<PAGE> 1
Total # of Pages: 17
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 March 31, 1996
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 0-11502
--------
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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
77 West Wacker Drive
Chicago, Illinois 60601
- ---------------------------------------- -------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (312) 574-6000
---------------
Indicate by checkmark 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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
<PAGE> 2
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets - March 31, 1996
and September 30, 1995 3
Statements of Operations - Three and six months
ended March 31, 1996 and 1995 4
Statement of Partners' Capital - Six
months ended March 31, 1996 5
Statements of Cash Flows - Six months
ended March 31, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART III. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURE 17
</TABLE>
2
<PAGE> 3
PART I. Financial Information
Item 1. Financial Statements
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
---------- ---------------
Assets
------
<S> <C> <C>
Real estate investments, at gross cost
Properties held for sale $ 8,687,577 $ 16,346,743
Less discount on related debt (778,407) (1,192,518)
------------ ------------
7,909,170 15,154,225
Less accumulated depreciation (2,494,125) (4,833,753)
------------ ------------
5,415,045 10,320,472
Cash and cash equivalents at cost, which
approximates market value 1,168,296 836,140
Accounts receivable and other assets 166,907 187,545
Property tax and other escrow deposits - 111,511
Debt issuance costs, net of accumulated
amortization of $26,627 and $154,874,
respectively 20,456 35,647
Deferred leasing costs, net of accumulated
amortization of $443,312 and $427,988,
respectively 179,479 174,354
------------ ------------
$ 6,950,183 $ 11,665,669
============ ============
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $5,851 and $7,162,
respectively $ 3,368,383 $ 7,153,781
Payable to managing general partner 530,194 1,527,391
Accounts payable and accrued expenses 291,067 322,420
Property taxes payable 21,238 140,902
Tenants' deposits 43,846 70,533
Unearned rental income 2,994 19,728
Accrued interest payable 854 33,685
------------ ------------
Total liabilities 4,258,576 9,268,440
------------ ------------
Commitments and Contingencies
Partners' capital
General partners (113,368) (126,310)
Limited partners 2,804,975 2,523,539
------------ ------------
Total partners' capital (deficit) 2,691,607 2,397,229
------------ ------------
$ 6,950,183 $ 11,665,669
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Operations
Three and Six Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
---------------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Rental income $ 407,763 509,649 924,978 1,065,282
Tenant reimbursements for
common area charges,
insurance and taxes 58,534 68,953 141,354 138,747
Other income 20,223 17,163 38,547 48,954
---------- --------- ---------- ---------
486,520 595,765 1,104,879 1,252,983
---------- --------- ---------- ---------
Expenses:
Interest, including
amortization of debt
discount and debt
issuance costs 154,154 216,410 343,921 406,745
Depreciation 95,262 113,349 211,397 225,747
Property taxes 40,380 63,993 102,838 127,644
Fees and reimbursements to
managing general partner 39,726 45,325 84,362 88,764
Other management fees 20,738 27,077 49,588 58,975
Salaries of on-site property
managers 31,413 42,790 62,888 72,588
Repairs and maintenance 49,620 70,210 100,975 150,883
Utilities 18,104 28,382 52,956 62,135
Other administrative 61,390 60,842 124,475 135,676
Environmental costs 3,005 50,227 6,906 61,167
---------- --------- ---------- ---------
513,792 718,605 1,140,306 1,390,324
---------- --------- ---------- ---------
Operating loss (27,272) (122,840) (35,427) (137,341)
Gain on sale of real estate investment 1,329,705 - 1,329,705 -
---------- --------- ---------- ---------
Net earnings (loss) $1,302,433 (122,840) 1,294,278 (137,341)
========== ========= ========== =========
Net earnings (loss) per limited
partnership unit $ 58.61 (5.53) 58.24 (6.18)
========== ========= ========== =========
Weighted average number of
limited partnership units
outstanding 22,000 22,000 22,000 22,000
========== ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statement of Partners' Capital
Six Months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total
General Limited partners'
partners partners capital
-------- -------- -------
<S> <C> <C> <C>
Balances at October 1, 1995 $(126,310) 2,523,539 2,397,229
Distributions to limited partners - (999,900) (999,900)
Net earnings for the six months
ended March 31, 1996 12,942 1,281,336 1,294,278
--------- --------- ---------
Balances at March 31, 1996 $(113,368) 2,804,975 2,691,607
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Six Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 1,294,278 (137,341)
Adjustments to reconcile net loss to
net cash provided by operating activities
Depreciation and amortization 264,078 285,422
Gain on sale of property (1,329,705) -
Change in assets and liabilities:
Decrease in accounts receivable and other assets 20,638 44,197
Decrease in property tax and other escrow deposits 111,511 58,374
Decrease in payable to managing general
partner relating to operations (997,197) (5,152)
Decrease in accounts payable and accrued expenses (31,361) (18,303)
Decrease in property taxes payable (119,664) (77,252)
Decrease in tenants' deposits (26,687) (5,410)
Decrease in unearned rental income (16,734) (16,562)
Increase (decrease) in accrued interest payable (32,831) 35
----------- --------
Net cash provided by (used by)
operating activities (863,674) 128,008
----------- --------
Cash flows used by investing activities:
Additions to real estate investments (6,415) (51,739)
Deferred leasing costs (37,614) (7,499)
Proceeds from sale of property
net of closing costs and other costs of sale 6,036,740 -
----------- --------
Net cash provided by (used by)
investing activities 5,992,711 (59,238)
----------- --------
Cash flows used in financing activities:
Advances from managing general partner - 10,557
Increase in debt issuance costs - (48,398)
Reductions in mortgage principal (3,796,981) (114,982)
Distributions to limited partners (999,900) -
----------- --------
Net cash used by
financing activities (4,796,881) (152,823)
----------- --------
Net increase (decrease) in cash and cash equivalents 332,156 (84,053)
Cash and cash equivalents at September 30 836,140 694,828
----------- --------
Cash and cash equivalents at March 31 $ 1,168,296 610,775
=========== ========
Supplemental disclosure of cash flow information:
Interest paid in cash during the
six month period $ 376,752 343,927
=========== ========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
BOETTCHER WESTERN PROPERTIES III LTD.
(A LIMITED PARTNERSHIP)
Notes to Financial Statements
March 31, 1996
(Unaudited)
(1) Financial Statement Adjustments and Footnote Disclosure
The accompanying financial statements are unaudited. However, Boettcher
Properties, Ltd. the Managing General Partner of Boettcher Western Properties
III Ltd. (the "Partnership"), believes all material adjustments necessary for a
fair presentation of the interim financial statements have been made. Certain
information and footnotes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to Securities and Exchange Commission rules and regulations. The
Managing General Partner believes the disclosures made are adequate to make the
information not misleading and suggests that the condensed financial statements
be read in conjunction with the financial statements and notes thereto included
in the Boettcher Western Properties III Ltd. September 30, 1995 Annual Report.
(2) Significant Accounting Principles
Deferred Leasing Costs
Costs associated with the leasing of the Partnership's shopping center are
deferred and amortized over the life of the related leases and are recorded at
cost. 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 liability for such
taxes is that of the partners rather than the Partnership. The Partnership
reports certain transactions differently for tax and financial statement
purposes, primarily depreciation and debt discount.
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.
Debt Discount and Debt Issuance Costs
Debt discount is amortized to interest expense using the level-interest-yield
method over the term of the related debt.
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.
7
<PAGE> 8
BOETTCHER WESTERN PROPERTIES III LTD.
(A LIMITED PARTNERSHIP)
Notes to Financial Statements
March 31, 1996
(Unaudited)
Statements of Cash Flows
For purposes of the Statements 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 at
March 31:
<TABLE>
<CAPTION>
1996 1995
-------------- ------------
<S> <C> <C>
Money Market $1,103,642 $510,048
Operating Cash 64,654 100,727
---------- --------
Cash and Cash Equivalents $1,168,296 610,775
========== ========
</TABLE>
(3) Transactions with Related Parties
Deferred Acquisition Fee: Pursuant to the Management Agreement, the Managing
General Partner receives an annual fee for acquisition services provided to the
Partnership for each fiscal year equal to (a) 2% of the average daily Aggregate
Capital Investment Account plus (b) 1/2 of 1% of the average daily Capital Cash
Account, as those terms are defined in the Limited Partnership Agreement.
Payments may be made for the lesser of 15 years or until the limit on payments
is reached. For the quarter ended March 31, 1996 the amount earned by the
Managing General Partner was $29,944.
Property Management Fee: In accordance with the provisions of the Management
Agreement, property management fees are payable to the Managing General
Partner, regardless of the profitability of the Partnership, equal to 5% of the
actual gross receipts from the properties reduced by management fees paid to
others. For the quarter ended March 31, 1996 the amount earned by the Managing
General Partner was $3,199.
Direct Services: The Managing General Partner and its affiliates provide
various services directly related to the operations of the Partnership and its
properties. The Partnership reimburses the Managing General Partner and its
affiliates for its allocable share of salaries of nonmanagement and
nonsupervisory personnel providing accounting, investor reporting and
communications, and legal services to the Partnership; as well as allowable
expenses related to the maintenance and repair of data processing equipment
used for or by the Partnership. For the quarter ended March 31, 1996 such
reimbursements totaled $6,584.
8
<PAGE> 9
BOETTCHER WESTERN PROPERTIES III LTD.
(A LIMITED PARTNERSHIP)
Notes to Financial Statements
March 31, 1996
(Unaudited)
(4) Sale of Real Estate Investment
On February 29, 1996 the Partnership sold the land, related improvements and
personal property of La Risa Apartments ("La Risa"). The purchaser, ALT
Affordable Housing Service, Inc. is not affiliated with the Partnership, its
Managing General Partner or any affiliate, director, officer or associate of
the foregoing, and the sales price was determined by arm's length negotiations.
The net proceeds to the Partnership, before proration of operating income and
expenses related to the property, were as follows:
<TABLE>
<S> <C> <C>
Sales Price $ 6,440,000
Less:
Costs of sale:
Sales commissions (223,453)
Closing costs (title fees, legal and other) (74,400)
Tenant security deposit liability (33,040)
Mortgage payoff (3,692,414) (4,023,307)
-----------
Net Proceeds $ 2,416,693
===========
The net proceeds were utilized as follows:
Distribution to limited partners ($45.45/unit) $ 999,900
Partial repayment of cash advances, reimbursement and
deferred fees to the Managing General Partner 1,000,000
Addition to Partnership cash reserves 416,793
-----------
$ 2,416,693
===========
</TABLE>
(5) 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 March
31, 1996, the Partnership had reserves of $1,168,296 while the required minimum
amount was $660,000.
For the six months ended March 31, 1996, the payable to Managing General
Partner decreased $997,197 to a total of $530,194. This decrease is the net
result of payments to (advances from) the Managing General Partner totaling
$1,081,560, and the accrual of fees and reimbursements earned by the Managing
General Partner in the first six months of fiscal 1996 in the amount of
$84,363. 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 ("Venetian"). See
Note 6 for further discussion of these remediation costs.
9
<PAGE> 10
BOETTCHER WESTERN PROPERTIES III LTD.
(A LIMITED PARTNERSHIP)
Notes to Financial Statements
March 31, 1996
(Unaudited)
Thereafter, the Partnership intends to pay the Managing General Partner all
deferred fees earned by the Managing General Partner which total $530,194, as
of March 31, 1996.
The Managing General Partner is attempting to sell the Partnership's remaining
real estate investment in fiscal 1996. However, there can be no assurances
that the Partnership will sell such property in 1996. As of March 31, 1996,
the Partnership has recorded its remaining real estate investment as property
held for sale. The Partnership has entered into a listing agreement with an
unrelated real estate brokerage firm to act as the exclusive selling agent for
Venetian. The Managing General Partner believes that such sale would provide
net proceeds to the Partnership after the payment of sales costs, closing costs
and mortgages payable; however, this sale transaction may include both cash at
closing and deferred payments to the Partnership. The ability of the
Partnership to sell Venetian may be adversely affected by the potential
remediation costs of the petroleum contamination on a parcel of land adjacent
to and part of the property. The Partnership intends to apply net sales
proceeds to pay all remaining liabilities identified by the Managing General
Partner arising out of or in connection with the operations of the Partnership
and the sale of Venetian, including amounts owed to the Managing General
Partner. Thereafter, all remaining cash reserves of the Partnership will be
utilized to first pay the costs of liquidation and dissolution of the
Partnership, and then to make a final distribution to limited partners.
On October 24, 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 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.
(6) Environmental Contingency
From approximately 1979 through 1990, a card-lock fueling station had been
operated on a parcel of land adjacent to and part of Venetian. In fiscal 1992,
upon removal of the three underground fuel storage tanks, leakage of petroleum
contaminants was discovered through performance of soil and groundwater tests.
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 $541,000 to date, including an accrual of $250,000, 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. 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. There can be no assurances that any insurance coverage
will be available to the Partnership related to these matter.
10
<PAGE> 11
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
For the three and six months ended March 31, 1996, the Partnership
generated total revenue of $486,520 and $1,104,879 and incurred total expenses
of $513,792 and $1,140,306, resulting in an operating loss of $27,272 and
$35,427, respectively. This represents an improvement in the Partnership's
operating loss for the three and six months ended March 31, 1996 of $95,568
(78%) and $101,914 (74%), respectively, when compared with the corresponding
periods of fiscal 1995. A gain on the sale of real estate investment, La Risa
Apartments ("La Risa"), in the amount of $1,329,705 was recorded in the second
quarter of fiscal 1996, as more fully discussed in Note 4 of the financial
statements contained in Item 1. Due to the gain on sale of La Risa, the
Partnership generated net earnings for the three and six months ended March 31,
1996 of $1,302,433 and $1, 294,278, respectively. The Partnership generated
decreased total revenue, primarily rental and other income, and decreased total
expenses in all categories for the six months ended March 31, 1996, primarily
due to the sale of La Risa. A summary of the Partnership's operations and
period-to-period comparisons before gain on sale of La Risa is presented below.
<TABLE>
<CAPTION>
Three Months Ended March 31 Six Months Ended March 31
--------------------------- -------------------------
(In Thousands) (In Thousands)
Amount Amount
of % of %
1996 1995 Change Change 1996 1995 Change Change
---- ----- ------ ------ ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue $487 596 (109) (18%) $1,105 1,253 (148) (12%)
Total expenses 514 719 (205) (29%) 1,140 1,390 (250) (18%)
---- ----- ---- ------ ----- ----
Net operating loss (27) (123) 96 78% (35) (137) 102 75%
==== ===== ==== ====== ===== ====
</TABLE>
For the three and six months ended March 31, 1996, the Partnership
generated total revenue of $486,520 and $1,104,879, which represent decreases
of $109,245 (18%) and $148,104 (12%), respectively, when compared with the
corresponding periods of fiscal 1995, primarily the consequence of the La Risa
sale. Rental income generated by the Partnership's properties for the three
and six month periods in fiscal 1996 decreased $101,886 (20%) and $140,304
(13%), when compared with fiscal 1995, primarily the result of one less month
of rental and other income from La Risa for fiscal 1996, and decreased average
occupancy at both properties in fiscal 1996. La Risa generated average
occupancy of 92% and an average effective rental rate per unit per month of
$424, representing decreases of 1% and $13, respectively when compared to the
second quarter of fiscal 1995. Rental income at La Risa decreased $111,802
(18%) for the six months ended March 31, 1996 when compared to the
corresponding period in 1995, primarily due to one less month of revenues in
fiscal 1996. Rental income at Venetian Square Shopping Center ("Venetian")
decreased $28,502 (6%) for the six months ended March 31, 1996 when compared to
1995. Venetian achieved average occupancy of 90% and an average effective
rental rate of $7.96 for the second quarter of fiscal 1996, representing a
decrease of 1% and an increase of .08, respectively, when compared to the same
period in fiscal 1995. Tenant reimbursement income remained relatively
constant for the six months ended March 31, 1996 when compared to the
corresponding period in fiscal 1995. Other income increased $3,060 (18%) and
decreased $10,407 (21%), for the three and six months ended March 31, 1996,
respectively, when compared to fiscal 1995. In the current quarter, other
income increased due to the additional interest earned on the increased
Partnership cash reserves resulting from the sale
11
<PAGE> 12
of La Risa. For the six months ended March 31, 1996, other income decreased,
also due to the sale of La Risa, resulting in one less month of revenues
generated by the property. A summary of the Partnership's properties' average
occupancy and average effective rental rates is presented below.
<TABLE>
<CAPTION>
Second Quarter
Fiscal 1996 Fiscal 1995
----------- -----------
<S> <C> <C>
Multi Family
- ------------
La Risa Apartments
Average Occupancy (3) 92% 93%
Average effective rental rate
per unit per month (3) (1) $ 424 $ 437
Commercial
- ----------
Venetian Square Shopping Center
Average occupancy 90% 91%
Average effective rental rate (1) (2) $7.96 $7.88
</TABLE>
(1) Average effective rental rates for apartments are stated in terms of an
average effective rental rate per unit per month and for commercial
properties they are stated in terms of an average annual effective rental
rate per square foot. Effective rental rates take into account the
effect of leasing concessions and bad debts.
(2) 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 project.
(3) The computations give effect to the sale of La Risa Apartments on
February 29, 1996.
The Partnership incurred total expenses of $513,792 and $1,140,306 for
the three and six months ended March 31, 1996, representing decreases of
$204,813 (29%) and $250,018 (18%), respectively, when compared with the
corresponding periods of fiscal 1995. The majority of expense categories
recognized decreases due to the sale of La Risa. Ignoring the sale of La
Risa, the following expense categories decreased due to other factors:
(1) property tax expense decreased $11,861 (23%) for the six months ended
March 31, 1996 when compared to 1995 at Venetian due to the successful
appeal and reduction in the property's assessed value when compared to
the prior year; (2) repair and maintenance expense decreased $26,810
(33%) for the six months ended March 31, 1996 when compared to the
corresponding period in fiscal 1995, due to parking lot repairs and the
repair of underground water leaks at Venetian that occurred in the second
quarter of fiscal 1995; and (3) environmental costs decreased $54,261
(89%) for the six months ended March 31, 1996 when compared to the same
period in 1995 due to a lesser amount of professional fees related to
this matter incurred in the current fiscal year.
12
<PAGE> 13
Liquidity and Capital Resources
Cash and cash equivalent balances which represent Partnership reserves
amounted to $1,168,296 at March 31, 1996 which represents an increase of
$332,156 when compared with fiscal 1995 year-end balances. Net cash used by
operating activities for the six months ended March 31, 1996 amounted to
$863,674 and included a decrease in payable to Managing General Partner of
$997,197. This net decrease represents the payment of fees and reimbursements
to the Managing General Partner of $1,200,000 and cash advances from the
Managing General Partner of $202,803 in the first and second quarters of 1996.
At March 31, 1996 the payable to Managing General Partner totaled $530,194.
Other significant changes in assets and liabilities all relate to the sale of
La Risa Apartments in the second quarter of fiscal 1996, more fully discussed
in Note 4 to the financial statements contained in Item 1 of this report.
Net cash provided by investing activities amounted to $5,992,711 for the
six months ended March 31, 1996, comprised of proceeds from the sale of La Risa
Apartments, net of closing costs and other costs of sale of $6,036,740, reduced
by expenditures made for additions to real estate investments of $6,415 and
deferred leasing costs of $37,614. The deferred leasing costs include 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 in financing activities amounted to $4,796,881 for the six
months ended March 31, 1996 and is comprised of distributions to limited
partners in the amount of $999,900, and reductions in mortgage principal in the
amount of $3,796,981 (the majority of which relates to the payoff of the La
Risa mortgage).
The Partnership is required under its Partnership Agreement to maintain
cash reserves of 3% of aggregate capital contributions ($660,000). As of March
31, 1996, the Partnership had $1,168,296 in cash reserves. The Partnership
intends to apply any cash flow generated from Partnership operations in fiscal
1996 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 deferred fees earned by the Managing
General Partner, which totaled $530,194 as of March 31, 1996.
To the knowledge of the Managing General Partner, its remaining property
is in good physical condition. Budgeted, tenant finish and lease commissions
for the remainder of fiscal 1996 total approximately $37,000. Tenant finish
costs and lease commissions are budgeted in anticipation of leasing vacant
space at Venetian Square Shopping Center.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investment in fiscal 1996. However, there can be no
assurances that the Partnership will sell this property in 1996. As of March
31, 1996, the Partnership has recorded its remaining real estate investment as
property held for sale. The Partnership has entered into a listing agreement
with an unrelated real estate brokerage firm to act as the exclusive selling
agent for the remaining
13
<PAGE> 14
property. The Managing General Partner believes that a sale would provide net
proceeds to the Partnership after the payment of sales costs, closing costs and
mortgage payable; however, this sales transaction 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 on a parcel
of land adjacent to and part of the property. The Partnership intends to apply
net sales proceeds to pay all remaining liabilities identified by the Managing
General Partner arising out of or in connection with the operations of the
Partnership and the sale of Venetian, including amounts owed to the Managing
General Partner. Thereafter, all remaining cash reserves of the Partnership
will be utilized to first pay the costs of liquidation and dissolution of the
Partnership, and then to make a final distribution to limited partners.
On February 29, 1996 the Partnership sold the land, related
improvements and personal property of La Risa Apartments. The purchaser, ALT
Affordable Housing Service, Inc. is not affiliated with the Partnership, its
Managing General Partner or any affiliate, director, officer or associate of
the foregoing, and the sales price was determined by arm's length negotiations.
The net proceeds to the Partnership, before proration of operating income and
expenses related to the property, were as follows:
<TABLE>
<S> <C> <C>
Sales Price $ 6,440,000
Less:
Costs of sale:
Sales commissions (223,453)
Closing costs (title fees, legal and other) (74,400)
Tenant security deposit liability (33,040)
Mortgage payoff (3,692,414) (4,023,307)
-----------
Net Proceeds $ 2,416,693
===========
The net proceeds were utilized as follows:
Distribution to limited partners ($45.45/unit) $ 999,900
Partial repayment of cash advances, reimbursement and
deferred fees to the Managing General Partner 1,000,000
Addition to Partnership cash reserves 416,793
-----------
$ 2,416,693
===========
</TABLE>
On October 24, 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,
14
<PAGE> 15
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.
From approximately 1979 through 1990, a card-lock fueling station had
been operated on a parcel of land adjacent to and part of Venetian Square
Shopping Center. In fiscal 1992, upon removal of the three underground fuel
storage tanks, leakage of petroleum contaminants was discovered through
performance of soil and groundwater tests. 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 $541,000 to
date, including an accrual of $250,000, 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.
15
<PAGE> 16
PART III. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Registrant on February 29, 1996
with respect to the sale of La Risa Apartments.
16
<PAGE> 17
SIGNATURE
Pursuant to the requirements 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., as
Managing General Partner
By: BPL Holdings, Inc., as
Managing General Partner
Dated: May 14, 1996 By: /s/ Thomas M. Mansheim
---------------------------
Thomas M. Mansheim
Treasurer; Principal
Financial and Accounting
Officer of the Partnership
17
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000716822
<NAME> BOETTCHER WESTERN PROPERTIES, III
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 1,168,296
<SECURITIES> 0
<RECEIVABLES> 166,907
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,909,170
<DEPRECIATION> 2,494,125
<TOTAL-ASSETS> 6,950,183
<CURRENT-LIABILITIES> 0
<BONDS> 3,368,383
0
0
<COMMON> 0
<OTHER-SE> 2,691,607
<TOTAL-LIABILITY-AND-EQUITY> 6,950,183
<SALES> 0
<TOTAL-REVENUES> 1,104,879
<CGS> 0
<TOTAL-COSTS> 1,140,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 343,921
<INCOME-PRETAX> (35,427)
<INCOME-TAX> 0
<INCOME-CONTINUING> (35,427)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,329,705
<CHANGES> 0
<NET-INCOME> 1,294,278
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
