIES III LTD.
(Registrant)
By: Boettcher Properties, Ltd.,
Managing General Partner
By: BPL Holdings, Inc.,
General Partner
By: /s/Thomas M. Mansheim
---------------------
Treasurer
Dated: December 29, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons (constituting a
majority of the Directors of the corporate general partner of the Registrant's
Managing General Partner) on the 29th day of December, 1995 in the capacities
indicated below.
Name Capacities
JANET L. REALI Director and President of BPL Holdings,
Inc.; Principal Executive Officer of the
Partnership
By: /s/ Janet L. Reali Dated: December 29, 1995
-------------------------
Janet L. Reali
DANIEL D. WILLIAMS Director and Vice President of BPL
Holdings, Inc.
By: /s/ Daniel D. Williams Dated: December 29, 1995
-------------------------
Daniel D. Williams
THOMAS M. MANSHEIM Director and Treasurer of BPL Holdings,
Inc.; Principal Financial and Accounting
Officer of the Partnership
By: /s/ Thomas M. Mansheim Dated: December 29, 1995
-------------------------
Thomas M. Mansheim
42
<PAGE> 43
No annual report or proxy material has been sent to the
limited partners of the Partnership. An annual report will be sent to the
limited partners subsequent to this filing and the Partnership will furnish
copies of such report to the Commission when it is sent to the limited
partners.
43
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000716822
<NAME> BOETTCHER WESTERN PROPERTIES III LTD.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 836,140
<SECURITIES> 0
<RECEIVABLES> 187,545
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,154,225
<DEPRECIATION> (4,833,753)
<TOTAL-ASSETS> 11,665,669
<CURRENT-LIABILITIES> 0
<BONDS> 7,153,781
0
0
<COMMON> 0
<OTHER-SE> 2,397,229
<TOTAL-LIABILITY-AND-EQUITY> 11,665,669
<SALES> 0
<TOTAL-REVENUES> 2,508,536
<CGS> 0
<TOTAL-COSTS> 2,655,431
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 807,298
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (146,895)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (146,895)
<EPS-PRIMARY> (6.61)
<EPS-DILUTED> (6.61)
</TABLE>
