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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14466
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1115374
(State of Organization) (I.R.S. Employer Identification No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (860) 726-6000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
1
<PAGE>
Part I - Financial Information
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Balance Sheets
<CAPTION>
June 30, December 31,
1999 1998
Assets (Unaudited) (Audited)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 784,121 $ 3,009,898
Buildings 5,208,937 16,661,970
Furniture and fixtures 895,101 1,462,984
-------------- --------------
6,888,159 21,134,852
Less accumulated depreciation 3,297,173 8,693,273
-------------- --------------
Net property and improvements 3,590,986 12,441,579
Cash and cash equivalents 442,545 739,751
Accounts receivable (net of allowance of $9,052
in 1999 and $8,956 in 1998) 10,414 7,185
Escrow deposits 7,144 143,422
Prepaid insurance 2,774 --
Other asset 8,348 1,000
Deferred charges, net 18,499 776,542
Escrowed debt service funds -- 506,660
-------------- --------------
Total $ 4,080,710 $ 14,616,139
============== ==============
Liabilities and Partners' Capital (Deficit)
Liabilities:
Notes and mortgages payable $ 3,855,635 $ 15,249,984
Accounts payable and accrued expenses (including $19,004
in 1999 and $18,906 in 1998 due to affiliates) 95,122 241,892
Tenant security deposits 42,529 82,092
Unearned income 4,285 26,611
-------------- --------------
Total liabilities 3,997,571 15,600,579
-------------- --------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 34,142 27,513
Cumulative cash distributions (37,268) (33,751)
-------------- --------------
(2,126) (5,238)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (9,924,492) (14,950,756)
Cumulative cash distributions (12,398,295) (8,436,498)
-------------- --------------
85,265 (979,202)
--------------- --------------
Total partners' capital (deficit) 83,139 (984,440)
--------------- --------------
Total $ 4,080,710 $ 14,616,139
============== ==============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
2
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income $ 385,589 $ 818,434 $ 1,203,549 $ 1,594,208
Other income 10,144 17,153 32,133 30,407
Interest income 21,851 19,474 38,133 35,736
-------------- ------------- -------------- -------------
417,584 855,061 1,273,815 1,660,351
-------------- ------------- -------------- -------------
Expenses:
Property operating expenses 143,386 237,110 361,990 455,391
General and administrative 117,840 133,888 226,779 242,520
Fees and reimbursements to affiliates 12,678 29,385 46,178 55,514
Interest expense 99,315 232,451 328,959 465,600
Depreciation and amortization 59,674 196,344 119,446 391,965
-------------- ------------- -------------- -------------
432,893 829,178 1,083,352 1,610,990
-------------- ------------- -------------- -------------
Income (loss) operations (15,309) 25,883 190,463 49,361
Gain on sale of property 4,842,430 -- 4,842,430 --
--------------- ------------- -------------- -------------
Net income $ 4,827,121 $ 25,883 $ 5,032,893 $ 49,361
============== ============= ============== =============
Net income:
General Partner $ 4,571 $ 259 $ 6,629 $ 494
Limited partners 4,822,550 25,624 5,026,264 48,867
-------------- ------------- -------------- -------------
$ 4,827,121 $ 25,883 $ 5,032,893 $ 49,361
============== ============= ============== =============
Net income per Unit $ 194.02 $ 1.03 $ 202.22 $ 1.97
============== ============= ============== =============
Cash distribution per Unit $ 153.24 $ 5.25 $ 159.39 $ 10.95
============== ============= ============== =============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,032,893 $ 49,361
Adjustment to reconcile net income to net cash
provided by operating activities:
Gain on sale of property (4,842,430) --
Depreciation and amortization 119,446 391,965
Accounts receivable (3,229) 4,564
Accounts payable and accrued expenses (146,770) (76,305)
Escrow deposits 136,278 66,074
Other, net (72,011) 50
--------------- ---------------
Net cash provided by operating activities 224,177 435,709
--------------- ---------------
Cash flows from investing activities:
Proceeds from sale of property 14,675,000 --
Payment of closing costs related to sale of property (286,215) --
Purchase of property and improvements (57,165) (70,793)
--------------- ---------------
Net cash provided by (used in) investing activities 14,331,620 (70,793)
--------------- ---------------
Cash flows from financing activities:
Proceeds from escrowed debt service funds 506,660 --
Distribution to limited partners (3,961,797) (272,173)
Distribution to General Partner (3,517) (2,749)
Repayment of notes and mortgage loans (11,394,349) (106,333)
--------------- ---------------
Net cash used in financing activities (14,853,003) (381,255)
--------------- ---------------
Net decrease in cash and cash equivalents (297,206) (16,339)
Cash and cash equivalents, beginning of year 739,751 682,614
--------------- ---------------
Cash and cash equivalents, end of period $ 442,545 $ 666,275
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 328,959 $ 465,600
=============== ===============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
4
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements
(Unaudited)
Readers of this quarterly report should refer to CONNECTICUT GENERAL REALTY
INVESTORS III LIMITED PARTNERSHIP'S (the "Partnership") audited financial
statements for the year ended December 31, 1998 which are included in the
Partnership's 1998 Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited financial statements
have been omitted from this report.
1. Summary of Significant Accounting Policies
a) Basis of Presentation: The financial statements have been prepared in
conformity with generally accepted accounting principles, and reflect
management's estimates and assumptions that affect the reported amounts. It
is the opinion of management that the financial statements presented
reflect all the adjustments necessary for a fair presentation of the
financial condition and results of operations. All such adjustments are of
a normal recurring nature.
b) Cash and Cash Equivalents: Short term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.
2. Deferred Charges
<TABLE>
Deferred charges consist of the following:
<CAPTION>
June 30, December 31,
1999 1998
<S> <C> <C>
Surety fee - Waterford Apartments mortgage note $ -- $ 963,910
Costs of obtaining financing 143,660 660,522
--------------- ---------------
143,660 1,624,432
Accumulated amortization (125,161) (847,890)
--------------- ---------------
$ 18,499 $ 776,542
=============== ===============
</TABLE>
3. Transactions with Affiliates
<TABLE>
Fees and expenses related to the General Partner or its affiliates are as
follows:
<CAPTION>
Three Months Ended Six Months Ended Unpaid at
June 30, June 30, June 30,
-------- -------- --------
1999 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Property management fees (a) $ 595 $ 5,172 $ 5,732 $ 10,029 $ --
Partnership management fees -- 12,515 19,517 25,551 --
Reimbursement (at cost) for
out-of-pocket expenses 12,083 11,698 20,929 19,934 19,004
------------ ------------- ----------- ----------- -----------
$ 12,678 $ 29,385 $ 46,178 $ 55,514 $ 19,004
============ ============= =========== =========== ===========
</TABLE>
5
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements (Continued)
(Unaudited)
(a) Does not include on-site property management fees earned by independent
property management companies of $16,000 and $36,334 for the three months
ended June 30, 1999 and 1998, respectively, and $52,190 and $70,703 for the
six months ended June 30, 1999 and 1998, respectively. On-site property
management services have been contracted by an affiliate of the General
Partner on behalf of the Partnership and are paid directly by the
Partnership to the third party companies.
4. Sale of Property
On April 14, 1999, the Partnership completed the sale of its investment in
the Waterford Apartments to Case Ventures, Inc., an Oklahoma Corporation for a
gross sales price of $14,675,000. The purchaser assumed the bond financing of
$11,355,000 as part of the sale. The property had a depreciated cost of
$9,546,354 as of the date of sale. After deducting closing costs, the
Partnership recorded a gain of $4,842,430.
5. Subsequent Event
On August 13, 1999, the Partnership paid a distribution of $125,274 to the
limited partners.
6
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Except for historical information provided in this Management's Discussion
and Analysis, statements made in this document are forward-looking and contain
information about financial results, economic conditions, trends, and known
uncertainties. The Partnership cautions the reader that actual results could
differ materially from those expected by the Partnership.
Liquidity and Capital Resources
At June 30, 1999, the Partnership had $442,545 in cash and cash equivalents
which was available for working capital requirements, cash distributions, and
the Partnership's cash reserves. For the three and six months ended June 30,
1999, the Partnership generated $199,000 of adjusted cash from operations after
debt service, capital improvements, and adjustments to the Partnership's cash
reserves. The Partnership's first quarter 1999 distribution of $3,808,933 or
$153.24 per Unit was paid on May 17, 1999 and represented the first quarter's
adjusted cash from operations of $195,368 or $7.86 per Unit and the net proceeds
from the sale of Waterford Apartments of $145.38 per unit. The Partnership's
second quarter 1999 cash distribution of $125,274 or $5.04 per Unit was paid on
August 13, 1999 and represented the Partnership's second quarter adjusted cash
from operations including an adjustment to cash reserves. The Partnership plans
to distribute cash quarterly to the extent cash is available from operations
after debt service, capital improvements, and changes to cash reserves for
liabilities and capital expenditures, until the sale of the Partnership's
remaining property.
On April 14, 1999, the Partnership completed the sale of its investment in
the Waterford Apartments to Case Ventures, Inc., an Oklahoma Corporation for a
gross sales price of $14,675,000. The purchaser assumed the bond financing of
$11,355,000 as part of the sale. After return of the debt escrows, including
accrued interest, and deducting closing costs, the Partnership netted
approximately $3,614,000. On May 17, 1999, the Partnership distributed the net
proceeds from the sale to limited partners. A gain was recorded for book
purposes of $4,842,430. The Partnership expects to record a gain for tax
purposes. The Partnership has commenced the marketing phase of the sales process
for Versailles Village, the Partnership's sole remaining property. Based on the
anticipated sale of Versailles Village by the fourth quarter, the Partnership
plans to liquidate and terminate by the end of the year.
Results of Operations
Generally, decreases in the income statement accounts for 1999, as compared
with 1998, are the result of the sale of Waterford Apartments in April 1999. The
Partnership's sole remaining property, Versailles Village, had improved
operations for both the three and six months ended June 30, 1999, as compared
with the same periods in 1998.
At Versailles Village, rental income increased $3,166 for the three months
and $13,609 for the six months ended June 30, 1999, as compared with the same
periods in 1998, due to an increase in rates. Property operating expenses
decreased $1,585 for the three months and $5,911 for the six months ended June
30, 1999. Savings in utility costs, insurance and maintenance more than offset
an increase in property taxes caused by a school levy. There were no significant
fluctuations in other income, general and administrative, interest expense and
depreciation and amortization for Versailles Village for the three and six
months ended June 30, 1999, as compared with the same periods in 1998.
Partnership other income increased overall for the six months ended June
30, 1999 due to the write off of a disputed payable relating to maintenance work
at Stonebridge Manor in 1997. Fees and reimbursements to affiliates decreased
for the three and six months ended June 30,1999, as compared with the same
periods in 1998, primarily due to lower
7
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
partnership management fees as a result of less cash available for distribution
resulting from the sale of Waterford Apartments in April 1999. There was no
depreciation and amortization expense for Waterford in 1999 as the property was
held for sale as of November 1998.
Occupancy
<TABLE>
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
<CAPTION>
1998 1999
------------------------------------------------- ------------------------------
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31 At 6/30
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, Ohio 97% 100% 94% 94% 99% 96%
2. Waterford Apartments
Tulsa, Oklahoma 94% 97% 94% 95% 90% N/A
</TABLE>
An N/A indicates that the property was not owned by the partnership at the end
of the quarter.
(a) Waterford Apartments was sold April 14, 1999.
Part II- Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedules.
(b) Reports on Form 8-K:
Registrant reported the sale of the Waterford Apartments on Form 8-K
dated April 27, 1999.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Fifth,
General Partner
Date: August 16, 1999 By: /s/ John D. Carey
---------------- ------------------------
John D. Carey, President
(Principal Executive Officer)
Date: August 16, 1999 By: /s/ Josephine C. Donofrio
--------------- -------------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 442545
<SECURITIES> 0
<RECEIVABLES> 19466
<ALLOWANCES> 9052
<INVENTORY> 0
<CURRENT-ASSETS> 471225
<PP&E> 6888159
<DEPRECIATION> 3297173
<TOTAL-ASSETS> 4080710
<CURRENT-LIABILITIES> 141936
<BONDS> 3855635
0
0
<COMMON> 0
<OTHER-SE> 83139
<TOTAL-LIABILITY-AND-EQUITY> 4080710
<SALES> 0
<TOTAL-REVENUES> 1273815
<CGS> 0
<TOTAL-COSTS> 634947
<OTHER-EXPENSES> 119446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 328959
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 5032893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5032893
<EPS-BASIC> 202.22
<EPS-DILUTED> 202.22
</TABLE>
