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, 1998
[ ] 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
<PAGE>
LDP-III
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1998
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 Registrant'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 Registrant
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 and Reports Form 8-K
Signatures
Index to Financial Statements included in the form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
On December 31, 1998, the registrant sold the last of its real property
investments known as Jefferson Place Office Building, located in Boise, Idaho.
Jefferson Place was the final operating property owned by LDP-III. The
Partnership intends to dissolve its operations by the end of the first
Quarter 1999. Immediately subsequent to the sale of this property, the
Partnership had no "Ongoing Operations" to report.
LDP-III (the "Partnership") was 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 consisted 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 was not 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, which sold in August, 1996. For financial
reporting purposes, the Partnership's investment in LDP-III Realty Service
Corporation was presented on a consolidated basis.
Cash reserves totaled $1,894,000 at December 31, 1998. The General Partner
has declared a final cash distribution of $48.25 per unit (one partial
distribution of $30 per unit/one final distribution of $18.25) to unit
holders of record on December 31, 1998, which was paid in January and March,
1999. These cash distributions represent the final assets of LDP-III which,
subsequent to this final distribution, is to be considered a fully
liquidated and dissolved Partnership.
ITEM 2. PROPERTIES
None.
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 1998.
<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
December 31, 1998, was 3,837.
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>
(In thousands, except per Unit amounts)
<CAPTION>
For the years ended December 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Rental Revenue $ 672 $ 1,275 $ 1,210 $ 1,339 $ 2,101
Comprehensive Income (Loss) 693 2,838 (193) (334) (259)
Comprehensive Income (Loss)
Per Unit<F2> 19 76 (5) (9) (7)
Total Assets 1,905 5,304 6,954 8,636 9,286
Long-term Obligations 0 2,452 6,891 7,871 8,167
Cash Distributions Per Unit<F3> 45 0 15 0 14
<FN>
<F1>
(1) Financial data of the Partnership for 1998 is not comparable to that of
1997, 1996 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>
(2) Based on a weighted average of outstanding Units in 1998, 1997, 1996,
1995 and 1994.
<F3>
(3) Final distributions of $48.25 per unit ($30 in January 1999 and $18.25
in March 1999) were made during the first quarter of 1999.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
LDP-III was a California limited partnership formed in August 1983. The
Partnership's business consisted of a single segment - equity investments in
leveraged income-producing real estate.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998 the Partnership had cash and cash equivalents totaling
approximately $1,894,000.
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.
On December 9, 1997, the Partnership sold one of its real property investments
known as 1201 Cadillac Court, located in Milpitas, California. The property
consisted of a 51,450 square feet commercial building. The sale price received
by the registrant was $6,800,000 which resulted in a gain of $3,020,000 and
cash proceeds of $1,796,000.
On December 31, 1998, the registrant sold the last of its real property
investments known as Jefferson Place Office Building, located in Boise, Idaho.
The sale price received by the registrant was $4,405,000 which resulted in a
gain of $1,065,055 and cash proceeds of $1,732,642. Jefferson Place was the
final operating property owned by LDP-III. The Partnership intends to cease
and dissolve its operations by the end of the first quarter 1999.
During 1998, the Partnership experienced a net decrease in cash and cash
equivalents of $114,000. Sources of cash during the year were from regular
Partnership Operations and the sale of Jefferson Place. Cash uses during 1998
were: $109,000 for property capital expenditures and lease commissions,
$48,000 for principal payments on notes payable, and cash distribution to
Limited Partners of $1,671,000. As of December 31, 1998, cash and cash
equivalents totaled $1,894,000 versus a balance of $2,008,000 at December 31,
1997.
<PAGE>
The Partnership made a cash distribution to its limited partners of $45.00 per
unit during 1998. The General Partner has declared a cash distribution of $30
per unit to unit holders of record on December 31, 1998. This distribution
was paid in January, 1999. The Partnership made a final distribution of
$18.25 per unit on March 8, 1999 to the unit holders of record on December 31,
1998. This distribution represents the last assets of the Partnership.
<PAGE>
RESULTS OF OPERATIONS
Overall, rental income decreased 48% in 1998 versus 1997. 1997's revenue
increased 5% from the 1996 level. The 1998 decrease was due to the sale of
1201 Cadillac in December 1997.
Interest income in 1998 increased 85% from that in 1997. This was the result
of larger cash balances held by the Partnership.
Interest expense and depreciation expenses decreased significantly from 1996
to 1997 and 1998 due to the disposition of properties in 1997 and 1998.
General and administrative expenses decreased 2% in 1998 versus 1997. 1997's
general and administrative expenses increased 5% from 1996.
Net loss of the Partnership before gain from sale of real estate increased 51%
in 1998 versus 1997. Net loss of the Partnership in 1997 decreased 56% versus
1996.
<PAGE>
<TABLE>
A comparison of the operations of the one property operated continuously
through 1998, 1997 and 1996 is provided below:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Rental Revenue $ 672 $ 667 $ 658
Rental Operating Expense 316 321 319
Net Operating Income $ 356 $ 346 $ 339
Interest Expense $ 225 $ 243 $ 232
Rental revenues increased 1.5% from 1996 to 1997 with only a slight increase
from 1997 to 1998.
Operating expense decreased 2% from 1997 to 1998 after increasing slightly
from 1996 to 1997.
INFLATION
Not applicable.
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.
</TABLE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership is Landsing Partners-III (LP-III),
which has sole responsibility for all aspects of the Partnership's operations.
LP-III is a General Partnership having two General Partners, Landsing Equities
Corporation, a California corporation, which is the managing 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, received
no compensation from the Partnership. The General Partner had contracted with
The Landsing Corporation, an affiliate, for the provision of certain asset and
property management and administrative services. The Landsing Corporation had
subcontracted these management and administrative services to its affiliate,
Pacific Coast Capital. During 1998, Pacific Coast Capital received management
fees of $121,000, which were determined based on expenses incurred in order to
operate the Partnership. In addition, Pacific Coast Capital was paid $15,000
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.
<PAGE>
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 had 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 had entered into a property management agreement with Pacific
Coast Capital for the management of the Partnership's properties. During
1998, Pacific Coast Capital received $15,000 for property management.
The Partnership had 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 was to perform these services
based on reimbursement of costs incurred but in no case were these to exceed
those which the Partnership would have had to pay independent parties for
comparable services. During 1998, Pacific Coast Capital received expense
reimbursements of $121,000.
For information concerning the agreements between the Partnership and the
affiliates of The Landsing Corporation, see Note 3 of Notes to Financial
Statements filed as part of this Annual Report.
<PAGE>
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
See the Index at page F-1.
2. Exhibits
See the Exhibit Index which immediately precedes
the Exhibits filed with this Report.
(b) None.
<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 29, 1999 By: /s/ Gary K. Barr
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 29, 1999 /s/ Gary K. Barr
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 the Partnership's Annual Report on Form 10-K.
<PAGE>
LDP-III
INDEX TO FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-K
Report of Independent Accountants
Financial Statements:
Balance Sheets, December 31, 1998 and 1997
Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Equity for the Years Ended
December 31, 1998, 1997 and 1996
Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the General Partner of LDP-III:
We have audited the accompanying consolidated financial statements of LDP-III
and subsidiary listed in the index on page F-1 of this Form 10-K as of
December 31, 1998 and 1997, and the related statements of operations,
partners' equity and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements.
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.
As described in Note 2 to the financial statements, the management of LDP-III
Adopted a plan of liquidation on December 31, 1998 and the Partnership began
Liquidation shortly thereafter.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LDP-III as of December 31,
1998 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
DALBY, WENDLAND & CO., P.C.
Glenwood Springs, Colorado
March 9, 1999
<PAGE>
<TABLE>
LDP-III
BALANCE SHEETS, DECEMBER 31, 1998 and 1997
(In thousands except unit amounts)
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
INVESTMENTS IN REAL ESTATE:
Rental properties (including property held for sale) $ 0 $ 5,985
Accumulated depreciation 0 (2,817)
0 3,168
CASH AND CASH EQUIVALENTS (including interest bearing
deposits of $1,894 in 1998 and $1,947 in 1997) 1,894 2,008
OTHER ASSETS:
Accounts receivable 10 37
Prepaid expenses and deposits 1 1
Loan costs and leasing commissions (net of accumulated
amortization of $0 in 1998 and $359 in 1997) 0 90
Total other assets 11 128
TOTAL $ 1,905 $ 5,304
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $ 0 $ 2,452
Accounts payable 0 0
Other liabilities 115 84
Total liabilities 115 2,536
PARTNERS' EQUITY
General Partners Equity 0 0
Limited Partners Equity 1,790 2,768
TOTAL $ 1,905 $ 5,304
Equity Units Authorized - Limited Partners 37,156 37,156
- General Partners 0 0
Equity Units Outstanding - Limited Partners 37,136 37,136
- General Partners 0 0
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(In thousands except unit amounts)
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
REVENUE:
Rental $ 672 $ 1,275 $ 1,210
Interest 37 20 22
Total revenue 709 1,295 1,232
EXPENSE:
Interest 225 596 671
Operating 431 372 472
Depreciation and amortization 239 319 325
General and administrative 186 190 180
Total expense 1,081 1,477 1,648
LOSS BEFORE GAIN FROM SALE OF
REAL ESTATE (372) (182) (416)
GAIN FROM SALE OF REAL ESTATE 1,065 3,020 223
NET INCOME (LOSS) $ 693 $ 2,838 $ (193)
NET INCOME (LOSS)-LIMITED PARTNERS $ 693 $ 2,838 $ (193)
NET INCOME (LOSS)-GENERAL PARTNERS 0 0 0
TOTAL $ 693 $ 2,838 $ (193)
NET INCOME (LOSS) PER PARTNERSHIP UNIT:
LIMITED PARTNERS $ 19 $ 76 $ (5)
GENERAL PARTNERS 0 0 0
TOTAL $ 19 $ 76 $ (5)
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(In thousands except unit amounts)
<CAPTION>
LIMITED PARTNERS TOTAL
NUMBER OF GENERAL PARTNERS'
PARTNERSHIP PARTNER EQUITY
UNITS AMOUNT AMOUNT (DEFICIT)
<S> <C> <C> <C> <C>
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)
Net Income - 1997 2,838 0 2,838
BALANCE, DECEMBER 31, 1997 37,136 $2,768 $ 0 $2,768
Distribution-1998 (1,671) 0 (1,671)
Net Income-1998 693 0 693
BALANCE, DECEMBER 31, 1998 37,136 $1,790 $ 0 $1,790
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
LDP-III
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(In thousands except unit amounts)
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 693 $ 2,838 $ (193)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain from sale of real estate (1,065) (3,020) (223)
Depreciation and amortization 239 319 325
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 27 (20) 7
Decrease in prepaid expenses and deposits 0 3 4
Decrease in accounts payable 0 0 (5)
Increase (decrease) in other liabilities 31 (49) 29
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (75) 71 (56)
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments 0 298 (100)
Capital expenditures and construction (109) (247) (51)
Deferred expenses 56 36 21
Net proceeds from sale of rental properties 1,733 1,796 660
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,680 1,883 530
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (48) (31) (45)
Distribution to unit holders (1,671) 0 (556)
NET CASH USED IN FINANCING ACTIVITIES (1,719) (31) (601)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (114) 1,923 (127)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 2,008 85 212
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,894 $ 2,008 $ 85
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
LDP-III
NOTES TO FINANCIAL STATEMENTS
(In thousands except 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 is authorized to
continue until December 31, 2033, unless sooner terminated. The Partnership
commenced operations on December 9, 1983, with the acquisition of the first
property.
During 1998, the Partnership owned one commercial office building located in
Idaho. (See Note 2 for the Plan of Liquidation.)
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. 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.
<PAGE>
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 Income (Loss) Per Partnership Unit - Net income (loss) per Partnership
unit is based on weighted average units outstanding after giving effect to net
income (loss) allocated to the General Partner.
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 maintained
in various accounts in FDIC insured institutions. 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.
Impairment of Long-Lived Assets - The Partnership adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed Of"
during 1996. SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used or disposed of by an entity and
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. During
1997 and 1996, the Partnership determined that no impairment loss need be
recognized for applicable assets of continuing operations.
Accounting Pronouncements - In June 1996, the Financial Accounting Standards
Board issued Statement No. 125 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities." This Statement is
effective for transactions occurring after December 31, 1996. However,
transactions such as securities lending, repurchase agreements, dollar rolls,
and similar secured financing arrangements are not subject to the provisions
of SFAS No. 125 until January 1, 1998. The standard provides that, following
a transfer of financial assets, an entity is to recognize the financial and
servicing assets it controls and the liabilities it has incurred, derecognize
financial assets when control has been surrendered and derecognize liabilities
when extinguished. The adoption of SFAS No. 125 had no impact on the
Partnership's financial statements. The impact of the delayed provisions is
also not expected to be material.
<PAGE>
Effective January 1998, the Partnership adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement,
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the
equity section of a statement of financial condition. However, the
Partnership does not have any items of comprehensive income at December 31,
1998.
Effective January 1, 1998, the Partnership adopted SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information." However, the
Partnership does not have any reportable segments at December 31, 1998.
Fair Value of Financial Instruments - The fair value of certain financial
assets carried at cost, including cash and cash equivalents and accounts
receivable, are considered to approximate their respective carrying values
due to their short-term nature and negligible credit losses. The fair value
of accrued liabilities is considered to approximate their respective book
values due to their short-term nature.
Reclassifications - Certain amounts in the 1997 financial statements have
been reclassified to conform to the 1998 presentation.
<PAGE>
<TABLE>
2. PLAN OF LIQUIDATION
The Partnership sold its final property on December 31, 1998. As a result,
management adopted a plan to liquidate the Partnership. At December 31,
1998, substantially all of the Partnership's assets consisted of cash and
cash equivalents. As part of the plan to liquidate, the Partnership made cash
distributions to unit holders of $30 and $18.25 per unit on January 26, 1999
and March 8, 1999, respectively.
3. 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>
1998 1997 1996
<S> <C> <C> <C>
General and Administrative Support $ 121 $ 143 $ 132
Property Management 15 30 32
Leasing Commissions 0 68 0
</TABLE>
<TABLE>
4. RENTAL PROPERTIES
Rental properties at December 31 consist of the following:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Land $ 0 $ 213 $ 1,384
Building and improvements 0 5,772 9,126
0 5,985 10,510
Accumulated depreciation 0 (2,817) (4,086)
0 $ 3,168 $ 6,424
</TABLE>
Depreciation expense for the years ended December 31, 1998 and 1997 was $239
and $319, respectively.
5. REAL ESTATE
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.
On December 9, 1997, the Partnership sold the 1201 Cadillac property. The
sale resulted in a gain for financial reporting purposes of $3,020 and cash
proceeds of $1,796.
On December 31, 1998, the Partnership sold its last property, Jefferson Place
Office Building. The sale price received by the registrant was $4,405, which
resulted in a gain of $1,065 and cash proceeds of $1,733.
<PAGE>
<TABLE>
6. NOTES PAYABLE
Notes Payable at December 31 consist of:
<CAPTION>
1998 1997
<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. $ 0 $2,452
</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 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 During 1995, the Partnership made an additional principal paydown
on this loan of $243. The entire outstanding balance on this loan was paid on
December 31, 1998 from proceeds from the sale of the property.
<PAGE>
<TABLE>
7. RECONCILIATION TO INCOME TAX BASIS OF ACCOUNTING
The differences at December 31, 1998, 1997 and 1996, 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:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Net income (loss) $ 693 $ 2,838 $ (193)
Loss on liquidation eliminated for
financial statement purposes - - (147)
(Increase) decrease resulted from:
Basis difference and accelerated depreciation (61) (233) (182)
Capitalize for tax purposes-special tax assessment - - 23
Basis difference and accelerated depreciation
on property sold 1,553 252 -
Prepayment penalty on property sold - (265) -
Investment - LDP-III Realty Service Corporation - - (226)
Other 102 (20) 35
Net income (loss) - tax basis $2,287 $ 2,572 $ (690)
Taxable income (loss) per Partnership unit $ 62 $ 69 $ (20)
Partners' equity $1,790 $ 2,768 $ (70)
Increase (decrease) resulted from:
Basis of assets - 698 1,504
Accumulated depreciation - (2,182) (2,756)
Syndication costs 4,615 4,615 4,615
Other 116 5 39
PARTNER'S EQUITY - TAX BASIS $6,521 $ 5,904 $ 3,332
</TABLE>
<PAGE>
8. SUPPLEMENTAL DISCLOSURE ABOUT NON-CASH INVESTING AND FINANCING
ACTIVITIES
In 1998, proceeds from the sale of property were used to retire debt of
$2,401.
In 1997, proceeds from the sale of property were used to retire debt of
$4,408.
In 1996, proceeds from the sale of building were used to retire debt 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.
9. SUPPLEMENTAL CASH FLOW INFORMATION
The Partnership paid interest of $225 in 1998, $578 in 1997, and $671 in 1996.
<PAGE>
E X H I B I T I N D E X
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)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,894
<SECURITIES> 0
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,905
<CURRENT-LIABILITIES> 115
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,790
<TOTAL-LIABILITY-AND-EQUITY> 1,905
<SALES> 0
<TOTAL-REVENUES> 709
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 854
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 225
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 695
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
