UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14466
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1115374
(State of Organization) (I.R.S. Employer Identification
No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (203) 726-6000
Indicate by check mark whether the Registrant
(1) has filed all reports required to be
filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter
period that the Registrant was required to
file such reports), and (2) has been subject
to such filing requirements for the past 90
days.
Yes X No
Part I - Financial Information
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CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Balance Sheets
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June 30, December 31,
1995 1994
Assets (Unaudited) (Audited)
Property and improvements, at cost:
Land and land improvements $6,054,496 $6,029,006
Buildings 30,527,560 30,507,857
Furniture and fixtures 2,173,649 2,113,119
38,755,705 38,649,982
Less accumulated depreciation 12,198,464 11,629,808
Net property and improvements 26,557,241 27,020,174
Cash and cash equivalents 2,091,938 1,662,708
Accounts receivable (net of allowance of $14,938
in 1995 and $10,353 in 1994) 11,224 87,264
Escrow deposits 233,409 171,265
Prepaid insurance 22,719 44,265
Deferred charges 1,427,712 1,415,350
Debt service fund escrow 506,660 506,660
Other assets 1,000 97,371
Total $30,851,903 $31,005,057
Liabilities and Partners' Capital (Deficit)
Liabilities:
Notes and mortgages payable $29,431,006 $29,487,591
Accounts payable and accrued expenses
(including $27,467 in 1995 and $8,067
in 1994 due to affiliates) 291,349 270,002
Accrued interest payable (including $17,000
due to affiliates in 1995 and 1994) 73,561 72,946
Tenant security deposits 165,974 169,144
Unearned income 23,510 25,693
Total liabilities 29,985,400 30,025,376
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net loss (101,789) (100,657)
Cumulative cash distributions (13,355) (13,355)
(114,144) (113,012)
Limited partners (24,856 Units)
Capital contributions,net of offering costs 22,408,052 22,408,052
Cumulative net loss (20,101,245) (19,989,199)
Cumulative cash distributions (1,326,160) (1,326,160)
980,647 1,092,693
Total partners' capital 866,503 979,681
Total $30,851,903 $31,005,057
The Notes to Financial Statements are an integral part of these statements.
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<CAPTION>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Operations
(Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Income:
Rental income $1,358,357 $1,580,105 $2,676,876 $3,166,856
Other income 72,147 67,779 107,960 137,638
Interest income 37,776 17,798 69,073 29,056
1,468,280 1,665,682 2,853,909 3,333,550
Expenses:
Property operating expenses 389,142 440,952 759,125 893,634
General and administrative 201,156 205,199 392,484 410,250
Fees and reimbursements to
affiliates 21,160 28,726 44,579 55,843
Interest expense (includes $17,000 and
$34,000 for 1995 and $17,000 and
$32,313 for 1994 to affiliates) 561,331 704,347 1,109,595 1,414,552
Depreciation and amortization 334,060 391,142 661,304 816,214
1,506,849 1,770,366 2,967,087 3,590,493
Net loss $(38,569) $(104,684) $(113,178) $(256,943)
Net loss:
General Partner $(386) $(1,046) $(1,132) $(2,569)
Limited partners (38,183) (103,638) (112,046) (254,374)
$(38,569) $(104,684) $(113,178) $(256,943)
Net loss per Unit $(1.54) $(4.17) $(4.51) $(10.23)
The Notes to Financial Statements are an integral part of these statements.
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<CAPTION>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
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1995 1994
Cash flows from operating activities:
Net loss $(113,178) $(256,943)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 661,304 816,214
Accounts receivable 76,040 119,456
Accounts payable and accrued expenses 25,019 47,841
Accrued interest payable 615 24,303
Other, net 50,420 (116,307)
Net cash provided by operating activities 700,220 634,564
Cash flows from investing activities:
Purchase of property and improvements (105,723) (59,125)
Payment of leasing commissions -- (22,502 )
Net cash used in investing activities (105,723) (81,627)
Cash flows from financing activities:
Proceeds from mortgage loan 5,300,000 4,200,000
Repayment of notes and mortgage loans (5,356,585) (4,143,950)
Payment of financing costs (105,010) (24,251)
Cash distribution for limited partners (3,672) (1,683)
Net cash (used in) provided by financing activities (165,267) 30,116
Net increase in cash and cash equivalents 429,230 583,053
Cash and cash equivalents, beginning of year 1,662,708 1,150,033
Cash and cash equivalents, end of period $2,091,938 $1,733,086
Supplemental disclosures of cash information:
Interest paid during period $1,108,980 $1,390,249
The Notes to Financial Statements are an integral part of these statements.
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CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements
(Unaudited)
Readers of this quarterly report should refer to CONNECTICUT
GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP'S (the "Partnership")
audited financial statements for the year ended December 31, 1994 which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
1. Basis of Accounting
a) Basis of Presentation: The accompanying financial statements were
prepared in accordance with generally accepted accounting
principles. It is the opinion of management that the financial
statements presented reflect all the adjustments necessary for a
fair presentation of the financial condition and results of
operations. Certain amounts in the 1994 financial statements have
been reclassified to conform to the 1995 presentation.
b) Cash and Cash Equivalents: Short term investments with a maturity
of three months or less at the time of purchase are reported as
cash equivalents.
c) Escrow Deposits: Escrow deposits consist of funds held to pay
property taxes and insurance, as required by the first mortgage
lender for Stewart's Glen, Versailles and Waterford, maintenance
escrows, as required by the first mortgage lender for Waterford and
Stonebridge Manor, and a utility deposit for Stonebridge Manor.
2. Notes and Mortgages Payable
On March 31, 1995, the Partnership refinanced the Stonebridge Manor
Apartment's first mortgage note which was scheduled to mature on April 1,
1995. The new mortgage note is in the amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest and twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year.
During 1994, the Partnership refinanced the debt for Stewart's Glen
III with the existing lender. The maturity date has been extended from
February 1995 to April 1996 and the interest rate was lowered to 8.55%.
The Partnership will likely sell the property in early 1996 at debt
maturity.
3. Deferred Charges
Deferred charges consist of the following:
June 30, December 31,
1995 1994
Surety fee - Waterford Apartments mortgage note $ 963,910 $ 963,910
Costs of obtaining financing 845,127 740,117
1,809,037 1,704,027
Accumulated amortization (381,325) (288,677)
$ 1,427,712 $1,415,350
4. Transactions with Affiliates
The recourse promissory notes for Promenades Plaza Shopping Center
and Stonebridge Manor were guaranteed by an affiliate of the General
Partner for an annual fee of 2% and 1.25% on the outstanding balance,
respectively, prior to consolidation, modification and extension effective
on March 25, 1994. After consolidation, the note guarantee carries an
annual fee of 2% of the outstanding balance.
Other fees and expenses related to the General Partner or its
affiliates are as follows:
Three Months Ended Six Months Ended Unpaid at
June 30, June 30, June 30,
1995 1994 1995 1994 1995
Property management fee(a) $11,066 $13,179 $21,575 $28,303 $7,433
Reimbursement (at cost) for
out-of-pocket expenses 10,094 15,547 23,004 27,540 20,034
$21,160 $28,726 $44,579 $55,843 $27,467
(a) Does not include property management fees earned by independent
property management companies of $58,804 and $71,853 for the three
months ended June 30, 1995 and 1994 respectively and $115,057 and
$143,295 for the six months ended June 30, 1995 and 1994,
respectively. Certain property management services have been
contracted by an affiliate of the General Partner on behalf of the
Partnership and are paid directly by the Partnership to the third
party companies.
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CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership had $2,091,938 in cash and cash
equivalents which will be used to fund working capital requirements and the
Partnership's reserves. The portfolio generated positive adjusted cash
from operations after debt service, capital improvements and partnership
expenses for the three and six months ended June 30, 1995.
Each of the apartment properties has produced positive results in
the second quarter of 1995 for the Partnership. Cash generated from
property operations after Partnership expenses will supplement reserves.
Distributions to partners will not resume until the Partnership retires the
$3,400,000 recourse note obligation. For the second quarter of 1995,
adjusted cash from operations approximated $233,000 after capital
improvements and partnership level expenses.
The first mortgage note for Stonebridge matured April 1, 1995. The
Partnership completed a refinance with Hibernia National Bank on March 31,
1995. The new loan is in the principal amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest with twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year. The new
loan approximated the principal balance of the loan in which it replaced.
Origination fees and closing costs totalled approximately $105,000. The
refinance positions the property for a sale in late 1997 or early 1998
prior to debt maturity.
During 1994, the Partnership refinanced the debt for Stewart's Glen
III with the existing lender. The maturity date was extended from February
1995 to April 1996. The Partnership's current strategy assumes a sale in
early 1996 at debt maturity. The cash residual from the sale, after
payment of the property's first mortgage, will be added to Partnership
reserves for payment of the Partnership's recourse promissory note upon its
maturity.
Results of Operations
Generally, decreases in the income statement accounts are the
result of the Promenades Plaza sale on September 22, 1994. For the six
months ended June 30, 1994, Promenades Plaza accounted for approximately
$570,000 of rental income, $73,000 of other income, $184,000 of property
operating expenses, $61,000 of general and administrative expenses,
$259,000 of interest expense and $188,000 of depreciation and amortization.
For the three months ended June 30, 1994, Promenades Plaza accounted for
approximately $274,000 of rental income, $35,000 of other income, $81,000
of property operating expenses, $23,000 of general and administrative
expenses, $129,000 of interest expense and $68,000 of depreciation and
amortization. The following analytical comments have been limited to the
Partnership's four remaining properties.
Rental income increased approximately $52,000 and $80,000 for the
three and six months ended June 30, 1995, respectively, as compared with
the same periods of 1994. Rental rate increases offset nominal decreases
in average occupancy for 1995 resulting in increased rental income of
approximately $25,000 and $47,000 for the three and six months at
Stonebridge Manor and $4,000 for the six months at Stewart's Glen. Rental
rate increases at Versailles Village resulted in an approximately $19,000
and $26,000 increase in rental income. At Waterford Apartments, an
increase in second quarter average occupancy led to an approximately $8,000
and $3,000 rental income increase for the three and six months.
The increase in other income for the three and six months ended
June 30, 1995, as compared with the same periods of 1994, was primarily the
result of approximately $35,000 received in the second quarter of 1995 for
additional 1994 expense recapture and percentage rents billings to tenants
at Promenades.
The increase in interest income for the three and six months ended
June 30, 1995, as compared with the same periods of 1994, was the result of
increased interest earned on the trust accounts associated with Waterford's
bond financing and an increase in interest rates on short term investments.
Overall, property operating expenses increased for the three and
six months ended June 30, 1995, as compared with the same periods of 1994,
due to increased painting costs and carpet and vinyl replacements at
Waterford and Stewart's Glen. In addition, Waterford had nonroutine
expenditures for balcony repairs and landscaping work while Stonebridge
incurred costs for dryer vent replacements and fireplace cleaning. An
expense decrease at Versailles was the result of a nonrecurring real estate
tax consulting fee in 1994 and a drop in utility usage in 1995 due to the
milder winter.
The increase in general and administrative expense for the three
and six months ended June 30, 1995, as compared with the same periods of
1994, was the result of increased payroll related costs at Waterford,
Stonebridge and Stewart's Glen. In addition, advertising costs were
increased at Waterford in an effort to increase occupancy.
The decrease in interest expense for the three and six months ended
June 30, 1995, as compared with 1994, was the result of the November 1,
1994 Stewart's Glen refinance, decreasing the interest rate from 9.94% to
8.55%. In addition, the March 30, 1994 Versailles Village first mortgage
refinance lowering the interest rate from 10% to 8% had decreased interest
expense for the first quarter of 1995, as compared with the same period of
1994.
The increase in depreciation and amortization for the three and six
months ended June 30, 1995, as compared with the same periods of 1994, was
the result of increased amortization of deferred charges related to
Waterford's fixed rate bond financing. In addition, amortization of
financing costs related to the April 1, 1995 Stonebridge Manor first
mortgage refinance increased expense for the three months ended June 30,
1995, as compared with the same period of the previous year.
Occupancy
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
1994 1995
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31 At 6/30
1. Versailles Village Apartments
Forest Park, Ohio 94% 97% 99% 96% 97% 99%
2. Promenades Plaza Shopping Ctr.
Port Charlotte, Florida(a) 82% 82% N/A N/A N/A N/A
3. Waterford Apartments
Tulsa, Oklahoma 88% 93% 94% 83% 90% 96%
4. Stonebridge Manor Apartments
New Orleans, Louisiana 96% 97% 95% 97% 96% 97%
5. Stewart's Glen Apts. Phase III
Willowbrook, Illinois 100% 99% 93% 98% 96% 89%
(a) Promenades Plaza was sold during the third quarter 1994.
Part II- Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended June 30, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Fifth,
General Partner
Date: August 14, 1995 By: /s/ John D. Carey
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<PERIOD-TYPE> 6-MOS
<CASH> 2091938
<SECURITIES> 0
<RECEIVABLES> 11224
<ALLOWANCES> 14938
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 38755705
<DEPRECIATION> 12198464
<TOTAL-ASSETS> 30851903
<CURRENT-LIABILITIES> 0
<BONDS> 29431006
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30851903
<SALES> 0
<TOTAL-REVENUES> 2853909
<CGS> 0
<TOTAL-COSTS> 1196188
<OTHER-EXPENSES> 661304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1109595
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (113178)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (113178)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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