<PAGE>
Total # of Pages: 17
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
---------------
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
December 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
incorporation or organization) Identification No.)
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>
<TABLE>
<CAPTION>
INDEX
-----
Page
----
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets -
December 31, 1996 and September 30, 1996 3
Statements of Operations -
Three months ended December 31, 1996 and 1995 4
Statement of Partners' Capital -
Three months ended December 31, 1996 5
Statements of Cash Flows -
Three months ended December 31, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART III. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURE 17
</TABLE>
2
<PAGE>
PART 1. Financial Information
Item 1: Financial Statements
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ -------------
Assets
------
<S> <C> <C>
Real estate investments, at gross cost
Properties held for sale $ - $8,771,101
Less discount on related debt - (778,407)
---------- ----------
- 7,992,694
Less accumulated depreciation - (2,599,948)
---------- ----------
- 5,392,746
Real estate held for sale 5,569,588 -
Cash and cash equivalents at cost, which
approximates market value 1,287,074 1,240,077
Accounts receivable and other assets 95,641 90,146
Debt issuance costs, net of accumulated
amortization of $36,855 and $33,446,
respectively 10,228 13,637
Deferred leasing costs, net of accumulated
amortization of $464,022 - 174,013
---------- ----------
$6,962,531 $6,910,619
========== ==========
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $3,857 and $4,525,
respectively $3,273,811 $3,303,685
Payable to managing general partner 654,035 602,323
Accounts payable and accrued expenses 279,177 296,557
Property taxes payable - 21,238
Tenants' deposits 39,339 39,339
Unearned rental income 3,195 5,556
Accrued interest payable - 490
---------- ----------
Total liabilities 4,249,557 4,269,188
---------- ----------
Commitments and contingencies
Partners' capital (deficit)
General partners (113,154) (113,869)
Limited partners 2,826,128 2,755,300
---------- ----------
Total partners' capital 2,650,957 2,641,431
---------- ----------
$6,962,531 $6,910,619
========== ==========
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Operations
Three Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------
1996 1995
-------- ---------
<S> <C> <C>
Revenue:
Rental income $206,920 $517,215
Tenant reimbursements for
common area charges,
insurance and taxes 75,329 82,820
Other income 29,955 18,324
-------- --------
312,204 618,359
-------- --------
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 96,728 189,767
Depreciation - 116,135
Property taxes 21,844 62,458
Fees and reimbursements to
managing general partner 25,744 44,636
Other management fees 12,391 28,850
Salaries of on-site property managers - 31,475
Repairs and maintenance 38,227 51,355
Utilities 10,409 34,852
Other administrative 31,444 63,085
Environmental costs 3,874 3,901
-------- --------
240,661 626,514
-------- --------
Net income (loss) $ 71,543 $ (8,155)
======== ========
Net income (loss) per limited
partnership unit, using the
weighted average number of limited
partnership units outstanding of 22,000 $ 3.22 $ (.37)
======== ========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statement of Partners' Capital
Three Months ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partners Partners Capital
---------- --------- ---------
<S> <C> <C> <C>
Capital (deficit) at October 1, 1996 $(113,869) 2,755,300 2,641,431
Net income for the three months
ended December 31, 1996 715 70,828 71,543
--------- --------- ---------
Capital (deficit) at December 31, 1996 $(113,154) 2,826,128 2,712,974
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Three Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 71,543 $ (8,155)
Adjustments to reconcile net income (loss) to
net cash used by operating
activities:
Depreciation and amortization 4,078 136,655
Change in assets and liabilities:
(Increase) decrease in accounts receivable
and other assets (5,495) 6,613
Decrease in property tax
and other escrow deposits - 77,329
Increase (decrease) in payable to managing general
partner 51,712 (112,631)
Decrease in property taxes payable (21,238) (108,002)
Increase (decrease) in tenants' deposits - 7,956
Decrease in accrued interest payable (490) (27)
Decrease in unearned rental income (2,361) (16,004)
Decrease in accounts payable and
other liabilities (17,380) (34,149)
---------- ---------
Net cash provided by (used by) operating activities 80,369 (50,415)
---------- ---------
Cash flows used in investing activities-
Additions to real estate held for sale (2,829) (18,014)
Increase in deferred leasing costs - (26,774)
---------- ---------
Net cash used in investment activities (2,829) (44,788)
---------- ---------
Cash flows used in financing activities-
Reductions in mortgage principal (30,543) (82,328)
---------- ---------
Net increase (decrease in) cash and
cash equivalents 46,997 (177,531)
Cash and cash equivalents at September 30 1,240,077 836,140
---------- ---------
Cash and cash equivalents at December 31 $1,287,074 $ 658,609
========== =========
Supplemental disclosure of cash flow information:
Interest paid in cash during the period $ 92,651 $ 179,742
========== =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
(1) Financial Statement Adjustments and Footnote Disclosure
The accompanying financial statements are unaudited. However, Boettcher
Properties, Ltd. (BPL), 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, 1996 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. These costs are
comprised of lease commissions and construction costs related to the
buildout of tenant spaces. Upon implementation of Statement of Financial
Accounting Standards No. 121 described in detail below, deferred leasing
costs have been included in real estate held for sale on the balance sheet.
Environmental Remediation Liabilities
Liabilities for loss contingencies, including environmental remediation
costs, arising from claims, assessments, litigation, fines and penalties,
and other sources are recorded when it is probable that a liability has
been incurred and the amount of the assessment and/or remediation can be
reasonable estimated. The costs of site clean-up are recorded in the amount
of the cash payments made or for future estimated costs for that site when
fixed or reliably determinable based upon information derived from the
remediation plan for that site. Recoveries from third parties which are
probable of realization are separately recorded, and are not offset against
the related environmental liability.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 96-1, Environmental Remediation
Liabilities. SOP 96-1 will be adopted by the Partnership during fiscal 1997
and will require, among other things, environmental remediation liabilities
to be accrued when the criteria of SFAS No. 5, Accounting for
Contingencies, have been met. The SOP also provides guidance with respect
to the measurement of the remediation liabilities. Such accounting is
consistent with the Partnership's current method of accounting for
environmental remediation costs and therefore, adoption of this new
Statement will not have a material impact on the Partnership's financial
position, results of operations, or liquidity.
7
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
Financial Instruments
The fair value of the Partnership's financial instruments approximate their
carrying values due to the short maturities of those instruments or due to
the interest rates of those instruments approximating interest rates for
similar issues.
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 value
based upon independent appraised values less estimated selling costs.
Impairment of Long-Lived Assets
In March of 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, effective for fiscal years beginning after December 15,
1995. Statement No. 121 requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets
are less than the assets' carrying amount. Statement No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
The Partnership adopted Statement No. 121 effective with its fiscal year
beginning October 1, 1996.
Debt Discount and Debt Issuance Costs
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.
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 December 31:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Money Market $1,220,842 $564,606
Operating Cash 66,232 94,003
---------- --------
Cash and Cash Equivalents $1,287,074 $658,609
========== ========
</TABLE>
8
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
Use of Estimates
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(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
Partnership Agreement. Payments may be made for the lesser of 15 years or
until the limit on payments is reached. For the quarter ended December 31,
1996, the amount earned by the Managing General Partner was $19,650.
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 December 31, 1996,
the fee earned by the Managing General Partner was $1,774.
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 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 December 31, 1996, such reimbursements
totaled $4,320.
(4) 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 December 31, 1996, the Partnership had cash reserves of $1,287,074,
while the required minimum amount was $660,000. During the first quarter of
fiscal 1997, the payable to managing general partner increased by $51,712
to a total of $654,035 as of December 31, 1996. This increase is the net
result of advances from the Managing General Partner totaling $25,968, and
the accrual of fees and reimbursements earned by the Managing General
Partner in the first quarter of fiscal 1997 in the amount of $25,744. The
Managing General Partner intends to apply cash flow generated from
Partnership operations in fiscal 1997, if any, to maintain the minimum
9
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
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 which total
$48,930, $12,960 and $592,145, respectively, as of December 31, 1996.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investment in fiscal 1997. However, there can be no
assurances that the Partnership will sell such property in 1997. As of
December 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 Square Shopping Center. The
Managing General Partner believes that this sale will 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 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 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 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 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.
(5) 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 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
$305,000 to date in connection with the remediation program and since
fiscal 1993 has maintained an accrual of $250,000 as a provision for
possible additional remediation expenses. 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. The estimate of costs and their
timing of
10
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
payment could change as a result of (1) changes to a remediation
plan required by the State Environmental Agency, (2) changes in technology
available to treat the site, (3) unforeseen circumstances existing at the
site and (4) differences between actual inflation rates and rates assumed
in preparing the estimate. As a result of these factors, it is not
possible for the Partnership to reasonably estimate the amount by which
remediation costs may exceed amounts that the Partnership has accrued. The
ultimate resolution of this matter and its impact on the Partnership's
financial statements is uncertain.
11
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
For the three months ended December 31, 1996, the Partnership generated total
revenue of $312,204 and incurred total expenses of $240,661, resulting in net
income of $71,543, which represents an improvement of $79,698 (217%) when
compared with the corresponding quarter of fiscal 1996. The most significant
item affecting the Partnership's results of operations for the quarter ended
December 31, 1996 was the adoption of Statement of Financial Accounting
Standards No. 121 ("SFAS 121"). Statement No. 121 requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. Statement
No. 121 also addresses the accounting for long-lived assets that are expected
to be disposed of. The Partnership adopted Statement No. 121 for fiscal 1997.
SFAS 121 requires the elimination of depreciation and amortization related to
those long-lived assets to be disposed of. For the quarter ended December 31,
1996, depreciation and amortization related to the Partnership's real estate
held for sale that was eliminated by the adoption of SFAS 121 approximated
$62,000.
The Partnership's first quarter fiscal 1996 results include the operations of
LaRisa Apartments ("LaRisa") which was sold in the second quarter of fiscal
1996. Due to the absence of this operating property in fiscal 1997 results and
the adoption of SFAS 121, the Partnership generated decreased total revenue,
primarily rental income, and decreased total expenses in all categories. A
summary of the Partnership's operations and period-to-period comparisons is
presented below:
<TABLE>
<CAPTION>
Three Months Ended December 31,
(In Thousands)
-------------------------------
Amount
of %
1996 1995 Change Change
---- ---- ------ ------
<S> <C> <C> <C> <C>
Total revenue $ 312 $ 618 $(306) (51%)
Total expenses 241 626 385 61%
----- ----- -----
Net income (loss) $ 71 $ (8) $ 79
===== ===== =====
</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 months ended December 31, 1995 in the table below.
<TABLE>
<CAPTION>
Three Months Ended December 31,
(In Thousands)
-------------------------------
Pro Amount
Forma of %
1996 1995 Change Change
---- ----- ------ ------
<S> <C> <C> <C> <C>
Total revenue $ 312 $ 305 $ 7 2%
Total expenses 241 296 (55) 18%
----- ----- ----
Net income (loss) $ 71 $ 9 $ 62
===== ===== ====
</TABLE>
Based upon the proforma amounts presented above, total revenue generated by the
Partnership amounted to $312,204, representing an increase of $7,096 (2%) from
$305,108 for the three
12
<PAGE>
months ended December 31, 1995. The Partnership's remaining property generated
rental income of $206,920 for the three months ended December 31, 1996, which
represents a decrease of $9,175 (4%) when compared with the same period in
fiscal 1996. Venetian Square Shopping Center achieved a weighted average
occupancy of 84%, a decrease of 7% when compared to the first quarter of fiscal
1996. However, the average effective rental rate increased $.28 when compared
with the same period in fiscal 1996. Tenant reimbursement income also decreased,
from $82,820 in the first quarter of fiscal 1996 to $75,329 in the first quarter
of fiscal 1997, a direct result of the increased vacancies at the remaining
property. Other income increased $23,762 for the first quarter of fiscal 1997
when compared with the same period of fiscal 1996, primarily the result of the
receipt of an insurance refund by the Partnership related to a past years
premium over-payment and increased interest income due to the maintenance of
higher cash reserve balances.
A comparative summary of the average occupancies and average effective rental
rates generated by the properties is presented below:
<TABLE>
<CAPTION>
First Quarter
Apartments Fiscal 1997 Fiscal 1996
- ---------- ----------- -----------
<S> <C> <C>
LaRisa (254 units)
Average occupancy /(3)/ N/A 93%
Average effective rental
rate per unit per month /(2)(3)/ N/A $425
Commercial
- ----------
Venetian Square Shopping Center
(117,115 net rentable square feet)
Average occupancy 84% 91%
Retail - Average effective
rental rate /(1)(2)/ $8.40 $8.12
</TABLE>
/(1)/The rates are "triple net". In addition to this base rent, the
majority of tenants pay their pro rata share of taxes, insurance and
common area maintenance expenses at the project.
/(2)/Average effective rental rates rental rate per unit per month an
average annual effective for apartments are stated in and for
commercial properties rental rate per square foot. terms of an average
effective they are stated in terms of Effective rental rates take into
account the effect of leasing concessions and bad debts.
/(3)/The computations give effect to the sale of LaRisa Apartments on
February 29, 1996.
Based upon the proforma amounts previously presented, total expenses incurred by
the Partnership for the three months ended December 31, 1996 amounted to
$240,661. Total Partnership expenses decreased $55,643 (18%) on a proforma basis
for the three months ended December 31, 1996 when compared with the three months
ended December 31, 1995. Excluding
13
<PAGE>
the impact of the adoption of SFAS 121, the most significant changes in
operating expenses, when comparing the first quarter of fiscal 1997 to the first
quarter of fiscal 1996, were in repairs and maintenance, fees paid to the
Managing General Partner and interest expense. All other expense categories
remained relatively constant. Repairs and maintenance expense increased $15,795
(70%) for the first quarter of fiscal 1997 when compared to the corresponding
period in fiscal 1996. This increase is primarily the result of increased sewer
line repairs and roof work at Venetian Square Shopping Center completed in
fiscal 1997. Fees paid to the Managing General Partner decreased $18,892 (42%)
for the three months ended December 31, 1996 when compared to the corresponding
period in fiscal 1996, primarily due to a reduction in fees paid to the Managing
General Partner due to the sale of LaRisa Apartments in fiscal 1996. Interest
expense increased $13,999 (17%) in the first quarter of 1997 when compared to
the corresponding period in fiscal 1996. This represents the increased interest
rate that went into effect upon execution of the loan extension agreement in the
middle of the first quarter of fiscal 1996. For additional information refer to
Note 4 to the Financial Statements as contained in Item 1 of this report.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalent balances which represent Partnership reserves
amounted to $1,287,074 at December 31, 1996, which represents an increase of
$46,997 when compared with fiscal 1996 year-end balances. Net cash provided by
operating activities for the three months ended December 31, 1996 amounted to
$80,369. The most significant change in assets and liabilities in the first
quarter of fiscal 1997 related to a decrease in property taxes payable of
$21,238. This decrease is a result of the final payment of 1996 property tax
liabilities at Venetian Square Shopping Center in the first quarter of fiscal
1997. Other changes in assets and liabilities included a decrease in accounts
payable and other liabilities of $17,380. The payable to managing general
partner increased $51,712. This increase is the result of direct advances
from, and accrual of fees and administrative reimbursements to, the Managing
General Partner in the first quarter of fiscal 1997.
Net cash used in investing activities in the first quarter of fiscal 1997
amounted to $2,829, and are comprised solely of deferred leasing costs included
under the caption real estate held for sale on the Balance Sheet. The
Partnership's fiscal 1997 deferred leasing costs include costs associated with
repair of tenant space at Venetian Square Shopping Center.
Net cash used by financing activities for the three months ended December
31, 1996 amounted to $30,543, and is comprised solely of reductions in mortgage
principal.
The Partnership is required under its Partnership Agreement to maintain
cash reserves of 3% of aggregate capital contributions ($660,000). As of
December 31, 1996, the Partnership had $1,287,074 in cash reserves. The
Partnership intends to apply any cash flow generated from Partnership
operations in fiscal 1997 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
14
<PAGE>
deferred fees earned by the Managing General Partner, which totaled $48,930,
$12,960 and $592,145, respectively, as of December 31, 1996.
To the knowledge of the Managing General Partner the remaining property is
in good physical condition. In fiscal 1997, other than tenant finish and lease
commissions associated with the ongoing leasing efforts at Venetian Square
Shopping Center, there are no other planned capital improvements.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investment in fiscal 1997. However, there can be no
assurances that the Partnership will sell such property in 1997. As of
December 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 property. The Managing General
Partner believes that this sale will provide net proceeds to the Partnership
after the payment of sales costs, closing costs and mortgages payable; however,
this 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 on a parcel of land adjacent to and part of 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 the Managing General Partner and 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 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 $305,000 to date in connection with the
remediation program and since fiscal 1993 has maintained an accrual of $250,000
as a provision for possible additional remediation expenses. 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. The estimate of costs and their timing
of payment could change as a result of (1) changes to a remediation plan
required by the State Environmental Agency, (2) changes in technology available
to treat the site, (3) unforeseen circumstances existing at the site and (4)
differences between actual inflation rates and rates assumed in preparing the
estimate. As a result of these factors, it is not possible for the Partnership
to reasonably estimate the amount by which remediation costs may exceed amounts
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that the Partnership has accrued. The ultimate resolution of this matter and its
impact on the Partnership's financial statements is uncertain.
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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 Registrant
during the period for which this report is filed.
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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 16, 1997 By: /s/ Thomas M. Mansheim
---------------------------
Thomas M. Mansheim
Treasurer; Principal
Financial and Accounting
Officer of the Partnership
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