<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 June 30, 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
Page
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets - June 30, 1996
and September 30, 1995 3
Statements of Operations - Three and nine months
ended June 30, 1996 and 1995 4
Statement of Partners' Capital - Nine
months ended June 30, 1996 5
Statements of Cash Flows - Nine months
ended June 30, 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
2
<PAGE> 3
PART I. Financial Information
---------------------
Item 1. Financial Statements
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
----------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Real estate investments, at gross cost
Properties held for sale $ 8,751,726 $16,346,743
Less discount on related debt (778,407) (1,192,518)
----------- -------------
7,973,319 15,154,225
Less accumulated depreciation (2,546,806) (4,833,753)
----------- -------------
5,426,513 10,320,472
Cash and cash equivalents at cost, which
approximates market value 1,180,309 836,140
Accounts receivable and other assets 146,485 187,545
Property tax and other escrow deposits - 111,511
Debt issuance costs, net of accumulated
amortization of $30,036 and $154,874,
respectively 17,047 35,647
Deferred leasing costs, net of accumulated
amortization of $454,070 and $427,988,
respectively 178,321 174,354
----------- -------------
$ 6,948,675 $11,665,669
=========== =============
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $5,190 and $7,162,
respectively $ 3,333,702 $ 7,153,781
Payable to managing general partner 570,710 1,527,391
Accounts payable and accrued expenses 325,214 322,420
Property taxes payable - 140,902
Tenants' deposits 43,846 70,533
Unearned rental income 2,501 19,728
Accrued interest payable 194 33,685
----------- -------------
Total liabilities 4,276,167 9,268,440
----------- -------------
Commitments and Contingencies
Partners' capital
General partners (113,559) (126,310)
Limited partners 2,786,067 2,523,539
----------- -------------
Total partners' capital (deficit) 2,672,508 2,397,229
----------- -------------
$ 6,948,675 $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 Nine Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Rental income $198,148 533,743 1,123,126 1,599,025
Tenant reimbursements for
common area charges,
insurance and taxes 42,904 48,702 184,258 187,449
Other income 14,551 21,243 53,098 70,197
--------- --------- --------- ---------
255,603 603,688 1,360,482 1,856,671
--------- --------- --------- ---------
Expenses:
Interest, including
amortization of debt
discount and debt
issuance costs 91,873 201,419 435,794 608,164
Depreciation 52,681 111,116 264,078 336,863
Property taxes 22,712 64,765 125,550 192,409
Fees and reimbursements to
managing general partner 24,951 49,881 109,313 138,645
Other management fees 11,219 22,749 60,807 81,724
Salaries of on-site property
managers - 36,503 62,888 109,091
Repairs and maintenance 25,122 59,151 126,097 210,034
Utilities 8,882 29,170 61,838 91,305
Other administrative 34,038 49,119 158,513 184,795
Environmental costs 3,224 2,205 10,130 63,372
--------- --------- --------- ---------
274,702 626,078 1,415,008 2,016,402
--------- --------- --------- ---------
Operating loss (19,099) (22,390) (54,526) (159,731)
Gain on sale of real estate investment - - 1,329,705 -
--------- --------- --------- ---------
Net earnings (loss) $ (19,099) (22,390) 1,275,179 (159,731)
========= ========= ========= =========
Net earnings (loss) per limited
partnership unit $ (.86) (1.01) 57.38 (7.18)
========= ========= ========= =========
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
Nine Months ended June 30, 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 nine months
ended June 30, 1996 12,751 1,262,428 1,275,179
---------- --------- ---------
Balances at June 30, 1996 $ (113,559) 2,786,067 2,672,508
========== ========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Nine Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
---------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $1,275,179 (159,731)
Adjustments to reconcile net loss to
net cash provided by operating activities
Depreciation and amortization 331,588 422,304
Gain on sale of property (1,329,705) -
Change in assets and liabilities:
Decrease in accounts receivable and other assets 41,060 60,523
Decrease in property tax and other escrow deposits 111,511 18,105
Increase (decrease) in payable to managing general
partner relating to operations (956,681) 63,696
Increase (decrease) in accounts payable and accrued expenses 2,794 (50,659)
Decrease in property taxes payable (140,902) (63,567)
Decrease in tenants' deposits (26,687) (7,795)
Decrease in unearned rental income (17,227) (14,792)
Decrease in accrued interest payable (33,491) (503)
----------- ---------
Net cash provided by (used by)
operating activities (742,561) 267,581
----------- ---------
Cash flows used by investing activities:
Additions to real estate investments (64,149) (89,011)
Deferred leasing costs (53,629) (12,724)
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 5,918,962 (101,735)
----------- ---------
Cash flows used in financing activities:
Increase in debt issuance costs - (48,398)
Reductions in mortgage principal (3,832,332) (154,804)
Distributions to limited partners (999,900) -
----------- ---------
Net cash used by
financing activities (4,832,232) (203,202)
----------- ---------
Net increase (decrease) in cash and cash equivalents 344,169 (37,356)
Cash and cash equivalents at September 30 836,140 694,828
----------- ---------
Cash and cash equivalents at June 30 $1,180,309 657,472
=========== =========
Supplemental disclosure of cash flow information:
Interest paid in cash during the
nine month period $451,438 608,667
=========== =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 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
June 30, 1996
(Unaudited)
Statements of Cash Flows
For purposes of the Statements of Cash Flows, cash and cash equivalents include
operating cash held at the properties and highly liquid money market
investments. Cash and cash equivalents are comprised of the following at June
30:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Money Market $1,094,504 $565,546
Operating Cash 85,805 91,926
---------- --------
Cash and Cash Equivalents $1,180,309 $657,472
========== ========
</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 June 30, 1996 the amount earned by the
Managing General Partner was $19,651.
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 June 30, 1996 the amount earned by the Managing
General Partner was $980.
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 June 30, 1996 such
reimbursements totaled $4,320.
(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.
8
<PAGE> 9
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 1996
(Unaudited)
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 June 30,
1996, the Partnership had reserves of $1,180,309 while the required minimum
amount was $660,000.
For the nine months ended June 30, 1996, the payable to Managing General
Partner decreased $956,681 to a total of $570,710. This decrease is the
result of net payments to the Managing General Partner totaling
$1,065,993 and the accrual of fees and reimbursements earned by the Managing
General Partner in the first nine months of fiscal 1996 in the amount of
$109,312. 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
June 30, 1996
(Unaudited)
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 $15,566, $4,320, and $550,824, respectively, as of June 30, 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 June 30, 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 $544,000 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 matters.
10
<PAGE> 11
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
For the three and nine months ended June 30, 1996, the Partnership
generated total revenue of $255,603 and $1,360,482 and incurred total expenses
of $274,702 and $1,415,008, resulting in operating losses of $19,099 and
$54,526, respectively. This represents improvements in the operating losses of
$3,291 (14%) and $105,205 (65%), respectively, for the three and nine months
ended June 30, 1996 when compared to the corresponding periods of fiscal 1995.
In the second quarter of fiscal 1996, the Partnership realized a gain on the
sale of its real estate investment, La Risa Apartments ("La Risa"), in the
amount of $1,329,705, as more fully discussed in Note 4 of the Notes to
Financial Statements contained in Item 1 of this report. Due to the gain on
sale of La Risa, the Partnership generated net earnings for the nine months
ended June 30, 1996 of $1,275,179. The Partnership generated decreased total
revenue, primarily rental and other income, and decreased total expenses in all
categories for the nine months ended June 30, 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 June 30 Nine Months Ended June 30
-------------------------- -------------------------
(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 $256 604 (348) (58%) $1,360 1,857 (497) (27%)
Total expenses 275 626 (351) (56%) 1,415 2,016 (601) (30%)
---- ---- ------ ------ ----- -----
Net operating loss (19) (22) 3 14% (55) (159) 104 65%
==== ==== ====== ====== ===== =====
</TABLE>
When making period-to-period comparisons, the exclusion of the operations
of LaRisa from the prior fiscal quarters' results allows for a more meaningful
analysis of the operations of the Partnership's remaining investment. For
comparison purposes only, the results of operations of LaRisa have been
excluded from the three and nine months ended June 30, 1995 and the nine months
ended June 30, 1996 in the table below.
<TABLE>
<CAPTION>
Three Months Ended June 30 Nine Months Ended June 30
-------------------------- -------------------------
(In Thousands) (In Thousands)
Pro Amount Amount
Forma of % Pro Forma of %
1996 1995 Change Change 1996 1995 Change Change
---- ---- ------ ------ ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenue $256 278 (22) (8%) $839 895 (56) (6%)
Total expenses 275 300 (25) (8%) 877 1,024 (147) (14%)
---- ---- ------ ---- ----- -----
Net operating loss (19) (22) 3 14% (38) (129) 91 70%
==== ==== ====== ==== ===== =====
</TABLE>
Based upon the pro forma amounts presented above, total revenue generated
by the Partnership for the three and nine months ended June 30, 1996, excluding
LaRisa, amounted to $255,603 and $838,892,
11
<PAGE> 12
respectively, representing decreases of $22,996 (8%) and $55,939 (6%) when
compared to the three and nine months ended June 30, 1995. Rental income
generated by the Partnership's remaining property, Venetian Square Shopping
Center ("Venetian"), for the three and nine month periods in fiscal 1996
decreased $25,225 (11%) and $53,727 (8%), when compared with fiscal 1995.
Venetian achieved an average occupancy of 87% and an average effective rental
rate of $7.76 for the third quarter of fiscal 1996, representing decreases of
4% and .12, respectively, when compared to the same period in fiscal 1995.
Tenant reimbursement income decreased $5,798 (12%) and $3,191 (2%),
respectively, for the three and nine months ended June 30, 1996 when compared
to the corresponding period in fiscal 1995. Other income increased $8,027 for
the three month period ended June 30, 1996, and remained relatively constant
for the nine months ended June 30, 1996 when compared to fiscal 1995. The
increase in other income in the current quarter is related to increased
interest income earned on the investment of the proceeds from the sale of La
Risa.
A summary of the Partnership's properties' average occupancy and average
effective rental rates is presented below.
<TABLE>
<CAPTION>
Third Quarter
Fiscal 1996 Fiscal 1995
----------- -----------
Multi Family
- ------------
<S> <C> <C>
La Risa Apartments
Average Occupancy (3) N/A 93%
Average effective rental rate
per unit per month (3) (1) N/A $437
Commercial
- --------------------------------------
Venetian Square Shopping Center
Average occupancy 87% 91%
Average effective rental rate (1) (2) $7.76 $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.
Based upon the pro forma amounts presented above, total expenses,
excluding La Risa, amounted to $274,702 and $876,906 for the three and nine
months ended June 30, 1996, representing decreases of $25,670 (8%) and $146,685
(14%), respectively, when compared to the corresponding periods of fiscal 1995.
Fees and reimbursements paid to the Managing General Partner decreased $24,930
(50%) and $29,332 (21%), respectively, for the three and nine months ended June
30, 1996 when compared with the corresponding periods in fiscal 1995. These
decreases are primarily due to the elimination of the accrual of deferred
acquisition fees related to La Risa since the time of sale in February 1996.
Property tax expense decreased $2,828 (11%) and $14,690 (19%), respectively,
for the three and nine months ended June 30, 1996 when compared to the
corresponding periods in fiscal 1995 due to the successful appeal
12
<PAGE> 13
and reduction in Venetian's assessed value when compared to the prior year.
Repair and maintenance expense decreased $5,292 (17%) and $32,102 (29%),
respectively, for the three and nine months ended June 30, 1996 when compared
to the corresponding periods 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. Environmental costs increased $1,019 (46%) and
decreased $53,242 (84%), respectively, for the three and nine months ended
June 30, 1996 when compared to the same periods in 1995 due to reduced
professional fees related to this matter. Administrative costs increased
$6,209 (77%) and decreased $20,504 (29%), respectively, for the three and nine
months ended June 30, 1996 when compared to the same periods in 1995 due to
lower legal fees related to the remediation costs at Venetian Square.
Liquidity and Capital Resources
Cash and cash equivalent balances which represent Partnership reserves
amounted to $1,180,309 at June 30, 1996; which represents an increase of
$344,169 when compared with fiscal 1995 year-end balances. Net cash used by
operating activities for the nine months ended June 30, 1996 amounted to
$742,561 and included a decrease in the payable to Managing General Partner of
$956,681. This net decrease is primarily the result of net payments to the
Managing General Partner totaling $1,065,993 and the accrual of fees and
reimbursements earned by the Managing General Partner of $109,312. At June 30,
1996 the payable to Managing General Partner totaled $570,710. 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 $5,918,962 for the
nine months ended June 30, 1996, and is 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
$64,149 and deferred leasing costs of $53,629. 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 $4,832,232 for the nine
months ended June 30, 1996 and is comprised of distributions to limited
partners in the amount of $999,900, and reductions in mortgage principal in the
amount of $3,832,332, which includes the payoff of the La Risa mortgage of
$3,692,414.
The Partnership is required under its Partnership Agreement to maintain
cash reserves of 3% of aggregate capital contributions ($660,000). As of June
30, 1996, the Partnership had $1,180,309 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 cash advances made to the Partnership, all
unpaid administrative reimbursements and all deferred fees earned by the
Managing General Partner which total $15,566, $4,320, and $550,824,
respectively, as of June 30, 1996.
13
<PAGE> 14
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 $22,000 and are 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 June
30, 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 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>
14
<PAGE> 15
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, 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 $544,000 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
No reports on Form 8-K were required or filed by the Registrant during the
period for which this report is filed.
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: August 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1180309
<SECURITIES> 0
<RECEIVABLES> 146485
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7973319
<DEPRECIATION> 2546806
<TOTAL-ASSETS> 6948675
<CURRENT-LIABILITIES> 0
<BONDS> 3333702
0
0
<COMMON> 0
<OTHER-SE> 2672508
<TOTAL-LIABILITY-AND-EQUITY> 6948675
<SALES> 0
<TOTAL-REVENUES> 1360482
<CGS> 0
<TOTAL-COSTS> 1415008
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 435794
<INCOME-PRETAX> (54526)
<INCOME-TAX> 0
<INCOME-CONTINUING> (54526)
<DISCONTINUED> 0
<EXTRAORDINARY> 1329705
<CHANGES> 0
<NET-INCOME> 1275179
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
