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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14466
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: (860) 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
1
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<CAPTION>
PART I - FINANCIAL INFORMATION
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 4,212,046 $ 4,170,151
Buildings 25,588,509 25,569,468
Furniture and fixtures 2,089,623 2,071,051
-------------- --------------
31,890,178 31,810,670
Less accumulated depreciation 11,662,706 11,431,301
-------------- --------------
Net property and improvements 20,227,472 20,379,369
Cash and cash equivalents 804,444 638,965
Accounts receivable (net of allowance of $8,697
in 1997 and $6,497 in 1996) 3,688 11,058
Escrow deposits 146,368 175,298
Prepaid insurance 44,627 --
Other asset 1,000 1,000
Deferred charges, net 1,082,709 1,131,995
Escrowed debt service funds 506,660 506,660
-------------- --------------
Total $ 22,816,968 $ 22,844,345
============== ==============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Notes and mortgages payable $ 20,737,314 $ 20,807,619
Accounts payable and accrued expenses (including $31,485
in 1997 and $5,978 in 1996 due to affiliates) 202,423 245,094
Tenant security deposits 147,717 151,867
Accrued interest payable 44,877 --
Unearned income 21,105 29,624
-------------- --------------
Total liabilities 21,153,436 21,234,204
-------------- --------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 12,052 11,518
Cumulative cash distributions (23,426) (23,426)
-------------- --------------
(10,374) (10,908)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (17,835,068) (17,887,925)
Cumulative cash distributions (2,899,078) (2,899,078)
-------------- --------------
1,673,906 1,621,049
-------------- --------------
Total partners' capital 1,663,532 1,610,141
-------------- --------------
Total $ 22,816,968 $ 22,844,345
============== ==============
The Notes to Financial Statements are an integral part of these statements.
2
</TABLE>
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<TABLE>
<CAPTION>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Income:
Rental income $ 1,170,579 $ 1,388,554
Other income 27,252 41,992
Interest income 15,856 40,069
-------------- -------------
1,213,687 1,470,615
-------------- -------------
Expenses:
Property operating expenses 308,737 368,428
General and administrative 164,450 182,900
Fees and reimbursements to affiliates 39,427 24,300
Interest expense (includes $17,000 in 1996 to affiliates) 366,991 550,707
Depreciation and amortization 280,691 276,582
-------------- -------------
1,160,296 1,402,917
-------------- -------------
Net income $ 53,391 $ 67,698
============== =============
Net income:
General Partner $ 534 $ 677
Limited partners 52,857 67,021
-------------- -------------
$ 53,391 $ 67,698
============== =============
Net income per Unit $ 2.13 $ 2.70
============== =============
The Notes to Financial Statements are an integral part of these statements.
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 53,391 $ 67,698
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 280,691 276,582
Accounts receivable 7,370 (1,319)
Accounts payable and accrued expenses 17,530 17,475
Accrued interest payable 44,877 --
Escrow deposits 28,930 72,038
Other, net (57,296) (16,456)
--------------- ---------------
Net cash provided by operating activities 375,493 416,018
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (139,709) (62,744)
--------------- ---------------
Cash flows from financing activities:
Repayment of notes and mortgage loans (70,305) (70,044)
--------------- ---------------
Net increase in cash and cash equivalents 165,479 283,230
Cash and cash equivalents, beginning of year 638,965 2,481,123
--------------- ---------------
Cash and cash equivalents, end of period $ 804,444 $ 2,764,353
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 322,114 $ 550,707
=============== ===============
Supplemental disclosure of non-cash information:
Accrued purchases of property and improvements $ 4,432 $ 51,029
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
4
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<PAGE>
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, 1996 which are included in the
Partnership's 1996 Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial statements
have been omitted from this report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The financial statements have been prepared in
conformity with generally accepted accounting principles, and reflect
management's estimates and assumptions that affect the reported amounts. 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. All such adjustments are of
a normal recurring nature. Certain amounts in the 1996 financial statements
have been reclassified to conform to the 1997 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.
<TABLE>
<CAPTION>
2. DEFERRED CHARGES
Deferred charges consist of the following:
March 31, December 31,
1997 1996
<S> <C> <C>
Surety fee - Waterford Apartments mortgage note $ 963,910 $ 963,910
Costs of obtaining financing 765,532 765,532
--------------- ---------------
1,729,442 1,729,442
Accumulated amortization (646,733) (597,447)
--------------- ----------------
$ 1,082,709 $ 1,131,995
=============== ===============
</TABLE>
3. TRANSACTIONS WITH AFFILIATES
The Partnership's promissory note payable was guaranteed by an affiliate of
the General Partner for an annual fee of 2% on the outstanding balance until the
note was retired on May 15, 1996.
Other fees and expenses related to the General Partner or its affiliates
are as follows:
Three Months Ended Unpaid at
March 31, March 31,
1997 1996 1997
---- ---- ----
Property management fees (a) $ 8,943 $ 11,405 $ 6,041
Partnership management fees 16,000 -- 16,000
Reimbursement (at cost) for
out-of-pocket expenses 14,484 12,895 9,444
----------- ----------- -----------
$ 39,427 $ 24,300 $ 31,485
=========== =========== ===========
5
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CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
(a) Does not include on-site property management fees earned by independent
property management companies of $50,494 and $60,236 for the three months
ended March 31, 1997 and 1996, respectively. On-site 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.
4. SUBSEQUENT EVENT
On May 15, 1997, the Partnership paid a distribution of $160,321 to the
limited partners and $1,618 to the General Partner.
6
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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 March 31, 1997, the Partnership had $804,444 in cash and cash
equivalents which was available for working capital requirements, cash
distributions, and the Partnership's cash reserves.
For the quarter ended March 31, 1997, the Partnership generated $178,000 of
adjusted cash from operations after debt service, capital improvements, and
adjustments to the Partnership's cash reserves. For the Partnership's three
remaining properties, results were materially unchanged when compared to the
first quarter of the prior year and the plan set at the beginning of the year.
As planned, beginning with the first quarter 1997, the Partnership has resumed
cash distributions. Cash will be distributed to partners each quarter to the
extent available from operations after debt service, capital, and changes to
cash reserves for liabilities and capital expenditures. The Partnership's first
quarter 1997 cash distribution of $160,321 or $6.45 per Unit is payable on May
15, 1997, and represents the first quarter's adjusted cash from operations.
The Stonebridge mortgage loan is scheduled to mature on April 1, 1998. The
Partnership plans to begin the marketing process in the second quarter to allow
enough time to sell the property. New Orleans has a limited supply of quality
projects and, because there have been very few sales of quality apartment
properties in the recent past, New Orleans has not attracted investor interest.
If the marketing of the property does not result in an acceptable offer, the
Partnership will pursue a refinancing of the mortgage debt. If the Partnership
is successful in selling the property, the net proceeds from the sale may be
available to distribute to partners later this year.
RESULTS OF OPERATIONS
Generally, decreases in the income statement accounts for the three months
ended March 31, 1997, as compared with the same period in 1996, are the result
of the sale of Stewart's Glen Apartments in April 1996. Interest income
decreased due to a lower average cash balance. The reduction in the
Partnership's cash balance was the result of a cash distribution to partners in
December 1996. Fees and reimbursements to affiliates increased as a result of
the partnership management fees. Management fees were earned on the first
quarter 1997 cash distribution, payable on May 15, 1997. The Partnership did not
distribute cash from operations for the first quarter of 1996. Interest expense
decreased due to the retirement of the Stewart's Glen mortgage note upon sale of
the property in April 1996, and the retirement of the $3,400,000 Mellon Bank
promissory note on May 15, 1996.
7
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
OCCUPANCY
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
1996 1997
---------------------------------------------- -------
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31
<S> <C> <C> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, Ohio 97% 98% 96% 94% 94%
2. Waterford Apartments
Tulsa, Oklahoma 94% 94% 93% 89% 94%
3. Stonebridge Manor Apartments
New Orleans, Louisiana 97% 97% 95% 97% 97%
4. Stewart's Glen Apts. Phase III
Willowbrook, Illinois (a) 89% N/A N/A N/A N/A
An N/A indicates that the property was not owned by the partnership at the end of the quarter.
(a) Stewart's Glen III was sold April 30, 1996.
</TABLE>
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 March 31, 1997.
8
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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: May 12, 1997 By: /s/ John D. Carey
------------- -----------------
John D. Carey, President
(Principal Executive Officer)
Date: May 12, 1997 By: /s/ Josephine C. Donofrio
------------ -------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
9
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 804444
<SECURITIES> 0
<RECEIVABLES> 12385
<ALLOWANCES> 8697
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 31890178
<DEPRECIATION> 11662706
<TOTAL-ASSETS> 22816968
<CURRENT-LIABILITIES> 0
<BONDS> 20737314
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 22816968
<SALES> 0
<TOTAL-REVENUES> 1213687
<CGS> 0
<TOTAL-COSTS> 512614
<OTHER-EXPENSES> 280691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 366991
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 53391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53391
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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