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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 JUNE 30, 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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PART I - FINANCIAL INFORMATION
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1997 1996
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 4,219,576 $ 4,170,151
Buildings 25,600,709 25,569,468
Furniture and fixtures 2,109,748 2,071,051
-------------- --------------
31,930,033 31,810,670
Less accumulated depreciation 11,895,229 11,431,301
-------------- --------------
Net property and improvements 20,034,804 20,379,369
Cash and cash equivalents 792,243 638,965
Accounts receivable (net of allowance of $9,162
in 1997 and $6,497 in 1996) 4,267 11,058
Escrow deposits 160,148 175,298
Prepaid insurance 19,679 --
Other asset 1,000 1,000
Deferred charges, net 1,033,422 1,131,995
Escrowed debt service funds 506,660 506,660
-------------- --------------
Total $ 22,552,223 $ 22,844,345
============== ==============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Notes and mortgages payable $ 20,653,692 $ 20,807,619
Accounts payable and accrued expenses (including $44,563
in 1997 and $5,978 in 1996 due to affiliates) 218,110 245,094
Tenant security deposits 152,748 151,867
Unearned income 17,726 29,624
-------------- --------------
Total liabilities 21,042,276 21,234,204
-------------- --------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 12,135 11,518
Cumulative cash distributions (25,044) (23,426)
-------------- --------------
(11,909) (10,908)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (17,826,797) (17,887,925)
Cumulative cash distributions (3,059,399) (2,899,078)
-------------- --------------
1,521,856 1,621,049
-------------- --------------
Total partners' capital 1,509,947 1,610,141
-------------- --------------
Total $ 22,552,223 $ 22,844,345
============== ==============
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)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 1,180,544 $ 1,225,695 $ 2,351,123 $ 2,614,249
Other income 26,676 31,374 53,928 73,366
Interest income 18,475 41,955 34,331 82,024
-------------- ------------- -------------- -------------
1,225,695 1,299,024 2,439,382 2,769,639
-------------- ------------- -------------- -------------
Expenses:
Property operating expenses 339,650 378,531 648,387 746,959
General and administrative 187,196 194,158 351,646 377,058
Fees and reimbursements to affiliates 41,589 26,418 81,016 50,718
Interest expense (includes $8,500 and $25,500
in 1996 to affiliates) 367,096 442,754 734,087 993,461
Depreciation and amortization 281,810 277,640 562,501 554,222
-------------- ------------- -------------- -------------
1,217,341 1,319,501 2,377,637 2,722,418
-------------- ------------- -------------- -------------
Net income (loss) from operations 8,354 (20,477) 61,745 47,221
Gain on sale of property -- 2,440,258 -- 2,440,258
-------------- ------------- -------------- -------------
Net income $ 8,354 $ 2,419,781 $ 61,745 $ 2,487,479
============== ============= ============== =============
Net income:
General Partner $ 83 $ 114,238 $ 617 $ 114,915
Limited partners 8,271 2,305,543 61,128 2,372,564
-------------- ------------- -------------- -------------
$ 8,354 $ 2,419,781 $ 61,745 $ 2,487,479
============== ============= ============== =============
Net income per Unit $ 0.33 $ 92.75 $ 2.46 $ 95.45
============== ============= ============== =============
Cash distribution per Unit $ 6.45 $ -- $ 6.45 $ --
============== ============= ============== =============
The Notes to Financial Statements are an integral part of these statements.
3
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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, 1997 AND 1996
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 61,745 $ 2,487,479
Adjustment to reconcile net income to net cash
provided by operating activities:
Gain on sale of property -- (2,440,258)
Depreciation and amortization 562,501 554,222
Accounts receivable 6,791 2,092
Accounts payable and accrued expenses 37,649 (114,160)
Accrued interest payable -- (64,446)
Escrow deposits 15,150 123,863
Other, net (30,696) (58,234)
--------------- ---------------
Net cash provided by operating activities 653,140 490,558
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (183,996) (242,151)
Proceeds from sale of property -- 7,853,900
Payment of closing costs related to sale of property -- (102,306)
--------------- ---------------
Net cash provided by (used in) investing activities (183,996) 7,509,443
--------------- ---------------
Cash flows from financing activities:
Repayment of notes and mortgage loans (153,927) (8,401,724)
Cash distribution to limited partners (160,321) (6,990)
Cash distribution to General Partner (1,618) --
--------------- ---------------
Net cash used in financing activities (315,866) (8,408,714)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 153,278 (408,713)
Cash and cash equivalents, beginning of year 638,965 2,481,123
--------------- ---------------
Cash and cash equivalents, end of period $ 792,243 $ 2,072,410
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 734,087 $ 1,057,907
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
4
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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, 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.
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2. DEFERRED CHARGES
Deferred charges consist of the following:
June 30, 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 (696,020) (597,447)
--------------- ---------------
$ 1,033,422 $ 1,131,995
=============== ===============
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<CAPTION>
3. TRANSACTIONS WITH AFFILIATES
An affiliate of the General Partner guaranteed the Partnership's promissory
note payable for an annual fee of 2% on the outstanding balance until the
Partnership retired the note on May 15, 1996.
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,
-------- ------- --------
1997 1996 1997 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Property management fees (a) $ 9,098 $ 9,580 $ 18,041 $ 20,985 $ 6,115
Partnership management fees 16,761 -- 32,761 -- 16,761
Reimbursement (at cost) for
out-of-pocket expenses 15,730 16,838 30,214 29,733 21,687
------------ ------------- ----------- ----------- -----------
$ 41,589 $ 26,418 $ 81,016 $ 50,718 $ 44,563
============ ============= =========== =========== ===========
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 $51,050 and $52,899 for the three months
ended June 30, 1997 and 1996, respectively, and $101,544 and $113,135 for
the six months ended June 30, 1997 and 1996, respectively. An affiliate of
the General Partner has contracted on-site property management services on
behalf of the Partnership and are paid directly by the Partnership to the
third party companies.
4. SUBSEQUENT EVENT
On August 15, 1997, the Partnership was scheduled to pay a distribution of
$167,778 to the limited partners and $1,695 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 June 30, 1997, the Partnership had $792,243 in cash and cash equivalents
which was available for working capital requirements, cash distributions, and
the Partnership's cash reserves.
For the three and six months ended June 30, 1997, the Partnership generated
$186,000 and $364,000, respectively, of adjusted cash from operations after debt
service, capital improvements, and adjustments to the Partnership's cash
reserves. Overall second quarter cash flow for the three remaining properties,
the Stewart's Glen property was sold in April 1996, was consistent with the
first quarter results. Year-to-date operations are in line with the plan set at
the beginning of the year. The Partnership has resumed the payment of quarterly
cash distributions from operations. The Partnership plans to distribute cash
quarterly to the extent cash is 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 was paid on May 15, 1997, and represented the first quarter's adjusted cash
from operations. The Partnership's second quarter 1997 cash distribution of
$167,778 or $6.75 per Unit is payable on August 15, 1997, and represents the
quarter's adjusted cash from operations.
The Stonebridge mortgage loan is scheduled to mature on April 1, 1998 and
the Partnership's strategy is to sell the property prior to debt maturity,
possibly as early as December 1997. The Partnership began the sale marketing
process in July. The Partnership expects that offers will be presented for
review by the end of the third quarter. 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 recently attracted
strong investor interest. Although the Partnership's brokers have reported many
inquires to date, if the marketing process 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 and six
months ended June 30, 1997, as compared with the same periods 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 average cash balance for the
second quarter of 1996 included the proceeds from the sale of Stewart's Glen
Apartments on April 30, 1996. The proceeds from the sale were utilized to payoff
the Partnership's unsecured debt on May 15, 1996. The Partnership's cash balance
was further reduced as the result of a cash distribution to partners in December
1996. Fees and reimbursements to affiliates increased as a result of partnership
management fees. Management fees were incurred in connection with the first and
second quarter 1997 cash distributions. The Partnership did not distribute cash
from operations for the first or second 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
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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 (CONTINUED)
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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 At 6/30
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, Ohio 97% 98% 96% 94% 94% 96%
2. Waterford Apartments
Tulsa, Oklahoma 94% 94% 93% 89% 94% 95%
3. Stonebridge Manor Apartments
New Orleans, Louisiana 97% 97% 95% 97% 97% 97%
4. Stewart's Glen Apts. Phase III
Willowbrook, Illinois (a) 89% N/A 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.
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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, 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: August 14, 1997 By: /s/ John D. Carey
---------------- -----------------
John D. Carey, President
(Principal Executive Officer)
Date: August 14, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 792243
<SECURITIES> 0
<RECEIVABLES> 13429
<ALLOWANCES> 9162
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 31930033
<DEPRECIATION> 11895229
<TOTAL-ASSETS> 22552223
<CURRENT-LIABILITIES> 0
<BONDS> 20653692
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 22552223
<SALES> 0
<TOTAL-REVENUES> 2439382
<CGS> 0
<TOTAL-COSTS> 1081049
<OTHER-EXPENSES> 562501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 734087
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 61745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61745
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
