FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended June 30, 1997
Commission File Number: 0-13559
LDP-III
(Exact name of registrant as specified in its governing instruments)
California 94-2911983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 130, Carbondale, Colorado 81623
(Address of principal executive offices)
(970) 963-8007
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LDP-III
CONSOLIDATED BALANCE SHEET, JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)(Dollars in thousands)
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
INVESTMENTS IN REAL ESTATE:
Rental properties $ 10,531 10,510
Accumulated depreciation (4,221) (4,086)
Rental properties - net 6,310 6,424
CASH AND CASH EQUIVALENTS
(including interest bearing deposits
of $4 in 1997 and $85 in 1996) 4 85
OTHER ASSETS:
Short-term investment 199 298
Accounts receivable 10 17
Prepaid expenses and deposits 7 4
Deferred organization costs, loan costs
and leasing commissions (net of
accumulated amortization of $488
in 1997 and $474 in 1996) 177 126
Total other assets 393 445
TOTAL $ 6,707 $ 6,954
LIABILITIES AND PARTNERS' EQUITY LIABILITIES:
Notes payable $ 6,867 $ 6,891
Accounts payable 20 0
Other liabilities 65 133
Total liabilities 6,952 7,024
PARTNERS' EQUITY (245) (70)
TOTAL $ 6,707 $ 6,954
See Financial Notes.
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<TABLE>
LDP-III
STATEMENTS OF OPERATIONS
(Unaudited) (In thousands except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUE:
Rental $ 288 $ 307 $ 557 $ 653
Interest 3 4 9 9
Total revenue 291 311 566 662
EXPENSE:
Interest 151 181 302 351
Operating 82 117 175 236
Depreciation and amortization 79 87 157 201
General and administrative 62 53 107 93
Total expense 374 438 741 881
NET INCOME(LOSS) $ (83) $(127) $(175) $(219)
NET LOSS PER PARTNERSHIP UNIT
Limited Partners (2) (3) (5) (6)
General Partners 0 0 0 0
(2) (3) (5) (6)
See Financial Notes.
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<TABLE>
LDP-III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
(Unaudited) (Dollars in thousands)
<CAPTION>
LIMITED PARTNERS
NUMBER OF GENERAL TOTAL
PARTNERSHIP PARTNER PARTNERS'
UNITS AMOUNT AMOUNT EQUITY
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 37,136 $ 679 $ 0 $ 679
Net loss - 1996 (193) 0 (193)
Distribution 1996 (556) 0 (556)
BALANCE, DECEMBER 31, 1996 37,136 (70) 0 (70)
Net loss - 1997 (175) 0 (175)
BALANCE, JUNE 30, 1997 37,136 $(245) $ 0 $ (245)
See Financial Notes.
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<TABLE>
LDP-III
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited) (In thousands)
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (175) $ (219)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 135 171
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 7 (6)
Increase in prepaid expenses and deposits (2) (2)
Increase in accounts payable 20 0
(Decrease) increase in other liabilities (69) 3
Net cash used in operating activities (84) (53)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in short term investments 99 0
Capital expenditures (22) (30)
(Increase) decrease in deferred expenses (51) 7
Net cash used in investing activities 26 (23)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (23) (8)
Net cash used in financing activities (23) (8)
Decrease in cash and cash equivalents (81) (84)
Cash and cash equivalents at beginning
of period 85 410
Cash and cash equivalents at end of period $ 4 $ 326
See Financial Notes.
</TABLE>
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LDP-III
FINANCIAL NOTES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements should be read in
conjunction with the Partnership's 1996 Annual Report. These consolidated
statements have been prepared in accordance with the instructions to the
Securities and Exchange Commission Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of the general partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The consolidated results of operations for the six months ended
June 30, 1997 and 1996, are not necessarily indicative of the results that may
be expected for the year ending December 31, 1997.
For purposes of the consolidated statement of cash flows, the Partnership
considers all highly liquid investments with a maturity of three months or
less from the date of purchase to be cash equivalents. The Partnership paid
interest of $302 and $351 for the six months ended June 30, 1997, and 1996,
respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
LDP-III is a California limited partnership formed in August 1983. The
Partnership's business consists of a single segment -- equity investments in
leveraged income-producing real estate.
The Partnership's current portfolio consists of fee title ownership of two
properties located in two geographic areas. The Partnership's property
investments are: Jefferson Place Office Building, Boise, Idaho; and 1201
Cadillac Court Building, Milpitas, California.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Partnership's consolidated cash balance totaled
$4,000. Cash not required for current operations is placed in federally
insured financial instruments and money market funds which can be liquidated
as needed.
The Partnership has invested $199,000 in short-term federally insured
certificates of deposit which mature on a date in excess of 90 days or 3
months from the date of purchase. Due to this characteristic, these deposits
are classified as "short-term investments" rather than as "cash and cash
equivalents."
During the first six months of 1996, the Partnership experienced a net
decrease in cash of $81,000. Short-term investments decreased $99,000. Uses
of cash included $22,000 for property capital expenditures and leasing
commissions, $23,000 for principal payments on notes payable, and $84,000 for
operations. As of June 30, 1997, cash plus short-term investments totaled
$203,000 versus a balance of $383,000 at December 31, 1996.
Management believes the cash flow from operations of the remaining two
properties, Jefferson Place and 1201 Cadillac, will be sufficient to cover the
operating costs of the Partnership. The Partnership has successfully
negotiated a new lease with the sole tenant at 1201 Cadillac, which will
significantly increase revenues for 1997.
Short-term investments (cash reserve) of $199,000 should remain in tact for
the balance of 1997.
The Partnership does not plan any cash distributions to its limited partners
in 1997. All sale and loan proceeds realized by the Partnership will be used
primarily to make cash distributions.
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RESULTS OF OPERATIONS
The following represents the operations of those properties held continuously
during the first six months of 1997 and 1996:
<CAPTION>
1997 1996 % Change
<S> <C> <C> <C>
Rental Revenue $ 566 $ 551 3%
Operating Expense 175 209 (17%)
Net Operating Income 391 342 15%
Interest Expense $ 302 $ 304 N/A
</TABLE>
There was a 3% increase in revenues for the six months ended June 30, 1997
relative to the same period in 1996.
Property operating expenses decreased 17% for the six months ended June 30,
1997 relative to the same period in 1996. This was primarily due to greater
efficiency of operations at the commercial properties.
The Partnership's general and administrative expense increased 14% in 1997
relative to the same period in 1996. This increase is primarily the result of
accounting and auditing fees as well as transfer agent fees.
Occupancy remained steady during the second quarter of 1997. 1201 Cadillac is
fully occupied. The Jefferson Place office building is currently 94%
occupied.
INFLATION
The Partnership's rental revenues in certain over built real estate markets,
including Boise and San Francisco Bay Area, have not followed the overall
inflationary trends of the economy. In the future, the General Partner
believes market rate rents in those areas will more closely follow or exceed
inflation. Operating costs for properties in most of the Partnership's
markets have continued to follow inflationary trends. It is not expected that
the Partnership will be materially impacted by inflationary forces in the near
term.
<PAGE>
PART II. OTHER INFORMATION
All items in Part II have been omitted since they are inapplicable or the
answer is negative.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LDP-III
Date: August 14, 1997 /s/ Gary K. Barr
Gary K. Barr, President
Landsing Equities Corporation
Managing Partner of the General Partner
Landsing Partners-III
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4
<SECURITIES> 0
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 216
<PP&E> 10,531
<DEPRECIATION> 4,221
<TOTAL-ASSETS> 6,707
<CURRENT-LIABILITIES> 85
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (245)
<TOTAL-LIABILITY-AND-EQUITY> 6,707
<SALES> 0
<TOTAL-REVENUES> 557
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 302
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (175)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
