UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(a) of the
Securities Exchange Act of 1934
Commission File Number 0-13559
LDP-III
(Exact name of registrant as specified in its charter)
California 94-2911983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 130, Carbondale, CO 81623
(Address of principal executive offices)
(970) 963-8007
(Partnership's telephone number, including area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K [ ].
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Inapplicable
DOCUMENTS INCORPORATED BY REFERENCE. None
1.
<PAGE>
LDP-III
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
Form 10-K
Item No. Name of Item
Part I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security
Holders
Part II
Item 5. Market for Partnership's Common Equity and
Related Partnership Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure
Part III
Item 10. Directors and Executive Officers of the
Partnership
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial
Owners and Management
Item 13. Certain Relationships and Related Transactions
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
Signatures
Index to Financial Statements and Supplemental
Financial Statement Schedules
<PAGE>
PART I
ITEM 1. BUSINESS
LDP-III (the "Partnership") is a limited partnership which was organized
under the Uniform Limited Partnership Act of the State of California on
August 30, 1983. The Partnership was organized as a non-specified
property limited partnership to acquire a diversified portfolio of real
properties, including commercial, residential and agricultural properties,
located primarily within the western portion of the United States. The
General Partner of the Partnership is Landsing Partners-III (the "General
Partner") , a partnership having two General Partners, Landsing Equities
Corporation, a California corporation which is the managing partner of the
General Partner, and Partners '84, a California limited partnership.
The Partnership's business consists of a single segment - equity
investments in leveraged income-producing real property. For a schedule
of the Partnership's revenue, net loss and total assets for its last fiscal
year, see Item 6, Selected Financial Data, below. The Partnership will not
be engaged in the production of goods or the rendering of services.
The Partnership had an investment in a wholly-owned subsidiary, LDP-III
Realty Service Corporation, which owned one property, the 391 Forbes
Building in South San Francisco, California, until it was sold in August,
1996. For financial reporting purposes, the Partnership's investment in
LDP-III Realty Service Corporation was presented on a consolidated basis.
The Partnership requires cash reserves to finance property operations.
Cash reserves totaled $383,000 at December 31, 1996. Funds not invested
in real property are placed in temporary high-grade investments which can
be readily liquidated.
Results of the Partnership's operations depend primarily upon the
successful operation of its existing investments. The yields (return on
capital) available on equity ownership of investments in income-producing
and other types of real estate investments depend to a large extent upon the
ability to lease or rent the property, the geographic location of the
property, competition and other factors, none of which can be predicted
with any certainty. See Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, for a more specific
discussion of the impact of the foregoing factors on the Partnership's
financial condition, operations and liquidity.
The Partnership has not engaged in research activities relating to the
development or improvement of products or services. The Partnership has
not made, nor does it anticipate making, during the remainder of its current
fiscal year or during its succeeding fiscal year, any capital expenditures for
environmental control facilities, nor does it expect any material effects
upon capital expenditures, earnings or competitive position resulting from
compliance with present Federal, state or local environmental control
provisions. The Partnership has no employees. All of the Partnership's
operations are located in the United States.
The Partnership is currently in the process of selling its properties. One
property was sold in 1996. One property, the 1201 Cadillac property, has
been listed for sale. The other property, Jefferson Office Building, will be
placed on the market in 1998.
<PAGE>
<TABLE>
ITEM 2. PROPERTIES
A description of the income-producing properties which the Partnership
owned at December 31, 1996 is as follows:
<CAPTION>
Financial
Occupancy Physical Average
Net For The Occupancy Effective
Rentable Year Ended At Rental
Name & Location Type Sq. Ft. 12/31/96 12/31/96 Rate
<F1> <F2> <F3>
<S> <C> <C> <C> <C> <C>
Jefferson Place Office Building 54,344 94% 89% $11.35
Boise, Idaho
1201 Cadillac Court Industrial 51,450 100% 100% $ 8.92
Milpitas, California
<FN>
<F1>
Expressed as a percentage, it compares the actual dollar amount of
rent received with the dollar amount of rent which would be received
if the property were fully leased.
<F2>
Physical occupancy denotes the percentage of net rentable square
footage leased as of a certain date.
<F3>
Represents the average effective rental rates, per square foot, for the
year ended December 31, 1996.
</TABLE>
Each of the Partnership's properties is subject to substantial encumbrances.
Reference is made to Schedule XI to the Financial Statements filed as part
of this annual report for information regarding such encumbrances.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of security holders, through
solicitation of proxies or otherwise, during fourth quarter 1996.
<PAGE>
<TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED PARTNERSHIP MATTERS
There is no established public trading market for the Units of Limited
Partnership interest of the Partnership and there are substantial restrictions
on the transferability of such Units imposed by Federal and state securities
laws and by the Limited Partnership Agreement, as amended.
The approximate number of record holders of Units of the Partnership as
of January 1, 1997, is 4,070.
The limited partners of the Partnership (the "Limited Partners") are entitled
to certain distributions under the Amended and Restated Certificate and
Agreement of Limited Partnership of the Partnership.
ITEM 6. SELECTED FINANCIAL DATA <F1>
<CAPTION>
(In thousands, except per Unit amounts)
.............For the years ended December 31...........
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Rental Revenue $ 1,210 $ 1,339 $ 2,101 $ 2,934 $ 2,907
Agricultural Revenue 0 0 0 369 1,599
Net Loss (193) (334) (259) (173) (1,108)
Net Loss Per Unit<F2> (5) (9) (7) (5) (30)
Total Assets 6,954 8,636 9,286 17,451 23,280
Long-term Obligations 6,891 7,871 8,167 15,218 20,201
Cash Distributions
Per Unit 15 0 14 0 0
__________
<FN>
<F1>
Financial data of the Partnership for 1996 is not comparable to that of
1995, 1994 or prior periods because the Partnership did not own the
same number of properties throughout these periods. For a more
specific discussion of the impact of the foregoing factor on the
comparability of the Partnership's financial information, see Item 7,
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
<F2>
Based on a weighted average of outstanding Units in 1996, 1995,
1994, 1993 and 1992.
</TABLE>
<PAGE>
ITEM 7. 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 December 31, 1996 the Partnership had cash and short-term
investments totaling approximately $383,000. Cash reserves not needed
for current operations are placed in temporary, high-grade investments
which can be readily liquidated.
During 1994, the Partnership sold the Silverado Apartments and the
Montbello Green Business Park. Gross proceeds were $8,500,000 for
Silverado Apartments and $260,000 for Montbello Green Business Park,
resulting in a gain of $364,000 and $37,000, respectively. Cash proceeds
from these two sales totaled $1,463,000 which was used to fund a Partner
Distribution, Capital Expenditures and Partnership Operations.
In August 1996, the Partnership sold its interest in the 391 Forbes Building
in South San Francisco, California. Gross proceeds were $1,730,000,
which resulted in a gain of $223,000 and cash proceeds of $660,000.
Proceeds were used to fund a Partnership distribution.
The Partnership has invested $298,000 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 1996, the Partnership experienced a net decrease in cash and short-
term investments of $27,000. Sources of cash during the year were from
regular Partnership Operations and the sale of 391 Forbes. Cash uses
during 1996 were: $51,000 for property capital expenditures and
construction, $45,000 for principal payments on notes payable, and
$556,000 for Partnership distribution. As of December 31, 1996, cash plus
short-term investments totaled $383,000 versus a balance of $410,000 at
December 31, 1995.
The Partnership's most significant current uses of cash reserves are for
principal payments on outstanding debt balance and capital expenditures
needed to maintain properties and current occupancy rates.
In prior years, the Boise and San Francisco Bay Area marketplaces, where
certain of the Partnership's real estate assets are located experienced a
significant imbalance between supply and demand. Historic high building
activity and declining economic conditions in these markets produced high
vacancies in industrial and commercial properties. As a result, market rate
rents declined. Due to these conditions the Partnership suffered recurring
losses and negative cash flows from operations. Market conditions have
improved in 1996 and are expected to continue to improve in 1997.
The Partnership made a cash distribution to its limited partners of $15.00
per unit during 1996. All future sale proceeds will be used to increase
reserves, reduce indebtedness and/or make distributions to investors.
The Partnership is currently in the process of selling its properties. One
property was sold in 1996. One property, the 1201 Cadillac property, has
been listed for sale. The other property, the Jefferson Place Office
Building, will be placed on the market in 1998. Management believes that
the cash reserves plus proceeds from operations and property sales will be
sufficient to meet the viable operating costs of the partnership as it
continues through this liquidation phase.
<PAGE>
RESULTS OF OPERATIONS
Overall, rental income decreased 9% in 1996 versus 1995. 1995's revenue
decreased 41% from the 1994 level. The 1996 decrease was due to the
sale of 391 Forbes in August 1996. The 1995 decrease was primarily due
to selling the Silverado Apartment complex, in July 1994.
Interest income in 1996 decreased 22% from that in 1995. This was the
result of lower average cash balances held by the Partnership. Revenues
for the two properties owned continuously for the three year period
increased 3% from 1995 to 1996, and 8% from 1994 to 1995.
Overall, operating expenses on rental properties increased 19% in 1996
versus 1995, or $78,000. In 1995, operating expenses decreased 61%
versus 1994. The 1996 increase was caused by an increase in maintenance
expenses, property taxes and other miscellaneous expenses.
Interest expense decreased 76% in 1996 versus 1995. The decrease was
caused by the reduced amount of property indebtedness due to the
disposition of properties in 1996. Interest expense in 1995 decreased 45%
versus 1994. This decrease was also the result of disposition of properties.
The partnership indebtedness is currently all at fixed rates. Thus, the
partnership will not be impacted by the current changes in the interest rate
environment. Depreciation and amortization expense decreased 17% and
33% from 1995 to 1996, and 1994 to 1995 respectively. The decrease in
depreciation expense was due to the disposition of properties during this
period of time.
General and administrative expenses decreased 7% in 1996 versus 1995.
1995's general and administrative expenses decreased 17% from 1994.
The decrease in 1996 was due to management's continuing efforts to keep
general and administrative expense under control. The General Partner
expects costs to stabilize during 1997 relative to 1996.
Net loss of the Partnership before gain from sale of real estate or ordinary
expenses increased 24% in 1996 versus 1995. This increase is primarily
the result of increased operating expenses. Loss of the Partnership in
1995 decreased 67% versus 1994. This decrease was primarily the result
of disposition of properties which were operating at a net loss, and
improvement in property operations of the properties which continue to be
held by the Partnership.
The result of operations for 1996 are not comparable to 1995 or 1994.
Variables between the years due to the number of properties operated and
the number of properties sold, can make comparison of operating results
misleading. Comparison of the operations of the two properties operated
continuously through 1996, 1995 and 1994 is provided below:
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Rental Revenue $ 1,076 $ 1,095 $ 1,100
Rental Operating Expense 436 344 436
Net Operating Income $ 640 $ 751 $ 664
Interest Expense $ 608 $ 611 $ 917
</TABLE>
Rental revenues from 1994 to 1995 decreased by less than 1%. Rental
Revenues decreased 1% for 1996 compared to 1995.
Rental operating expense on continuously owned properties increased
26% from 1995 to 1996 due to higher maintenance and upkeep at Jefferson
Place and higher property taxes at 1201 Cadillac Court. Operating
expense decreased 9% from 1994 to 1995. This decrease was the result
Of decreases in insurance costs and general and administrative expenses.
INFLATION
The Partnership's rental revenues in the overbuilt real estate markets of
Boise and San Francisco, 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is contained at Page F-1 following
in this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership is Landsing Partners-III, which has
sole responsibility for all aspects of the Partnership's operations. It is a
General Partnership having two General Partners, Landsing Equities
Corporation, a California corporation, which is the managing General
Partner of the General Partner, and Partners '84, a California limited
partnership. The organizers or promoters of the Partnership are Landsing
Equities Corporation and Gary K. Barr. Landsing Equities Corporation
and Mr. Barr are the General Partners of Partners '84. Mr. Barr holds the
position with Landsing Equities Corporation indicated below.
Gary K. Barr is the Director and President of Landsing Equities
Corporation. His principal occupation during the last five years or more,
and certain other affiliations are set forth below:
Gary K. Barr. Mr. Barr serves as Chairman and Chief Executive Officer
of Pacific Coast Capital and has served as President and Director of
Landsing Pacific Fund from its inception in November, 1988 to July, 1992.
Mr. Barr received a Bachelor of Science degree in Mechanical Engineering
from Oklahoma State University in 1967 and a Master of Business
Administration degree from the Stanford University Graduate School of
Business in 1972. Mr. Barr serves on the Board of Governors of the
National Association of Real Estate Investment Trusts and on its Editorial
Board. Mr. Barr has served as President of the California Chapter of the
Real Estate Securities and Syndication Institute of the National Association
of Realtors ("RESSI"), which has awarded him the designation of
Specialist in Real Estate Securities. Since 1983, he has served on the
Board of Directors of Silicon Valley Bancshares. In 1989 he authored the
book J.K. Lasser's "Real Estate Investment Guide" published by Prentice
Hall.
ITEM 11. EXECUTIVE COMPENSATION
The General Partner, Landsing Partners-III, and its General Partners,
receive no compensation from the Partnership. The General Partner has
contracted with The Landsing Corporation, an affiliate, for the provision of
certain asset and property management and administrative services. The
Landsing Corporation has subcontracted these management and
administrative services to its affiliate, Pacific Coast Capital. During 1996,
Pacific Coast Capital received management fees of $132,000, which were
determined based on expenses incurred in order to operate the Partnership.
In addition, Pacific Coast Capital was paid $32,000 for property
management services. These property management fees were based on
monthly property revenues received. See Item 13, "Certain Relationships
and Related Transactions" for further information.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person or group is known by the Partnership to hold more than 5% of
the Units of Limited Partnership. The General Partner is not a direct or
beneficial owner of any Units of the limited partnership. The General
Partner knows of no arrangements, including any pledge by any person of
securities of the Partnership, the operation of which may at a subsequent
date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has agreements with The Landsing Corporation and one of
its affiliates, Pacific Coast Capital, pursuant to which the Partnership has
paid various fees and compensation to these companies. The Landsing
Corporation is a closely-held corporation.
The Partnership has entered into a property management agreement with
Pacific Coast Capital for the management of the Partnership's properties.
During 1996, Pacific Coast Capital received $32,000 for property
management.
The Partnership has retained The Landsing Corporation to serve as advisor
and to manage the day-to-day operations of the Partnership. These
services are provided under a subcontract with Pacific Coast Capital, an
affiliate of The Landsing Corporation. Pacific Coast Capital is to perform
these services based on reimbursement of costs incurred but in no case are
these to exceed those which the Partnership would have to pay
independent parties for comparable services. During 1996, Pacific Coast
Capital received expense reimbursements of $132,000.
For information concerning the agreements between the Partnership and
the affiliates of The Landsing Corporation, see Note 2 of Notes to
Consolidated Financial Statements filed as part of this Annual Report.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See the Index at page F-1.
2. Financial Statements Schedules
See the Index at page F-1.
3. Exhibits
See the Exhibit Index which immediately precedes the
Exhibits filed with this Report.
(b) The Partnership filed one report on Form 8-K during the quarter
ended September 30, 1996, to report the "Disposition of an Asset".
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LDP-III
By: Landsing Partners-III, General Partner
By: Landsing Equities Corporation,
General Partner
March 31, 1997 By: /s/ Gary K. Barr
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Partnership and in the capacities and on the dates indicated.
March 31, 1997 /s/ Gary K. Barr
President and Director,
Landsing Equities Corporation
(Principal Executive Officer)
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act.
No Annual Report or Proxy material has been sent to Partnership's security
holders. An Annual Report will be furnished to such security holders
subsequent to the filing of Partnership's Annual Report on Form 10-K, and,
when sent, Partnership shall furnish copies of such material to the
Commission.
<PAGE>
LDP-III
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
INCLUDED IN THE FORM 10-K
DESCRIPTION
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets, December 31, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Changes in Partners' Equity (Deficit)
for the Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Supplemental Consolidated Financial Statement Schedules:
Schedule X - Supplementary Consolidated Income Statement Information
for the Years Ended December 31, 1996, 1995 and 1994
Schedule XI - Real Estate and Accumulated Depreciation
at December 31, 1996
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the General Partner of LDP-III:
We have audited the accompanying consolidated financial statements and
consolidated financial statement schedules of LDP-III and subsidiary listed
in the index on page F-1 of this Form 10-K as of December 31, 1996 and
1995, and the related consolidated statements of operations, partners'
equity and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of LDP-III and subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
consolidated financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects, the information required to be
included therein.
The accompanying consolidated financial statements and consolidated
financial statement schedules have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 1 to
the financial statements, the Partnership has suffered negative cash flows
and recurring losses from operations which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to
this matter are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
DALBY, WENDLAND & CO., P.C.
Glenwood Springs, Colorado
March 13, 1997
<PAGE>
<TABLE>
LDP-III
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 and 1995
(In thousands)
<CAPTION>
1996 1995
<S> <C> <C>
ASSETS
INVESTMENTS IN REAL ESTATE:
Rental properties (including property held for sale) $ 10,510 $ 12,306
Accumulated depreciation (4,086) (4,264)
6,424 8,042
CASH AND CASH EQUIVALENTS (including interest
bearing deposits of $85 in 1996 and $104 in 1995,
and including restricted cash of $37 in 1996
and $14 in 1995) 85 212
OTHER ASSETS:
Short-term investments 298 198
Accounts receivable 17 24
Prepaid expenses and deposits 4 8
Loan costs and leasing commissions (net of accumulated
amortization of $474 in 1996 and $536 in 1995) 126 152
Total other assets 445 382
TOTAL $ 6,954 $ 8,636
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Notes payable $ 6,891 $ 7,871
Accounts payable 0 5
Other liabilities 133 81
Total liabilities 7,024 7,957
PARTNERS' EQUITY (DEFICIT) (70) 679
TOTAL $ 6,954 $ 8,636
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands except per unit amounts)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUE:
Rental $ 1,210 $ 1,339 $ 2,101
Interest 22 28 30
Total revenue 1,232 1,367 2,131
EXPENSE:
Interest 671 717 1,302
Operating 472 394 1,002
Depreciation and amortization 325 396 588
General and administrative 180 194 233
Total expense 1,648 1,701 3,125
LOSS BEFORE GAIN FROM SALE OF REAL
ESTATE AND EXTRAORDINARY ITEM (416) (334) (994)
GAIN FROM SALE OF REAL ESTATE 223 0 401
LOSS BEFORE EXTRAORDINARY ITEM (193) (334) (593)
EXTRAORDINARY ITEM - GAIN FROM
EXTINGUISHMENT OF DEBT 0 0 334
NET LOSS $ (193) $ (334) $ (259)
NET LOSS BEFORE EXTRAORDINARY ITEM PER PARTNERSHIP UNIT:
LIMITED PARTNERS (5) (9) (16)
GENERAL PARTNERS 0 0 0
EXTRAORDINARY ITEM:
GAIN FROM EXTINGUISHMENT OF DEBT PER PARTNERSHIP UNIT:
LIMITED PARTNERS 0 0 9
GENERAL PARTNERS 0 0 0
NET LOSS PER PARTNERSHIP UNIT:
LIMITED PARTNERS (5) (9) (7)
GENERAL PARTNERS 0 0 0
TOTAL (5) (9) (7)
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in thousands except per unit amounts)
<CAPTION>
LIMITED PARTNERS
NUMBER OF GENERAL TOTAL
PARTNERSHIP PARTNER PARTNERS'
UNITS AMOUNT AMOUNT EQUITY
(DEFICIT)
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 37,156 1,792 0 1,792
Abandonments (15)
Distribution - 1994 (520) (520)
Net loss - 1994 (259) (259)
BALANCE, DECEMBER 31, 1994 37,141 1,013 0 1,013
Abandonments (5)
Net loss - 1995 (334) (334)
BALANCE, DECEMBER 31, 1995 37,136 679 0 679
Distribution-1996 (556) 0 (556)
Net loss - 1996 (193) 0 (193)
BALANCE, DECEMBER 31, 1996 37,136 $ (70) $ 0 $ (70)
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (193) $ (334) $ (259)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for loss in value of investment in real
estate, gain from sale of real estate and extra-
ordinary item (223) 0 (699)
Depreciation 325 342 588
Changes in operating assets and liabilities:
Decrease in accounts receivable 7 13 60
Decrease (increase) in prepaid expenses
and deposits 4 1 43
Decrease in accounts payable (5) (27) (61)
Increase (decrease) in accrued interest payable 0 0 (45)
Increase (decrease) in other liabilities 29 6 (124)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (56) 1 (497)
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments (100) 397 0
Capital expenditures and construction (51) (134) (537)
Deferred expenses 21 (21) 43
Net proceeds from sale of rental properties 660 0 1,415
NET CASH PROVIDED BY INVESTING ACTIVITIES 530 242 921
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (45) (295) (92)
Net proceeds from refinancing 0 0 173
Distribution to unit holders (556) 0 (520)
NET CASH USED IN FINANCING ACTIVITIES (601) (295) (439)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (127) (52) (15)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 212 264 279
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 85 $ 212 $ 264
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
LDP-III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per unit amounts)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - LDP-III (the "Partnership") is a limited partnership
organized under the laws of the state of California for the purpose
of acquiring, operating, holding for investment, and ultimately
selling income producing real estate. Landsing Partners-III (the
"General Partner") is a California General Partnership whose
partners are Landsing Equities Corporation and Partners '84.
LDP-III was formed on August 30, 1983, and shall continue until
December 31, 2033, unless sooner terminated. The Partnership
commenced operations on December 9, 1983, with the acquisition
of the first property.
The Partnership owns two buildings. One is an office building
Located in northern California which is leased solely to one
Corporate tenant. The other is located in Idaho and is a commercial
Office building.
Investment in Subsidiary - On December 3, 1992 the Partnership
transferred two of its properties, the 533 Cabot Building and the
391 Forbes Building to its wholly owned subsidiary, LDP-III
Realty Service Corporation, which filed bankruptcy under Chapter
11 of the Federal Bankruptcy Code. During 1993, the U.S.
Bankruptcy case was dismissed and the 533 Cabot Building was
disposed of. In 1996, 391 Forbes Building was sold and the
subsidiary dissolved. For financial reporting purposes the
Partnership consolidated the operation of the subsidiary with that
of the Partnership. All significant intercompany transactions and
balances have been eliminated.
Rental Properties - Rental properties are stated at the lower of cost
or recoverable value. Depreciation is computed by the straight-
line method over estimated useful lives ranging from five to forty
years. Certain acquisition fees and expenses for real estate
brokerage services paid to Landsing Property Corporation, an
affiliate of the General Partner, are capitalized as a cost of rental
properties. Tenant improvements are amortized over the lives of
the related tenant leases which range from one to ten years.
Major additions are capitalized at cost, while maintenance and
repairs which do not improve or extend the life of the respective
assets are expensed currently. When assets are retired or
otherwise disposed of, the costs and related accumulated
depreciation are removed from the accounts, and any gain or loss
on disposal is included in the results of operations.
Loan Costs and Leasing Commissions - Amounts paid to obtain
loans are deferred and amortized over the lives of the related
notes payable, which range from four to ten years. Leasing
commissions are amortized over the lives of the tenant leases
which range from one to ten years.
Cash and Cash Equivalents - The Partnership considers all highly
liquid investments with a maturity of three months or less from
the date of purchase to be cash equivalents.
Short-Term Investments - The Partnership invests in short-term
federally insured certificates of deposits which mature on a date
in excess of three months from the date of purchase. The cost
of these investments approximates market value.
Income Taxes - No provision for Federal or state income taxes
has been made in the financial statements because these taxes are
the obligation of the partners.
Net Loss Per Partnership Unit - Net loss per Partnership unit is
based on weighted average units outstanding after giving effect to
net income (loss) allocated to the General Partner of $0 in 1996,
$0 in 1995 and $0 in 1994.
Concentrations of Credit Risk - The Partnership's financial
instruments that are exposed to concentrations of credit risk
consist primarily of its cash and cash equivalents. The
Partnership's cash and cash equivalents are in high-quality
institutions with high credit ratings. This investment policy limits
the Partnership's exposure to concentrations of credit risks.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Adequate Capital Resources - The General Partner believes that
despite the fact the Partnership has continued to operate at a net
loss before gain from the sale of properties and extraordinary items,
the Partnership has adequate capital resources to continue operations.
Improvements in the operation at Jefferson Place in Idaho, one of the
remaining properties, has the property operating at a positive
cash flow position. The California property, 1201 Cadillac, also operates
in a positive cash flow position, and a recent re-negotiation of the
lease at that complex will significantly increase operating cash flow.
The Partnership has continued to incur substantial operating losses.
A combination of historic high building activity and recessionary
Economic activity caused severe market pressures on rental rates,
Occupancy levels and agricultural prices. As a result of these conditions,
the Partnership has been unable to generate sufficient cash from operations
to fully fund its operating, necessary capital improvements and debt service
requirements, resulting in depletion of the Partnership's cash reserves.
These conditions may indicate that the Partnership will be unable to
continue as a going concern and realize its property values in the normal
course of business. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts
or the amounts and classification of liabilities that might be necessary
should the Partnership be unable to continue as a going concern.
The General Partner believes that due to the disposition of certain
properties and improvement in the remaining properties in the portfolio,
that operations will stabilize. Net loss before gains from sales and
extraordinary items decreased to $193 in 1996 compared to $334 in 1995.
The Partnership expects this positive trend to continue.
In the event the Partnership must liquidate its assets, management
believes the costs of the assets will be recovered and excess funds
would be available then for satisfaction of all liabilities.
Limited Partner Units Outstanding - Limited Partner Units outstanding
as of December 31, 1996, 1995 and 1994 were: 37,136, 37,136 and
37,141 respectively.
Restricted Cash - At December 31, 1996 and 1995, there was restricted
cash of $37 and $14, respectively. The cash relates to an escrow
agreement for tenant security deposits.
<PAGE>
<TABLE>
2. RELATED PARTY TRANSACTIONS
The Partnership has entered into agreements with The Landsing
Corporation and one of its affiliates, Pacific Coast Capital.
Advisory services for investment management, general and
administrative and property management are provided by Pacific
Coast Capital under subcontract with The Landsing Corporation.
The General Partner is an affiliate of The Landsing Corporation.
The related party transactions delineated in the Partnership
Agreement with affiliates of the General Partner are as follows:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
General and Administrative Support $ 132 $ 194 $ 233
Property Management and Lease Commissions 32 38 58
3. RENTAL PROPERTIES
1996 1995
Rental properties consist of the following:
Land $ 1,384 $ 2,205
Building and improvements 9,126 10,101
Total $10,510 $12,306
4. REAL ESTATE
During 1994, a first note payable of $2,395, a second note
payable of $419 and a third note payable of $304, all due to the
same lender and collateralized by the Jefferson Place Office
Building, were consolidated into a single note. This consolidation
resulted in a gain on debt forgiven of $334.
On July 7, 1994, the Partnership sold the Silverado Apartments
located in Houston, Texas. Total consideration received by the
Partnership was $8,500, which resulted in a gain of $364 and cash
proceeds of $1,234.
On October 14, 1994, the Partnership sold the Montbello Green
Commercial Building located in Denver, Colorado. Total
consideration received by the Partnership was $260, which
resulted in a gain of $37 and cash proceeds of $229.
On August 16, 1996, the Partnership's wholly owned subsidiary,
LDP-III Realty Services Corporation, sold its remaining property
391 Forbes. The sale resulted in a gain for financial reporting
purposes of $223, and cash proceeds of $660.
</TABLE>
<PAGE>
<TABLE>
5. NOTES PAYABLE
Notes Payable at December 31, 1996 and 1995, consisted of
(thousands of dollars):
<CAPTION>
1996 1995
<S> <C> <C>
First note payable collateralized by the
Jefferson Place Building bears interest at
a rate of 9.25% and requires payments of$23 per
month. This note matures August 8, 2001. $ 2,483 $ 2,529
Note payable collateralized by the 391 Forbes
Building bears interest at a rate of 11.25% and
requires principal and interest payments of$10 per
month. This note matured on March 1, 1996. 0 934
(See Note 10)
First note payable collateralized by the 1201
Cadillac Building bears interest at a rate of 8.5%
and requires interest payments of $31 per month.
This note matures on September 1, 1999. 4,408 4,408
Total $ 6,891 $ 7,871
</TABLE>
During 1994, the General Partner re-negotiated the terms and
conditions of the first mortgage loan on the Jefferson Place Office
Building. In return for a principal paydown of $50 the existing loan
was reduced by $334 to an outstanding balance of $2,814. This new
loan accrues interest at the rate of 9.25% per annum, and requires
monthly principal and interest payments of $23. Loan is all due
and payable on August 8, 2001. This reduction in the outstanding
principal balance in excess of the principal payments made
resulted in income to the partnership from forgiveness of debt of
$334 in 1994. During 1995, the Partnership made an additional principal
paydown on this loan of $243.
The loans on the 1201 Cadillac building have a principal balance
of $4,408, accrue interest at the rate of 8.5% per annum,
and require interest only payments. The entire outstanding balance
of the loan is all due and payable on September 1, 2001.
Rental properties are pledged as collateral for notes payable
which mature over periods ending through 2001. Principal
payments required in future years are as follows:
1997 $ 50
1998 55
1999 4,468
2000 66
2001 2,252
Total $6,891
6. RENTAL PROPERTIES UNDER OPERATING LEASES
Minimum future rents from rental properties under operating
leases having initial or remaining noncancelable lease terms in
excess of one year at December 31, 1996, are as follows:
1997 $ 996
1998 1,166
1999 1,127
2000 1,038
2001 984
Total $5,311
During February 1997, the Partnership extended the lease of the sole tenant at
1201 Cadillac for 5 years at an increased rental rate. The increase is
included in the schedule above.
<PAGE>
<TABLE>
7. RECONCILIATION TO INCOME TAX BASIS OF ACCOUNTING
The differences at December 31, 1996, 1995 and 1994, between
the basis of accounting used in the accompanying financial
statements and the income tax basis used to file the Partnership's
Federal income tax return are as follows (in thousands except per unit
amounts):
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net loss $ (193) $ (334) $ (259)
Loss on liquidation eliminated for
financial statement purposes (147)
(Increase) decrease resulted from:
Basis difference and accelerated depreciation (233) (182) (300)
Capitalize for tax purposes-special tax assessment 23 23
Basis difference and accelerated depreciation on
property sold 2,242
Investment - LDP-III Realty Service Corporation (226) 12 35
Other 35 36
Net income(loss) - tax basis $ (741) $ (481) $ 1,754
Taxable income (loss) per Partnership unit $ (20) $ (13) $ 47
Partners' equity $ (70) $ 679 $ 1,013
Increase (decrease) resulted from:
Basis of assets 1,504 1,481 1,457
Accumulated depreciation (2,756) (2,523) (2,336)
Syndication costs 4,615 4,615 4,615
Other 35 4
Remove consolidated equity in LDP-III
Realty Services Corp. (344) (390)
Tax investment in LDP-III Realty Service Corp. 717 750
PARTNERS' EQUITY - TAX BASIS $3,332 $ 4,629 $5,109
</TABLE>
<PAGE>
8. SUPPLEMENTAL DISCLOSURE ABOUT NON-CASH
INVESTING AND FINANCING ACTIVITIES
In 1996, proceeds from the sale of building were used to retire debt in the
amount of $935. A note payable to a bank with a principal balance of $932 was
refinanced. The new loan balance was initially $950; the increase in principal
of $18 was used for deferred loan fees and other closing costs.
During 1994, notes payable of $334 were forgiven.
9. SUPPLEMENTAL CASH FLOW INFORMATION
The Partnership paid interest of $671 in 1996, $717 in 1995, and $1,302
in 1994.
<PAGE>
<TABLE>
SCHEDULE X
LDP-III
SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<CAPTION>
COLUMN A COLUMN B
ITEM CHARGED TO COSTS AND EXPENSES
1996 1995 1994
<S> <C> <C> <C>
1. Maintenance and repairs $ 122 $ 109 $ 218
2a. Depreciation 286 342 510
2b. Amortization of deferred loan costs and
leasing commissions 39 54 78
3. Property taxes 163 130 254
4. Utilities 72 63
5. Insurance 34 29
As to items omitted, amounts did not exceed one percent of total revenue.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE XI
LDP-III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(In thousands)
<CAPTION>
COST
CAPITALIZED
INITIAL COST SUBSE- PROVISION
BLDG. & QUENT TO FOR ACCUMULATED
ENCUM- IMPROVE- ACQUI- LOSS IN DEPRECI-
BRANCES LAND MENTS TOTAL SITION VALUE TOTAL ATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jefferson Place $2,483 $ 243 $5,150 $ 5,393 $1,126 $ (640) $ 5,879 $2,633
Boise, Idaho
Date Acquired 12/09/83
1201 Cadillac Court 4,408 1,450 3,773 5,223 408 (1,000) 4,631 1,453
Milpitas, California
Date Acquired 10/32/85
TOTAL $6,891 $1,693 $8,923 $10,616 $1,534 $(1,640) $10,510 $4,086
</TABLE>
NOTES:
(1) The Partnership's policy is to purchase development and completed
projects. Costs incurred before completion of the development are
included in building basis. Costs incurred after completion of the
development projects and costs incurred subsequent to the purchase of
completed projects are included as improvements.
(2) Depreciation is computed by the straight-line method on lives ranging
from five to forty years.
<PAGE>
EXHIBIT INDEX
Exhibit Number in
Accordance with
601 of
Regulation S-K Exhibit Description
3 & 4 The Partnership Agreement included as Exhibit B to
the Prospectus dated March 1, 1984 (Incorporated by
reference to Exhibit 3.4 of Form 10-K for the year
ended December 31, 1985)
10.1 Commercial Contract to Buy and Sell Real Estate
dated December 11, 1989 between Highland Hall
and Landsing Diversified Properties-III
10.2 Bill of Sale and General Warranty Deed related to
the sale of Silverado Apartments. (Incorporated by
reference to Exhibit 10.1 and 10.2 of Form 8-K
dated July 7, 1994)
99 ADDITIONAL EXHIBITS
99.1 The Prospectus dated March 1, 1984 (Incorporated
by reference to Exhibit 28.1 of Form 10-K for the
year ended December 31, 1985)
99.2 Supplement No. 12 to Prospectus (Incorporated by
reference to Exhibit 28.2 of Form 10-K for the year
ended December 31, 1985)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 383
<SECURITIES> 0
<RECEIVABLES> 17
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 130
<PP&E> 10,510
<DEPRECIATION> 4,086
<TOTAL-ASSETS> 6,954
<CURRENT-LIABILITIES> 133
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (70)
<TOTAL-LIABILITY-AND-EQUITY> 6,954
<SALES> 0
<TOTAL-REVENUES> 1,232
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 977
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 671
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
