<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[x] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BOETTCHER WESTERN PROPERTIES III LTD.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
$7,275,000 purchase price of substantially all assets
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(4) Proposed maximum aggregate value of transaction:
$7,275,000
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(5) Total fee paid:
$1,455
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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BOETTCHER WESTERN PROPERTIES III LTD.
77 West Wacker Drive, Chicago, Illinois 60601
NOTICE OF SPECIAL MEETING OF THE LIMITED PARTNERS
OF BOETTCHER WESTERN PROPERTIES III LTD.
NOTICE IS HEREBY GIVEN that a Special Meeting of Limited Partners of
Boettcher Western Properties III Ltd., a Colorado limited partnership (the
"Partnership"), will be held at the Westin Tabor Center, 1200 Seventeenth
Street, Denver, Colorado, 80202 on December __, 1997, at 2:00 p.m., Mountain
Standard Time, for the following purpose:
To consider and approve a proposal to sell substantially all of the assets
of the Partnership, comprised of the shopping center property owned by the
Partnership located in Stockton, California, commonly known as Venetian
Square Shopping Center, and to subsequently liquidate and dissolve the
Partnership.
Only limited partners of record at the close of business on November __,
1997 are entitled to notice of, and to vote at the special meeting.
It is very important that all limited partners participate in the voting.
The Partnership's ability to complete the transaction discussed in the
Proxy Statement and make distributions to the limited partners in
liquidation and dissolution of the Partnership pursuant to the terms of the
limited partnership agreement is dependent upon the approval of limited
partners owning a majority in interest of the limited partnership units.
BPL Holdings, Inc., a Delaware corporation, as the managing general partner
of the managing general partner of the Partnership, urges you to sign and
return the enclosed proxy as promptly as possible and in any event by
December __, 1997. The proxy should be returned in the enclosed envelope.
BPL Holdings, Inc., managing general partner of
Boettcher Properties, Ltd., managing general
partner of the Partnership
Dated: November __, 1997
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
PROXY STATEMENT
---------------
SPECIAL MEETING OF THE LIMITED PARTNERS
PURPOSE OF THE SPECIAL MEETING
On December ___, 1997, Boettcher Western Properties III Ltd., a Colorado
limited partnership (the "Partnership"), intends to hold a Special Meeting
of Limited Partners (the "Special Meeting") to consider a proposal to sell
substantially all of the assets of the Partnership, comprised of the
shopping center property owned by the Partnership located in Stockton,
California, commonly known as Venetian Square Shopping Center (the
"Property"), and to subsequently liquidate and dissolve the Partnership.
The sale of the Property is intended to be made pursuant to the terms of a
Purchase and Sale Agreement, as amended or supplemented from time to time
(the "Purchase and Sale Agreement"), dated effective July 17, 1997 between
the Partnership and M. Phillip Cardoza, an individual (the "Buyer"). The
proposed sale of the Property is described below in this Proxy Statement,
which is first being mailed on November __, 1997 to the limited partners
(the "Limited Partners") of record as of November __, 1997.
The managing general partner of the Partnership is Boettcher Properties,
Ltd. (the "Managing General Partner"), which is 98% owned by BPL Holdings,
Inc. ("Holdings"). The associate general partner of the Partnership is
Boettcher 1983 Associates (the "Associate General Partner"). The Managing
General Partner is the managing general partner of the Associate General
Partner.
Upon the closing of the sale of the Property, the sale proceeds will be
used to repay the mortgages secured by the Property and expenses of sale
(including, without limitation, the cost of purchasing insurance covering
unknown environmental contamination). Thereafter, the Managing General
Partner will proceed to liquidate and dissolve the Partnership, applying
the remaining net proceeds from the sale of the Property and any other
funds of the Partnership in the following manner:
1. To the payment of remaining debts and liabilities of the Partnership
and expenses of liquidation;
2. To the setting up of cash reserves, if necessary, to cover any
contingent liabilities identified by the Managing General Partner
arising out of or in connection with the operations of the Partnership,
including any additional reserves to cover environmental remediation
expenses and liabilities; and
3. To distributions to the Limited Partners.
Once this liquidation has been completed, the operations of the
Partnership will cease and the Partnership will be dissolved.
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Based upon financial information as of June 30, 1997, the estimated
costs of closing and the estimated distributions in liquidation and
dissolution of the Partnership after the sale of the Property, set forth
below is a summary of cash distributions to the Limited Partners to date,
estimated distributions in liquidation and total distributions (without
regard to any additional reserves or expenses to cover environmental
remediation liabilities) per $1,000 unit:
<TABLE>
<CAPTION>
<S> <C>
Distributions to date $258.47
Estimated distributions in liquidation 174.13
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Total estimated distributions per $1,000 Unit $432.60
=======
</TABLE>
Proxies in the form enclosed, properly executed and duly returned,
will be voted in accordance with the instructions thereon. Properly
executed proxies that are returned, but in which no direction on the
proposal is given, will be voted for the proposal. Proxies will be voted
in the foregoing manner with respect to any proposal to adjourn the Special
Meeting. Proxies cannot be revoked except by submitting a duly executed
proxy bearing a later date or by voting in person at the Special Meeting.
Officers and other employees of Holdings and/or its affiliates may solicit
proxies by telephone, telefacsimile, telegraph or personal interview, as
well as by mail. No compensation will be paid to any person for soliciting
proxies. The cost of the solicitation will be paid by the Partnership.
The Partnership has only one class of limited partners and no Limited
Partner has a right of priority over any other Limited Partner. The
participation of the Limited Partners is divided into limited partnership
interests and each Limited Partner owns one limited partnership interest (a
"Unit") for each $1,000 of capital contributed by such Limited Partner to
the Partnership.
As of June 30, 1997, the Partnership had 22,000 Units outstanding,
held by approximately 2,300 holders of record. There is no established
trading market for the Units. The Partnership is not aware of any person
or group of persons who beneficially owns more than 5% of the outstanding
Units. The Managing General Partner owns 424 Units and intends to vote
these Units in favor of the proposed sale of the Property and subsequent
liquidation and dissolution of the Partnership. None of the officers or
directors of Holdings own any Units. Only Limited Partners of record at
the close of business on November __, 1997 will be entitled to notice of
and to vote at the Special Meeting.
The Board of Directors of Holdings, on its own behalf, as the managing
general partner of the Managing General Partner, and as managing general
partner of the managing general partner of the Associate General Partner
unanimously approved the proposed sale of the Property and the subsequent
liquidation and dissolution of the Partnership and recommends that the
Limited Partners approve the sale of the Property and the subsequent
liquidation and dissolution of the Partnership. The sale of the Property
and subsequent liquidation and dissolution of the Partnership is the
proposal that is the subject of this proxy solicitation, and such proposal
will be adopted only if
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approved by Limited Partners owning a majority in interest of the Units.
Each Unit is entitled to one vote on the proposal.
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PROPOSED SALE OF ASSETS
Forward-Looking Statements
This Proxy Statement contains forward-looking statements (within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended)
representing the Managing General Partner's current expectations and
beliefs concerning future events. When used in this Proxy Statement, the
words "may," "will," "should," "continue," "believe," "estimate," "plan,"
"expect," "intend," "anticipate," or the negation thereof or other
variations thereon or comparable terminology as they relate to the
Partnership or its management, are intended to identify forward-looking
statements. The matters set forth in such forward-looking statements
constitute statements identifying important factors with respect to this
Proxy Statement, including certain risks and uncertainties that could cause
actual results to differ materially from those in such forward-looking
statements. The actual results of the Partnership could differ materially
from those indicated by the forward-looking statements because of various
risks and uncertainties related to and including, without limitation, the
Partnership's ability to sell its remaining real estate investment, the
levels of rental income and expenses relating to its real estate
investment, and the extent of additional costs to complete environmental
remediation at its remaining property. These risks and uncertainties are
beyond the ability of the Managing General Partner to control; in many
cases, the Managing General Partner cannot predict the risks and
uncertainties that could cause actual results to differ materially from
those indicated by the forward-looking statements.
Description of the Property
The Property is located at 4555 North Pershing Street, Stockton,
California. The Property, improved in the fall of 1979, consists of
approximately 9.2 acres of land and three buildings containing
approximately 117,107 square feet of net rentable area.
The Property is adequately maintained. The Buyer has not requested any
structural repairs or improvements as a condition to purchasing the
property. The Property, however, is currently the subject of an
environmental remediation effort undertaken by the Partnership (see
"Environmental Matters"). In the event the proposed sale does not occur,
it is anticipated that the shopping center would require roof replacement
and facade repairs in the next one to two year period. The cost estimates
for this replacement range from $200,000 to $250,000. Additionally, as
discussed below under "Factors Affecting Decision to Sell the Property," it
is anticipated that the Property will incur additional maintenance costs in
the future as the Property ages.
Acquisition of the Property by the Partnership
On December 9, 1983, the Partnership acquired the Venetian Square
Shopping Center in Stockton, California for a total purchase price of
$8,040,000 ($7,261,593 net of debt discount) of which $3,532,695 was paid
in cash. The remainder was financed by the
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assumption of an existing first mortgage for $4,380,972 ($3,636,579 net of
debt discount). In addition to the first note and deed of trust, the
Property was acquired subject to a City of Stockton Improvement District
Bond Assessment and certain industrial revenue bonds in the amount of
$126,333 ($92,319 net of debt discount).
Description of Buyer
The Buyer is M. Phillip Cardoza, an individual. The principal
executive office of the Buyer is located at 1111 Civic Drive, Suite 365,
Walnut Creek, California, 94596, and his telephone number is (510) 932-
0500. To the knowledge of the Managing General Partner, the Buyer and his
affiliates are unrelated to the Partnership and its affiliates. An
affiliate of the Buyer, Cardoza Properties, Inc., ("Cardoza"), however, is
currently employed by the Partnership as the property manager of the
Property.
Purchase Price
Pursuant to the terms and conditions of the Purchase and Sale
Agreement, the Partnership has agreed to sell the Property to the Buyer
upon approval of Limited Partners owning a majority in interest of the
Units. Subject to the adjustments described below, the purchase price for
the Property is $7,275,000.
The purchase price for the Property will be adjusted as of the closing
date with respect to all items of income and expense associated with the
operation of the Property. These adjustments will reflect that all
expenses and income attributable to the period on or after the closing date
will be allocated to the Buyer and those prior to the closing date will be
allocated to the Partnership. At closing, all principal and interest on
indebtedness relating to the Property will be repaid, which is estimated to
total approximately $3,200,000 (assuming a closing date of December __,
1997). See "Distributions in Liquidation of the Partnership." In
addition, the Buyer will be credited with, or the purchase price reduced
for, certain liabilities relating to the Property at closing including,
among others, the amount of refundable tenant security deposits owed to
tenants of the Property. See Note 2 of the Notes to Unaudited Pro Forma
Financial Information for a detailed description of the estimated closing
adjustments.
Upon closing, a sales commission will be paid to Grubb & Ellis Company
(the "Broker"), the Partnership's exclusive listing agent for the sale of
the Property. Under the listing agreement, the Broker will be paid 3% of
the purchase price. In addition, the Partnership will pay Cardoza a 4%
selling commission as cooperating broker in this sale transaction. Based
upon the $7,275,000 purchase price of the Property, the sales commission
will equal $509,250. Therefore the effective purchase price paid by the
Buyer will be $6,765,750. The Broker is unrelated to the Partnership and
its affiliates; however, the cooperating broker is an affiliate of the
Buyer.
In connection with the execution of the Purchase and Sale Agreement,
the Buyer deposited $60,000 into escrow as an earnest money deposit. The
Buyer completed his due diligence review of the Property and according to
the terms of the Purchase and Sale
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Agreement his earnest money deposit became "non-refundable" on October 7,
1997, unless the Purchase and Sale Agreement is terminated for a failure of
a condition precedent to the Buyer's obligation. If the Purchase and Sale
Agreement is terminated by the Buyer for a failure of a condition precedent
to the Buyer's obligation, in addition to the return of the escrow deposit,
the Buyer may seek a reward of actual damages from the Partnership in an
amount up to $60,000. In that circumstance the Purchase and Sale Agreement
also requires the Partnership to return the escrow deposit and reimburse
the Buyer, up to a maximum of $50,000, for out of pocket expenses incurred
in connection with the Buyer's due diligence inspection of the Property,
negotiating the sale of the Property, and documentation of the sale of the
Property. Currently, the closing of the sale is expected to occur no later
than 15 days after the sale is approved by the Limited Partners.
Conditions to Closing
Because the closing of the Purchase and Sale Agreement is conditioned
upon, among other things, the approval of Limited Partners owning a
majority in interest of the Units, there can be no assurance that the
proposed sale will occur. The Buyer's further obligations under the
Purchase and Sale Agreement are subject to, among other things, the
satisfaction of certain conditions including, the Partnership's failure to
sell the Property in accordance with the terms of the Purchase and Sale
Agreement, the Partnership's failure to obtain the Limited Partner's
approval of the sale of the Property, or the Partnership's failure to
contribute to the purchase of an environmental guaranty policy which would
guarantee the closure of the environmental remediation of the Property
currently being undertaken (the "Closure Guaranty") (see "Environmental
Matters").
The Partnership's further obligations under the Purchase and Sale
Agreement are subject to, among other things, approval of the transaction
by Limited Partners owning a majority in interest of the Units on or before
January 12, 1998, and the Buyer's payment of the purchase price for the
Property. However, due to the maturity of the Partnership's current
financing arrangements, the transaction needs to be approved by limited
partners owning a majority in interest of the units on or before December
31, 1997.
Regulatory Compliance
No federal or state agency imposes requirements which, in themselves
would restrict closing the sale and transferring ownership of the Property.
However, certain conditions precedent to closing the sale are dependent
upon the actions of a state agency (see "Environmental Matters").
Factors Affecting Decision to Sell the Property
General. The Managing General Partner's determination that the sale
of the Property under the terms set forth in the Purchase and Sale
Agreement is advantageous to the Partnership is based primarily upon the
following factors: (i) the fairness of the
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purchase price; (ii) material change in the demographics of the
neighborhood surrounding the Property; (iii) the potential for increased
maintenance and capital improvement costs in future years as the Property
ages; and (iv) difficulty in obtaining first rate, low credit risk tenants
as a result of increasing competition.
Notwithstanding the Managing General Partner's recommendation to
approve the sale of the Property to the Buyer, consideration should be
given to certain disadvantages of a current sale. The Managing General
Partner has identified the following as possible disadvantages of the sale
of the Property as described herein: (i) the possibility of obtaining a
higher price from the sale of the Property to other buyers; (ii) the
possibility of improvement in the Stockton, California real estate market
to the extent that such improvement might result in materially higher net
proceeds from a sale of the Property in the future; (iii) the possibility
that future maintenance and capital improvement costs will be more than
offset by future appreciation of and/or increases in revenues generated by
the Property; and (iv) the recognition of taxable gain resulting from a
sale of the Property in 1997 rather than in a future year.
Purchase Price. The Managing General Partner believes that the
$7,275,000 purchase price for the Property represents a fair price to the
Partnership based on the (i) extensive marketing of the Property to many
potential buyers utilizing the office of the Broker, and (ii) the purchase
price of the Property being virtually equal to the most recent appraised
value of the Property as determined by an independent real estate appraisal
firm.
After the decision was made to attempt to sell the Property, several
real estate brokerage firms were interviewed, not only to determine their
capability, but to elicit their opinions as to market conditions, pricing
considerations and timing factors. The Managing General Partner then
considered whether the Property should be marketed directly to potential
buyers or through one of the brokerage firms that had been interviewed.
The Managing General Partner decided that it would be appropriate to list
the Property with a real estate brokerage firm to provide the greatest
exposure of the Property to the marketplace. Although this required paying
a commission to a broker, the Managing General Partner believed that the
broader exposure could result in a higher purchase price.
The Broker was selected from this process based on the ability and
experience of the individual directing the marketing effort and his
thorough knowledge of the market for commercial properties in the Stockton,
California area. In marketing the Property, the Broker utilized the
national organization associated with the Broker, the individual's
extensive contacts and database of past and current buyers of properties
similar to the Property.
As a result of the marketing process, the Partnership received six
offers to purchase the Property. Based on the bid price, reputation of the
proposed purchaser, and ability to consummate the transaction, three buyers
were given the opportunity to submit
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a final and best offer. To ensure that these buyers had maximum information
regarding the Property, a comprehensive package of information was
submitted to each of them. Final and best offers were then submitted to the
Broker, from which the final and best offer for the Property was selected.
The final and best offer accepted by the Partnership did not constitute the
highest cash offer for the Property, however, based upon the number and
nature of the contingencies associated with the higher cash offer
significant burdens and additional costs would have had to be absorbed by
the Partnership. Based upon its review of all the offers, the Managing
General Partner concluded that acceptance of the Buyer's offer would
produce the best results for the Partnership.
Complete appraisals of the Property by the independent real estate
appraisal firm of Joseph J. Blake and Associates, Inc. were prepared in
connection with prior annual audits of the Partnership's financial
statements. A summary of the results of the appraisals follows:
<TABLE>
<CAPTION>
Date of
Appraisal Appraised Value
---------- ---------------
<S> <C>
9/30/96 $7,300,000
9/30/95 $7,950,000
11/10/94 $8,400,000
</TABLE>
These appraisals conform to the Uniform Standards of Professional
Appraisal Practice and were each prepared by an individual appraiser with
the MAI designation from the Appraisal Institute. There is no relationship
between the Partnership, the Managing General Partner, Holdings or the
officers and directors of any of their respective affiliates, and the
appraiser, other than as client and appraiser.
The purpose of the appraisals was to estimate the market value of the
fee simple estate of the Property. The appraisals were primarily based
upon an inspection and evaluation of the physical condition of the
Property, investigation into the surrounding shopping center markets,
including a review of the rents received by and recent sales of comparable
properties, and an analysis of and capitalization of the estimated future
income streams to be generated by the Property.
Notwithstanding the Managing General Partner's belief that the
purchase price of the Property, based upon the extensive marketing of the
Property and the most recent independent appraisals, is fair, there are no
assurances that the Partnership would not be able to obtain a higher price
from a sale of the Property to other buyers or in the future.
Market Conditions and Competition for Tenants. The strategy of
marketing the Property for sale was initially prompted by stagnant market
conditions in the Stockton, California area, and the fact that the
investment in the Property was well beyond the seven to ten year holding
period anticipated at the time of its acquisition. The northwest Stockton,
California retail market has been over built in the past five years. The
additional competition has kept rental rates flat and increased vacancy
from 7% in the
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early 1990's to 10% at this time. The majority of new centers have been
built nearer to new residential developments where the demographics are
much more attractive to potential tenants than the demographics of the area
near the Property. This trend of new housing and retail centers being built
away from the Property is expected to have a negative effect on the
neighborhood immediately surrounding the Property and thus hinder the
ability to attract new tenants and raise rental rates at the Property. The
prospect of added competition from newer projects, the need to complete
certain anticipated maintenance of Property in the next one to two years to
remaining competitive in the marketplace and the material change in the
neighborhood demographics resulted in a decision to explore the feasibility
of a sale of the Property.
While the Stockton, California overall shopping center market and
interest by investors in the market is currently stable, it appears that
the construction phase of the real estate cycle has moved away from the
area surrounding the Property and, as a result, a greater supply of
shopping centers in the more demographically desirable areas of Stockton
will mean greater competition, potentially lower occupancy levels and rents
and, potentially, reduced cash flow from the Property.
Therefore, the Managing General Partner does not believe, especially
in light of the ongoing environmental remediation at the Property (see
"Environmental Matters"), that the value of the Property will increase in
the foreseeable future materially above the net sale price to be realized
by the Partnership pursuant to the Purchase and Sale Agreement. Despite
this belief, however, there are no assurances that the Stockton,
California, shopping center market will not continue to improve to the
extent that a future sale would generate materially higher net proceeds to
the Partnership than the amount to be realized from the sale of the
Property to the Buyer.
Maintenance Costs and Capital Improvement Costs. Generally, in the
initial years after the construction of a shopping center, maintenance
costs are low. As a shopping center ages, maintenance costs increase in
order to preserve the physical quality of the property and to compete with
newer shopping centers. The Property is in excess of 18 years in age and
the Managing General Partner expects that the Property will require, over
the next one to two year period, from $200,000 to $250,000 of maintenance
and capital improvement expenditures for roof and facade repairs to
maintain the competitive position of the Property.
There are no assurances that the actual costs of completing the
maintenance and capital improvement projects discussed above will not be
more or less than the estimates provided or that additional maintenance
expenses will not be required. Further, there are no assurances that such
maintenance and capital improvement expenditures would not be more than
offset by future appreciation of and/or revenue generated by the Property.
Tax Matters. With regard to ongoing tax benefits related to the
ownership of the Property, the Managing General Partner believes that most
Limited Partners are unable to use losses generated by these investments
due to the limitations on the deductibility of
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passive activity losses imposed by the Tax Reform Act of 1986. Thus, other
than a deferral of the gain related to a sale of the Property, most Limited
Partners likely will derive no significant tax benefits from a longer
holding period.
The major disadvantage to most Limited Partners of a current sale of
the Property and dissolution of the Partnership from a tax standpoint is
the realization of the gain on the sale in 1997. If the sale of the
Property was accomplished in a future year, a Limited Partner's tax
liability related to the gain from a sale of the Property would be deferred
to that year. With regard to tax exempt Limited Partners, the sale of the
Property will create unrelated business taxable income. See "Federal
Income Tax Consequences" below for a detailed presentation of the estimated
tax consequences of the sale.
Summary. Based upon (i) the Managing General Partner's determination
that the purchase price for the Property is fair, (ii) the current and
anticipated future status of the Stockton, California, real estate market,
(iii) the anticipation of increased future maintenance and capital
improvement costs which may not be offset by appreciation of and/or revenue
generated by the Property, (iv) the material change in the demographics of
the neighborhood surrounding the Property, and (v) the elimination of the
tax benefits to non-tax exempt Limited Partners associated with ownership
of the Property, the Managing General Partner has determined that the
proposed sale of the Property in accordance with the Purchase and Sale
Agreement and subsequent liquidation and dissolution of the Partnership is
in the best interests of the Partnership.
Environmental Matters
From approximately 1979 through 1990 a card-lock fueling station had
been operated on a parcel of land adjacent to and a part of the Property.
In 1990, operation of the fueling station ceased, and in fiscal 1991 the
Partnership determined that it would be permanently closed. In compliance
with the California and San Joaquin County environmental regulatory
requirements, the Partnership contracted with an environmental engineering
firm to perform Phase I and Phase II environmental site assessments on this
specific parcel of land. The results of those site assessments suggested
that the site may contain petroleum contaminants.
In fiscal 1992, the Partnership contracted for the excavation and
removal of the three underground fuel storage tanks located on this parcel
of land. Upon excavation and removal of those underground fuel storage
tanks, leakage of petroleum contaminants was discovered through performance
of soil and groundwater tests. The Partnership retained California legal
counsel and contracted with an environmental engineering firm (the
"Engineering Firm") to perform further site analysis and to determine the
proximate cause and extent of any contaminants.
In the first quarter of fiscal 1993, the Partnership received the
Preliminary Site Assessment report from the Engineering Firm detailing the
results of its Phase II soil and groundwater sampling and analysis, as well
as the Engineering Firm's recommendation
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for further action. In working with the San Joaquin County Public Health
Services/Environmental Health Division (the "County Health Division"), the
Partnership received approval to proceed with quarterly groundwater
monitoring of the site for a term of one year which was completed as of
December 31, 1993. An Evaluation of Remedial Alternatives For Petroleum
Hydrocarbon Impacted Soil was submitted to the County Health Division for
further review and comments. The County Health Division notified the
Partnership that the remedial alternative consisting primarily of soil
vapor extraction complies with regulatory requirements and requested that
the Partnership submit a work plan to the regulatory agency which included
the proposed actions and proposed schedule for implementation and operation
of the soil vapor extraction system. However, the Partnership became aware
that groundwater contamination had also occurred and then began the process
of determining the method, cost and timing of required soil and groundwater
remediation measures. The Partnership has spent approximately $300,000 to
date in connection with the remediation program and since fiscal 1993 has
maintained an accrual of approximately $250,000 as a provision for possible
additional remediation expenses.
The existence of the petroleum contamination has limited the potential
buyers of the Property. Specifically, it has prevented marketing to many
institutional buyers and public real estate investment trusts. The
Partnership had to focus its marketing efforts on entrepreneurial investors
who were not subject to financing or other constraints due to environmental
remediation issues.
Pursuant to the Purchase and Sale Agreement, the Buyer is purchasing
the Property "as is" from the Partnership subject to the following
conditions related to the environmental issues at the Property. The Buyer
has investigated the Property thoroughly and is aware of and has evaluated
the environmental remediation requirements with respect to the Property.
The Buyer has released the Partnership from any and all claims it may have
against the Partnership with respect to environmental remediation matters;
however, the Partnership will remain liable, to persons other than the
Buyer, to the extent provided by law for any environmental remediation
relating to its period of ownership of the Property.
As a condition of the Purchase and Sale Agreement, the Partnership
must purchase property transfer liability insurance (the "Environmental
Insurance") and resolve the pending environmental investigation with the
County Health Division. The Managing General Partner is purchasing the
Environmental Insurance for the benefit of the Partnership to insure the
Partnership against any future claims for environmental matters and to
facilitate the sale of the Property. The appoximate $67,000 cost of the
Environmental Insurance will be paid from Partnership funds. The
Environmental Insurance will cover claims relating to environmental
contamination unknown as of the date of the policy. The Environmental
Insurance covers the Partnership (as an additional insured) and the Buyer
(as the primary insured) the aggregate claims of up to $2,000,000 for a
period of 10 years.
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As noted in the preceding paragraph, the Purchase and Sale Agreement
requires that the Partnership obtain a written notice from the County
Health Division confirming that the County Health Division has recommended
that all pending investigations of the environmental condition of the
Property be terminated, closed, and discontinued (the "Closure Letter"). In
the event that the Partnership has not obtained the Closure Letter on or
before December 31, 1997, (i) the Buyer may terminate the Purchase and Sale
Agreement, (ii) the Buyer and the Partnership may mutually agree to extend
the period for obtaining the Closure Letter until June 30, 1998, (iii) the
Buyer and the Partnership may mutually agree to waive the Closure Letter
requirement, or (iv) the Buyer or the Partnership may require the other
party to contribute one-half the cost of a Closure Guaranty which
guarantees that an environmental firm can obtain the Closure Letter. If
either the Buyer or the Partnership elects to require contribution to the
Closure Guaranty, the party making such election obligates itself to
contribute one-half of the cost of the Closure Guaranty, the Partnership's
liability under the contribution arrangement, however, is limited to
$50,000.
The Managing General Partner intends to complete all environmental
remediation required by applicable regulatory authorities prior to closing
the sale of the Property. The Managing General Partner is unsure of the
time required to complete all environmental remediation to the satisfaction
of applicable regulatory authorities. The Partnership will continue to bear
the cost of environmental remediation of the Property through completion of
such activities. The Managing General Partner intends to retain a reserve,
adequate to fund all anticipated environmental remediation costs, from cash
available to the Partnership until such time as such costs are fully
funded.
After completion of the foregoing and such other steps as the Managing
General Partner may determine necessary to adequately provide for all
existing and potential environmental liabilities of the Partnership, a
final distribution and liquidation of the Partnership will be made and the
Partnership dissolved. Therefore, Limited Partners may expect an initial
distribution after closing of the sale of the Property of cash available
for distribution (less cash retained by the Partnership to maintain
adequate reserves) and a subsequent distribution upon completion of
environmental remediation as described above. The Managing General Partner
is unable at this time to estimate the full extent of additional expenses
that may be incurred. The estimate of costs and their timing of payment
could change as a result of (i) changes to a remediation plan required by
the County Health Division , (ii) changes in technology available to treat
the site, (iii) unforeseen circumstances existing at the site and (iv)
differences between actual inflation rates and rates assumed in preparing
the estimate.
Projected Operations of the Partnership
Historically, the Partnership has incurred cash flow deficits from
time to time. However, as a result of the sale of Partnership properties
and environmental remediation costs being incurred by the Partnership, the
Partnership is currently operating on a marginal break-even basis. If the
operating results of the Partnership were to deteriorate
12
<PAGE>
or the Partnership incurred substantial additional costs for environmental
remediation or capital expenditures, the Partnership may require funds in
excess of Partnership cash reserves to support these expenditures. The
Managing General Partner has no obligation to make advances to the
Partnership. To the extent that positive cash flow is generated and the
Property is not sold, the Managing General Partner intends to maintain
necessary cash reserves, repay amounts payable to the Managing General
Partner, and thereafter make distributions to the Limited Partners.
The Managing General Partner believes that a sale of the Property at
this time is advantageous to the Partnership by avoiding the possibility of
future cash flow deficits, providing funds to the Partnership to repay its
outstanding debt (including debt owed to the Managing General Partner) and
to make distributions to the Limited Partners.
The mortgage payable on the Property in the amount of $3,204,118 at
June 30, 1997 is secured by a first deed of trust and is nonrecourse to the
Partnership. The carrying value of the Property at June 30, 1997 was
$5,569,588. The interest rate on the loan was 10.5% and matures December
31, 1997. The Partnership is unable at this time to determine whether its
financing arrangements can be extended past its current maturity date in
the event the sale transaction is not finalized prior to December 31, 1997.
In the event the current financing cannot be extended, the Partnership
would be unable to meet its outstanding loan obligation and could
subsequently lose the Property in forclosure.
Certain Effects of the Sale
Upon consummation of the sale of the Property, the proceeds of the
sale will be used to repay the mortgage note secured by the Property and
expenses of such sale. The expenses of the sale are estimated at $665,250
and are comprised of a sales commission ($509,250) and estimated title,
legal fees the Environmental Insurance and other expenses ($142,000).
The Partnership will then apply the remaining net proceeds from the
sale of the Property and any other funds of the Partnership to the payment
of remaining debts and liabilities of the Partnership (including amounts
owed to the Managing General Partner, which totaled $126,030 on June 30,
1997, including cash advances of $9,324, deferred fees earned of $112,386
and unpaid administrative expenses of $4,320), the expenses of liquidation
and to the setting up of cash reserves, if necessary, to cover contingent
liabilities arising out of or in connection with the operations of the
Partnership (including reserves to cover environmental remediation expenses
and liabilities). The amount owed to the Managing General Partner will be
reduced by the $102,176 negative capital account of the Managing General
Partner generated from the sale of the Property, resulting in a net payable
to the Managing General Partner of $23,854. The remaining amounts will be
distributed to the Limited Partners in one or more distributions. The
timing and amount of the final distribution in liquidation of the
Partnership will depend upon resolution of environmental remediation
liabilities. See "Environmental Matters." Based upon the pro forma
financial information as of June 30, 1997, the Limited Partners
13
<PAGE>
would receive approximately $3,830,951, or approximately $174 per Unit
(without reduction for additional environmental remediation expenses).
Neither Colorado law nor the Partnership Agreement afford dissenters'
or appraisal rights to the Limited Partners in connection with the proposed
sale of the Property. If the proposed transaction is approved by Limited
Partners owning a majority in interest of the Units, all Limited Partners
will receive a distribution in accordance with the procedures prescribed by
the Partnership Agreement.
It is anticipated that if the proposed transaction is not consummated,
the Managing General Partner will continue to manage the Property on behalf
of the Partnership until such time as the Property is sold.
Accounting Treatment
Upon closing the sale of the Property and subsequent liquidation of
the Partnership, the Partnership currently estimates that it will realize a
net gain for accounting purposes of approximately $897,918.
Federal Income Tax Consequences
The purpose of the following discussion of Federal income tax
consequences is to inform the Limited Partners of the anticipated Federal
income tax consequences to the Limited Partners arising from the sale of
the Property and the subsequent liquidation and dissolution of the
Partnership. The tax information included herein was prepared by the
Managing General Partner. The tax information is taken from tax data
compiled by the Managing General Partner in its role as the Partnership's
tax administrator and is not based upon the advice or formal opinion of
counsel or any other independent tax advisor. The tax discussion that
follows is merely intended to inform the Limited Partners of anticipated
Federal income tax consequences and should not be considered tax advice.
The following discussion does not take into consideration any state income
tax consequences.
The tax estimates presented in this section utilize two different tax
rate scenarios ("Higher" and "Lower") and two different passive activity
loss ("PAL") scenarios in an effort to provide Limited Partners with a
range of the tax consequences experienced to date related to their
investment in the Partnership and the tax consequences resulting from the
sale of the Property and subsequent liquidation and dissolution of the
Partnership contemplated herein. It is possible that Limited Partners'
individual tax situations will vary from the scenarios presented and as a
result Limited Partners are encouraged to review the consequences of the
sale with their tax advisor.
Through December 31, 1996, the Limited Partners have received the
following estimated tax expense/(benefit):
14
<PAGE>
<TABLE>
<CAPTION>
Higher Lower
Scenario 1 Tax Rates Tax Rates
---------- ----------- -----------
<S> <C> <C>
Gross Tax Expense/(Benefit) $(4,083,427) $(2,397,350)
Expense/(Benefit) Per $1,000 Unit (186) (109)
</TABLE>
These estimates are based on the following assumptions:
(a) Each Limited Partner was allocated the same amount of gain, loss, income, or
deduction per Unit in the initial year of the Partnership whereas the actual
amount of income allocated during the initial year was different based upon
the day on which the Limited Partner acquired an interest in Units of the
Partnership.
(b) The PAL's generated by the Partnership were fully deducted in the year the
losses were generated.
(c) There were no limitations on the deductibility of capital losses. Capital
losses were fully deducted in the year in which they were generated.
<TABLE>
<CAPTION>
(d) Tax rates per year:
Higher Lower
Year Tax Rates Tax Rates
---- --------- ---------
<S> <C> <C>
1984-1986 40% 25%
1987-1997 28% 15%
</TABLE>
<TABLE>
<CAPTION>
Higher Lower
Scenario 2 Tax Rates Tax Rates
---------- --------- ---------
<S> <C> <C>
Gross Tax Expense/(Benefit) $(3,307,010) $(1,981,412)
Expense/(Benefit) Per $1000 Unit (150) (90)
</TABLE>
These estimates are based on the following assumptions:
(a) Each Limited Partner was allocated the same amount of gain, loss, income,
or deduction per Unit in the initial year of the Partnership whereas the
actual amount of income allocated during the initial year was different
based upon the day on which the Limited Partner acquired an interest in
Units of the Partnership.
(b) Only the PAL deduction allowed by the phase-in rules of the 1986 Tax Act
were used to offset passive activity income.
(c) There were no limitations on the deductibility of capital losses. Capital
losses were fully deducted in the year in which they were generated.
15
<PAGE>
(d) Tax rates per year:
<TABLE>
<CAPTION>
Higher Lower
Year Tax Rates Tax Rates
-------- --------- ---------
<S> <C> <C>
1984-1986 40% 25%
1987-1997 28% 15%
</TABLE>
The sale of the Property and liquidation and dissolution of the Partnership
will result in a net gain for Federal income tax purposes in 1997. The amount of
this net gain allocated to the Limited Partners is estimated to be $3,350,953.
The Managing General Partner estimates that the composition of this gain and the
Federal income tax liability or benefit related thereto will be as follows:
<TABLE>
<CAPTION>
Per Unit
--------
Higher Lower
Tax Tax
Total Rates Rates
---------- ------ -----
<S> <C> <C> <C>
Ordinary income $ 53,296 - -
Section 1231 gain/(1)/ 3,297,657 - -
Net gain allocated to ----------
Limited Partners $3,350,953 - -
==========
Federal income tax
liability - no PAL
carryforward/(2)/ -- $43 $23
=== ===
Federal income tax
liability - PAL carryforward/(3)/ -- $ 7 $ 4
=== ===
</TABLE>
/(1)/ Generally, Section 1231 gain is treated as long-term capital gain. The
maximum tax rate on capital gains in 1997 is 28 percent, whereas the
maximum tax rate in 1997 on ordinary income is 39.6 percent.
/(2)/ This Federal income tax calculation assumes:
(a) The PAL generated by the Partnership in prior years were fully deducted
in the year the losses were generated.
(b) There are no limitations on the deductibility of the long-term capital
loss. Capital losses were fully deducted in the year the losses were
generated.
16
<PAGE>
(c) The calculation is as follows:
<TABLE>
<CAPTION>
Higher Lower
Tax Rates Tax Rates
--------- ---------
<S> <C> <C>
Assumed Federal tax rate 28% 15%
Total income allocated (per Unit) $152 $152
Federal income tax (per Unit) $ 43 $ 23
</TABLE>
/(3)/ This Federal income tax calculation assumes:
(a) Only the PAL deduction allowed by the phase-in rules of the 1989
Tax Act were used to offset passive income.
(b) There are no limitations on the deductibility of the long-term
capital loss. Capital losses were fully deducted in the year the
losses were generated.
(c) The calculation is as follows:
<TABLE>
<CAPTION>
Higher Lower
Tax Rates Tax Rates
--------- ---------
<S> <C> <C>
Assumed Federal tax rate 28% 15%
Total income allocated (per Unit) $26 $26
Federal income tax (per Unit) $ 7 $ 4
</TABLE>
The Limited Partners' share of Partnership syndication costs is $2,057,308
($94 per Unit). These costs have never been deducted by the Partnership. Please
consult your tax advisor to discuss the proper treatment of these costs upon the
liquidation of the Partnership and final distribution corresponding to your
Partnership interest.
The preceding tax discussion assumes the Limited Partner is a taxable
entity. For tax-exempt Limited Partners such as IRAs, certain pension and
profit-sharing plans and other tax-exempt entities, the unrelated business
taxable income ("UBTI") allocable to the Limited Partners from the sale of the
Property and the liquidation and dissolution of the Partnership is estimated as
follows:
<TABLE>
<CAPTION>
Total Per Unit
---------- --------
<S> <C> <C>
UBTI from sale of the Property $3,307,699 $150
Income from operations $ 53,296 $ 2
</TABLE>
Tax-exempt entities subject to UBTI should consult their tax advisor for
the treatment and reporting of the UBTI from the sale of the Property, the
income from operations and the tax consequences of the liquidation and
dissolution of the Partnership and final distribution corresponding to their
Partnership interest.
17
<PAGE>
Interests of Certain Persons in the Purchase and Sale Agreement
After the payment of the remaining liabilities of the Partnership and the
expenses of liquidation and the establishment of cash reserves as the Managing
General Partner determines appropriate to cover potential contingent liabilities
(see "Environmental Matters"), the Managing General Partner intends to
distribute all of the available funds of the Partnership. Included in the
remaining liabilities of the Partnership are the net amounts owed to the
Managing General Partner for cash advances made to the Partnership, deferred
fees earned, and unpaid administrative expenses reduced by the negative capital
account balance of the Managing General Partner resulting from the sale of the
Property. These net amounts totaled $23,854 as of June 30, 1997, and will be
adjusted for any additional liabilities of the Partnership to the Managing
General Partner through closing. See "Distributions in Liquidation of the
Partnership" below.
Pursuant to the Partnership Agreement, the Managing General Partner is not
permitted to grant to itself or to any affiliate an exclusive listing for the
sale of Partnership properties. The Managing General Partner will not receive a
sales commission or fee associated with the sale of the Property. None of the
officers, directors, employees or affiliates of Holdings will receive any
incentive compensation related to the sale of the Property.
Distributions in Liquidation of the Partnership
The following is a brief summary of the Partnership's estimated
distributions in liquidation of the Partnership after the sale of the Property.
All of the following selected financial information is based upon amounts as of
June 30, 1997, and certain estimates of liabilities at closing (assuming a
closing date of December __, 1997). The estimated distributions do not take
into consideration federal or state income tax liabilities or additional
environmental remediation expenses. Final results may differ from these
estimates. A more detailed discussion of the financial consequences of the sale
of the Property and liquidation of the Partnership is set forth below under the
caption "Unaudited Pro Forma Financial Information." All Limited Partners are
encouraged to review carefully the unaudited pro forma financial statements and
notes thereto.
If the Limited Partners owning a majority in interest of the Units approve
the proposed sale of the Property and the liquidation and dissolution of the
Partnership and the transaction is closed, the Partnership will distribute the
available funds of the Partnership pursuant to the terms of the Partnership
Agreement. The estimated available funds of the Partnership after the sale of
the Property and subsequent dissolution do not include additional expenses for
environmental remediation.
18
<PAGE>
<TABLE>
<CAPTION>
Estimated Distribution to Limited Partners:
- -------------------------------------------
<S> <C>
Total contract sale price $ 7,275,000
Selling commission (509,250)
Other expenses of sale (primarily legal fees and environmental and
title insurance) (142,000)
Less: Current liabilities of Venetian (including mortgage payable) (3,543,429)
-----------
Adjusted cash received 3,080,321
Add: Current liquid assets of the Partnership 789,484
Less: Outstanding debt to Managing General Partner (23,854)
Estimated expenses of liquidation and dissolution (15,000)
-----------
Estimated cash available for final distribution $ 3,830,951
===========
Estimated distribution to Limited Partners per $1,000 Unit $ 174.13
===========
</TABLE>
Based upon financial information available at June 30, 1997, set forth
below is a summary of all cash distributions that will have been made to Limited
Partners from the inception of the Partnership through the distribution of the
estimated available cash in liquidation and dissolution of the Partnership
(without regard to any additional environmental remediation expenses).
<TABLE>
<CAPTION>
Aggregate Distribution
Distribution per $1,000 Unit
------------ ---------------
<S> <C> <C>
Actual Partnership Distributions from
Net Operating Cash Flow to Date $5,686,490 $258.47
Estimated Partnership Distributions in
Liquidation of the Partnership 3,830,951 174.13
---------- -------
Total Estimated Cash Distributions to the
Limited Partners $9,517,441 $432.60
========== =======
</TABLE>
Based upon financial information available at June 30, 1997, set forth
below is an estimate of the cumulative per Unit Federal income tax results, for
taxable persons, and cash distributions during the life of the Partnership
assuming the sale of the Property and estimated distribution of available cash
in liquidation and dissolution of the Partnership (without regard to any
additional environmental remediation expenses):
<TABLE>
<CAPTION>
Higher Lower
Tax Rates(1) Tax Rates(1)
------------ ------------
<S> <C> <C>
Federal Income Tax Results
Ordinary loss $(276) $(157)
Section 1231 Gain 133 71
----- -----
Total Tax Benefit per Unit $(143) $ (86)
===== =====
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Estimated Cash Distributions to Limited
Partners per Unit (Return of Capital) $ 436 $ 436
===== =====
Total Tax and Cash Benefit per Unit $ 579 $ 522
===== =====
- -------------
</TABLE>
(1) Assumed Tax Rates:
<TABLE>
<CAPTION>
Higher Lower
Year Tax Rates Tax Rates
--------- ----------- -----------
<S> <C> <C> <C>
1984-1986 40% 25%
1987-1997 28% 15%
</TABLE>
20
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma balance sheet assumes that as of June 30,
1997, the Partnership had sold the Property to the Buyer for $7,275,000 and
liquidated and dissolved the Partnership. The funds available for distribution
to Limited Partners, adjusting for payment of liabilities of the Partnership,
expenses and prorations of sale and expenses of liquidation, are expected to
total approximately $3,897,951. All of such funds will be distributed to the
Limited Partners pursuant to the terms of the Partnership Agreement (subject to
reductions for additional environmental remediation expenses).
The unaudited pro forma statements of operations which follow restate the
historical operations of the Partnership for the year ended September 30, 1996,
and the nine months ended June 30, 1997, through the elimination in total of the
operating results of the Partnership.
The unaudited pro forma balance sheet and unaudited pro forma statement of
operations should be read in conjunction with the appropriate notes to the
unaudited pro forma financial information.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA FINANCIAL INFORMATION IS BASED
UPON AMOUNTS AS OF JUNE 30, 1997. FINAL RESULTS MAY DIFFER FROM SUCH
INFORMATION.
21
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Pro Forma Balance Sheet
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------------------------------------------
<S> <C> <C> <C> <C>
Historical Sale of Liquidation & Pro Forma
June 30, 1997 Venetian Dissolution June 30, 1997
------------- ----------- ------------- -------------
Assets
- ------
Real estate held for sale $5,569,588 $(5,569,588) $ - $-
Cash and cash equivalents, at cost
which approximates market value 789,484 3,147,321 (3,936,805) -
Accounts receivable and other assets 137,835 (137,835) - -
Debt issuance costs, net of accumulated
amortization of $43,673 3,409 (3,409) - -
---------- ----------- ----------- --
Total Assets $6,500,316 $(2,563,511) $(3,936,805) $-
========== =========== =========== ==
Liabilities and Partners' Capital
- ---------------------------------
Mortgages payable, net of unamortized
debt discount of $2,509 $3,204,118 $(3,204,118) $ - $-
Payable to managing general partner 126,030 - (23,854) -
(102,176)
Tenants' deposits 38,458 (38,458) - -
Accounts payable and accrued liabilities 293,812 (293,812) - -
Unearned rental income 7,041 (7,041) - -
---------- ----------- ----------- --
Total Liabilities 3,669,459 (3,543,429) (126,030) -
---------- ----------- ----------- --
Partners' Capital:
General partners (111,975) 9,799 102,176 -
Limited partners 2,942,832 970,119 (3,912,951) -
---------- ----------- ----------- --
Total Partners' Capital 2,830,857 979,918 (3,810,775) -
---------- ----------- ----------- --
Total Liabilities & Partners' Capital $6,500,316 $(2,563,511) $(3,936,805) $-
========== =========== =========== ==
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Pro Forma Statement of Operations
For the nine months ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------
Historical Pro Forma
Nine Months Ended Sale of Venetian, Nine Months Ended
June 30, 1997 Liquidation & Dissolution June 30, 1997
----------------- ------------------------- -----------------
<S> <C> <C> <C>
Revenue:
Rental income $593,969 $(593,969) $ -
Tenant reimbursements for common
area charges, insurance and taxes 203,583 (203,583) -
Other income 48,169 (48,169) -
-------- --------- ---
845,721 (845,721) -
-------- --------- ---
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 274,831 (274,831) -
Property taxes 64,624 (64,624) -
Fees and reimbursements to
managing general partner 76,395 (76,395) -
Other management fees 35,160 (35,160) -
Repairs and maintenance 102,207 (102,207) -
Utilities 26,433 (26,433) -
Other administrative 68,820 (68,820) -
Environmental 7,825 (7,825) -
-------- --------- ---
656,295 (656,295) -
-------- --------- ---
Net earnings (loss) $189,426 $(189,426) $ -
======== ========= ===
Net earnings per limited partnership unit
using the weighted average number of
limited partnership units outstanding
of 22,000 $ 8.61 $ (8.61) $ -
======== ========= ===
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Pro Forma Statement of Operations
For the year ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------
Historical Pro Forma
Year Ended Sale of Venetian, Year Ended
September 30, 1996 Liquidation & Dissolution September 30, 1996
------------------- ------------------------- ------------------
<S> <C> <C> <C>
Revenue:
Rental income $1,323,274 $(1,323,274) $ -
Tenant reimbursements for common
area charges, insurance and taxes 229,628 (229,628) -
Other income 78,783 (78,783) -
---------- ----------- ---
1,631,685 (1,631,685) -
---------- ----------- ---
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 526,180 (526,180) -
Depreciation 317,221 (317,221) -
Property taxes 143,570 (143,570) -
Fees and reimbursements to managing
general partner 133,530 (133,530) -
Other management fees 72,928 (72,928) -
Salaries of on-site property managers 62,888 (62,888) -
Repairs and maintenance 170,148 (170,148) -
Utilities 71,245 (71,245) -
Other administrative 202,982 (202,982) -
Environmental costs 16,596 (16,596) -
---------- ----------- ---
1,717,288 (1,717,288) -
---------- ----------- ---
Earnings (loss) from operations (85,603) 85,603 -
Gain (loss) on sale of real estate
investment 1,329,705 (1,329,705) -
---------- ----------- ---
Net earnings (loss) $1,244,102 $(1,244,102) $ -
========== =========== ===
Net earnings (loss) per limited partnership unit
using the weighted average number of
limited partnership units outstanding of
22,000 $ 55.98 $ (55.98) $ -
========== =========== ===
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
1) The unaudited pro forma balance sheet assumes that the Partnership had sold
Venetian Square Shopping Center ("Venetian") for $7,275,000 and liquidated
and dissolved the Partnership as of June 30, 1997. The unaudited pro forma
statements of operations restate the historical operations of the
Partnership for the year ended September 30, 1996, and the nine months
ended June 30, 1997, by eliminating in total the operating results of the
Partnership.
2) The estimated gain recognized from the sale of Venetian and estimated
distribution of available funds in liquidation of the Partnership to
Limited Partners as of June 30, 1997 has been computed as follows:
<TABLE>
<CAPTION>
Gain on sale of real estate investment:
- ---------------------------------------
<S> <C>
Total contract sale price $ 7,275,000
Less: Net book value of real estate investment (5,569,588)
Selling commission (509,250)
Other expenses of sale (primarily legal fees
and environmental and title insurance) (142,000)
-----------
Gain on sale 1,054,162
Write off of non-cash assets (141,244)
-----------
Net gain on sale 912,918
Estimated expenses of liquidation and dissolution (15,000)
-----------
Net gain on sale and dissolution $ 897,918
===========
Distribution to Partners:
- -------------------------
Total contract sale price $ 7,275,000
Selling commission (509,250)
Other expenses of sale (primarily legal fees and environmental and title insurance) (142,000)
Less: Current liabilities of Venetian (including mortgages payable) (3,543,429)
-----------
Adjusted cash received 3,080,321
Add: Current liquid assets of the Partnership 789,484
Less: Outstanding debt to Managing General Partner (23,854)
Estimated expenses of liquidation and dissolution (15,000)
-----------
Estimated cash available for final distribution $ 3,830,951
===========
Estimated distribution to Limited Partners per $1,000 unit $ 174.13
===========
</TABLE>
25
<PAGE>
CERTAIN INFORMATION ABOUT THE PARTNERSHIP,
THE MANAGING GENERAL PARTNER AND HOLDINGS
The principal executive offices of the Partnership, the Managing General
Partner and Holdings are located at 77 West Wacker Drive, Chicago, Illinois,
60601, and their telephone number is (312) 574-6000.
The Units are registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act"). As such, the Partnership currently is
subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is obligated to file periodic reports, proxy statements
and other information with the Securities and Exchange Commission relating to
its business, financial condition and other matters. Reports and other
information filed by the Partnership can be inspected at and obtained from the
Commission at prescribed rates at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at certain regional offices of the Commission located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 13th Floor, 7 World Trade Center, New York, New York 10048.
The Commission maintains a website at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The Partnership's registration and
reporting requirements under the Exchange Act will discontinue after the sale of
the Property and liquidation and dissolution of the Partnership.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP is the Partnership's independent auditors. No
representatives of KPMG Peat Marwick LLP will attend the Special Meeting of
Limited Partners.
INCORPORATION BY REFERENCE
The following shall be deemed to be incorporated by reference into this
Proxy Statement:
(a) The Partnership's Annual Report on Form 10-K/A for the fiscal year
ended September 30, 1996, specifically Item 1. Business, Item 2.
Properties, Item 5. Market for the Registrant's Limited Partnership
Interests and Related Limited Partner Matters, Item 6. Selected
Financial Data, Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations, Item 8. Financial
Statements and Supplementary Data, and Item 13. Certain Relationships
and Related Transactions;
(b) The Partnership's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997; and
(c) All documents subsequently filed pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the date of the Special Meeting.
26
<PAGE>
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement. This Proxy Statement is accompanied by the Partnership's Annual
Report on Form 10-K/A for the fiscal year ended September 30, 1996, and the
Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
The Partnership will provide, without charge, to each person to whom this Proxy
Statement is delivered, upon written or oral request of such person and by first
class mail or equally prompt means, within one business day of receipt of such
request, a copy of any and all other information that has been incorporated by
reference in this Proxy Statement (not including exhibits to the information
that is incorporated by reference unless such exhibits are specifically
incorporated by reference into the information that the proxy statement
incorporates). Requests for such information should be directed to Investor
Services Department, 77 West Wacker Drive, Chicago, Illinois 60601, (312) 574-
5312.
27
<PAGE>
Appendix A
PROXY
BOETTCHER WESTERN PROPERTIES III LTD.
77 West Wacker Drive, Chicago, Illinois 60601
This proxy is solicited on behalf of
Boettcher Western Properties III Ltd.
The undersigned hereby appoints each of Thomas M. Mansheim and Kelly J.
Stradinger, individually, with full power of substitution, as proxies, and
hereby authorizes them to represent and to vote as designated below all units of
limited partner interest of Boettcher Western Properties III Ltd. (the
"Partnership") held of record by the undersigned on November ______, 1997 at the
Special Meeting of the Limited Partners of the Partnership to be held on
December __, 1997, or any adjournments or postponements thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Limited Partner or, if no direction is given, this
proxy will be voted FOR the Proposal and in the same manner with respect to any
proposal to adjourn the Special Meeting. Additionally, this proxy may be voted
in the discretion of the proxies appointed hereby with respect to any matter
incident to the conduct of the Special Meeting.
Please check the appropriate blanks below in blue or black ink.
Proposal to sell substantially all the assets of the Partnership, comprised
of the shopping center property owned by the Partnership located in Stockton,
California, commonly known as Venetian Square Shopping Center, and to
subsequently liquidate and dissolve the Partnership.
___ For ___ Against ___ Abstain
_____________________________________ __________
Signature Date
_____________________________________
Print Name
_____________________________________ __________
Signature, if held jointly Date
_____________________________________
Print Name
Please sign exactly as your name appears on the certificate(s) representing
your limited partner interest(s). When such interest(s) are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please have signed in full corporate name by the president or
other authorized officer. If a partnership, please have signed in
partnership name by an authorized person.
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
