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, 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 of I.R.S. Employer Identification No.
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 March 31, At December 31,
1996 1995
Assets
Real estate, at cost:
Land $ 5,808,694 $ 5,808,694
Buildings and improvements 30,627,076 31,446,737
36,435,770 37,255,431
Less accumulated depreciation (12,256,595) (12,714,080)
24,179,175 24,541,351
Cash and cash equivalents 683,694 2,134,370
Restricted cash 239,929 237,566
Accounts and rent receivable, net
of allowance for doubtful accounts
of $5,486 in 1996 and $5,486 in 1995 130,992 64,616
Deferred rent receivable 244,552 230,626
Prepaid expenses and other assets,
net of accumulated amortization of
$635,816 in 1996 and $900,609 in 1995 592,783 633,476
Total Assets $ 26,071,125 $ 27,842,005
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 306,090 $ 237,185
Due to affiliates 22,000 28,479
Distribution payable 360,782 563,804
Security Deposits 213,787 214,388
Total Liabilities 902,659 1,043,856
Minority interest 221,337 221,337
Partners' Capital (Deficit):
General Partners (437,170) (402,866)
Limited Partners (109,378 units outstanding) 25,384,299 26,979,678
Total Partners' Capital 24,947,129 26,576,812
Total Liabilities and Partners' Capital $26,071,125 $27,842,005
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1996
General Limited
Partners Partners Total
Balance at December 31, 1995 $(402,866) $26,979,678 $26,576,812
Net income 20,844 187,600 208,444
Distributions (55,148) (1,782,979) (1,838,127)
Balance at March 31, 1996 $(437,170) $25,384,299 $24,947,129
Consolidated Statements of Operations
For the three months ended March 31, 1996 1995
Income
Rent $1,375,776 $1,273,051
Interest 27,541 22,245
Total income 1,403,317 1,295,296
Expenses
Property operating 612,466 567,504
Depreciation and amortization 512,306 603,687
General and administrative 70,101 59,912
Total expenses 1,194,873 1,231,103
Net Income $ 208,444 $ 64,193
Net Income Allocated:
To the General Partners $ 20,844 $ 642
To the Limited Partners 187,600 63,551
$ 208,444 $ 64,193
Per limited partnership unit
(109,378 outstanding) $1.72 $0.58
Consolidated Statements of Cash Flows
For the three months ended March 31, 1996 1995
Cash Flows From Operating Activities
Net income $208,444 $ 64,193
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 512,306 603,687
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Restricted cash (2,363) (4,084)
Accounts and rent receivable (66,376) (177)
Deferred rent receivable (13,926) 3,673
Prepaid expenses (18,276) (11,456)
Accounts payable and accrued expenses 68,905 (134,262)
Due to affiliates (6,479) (25,288)
Security deposits payable (601) (5,189)
Net cash provided by operating activities 681,634 491,097
Cash Flows From Investing Activities
Additions to real estate assets (91,161) (160,685)
Net cash used for investing activities (91,161) (160,685)
Cash Flows From Financing Activities
Cash distributions (2,041,149) (281,902)
Net cash used for financing activities (2,041,149) (281,902)
Net increase (decrease) in cash and cash equivalents (1,450,676) 48,510
Cash and cash equivalents, beginning of period 2,134,370 1,637,501
Cash and cash equivalents, end of period $ 683,694 $1,686,011
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 March 31, 1996 and the
results of operations and cash flows for the three months ended
March 31, 1996 and 1995 and the statement of partner's capital
(deficit) for the three months ended March 31, 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 $683,694
at March 31, 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. The Partnership also
had a restricted cash balance of $239,929 at March 31, 1996,
which consists of security deposits and funds reserved for
property tax payments, largely unchanged from December 31, 1995.
At Metro Park Executive Center, the General Partners are
currently marketing the property's vacant space. In April 1996,
the General Partners executed a five-year lease with a new tenant
for 1,212 square feet. Four leases totaling 10,723 square feet
or approximately 19% of the property's space are scheduled to
expire during the remainder of 1996, and one lease for 16,517
square feet can be canceled at any time throughout 1996 by the
tenant.
At Fort Lauderdale Commerce Center, in February 1996, the General
Partners executed a four-year lease with a new tenant for 5,428
square feet, prematurely vacated by a tenant during the fourth
quarter of 1995. The vacating tenant remained responsible for
its lease until January 1996. During the remainder of 1996,
seven leases representing 33,202 square feet or approximately 17%
of the property's leasable space, are scheduled to expire. These
tenants have been contacted by the General Partners to discuss
the renewal of their leases, however, it is uncertain whether
they will renew.
At Three Financial Centre, during the first quarter, the General
Partners executed two new short-term leases for a total of 1,284
square feet. However, two tenants leasing a total of 9,945
square feet vacated the premises upon the expiration of their
leases. As a result, the Property was 86% leased at March 31,
1996. In April 1996, the General Partners re-leased 6,387 square
feet of the Property's vacant space to an existing tenant, which
will now lease a total of 12,240 square feet for the next three
years.
At Quorum II Office Building, a tenant leasing 8,028 square feet
pursuant to a lease scheduled to expire in February 1996,
continues to rent on a month-to-month basis. As a result, the
property remained 98% at March 31, 1996. In April 1996, the
General Partners leased the property's remaining vacant space, of
approximately 1,542 square feet. As a result, the property is
currently 100% leased. 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 $130,992 at March 31,
1996 from $64,616 at December 31, 1995, primarily due to the
timing of rental payments. Prepaid expenses totaled $592,783 at
March 31, 1996 compared with $633,476 at December 31, 1995. The
decrease is primarily attributable to the amortization of leasing
commissions. Accounts payable and accrued expenses totaled
$306,090 at March 31, 1996 compared with $237,185 at
December 31, 1995. The increase is largely due to the additional
accrual of real estate taxes.
A cash distribution in the amount of $3.00 per Unit will be paid to the Limited
Partners in May 1996. This distribution will be funded from Partnership
operations and was declared after a review of the Partnership's 1996 first
quarter operations, anticipated future cash needs and current cash position.
Results of Operations
- ---------------------
The Partnership's operations resulted in net income of $208,444 for the three
months ended March 31, 1996, compared with net income of $64,193 for the three
months ended March 31, 1995. The increase is primarily attributable to higher
rental income and lower depreciation and amortization partially offset by
increased property operating expenses.
Rental income totaled $1,375,776 for the three months ended March 31, 1996,
compared with $1,273,051 a year earlier. The increase is largely attributable
to higher occupancy at Three Financial Centre and Quorum II Office Building.
Property operating expenses totaled $612,466 for the three months ended March
31, 1996, compared with $567,504 for the comparable 1995 period. The increase
is primarily due to roof repairs at Fort Lauderdale Commerce Center and
electrical repairs at Three Financial Centre. Depreciation and amortization
declined from $603,687 for the three months ended March 31, 1995 to $512,306
for the three months ended March 31, 1996 primarily as a result of the
write-down of Quorum II Office Building to its fair market value at year-end
1995.
As of March 31, 1996, lease levels at each of the Properties were as follows:
Metro Park Executive Center - 78%; Fort Lauderdale Commerce Center - 88%;
Three Financial Centre - 86%; and Quorum II Office Building - 98%.
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.
On March 15, 1996, based upon, among other things, the
advice of Partnership counsel, Skadden, Arps, Slate,
Meagher & Flom, the General Partners adopted a
resolution that states, among other things, if a Change
of Control (as defined below) occurs, the General
Partners may distribute the Partnership's cash balances
not required for its ordinary course day-to-day
operations. "Change of Control" means any purchase or
offer to purchase more than 10% of the Units that is
not approved in advance by the General Partners. In
determining the amount of the distribution, the General
Partners may take into account all material factors.
In addition, the Partnership will not be obligated to
make any distribution to any partner, and no partner
will be entitled to receive any distribution, until the
General Partners have declared the distribution and
established a record date and distribution date for the
distribution. The Partnership filed a Form 8-K
disclosing this resolution on March 21, 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: CP3 Real Estate Services, Inc.
General Partner
Date: May 15, 1996 BY: /s/ Rocco Andriola
Director, President and Chief
Financial Officer
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 923,623
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<RECEIVABLES> 375,544
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