UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - - - - - --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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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: 0-13341
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HUTTON/GSH COMMERCIAL PROPERTIES 3
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(Exact name of registrant as specified in its charter)
Virginia 11-2680561
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, New York, NY 10285
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(Address of principal executive offices) (Zip code)
(212) 526-3237
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Consolidated Balance Sheets
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March 31, December 31,
Assets 1995 1994
- - - - - - -------------- ---------- ----------
Real estate investments, at cost:
Land $ 6,422,301 $ 6,422,301
Buildings and improvements 39,471,319 39,764,931
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45,893,620 46,187,232
Less accumulated depreciation (16,204,704) (16,113,296)
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29,688,916 30,073,936
Cash and cash equivalents 1,686,011 1,637,501
Restricted cash 220,163 216,079
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1,906,174 1,853,580
Accounts and rent receivable, net of
allowance for doubtful accounts of
$13,332 in 1995 and $14,557 in 1994 28,503 28,326
Deferred rent receivable 231,573 235,246
Prepaid expenses and other assets, net
of accumulated amortization of $742,107
in 1995 and $718,547 in 1994 599,467 645,993
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Total Assets $32,454,633 $32,837,081
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 292,380 $ 426,642
Due to affiliates 25,414 50,702
Distributions payable 281,902 281,902
Security Deposits 199,276 204,465
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Total Liabilities 798,972 963,711
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Minority Interest 171,315 171,315
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Partners' Capital (Deficit):
General Partners (329,547) (321,732)
Limited Partners 31,813,893 32,023,787
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Total Partners' Capital 31,484,346 31,702,055
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Total Liabilities and Partners' Capital $32,454,633 $32,837,081
========== ==========
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Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1995
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General Limited
Partners Partners Total
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Balance at December 31, 1994 $(321,732) $32,023,787 $31,702,055
Net income 642 63,551 64,193
Distributions (8,457) (273,445) (281,902)
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Balance at March 31, 1995 $(329,547) $31,813,893 $31,484,346
======== ========== ==========
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Operations
For the three months ended March 31, 1995 and 1994
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Income 1995 1994
- - - - - - ----------------- --------- ---------
Rent $1,273,051 $1,043,242
Interest 22,245 5,907
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Total Income 1,295,296 1,049,149
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Expenses
- - - - - - -----------------
Property operating 567,504 570,846
Depreciation and amortization 603,687 621,662
General and administrative 59,912 54,372
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Total Expenses 1,231,103 1,246,880
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Net Income (Loss) $ 64,193 $ (197,731)
========= =========
Net Income (Loss) Allocated:
To the General Partners $ 642 $ (1,977)
To the Limited Partners 63,551 (195,754)
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$ 64,193 $ (197,731)
========= =========
Per limited partnership unit
(109,378 outstanding) $ 0.58 $ (1.79)
========= =========
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
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Cash Flows from Operating Activities: 1995 1994
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Net income (loss) $ 64,193 $ (197,731)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 603,687 621,662
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Restricted cash (4,084) 962
Accounts and rent receivable (177) 32,846
Deferred rent receivable 3,673 8,293
Notes receivable -- 51,403
Prepaid expenses (11,456) (37,124)
Accounts payable and accrued expenses (134,262) 86,769
Due to affiliates (25,288) (12,117)
Security deposits payable (5,189) --
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Net cash provided by operating activities 491,097 554,963
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Cash Flows from Investing Activities:
Additions to real estate assets (160,685) (393,052)
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Net cash used for investing activities (160,685) (393,052)
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Cash Flows from Financing Activities:
Cash distributions (281,902) (112,761)
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Net cash used for financing activities (281,902) (112,761)
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Net increase in cash and cash equivalents 48,510 49,150
Cash and cash equivalents at beginning of period 1,637,501 734,361
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Cash and cash equivalents at end of period $1,686,011 $ 783,511
========= =========
Supplemental Schedule of Non-Cash Investing Activity:
Write-off of fully depreciated assets $ 454,297 $ --
========= =========
See accompanying notes to the consolidated financial statements.
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Notes to the Consolidated Financial Statements
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The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of March 31, 1995 and the results of operations and cash
flows for the three months ended March 31, 1995 and 1994 and the statement of
changes in partners' capital (deficit) for the three months ended March 31,
1995. Results of operations for the period are not necessarily indicative of
the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist that require disclosure in this interim report per
Regulation S-X, Rule 10-01, Paragraph (a)(5).
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Part I, Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
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Liquidity and Capital Resources
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The Partnership had cash and cash equivalents totaling $1,686,011 at March 31,
1995 compared with $1,637,501 at December 31, 1994. The increase of $48,510 is
due to net cash provided by operating activities in excess of additions to real
estate assets totaling $160,685 and the payment of cash distributions to
partners totaling $281,902. The Partnership had a restricted cash balance of
$220,163 at March 31, 1995, compared with $216,079 at December 31, 1994. The
restricted cash balance is comprised of tenant security deposits. Unexpended
funds and working capital reserves are invested in unaffiliated money market
funds and interest on such invested balances accrues to the benefit of the
Partnership.
Prepaid expenses decreased to $599,467 at March 31, 1995 from $645,993 at
December 31, 1994 mainly due to the amortization of leasing commissions in the
amount of $56,374. Accounts payable and accrued expenses decreased to $292,380
at March 31, 1995 from $426,642 at December 31, 1994. The decrease is
primarily due to the payment of tenant improvement invoices which were unpaid
at December 31, 1994.
Leases scheduled to expire during the next 12 months at the Partnership's
properties are as follows: five leases representing 24,922 square feet at
Quorum II Office Building; six leases representing 17,857 square feet at Metro
Park Executive Center; five leases representing 17,515 square feet at Fort
Lauderdale Commerce Center; and seven leases representing 37,849 square feet at
Three Financial Centre. At Three Financial Centre, the General Partners
executed a three-year lease renewal with a tenant which originally leased
10,306 square feet. The tenant now leases 9,190 square feet.
One tenant representing 4,095 square feet at Fort Lauderdale Commerce Center
and one tenant representing 18,854 square feet at Three Financial Centre have
notified the General Partners that they will not renew their leases. However,
the General Partners are presently engaged in discussions with an existing
tenant at Three Financial Centre to expand into the entire 18,854 square feet
that will be vacated.
The General Partners have approached several tenants regarding renewals and
will approach the balance when appropriate. However, there can be no
assurances that renewals will be executed.
The Partnership declared a cash distribution to the Limited Partners of $2.50
per Unit for the quarter ended March 31, 1995, which will be paid on or about
May 15, 1995. The timing and amount of future cash distributions will be
determined quarterly by the General Partners, and will depend on the adequacy
of cash flow and the Partnership's cash reserve requirements.
Results of Operations
- - - - - - ---------------------
For the three months ended March 31, 1995, the Partnership's operations
resulted in net income of $64,193, compared to a net loss of $197,731 for the
corresponding period in 1994. The difference is primarily attributable to an
increase in rental income.
Rental income totaled $1,273,051 for the three months ended March 31, 1995
compared to $1,043,242 for the three months ended March 31, 1994. The increase
is due to higher occupancy at Fort Lauderdale Commerce Center, Three Financial
Centre and Metro Park Executive Center.
Property operating expenses totaled $567,504 for the three months ended March
31, 1995 largely unchanged from $570,846 for the three months ended March 31,
1994. Depreciation and amortization decreased to $603,687 for the three months
ended March 31, 1995, from $621,662 for the three months ended March 31, 1994.
The decline is primarily attributable to a lower depreciable asset base in
1995.
As of March 31, 1995, lease levels at each of the properties were as follows:
Metro Park Executive Center - 87%; Fort Lauderdale Commerce Center - 84%; Three
Financial Centre - 92%; Quorum II Office Building - 91%.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended March 31, 1995
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SIGNATURES
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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.
HUTTON/GSH COMMERCIAL PROPERTIES 3
BY: REAL ESTATE SERVICES VII, INC.
General Partner
Date: May 12, 1995 BY: /s/Rocco Andriola
Name: Rocco Andriola
Title: Director, President and Chief
Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,906,174
<SECURITIES> 000
<RECEIVABLES> 273,408
<ALLOWANCES> (13,332)
<INVENTORY> 000
<CURRENT-ASSETS> 1,934,677
<PP&E> 45,893,620
<DEPRECIATION> (16,204,704)
<TOTAL-ASSETS> 32,454,633
<CURRENT-LIABILITIES> 599,696
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 31,484,346
<TOTAL-LIABILITY-AND-EQUITY> 32,454,633
<SALES> 000
<TOTAL-REVENUES> 1,295,296
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 1,231,103
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 64,193
<INCOME-TAX> 000
<INCOME-CONTINUING> 64,193
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 64,193
<EPS-PRIMARY> .58
<EPS-DILUTED> 000
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