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- --------------------------------------------------------------------------------
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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, 1998
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
<PAGE>
Part I - Financial Information
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Balance Sheets
<CAPTION>
March 31, December 31,
1998 1997
Assets (Unaudited) (Audited)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 2,964,303 $ 2,964,303
Buildings 16,624,871 16,618,817
Furniture and fixtures 1,398,478 1,390,985
-------------- --------------
20,987,652 20,974,105
Less accumulated depreciation 8,267,657 8,112,558
-------------- --------------
Net property and improvements 12,719,995 12,861,547
Cash and cash equivalents 700,109 682,614
Accounts receivable (net of allowance of $14,970
in 1998 and $12,907 in 1997) 6,480 9,819
Escrow deposits 82,095 144,407
Prepaid insurance 6,686 --
Other asset 1,000 1,000
Deferred charges, net 885,564 926,086
Escrowed debt service funds 506,660 506,660
-------------- --------------
Total $ 14,908,589 $ 15,132,133
============== ==============
Liabilities and Partners' Capital (Deficit)
Liabilities:
Notes and mortgages payable $ 15,399,476 $ 15,452,462
Accounts payable and accrued expenses (including $24,438
in 1998 and $31,485 in 1997 due to affiliates) 183,797 235,092
Tenant security deposits 63,859 61,350
Unearned income 10,871 13,011
-------------- --------------
Total liabilities 15,658,003 15,761,915
-------------- --------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 26,037 25,802
Cumulative cash distributions (29,925) (28,494)
-------------- --------------
(2,888) (1,692)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (15,096,886) (15,120,129)
Cumulative cash distributions (8,057,692) (7,916,013)
-------------- --------------
(746,526) (628,090)
-------------- --------------
Total partners' deficit (749,414) (629,782)
-------------- --------------
Total $ 14,908,589 $ 15,132,133
============== ==============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
2
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Operations
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Income:
Rental income $ 775,774 $ 1,170,579
Other income 13,254 27,252
Interest income 16,262 15,856
-------------- -------------
805,290 1,213,687
-------------- -------------
Expenses:
Property operating expenses 218,281 308,737
General and administrative 108,632 164,450
Fees and reimbursements to affiliates 26,129 39,427
Interest expense 233,149 366,991
Depreciation and amortization 195,621 280,691
-------------- -------------
781,812 1,160,296
-------------- -------------
Net income $ 23,478 $ 53,391
============== =============
Net income:
General Partner $ 235 $ 534
Limited partners 23,243 52,857
-------------- -------------
$ 23,478 $ 53,391
============== =============
Net income per Unit $ 0.94 $ 2.13
============== =============
Cash distribution per Unit $ 5.70 $ --
============== =============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,478 $ 53,391
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 195,621 280,691
Accounts receivable 3,339 7,370
Accounts payable and accrued expenses (51,295) 17,530
Accrued interest payable -- 44,877
Escrow deposits 62,312 28,930
Other, net (6,317) (57,296)
--------------- ---------------
Net cash provided by operating activities 227,138 375,493
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (13,547) (139,709)
--------------- ---------------
Cash flows from financing activities:
Distribution to limited partners (141,679) --
Distribution to General Partner (1,431) --
Repayment of notes and mortgage loans (52,986) (70,305)
--------------- ---------------
Net cash used in financing activities (196,096) (70,305)
--------------- ---------------
Net increase in cash and cash equivalents 17,495 165,479
Cash and cash equivalents, beginning of year 682,614 638,965
--------------- ---------------
Cash and cash equivalents, end of period $ 700,109 $ 804,444
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 233,149 $ 322,114
=============== ===============
Supplemental disclosure of non-cash information:
Accrued purchases of property and improvements $ -- $ 4,432
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
4
<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, 1997 which are included in the
Partnership's 1997 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.
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.
2. Deferred Charges
Deferred charges consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Surety fee - Waterford Apartments mortgage note $ 963,910 $ 963,910
Costs of obtaining financing 660,522 660,522
--------------- ---------------
1,624,432 1,624,432
Accumulated amortization (738,868) (698,346)
--------------- ----------------
$ 885,564 $ 926,086
=============== ===============
</TABLE>
3. Transactions with Affiliates
Fees and expenses related to the General Partner or its affiliates are as
follows:
<TABLE>
<CAPTION>
Three Months Ended Unpaid at
March 31, March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Property management fees (a) $ 4,857 $ 8,943 $ 3,242
Partnership management fees 13,036 16,000 13,036
Reimbursement (at cost) for
out-of-pocket expenses 8,236 14,484 8,160
----------- ----------- -----------
$ 26,129 $ 39,427 $ 24,438
=========== =========== ===========
</TABLE>
5
<PAGE>
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 $34,369 and $50,494 for the three months
ended March 31, 1998 and 1997, 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, 1998, the Partnership paid a distribution of $130,494 to the
limited partners and $1,318 to the General Partner.
6
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Except for historical information provided in this Management's Discussion
and Analysis, statements made in this document are forward-looking and contain
information about financial results, economic conditions, trends, and known
uncertainties. The Partnership cautions the reader that actual results could
differ materially from those expected by the Partnership.
Liquidity and Capital Resources
At March 31, 1998, the Partnership had $700,109 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, 1998, the Partnership generated $133,000 of adjusted cash from operations
after debt service, capital improvements, and adjustments to the Partnership's
cash reserves. The Partnership's first quarter 1998 cash distribution of
$130,494 or $5.25 per Unit is payable on May 15, 1998, and represents the first
quarter's adjusted cash 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, until the sale of the Partnership's remaining two properties. The
Partnership's current plans assume the sale of the two remaining apartment
projects in early 1999. Once the Partnership completes the sales of the two
remaining properties, the Partnership will distribute the net sales proceeds to
the limited partners as part of a complete liquidation and Partnership
termination.
Results of Operations
Generally, decreases reflected in the statement of operations for the three
months ended March 31, 1998, as compared with the same period in 1997, are the
result of the sale of Stonebridge Manor Apartments in October 1997. Besides the
sale, the Partnership's results reflect the following changes at the two
remaining properties. Rental income at Waterford increased 5% due to an increase
in rates throughout 1997. Waterford plans to increase rates at a similar pace in
1998. Versailles Village reported a 12% increase in property operating expenses,
which generally was the result of the timing of repairs and maintenance
expenses. As 1998 progresses, the change in repairs and maintenance expenses,
when compared with the same period of the prior year, is expected to diminish at
Versailles Village.
Fees and reimbursements to affiliates decreased because of a drop in the
property management fees (resulting from the sale of Stonebridge Manor), lower
partnership management fees as a result of less cash available for distribution
(resulting from the sale of Stonebridge Manor), and a savings in 1998 on
printing costs.
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)
Occupancy
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
<TABLE>
<CAPTION>
1997 1998
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 94% 96% 98% 94% 97%
2. Waterford Apartments
Tulsa, Oklahoma 94% 95% 96% 92% 94%
3. Stonebridge Manor Apartments
New Orleans, Louisiana (a) 97% 97% 96% N/A N/A
</TABLE>
An N/A indicates that the property was not owned by the partnership at the end
of the quarter.
(a) Stonebridge Manor Apartments was sold October 23, 1997.
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, 1998.
8
<PAGE>
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 13, 1998 By: /s/ John D. Carey
------------- -----------------
John D. Carey, President
(Principal Executive Officer)
Date: May 13, 1998 By: /s/ Josephine C. Donofrio
------------ -------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 700109
<SECURITIES> 0
<RECEIVABLES> 21450
<ALLOWANCES> 14970
<INVENTORY> 0
<CURRENT-ASSETS> 796370
<PP&E> 20987652
<DEPRECIATION> 8267657
<TOTAL-ASSETS> 14908589
<CURRENT-LIABILITIES> 258527
<BONDS> 15399476
0
0
<COMMON> 0
<OTHER-SE> (749414)
<TOTAL-LIABILITY-AND-EQUITY> 14908589
<SALES> 0
<TOTAL-REVENUES> 805290
<CGS> 0
<TOTAL-COSTS> 353042
<OTHER-EXPENSES> 195621
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 233149
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 23478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23478
<EPS-PRIMARY> 5.70
<EPS-DILUTED> 5.70
</TABLE>
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