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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, 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>
June 30, December 31,
1998 1997
Assets (Unaudited) (Audited)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 3,003,903 $ 2,964,303
Buildings 16,630,778 16,618,817
Furniture and fixtures 1,410,217 1,390,985
-------------- --------------
21,044,898 20,974,105
Less accumulated depreciation 8,423,479 8,112,558
-------------- --------------
Net property and improvements 12,621,419 12,861,547
Cash and cash equivalents 666,275 682,614
Accounts receivable (net of allowance of $9,464
in 1998 and $12,907 in 1997) 5,255 9,819
Escrow deposits 78,333 144,407
Prepaid insurance 8,552 --
Other asset 1,000 1,000
Deferred charges, net 845,042 926,086
Escrowed debt service funds 506,660 506,660
-------------- --------------
Total $ 14,732,536 $ 15,132,133
============== ==============
Liabilities and Partners' Deficit
Liabilities:
Notes and mortgages payable $ 15,346,129 $ 15,452,462
Accounts payable and accrued expenses (including $35,615
in 1998 and $20,550 in 1997 due to affiliates) 158,787 235,092
Tenant security deposits 72,312 61,350
Unearned income 10,651 13,011
-------------- --------------
Total liabilities 15,587,879 15,761,915
-------------- --------------
Partners' deficit:
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 26,296 25,802
Cumulative cash distributions (31,243) (28,494)
-------------- --------------
(3,947) (1,692)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (15,071,262) (15,120,129)
Cumulative cash distributions (8,188,186) (7,916,013)
-------------- --------------
(851,396) (628,090)
-------------- --------------
Total partners' deficit (855,343) (629,782)
-------------- --------------
Total $ 14,732,536 $ 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
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 818,434 $ 1,180,544 $ 1,594,208 $ 2,351,123
Other income 17,153 26,676 30,407 53,928
Interest income 19,474 18,475 35,736 34,331
-------------- ------------- -------------- -------------
855,061 1,225,695 1,660,351 2,439,382
-------------- ------------- -------------- -------------
Expenses:
Property operating expenses 237,110 339,650 455,391 648,387
General and administrative 133,888 187,196 242,520 351,646
Fees and reimbursements to affiliates 29,385 41,589 55,514 81,016
Interest expense 232,451 367,096 465,600 734,087
Depreciation and amortization 196,344 281,810 391,965 562,501
-------------- ------------- -------------- -------------
829,178 1,217,341 1,610,990 2,377,637
-------------- ------------- -------------- -------------
Net income $ 25,883 $ 8,354 $ 49,361 $ 61,745
============== ============= ============== =============
Net income:
General Partner $ 259 $ 83 $ 494 $ 617
Limited partners 25,624 8,271 48,867 61,128
-------------- ------------- -------------- -------------
$ 25,883 $ 8,354 $ 49,361 $ 61,745
============== ============= ============== =============
Net income per Unit $ 1.03 $ 0.33 $ 1.97 $ 2.46
============== ============= ============== =============
Cash distribution per Unit $ 5.25 $ 6.45 $ 10.95 $ 6.45
============== ============= ============== =============
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 Six Months Ended June 30, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 49,361 $ 61,745
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 391,965 562,501
Accounts receivable 4,564 6,791
Accounts payable and accrued expenses (76,305) 37,649
Escrow deposits 66,074 15,150
Other, net 50 (30,696)
--------------- ---------------
Net cash provided by operating activities 435,709 653,140
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (70,793) (183,996)
--------------- ---------------
Cash flows from financing activities:
Distribution to limited partners (272,173) (160,321)
Distribution to General Partner (2,749) (1,618)
Repayment of notes and mortgage loans (106,333) (153,927)
--------------- ---------------
Net cash used in financing activities (381,255) (315,866)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (16,339) 153,278
Cash and cash equivalents, beginning of year 682,614 638,965
--------------- ---------------
Cash and cash equivalents, end of period $ 666,275 $ 792,243
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 465,600 $ 734,087
=============== ===============
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>
June 30, 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 (779,390) (698,346)
--------------- ---------------
$ 845,042 $ 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 Six Months Ended Unpaid at
June 30, June 30, June 30,
-------- -------- --------
1998 1997 1998 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Property management fees (a) $ 5,172 $ 9,098 $ 10,029 $ 18,041 $ 3,428
Partnership management fees 12,515 16,761 25,551 32,761 12,515
Reimbursement (at cost) for
out-of-pocket expenses 11,698 15,730 19,934 30,214 19,672
------------ ------------- ----------- ----------- -----------
$ 29,385 $ 41,589 $ 55,514 $ 81,016 $ 35,615
============ ============= =========== =========== ===========
</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 $36,334 and $51,050 for the three months
ended June 30, 1998 and 1997, respectively, and $70,703 and $101,544 for
the six months ended June 30, 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 August 15, 1998, the Partnership paid a distribution of $125,274 to the
limited partners and $1,265 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 June 30, 1998, the Partnership had $666,275 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,
1998, the Partnership generated $127,000 and $260,000, respectively, of adjusted
cash from operations after debt service, capital improvements, and adjustments
to the Partnership's cash reserves. Property net operating income was consistent
with the first quarter results. The Partnership expects capital expenditures to
be 9% below those planned at the start of the year. The Partnership's first
quarter 1998 distribution of $130,494 or $5.25 per Unit was paid on May 15,
1998. The Partnership's second quarter 1998 cash distribution of $125,274 or
$5.04 per Unit is payable on August 15, 1998. The distributions represent the
respective 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
and six months ended June 30, 1998, as compared with the same periods 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 8% for the three
months and 6% for the six months ended June 30, 1998, as compared with the same
periods in 1997, due to an increase in rates. At Versailles Village, strong
occupancy and an increase in rates led to higher rental revenue for the three
and six months ended June 30, 1998. Partially offsetting the increase in revenue
was higher property operating expense at Versailles Village due to an increase
in carpet, paint and cleaning expense. In addition, payroll costs were higher at
Versailles Village due to a staffing vacancy in the second quarter of 1997 which
led to an increase in general and administrative expense.
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 At 6/30
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, Ohio 94% 96% 98% 94% 97% 100%
2. Waterford Apartments
Tulsa, Oklahoma 94% 95% 96% 92% 94% 97%
3. Stonebridge Manor Apartments
New Orleans, Louisiana (a) 97% 97% 96% N/A 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 June 30, 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: August 14, 1998 By: /s/ John D. Carey
---------------- -----------------
John D. Carey, President
(Principal Executive Officer)
Date: August 14, 1998 By: /s/ Josephine C. Donofrio
--------------- -------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 666275
<SECURITIES> 0
<RECEIVABLES> 14719
<ALLOWANCES> 9464
<INVENTORY> 0
<CURRENT-ASSETS> 759415
<PP&E> 21044898
<DEPRECIATION> 8423479
<TOTAL-ASSETS> 14732536
<CURRENT-LIABILITIES> 241750
<BONDS> 15346129
0
0
<COMMON> 0
<OTHER-SE> (855343)
<TOTAL-LIABILITY-AND-EQUITY> 14732536
<SALES> 0
<TOTAL-REVENUES> 1660351
<CGS> 0
<TOTAL-COSTS> 753425
<OTHER-EXPENSES> 391965
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 465600
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 49361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49361
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.97
</TABLE>
