United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
___Act of 1934
For the Quarterly Period Ended June 30, 1997
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,
1997 1996
Assets
Property:
Land $5,808,694 $5,808,694
Buildings, building improvements
and equipment 30,779,695 30,831,532
36,588,389 36,640,226
Less accumulated depreciation (14,198,263) (13,546,913)
22,390,126 23,093,313
Cash and cash equivalents 1,385,670 1,228,502
Restricted cash 222,823 232,330
Accounts and rent receivable,
net of allowance for doubtful accounts of
$5,444 in 1997 and 1996 56,128 40,090
Deferred rent receivable 125,952 205,718
Prepaid leasing costs and other assets,
net of accumulated amortization of
$549,044 in 1997 and $805,502 in 1996 641,105 563,611
Total Assets $24,821,804 $25,363,564
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable and accrued expenses $439,197 $249,517
Due to affiliates 37,380 5,941
Distribution payable 338,282 338,282
Security deposits payable 198,664 215,026
Total Liabilities 1,013,523 808,766
Minority Interest 263,477 263,477
Partners' Capital (Deficit):
General Partners (389,064) (368,069)
Limited Partners (109,378 units outstanding) 23,933,868 24,659,390
Total Partners' Capital 23,544,804 24,291,321
Total Liabilities and Partners' Capital $24,821,804 $25,363,564
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended June 30, 1997
General Limited
Partners Partners Total
Balance at December 31, 1996 $(368,069) $24,659,390 $24,291,321
Net loss (699) (69,254) (69,953)
Distributions (20,296) (656,268) (676,564)
Balance at June 30, 1997 $(389,064) $23,933,868 $23,544,804
Consolidated Statements of Operations
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Rent $1,121,389 $1,297,464 $2,300,078 $2,673,241
Interest 20,776 2,426 39,430 29,966
Total Income 1,142,165 1,299,890 2,339,508 2,703,207
Expenses
Property operating 575,366 567,258 1,127,534 1,179,724
Depreciation and
amortization 508,976 526,193 1,014,736 1,038,499
General and administrative 120,469 70,941 267,191 141,042
Total Expenses 1,204,811 1,164,392 2,409,461 2,359,265
Net Income (Loss) $(62,646) $135,498 $(69,953) $343,942
Net Income (Loss) Allocated:
To the General Partners $(626) $1,355 $(699) $3,439
To the Limited Partners (62,020) 134,143 (69,254) 340,503
$(62,646) $135,498 $(69,953) $343,942
Per limited partnership unit
(109,378 outstanding) $(.57) $1.23 $(.63) $3.11
Consolidated Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income (loss) $(69,953) $343,942
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation 904,437 920,265
Amortization 110,299 118,235
Increase (decrease) in cash arising from changes in
operating assets and liabilities
Restricted cash 9,507 5,746
Accounts and rent receivable, net (16,038) (37,372)
Deferred rent receivable 79,766 (25,515)
Prepaid leasing costs and other assets (187,793) (105,783)
Accounts payable and accrued expenses 189,680 191,707
Due to affiliates 31,439 (5,108)
Security deposits payable (16,362) 968
Net cash provided by operating activities 1,034,982 1,407,085
Cash Flows From Investing Activities
Additions to real estate (201,250) (162,716)
Net cash used for investing activities (201,250) (162,716)
Cash Flows From Financing Activities
Cash distributions (676,564) (2,402,086)
Net cash used for financing activities (676,564) (2,402,086)
Net increase (decrease) in cash and cash equivalents 157,168 (1,157,717)
Cash and cash equivalents, beginning of period 1,228,502 2,134,370
Cash and cash equivalents, end of period $1,385,670 $976,653
Supplemental Disclosure of Non-Cash Operating Activities:
Write-off of fully amortized leasing costs $311,967 $ --
Supplemental Disclosure of Non-Cash Investing Activities:
Write-off of fully depreciated improvements $253,087 $ --
Notes to the Consolidated Financial Statements
The unaudited interim financial statements should be read in
conjunction with the Partnership's annual 1996 audited financial
statements within Form 10-K.
The unaudited consolidated financial statements include all
normal and reoccurring adjustments which are, in the opinion of
management, necessary to present a fair statement of financial
position as of June 30, 1997 and the results of operations for
the three and six months ended June 30, 1997 and 1996, cash flows
for the six months ended June 30, 1997 and 1996, and the
statement of partner's capital (deficit) for the six months ended
June 30, 1997. Results of operations for the period are not
necessarily indicative of the results to be expected for the full
year.
Reclassification. Certain prior year amounts have been
reclassified in order to conform to the current year's
presentation.
The following significant events have occurred subsequent to
fiscal year 1996, or the following material contingencies exist
and require disclosure in this interim report per Regulation S-X,
Rule 10-01, Paragraph (a)(5):
Effective as of January 1, 1997, the Partnership began
reimbursing certain expenses incurred by Real Estate Services
VII, Inc. and its affiliates in servicing the Partnership to the
extent permitted by the partnership agreement. In prior years,
affiliates of the Real Estate Services VII, Inc. general partner
had voluntarily absorbed these expenses.
Part I, Item 2.Management's Discussion and Analysis of Financial
Condition and Results of
Operations
Liquidity and Capital Resources
The General Partners have decided to commence marketing efforts
to sell all four of the Partnership's properties. Accordingly,
the Partnership intends to engage real estate brokers to assist
in its marketing efforts. However, there can be no assurance as
to when the properties will be sold, or that any sale, if
completed, will result in a particular price.
The Partnership had cash and cash equivalents totaling $1,385,670
at June 30, 1997, compared with $1,228,502 at December 31, 1996.
The increase is primarily due to cash flows from operating
activities exceeding additions to real estate and cash
distributions. The Partnership also had restricted cash, which
primarily consisted of security deposits, of $222,823 at June 30,
1997, largely unchanged from
December 31, 1996.
Accounts and rent receivable totaled $56,128 at June 30, 1997,
compared to $40,090 at December 31, 1996. The increase is primarily
due to past due rents from tenants at Fort Lauderdale Commerce Center.
Deferred rent receivable totaled $125,952 at June 30, 1997, compared
to $205,718 at December 31, 1996. The decrease is largely due to the
amortization of deferred rent associated with older leases at all of
the Partnership's properties. Prepaid leasing costs and other assets
totaled $641,105 at June 30, 1997, compared to $563,611 at
December 31, 1996. The increase is largely due to prepayment of
insurance premiums.
Accounts payable and accrued expenses totaled $439,197 at June
30, 1997, compared with $249,517 at December 31, 1996. The
increase is largely due to the timing of payments of real estate
taxes. Due to affiliates increased to $37,380 at June 30, 1997,
from $5,941 at December 31, 1996, primarily reflecting the
reimbursement of certain expenses incurred in servicing the
Partnership, as described below under "Results of Operations."
The Partnership's second quarter cash distribution, in the amount
of $3.00 per Unit, will be paid to limited partners on or about
August 22, 1997 and will be funded from Partnership operations.
In light of the decision to begin marketing all four properties,
the Partnership may need to make capital improvements to better
position the properties for sale. In order to fund these
improvements and maintain adequate cash reserves, it may be
necessary to suspend distributions in the future. It is
important to note, however, that as the properties are sold, the
sales proceeds will be distributed to the partners.
As of June 30, 1997, lease levels at each of the Properties were
as follows: Metro Park Executive Center - 83%; Fort Lauderdale
Commerce Center - 93%; Three Financial Centre - 92%; and Quorum
II Office Building - 94%.
Results of Operations
Rental income totaled $1,121,389 and $2,300,078 for the three and
six months ended June 30, 1997, respectively, compared with
$1,297,464 and $2,673,241 for the comparable periods a year
earlier. The decreases are largely attributable to lower
occupancy at Quorum II Office Building. Interest income totaled
$20,776 and $39,430 for the three and six months ended June 30,
1997, respectively, compared with $2,426 and $29,966 for the
comparable periods a year earlier. The increases are primarily
due to the Partnership's higher average cash balances in 1997.
Property operating expenses totaled $575,366 and $1,127,534 for
the three and six months ended June 30, 1997, respectively,
largely unchanged from $567,258 and $1,179,724 for the comparable
1996 periods. Depreciation and amortization declined to $508,976
and $1,014,736 for the three and six months ended June 30, 1997,
respectively, largely unchanged from $526,193 and $1,038,499 for
the comparable periods in 1996.
General and administrative expenses for the three and six months
ended June 30, 1997, were $120,469 and $267,191, respectively,
compared with $70,941 and $141,042 for the same periods in 1996.
During the 1997 period, certain expenses incurred by Real Estate
Services VII, Inc., its affiliates, and an unaffiliated third
party service provider in servicing the Partnership, which were
voluntarily absorbed by affiliates of Real Estate Services VII,
Inc. in prior periods, were reimbursable to Real Estate Services
VII, Inc. and its affiliates.
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, 1997.
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 13, 1997 BY: /s/Mark J. Marcucci
Director, President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 1,385,670
<SECURITIES> 000
<RECEIVABLES> 56,128
<ALLOWANCES> 5,444
<INVENTORY> 000
<CURRENT-ASSETS> 2,431,678
<PP&E> 36,588,389
<DEPRECIATION> 14,198,263
<TOTAL-ASSETS> 24,821,804
<CURRENT-LIABILITIES> 1,013,523
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 23,544,804
<TOTAL-LIABILITY-AND-EQUITY> 24,821,804
<SALES> 000
<TOTAL-REVENUES> 2,339,508
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 2,409,461
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> (69,953)
<INCOME-TAX> 000
<INCOME-CONTINUING> (69,953)
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (69,953)
<EPS-PRIMARY> (.63)
<EPS-DILUTED> (.63)
</TABLE>
