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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
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)
Registrant's telephone number, including area code: (860) 726-6000
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Each Class)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
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1
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
PART I PAGE
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 26
PART III
Item 10. Directors and Executive Officers of the Registrant 26
Item 11. Executive Compensation 28
Item 12. Security Ownership of Certain Beneficial Owners and Management 29
Item 13. Certain Relationships and Related Transactions 29
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 30
SIGNATURES 34
2
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
The registrant, Connecticut General Realty Investors III Limited
Partnership (the "Partnership"), was formed on April 12, 1984, under the Uniform
Limited Partnership Act of the State of Connecticut to invest in primarily
residential and, to a lesser extent, commercial real properties. On July 2,
1984, the Partnership commenced an offering of $25,000,000 (subject to increase
up to $50,000,000) of Limited Partnership Interests (the "Units") at $1,000 per
Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act
of 1933 (Registration No. 2-90944).
The General Partner of the Partnership is CIGNA Realty Resources, Inc.-
Fifth (the "General Partner"), which is an indirect wholly owned subsidiary of
CIGNA Corporation ("CIGNA"), a publicly held corporation whose stock is traded
on the New York Stock Exchange.
A total of 24,856 Units was sold to the public prior to the offering's
termination on July 1, 1986. The holders of 6,480 Units were admitted to the
Partnership in 1984; the holders of 11,519 Units were admitted to the
Partnership in 1985; the holders of the remaining 6,857 Units were admitted to
the Partnership in 1986. From the 24,856 Units sold, the Partnership received
net proceeds of $22,408,052. The holders of Units ("Unit Holders" or "Limited
Partners") of the Partnership will share in the ownership of the Partnership's
real property investments according to the number of Units held. Subsequent to
admittance to the Partnership, no Unit Holder has made any additional capital
contribution. The Partnership is engaged solely in the business of real estate
investment. A presentation of information about industry segments is not
applicable.
The Partnership is engaged in passive activities and therefore investors
are subject to the applicable provisions of the Internal Revenue Code and
Regulations. Losses from "passive activities" (which include any rental
activity) may only offset income from "passive activities". Investors' passive
losses in excess of passive income from all sources are suspended and are
carried over to future years when they may be deducted against passive income
generated by the Partnership in such year (including gain recognized on the sale
of the Partnership's assets) or against passive income derived by investors from
other sources. Any suspended losses remaining subsequent to Partnership
dissolution may be used by investors to offset ordinary income.
The Partnership acquired four residential complexes located in Ohio,
Oklahoma, Louisiana, and Illinois and one shopping center located in Florida. In
order to acquire these properties, the Partnership invested $16,372,438 in cash,
took or assumed $35,684,061 in mortgages, incurred $3,673,982 in acquisition
fees and expenses, established reserves for improvements of $720,000 and
established working capital reserves of $1,242,800.
Pursuant to the Partnership Agreement, the Partnership is required to
terminate on or before December 31, 2017. The Partnership anticipated that prior
to its termination and dissolution, some or all of the Partnership's properties
would be sold, the retention or sale of any property dependent, in part, on the
anticipated remaining economic benefits of continued ownership. It was expected
that most sales would occur after a period of ownership extending from five to
ten years. The Partnership sold the Florida shopping center, Promenades Plaza,
on September 22, 1994. The Partnership completed a sale of its Illinois
apartment complex on April 30, 1996 and the sale of its New Orleans apartment
complex on October 23, 1997. On March 8, 1999, the Partnership entered into an
Agreement of Purchase and Sale to sell its investment in the Oklahoma apartment
complex by April 13, 1999. The Partnership estimates that the Ohio apartment
complex will be sold in 1999. Upon the sale of each of the properties, the net
proceeds will be distributed to limited partners.
In December 1993, the Partnership refinanced the first and second mortgages
encumbering the Waterford Apartments property. The first mortgage, funded with
multifamily housing revenue bonds issued by the Tulsa County Home Finance
Authority, and the second mortgage were replaced with a new first mortgage. The
replacement financing was also funded with newly issued multifamily housing
revenue bonds issued by the Tulsa County Home Finance Authority. As a
requirement of the new financing, the Waterford property had to be classified as
single asset ownership. Since the Partnership owns multiple properties, a new
partnership was created to house the Waterford property as its sole real estate
asset. Waterford Partnership, a general partnership, was organized in the State
of Connecticut with the Partnership as its managing general partner (99.9%
interest) and the General Partner (0.1% interest) as the other general partner.
The
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interest of the General Partner in the new partnership is held in trust for the
benefit of The Tulsa Corporation, a newly organized Delaware corporation, the
stock of which is 100% owned by the Partnership. The Tulsa Corporation was
created with the sole purpose of acting as the beneficiary of the General
Partner's ownership interest in the Waterford Partnership. The new structure has
no economic effect on the Partners nor does it require any changes in financial
reporting for the Partnership.
The Partnership has made the real property investments set forth in the
following table:
<TABLE>
<CAPTION>
Versailles Village Promenades Waterford Stonebridge Stewart's Glen
Apartments Plaza Shopping Apartments Manor Apartments
Forest Park, Center Tulsa, Oklahoma Apartments Phase III
Ohio Port Charlotte, New Orleans, Willowbrook,
Florida (c) Louisiana (d) Illinois (e)
<S> <C> <C> <C> <C> <C>
Purchase $5,920,000 $10,486,000 $17,130,000 $11,326,014 $7,194,485
Price (a)
Cash $2,120,000 $5,463,052 $3,441,666 $3,278,235 $2,069,485
Investment
Initial $3,800,000 $5,022,948 $13,688,334 $8,047,779 $5,125,000
Mortgage
Financing (b)
Acquisition $433,986 $1,194,469 $806,350 $742,782 $496,395
Fees and
Expenses
Size 180 units 230,268 sq. ft. 344 units 264 units 104 units
Date of 02/06/85 04/15/85 (sold 10/31/85 11/26/85 (sold 07/24/87 (sold
Purchase 09/22/94) 10/23/97) 04/30/96)
Type of Fee ownership Fee ownership Fee ownership Fee ownership Fee ownership
Ownership subject to subject to subject to subject to subject to
Mortgage Mortgage Mortgage Mortgage Mortgage
================= =================== =================== =================== ==================== ===================
(a) Excludes all broker fees paid at closing. Amounts shown do not reflect
reductions for discounts on related debt or sellers' guarantees which are
adjustments to the recorded purchase price.
(b) Reference is made to the Notes to Financial Statements included in this
annual report for details on debt modifications, the current outstanding
principal balances and a description of the long-term indebtedness secured
by the Partnership's real property investments and to Schedule III for
additional information.
(c) Promenades Plaza added 14,624 square feet subsequent to acquisition. This
property was sold September 22, 1994. Reference is made to the Notes to
Financial Statements for a description of the sale.
(d) This property was sold October 23, 1997. Reference is made to the Notes to
Financial Statements for a description of the sale.
(e) In July 1987, the Partnership acquired a 33% interest in the Phase III
Apartment Venture, a joint venture with the General Partner, which was
established as a temporary vehicle for providing the Partnership with
the means to acquire the property without finalized mortgage
arrangements, and, thereby, avoid being in default under the terms of
the purchase agreement. On December 10, 1987 the Partnership received
a commitment for permanent mortgage financing and, in accordance with
the terms of the joint venture agreement, the Partnership purchased
the General Partner's joint venture interest. Funding of the purchase
took place in January 1988. The information shown represents the
Partnership's 100% ownership of the property. This property was sold
April 30, 1996. Reference is made to the Notes to Financial Statements
for a description of the sale.
</TABLE>
4
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Versailles Village Apartments is located in the City of Forest Park, Ohio,
in the northwest section of Hamilton County, approximately 14 miles outside
downtown Cincinnati. It is expected that Cincinnati's economy will decelerate in
response to national and international forces. Cincinnati's economic expansion
was steady in 1998 with employment up 2.8%, although this rate is expected to
slow to 1.0% through 2003. Unemployment remained low in 1998 at 3.3%, below the
national average of 4.4%, but is expected to climb to 4.2% by 2003. Population
gains are expected to continue at approximately 0.6% in the short term. Per
capita income in 1998 was $27,900 and ranked 46th out of 114 metro areas.
However, incomes are expected to slow over the next several years with wages
dropping below the national average.
Both the manufacturing and service employment segments have led to positive
employment trends in Ohio over the past few years. Following national trends,
the service sector is expected to create the majority of new jobs in Ohio
through the year 2000. Business, computer, personnel and medical services are
some of the fastest growing industries in the area market. While manufacturing
remains a significant presence in the area, the industry will post declines of
approximately 1.4% per year through 2003. International weakness has hurt local
steel production leading to price cuts and employment losses. Cutbacks in
defense spending has slowed the growth at General Electric Aircraft Engines.
Weakness in Asia has impacted Cincinnati-based Proctor & Gamble which recently
announced a reorganization plan. Expansion in service industries will help
offset the declines in manufacturing over the short term.
The Cincinnati apartment market has rebounded from the lows experienced in
the early 1990's. Apartment construction has been fairly active over the past
couple of years, and is expected to continue as long as the local economy
remains strong. Cincinnati posted 2,215 apartment unit starts in 1998, ranking
31st out of the top 114 metropolitan areas (80% of the annual average of 2,768
and 38% of the peak of 5,795). In the northwest area where Versailles Village is
located, approximately 250 units were constructed in 1998. Although the market
is absorbing the new units as they become available, the competition from newer
units tends to limit rate increases. Home ownership continues to compete with
the rental market due to the relative low cost of housing and low interest
rates. Single-family housing permits totalled 8,700 in 1998 compared to
multi-housing permits of 2,700. An older property, Versailles Village competes
well with similar class C and B properties in its submarket of approximately
3,930 units although rates are generally lower than the competition due to its
age. Versailles Village competes directly with 1,126 units. The property offers
amenities similar to the competition but has much larger floor plans. Rental
rates for two bedroom units are offered at $631 per month in the submarket and
between $570 and $620 at Versailles Village. Versailles Village has planned to
increase rates by approximately 3.4% in 1999. Occupancy at Versailles Village is
in line with the market, averaging 94% to 97%. The Partnership plans to place
the property on the market for sale during the second quarter of 1999.
Waterford Apartments is located in South Tulsa, Oklahoma. Tulsa remains one
of the fastest growing metropolitan areas in the country. Employment expansion
at 2.65% in 1998 was slower than 1997 due to an expected slow down in the
manufacturing segment. The rate of growth is anticipated to fall further to 1.5%
in 1999. The majority of jobs created during 1998 was in the service sector. The
services, transportation, communications and public utilities, finance, real
estate, and construction segments all showed strong growth during the year.
Additionally, Tulsa's unemployment rate of 3% remained below the national
average of 4.4%. Tight labor markets continue to put upward pressure on wages,
although Tulsa's per capita income remains below the national average.
Home sales in Tulsa grew by approximately 15% in 1998 with the median price
up 4%. Local markets were assisted by strong national and regional growth and
low mortgage rates. Housing permits are expected to increase from 1998's total
of 3,700 to 4,900 by the year 2003. Multifamily housing construction, which was
at a virtual standstill in the early 1990s, experienced strong growth in the
latter half of the decade. Approximately 2,200 apartment units have come on-line
since 1996, half of which were Low Income Housing Tax Credit properties. Despite
the rise in inventory, occupancy held steady at 94.5% in 1998 with rates up
6.5%. Over the next 18 months, approximately 2,900 units are planned for the
Tulsa market, which will likely create an occupancy "softness" in the upper tier
of the market. Despite economic expansion, occupancy could dip somewhat as the
new construction supply is added.
The southeast submarket where Waterford is located consists of approximately
20,080 units. Occupancy in the market was 94% with Waterford at 95% for 1998.
Waterford is located only five miles outside the central business district in a
well-maintained, vintage neighborhood. The property is a Class "A" luxury
apartment complex and continues to hold an
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advantage over the Tulsa luxury apartment market due to its superior location.
While Waterford's unit sizes are smaller than the competition, Waterford
compensates with mature landscaping, a variety of amenities and a focus on the
upkeep of the units. When compared with the direct competition in the Tulsa
rental market, Waterford's rental rates are above the average. Average rents for
the direct competition are approximately $549 for one bedroom units and $729 for
two bedroom units, while Waterford's average rental rates are approximately $575
for one bedroom units and $750 for two bedroom units. The property is expected
to be sold in the second quarter of 1999, in line with the Partnership's
liquidation objective and to capitalize on the strong Tulsa market.
Approximate occupancy levels for the properties on a quarterly basis are
set forth in the table in Item 2.
The Partnership itself has no employees; however, the unaffiliated property
managers engaged by CIGNA Investments, Inc. ("CII", formerly CIGNA Capital
Advisers, Inc.) on behalf of the Partnership maintain on-site staff. For a
description of asset management services provided by CII and the terms of
transactions between the Partnership and affiliates of the General Partner, see
Item 13 and the Notes to Financial Statements.
The following list details gross revenues from operations for each of the
Partnership's investment properties as a percentage of the Partnership's total
gross revenues during 1996, 1997, and 1998. In each year, interest income
accounted for the balance of gross revenues from operations.
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, OH 23% 26% 36%
2. Waterford Apartments
Tulsa, OK 35% 42% 60%
3. Stonebridge Manor Apartments
New Orleans, LA (a) 32% 31% N/A
4. Stewart's Glen Apartments Phase III
Willowbrook, IL (b) 7% N/A N/A
An "N/A" indicates the property was not owned by the Partnership during the
year.
(a) Stonebridge Manor Apartments was sold on October 23, 1997.
(b) Stewart's Glen Apartments was sold on April 30, 1996.
</TABLE>
ITEM 2. PROPERTIES
The Partnership owns directly (subject to existing first mortgage loans)
the properties described in Item 1 herein. The Partnership's properties
generally have lease terms of one year or less. In the opinion of the General
Partner, the Partnership's properties continue to be adequately insured.
6
<PAGE>
The following list compares approximate occupancy levels by quarter for the
Partnership's investment properties during 1994, 1995, 1996, 1997 and 1998:
<TABLE>
<CAPTION>
VERSAILLES VILLAGE PROMENADES WATERFORD STONEBRIDGE STEWART'S GLEN
APARTMENTS PLAZA SHOPPING APARTMENTS MANOR APTS. PHASE III
FOREST PARK, OH CENTER TULSA, OK APARTMENTS WILLOWBROOK, IL
PORT CHARLOTTE, FL NEW ORLEANS, LA (C)
(A) (B)
============== =================== =================== =================== =================== ===================
<S> <C> <C> <C> <C> <C>
1994
AT 03/31 94% 82% 88% 96% 100%
AT 06/30 97% 82% 93% 97% 99%
AT 09/30 99% N/A 94% 95% 93%
AT 12/31 96% N/A 83% 97% 98%
1995
AT 03/31 97% N/A 90% 96% 96%
AT 06/30 99% N/A 96% 97% 89%
AT 09/30 96% N/A 98% 96% 98%
AT 12/31 94% N/A 92% 98% 97%
1996
AT 03/31 97% N/A 94% 97% 89%
AT 06/30 98% N/A 94% 97% N/A
AT 09/30 96% N/A 93% 95% N/A
AT 12/31 94% N/A 89% 97% N/A
1997
AT 03/31 94% N/A 94% 97% N/A
AT 06/30 96% N/A 95% 97% N/A
AT 09/30 98% N/A 96% 96% N/A
AT 12/31 94% N/A 92% N/A N/A
1998
AT 03/31 97% N/A 94% N/A N/A
AT 06/30 100% N/A 97% N/A N/A
AT 09/30 94% N/A 94% N/A N/A
AT 12/31 94% N/A 95% N/A N/A
============== =================== =================== =================== =================== ===================
An "N/A" indicates that the property was not owned by the Partnership at the end
of the quarter.
(a) Promenades Plaza was sold on September 22, 1994.
(b) Stonebridge Manor Apartments was sold on October 23, 1997.
(c) Stewart's Glen Apartments was sold on April 30, 1996.
</TABLE>
7
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ITEM 3. LEGAL PROCEEDINGS
Neither the Partnership nor its properties are party to or the subject of
any legal proceedings involving any material exposure.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
As of March 1, 1999, there were approximately 1,100 record Unit Holders.
There is no established public trading market for Units. The General Partner
will not redeem or repurchase the Units.
The Revenue Act of 1987 contains provisions which have an adverse impact on
investors in a "publicly traded partnership" ("PTP"). A PTP is a partnership
whose interests are traded on an established securities market or readily
tradable on a secondary market (or the substantial equivalent thereof). If the
Partnership were classified as a PTP, (i) the Partnership may be taxed as a
corporation and (ii) the passive activity rules of section 469 are applied
separately with respect to items attributable to each publicly traded
partnership. On November 29, 1995, the Internal Revenue Service ("IRS") issued
the Final PTP Regulations under section 1.7704-1. The Final PTP Regulations are
effective for the tax years beginning after December 31, 1995. However, a
transition rule exists for partnerships that were engaged in an activity before
December 4, 1995 and that do not add a substantial new line of business after
that date. The Partnership qualifies for the transition rule and may continue to
rely on Notice 88-75 for guidance through the end of 2005. In Notice 88-75, the
IRS established alternative safe harbors that allow interests in a partnership
to be transferred or redeemed in certain circumstances without causing the
partnership to be characterized as a PTP. Units of the Partnership are not
listed or quoted for trading on an established securities exchange. However,
CIGNA Financial Partners ("CFP") will, upon request, provide a Limited Partner
desiring to sell or transfer Units with a list of secondary market firms which
may provide a means for matching potential sellers with potential buyers of
Units, if any. Frequent sales of Units utilizing these services could cause the
Partnership to be deemed a PTP. The Partnership has adopted a policy prohibiting
transfers of Units in secondary market transactions unless, notwithstanding such
transfers, the Partnership will satisfy at least one of the safe harbors.
Although such a restriction could impair the ability of an investor to liquidate
its investment, the service provided by CFP described above should allow a
certain number of transfers to be made in compliance with the safe harbor.
The Partnership suspended quarterly distributions to Partners as of the
fourth quarter of 1988 to enable it to fund operating deficits from certain of
its properties. Subsequent to the sale of the Partnership's Stewart's Glen
property in April 1996, the Partnership reduced the balance of its cash reserves
to a level deemed sufficient in connection with the Partnership's operations.
Accordingly, on December 15, 1996, the Partnership made a cash distribution of
$1,565,928 or $63 per Unit to Limited Partners of record as of November 30,
1996. The Partnership resumed regular quarterly distributions beginning in 1997.
The Partnership declared quarterly cash distributions to Limited Partners for
1998 and 1997 as set forth in the following table:
Cash Distribution per Unit
Quarter Date Paid (a) 1998 1997
-------- ------------- ---- ----
1st May 15 $ 5.25 $ 6.45
2nd August 15 5.04 6.75
3rd November 15 4.95 188.64 (b)
4th February 15 6.15 5.70
--------- ----------
$ 21.39 $ 207.54
========= ==========
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(a) Quarterly distributions are paid 45 days following the end of the calendar
quarter.
(b) Includes $181.65 per Unit from the sale of Stonebridge Manor Apartments.
Reference is made to Item 6 for information on cash distributions paid to
Limited Partners during 1998, 1997 and 1996.
There are no material legal restrictions upon the Partnership's ability to
make distributions in accordance with the provisions of the Partnership
Agreement. The Partnership plans to distribute adjusted cash from operations
quarterly to Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA (A)
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
DECEMBER 31, 1998, 1997, 1996, 1995 AND 1994
(NOT COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS)
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total income $ 3,409,975 $ 4,640,806 $ 5,205,570 $ 5,818,941 $ 6,392,361
Net income (loss) (b) 171,084 2,782,080 2,424,325 (210,876) (706,274)
Net income (loss) per Unit (b) 6.81 111.35 92.94 (8.40) (29.12)
Total assets 14,616,139 15,132,133 22,844,345 30,739,260 31,005,057
Notes and mortgages payable 15,249,984 15,452,462 20,807,619 29,347,622 29,487,591
Cash distributions to limited partners 520,485 5,016,935 1,565,928 -- --
Cash distributions per Unit 20.94 201.84 63.00 -- --
(a) The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing herein.
(b) Included in 1997 is a $2,574,230 gain on sale of property ($2,562,025 to
limited partners or $103.07 per unit). Included in 1996 is a $2,440,258
gain on sale of property ($2,325,815 to limited partners or $93.57 per
unit). Included in 1994 is a $24,837 gain on sale of property (100% to the
General Partner).
</TABLE>
9
<PAGE>
ITEM 7. 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 throughout 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
On July 2, 1984, the Partnership commenced an offering of $25,000,000
(subject to an increase up to $50,000,000) of limited partnership interests
pursuant to a Registration Statement on Form S-11 under the Securities Act of
1933. The offering terminated on July 1, 1986 and a total of 24,856 Units were
issued by the Partnership and assigned to the public at $1,000 per Unit.
Subsequent to the termination of the offering, no Unit Holder has made any
additional capital contribution. The Partnership will not seek additional
capital contributions from Unit Holders.
After deduction of selling expenses and other offering costs, the
Partnership had $22,408,052 with which to make investments in real properties,
to pay legal fees and other costs (including acquisition fees) related to such
investments for working capital reserves and for capital expenditure reserves. A
portion of the proceeds was utilized to acquire the properties described in Item
1 herein. As of December 31, 1998, the Partnership had two investment properties
remaining, representing approximately 30% of the offering proceeds. The
Partnership is in its final phase, which contemplates the sale of the remaining
investment properties and subsequent dissolution of the Partnership in 1999.
The Partnership entered its final phase in 1994 with the sale of Promenades
Plaza. The Partnership considered the remaining properties sale candidates when
local market conditions were stabilized and investor interest was competitive.
With property operations stable at Waterford Apartments and the Tulsa market
exhibiting signs of high occupancy and increasing rental rates, the Partnership
placed the property on the market in November 1998. On March 8, 1999, the
Partnership entered into an Agreement of Purchase and Sale with Case Ventures,
Inc., an Oklahoma Corporation, to sell its investment in the Waterford
Apartments for a gross sales price of $14,675,000. The purchaser will assume the
bond financing as a part of the sale. The Agreement of Purchase and Sale states
that the sale will close on or before April 13, 1999. After estimated closing
costs of $330,000, the Partnership is expecting to net approximately $3,477,000.
The Partnership expects to record a gain for book and tax purposes. The
Partnership will complete the sale of its investment properties with the sale of
Versailles Village. Versailles Village was selected as the final property sale
due to its stable operating income and stable market. Once the sale of Waterford
is completed, the Partnership will commence the sales process for Versailles
Village. Subsequent to the sale of Versailles Village, the Partnership will
liquidate and dissolve. Assuming both property sales are completed within the
planned time frames, the final distribution will be made by November 15, 1999.
At December 31, 1998, the Partnership had $739,751 in cash and cash
equivalents available for working capital requirements, Partnership cash
reserves, and distributions. The source of capital for both short-term and
long-term future liquidity and distributions is expected to be through cash
generated by the investment properties and from the sale of such properties.
During 1998, the Partnership's two properties generated net operating
income of $1,889,000 and, in addition, a net loss of $48,000 at the Partnership
level, resulting in net operating income of $1,841,000 available for debt
service and capital expenditures. For 1998, net cash flow from operations of the
Partnership totaled $538,000 after debt service of $1,142,000, and capital
improvements of $161,000. The Partnership distributed the net cash flow from
operations to Partners forty-five days after the close of each quarter in 1998.
The 1998 distributions from operations totaled $537,039.
Cash distributions from inception through 1997 ranged from $302.34 to
$356.79 per $1,000 Unit, dependent upon the specific limited partner admission
dates. The Partnership distributed an additional $21.39 per Unit for 1998,
therefore, assuming the first admission date, cash distributions from inception
through 1998 total $378.18 per Unit.
10
<PAGE>
Reference is made to Item 1 for a description of the Partnership's
investment properties and a description of the markets in which the properties
operate.
As a result of a general downturn in the economy, and especially real
estate markets during the latter part of the 1980's and early 1990's, the
Partnership has held its investment properties longer than originally
anticipated in order to maximize the recovery of its investments and any
potential for return thereon. The economy and many real estate markets have
recovered. The Partnership has entered the final phase which contemplates the
sale of the remaining investment properties in 1999. Based on the current
position of the Partnership, the Partnership's objective of capital appreciation
will not be achieved. Although the Partnership expects to continue to distribute
cash from operations and the proceeds from the property sales, the total per
Unit cash distributions over the term of the Partnership will be significantly
less than the original per Unit capital contribution. The Partnership has
estimated that the liquidation value of the Partnership's remaining net assets
as of December 31, 1998 approximates $220 per Unit. The Partnership expects to
continue to distribute cash available from operations until the final
dissolution of the Partnership.
RESULTS OF OPERATIONS
RESULTS - 1998 COMPARED WITH 1997
Partnership net operating income (total revenue less property operating
expenses, general and administrative expenses, fees and reimbursements to
affiliates and provision for doubtful accounts) was approximately $1,841,000 for
1998, a decrease from approximately $2,539,000 in 1997. The decrease is mainly
attributable to the sale of Stonebridge Manor in October 1997. Stonebridge Manor
contributed approximately $846,000 to the partnership net operating income in
1997. Excluding the sold property, partnership net operating income increased
approximately $148,000.
Generally, decreases in the income statement accounts for 1998, as compared
with 1997, are the result of the sale of Stonebridge Manor in October 1997.
Stonebridge Manor accounted for $1,365,348 and $46,450 of the change in rental
income and other income, respectively. It also accounted for decreases of
$351,648, $216,496, $425,300, and $174,697 in property operating expenses,
general and administrative, interest expense, and depreciation and amortization,
respectively.
Rental income increased at both Versailles Village and Waterford due
primarily to increased rental rates and slightly higher average occupancy in
1998. Interest income decreased due to a lower average cash balance. The average
cash balance for the fourth quarter of 1997 included the proceeds from the sale
of Stonebridge Manor. The proceeds from the sale were invested until distributed
on November 15, 1997.
Property operating expenses increased approximately 10% at Versailles
Village and 5% at Waterford. Real estate taxes accounted for most of the
increase due to an increase in the mill rate at Versailles Village and an
increase in both the gross assessed value and mill rate at Waterford. Versailles
Village also incurred an increase in turnover expenses (carpet, paint and
cleaning). At Waterford, an increase in water usage, repairs and maintenance and
management fees (due to higher revenues) were partially offset by a savings in
insurance premiums. Further savings at Waterford resulted from a nonrecurring
termite treatment in 1997.
An increase in general and administrative expenses for the remaining
properties was caused by higher payroll costs at Waterford and a staffing
vacancy in 1997 at Versailles Village. Fees and reimbursements to affiliates
decreased due to a drop in property management fees and partnership management
fees resulting from the sale of Stonebridge Manor. In addition, reimbursements
to affiliates were lower in 1998 as printing and mailing of distribution checks
were handled by a third party in 1998. Interest expense decreased due to the
retirement of the Stonebridge Manor mortgage note upon sale of the property in
October 1997. Depreciation and amortization expense decreased for Waterford as
the property was held for sale as of November 1998.
RESULTS - 1997 COMPARED WITH 1996
Partnership net operating income (total revenue less property operating
expenses, general and administrative expenses,
11
<PAGE>
fees and reimbursements to affiliates and provision for doubtful accounts) was
approximately $2,539,000 for 1997, a decrease from approximately $2,846,000 in
1996. The decrease is mainly attributable to the sale of Stewart's Glen in April
1996 and Stonebridge Manor in October 1997. The Stewart's Glen property
contributed approximately $198,000 to the partnership net operating income in
1996. The decrease in net operating income from Stonebridge Manor amounted to
approximately $160,000. Excluding the sold properties, partnership net operating
income increased approximately $51,000. Through the date of sale, Stonebridge
Manor posted no significant fluctuations between 1997 and 1996 operating
results.
Generally, decreases in the income statement accounts for 1997, as compared
with 1996, are the result of the sale of Stewart's Glen in April 1996 and the
sale of Stonebridge Manor in October 1997. The sold properties accounted for
$603,889 and $18,227 of the change in rental income and other income,
respectively. The two properties sold accounted for decreases of $175,824,
$85,533, $247,408, and $171,937 in property operating expenses, general and
administrative, interest expense, and depreciation and amortization,
respectively.
Rental income at both Versailles Village and Waterford increased slightly
as the properties raised rents and posted strong occupancies throughout 1997.
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. The proceeds from the sale were utilized to payoff
the Partnership's unsecured debt on May 15, 1996. Further, a cash distribution
to partners in December 1996 reduced the cash balance.
An increase in general and administrative expenses for the remaining
properties was caused by increases in advertising to maintain occupancy coupled
with an increase in payroll expenses at Waterford. The general and
administrative increase at Waterford was partially offset by a decrease in
similar expenses at Versailles Village. Versailles Village increased its
advertising in 1996 to assist with occupancy and payroll decreased as a result
of a staffing vacancy for a portion of the year. Fees and reimbursements to
affiliates decreased mainly as a result of drop in partnership management fees
earned in connection with cash distributions from operations. Distributions from
operations were higher in 1996 than in 1997 due to the one-time distribution of
cash reserves (the portion generated by operations) in the fourth 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.
INFLATION
With inflation at a low rate during 1998, 1997 and 1996, the effect of
inflation and changing prices on current revenue and income from operations has
been minimal.
Any significant inflation in future periods is likely to increase rental
rates (from leases to new tenants or renewals of leases to existing tenants)
assuming no major changes in market conditions. At the same time, it is
anticipated that property operating expenses will be similarly affected.
Assuming no major changes in occupancy levels, increases in rental income are
expected to cover inflation driven increases in the cost of operating the
properties and in property taxes. Inflation may also result in capital
appreciation of the Partnership's investment properties over a period of time as
rental rates and replacement costs of properties increase.
12
<PAGE>
<TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
INDEX
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants 14
Financial Statements:
Balance Sheets, December 31, 1998 and 1997 15
Statements of Operations, For the Years Ended December 31, 1998, 1997 and 1996 16
Statements of Partners' Capital (Deficit), For the Years Ended December 31, 1998, 1997 and 1996 17
Statements of Cash Flows, For the Years Ended December 31, 1998, 1997 and 1996 18
Notes to Financial Statements 19
Schedules:
III - Real Estate and Accumulated Depreciation, December 31, 1998 24
Schedules not filed:
All schedules other than those indicated in the index have been omitted as
the required information is inapplicable or the information is presented in the
financial statements or related notes.
13
</TABLE>
<PAGE>
Report of Independent Accountants
To the Partners of
Connecticut General Realty Investors III
Limited Partnership
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Connecticut
General Realty Investors III Limited Partnership at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Hartford, Connecticut
February 16, 1999
14
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<CAPTION>
ASSETS 1998 1997
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 3,009,898 $ 2,964,303
Buildings 16,661,970 16,618,817
Furniture and fixtures 1,462,984 1,390,985
--------------- ---------------
21,134,852 20,974,105
Less accumulated depreciation 8,693,273 8,112,558
--------------- ---------------
Net property and improvements 12,441,579 12,861,547
Cash and cash equivalents 739,751 682,614
Accounts receivable (net of allowance of $8,956 in 1998 and
$12,907 in 1997) 7,185 9,819
Escrow deposits 143,422 144,407
Other asset 1,000 1,000
Deferred charges, net 776,542 926,086
Escrowed debt service funds 506,660 506,660
--------------- ---------------
Total $ 14,616,139 $ 15,132,133
=============== ===============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Notes and mortgages payable $ 15,249,984 $ 15,452,462
Accounts payable and accrued expenses (including $18,906
in 1998 and $20,550 in 1997 due to affiliates) 241,892 235,092
Tenant security deposits 82,092 61,350
Unearned income 26,611 13,011
--------------- ---------------
Total liabilities 15,600,579 15,761,915
--------------- ---------------
Partners' deficit:
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 27,513 25,802
Cumulative cash distributions (33,751) (28,494)
--------------- ---------------
(5,238) (1,692)
--------------- ---------------
Limited partners (24,856 Units):
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (14,950,756) (15,120,129)
Cumulative cash distributions (8,436,498) (7,916,013)
--------------- ---------------
(979,202) (628,090)
--------------- ---------------
Total partners' deficit (984,440) (629,782)
--------------- ---------------
Total $ 14,616,139 $ 15,132,133
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
15
</TABLE>
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income:
Rental income $ 3,238,750 $ 4,439,392 $ 4,932,691
Other income 99,264 104,094 123,278
Interest income 71,961 97,320 149,601
------------- ------------- -------------
3,409,975 4,640,806 5,205,570
------------- ------------- -------------
Expenses:
Property operating expenses 989,444 1,278,482 1,452,587
General and administrative 464,819 659,864 718,639
Fees and reimbursements to affiliates 111,675 150,853 181,933
Provision for doubtful accounts 3,229 13,026 6,633
Interest expense (includes $25,500 to affiliates
for 1996) 939,465 1,378,234 1,749,224
Depreciation and amortization 730,259 952,497 1,112,487
------------- ------------- -------------
3,238,891 4,432,956 5,221,503
------------- ------------- -------------
Income (loss) from operations 171,084 207,850 (15,933)
Gain on sale of property -- 2,574,230 2,440,258
------------- ------------- -------------
Net income $ 171,084 $ 2,782,080 $ 2,424,325
============= ============= =============
Net income:
General Partner $ 1,711 $ 14,284 $ 114,283
Limited partners 169,373 2,767,796 2,310,042
------------- ------------- -------------
$ 171,084 $ 2,782,080 $ 2,424,325
============= ============= =============
Net income per Unit $ 6.81 $ 111.35 $ 92.94
============= ============= =============
Cash distributions per Unit $ 20.94 $ 201.84 $ 63.00
============= ============= =============
The Notes to Financial Statements are an integral part of these statements.
16
</TABLE>
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance (deficit) at December 31, 1995 $ (115,120) $ 876,935 $ 761,815
Distributions (10,071) (1,565,928) (1,575,999)
Net income 114,283 2,310,042 2,424,325
------------ ------------- -------------
Balance (deficit) at December 31, 1996 (10,908) 1,621,049 1,610,141
Distributions (5,068) (5,016,935) (5,022,003)
Net income 14,284 2,767,796 2,782,080
------------ ------------- -------------
Deficit at December 31, 1997 (1,692) (628,090) (629,782)
Distributions (5,257) (520,485) (525,742)
Net income 1,711 169,373 171,084
------------ ------------- -------------
Deficit at December 31, 1998 $ (5,238) $ (979,202) $ (984,440)
============ ============= =============
The Notes to Financial Statements are an integral part of these statements.
17
</TABLE>
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 171,084 $ 2,782,080 $ 2,424,325
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of property -- (2,574,230) (2,440,258)
Depreciation and amortization 730,259 952,497 1,112,487
Provision for doubtful accounts 3,229 13,026 6,633
Accounts receivable (595) (11,787) (9,997)
Escrow deposits 985 30,891 105,938
Accounts payable and accrued expenses 6,800 54,631 (128,116)
Accrued interest payable -- -- (72,946)
Other, net 34,342 (107,130) (13,878)
--------------- ---------------- ---------------
Net cash provided by operating activities 946,104 1,139,978 984,188
--------------- ---------------- ---------------
Cash flows from investing activities:
Proceeds from sale of property -- 9,800,000 7,853,900
Payment of closing costs related to sale of property -- (223,733) (102,306)
Purchases of property and improvements (160,747) (295,436) (454,948)
--------------- ---------------- ---------------
Net cash provided by (used in)
investing activities (160,747) 9,280,831 7,296,646
--------------- ---------------- ---------------
Cash flows from financing activities:
Distribution to limited partners (520,485) (5,016,935) (1,572,918)
Distribution to General Partner (5,257) (5,068) (10,071)
Repayment of notes and mortgage loans (202,478) (5,355,157) (8,540,003)
--------------- ---------------- ---------------
Net cash used in financing activities (728,220) (10,377,160) (10,122,992)
--------------- ---------------- ---------------
Net increase (decrease) in cash and cash equivalents 57,137 43,649 (1,842,158)
Cash and cash equivalents, beginning of year 682,614 638,965 2,481,123
--------------- ---------------- ---------------
Cash and cash equivalents, end of year $ 739,751 $ 682,614 $ 638,965
=============== ================ ===============
Supplemental disclosure of cash information:
Interest paid during year $ 939,465 $ 1,378,234 $ 1,822,170
=============== ================ ===============
Supplemental disclosure of non-cash information:
Accrued purchases of property and improvements $ -- $ -- $ 64,633
=============== ================ ===============
The Notes to Financial Statements are an integral part of these statements.
18
</TABLE>
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Connecticut General Realty Investors III Limited Partnership (the
"Partnership"), a Connecticut limited partnership, was organized in April 1984
to own and operate residential and commercial real estate. The general partner
of the Partnership is CIGNA Realty Resources, Inc. - Fifth (the "General
Partner").
In December 1993, the Partnership refinanced the mortgages encumbering its
Oklahoma property, Waterford Apartments. In conformity with the loan
requirements, the property was segregated from the Partnership's remaining
investment properties. The Partnership contributed the real property and
improvements subject to mortgage debt and net working capital to the Waterford
Partnership, a Connecticut general partnership, in exchange for a 99.9% general
partnership interest, and the General Partner contributed $1 in exchange for a
0.1% general partnership interest. The General Partner's interest is held in
trust for the benefit of Tulsa Corporation, the stock of which is 100% owned by
the Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The financial statements reflect the consolidation
of the accounts of the Partnership with the accounts of majority owned
partnership interests and have been prepared in conformity with generally
accepted accounting principles, and reflect management's estimates and
assumptions that affect the reported amounts. Actual results could differ
from those estimates.
B) FINANCIAL INSTRUMENTS: Except for Notes and Mortgages Payable, financial
instruments subject to fair value disclosure requirements are carried in
the financial statements at amounts that approximate fair value. For Notes
and Mortgages Payable, the estimate of fair value was based on the quoted
market prices for similar issues or by discounted cash flow analyses which
utilize current interest rates for similar financial instruments with
comparable terms and credit quality.
C) PROPERTY AND IMPROVEMENTS: Property and improvements are either held for
the production of income or held for sale. Property and improvements held
for the production of income are carried at depreciated cost less any
write-downs to fair value. The cost represents the initial purchase price
and subsequent capitalized costs and adjustments, including certain
acquisition expenses. Depreciation is calculated on the straight-line
method based on the estimated useful lives of the various components (5 to
30 years).
Properties are considered held for sale when they are subject to an active
plan to find a buyer and a sale is likely to be completed within one year.
Properties held for sale are carried at the lower of depreciated cost or
current fair value less estimated costs to sell (through the use of
valuation reserves). Properties that are held for sale are no longer
depreciated. As of November 1998, the Partnership held Waterford Apartments
for sale. Net income was $57,972, as adjusted for property tax accruals,
for the period that the property was held for sale. The Partnership held
Stonebridge Manor Apartments for sale in July 1997 and on October 23, 1997,
the Partnership completed the sale. Net income was $153,350 for the period
that the Partnership held Stonebridge Manor Apartments for sale.
D) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are generally reported as cash
equivalents.
E) ESCROW DEPOSITS AND ESCROWED DEBT SERVICE FUNDS: Escrow deposits consist of
funds held to pay property taxes and insurance required by the
Partnership's mortgage lenders, and a maintenance escrow required by
Waterford's mortgage lender. Escrowed debt service funds relate to
Waterford and include debt service reserves and a cash collateral reserve.
19
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
F) DEFERRED CHARGES: Deferred charges consist of a surety fee and financing
costs relating to Waterford Apartments, which are amortized over the ten
year period of the surety, and financing costs for Versailles Village which
are amortized over the life of the loan. Deferred costs relating to
properties held for sale are no longer amortized.
G) PARTNERS' CAPITAL: Offering costs, comprised of sales commissions and other
issuance expenses, have been charged to the partners' capital accounts as
incurred.
H) INCOME TAXES: No provision for income taxes has been made as the liability
for such taxes is that of the partners rather than the Partnership.
3. FEDERAL INCOME TAX REPORTING
The principal differences between generally accepted accounting principles and
tax reporting is the classification of offering costs (sales commissions and
other issuance expenses) and the method of depreciation. The net effects of the
differences as of December 31, 1998, 1997 and 1996, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------- ---------------------------- ----------------------------
Financial Tax Financial Tax Financial Tax
Reporting Reporting Reporting Reporting Reporting Reporting
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 14,616,139 $ 11,219,885 $ 15,132,133 $ 11,933,069 $ 22,844,345 $ 17,279,595
Partners' capital
(deficit):
General Partner (5,238) (34,810) (1,692) (29,428) (10,908) (126,311)
Limited partners (979,202) (4,319,702) (628,090) (3,786,838) 1,621,049 (3,799,106)
Net income (loss) (a):
General Partner 1,711 (125) 14,284 101,951 114,283 62,844
Limited partners 169,373 (12,379) 2,767,796 5,029,203 2,310,042 2,154,319
Net income (loss) per Unit (a) 6.81 (.50) 111.35 202.33 92.94 86.67
(a) Included in 1997 is a gain on sale of property of $2,574,230 ($2,562,025 or
$103.07 per Unit to limited partners) for financial reporting purposes and
a gain of $5,265,441 ($5,162,147 or $207.68 per Unit to limited partners)
for tax reporting. Included in 1996 is a gain on sale of property of
$2,440,258 ($2,325,815 or $93.57 per Unit to limited partners) for
financial reporting purposes and a gain of $2,703,671 ($2,635,963 or
$106.05 per Unit to limited partners) for tax reporting.
</TABLE>
4. INVESTMENT PROPERTIES
The Partnership purchased four apartment complexes located in Ohio,
Oklahoma, Louisiana and Illinois and one shopping center located in Florida. At
December 31, 1998, the Partnership held for the production of income the Ohio
property, Versailles Village, which was operating with leases in effect
generally for a term of one year or less. As of November 1998, the Partnership
was holding the Oklahoma property, Waterford Apartments, for sale. Each
investment property is pledged as security for its respective non-recourse
long-term debt.
On January 27, 1993, the Partnership sold an outparcel at the Florida
property, Promenades Plaza Shopping Center, with a net book value of $376,083
for a sales price of $500,000, netting the Partnership $452,500 after commission
and
20
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
closing costs. The Partnership recognized a gain on the sale of $76,417 in 1993.
On September 22, 1994, the Partnership completed the sale of Promenades Plaza
for a gross sales price of $6,572,000. The property had a carrying value of
$6,239,957 (net of impairment losses of $5,000,000 in 1993 and $700,000 in
1991). After deducting closing costs of $307,206, the Partnership recorded a
gain of $24,837 in 1994.
On April 30, 1996, the Partnership completed the sale of the Illinois
property, Stewart's Glen III, for a gross sales price of $7,853,900. After
closing costs and payment of the first mortgage loan obligation, the Partnership
netted $2,890,011. The property had a carrying value of $5,311,336. After
deducting closing costs of $102,306, the Partnership recorded a gain of
$2,440,258.
On October 23, 1997, the Partnership completed the sale of the Louisiana
property, Stonebridge Manor Apartments, for an all cash gross sales price of
$9,800,000. The property had a depreciated cost of $7,002,037 as of the date of
sale. After deducting closing costs of $223,733, the Partnership recorded a gain
of $2,574,230.
5. DEFERRED CHARGES
Deferred charges at December 31, 1998 and 1997 consist of the following:
1998 1997
---- ----
Surety fee - Waterford financing $ 963,910 $ 963,910
Financing costs 660,522 660,522
------------- -------------
1,624,432 1,624,432
Accumulated amortization (847,890) (698,346)
------------- -------------
$ 776,542 $ 926,086
============= =============
6. NOTES AND MORTGAGES PAYABLE
The Partnership's debt is non-recourse to the Partnership and is secured by
the investment properties. Notes and mortgages payable at December 31, 1998 and
1997 consist of the following:
<TABLE>
<CAPTION>
December 31
-----------
1998 1997
---- ----
<S> <C> <C>
8% mortgage note for Versailles Village Apartments. Principal and interest of
$32,416 payable monthly from May 1, 1994 until April 1, 2001, when the balance $ 3,894,984 $ 3,969,129
of $3,704,876 will be due.
Waterford Apartments promissory note financed with industrial revenue bonds.
Non-taxable Series 1993A Bonds; 5.35%; interest only payments of $50,624 12/1/93
to 12/1/2018 due monthly; 10% of principal required in cash collateral account
by 12/1/2003; cash collateral set up at closing with $100,000; additional
contributions to collateral account begin 12/1/98; bond maturity, 12/1/2018. 11,355,000 11,355,000
</TABLE>
21
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
December 31
-----------
1998 1997
---- ----
<S> <C> <C>
Waterford Apartments promissory note financed with industrial revenue bonds.
Taxable Series 1993B Bonds; 5.75%; interest only payments of $1,917 due monthly
12/1/93 to 12/1/95, principal and interest of $12,750 due monthly 12/1/95 to
6/1/96, $11,605 6/1/96 to 12/1/96, $12,984 12/1/96 to 6/1/97, $11,816 6/1/97 to
12/1/97, $12,338 12/1/97 to 6/1/98, $12,002 6/1/98 to 12/1/98; fully amortized
by 12/1/98.
Total notes and mortgages payable -- 128,333
--------------- ------------
$ 15,249,984 $ 15,452,462
================ ==============
</TABLE>
The Waterford Apartments mortgage debt consists of a promissory note
financed with $11,355,000 in industrial bonds issued from the Tulsa County Home
Finance Authority and credit enhanced by AXA Reassurance, SA. The AXA insurance
policy expires on December 1, 2004, however, the Partnership is required to
obtain a new credit enhancer by December 1, 2003. The bonds can be prepaid in
2001 at 102% and at par in 2002 and thereafter.
Five year maturities of long-term debt are summarized as follows:
1999 $ 80,299
2000 86,963
2001 3,727,722
2002 --
2003 --
Thereafter 11,355,000
The fair value of notes and mortgages payable was approximately $15,700,000
at December 31, 1998 and $15,800,000 at December 31, 1997. The estimate of fair
value was based on the quoted market prices for similar issues or by discounted
cash flow analysis which utilize current interest rates for similar financial
instruments with comparable terms and credit quality.
7. TRANSACTIONS WITH AFFILIATES
Fees and other expenses incurred by the Partnership related to the General
Partner or its affiliates during the periods ended December 31, 1998, 1997 and
1996 are as follows:
1998 1997 1996
---- ---- ----
Property management fees(a) $ 20,667 $ 33,300 $ 38,756
Partnership management fees 53,113 64,272 99,601
Printing 9,490 17,101 7,785
Reimbursement (at cost) for
out-of-pocket expenses 28,405 36,180 35,791
----------- ----------- -----------
$ 111,675 $ 150,853 $ 181,933
=========== =========== ===========
22
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(a) Does not include property management fees earned by independent property
management companies of $144,005, $192,406, and $213,881 for 1998, 1997 and
1996, 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.
In addition, the Partnership had third party borrowings outstanding during
1996 which were guaranteed by an affiliate of the General Partner for an annual
fee of 2% of the outstanding balance. The note was paid in full on May 15, 1996.
8. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement as amended January 1,
1988, net income or loss and cash distributions from operations, as well as any
net losses arising from the sale or disposition of investment properties, are to
be allocated 1% to the General Partner and 99% to the Limited Partners. Cash
distributions are allocated to the Partners following the receipt by an
affiliate of the General Partner of a partnership management fee of 9% of
"Adjusted Cash From Operations", as defined in the Partnership Agreement.
Distributable cash from the sale or disposition of investment properties
is to be generally allocated as follows:
o To the Limited Partners up to the amount of their Original Invested
Capital;
o To the General Partner, an additional amount depending upon the
percentage of Gross Proceeds committed to investment in properties;
o To the Limited Partners in an amount, which when added to prior
distributions from operations, equals an 8% cumulative noncompounded
return on their adjusted invested capital;
o To an affiliate of the General Partner as a subordinated disposition
fee; and
o With respect to the remainder, 85% to the Limited Partners and 15% to
the General Partner.
Generally, income from the sale or disposition of investment property is
allocated as follows:
o To each Partner having a deficit balance in the same ratio of
such balance to the aggregate balance of all Partners;
o To each Partner to the extent of cash distributed from the sale; and
o Any remaining gain, 1% to the General Partner and 99% to the Limited
Partners.
9. SUBSEQUENT EVENTS
On February 15, 1999, the Partnership paid a cash distribution of $152,864
to the limited partners and $1,544 to the General Partner.
On March 8, 1999, the Partnership entered into an Agreement of Purchase
and Sale with Case Ventures, Inc., an Oklahoma Corporation, to sell its
investment in the Waterford Apartments for a gross sales price of $14,675,000.
The purchaser will assume the bond financing as a part of the sale. The
Agreement of Purchase and Sale states that the closing of the transaction will
occur on or before April 13, 1999.
23
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP SCHEDULE III
(A CONNECTICUT LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
<CAPTION>
Costs
Capitalized
Initial Cost to Partnership (B)(C) Subsequent
to Acquisition
Description of Apartment Land, Building
Complexes by Property Land and Land Furniture and Improvements and
Location Encumbrances (A) Improvements Buildings Fixtures Furniture & Fixtures
<S> <C> <C> <C> <C> <C>
Versailles Village Apts. $ 4,100,806 $ 562,000 $ 4,857,554 $ 406,800 $ 1,047,203
Forest Park, OH
Waterford Apts. 11,744,167 2,085,826 11,343,875 492,765 338,829
Tulsa, OK ----------- ---------- ----------- -------- ----------
Totals $15,844,973 $2,647,826 $16,201,429 $899,565 $1,386,032
=========== ========== =========== ======== ==========
</TABLE>
<TABLE>
Gross Amount at Which Carried at Close of Period (D)(E)
<CAPTION>
Description of Apartment
Complexes by Property Land and Land
Location Improvements Buildings Furniture and Fixtures Total
<S> <C> <C> <C> <C>
Versailles Village Apts. $ 784,121 $ 5,208,937 $ 880,500 $ 6,873,558
Forest Park, OH
Waterford Apts. 2,225,777 11,453,033 582,484 14,261,294
Tulsa, OK ---------- ----------- ---------- -----------
Total $3,009,898 $16,661,970 $1,462,984 $21,134,852
========== =========== ========== ===========
</TABLE>
24
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP SCHEDULE III
(A CONNECTICUT LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
DECEMBER 31, 1998
<CAPTION>
Life on Which
Description of Depreciation in Latest
Apartment Statement of
Complexes by Accumulated Date of Operations is
Property Location Depreciation (F) Construction Date Acquired Computed
<S> <C> <C> <C> <C>
Versailles Village Apts. $3,183,132 1970 02/06/85 5-30 years
Forest Park, OH
Waterford Apts. 5,510,141 1984 10/31/85 5-30 years
Tulsa, OK ----------
Totals $8,693,273
==========
</TABLE>
(A) Encumbrances, which are secured by the Partnership's properties include
accrued interest payable at maturity (See Notes to Financial Statements).
(B) The cost to the Partnership represents the initial purchase price
of the properties including certain acquisition fees and expenses.
(C) The Partnership recorded $774,493 under the guarantee agreement from the
sellers of Waterford, which was treated as a reduction of initial cost.
(D) The aggregate cost of real estate owned at December 31, 1998 for
federal income tax purposes is $21,433,812.
(E) Reconciliation of real estate owned:
<TABLE>
<CAPTION>
Description 1998 1997 1996
<S> <C> <C> <C>
Balance at beginning of period $20,974,105 $31,810,670 $38,902,618
Additions during period 160,747 230,803 488,210
Reductions during period (G) -- (11,067,368) (7,580,158)
----------- ----------- -----------
Balance at end of period $21,134,852 $20,974,105 $31,810,670
=========== =========== ===========
</TABLE>
(F) Reconciliation of accumulated depreciation:
<TABLE>
<CAPTION>
Description 1998 1997 1996
<S> <C> <C> <C>
Balance at beginning of period $8,112,558 $11,431,301 $12,770,211
Additions during period 580,715 772,880 915,342
Reductions during period (G) -- (4,091,623) (2,254,252)
---------- ---------- -----------
Balance at end of period $8,693,273 $8,112,558 $11,431,301
========== ========== ===========
</TABLE>
(G) Includes sale of Stonebridge Manor Apartments in 1997 and Stewart's Glen
Apartments Phase III in 1996.
25
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The General Partner of the Partnership, CIGNA Realty Resources, Inc.-
Fifth, a Delaware corporation, is an indirectly, wholly owned subsidiary of
CIGNA Corporation, a publicly held corporation whose stock is traded on the New
York Stock Exchange. The General Partner has responsibility for and control over
the affairs of the Partnership.
The directors and executive officers of the General Partner as of March
10, 1999 are as follows:
<TABLE>
<CAPTION>
Name Office Served Since
<S> <C> <C>
Robert Fair Director March 1, 1998
Philip J. Ward Director May 2, 1988
John Wilkinson Director September 11, 1998
John D. Carey President September 7, 1993
Verne E. Blodgett Vice President, Counsel April 2, 1990
Joseph W. Springman Vice President, Assistant Secretary September 7, 1993
David C. Kopp Secretary September 29, 1989
Stephen C. Stachelek Treasurer May 20, 1997
Josephine C. Donofrio Controller September 23, 1996
</TABLE>
There is no family relationship among any of the foregoing directors or
officers. There are no arrangements or understandings between or among said
officers or directors and any other person pursuant to which any officer or
director was selected as such.
The foregoing directors and officers are also officers and/or directors of
various affiliated companies of CIGNA Realty Resources, Inc. - Fifth, including
CIGNA Financial Partners, Inc. (the parent of CIGNA Realty Resources, Inc. -
Fifth), CIGNA Investments, Inc., CIGNA Corporation (the parent of CIGNA
Investments, Inc.), and Connecticut General Corporation (the parent of CIGNA
Financial Partners, Inc.).
26
<PAGE>
The business experience of each of the directors and executive officers of
the General Partner of the Partnership is as follows:
ROBERT FAIR - DIRECTOR
Mr. Fair, age 45, is Managing Director and head of Asset
Management/Dispositions in the Real Estate Division of CIGNA Investment
Management. He joined CIGNA's real estate operations in 1979 and has held a
variety of positions, including regional head and head of the Asset Management
Dispositions unit. Most recently, he was a leader of a mortgage investment team.
Before coming to CIGNA, he was associated with several major construction firms.
Mr. Fair holds a Bachelor of Science degree from Worcester Polytechnic
Institute.
PHILIP J. WARD - DIRECTOR
Mr. Ward, age 50, is Senior Managing Director and Division Head of CIGNA
Investment Management, in charge of the Real Estate Investment Division. He was
appointed to that position in December 1985. Mr. Ward joined Connecticut
General's Mortgage and Real Estate Department in 1971 and became an officer in
1976. Since joining CIGNA, he has held real estate investment assignments in
Mortgage and Real Estate Production and in Portfolio Management. Prior to his
current position, Mr. Ward held assignments in CIGNA Investments Inc.,
responsible for the Real Estate Production area, CIGNA Realty Advisors, Inc. and
Congen Realty Advisory Company, all wholly-owned subsidiaries of CIGNA and/or
Connecticut General. Mr. Ward has held various positions with the General
Partner. His experience includes all forms of real estate investments, with
recent emphasis on acquisitions and joint ventures. Mr. Ward is a 1970 graduate
of Amherst College with a Bachelor of Arts degree in Economics. He is a member
of the Society of Industrial and Office Realtors, the National Association of
Industrial and Office Parks, the Urban Land Institute and a trustee of the
International Council of Shopping Centers. He is a member of the Board of
Directors of Simon Property Group and Patriot American Hospitality Corporation.
JOHN WILKINSON - DIRECTOR
Mr. Wilkinson, age 55, has recently been appointed Senior Vice President
and Chief Financial Officer of the CIGNA Reinsurance Division. Mr.
Wilkinson joined CIGNA in 1970 and became an officer in 1978. Prior to his
current position, he also served as Chief Financial Officer in both the
Healthcare Division and the Individual Financial Services Division (more
recently known as CIGNA Individual Insurance prior to its sale). Mr. Wilkinson
is a 1965 graduate of the U.S. Naval Academy where he earned a Bachelor of
Science degree. Mr. Wilkinson is a Fellow of the Society of Actuaries, a member
of the American Academy of Actuaries, a Chartered Life Underwriter and Chartered
Financial Counselor.
JOHN D. CAREY - PRESIDENT
Mr. Carey, age 35, is the President of the General Partner and CIGNA
Financial Partners, Inc. (CFP) which are managed as part of the Tax Advantaged
Investment unit of CIGNA Investment Management - Real Estate. Mr. Carey was
elected President in 1993, and from 1990 to 1996, he served as the Controller of
the General Partner and CFP. Mr. Carey also holds the position of Vice President
of CIGNA Investments, Inc. in the Asset Management unit responsible for managing
multi-family real estate investments. Prior to joining CIGNA Investment
Management, he held the position of manager at KPMG Peat Marwick in the audit
department and was a member of the Real Estate Focus Group. Mr. Carey is a
graduate of Central Connecticut State University with a Bachelor of Science
degree and is a Certified Public Accountant.
VERNE E. BLODGETT - VICE PRESIDENT, COUNSEL
Mr. Blodgett, age 61, is an Assistant General Counsel of CIGNA. He joined
Connecticut General Life Insurance Company in 1975 as an investment attorney and
held various positions in the Legal Division of Connecticut General Life
Insurance Company prior to his appointment as Assistant General Counsel in 1981.
He has served as CIGNA Investment
27
<PAGE>
Counsel, Counsel to CIGNA Individual Insurance, and is currently a member of the
CIGNA Domestic Property and Casualty Law Department. Mr. Blodgett received a
Bachelor of Arts degree from Yale University and graduated with honors from the
University of Connecticut School of Law. He is a member of the Connecticut and
the American Bar Associations.
JOSEPH W. SPRINGMAN - VICE PRESIDENT, ASSISTANT SECRETARY
Mr. Springman, age 57, is Managing Director and department head responsible
for Acquisitions. He joined CIGNA's Real Estate operations in 1970. He has held
positions as an officer or director of several real estate affiliates of CIGNA.
His past real estate assignments have included Development and Engineering,
Property Management, Director - Real Estate Operations, Portfolio Management,
Vice President - Real Estate Production and Managing Director - Asset
Management. He received a Bachelor of Science degree from the U.S. Naval
Academy.
DAVID C. KOPP - SECRETARY
Mr. Kopp, age 53, is Secretary of CIGNA Investments, Inc., Corporate
Secretary of Connecticut General Life Insurance Company and Assistant General
Counsel of CIGNA Corporation. He also serves as an officer of various other
CIGNA Companies. He joined Connecticut General Life Insurance Company in 1974 as
a commercial real estate attorney and held various positions in the Legal
Department of Connecticut General Life Insurance Company prior to his
appointment as Corporate Secretary in 1977. Mr. Kopp is an honors graduate of
Northern Illinois University and served on the law review at the University of
Illinois College of Law. He is a member of the Connecticut Bar Association and
is past President of the Hartford Chapter, American Society of Corporate
Secretaries.
STEPHEN C. STACHELEK - TREASURER
Mr. Stachelek, age 41, is Assistant Vice President and Division Treasurer
for CIGNA's Retirement and Investment Services, Investment Management and
Reinsurance Divisions. In this capacity, he manages a staff responsible for cash
and liquidity management, cash accounting, cash receipts and cash disbursements
processing, reconciliation of bank accounts and ensuring that the Division's
treasury needs are met for each to effectively conduct its business. Mr.
Stachelek joined CIGNA in 1988. He held numerous positions in CIGNA's HealthCare
Division before joining the Corporate Treasury function in late 1994. He
received a B.S. degree from Central Connecticut State University, an M.B.A. from
Northeastern University and is a Certified Public Accountant.
JOSEPHINE C. DONOFRIO - CONTROLLER
Ms. Donofrio, age 31, was elected Controller of Tax Advantaged Investments
in 1996. In 1993, Ms. Donofrio joined CIGNA Investment Management - Real Estate
as a member of the Tax Advantaged Investment Unit. Prior to joining CIGNA
Investment Management, Ms. Donofrio was a senior accountant at Kostin, Ruffkess
& Company, LLC. Her experiences include financial and tax reporting for public
and private real estate limited partnership syndications. Ms. Donofrio is a
graduate of the University of Connecticut with a Bachelor of Science Degree. She
is a Certified Public Accountant and a member of the Connecticut Society of
Certified Public Accountants.
ITEM 11. EXECUTIVE COMPENSATION
Officers and directors of the General Partner receive no current or
proposed direct compensation from the Partnership in such capacities. However,
certain officers and directors of the General Partner received compensation from
the General Partner and/or its affiliates (but not from the Partnership) for
services performed for various affiliated entities, which may include services
performed for the Partnership, but such compensation was not material in the
aggregate.
28
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person or group is known by the Partnership to own beneficially more
than 5% of the outstanding Units of interest of the Partnership.
There exists no arrangement, known to the Partnership, the operation of
which may at a subsequent date result in a change in control of the Partnership.
As of March 10, 1999, the individual directors and the directors and
officers, as a group, of the General Partner beneficially owned Partnership
Units and shares of the common stock of CIGNA, parent of the General Partner, as
set forth in the following table:
Units Shares
Beneficially Beneficially Percent
Name Owned(a) Owned(b) of Class
Robert Fair(c) 0 11,895 *
Philip J. Ward (d) 0 57,045 *
John Wilkinson (e) 0 36,509 *
All directors and officers
Group (9) (f) 0 125,214 *
* Less than 1% of class
(a) No officer or director of the General Partner possesses a right to acquire
beneficial ownership of additional Units of interest of the Partnership.
(b) The directors and officers have sole voting and investment power over all
the shares of CIGNA common stock they own beneficially.
(c) Shares beneficially owned includes options to acquire 6,135 shares and
3,315 shares which are restricted as to disposition.
(d) Shares beneficially owned includes options to acquire 28,008 shares and
2,220 shares which are restricted as to disposition.
(e) Shares beneficially owned includes options to acquire 27,969 shares and
693 shares which are restricted as to disposition.
(f) Shares beneficially owned by directors and officers include 68,452 shares
of CIGNA common stock which may be acquired upon exercise of stock options
and 15,627 shares which are restricted as to disposition.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner of the Partnership is generally entitled to receive 1%
of cash distributions, when and as cash distributions are made to the limited
partners, and is generally allocated 1% of profits or losses. In 1998, the
General Partner was entitled to receive distributable cash from operations of
$5,257. The General Partner was allocated a share of Partnership income in 1998
of $1,711. Reference is also made to the Notes to Financial Statements included
in this annual report for a description of such distributions and allocations.
The relationship of the General Partner (and its directors and officers) to its
affiliates is set forth in Item 10 above.
CII provided asset management services to the Partnership during 1998 at
fees calculated at 5% of gross revenues from the Versailles Village Apartments
and Waterford Apartments less amounts earned by independent third party property
management companies contracted by CII on behalf of the Partnership. In 1998,
such affiliate earned asset management fees amounting to $20,667 for such
services, of which $3,632 was unpaid as of December 31, 1998. Non-affiliated
third
29
<PAGE>
party independent property managers contracted by CII earned $144,005 of
management fees.
CFP provided partnership management services for the Partnership at fees
calculated at 9% of adjusted cash from operations in any one year. The
partnership management fee shall be paid when adjusted cash from operations is
distributed to Limited Partners. In 1998, CFP earned partnership management fees
amounting to $53,113 for such services, of which $15,271 was unpaid as of
December 31, 1998.
The General Partner and its affiliates may be reimbursed for their direct
expenses incurred in the administration of the Partnership. In 1998, the General
Partner and its affiliates were entitled to reimbursement for such out of pocket
expenses in the amount of $37,895, of which $4 was unpaid as of December 31,
1998.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements. See Index to Financial Statements in Item 8.
2. Financial Statement Schedules
(a) Real Estate and Accumulated Depreciation. See Index to
Financial Statements in Item 8.
3. Exhibits
3 Partnership Agreement, incorporated by reference to Exhibit
A to the Prospectus of Registrant, dated July 2, 1984, filed
pursuant to Rule 424(b) under the Securities Act of 1933,
File No. 2-90944.
3(a) Amendment to Partnership Agreement, dated as of July 1,
1985, incorporated by reference to Exhibit 3(a) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1984.
4 Certificate of Limited Partnership, dated April 16, 1984,
incorporated by reference to Exhibit 4 to Form S-11
Registration Statement under the Securities Act of 1933,
File No. 2-90944.
10(a) Acquisition and Disposition Services Agreement, dated
July 2, 1984, between Connecticut General Realty
Investors III Limited Partnership and CIGNA Capital
Advisers, Inc., incorporated by reference to exhibit
10(a) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.
(b) Supervisory Property Management Agreement, dated July 2,
1984, between Connecticut General Realty Investors III
Limited Partnership and CIGNA Capital Advisers, Inc.,
incorporated by reference to exhibit 10(b) to Registrants
Annual Report on Form 10-K for the fiscal year ended
December 31, 1987.
(c) Agreements concerning Certain Capital Contributions, between
Connecticut General Management Resources, Inc. and CIGNA
Realty Resources, Inc.-Fifth, incorporated by reference to
exhibit 10(c) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.
(d) Purchase and Sale Agreement, dated as of January 17, 1985,
relating to the Acquisition of Versailles Village
Apartments, incorporated by reference to Exhibit 10(d) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1984.
(e) Bill of Sale and Assignment between Stonebridge Manor,
a Louisiana Partnership in Commendam, and Connecticut General
Realty Investors III Limited Partnership, dated November 26,
1985, relating to the
30
<PAGE>
acquisition of the Stonebridge Manor Apartments,
incorporated by reference to Exhibit 10(h) to Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1985.
(f) Act of Credit Sale and Assumption of Mortgage between
Stonebridge Manor, a Louisiana Partnership in Commendam, and
Connecticut General Realty Investors III Limited Partnership
dated November 26, 1985, relating to the acquisition of the
Stonebridge Manor Apartments, incorporated by reference to
Exhibit 10(i) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1985.
(g) Purchase and Sale Agreement between Waterford, LTD. and
Connecticut General Realty Investors III Limited
Partnership, dated October 31, 1985, relating to the
acquisition of the Waterford Apartments, incorporated by
reference to Exhibit 10(k) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1985.
(h) Promissory Note between Connecticut General Realty Investors
III Limited Partnership, as Maker, and Waterford, LTD., as
Payee, dated October 31, 1985, relating to the acquisition
of the Waterford Apartments, incorporated by reference to
Exhibit 10(l) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1985.
(i) Purchase and Sale Agreement between First Capital Income
Properties Limited, Series V, and Connecticut General Realty
Investors III Limited Partnership, relating to the
acquisition of the Promenades Plaza Shopping Center,
incorporated by reference to Exhibit 10(m) to Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1985.
(j) Mortgage Consolidation and Modification Agreement between
Connecticut General Realty Investors III Limited Partnership
and The Equitable Life Assurance Society of the United
States, dated as of December 10, 1986, relating to the
Promenades Plaza Shopping Center, incorporated by reference
to Exhibit 10(n) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1986.
(k) Real Estate Purchase Agreement between Willowbrook
Associates II and CIGNA Financial Partners, Inc., relating
to Stewart's Glen Apartments Phase III, dated as of April
14, 1987, incorporated by reference to Exhibit 10(p) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987.
(l) Amendment to Real Estate Purchase Agreement, dated July 20,
1987, between Willowbrook Associates II and Phase III
Apartment Venture, relating to the acquisition of Stewart's
Glen Apartments Phase III, incorporated by reference to
Exhibit 10(s) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.
(m) Management and Leasing Agreement between Phase III Apartment
Venture and Chasewood Properties, effective as of July 24,
1987, incorporated by reference to Exhibit 10(t) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987.
(n) Mortgage, Security Agreement and Financing Statement and
Promissory Note between Connecticut General Realty Investors
III Limited Partnership and Massachusetts Mutual Life
Insurance Company, dated January 25, 1988, relating to
Stewart's Glen Apartments Phase III, incorporated by
reference to Exhibit 10(v) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987.
(o) Mortgage Note between Connecticut General Realty Investors
III Limited Partnership and the John Hancock Mutual Life
Insurance Co., dated as of August 12, 1988, relating to
Versailles Village Apartments, incorporated by reference to
Exhibit 10(w) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988.
31
<PAGE>
(p) Promissory Note between Connecticut General Realty Investors
III Limited Partnership and Aetna Life Insurance Company,
dated March 28, 1990, relating to Stonebridge Manor
Apartments incorporated by reference to Exhibit 10 (p) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989.
(q) Promissory Note between Connecticut General Realty Investors
III Limited Partnership and Mellon Bank National
Association, dated March 28, 1990, relating to Stonebridge
Manor Apartments incorporated by reference to Exhibit 10 (q)
to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989.
(r) Mortgage and Note Modification Agreement between Connecticut
General Realty Investors III Limited Partnership and The
Equitable Life Assurance Society of the United States, dated
June 30, 1989, relating to Promenades Plaza Shopping Center
incorporated by reference to Exhibit 10 (r) to Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1989.
(s) Promissory Note between Connecticut General Realty Investors
III Limited Partnership and Barnett Bank of Southwest
Florida, dated June 30, 1989, relating to Promenades Plaza
Shopping Center incorporated by reference to Exhibit 10 (s)
to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989.
(t) Promissory Note between Registrant and John Hancock Mutual
Life Insurance Company, dated March 24, 1994, relating to
Versailles Village Apartments incorporated by reference to
Form 10-Q for the quarter ended March 31, 1994.
(u) Documents and Agreements concerning the December 17, 1993
debt refinance of the Registrant's Waterford Apartments
property with industrial revenue bonds issued by the Tulsa
County Home Finance Authority and credit enhanced by AXA
Reassurance, SA incorporated by reference to Form 10-Q for
the quarter ended March 31, 1994.
(v) Consolidation, Extension, Modification, and Restatement of
Promissory Notes between Registrant and Mellon Bank, N.A.,
dated March 25, 1994 relating to Stonebridge Manor
Apartments and Promenades Plaza Shopping Center incorporated
by reference to Form 10-Q for the quarter ended March 31,
1994.
(w) Contract for Purchase and Sale dated July 19, 1994, First
Amendment to Contract for Purchase and Sale dated August 18,
1994, and Second Amendment to Contract for Purchase and Sale
dated September 21, 1994 between the Registrant and Sterling
Promenades Limited Partnership, a Florida limited
partnership incorporated by reference to Form 8-K dated
September 22, 1994.
(x) Loan Modification Agreement between Connecticut General
Realty Investors III Limited Partnership and Massachusetts
Mutual Life Insurance Company, dated November 1, 1994,
relating to Stewart's Glen Apartments, incorporated by
reference to Form 10-K for the fiscal year ended December
31, 1994.
(y) Loan Agreement between Connecticut General Realty Investors
III Limited Partnership and Hibernia National Bank, dated
March 29, 1995, relating to Stonebridge Manor Apartments,
incorporated by reference to Form 10-Q for the quarter ended
March 31, 1995.
(z) Agreement of Purchase and Sale for Stewart's Glen I, II and
III dated April 30, 1996 between CIGNA/Willowbrook
Associates Limited Partnership, CIGNA/Willowbrook II
Associates Limited Partnership, Connecticut General Realty
Investors III Limited Partnership and AMLI Residential, L.P.
incorporated by reference to Form 10-Q for the quarter ended
March 31, 1996.
(aa) Agreement of Purchase and Sale for Stonebridge Manor
Apartments dated October 22, 1997 between the
32
<PAGE>
Registrant and TGM Realty Corp. #6, a Delaware corporation,
incorporated by reference to Form 8-K dated November 6,
1997.
(bb) Agreement of Purchase and Sale for Waterford Apartments
dated March 8, 1999 between Waterford Partnership and Case
Ventures, Inc., an Oklahoma Corporation.
27 Financial Data Schedules.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter of the fiscal
year.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 30, 1999 By: /s/ John D. Carey
-------------------
John D. Carey, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities (with respect to the General Partner) and on the date
indicated.
/s/ Robert Fair Date: March 30, 1999
------------------------------------------
Robert Fair, Director
/s/ Philip J. Ward Date: March 30, 1999
------------------------------------------
Philip J. Ward, Director
/s/ John Wilkinson Date: March 30, 1999
------------------------------------------
John Wilkinson, Director
/s/ John D. Carey Date: March 30, 1999
------------------------------------------
John D. Carey, President
(Principal Executive Officer)
/s/ Stephen C. Stachelek Date: March 30, 1999
------------------------------------------
Stephen C. Stachelek, Treasurer
(Principal Financial Officer)
/s/ Josephine Donofrio Date: March 30, 1999
------------------------------------------
Josephine Donofrio, Controller
(Principal Accounting Officer)
34
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<PERIOD-TYPE> YEAR
<CASH> 739751
<SECURITIES> 0
<RECEIVABLES> 16141
<ALLOWANCES> 8956
<INVENTORY> 0
<CURRENT-ASSETS> 890358
<PP&E> 21134852
<DEPRECIATION> 8693273
<TOTAL-ASSETS> 14616139
<CURRENT-LIABILITIES> 350595
<BONDS> 15249984
<COMMON> 22409052
0
0
<OTHER-SE> (23393492)
<TOTAL-LIABILITY-AND-EQUITY> 14616139
<SALES> 0
<TOTAL-REVENUES> 3409975
<CGS> 0
<TOTAL-COSTS> 1565938
<OTHER-EXPENSES> 730259
<LOSS-PROVISION> 3229
<INTEREST-EXPENSE> 939465
<INCOME-PRETAX> 171084
<INCOME-TAX> 0
<INCOME-CONTINUING> 171084
<DISCONTINUED> 0
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<NET-INCOME> 171084
<EPS-PRIMARY> 6.81
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</TABLE>
EXHIBIT 10(bb)
AGREEMENT OF PURCHASE AND SALE
BETWEEN
WATERFORD PARTNERSHIP,
A CONNECTICUT GENERAL PARTNERSHIP, SELLER
AND
CASE VENTURES, INC.,
AN OKLAHOMA CORPORATION, PURCHASER
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
Article I. Property........................................................................................1
Article II. Purchase Price and Deposits ....................................................................4
Article III. Failure to Close................................................................................6
3.1 Purchaser's Default....................................................................6
3.2 Seller's Default.......................................................................7
3.3 Termination of Agreement in Accordance with its Terms..................................7
Article IV. Closing and Transfer of Title...................................................................8
4.1 Closing................................................................................8
4.2 Closing Procedure......................................................................8
4.3 Purchaser's Performance...............................................................11
4.4 Bond-Related Documentation; Special Condition to Purchaser's
Obligations; Release of Seller from Bond Obligations..................................11
4.4.1 Bond-Related Documentation...........................................11
4.4.2 Special Condition to Purchaser's Obligations.........................13
4.4.3 Release of Seller from Bond Obligations and from Existing
Credit Enhancement Liability.........................................15
4.4.4 Fees and Costs.......................................................16
4.4.5 No Covenants.........................................................16
4.5 Evidence of Authority; Miscellaneous..................................................17
4.6 Assignment and Assumption of Partnership Interests in Seller..........................17
Article V. Prorations of Rents, Taxes, Etc................................................................18
Article VI. Purchaser Inspections and Contingencies........................................................20
6.1 Document Inspection...................................................................20
6.2 Physical Inspection...................................................................21
6.3 Feasibility Period ...................................................................21
6.4 Survey Contingency....................................................................22
6.5 Title Contingency.....................................................................22
Article VII Loss due to Casualty or Condemnation...........................................................24
7.1 Loss due to Condemnation..............................................................24
7.2 Loss due to Casualty..................................................................25
Article VIII. Seller's Operation and Maintenance of the Property Prior to Closing............................26
Article IX. Broker.........................................................................................27
Article X. Representations and Warranties.................................................................27
10.1 Limitations on Representations and Warranties.........................................27
10.2 Representations and Warranties of Seller..............................................28
<PAGE>
TABLE OF CONTENTS (CONTINUED)
Page
10.3 Seller's Knowledge.............................................................................32
10.4 Representations and Warranties of Purchaser...........................................32
10.5 Survival..............................................................................33
Article XI. Liability of Seller............................................................................34
Article XII. Assignment.....................................................................................35
Article XIII. Notices........................................................................................36
Article XIV. Expenses.......................................................................................37
Article XV. Miscellaneous..................................................................................38
15.1 Successors and Assigns................................................................38
15.2 Gender................................................................................38
15.3 Captions..............................................................................38
15.4 Construction..........................................................................38
15.5 Entire Agreement......................................................................39
15.6 Recording.............................................................................39
15.7 No Continuance........................................................................39
15.8 Time of Essence.......................................................................39
15.9 Counterparts..........................................................................39
15.10 Governing Law.........................................................................40
15.11 Acceptance of Offer...................................................................40
15.12 Confidentiality.......................................................................40
15.13 Surviving Covenants...................................................................40
15.14 Real Estate Reporting Person..........................................................41
15.15 Independent Contract Consideration....................................................41
15.16 Exclusive Period......................................................................41
15.17 Approval..............................................................................41
15.18 Business Day(s).......................................................................42
EXHIBIT A DESCRIPTION OF LAND
EXHIBIT B RENT ROLL
EXHIBIT C CONSENT AND RELEASE AGREEMENT
EXHIBIT D SPECIAL WARRANTY DEED
EXHIBIT E BILL OF SALE AND GENERAL ASSIGNMENT
EXHIBIT F ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY
DEPOSITS
EXHIBIT G INDEMNIFICATION AGREEMENT
EXHIBIT H FORM OF SELLER'S AFFIDAVIT OF NON-FOREIGN STATUS
EXHIBIT I DUE DILIGENCE MATERIALS
EXHIBIT J PENDING LITIGATION
EXHIBIT K ASSIGNMENT OF AND AMENDMENT TO AGREEMENT OF PURCHASE
AND SALE
EXHIBIT L LIST OF PERSONAL PROPERTY
EXHIBIT M LIST OF SERVICE CONTRACTS
EXHIBIT N BOND DOCUMENTS
EXHIBIT O ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTERESTS
</TABLE>
<PAGE>
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (THIS "AGREEMENT") is made
by and between WATERFORD PARTNERSHIP, a Connecticut general partnership
("SELLER"), and CASE VENTURES, INC., an Oklahoma corporation, ("PURCHASER") or
its designee, or assignee as of the "EFFECTIVE DATE" (as defined below).
Article I
Property
Seller hereby agrees to sell, and Purchaser hereby agrees to
buy, all of the following property: (a) a parcel of real property, located in
the City of Tulsa, Oklahoma, more particularly described on Exhibit A attached
to this Agreement and made a part hereof, together with Assignor's assignable
right, title, and interest in, to and under (i) all and singular easements,
covenants, agreements, rights, privileges, tenements, hereditaments and
appurtenances thereunto now or hereafter belonging or appertaining thereto and
(ii) any and all oil, gas and mineral rights relating to the real estate, water
and water rights, and water stock, and all right, title and interest of Seller
(whether now or hereafter existing) in and to any land lying in the bed of any
street, alley, road or avenue (whether open, closed or proposed) within, in
front of, behind or otherwise adjoining the real estate or any of it and if, and
only to the extent expressly provided elsewhere in this Agreement, all right,
title and interest of Seller (whether now or hereafter existing) in and to any
award made or to be made as a result or in lieu of condemnation, and if and only
to the extent
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expressly provided elsewhere in this Agreement, in and to any award for damage
to the Property or any part thereof by reason of casualty (collectively, "THE
LAND"); (b) the buildings, structures, fixtures, facilities, installations and
other improvements now or hereafter located in, on, over and under the Land,
being a 344-unit apartment complex containing an aggregate of approximately
230,676 square feet of net rentable area, generally known as "Waterford
Apartments", including, without limitation, any and all plumbing, air
conditioning, heating, ventilating, mechanical, electrical and other utility
systems, parking lots and facilities, landscaping, roadways, sidewalks, swimming
pools and other recreational facilities, security devices, signs and light
fixtures (collectively, the "IMPROVEMENTS"); (c) the landlord's interests under
all tenant leases relating to the Improvements, being the leases referred to on
the Rent Roll attached hereto as Exhibit B (as such leases may expire or be
terminated in the ordinary course of business), together with any tenant leases
hereafter entered into pursuant to the provisions of this Agreement
(collectively, the "LEASES") (the Land, Improvements, and the Leases are
referred to herein, collectively, as the "REAL PROPERTY"); (d) all of Seller's
assignable right, title and interest, all furniture, furnishings, fixtures,
fittings, appliances, apparatus, equipment, machinery, maintenance vehicles and
equipment, tools, parts, recreational equipment, carpeting, window treatments,
stationery and other office supplies, and other personal property (the "TANGIBLE
PERSONAL PROPERTY"), including, without limitation, the items shown on Exhibit L
attached hereto and made a part hereof; (e) all Seller's assignable right, title
and interest in all existing surveys, blue prints, drawings, plans and
specifications (including, without limitation, structural, HVAC, mechanical and
plumbing plans and specifications) and other documentation for or with respect
to the Real Property or the Tangible Personal Property, or any part thereof; all
use, occupancy, building and
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operating permits, licenses and approvals relating to the Real Property or the
Tangible Personal Property; all marketing artwork, construction drawings, all
guaranties, warranties, booklets, manuals and promotional and advertising
materials exclusively concerning the Real Property or the Tangible Personal
Property, or any part thereof; and such other existing books, records and
documents (including, without limitation, those relating to ad valorem taxes and
leases) used exclusively in connection with and integral to the operation of the
Real Property or the Tangible Personal Property, or any part thereof, and all
other intangible personal property, together with any associated good will, now
or hereafter owned by Seller or in which Seller otherwise has an interest and
used exclusively in connection with or arising from the business now or
hereafter conducted on or from the Real Property or any part thereof, including,
without limitation, claims, choses in action, lease and other contract rights,
names, and, if available, telephone exchange numbers (collectively, the
"INTANGIBLE PERSONAL PROPERTY") (the Tangible Personal Property and the
Intangible Personal Property shall hereinafter be referred to collectively as
the "PERSONAL PROPERTY"); (f) all Seller's assignable right, title and interest
in and to all purchase, service and maintenance agreements, cable television
agreements, laundry facility leases, equipment leases and any other agreements,
contracts, licenses and permits exclusively affecting or exclusively pertaining
in any way to the Real Property or the Personal Property, or any part thereof,
including, without limitation, the property management agreement and those
listed on Exhibit M attached hereto and made a part hereof, (the "SERVICE
CONTRACTS") (collectively, the Real Property, the Personal Property and the
Service Contracts are sometimes referred to herein as the "PROPERTY"). As used
herein, unless otherwise expressly stated, the term "assignable" shall mean
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<PAGE>
assignable without any additional cost to Seller on account of such assignment,
other than de minimis and incidental transactional costs.
Article II
Purchase Price and Deposits
The purchase price which the Purchaser agrees to pay and the
Seller agrees to accept for the Property shall be the sum of Fourteen Million
Six Hundred Seventy-Five Thousand Dollars ($14,675,000) (the "PURCHASE PRICE"),
subject to adjustment as provided in Article V hereof, as to which Purchaser
shall receive a credit against the balance of such Purchase Price at Closing in
the amount equal to the unpaid principal balance (as of the Closing Date) of the
Bonds (as defined in Section 4.4.1 hereof). The Purchase Price shall be payable
as follows:
(a) An initial earnest money deposit (together with any
interest earned thereon, the "INITIAL DEPOSIT") in the amount of One
Hundred Thousand Dollars ($100,000), in cash, which has already been
deposited with Frisco Title Insurance Company (the "TITLE COMPANY") in
Tulsa, Oklahoma, such amount to be held in escrow in accordance with
the terms of this Agreement in an interest-bearing account (the
"INITIAL ACCOUNT");
(b) An additional earnest money deposit (together with
interest thereon, the "ADDITIONAL DEPOSIT") in the amount of Two
Hundred Thousand Dollars ($200,000) to be deposited with the Title
Company at the time Purchaser delivers this Agreement to the
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Title Company in accordance with the last paragraph of this Article II,
such amount to be held in escrow in accordance with the terms of this
Agreement in an interest-bearing account in the State of Oklahoma
according to this Agreement (the "ESCROW ACCOUNT"), at which time the
Title Company shall transfer the Initial Deposit from the Initial
Account to the Escrow Account to be held pursuant to the terms of this
Agreement (the Initial Deposit and, upon deposit of the Additional
Deposit as provided above, the Additional Deposit are collectively
referred to as the "DEPOSIT");
(c) The execution and delivery by Purchaser at Closing of a
Release and Indemnification Agreement substantially in the form
attached hereto as Exhibit C (the "RELEASE AGREEMENT"), whereby
Purchaser shall assume all of Seller's obligations under the Bond
Documents (as defined in Section 4.4.1 hereof) occurring from and after
the Closing, all in accordance with the terms of the Release Agreement;
and
(d) The balance of the Purchase Price (less the amount of the
Deposit) shall be paid at time of Closing by Federal wire transfer,
with the transfer of funds to Seller to be completed and the sale
proceeds received by Seller no later than 4:00 p.m. E.S.T. on the day
of the Closing.
Purchaser shall provide the Title Company with its tax
identification number, and all interest shall be for Purchaser's account for tax
purposes.
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<PAGE>
In addition, Purchaser shall deposit three (3) fully executed
original counterparts of this Agreement with the Title Company immediately after
both parties have executed it. The date of such deposit shall be acknowledged by
the Title Company on all such counterparts, and such date shall be the
"EFFECTIVE DATE" of this Agreement. The Title Company shall retain one copy of
this Agreement and deliver one (1) copy hereof to each of Purchaser and Seller.
Article III
Failure to Close
3.1 Purchaser's Default. If Seller has complied with all of the
covenants and conditions contained herein and is ready, willing and able to
convey the Property in accordance with this Agreement and Purchaser defaults in
its obligations under this Agreement, including, without limitation, failing to
consummate this Agreement and take title, then the parties hereto recognize and
agree that the damages that Seller will sustain as a result thereof will be
substantial, but difficult if not impossible to ascertain. THEREFORE, THE
PARTIES AGREE THAT, IN THE EVENT OF PURCHASER'S DEFAULT, THE DEPOSIT SHALL BE
FORFEITED TO SELLER AS LIQUIDATED DAMAGES, AND AS SELLER'S SOLE AND EXCLUSIVE
REMEDY AT LAW AND IN EQUITY, AND BOTH PARTIES SHALL BE RELIEVED OF AND RELEASED
FROM ANY FURTHER LIABILITY UNDER THIS AGREEMENT, EXCEPT FOR THE SURVIVING
COVENANTS (AS HEREINAFTER DEFINED). SELLER AND PURCHASER AGREE THAT THE EARNEST
MONEY IS A FAIR AND REASONABLE AMOUNT TO BE RETAINED BY SELLER AS AGREED AND
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 6
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LIQUIDATED DAMAGES IN LIGHT OF SELLER'S REMOVAL OF THE PROPERTY
FROM THE MARKET AND THE COSTS INCURRED BY SELLER AND SHALL NOT
CONSTITUTE A PENALTY OR FORFEITURE.
Initials:Seller_____________ Purchaser____________
3.2 Seller's Default. In the event that Purchaser has complied with all
of the covenants and conditions contained herein and is ready, willing and able
to take title to the Property in accordance with this Agreement, and Seller
defaults in its obligations under this Agreement, including, without limitation,
failing to consummate this Agreement and convey title as set forth herein, or
breaches any representations or warranties set forth herein, then Purchaser may,
as its sole remedy, either (i) terminate this Agreement and pursue recovering
all actual expenses incurred by Purchaser in connection with this Agreement,
including, without limitation, its reasonable attorney's fees, or (ii) bring an
action for specific performance of this Agreement.
3.3 Termination of Agreement in Accordance with its Terms. In the event
that this Agreement is terminated in accordance with its terms pursuant to a
right to do so as expressly provided in this Agreement (other than a termination
by Seller pursuant to Section 3.1 above), the Deposit shall be returned to
Purchaser and no other party shall have any further rights or obligations
hereunder, except for the Surviving Covenants.
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 7
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Article IV
Closing and Transfer of Title
4.1 Closing. The parties hereto agree to conduct a closing of this sale
(the "CLOSING") on or before April 9, 1999 [30 days after end of the Feasibility
Period], or on or before April 13, 1999 [15 days after the end of the Extended
Bond Financing Approval Period], if applicable, (such actual date of Closing
shall be referred to herein as the "CLOSING DATE"), in the local office of the
Title Company, or at such other place as may be agreed upon by the parties
hereto. This Agreement shall automatically terminate, subject to any Surviving
Covenants, if transfer of title is not completed by the date provided above
(unless (i) such failure to close is due solely to Seller's default, (ii) the
date for Closing is extended pursuant to any express provision hereof, or (iii)
the date for Closing is extended by agreement of the parties, which agreement
shall be confirmed in writing).
4.2 Closing Procedure. At the Closing, Seller shall execute and/or
deliver or cause to be delivered to Purchaser, or, in the case of the items
covered by clauses (e), (f), and (j) below, to be available to Purchaser at the
Property (a) a Special Warranty Deed, in the form attached hereto as Exhibit D,
proper for recording, conveying Seller's interest in the Real Property to
Purchaser, subject, however, to (i) exceptions as reported in the Title
Commitment (defined in Section 6.5 below, (ii) any and all easements, rights of
way, encumbrances, liens, covenants, restrictions, or other matters of record,
(iii) any and all matters shown on the Survey (as defined in Section 6.4
hereof), (iii) taxes not yet due and payable, (iv) the rights of lessees and
licensees of space in the
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 8
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Improvements at the time of Closing (to the extent shown on the Rent Roll
delivered at Closing or as otherwise provided under this Agreement), and (v) any
encumbrances created or permitted by the terms of this Agreement, except in each
case for title or survey matters which Purchaser objects to in writing prior to
the expiration of the Feasibility Period and which Seller expressly agrees in
writing to cure prior to Closing (collectively, the "PERMITTED EXCEPTIONS"); (b)
a bill of sale (the "BILL OF SALE") in the form attached hereto as Exhibit E,
dated as of the date of Closing conveying to Purchaser any and all Personal
Property and the Service Contracts; (c) an assignment of Leases (the "Assignment
of Leases and Security Deposits") in the form attached hereto as Exhibit F,
dated the date of Closing, assigning all of the landlord's right, title and
interest in and to all of the Leases; (d) Tenant Notification Agreements (the
"TENANT NOTICES"), dated the date of the Closing, executed by Seller, and
complying with applicable statutes in order to relieve Seller of liability for
tenant security deposits (provided the security deposits are paid to Purchaser),
notifying the tenants that the Property has been sold to Purchaser and directing
the tenants to pay rentals to Purchaser (or Purchaser's designated agent); (e)
the originals of all Leases, (f) to the extent in the possession or control of
Seller or Seller's property management company, (i) as-built plans and
specifications, surveys, site plans, engineering plans and studies, utility
plans, development plans and marketing artwork, (ii) the originals of all
guaranties and warranties relating to the Property, (iii) the originals of all
governmental licenses and permits relating to the Property, including, without
limitation, a currently effective certificate of occupancy, (iv) the originals
of all books and records of the Property, (v) all Service Contracts, and (vi)
all maintenance records; (g) an indemnification agreement (the "INDEMNIFICATION
AGREEMENT") in the form attached as Exhibit G, dated the date of Closing; (h) an
affidavit that
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 9
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Seller is not a "foreign person" in the form attached as Exhibit H; (i) a
duplicate key for all locks in the Improvements; (j) the Release Agreement; and
(k) a termite inspection report reasonably satisfactory to Purchaser dated not
more than sixty (60) days prior to the Closing Date.
In addition, if required by the Title Company, Seller shall deliver to
the Title Company a reasonable Seller's affidavit, negotiated in good faith
between Seller and the Title Company, as to matters concerning title to the
Property which can only be reasonably ascertained by the Title Company from
Seller and which are actually known to Seller "to the best of Seller's
knowledge", as that term is described in Section 10.3 hereof.
Purchaser acknowledges and agrees that, except for objections which
Seller expressly agrees to cure in accordance with Section 6.4 or in Section 6.5
hereof, Seller is under no obligation under the terms of this Agreement to clear
from title any easements, rights of way, encumbrances, liens, covenants,
restrictions, or any other matters of record or to cure any Survey objections of
Purchaser, or to create any encumbrances on, or for the benefit of, the
Property. If Seller does not deliver title at Closing pursuant to the deed in
form provided in clause 4.2(a) above and such failure is not a result of (i)
Seller's acquiescence in the placement of or failure to remove a monetary lien
(other than those pertaining to the Bond Financing or those caused by the acts
of Purchaser or its agents), or (ii) Seller's failure to pay real estate taxes
due and payable, such failure shall not constitute a breach of or default by
Seller hereunder, and notwithstanding any other provision of this Agreement,
Purchaser's sole and exclusive remedy shall be (i) to terminate this Agreement
and receive a prompt return of the Deposit, in which case neither party
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 10
<PAGE>
shall have any further obligations pursuant to this Agreement except for the
Surviving Covenants, or (ii) to accept conveyance by Seller of such title as it
delivers without reduction of the Purchase Price.
4.3 Purchaser's Performance. At the Closing, Purchaser will cause the
Purchase Price, plus or minus prorations, less the unpaid principal balance of
the Bonds, to be delivered to Seller, will execute and deliver the
Indemnification Agreement, the Assignment of Leases, the Bill of Sale, the
Release Agreement, and any other documentation as is required pursuant to
Section 4.4 hereof to evidence Purchaser's assumption of all the obligations of
the Seller under the Bond Documents (as defined in Section 4.4.1 hereof).
4.4 Bond-Related Documentation; Special Condition to Purchaser's
Obligations; Release of Seller from Bond Obligations.
4.4.1 Bond-Related Documentation. Acquisition, construction
and development of the Project was financed initially by a loan to
Seller's predecessor-in-interest (the "ORIGINAL BOND FINANCING") of the
proceeds received from the sale of those certain Tulsa County
Multi-Family Housing Revenue Bonds (Credit Enhanced Projects), Series
1985A in the original principal amount of $12,775,000 (the "ORIGINAL
BONDS") issued by the Tulsa County Home Finance Authority (the
"ISSUER"). The obligations represented by the Issuer's Original Bonds
were refunded by the Multi-Family Housing Revenue Bonds, Taxable Series
1993A (Waterford Project) in the original principal amount of
$11,355,000
AFL\WATERFRD\P&SIGMOID.005 (3-5-99) Page 11
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(the "Tax Exempt Bonds") and the Issuer's Multi-Family Housing Revenue
Bonds, Taxable Series 1993B (Waterford Project) in the original
principal amount of $400,000 (the "Taxable Bonds") (the Tax Exempt
Bonds and the Taxable Bonds are hereinafter referred to as the
"Bonds"). The current refunded bond financing (the "Bond Financing") is
evidenced by (i) a Promissory Note (Series 1993A Bonds) dated December
1, 1993 in the original principal amount of $11,355,000 from Seller to
Issuer, and (ii) a Promissory Note (Series 1993B Bonds) dated December
1, 1993 in the original principal amount of $400,000 from Seller to
Issuer which was repaid in full on December 1, 1998, (collectively, the
"Notes"), and (iii) a Loan Agreement dated as of December 1, 1993 by
and between Seller and Issuer (the "LOAN AGREEMENT"). Issuer and Bank
of Oklahoma, National Association, as trustee (the "TRUSTEE") executed
that certain Trust Indenture dated as of December 1, 1993 (the
"INDENTURE") for the purpose of authorizing and securing the Bonds,
prescribing the terms thereof and the conditions, terms, trusts, and
provisions upon which the Bonds were delivered and the proceeds thereof
expended and held. The Loan Agreement, the Indenture, that certain
Escrow Trust Agreement dated as of December 1, 1993 by and among
Issuer, Trustee and Seller, the Tax Regulatory Agreement dated as of
December 1, 1993 by and among Issuer, Trustee and Seller, and any and
all other documents and agreements evidencing, securing or otherwise
executed and delivered in connection with the Bond Financing set forth
on Exhibit N hereto are hereinafter collectively referred to herein as
the "BOND DOCUMENTS".
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4.4.2 Special Condition to Purchaser's Obligations. It shall
be a condition of Purchaser's obligations hereunder that it acquire the
Property subject to the Bond Financing. Purchaser, at its sole cost and
expense, will use its good faith efforts to obtain all necessary
consents, approvals and agreements required under the Bond Documents to
its purchase of the Property or its purchase of the Partnership
Interests (as hereinafter defined) subject to the Bond Financing, to
assume the Existing Credit Enhancement Liability (as hereinafter
defined) or obtain and provide satisfactory substitute credit
enhancement for the Bonds and to release Seller from the Existing
Credit Enhancement Liability in accordance with the Indenture
("ALTERNATE SECURITY") and to otherwise satisfy the conditions of this
Section 4.4.2 and Section 4.4.3. As used herein, "Existing Credit
Enhancement Liability" shall mean (i) the Policy of Indemnity issued by
AXA Reinsurance UK Plc ("AXA") on December 1, 1993 to the Trustee, as
insured (the "Policy"), (ii) the Reimbursement Agreement dated as of
December 1, 1993 by and between Seller and AXA, and (iii) the Mortgage,
Security Agreement, Assignment of Rents and Leases, Fixture Filing and
Financing Statement dated as of December 1, 1993 from Seller as
"Mortgagor" to Issuer and AXA, each as "Co-Mortgagee". Seller agrees to
cooperate with Purchaser to effect the obtaining of any such consents,
provided that Seller shall not be obligated to consent to (i) expend
funds, (ii) consent to, agree to or cause any amendment or agreement
with respect to the Bonds or the Bond Financing which will be effective
prior to the Closing or upon a failure to close for any reason
whatsoever, (iii) make or give any irrevocable notices or elections
with respect to the Bonds, the Bond Documents or the Bond Financing
which would be effective prior to the Closing which, in
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Seller's sole opinion, in any case, could result in any additional
liability, monetary obligation, or expense of Seller under the Bonds,
whether or not the Closing occurs, except as may be expressly provided
herein.
Purchaser shall have until the end of the Feasibility Period
(defined in Section 6.3 below) to obtain all required assurances,
consents, approvals and agreements, including those of or with the
Issuer, the trustee, bond counsel, AXA, or the provider of any
Alternate Security (which shall be unconditioned except for those
conditions which can only be satisfied at and as of the Closing)
necessary for Purchaser to (a) acquire the Property or the Partnership
Interests subject to the Bond Financing, and (b) satisfy the conditions
of Sections 4.4.2 and 4.4.3 of this Agreement (collectively, the "BOND
FINANCING APPROVALS"); provided, however, that if Purchaser is unable
to obtain the Bond Financing Approvals prior to the end of the
Feasibility Period, through no fault of Purchaser, Purchaser may
request from Seller an extension of the time period to obtain the Bond
Financing Approvals until March 29, 1999 (such period being hereinafter
referred to as the "EXTENDED BOND FINANCING APPROVAL PERIOD"), which
request must be in writing. The delivery of the request for the
Extended Bond Financing Approval Period shall constitute Purchaser's
agreement and acknowledgment of approval as to all other aspects of the
Property and of the Bond Financing and Bond Documents (with the sole
exception of being able to obtain the Bond Financing Approvals) and
shall constitute Purchaser's election not to terminate this Agreement
for any reason other than its failure to obtain the Bond Financing
Approvals prior to the expiration of the Extended Bond
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Financing Approval Period, subject to Purchaser's rights to terminate
the Agreement as set forth in Section 3.2, Section 4.2, in the last
sentence of this Section 4.4.2, Article 7 and as otherwise expressly
set forth in this Agreement. In the event that, after good faith and
diligent efforts throughout the Extended Bond Financing Approval
Period, Purchaser is still unable to obtain the Bond Financing
Approvals, either Purchaser or Seller may terminate this Agreement for
such reason and have the Deposit returned, after which neither party
shall have any further rights or duties hereunder except for the
Surviving Covenants.
The parties agree that it shall be a condition of Purchaser's
obligations hereunder that, on or prior to the Closing Date, bond
counsel retained by Purchaser shall have issued its opinion to the
effect that the transfer of the Property to Purchaser, or the
assumption of the Partnership Interests by Purchaser, and the execution
of the documents in connection therewith will not cause interest on the
Bonds to be includable in the gross income of the recipients thereof
for federal income tax purposes.
4.4.3 Release of Seller from Bond Obligations and from
Existing Credit Enhancement Liability. It is a condition to Seller's
obligations hereunder that Seller and its partners be fully and
unconditionally released at Closing for all periods from and after the
Closing Date from all obligations with regard to the Existing Credit
Enhancement Liability with respect to the Bonds, the Bond Documents,
the Issuer, the Trustee, and all other parties or circumstances with
respect to the Bond Financing, which releases shall be
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evidenced by the Release Agreement and a corresponding release of
Seller and its partners from all Developer/Owner obligations under the
Bond Documents for all periods from and after the Closing Date.
4.4.4 Fees and Costs. Purchaser hereby agrees to pay all
costs, expenses, and fees due to any third party (other than Seller's
outside counsel and Seller's bond counsel) in connection with
Purchaser's efforts to satisfy the conditions to Closing contained in
Sections 4.4.2 and 4.4.3 above. Notwithstanding any provision to the
contrary herein, Purchaser's obligations under this Section 4.4.4 shall
survive the expiration or termination of this Agreement, and shall
survive Closing.
4.4.5 No Covenants. Notwithstanding anything in this Agreement
to the contrary, the approvals, consents and releases of the
obligations of Purchaser and Seller relating to the Bonds as referred
to in Sections 4.4.2 and 4.4.3 hereof are only conditions precedent to
the Closing of the transaction contemplated hereby, and neither
Purchaser nor Seller covenant that such approvals, consents or releases
can or will be obtained. Failure to obtain such approvals, consents or
releases shall not constitute a breach by either party of this
Agreement, the sole and exclusive remedy of either party for such
failure being termination of this Agreement, subject to the Surviving
Covenants, and return to Purchaser of the Deposit.
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4.5 Evidence of Authority; Miscellaneous. Both parties will deliver to
the Title Company and each other such evidence or documents as may reasonably be
required by the Title Company or either party hereto evidencing the power and
authority of Seller and Purchaser and the due authority of, and execution and
delivery by, any person or persons who are executing any of the documents
required hereunder in connection with the sale of the Property. Both parties
will execute and deliver such other documents as are reasonably required to
effect the intent of this Agreement.
4.6 Assignment and Assumption of Partnership Interests in Seller. In
lieu of purchasing the Property as set forth herein, at Closing, Purchaser may
elect to purchase one hundred percent (100%) of the partnership interests in
Seller (the "Partnership Interests") pursuant to the Assignment and Assumption
of Partnership Interests attached hereto as Exhibit O. If Purchaser elects to
purchase the Partnership Interests, as a condition precedent to Closing, Seller
shall deliver to Purchaser evidence that Seller's partners have consented to the
assignment and assumption by Purchaser of the Partnership Interests.
Article V
Prorations of Rents, Taxes, Etc.
All revenues, taxes and other expenses of the Property shall be
prorated at Closing as of 12:01 a.m. on the Closing Date. Real estate taxes for
the year of Closing shall be prorated as of the date of Closing either using
actual tax figures or, if actual figures are not available, then using
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as a basis for said proration the most recent assessed value of the Real
Property multiplied by the current tax rate, with a subsequent cash adjustment
to be made between Purchaser and Seller outside escrow when actual tax figures
are available, but in no event later than the date which is 120 days after the
Closing Date (the "Final Settlement Date). Personal property taxes, annual
permit or inspection fees, sewer charges, and other expenses normal to the
operation and maintenance of the Property shall also be prorated as of the date
of Closing, either using actual figures or, if actual figures are not available,
then using good faith estimates, with a subsequent cash adjustment to be made
between Purchaser and Seller outside closing when actual figures are available,
but in no event later than the Final Settlement Date. Rents and other income
that have been collected for the month of the Closing will be prorated at the
Closing, effective as of 12:01 a.m. on the Closing Date. Interest on the Bonds
shall be prorated as of the Closing and an appropriate adjustment shall be made.
Seller shall receive a credit for all funds in (i) the debt service reserve
escrow account with regard to the Bonds, and (ii) the cash collateral escrow
account with regard to the Bonds. With regard to rents that are delinquent as of
the date of the Closing, (i) no proration will be made at the Closing, (ii)
Purchaser will make a good faith effort after the Closing to collect the rents
in the usual course of Purchaser's operation of the Property, and (iii)
Purchaser will apply all rents collected first to the rents owed to Purchaser
for periods after the Closing, and the excess amount, if any, collected by
Purchaser within 120 days after Closing shall be applied to the delinquent rent
owed to Seller. It is agreed, however, that Purchaser will not be obligated to
institute any lawsuit or other collection procedures to collect delinquent
rents. Rents collected by Purchaser within 120 days after the Closing Date, to
which Seller is entitled, shall be promptly paid to Seller. As of the Closing
Date, Purchaser shall be
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entitled to a credit for any tenant deposits under the Leases, together with
interest thereon to the extent any interest is required by law or otherwise to
be paid to such tenants. Final readings on all gas, water and electric meters
shall be made as of the Closing Date, if possible. If final readings are not
possible, gas, water and electricity charges will be prorated based on the most
recent period for which costs are available. Any deposits made by Seller with
utility companies shall be returned to Seller. Purchaser shall be responsible
for making all arrangements for the continuation of utility services. After the
Closing, Purchaser will assume full responsibility for all security deposits and
advance rental deposits of current tenants of the Real Property currently held
by Seller, which items will be itemized by Seller and transferred and paid over
to Purchaser at the Closing.
All items (including taxes) that are not subject to an exact
determination shall be estimated by the parties. When any item so estimated is,
after the Closing capable of exact determination, but in no event later than the
Final Settlement Date, the party in possession of the facts necessary to make
the determination shall send the other party a detailed report on the exact
determination so made and the parties shall adjust the prior estimate within
thirty (30) days after both parties have received said reports.
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Article VI
Purchaser Inspections and Contingencies
6.1 Document Inspection. Purchaser acknowledges that Seller has
delivered , to the extent in the possession of Seller for review by Purchaser,
the items or materials listed on Exhibit I attached hereto and made a part
hereof, other than the Title Commitment (as hereinafter defined), the Supporting
Documents (as hereinafter defined), and the Survey (as hereinafter defined) (
such items except for the Title Commitment, the Supporting Documents, and the
Survey are hereinafter referred to collectively as the "DUE DILIGENCE
MATERIALS"). In the event Seller obtains after the Effective Date any additional
items or materials which are included within the categories contained in Exhibit
I, copies of such items or materials shall be promptly delivered to Purchaser.
Purchaser agrees that if for any reason the Closing is not consummated,
Purchaser will immediately return to Seller any and all materials furnished to
Purchaser pursuant to this Section 6.1 or otherwise obtained by Purchaser with
respect to the Property.
Purchaser acknowledges and agrees that Seller's having delivered or
made available to Purchaser the foregoing items in accordance with this Section
6.1 constitutes a good faith undertaking only, and does not constitute a
representation or warranty on the part of Seller with respect to any of the
foregoing or with respect to the accuracy of the materials furnished to
Purchaser.
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6.2 Physical Inspection. In addition to Seller's having made available
to Purchaser the Due Diligence Materials, Purchaser acknowledges that Seller has
made the Property available to Purchaser and Purchaser has conducted, or will
during the Feasibility Period conduct, at Purchaser's risk, a Phase I
environmental audit (the "Environmental Audit") of the Property. The
Environmental Audit shall be conducted at a reasonable times so as not to
interfere with the business of tenants at the Real Property. Seller shall have
the right to designate a representative to accompany Purchaser's employees,
agents, and independent contractors on any such Environmental Audit.
Purchaser hereby agrees to pay, protect, defend, indemnify and save
Seller harmless against all liabilities, obligations, claims (including
mechanic's lien claims), damages, penalties, causes of action, judgments, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) imposed upon, incurred by or asserted against Seller involving either
bodily injury or property damage in connection with or arising out of the entry
upon the Real Property, either prior to or after execution and delivery of this
Agreement and caused by Purchaser's employees, agents or independent contractors
and the actions of such persons on the Real Property. In the event any part of
the Property is or has been damaged or excavated by Purchaser, its employees,
agents or independent contractors, Purchaser agrees in the event its purchase
hereunder is not consummated, to make such additional payments to Seller as may
be reasonably required to return the Property to its condition immediately prior
to such damage or excavation or, at Seller's option, to cause such work to be
done. Notwithstanding any provision
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to the contrary herein, Purchaser's obligations under this subparagraph shall
survive the expiration or termination of this Agreement, and shall survive
Closing.
6.3 Feasibility Period. Purchaser shall have the period from February
22, 1999 until 5:00 p.m. E.S.T. on March 8, 1999 (the "FEASIBILITY PERIOD") to
conduct its inspection of the Due Diligence Materials. On or before the last day
of the Feasibility Period, Purchaser may, in its sole discretion without
obligation to specify which aspect of its inspection was unsatisfactory,
terminate this Agreement by delivering a written notice to Seller so providing.
Upon receipt of such notice, this Agreement shall terminate and Seller shall
instruct the Title Company to return the Deposit to Purchaser, and neither party
shall have any obligation to the other, except for the Surviving Covenants. If
Purchaser fails to deliver such notice of termination on or before the last day
of the Feasibility Period, (a) Purchaser shall be deemed to have approved the
Due Diligence Materials, (b) this Agreement shall remain in full force and
effect, and (c) the Deposit shall become non-refundable, subject only to
Purchaser's right to terminate this Agreement as provided in this Agreement.
6.4 Survey Contingency. Purchaser shall have until 5:00 p.m.E.S.T. on
the later of (i) the last day of the Feasibility Period, or (ii) ten (10) days
after receipt of the Survey to terminate this Agreement due to any objection to
the Survey (as defined on Exhibit I) or any information reflected thereon. The
Survey and all information reflected thereon shall be deemed approved in all
respects if Seller has not received written notice of Purchaser's termination
before such date. If Purchaser does terminate this Agreement in writing
delivered prior to the expiration of the
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Feasibility Period, Seller shall instruct the Title Company to return the
Deposit to Purchaser, and neither party shall have any further obligations
hereunder, except for the Surviving Covenants.
6.5 Title Contingency. It shall be a condition to Purchaser's
obligation to close hereunder that the Title Company issue at Closing an ALTA
Form B (1970) Owner's Title Insurance Policy (or an equivalent form for
Oklahoma) (or a marked-up commitment therefor) insuring fee simple title to the
Real Property in Purchaser in the amount of the Purchase Price subject only to
the Permitted Exceptions (the "TITLE POLICY"), containing an extended coverage
endorsement over the so-called general or standard exceptions which are a part
of the printed form of the policy (unless the same are deleted), an endorsement
deleting any creditors' rights exceptions or exclusions (if any appear in the
form of policy to be issued), an owner's comprehensive endorsement, an ACTA Form
3.1 zoning endorsement, an ACTA Form 9 comprehensive endorsement, an ACTA Form
8.1 environmental endorsement, a survey/location endorsement, an access (to
publicly dedicated street) endorsement, a contiguity (if more than one parcel)
endorsement, and a tax parcel endorsement (collectively, the "Title
Endorsements"). Accordingly, Purchaser has obtained, or shall, during the
Feasibility Period, obtain a commitment for the Title Policy (the "TITLE
COMMITMENT"), issued by the Title Company in the amount of the Purchase Price,
together with copies of all items and documents referred to in the Title
Commitment (the "SUPPORTING DOCUMENTATION").
Purchaser shall have until 5:00 p.m. E.S.T. on the later of (i) the
last day of the Feasibility Period, or (ii) ten (10) days after receipt of the
Title Commitment to terminate this Agreement
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due to any objections to the Title Commitment or any information reflected
thereon. The Title Commitment, the Supporting Documentation and all information
reflected thereon shall be deemed approved in all respects if Seller has not
received written notice of Purchaser's termination of this Agreement before such
date. Notwithstanding the foregoing, provided that Purchaser notifies Seller
specifically in writing on or before the last day of the Feasibility Period as
to the existence of any Removable Liens (defined below), Seller shall cause the
Title Company to remove (with proceeds of the Purchase Price, unless otherwise
provided by Seller) from the Owner's Title Policy all monetary liens and
encumbrances affecting the Property, other than liens associated with the Bond
Financing and liens for current taxes not yet due and payable ("REMOVABLE
LIENS"). If Purchaser does terminate this Agreement in writing delivered prior
to the expiration of the Feasibility Period, then Seller shall instruct the
Title Company to return the Deposit to Purchaser, and neither party shall have
any further obligations hereunder, except for the Surviving Covenants.
Article VII
Loss due to Casualty or Condemnation
7.1 Loss due to Condemnation. In the event of a condemnation of all or
a Substantial Portion (hereinafter defined) of the Real Property which
condemnation shall or would render a Substantial Portion of the Real Property
untenantable, or if any portion of the building or
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substantial parking area is taken, or if the existing access to the Property is
materially altered or restricted in any way, Purchaser may, upon written notice
to Seller given within ten (10) Business Days (as hereinafter defined) of
receipt of notice of such event, terminate this Agreement, in which event Seller
shall instruct the Title Company to return the Deposit to Purchaser, this
Agreement shall terminate and neither party shall have any rights or obligations
hereunder, except for the Surviving Covenants. In the event that Purchaser
elects not to terminate, or if the condemnation affects less than a Substantial
Portion or does not affect the building or substantial parking area, then this
Agreement shall remain in full force and effect, and Seller shall be entitled to
all monies received or collected by reason of such condemnation prior to
Closing. In such event, the transaction hereby contemplated shall close in
accordance with the terms and conditions of this Agreement except that there
will be an abatement of the Purchase Price equal to the amount of the net
proceeds (less costs and attorneys fees), which are received by Seller by reason
of such condemnation prior to Closing. If the condemnation proceeding shall not
have been concluded and no condemnation proceeds have been paid to or for the
benefit of Seller prior to the Closing, then there shall be no abatement of the
Purchase Price and Seller shall assign any interest it has in the pending award
to Purchaser. For purposes of this Section 7.1, a Substantial Portion shall mean
a condemnation of in excess of $100,000 in value of the Real Property.
7.2 Loss due to Casualty. In the event of Substantial Loss or Damage
(hereinafter defined) to the Real Property by fire or other casualty (not
resulting from acts of Purchaser or its agents), Purchaser may, upon written
notice to Seller given within ten (10) Business Days of receipt of notice of
such event, terminate this Agreement in which event Seller shall instruct the
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Title Company to return the Deposit to Purchaser and this Agreement shall
terminate and neither party shall have any rights or obligations hereunder,
except for the Surviving Covenants. In the event that Purchaser elects not to
terminate, or if the casualty results in less than Substantial Loss or Damage,
then this Agreement shall remain in full force and effect and Seller shall be
entitled to all insurance proceeds received or collected by reason of such
damage or loss, whereupon the transaction hereby contemplated shall close in
accordance with the terms and conditions of this Agreement except that there
will be abatement of the Purchase Price equal to the amount of the net proceeds
plus all deductible amounts under any applicable casualty insurance of Seller
less costs and attorney's fees, which are received by Seller as a result of such
damage or loss, provided that such abatement will be reduced by the amount
expended by Seller in accordance with Article VIII hereof for restoration or
preservation of the Property following the casualty. Alternatively, Purchaser
may, in its discretion, have Seller repair or replace the damaged Property, and
there shall be no abatement of the Purchase Price in such case. However,
Purchaser shall not be entitled to require Seller to effect repair or
replacement unless the loss is entirely covered by insurance (except for any
applicable deductible), Seller is not restricted from using such proceeds for
repairs or restoration by the terms of any existing mortgage or the Bond
Documents, and the repair or replacement will take no more than three (3) months
to complete. For purposes of this Section 7.2, "SUBSTANTIAL LOSS OR DAMAGE"
shall mean loss or damage, the cost for repair of which exceeds $100,000.
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Article VIII
Seller's Operation and Maintenance of the Property Prior to Closing
Between the Effective Date of this Agreement and the earlier of (i) the
Closing Date, or (ii) the termination of this Agreement, Seller shall maintain
the Property in good repair, reasonable wear and tear excepted, shall perform
all work required to be done under the terms of any lease or agreement relating
to the Property, and shall timely make all repairs, maintenance and replacements
of equipment or improvements, the same as though Seller were retaining the
Property; except that in the event of a fire or other casualty, damage or loss,
Seller shall have no duty to repair said damage, except as set forth in Section
7.2 above. However, Seller may repair any such damage with Purchaser's prior,
written approval and may, without Purchaser's approval, repair damage where such
repair is necessary in Seller's reasonable opinion to preserve and protect the
health and safety of tenants of the Property or to preserve the Property from
imminent risk of further damage or if required to do so by Seller's insurance
carrier. Any such emergency repairs shall be reported to Purchaser within 48
hours of their completion. During the period prior to Closing and after the last
day of the Feasibility Period, Seller shall not lease any portion of the Real
Property except in the ordinary course of business.
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Article IX
Broker
Purchaser and Seller represent to each other that they have dealt with
no agent or broker who in any way has participated in the sale of the Property,
except for Case & Associates Properties, Inc. ("Case") and CB Richard Ellis
("CB") (collectively, the "BROKERS"). The brokerage fee of one-half percent
(.5%) of the Purchase Price owed to Case and the brokerage fees of one and
one-quarter percent (1.25%) owed to CB will be paid by Seller at Closing. Each
party will indemnify the other for any and all brokerage fees and commissions of
any brokers based on dealings with them other than as provided above.
Article X
Representations and Warranties
10.1 Limitations on Representations and Warranties. Purchaser hereby
agrees and acknowledges that, except as set forth in Section 10.2 below, neither
Seller nor any agent, attorney, employee or representative of Seller has made
any representation whatsoever regarding the subject matter of this sale, or any
part thereof, including (without limiting the generality of the foregoing)
representations as to the physical nature or condition of the Property or the
capabilities thereof, and that Purchaser, in executing, delivering and/or
performing this Agreement, does not rely upon any statement and/or information
to whomever made or given, directly or indirectly, orally or in writing, by any
individual, firm or corporation. Purchaser agrees to take the Real
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Property and the Personal Property "as is," as of the Effective Date,
reasonable wear and tear excepted. EXCEPT AND ONLY TO THE EXTENT AS MAY BE
EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES AS TO THE PHYSICAL CONDITION OF THE PROPERTY OR THE SUITABILITY
THEREOF FOR ANY PURPOSE FOR WHICH PURCHASER MAY DESIRE TO USE IT. SELLER HEREBY
EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A
PARTICULAR PURPOSE AND ANY OTHER WARRANTIES OR REPRESENTATIONS AS TO THE
PHYSICAL CONDITION OF THE PROPERTY. PURCHASER, BY ACCEPTANCE OF THE DEED, AGREES
THAT IT HAS INSPECTED THE PROPERTY AND ACCEPTS SAME "AS-IS" AND "WITH ALL
FAULTS" AND THIS PROVISION SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED.
Purchaser understands that Seller makes no representation and warranty
with regard to any financial statements and data, including, without limitation,
gross rental income, operating expenses and cash flow statements relating to the
Property as all such financial data and statements have been prepared by the
property manager, Case and Associates, which is an affiliate of Purchaser.
10.2 Representations and Warranties of Seller. Seller makes the
following representations and warranties and agrees that Purchaser's obligations
under this Agreement are
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conditioned upon the truth and accuracy of such representations and warranties,
both as of this date and as of the Closing Date:
Except as may be disclosed in the Due Diligence Materials,
(a) To the best of Seller's knowledge, Seller has received no
notice of any existing, pending or threatened litigation,
administrative proceeding or condemnation or sale in lieu thereof, with
respect to any portion of the Real Property, except as noted on Exhibit
J attached hereto.
(b) To the best of Seller's knowledge, Seller has received no
notice from any governmental authority pertaining to the Real Property.
(c) Except for those tenants and licensees in possession of
the Real Property under written Leases as shown in the Rent Roll (as
the same may be updated before Closing), to the best of Seller's
knowledge, there are no parties in possession of, or, to the best of
Seller's knowledge, claiming any possession to, any portion of the Real
Property as lessees, tenants at sufferance, licensees, trespassers or
otherwise.
(d) Seller has delivered to Purchaser a true, complete and
correct copy of Seller's partnership agreement.
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(e) There are no attachments or executions affecting the
Property, general assignments for the benefit of creditors, or
voluntary or involuntary proceedings in bankruptcy, pending or, to the
best of Seller's knowledge, threatened against Seller.
(f) Except as otherwise disclosed in the Environmental Audit
and except for normal and customary use of Hazardous Materials (as
hereinafter defined) in the use and operation of the Property in the
ordinary course of business, during the period of Seller's ownership of
the Property, (i) Seller has not itself, and to the best of Seller's
knowledge, no prior owner or current or prior tenant or other occupant
of all or any part of the Property at any time has, used Hazardous
Materials on, from, or affecting the Property in any manner that
violates any Environmental Laws (as hereinafter defined), and (ii) to
the best of Seller's knowledge, no Hazardous Materials have been
disposed of in, on or under the Property. "HAZARDOUS MATERIALS" shall
mean and include those elements, materials, compounds, mixtures, wastes
or substances which are contained in any list of hazardous substances
adopted by the United States Environmental Protection Agency (the
"EPA") or any list of toxic pollutants designated by Congress or the
EPA or which are defined as hazardous, toxic, pollutant, infectious,
flammable or radioactive by any of the Environmental Laws and, whether
or not included in such lists, shall be deemed to include all products
or substances containing lead, petroleum, asbestos, and polychlorinated
biphenyls.
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"ENVIRONMENTAL LAWS" shall mean and include any Federal, State,
or local statute, law, ordinance, code, rule, regulation, order, or
decree regulating or relating to protection of human health or the
environment, or regulating or imposing liability or standards of
conduct concerning the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of any
hazardous, toxic, or dangerous waste, substance, element, compound,
mixture or material, as now or at any time hereafter in effect
including, without limitation, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.ss.9601 et seq., the Superfund Amendments and Reauthorization Act,
42 U.S.C. ss.ss.9601 et. seq., the Federal Oil Pollution Act of 1990,
ss.ss.2701, et. seq., the Federal Toxic Substances Control Act, 15
U.S.C. ss.ss.2601 et. seq., the Federal Resource Conservation and
Recovery Act as amended, 42 U.S.C. ss.ss.6901 et. seq., the Federal
Hazardous Materials Transportation Act, 49 U.S.C. ss.ss.1801 et. seq.,
the Federal Clean Air Act 42 U.S.C. ss.7401 et. seq., the Federal
Water Pollution Control Act, 33 U.S.C. ss.1251 et. seq., the River and
Harbors Act of 1899, 33 U.S.C. ss.ss.401 et. seq., all rules and
regulations of the EPA, or any other state or federal department,
board, or agency, or any other agency or governmental board or entity
having jurisdiction over the Security, as any of the foregoing have
been, or are hereafter amended.
(g) Seller has all requisite partnership power and authority
to enter into this Agreement and convey the Property or the Partnership
Interests, as applicable, to Purchaser and to execute and deliver all
agreements and documents in connection
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therewith as are contemplated by this Agreement in accordance with and
subject to the terms and conditions of this Agreement. Neither the
delivery of this Agreement nor its performance by Seller, subject to
obtaining the Bond Consents, will conflict with or result in the breach
of any contract, agreement, law, rule, regulation, judgment or lien to
which Seller is a party or by which Seller is bound.
(h) This Agreement and its performance by Seller have been
duly authorized by all necessary partnership action under Seller's
partnership agreement.
10.3 Seller's Knowledge. Whenever the term "to the best of Seller's
knowledge" is used in this Agreement or in any representations and warranties
given to Purchaser at Closing, such knowledge shall be the actual knowledge of
John D. Carey (the "Key Personnel") who is President of CIGNA Realty Resources,
Inc. - Fifth, the sole general partner of Connecticut General Realty Investors
III Limited Partnership ("CGRI III"), the managing partner of Seller, after
review of the files of Seller (to the extent within the possession or control of
CGRI III), and inquiry of Seller's property manager. Seller shall have no duty
to conduct any further inquiry in making any such representations and
warranties, and no knowledge of any other person shall be imputed to Seller or
to the Key Personnel.
10.4 Representations and Warranties of Purchaser. Purchaser makes
the following representations and warranties and agrees that Seller's
obligations under this Agreement are
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conditioned upon the truth and accuracy of such representations and warranties,
both as of this date and as of the Closing Date:
(a) Purchaser has all requisite power and authority to enter
into this Agreement and purchase the Property or the Partnership
Interests, as applicable, from Seller and to execute and deliver all
agreements and documents in connection therewith as are contemplated by
this Agreement in accordance with and subject to the terms and
conditions of this Agreement. Neither the execution and delivery of
this Agreement nor its performance by Purchaser will conflict with or
result in the breach of any contract, agreement, law, rule or
regulation to which Purchaser is a party or by which Purchaser is
bound; and
(b) This Agreement has been duly authorized by all necessary
action on the part of Purchaser.
10.5 Survival. All representations and warranties contained in Section
10.2 will survive the Closing of this transaction (but only as to the status of
facts as they exist as of the Closing, it being understood that Seller makes no
representations or warranties which would apply to changes or other matters
occurring after the Closing), but shall expire on the date one (1) year from the
date of Closing, and no action on such representations and warranties may be
commenced after such expiration.
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Article XI
Liability of Seller
Except for any liability of Seller under the provisions of Article X,
neither Seller, nor any partner of Seller, nor any independent property manager
which Seller has hired to manage the Property shall, by entering into this
Agreement, become liable for any costs or expenses incurred by Purchaser
subsequent to the date of Closing, (a) for any labor performed on, or materials
furnished to, the Real Property on or after the Closing Date, or (b) for any
leasing commissions or other fees or commissions due for renewals or extensions
of existing leases or otherwise renewed or extended after the Closing Date
(unless the existence of such commissions or fees was not disclosed to Purchaser
in this Agreement or in the Due Diligence Materials or otherwise, (c) for
compliance with any laws, requirements or regulations of, or taxes, assessments
or other charges thereafter due to, any governmental authority and related to
events first occurring on or after the Closing Date, or (d) under the Bond
Documents and relating to obligations thereunder related to periods on and after
the Closing Date, or (e) for any other charges or expenses whatsoever pertaining
to the Property or to the ownership, title, possession, use, or occupancy of the
Property, whether or not such costs and expenses were incurred pursuant to
obligations of Purchaser under this Agreement (including, without limitation,
any costs of compliance with presently-existing and future environmental laws,
any environmental remediation costs, and any costs of, or awards of damages for,
damage to the environment, to natural resources, or to any third party), it
being the intent of this Agreement\, as between Purchaser and Seller, to shift
all such liability to Purchaser for liabilities which arise from or relate to an
event first occurring from
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and after the Closing Date, except for any liability of Seller under the
provisions of Article X hereof, and Purchaser hereby agrees to defend, indemnify
and hold Seller and its property manager harmless from any such liability for
costs and expenses. The provisions of this Article XI shall survive Closing.
Except as may be specifically limited herein, nothing contained in this Article
XI is in any way intended to limit any rights of the parties hereto to pursue
any remedies as may exist at law or in equity against any unrelated third
parties with respect to the liabilities covered by this Article XI.
Article XII
Assignment
This Agreement is solely for the benefit of Seller and Purchaser and
there are no third-party beneficiaries hereof. Neither this Agreement nor any
interest hereunder shall be assigned or transferred by Seller or Purchaser,
except as expressly provided herein. Notwithstanding the foregoing to the
contrary, Purchaser shall have the right to assign all of its rights and
interests in this Agreement at or prior to Closing to an entity which has an
affiliate of Purchaser as its general partner or managing member, as applicable
(the "Permitted Assignee"). Any such permitted assignment shall be effectuated
only by Purchaser signing and causing the Permitted Assignee to sign and deliver
to Seller at or prior to the Closing Date, an assignment, assumption and
amendment agreement in the form attached hereto as Exhibit K. In the event that
this Agreement shall be assigned by Purchaser in accordance with this Article
XII, all of the exhibits and attachments attached hereto shall be deemed revised
to reference the Permitted Assignee as the
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transferee of the Property and such documents shall be executed by such
Permitted Assignee for the purposes of Closing as if Permitted Assignee had been
originally contemplated thereby. Any assignment of this Agreement in violation
of the foregoing provisions shall be null and void.
As used herein, an entity shall be deemed to be an "affiliate" of
Purchaser if such entity is either controlled by, under common control with or
controls Purchaser.
As used herein, the term "control" and "controlled by" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity whether through the
ownership of voting securities, by contract, or otherwise.
Article XIII
Notices
All notices hereunder or required by law shall be sent via United
States Mail, postage prepaid, certified or registered mail, return receipt
requested, via facsimile transmission (with a copy sent by United States Mail),
or via any nationally recognized commercial overnight carrier with provisions
for receipt, addressed to the parties hereto at their respective addresses set
forth below or as they have theretofore specified by written notice delivered in
accordance herewith:
PURCHASER: Case Ventures, Inc.
4200 East Skelly Drive
Suite 800
Tulsa, OK 74135-3237
Attn: Mike D. Case
Facsimile: 918.492.4446
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with a copy to: Riggs, Abney, Neal, Turpen, Orbison & Lewis, P.C.
Frisco Building
502 West Sixth Street
Tulsa, OK 74119-1010
Attn: Gary Neal, Esq.
Facsimile: 918.587.2150
SELLER: Waterford Partnership
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2311
Attn: Real Estate Investment Department
Asset Management, S-311
Mr. John D. Carey
Facsimile: (860) 726-6327
with a copy to: CIGNA Corporation
900 Cottage Grove Road
Hartford, CT 06152-2215
Attn: Investment Law, S-215A
Andrea F. Levy, Esq.
Facsimile: (860) 726-8446
Delivery will be deemed complete upon actual receipt or refusal to accept
delivery.
Article XIV
Expenses
Seller shall pay its own attorney's fees (including, without
limitation, the fees of its bond counsel). Seller shall also pay (i) the title
insurance premiums for the Title Policy (including the cost for extended
coverage, ALTA or otherwise), (ii) the costs of the Survey, (iii) the brokerage
fees described in Article IX hereof, and (iv) the costs of the termite
certificate described in
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Section 4.2. Purchaser shall pay (i) all recording costs, (ii) all fees, costs,
and expenses incurred by Purchaser in the conduct and completion of its due
diligence review, and with respect to the Bonds, the Bond Financing, and any
consents, amendments, opinions or other documentation required in connection
with the satisfaction by Purchaser of the conditions of Sections 4.4.2 and 4.4.3
hereof and its covenants hereunder, including without limitation, the fees of
the Issuer, the Trustee, and their respective counsel (but not Seller's
counsel), (iii) the cost of the Title Endorsements, (iv) any applicable sales
tax on the transfer of personal property, (v) all revenue stamps and filing
fees, and (vi) any other costs customarily paid by purchasers in Tulsa,
Oklahoma. The cost of all closing escrow fees shall be divided equally between
Seller and Purchaser.
Article XV
Miscellaneous
15.1 Successors and Assigns. All the terms and conditions of this
Agreement are hereby made binding upon the executors, heirs, administrators,
successors and permitted assigns of both parties hereto.
15.2 Gender. Words of any gender used in this Agreement shall be held
and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
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15.3 Captions. The captions in this Agreement are inserted only for the
purpose of convenient reference and in no way define, limit or prescribe the
scope or intent of this Agreement or any part hereof.
15.4 Construction. No provision of this Agreement shall be construed by
any Court or other judicial authority against any party hereto by reason of such
party's being deemed to have drafted or structured such provisions.
15.5 Entire Agreement. This Agreement constitutes the entire contract
between the parties hereto and there are no other oral or written promises,
conditions, representations, understandings or terms of any kind as conditions
or inducements to the execution hereof and none have been relied upon by either
party. This agreement supersedes any and all communications, writings and
agreements between Purchaser and Seller with respect to the Property, including
without limitation, that certain Letter Agreement dated February 9, 1999 and
executed by Purchaser on February 11, 1999, as the same may have been amended in
writing from time to time which shall be of no further force and effect after
the Effective Date.
15.6 Recording. The parties agree that this Agreement shall not be
recorded. If Purchaser causes this Agreement or any notice or memorandum thereof
to be recorded, this Agreement shall be null and void at the option of the
Seller.
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15.7 No Continuance. Purchaser acknowledges that there shall be no
assignment, transfer or continuance of any of Seller's insurance coverage or of
the property management contract.
15.8 Time of Essence. Time is of the essence in this transaction.
15.9 Counterparts. This Agreement may be executed in any number of
identical counterparts, any or all of which may contain the signatures of fewer
than all of the parties but all of which shall be taken together as a single
instrument.
15.10 Governing Law. This Agreement shall be construed, and the rights
and obligations of Seller and Purchaser hereunder, shall be determined in
accordance with the laws of the State of Oklahoma.
15.11 Acceptance of Offer. This Agreement constitutes Seller's offer to
sell to Purchaser on the terms set forth herein and must be accepted by
Purchaser by signing three (3) copies hereof and forwarding all three (3) copies
to the Title Company along with the Deposit in accordance with Article II hereof
no later than 5:00 p.m. EST on March 9, 1999. If Purchaser has not accepted this
Agreement by such date, then this Agreement and the offer represented hereby
shall automatically be revoked and shall be of no further force or effect.
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15.12 Confidentiality. Except to the extent disclosure is required by
law, Purchaser and Seller agree that all documents and information concerning
the Property delivered to Purchaser, the subject matter of this Agreement, the
result of Purchaser's inspection and all negotiations will remain confidential.
Purchaser and Seller will disclose such information only to those parties
required to know it, including, without limitation, employees of either of the
parties, consultants and attorneys engaged by either of the parties, and
prospective or existing investors and lenders.
15.13 Surviving Covenants. Notwithstanding any provisions hereof to the
contrary, the provisions of Section 4.4.4 hereof, the second paragraph of
Section 6.2 hereof, the provisions of Article IX hereof, the provisions of
Section 15.12 (Confidentiality) hereof and any other provision which expressly
states by its terms that it shall survive Closing or the termination or
expiration of this Agreement (collectively, the "SURVIVING COVENANTS") shall
survive the Closing and any termination or expiration of this Agreement. In
addition, the provisions of Article X shall survive the Closing to the extent
provided herein.
15.14 Real Estate Reporting Person. Seller and Purchaser hereby
designate Title Company as the Real Estate Reporting Person for purposes of
Section 6045 of the Internal Revenue Code, and Title Company, by its execution
below, hereby accepts such appointment.
15.15 Independent Contract Consideration. Purchaser tenders to Seller
and Seller acknowledges receipt of the sum of One Hundred Dollars ($100.00) as
independent and non-refundable contract consideration (the "INDEPENDENT
CONSIDERATION") for any options granted in
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this Agreement. The Independent Consideration is in addition to any other
deposits made under this Agreement; provided, if this Agreement closes,
Purchaser will receive a credit against the Purchase Price in the amount of the
Independent Consideration.
15.16 Exclusive Period. Seller agrees that from the Effective Date of
this Agreement until the Closing or any earlier termination of this Agreement
for any reason, Seller shall not offer the Property (or any interest therein)
for sale or lease to any other party or negotiate, solicit or entertain any
offers to purchase or lease the Property (or any interest therein).
15.17 Approval. Seller's obligation to perform its duties hereunder is
contingent upon approval by all required boards and committees in accordance
with standard policies and procedures of Seller. Seller will seek such approvals
during the period commencing on the Effective Date hereof to and including March
16, 1999, and will notify Purchaser promptly of the decision of such boards and
committees. If the transaction is not approved, then Seller may terminate this
Agreement by giving notice thereof to Purchaser, whereupon the Deposit shall be
returned to Purchaser, and neither party shall have any further rights or duties
hereunder except for the Surviving Covenants.
15.18 Business Day(s). As used in this Agreement, the term "Business
Day(s)" shall mean any day other than a Saturday or Sunday or day that
commercial banks are closed for business in the State of Oklahoma or the State
of Connecticut.
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EXECUTED BY PURCHASER this 8th day of March, 1999.
PURCHASER:
CASE VENTURES, INC., an Oklahoma corporation
By: /s/ Ben Abney
Name: Ben Abney
Its: Vice President
EXECUTED BY SELLER this _____ day of March, 1999.
SELLER:
WATERFORD PARTNERSHIP, a Connecticut general
partnership
By: Connecticut General Realty Investors III Limited
Partnership, a Connecticut limited partnership, its
managing general partner
By: CIGNA Realty Resources, Inc. - Fifth, a
Delaware corporation, its sole general
partner
By: /s/ John D. Carey
John D. Carey
President
Receipt of original copies of this Agreement executed by Seller and Purchaser is
acknowledged this 8th day of March, 1999.
TITLE COMPANY:
FRISCO TITLE CORPORATION
By: /s/ M. Jean Little
Name: M. Jean Little
Title: Executive Vice President
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