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 June 30, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 0-13341
COMMERCIAL PROPERTIES 3, L.P.
----------------------------------------------------
Exact Name of Registrant as Specified in its Charter
Virginia 11-2680561
- --------------------------- ---------------------------------
State or Other Jurisdiction I.R.S. Employer Identification No.
of Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
- -------------------------------------- --------
Address of Principal Executive Offices Zip Code
(212) 526-3237
------------------------
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
----- -----
Consolidated Balance Sheets At June 30, At December 31,
1996 1995
Assets
Real estate, at cost:
Land $ 5,808,694 $ 5,808,694
Buildings and improvements 30,698,631 31,446,737
36,507,325 37,255,431
Less accumulated depreciation (12,723,523) (12,714,080)
23,783,802 24,541,351
Cash and cash equivalents 976,653 2,134,370
Restricted cash 231,820 237,566
Accounts and rent receivable, net of allowance
for doubtful accounts of $5,486 in 1996 and 1995 101,988 64,616
Deferred rent receivable 256,141 230,626
Prepaid leasing costs and other assets, net
of accumulated amortization of $695,082 in
1996 and $900,609 in 1995 621,024 633,476
Total Assets $25,971,428 $27,842,005
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses 423,892 237,185
Due to affiliates 28,371 28,479
Distributions payable 338,282 563,804
Security deposits payable 215,356 214,388
Total Liabilities 1,005,901 1,043,856
Minority interest 221,337 221,337
Partners' Capital (Deficit):
General Partners (464,723) (402,866)
Limited Partners (109,378 units outstanding) 25,208,913 26,979,678
Total Partners' Capital 24,744,190 26,576,812
Total Liabilities and Partners' Capital $25,971,428 $27,842,005
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $(402,866) $26,979,678 $26,576,812
Net income 3,439 340,503 343,942
Distributions (65,296) (2,111,268) (2,176,564)
Balance at June 30, 1996 $(464,723) $25,208,913 $24,744,190
Consolidated Statements of Operations
Three months Six months
ended June 30, ended June 30,
1996 1995 1996 1995
Income
Rent $1,297,464 $1,255,531 $2,673,241 $2,528,582
Interest 2,426 27,922 29,966 50,167
Total Income 1,299,890 1,283,453 2,703,207 2,578,749
Expenses
Property operating 567,258 533,330 1,179,724 1,100,834
Depreciation and amortization 526,193 568,336 1,038,499 1,172,023
General and administrative 70,941 59,647 141,042 119,559
Total Expenses 1,164,392 1,161,313 2,359,265 2,392,416
Net Income $ 135,498 $ 122,140 $ 343,942 $ 186,333
Net Income Allocated:
To the General Partners $ 1,355 $ 1,221 $ 3,439 $ 1,863
To the Limited Partners 134,143 120,919 340,503 184,470
$ 135,498 $ 122,140 $ 343,942 $ 186,333
Per limited partnership unit
(109,378 outstanding) $1.23 $1.11 $3.11 $1.69
Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 343,942 $ 186,333
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,038,500 1,172,023
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Restricted cash 5,746 (16,153)
Accounts and rent receivable, net (37,372) 1,915
Deferred rent receivable (25,515) 7,354
Prepaid expenses (105,783) (71,514)
Accounts payable and accrued expenses 186,707 118,041
Due to affiliates (108) (8,102)
Security deposits payable 968 8,253
Net cash provided by operating activities 1,407,085 1,398,150
Cash Flows From Investing Activities
Additions to real estate assets (162,716) (409,130)
Net cash used for investing activities (162,716) (409,130)
Cash Flows From Financing Activities
Cash distributions (2,402,086) (555,347)
Net cash used for financing activities (2,402,086) (555,347)
Net increase (decrease) in cash and cash equivalents (1,157,717) 433,673
Cash and cash equivalents, beginning of period 2,134,370 1,637,501
Cash and cash equivalents, end of period $ 976,653 $2,071,174
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1995 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1996 and the results of operations for the three and
six months ended June 30, 1996 and 1995, the statements of cash flows for the
six months ended June 30, 1996 and 1995, and the statement of changes in
partners' capital (deficit) for the six months ended June 30, 1996. 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 1995, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Partnership had cash and cash equivalents totaling $976,653 at June 30,
1996, compared with $2,134,370 at December 31, 1995. The decrease is primarily
due to the payment of a special cash distribution in the amount of $1,500,000
on March 29, 1996. The Partnership also had restricted cash, which consists of
security deposits, of $231,820 at June 30, 1996, largely unchanged from
December 31, 1995.
Metro Park Executive Center - In April 1996, the General Partners executed a
new five-year lease with a tenant for 1,212 square feet. As a result, the
property was 81% leased at June 30, 1996. The General Partners continue to
aggressively market the property's vacant space, however, market conditions in
Fort Myers remain highly competitive. Three leases totaling 8,901 square feet
or approximately 16% of the property's space are scheduled to expire during the
remainder of 1996. Another lease for 16,517 square feet can be canceled by the
tenant at any time with six months notice.
Fort Lauderdale Commerce Center - One tenant leasing a total of 2,245 square
feet pursuant to a lease scheduled to expire in May 1996, renewed for three
years. Another tenant, leasing a total of 6,425 square feet pursuant to two
leases originally scheduled to expire in July 1996, extended its leases until
October 1997. As a result, the property remained 88% leased at June 30, 1996. A
tenant, occupying a total of 12,370 square feet pursuant to two leases
scheduled to expire in October 1996, has indicated that it intends to renew its
lease, however, no lease renewal has been executed as of this date. During the
remainder of 1996, two leases representing 14,499 square feet or approximately
8% of the property's leasable space, are scheduled to expire.
Three Financial Centre - During the 1996 second quarter, the General Partners
re-leased 6,387 square feet of the property's vacant space to an existing
tenant, which extended its lease and will now occupy a total of 12,240 square
feet for the next three years. As a result, the property was 88% leased at
June 30, 1996. Four leases, representing 5,908 square feet are scheduled to
expire, during the remainder of 1996.
Quorum II Office Building - In April 1996, the General Partners leased the
property's 1,266 square feet of remaining vacant space to a new tenant for
three years. Additionally, a tenant leasing 8,028 square feet pursuant to a
lease which expired in February 1996, continues to rent on a month-to-month
basis. As a result, the property was 100% leased at June 30, 1996. Two leases
representing 16,742 square feet or approximately 20% of the property's leasable
area are scheduled to expire during the fourth quarter of 1996.
Accounts and rent receivable increased to $101,988 at June 30, 1996 from
$64,616 at December 31, 1995, primarily due to the timing of rental payments.
Deferred rent receivable totaled $256,141 at June 30, 1996 compared with
$230,626 at December 31, 1995. The increase is primarily attributable to
increased occupancy at Quorum II and recent leasing activity at Three Financial
Centre. Accounts payable and accrued expenses totaled $423,892 at June 30,
1996 compared with $237,185 at December 31, 1995. The increase is largely due
to the accrual for real estate taxes.
A cash distribution in the amount of $3.00 per Unit will be paid to the Limited
Partners in August 1996. This distribution was funded from the Partnership's
second quarter operations and was declared after a review of the Partnership's
anticipated future cash needs and current cash position. The timing and amount
of future cash distributions will be reviewed quarterly by the General
Partners.
Results of Operations
The Partnership's operations resulted in net income of $135,498 and $343,942
for the three and six months ended June 30, 1996, respectively, compared with
net income of $122,140 and $186,333 for the three and six months ended June 30,
1995, respectively. The increases are primarily attributable to higher rental
income and lower depreciation and amortization, partially offset by increased
property operating expenses.
Rental income totaled $1,297,464 and $2,673,241 for the three and six months
ended June 30, 1996, respectively, compared with $1,255,531 and $2,528,582 for
the comparable periods a year earlier. The increases are largely attributable
to higher average occupancy at Quorum II Office Building and increased rental
rates on recent leases at Three Financial Centre.
Property operating expenses totaled $567,258 and $1,179,724 for the three and
six months ended June 30, 1996, respectively, compared with $533,330 and
$1,100,834 for the comparable 1995 periods. The increases are primarily due to
roof repairs at Fort Lauderdale Commerce Center and electrical usage and
repairs at Three Financial Centre. Depreciation and amortization declined to
$526,193 and $1,038,499 for the three and six months ended June 30, 1996 from
$568,336 and $1,172,023 for the three and six months ended June 30, 1995,
respectively, primarily as a result of the write-down of Quorum II Office
Building to its fair market value at year-end 1995.
As of June 30, 1996, lease levels at each of the Properties were as follows:
Metro Park Executive Center - 81%; Fort Lauderdale Commerce Center - 88%;
Three Financial Centre - 88%; and Quorum II Office Building - 100%.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 1996.
SIGNATURES
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.
COMMERCIAL PROPERTIES 3, L.P.
BY: Real Estate Services VII Inc.
General Partner
Date: August 14, 1996 BY: /s/ Rocco F. Andriola
Director, President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 976,653
<SECURITIES> 000
<RECEIVABLES> 358,129
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 36,507,325
<DEPRECIATION> 12,723,523
<TOTAL-ASSETS> 25,971,428
<CURRENT-LIABILITIES> 1,005,901
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 24,744,190
<TOTAL-LIABILITY-AND-EQUITY> 25,971,428
<SALES> 000
<TOTAL-REVENUES> 2,703,207
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 2,359,265
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 343,942
<INCOME-TAX> 000
<INCOME-CONTINUING> 343,942
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 343,942
<EPS-PRIMARY> 3.11
<EPS-DILUTED> 000
</TABLE>
