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- --------------------------------------------------------------------------------
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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>
March 31, December 31,
1999 1998
Assets (Unaudited) (Audited)
<S> <C> <C>
Property and improvements, at cost:
Land and land improvements $ 3,017,188 $ 3,009,898
Buildings 16,688,744 16,661,970
Furniture and fixtures 1,468,506 1,462,984
-------------- --------------
21,174,438 21,134,852
Less accumulated depreciation 8,750,342 8,693,273
-------------- --------------
Net property and improvements 12,424,096 12,441,579
Cash and cash equivalents 661,936 739,751
Accounts receivable (net of allowance of $8,674
in 1999 and $8,956 in 1998) 31,772 7,185
Escrow deposits 117,601 143,422
Prepaid insurance 13,897 --
Other asset 1,000 1,000
Deferred charges, net 773,839 776,542
Escrowed debt service funds 553,328 506,660
-------------- --------------
Total $ 14,577,469 $ 14,616,139
============== ==============
Liabilities and Partners' Capital (Deficit)
Liabilities:
Notes and mortgages payable $ 15,230,506 $ 15,249,984
Accounts payable and accrued expenses (including $29,872
in 1999 and $18,906 in 1998 due to affiliates) 173,719 241,892
Tenant security deposits 86,206 82,092
Unearned income 20,114 26,611
-------------- --------------
Total liabilities 15,510,545 15,600,579
-------------- --------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net income 29,571 27,513
Cumulative cash distributions (35,295) (33,751)
-------------- --------------
(4,724) (5,238)
-------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (14,747,042) (14,950,756)
Cumulative cash distributions (8,589,362) (8,436,498)
-------------- --------------
(928,352) (979,202)
-------------- --------------
Total partners' deficit (933,076) (984,440)
-------------- --------------
Total $ 14,577,469 $ 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
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Income:
Rental income $ 817,960 $ 775,774
Other income 21,989 13,254
Interest income 16,282 16,262
-------------- -------------
856,231 805,290
-------------- -------------
Expenses:
Property operating expenses 218,604 218,281
General and administrative 108,939 108,632
Fees and reimbursements to affiliates 33,500 26,129
Interest expense 229,644 233,149
Depreciation and amortization 59,772 195,621
-------------- -------------
650,459 781,812
-------------- -------------
Net income $ 205,772 $ 23,478
============== =============
Net income:
General Partner $ 2,058 $ 235
Limited partners 203,714 23,243
-------------- -------------
$ 205,772 $ 23,478
============== =============
Net income per Unit $ 8.20 $ 0.94
============== =============
Cash distribution per Unit $ 6.15 $ 5.70
============== =============
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 205,772 $ 23,478
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 59,772 195,621
Accounts receivable (24,587) 3,339
Accounts payable and accrued expenses (68,173) (51,295)
Escrow deposits 25,821 62,312
Other, net (16,280) (6,317)
--------------- ---------------
Net cash provided by operating activities 182,325 227,138
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (39,586) (13,547)
--------------- ---------------
Cash flows from financing activities:
Repayment of notes and mortgage loans (19,478) (52,986)
Contribution to debt service escrow funds (46,668) --
Distribution to limited partners (152,864) (141,679)
Distribution to General Partner (1,544) (1,431)
--------------- ---------------
Net cash used in financing activities (220,554) (196,096)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (77,815) 17,495
Cash and cash equivalents, beginning of year 739,751 682,614
--------------- ---------------
Cash and cash equivalents, end of period $ 661,936 $ 700,109
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 229,644 $ 233,149
=============== ===============
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
Deferred charges consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
Surety fee - Waterford Apartments mortgage note $ 963,910 $ 963,910
Costs of obtaining financing 660,522 660,522
--------------- ---------------
1,624,432 1,624,432
Accumulated amortization (850,593) (847,890)
--------------- ----------------
$ 773,839 $ 776,542
=============== ===============
</TABLE>
3. Transactions with Affiliates
Fees and expenses related to the General Partner or its affiliates are as
follows:
<TABLE>
<CAPTION>
Three Months Ended Unpaid at
March 31, March 31,
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Property management fees (a) $ 5,137 $ 4,857 $ 3,423
Partnership management fees 19,517 13,036 19,517
Reimbursement (at cost) for
out-of-pocket expenses 8,846 8,236 6,932
----------- ----------- -----------
$ 33,500 $ 26,129 $ 29,872
=========== =========== ===========
</TABLE>
5
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements (Continued)
(Unaudited)
(a) Does not include on-site property management fees earned by independent
property management companies of $36,190 and $34,369 for the three months
ended March 31, 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. Subsequent Event
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
approximately $9,550,000 as of the date of sale. After deducting closing costs,
the Partnership expects to record a gain of approximately $4,850,000.
On May 17, 1999, the Partnership paid a distribution of $3,808,933 to the
limited partners and $1,973 to the General Partner.
6
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Except for historical information provided in this Management's Discussion
and Analysis, statements made in this document are forward-looking and contain
information about financial results, economic conditions, trends, and known
uncertainties. The Partnership cautions the reader that actual results could
differ materially from those expected by the Partnership.
Liquidity and Capital Resources
At March 31, 1999, the Partnership had $661,936 in cash and cash
equivalents which was available for working capital requirements, cash
distributions, and the Partnership's cash reserves. For the quarter ended March
31, 1999, the Partnership generated $197,000 of adjusted cash from operations
after debt service, capital improvements, and adjustments to the Partnership's
cash reserves. The Partnership will pay a cash distribution of $3,808,933 or
$153.24 per Unit on May 17, 1999 representing 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 plans to distribute
cash quarterly to the extent cash is available from operations after debt
service, capital, and changes to cash reserves for liabilities and capital
expenditures, until the sale of the Partnership's remaining 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 deducting closing costs, the Partnership
netted approximately $3,614,000. On May 17, 1999, the Partnership is scheduled
to distribute the net proceeds from the sale to limited partners. The
Partnership expects to record a gain for both book and tax purposes. With the
sale of Waterford completed, the Partnership will commence the sales process for
Versailles Village. The property will likely be sold on a leveraged basis. Based
on the anticipated sale of Versailles Village by the end of the third quarter,
the Partnership plans to liquidate and terminate by the end of the year.
Results of Operations
Rental income increased 7% at Waterford and 4% at Versailles Village for
the three months ended March 31, 1999, as compared with the same period in 1998,
due to an increase in rates. Versailles Village plans to continue to increase
rental rates in the second quarter. Other income increased due to the write off
of a disputed payable relating to maintenance work at Stonebridge Manor in 1997.
Fees and reimbursements to affiliates increased primarily due to higher
partnership management fees as a result of more cash available for distribution
for the three months ended March 31, 1999 than in the same period in 1998. More
cash was available to distribute in 1999 due to improved operations, fewer
reserves required and less debt service (Waterford Taxable Series 1993B Bonds
fully amortized by December 1998). There was no depreciation and amortization
expense for Waterford in 1999 as the property was held for sale as of November
1998.
7
<PAGE>
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Occupancy
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
<TABLE>
<CAPTION>
1998 1999
----------------------------------------------- -------
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
1. Versailles Village Apartments
Forest Park, Ohio 97% 100% 94% 94% 99%
2. Waterford Apartments
Tulsa, Oklahoma 94% 97% 94% 95% 90%
</TABLE>
Part II- Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended March 31, 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: May 12, 1999 By: /s/ John D. Carey
------------ ----------------------------
John D. Carey, President
(Principal Executive Officer)
Date: May 12, 1999 By: /s/ Josephine C. Donofrio
------------ -----------------------------
Josephine C. Donofrio, Controller
(Principal Accounting Officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 661936
<SECURITIES> 0
<RECEIVABLES> 40446
<ALLOWANCES> 8674
<INVENTORY> 0
<CURRENT-ASSETS> 826026
<PP&E> 21174438
<DEPRECIATION> 8750342
<TOTAL-ASSETS> 14577469
<CURRENT-LIABILITIES> 280039
<BONDS> 15230506
0
0
<COMMON> 0
<OTHER-SE> (933076)
<TOTAL-LIABILITY-AND-EQUITY> 14577469
<SALES> 0
<TOTAL-REVENUES> 856231
<CGS> 0
<TOTAL-COSTS> 361043
<OTHER-EXPENSES> 59772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 229644
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 205772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205772
<EPS-PRIMARY> 8.20
<EPS-DILUTED> 8.20
</TABLE>
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