<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended June 30, 1996
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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 0-14122
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FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 3
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(Exact name of registrant as specified in its charter)
Florida 36-3330657
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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 __
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated January 17, 1985, included
in the Registrant's Registration Statement on Form S-11 (Registration No.
2-79092), is incorporated herein by reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 1,908,600 $ 1,908,600
Buildings and improvements 17,637,500 17,468,200
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19,546,100 19,376,800
Accumulated depreciation and amortization (6,218,300) (5,851,700)
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Total investment properties, net of accumulated
depreciation and amortization 13,327,800 13,525,100
Cash and cash equivalents 3,047,700 8,022,200
Investments in debt securities 3,948,800
Restricted cash 112,500 62,500
Investment in joint venture 4,835,100 4,620,200
Rents receivable 29,600 29,600
Other assets (including amount due from joint
venture of $817,200 and $785,000, respectively) 885,700 817,000
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$26,187,200 $27,076,600
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 321,100 $ 429,100
Due to Affiliates 82,100 136,100
Distributions payable 2,711,500 711,500
Security deposits 57,700 55,700
Other liabilities 7,100 4,400
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3,179,500 1,336,800
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Partners' capital:
General Partner (deficit) (183,300) (183,300)
Limited Partners (45,737 Units issued and
outstanding) 23,191,000 25,923,100
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23,007,700 25,739,800
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$26,187,200 $27,076,600
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1996 (Unaudited)
and the year ended December 31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
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<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1995 $(163,300) $29,202,100 $29,038,800
Net income (loss) for the year ended
December 31, 1995 249,300 (854,900) (605,600)
Distributions for the year ended December
31, 1995 (269,300) (2,424,100) (2,693,400)
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Partners' (deficit) capital,
December 31, 1995 (183,300) 25,923,100 25,739,800
Net income for the six months ended
June 30, 1996 142,300 548,600 690,900
Distributions for the six months ended
June 30, 1996 (142,300) (3,280,700) (3,423,000)
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Partners' (deficit) capital,
June 30, 1996 $(183,300) $23,191,000 $23,007,700
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</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Income:
Rental $ 789,900 $ 748,200
Interest 113,000 175,900
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Net income 902,900 924,100
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Expenses:
Depreciation and amortization 178,900 207,400
Property operating:
Affiliates 43,600 37,800
Nonaffiliates 164,900 143,900
Real estate taxes 98,200 79,400
Insurance--Affiliate 9,100 6,400
Repairs and maintenance 115,100 98,400
General and administrative:
Affiliates 9,700 6,800
Nonaffiliates 48,400 51,600
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667,900 631,700
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Net income before income from participation in joint
venture 235,000 292,400
Income from participation in joint venture 151,100 121,520
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Net income $ 386,100 $ 413,900
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Net income allocated to General Partner $ 71,100 $ 66,100
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Net income allocated to Limited Partners $ 315,000 $ 347,800
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Net income allocated to Limited Partners per
Unit (45,737 Units outstanding) $ 6.89 $ 7.60
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Income:
Rental $1,541,900 $1,543,900
Interest 231,000 318,900
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Net income 1,772,900 1,862,800
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Expenses:
Depreciation and amortization 366,600 415,400
Property operating:
Affiliates 88,700 86,400
Nonaffiliates 316,700 283,500
Real estate taxes 171,500 158,700
Insurance--Affiliate 18,200 12,500
Repairs and maintenance 213,600 173,600
General and administrative:
Affiliates 20,800 17,200
Nonaffiliates 97,900 98,000
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1,294,000 1,245,300
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Net income before income from participation in joint
venture 478,900 617,500
Income from participation in joint venture 212,000 190,800
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Net income $ 690,900 $ 808,300
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Net income allocated to General Partner $ 142,300 $ 129,600
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Net income allocated to Limited Partners $ 548,600 $ 678,700
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Net income allocated to Limited Partners per
Unit (45,737 Units outstanding) $ 11.99 $ 14.84
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</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 690,900 $ 808,300
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 366,600 415,400
(Income) from participation in joint venture (212,000) (190,800)
Changes in assets and liabilities:
(Increase) in rents receivable (8,200)
(Increase) decrease in other assets (36,500) 12,200
(Decrease) in accounts payable and accrued expenses (108,000) (66,100)
(Decrease) increase in due to Affiliates (54,000) 18,300
Increase in other liabilities 2,700 1,500
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Net cash provided by operating activities 649,700 990,600
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Cash flows from investing activities:
Payments for capital and tenant improvements (169,300) (74,800)
(Increase) in investments in debt securities (3,948,800)
(Increase) in restricted cash (50,000)
(Funding of) loans to joint venture (32,200) (55,300)
(Contributions to) distributions received from
joint venture (2,900) 341,900
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Net cash (used for) provided by investing
activities (4,203,200) 211,800
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Cash flows from financing activities:
Distributions paid to Partners (1,423,000) (1,194,200)
Increase (decrease) in security deposits 2,000 (1,500)
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Net cash (used for) financing activities (1,421,000) (1,195,700)
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Net (decrease) increase in cash and cash equivalents (4,974,500) 6,700
Cash and cash equivalents at the beginning of the
period 8,022,200 6,945,300
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Cash and cash equivalents at the end of the period $ 3,047,700 $ 6,952,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires manangement to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1996 are not necessarily indicative
of the operating results for the year ending December 31, 1996.
The financial statements include the Partnership's interest in three joint
ventures with Affiliated partnerships. These joint ventures were formed for the
purpose of each acquiring a 100% interest in certain real property and are
operated under the common control of the General Partner. Accordingly, the
Partnership's pro rata share of the ventures' revenues, expenses, assets,
liabilities and Partners' capital is included in the financial statements.
Investment in joint venture represents the recording of the Partnership's
interest, under the equity method of accounting, in a joint venture with an
Affiliated partnership. The joint venture acquired a preferred majority
interest in a joint venture with the seller of the Lansing, Michigan property.
Under the equity method of accounting, the Partnership recorded its initial
interest at cost and adjusts its investment account for its share of joint
venture income or loss and its distributions of cash flow (as defined by the
joint venture agreement).
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts, if
any, allocated to land and value impairments) on the straight-line method over
their estimated useful lives. Upon classifying a commercial rental property as
held for disposition, no further depreciation or amortization of such property
is provided for in the financial statements. Lease acquisition fees are
recorded at cost and amortized over the life of the lease. Maintenance and
repair costs are expensed against operations as incurred; expenditures for
improvements are capitalized to the appropriate property accounts and
depreciated over the estimated life of the improvements.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets
are impaired, and if so, how impairment losses should be measured and reported
in the financial statements. The Standard also addressed the accounting for
long-lived assets that are expected to be disposed of. The adoption of the
Standard did not have a material effect on the Partnership's financial
statements.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities are comprised of corporate debt securities and
obligations of the United States government totaling $3,948,800 and are
classified as held-to-maturity. These investments are carried at their
amortized cost basis in the financial statements, which approximated fair
market value. All of these securities had a maturity of less than one year when
purchased.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications have no effect on net income or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 for a description of other accounting policies and additional
details of the Partnership's financial condition, results of operations,
changes in Partners' capital and changes in cash balances for the year then
ended. The details provided in the notes thereto have not changed except as a
result of normal transactions in the interim or as otherwise disclosed herein.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to May 16, 1986, the
Termination of the Offering, the General Partner is entitled to 10% of
distributable Cash Flow (as defined in the Partnership Agreement) as a
Partnership Management Fee. In addition, Net Profits (exclusive of Net Profits
from the sale or disposition of Partnership properties) are allocated to the
General Partner in an amount equal to the greater of 1% of such Net Profits or
the Partnership Management Fee paid by the Partnership to the General Partner
and, the balance, if any, to the Limited Partners. Net Losses (exclusive of Net
Losses from the sale, disposition or provision for value impairment of
Partnership properties) are allocated 1% to the General Partner and 99% to the
Limited Partners. Net Profits from the sale or disposition of a Partnership
property are allocated: first, prior to giving effect to any distributions of
Sale Proceeds from the transaction, to all Partners with negative balances in
their Capital Accounts, pro rata in proportion to such respective negative
balances, to the extent of the total of such negative balances; second, to the
General Partner, in an amount necessary to make the
positive balance in its Capital Account equal to the amount of Sale Proceeds to
be distributed to the General Partner with respect to the sale or disposition
of such property; and third, the balance, if any, to the Limited Partners. Net
Losses from the sale, disposition or provision for value impairment of
Partnership properties are allocated: first, after giving effect to any
distributions of Sale Proceeds from the transaction to all Partners with
positive balances in their Capital Accounts,
4
<PAGE>
pro rata in proportion to such respective positive balances, to the extent of
the total amount of such positive balances; and second, the balance, if any, 1%
to the General Partner and 99% to the Limited Partners. Notwithstanding
anything to the contrary, there shall be allocated to the General Partner not
less than 1% of all items of Partnership income, gain, loss, deduction and
credit during the existence of the Partnership. For the quarter and six months
ended June 30, 1996, the General Partner was entitled to a Partnership
Management Fee, and accordingly, allocated Net Profits, of $71,100 and
$142,300, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Paid
------------------
Quarter Six Months Payable
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $66,100 $ 98,700 $36,700
Reimbursement of property insurance premiums, at
cost 18,200 18,200 None
Real estate commissions (a) None None 40,300
Reimbursement of expenses, at cost
--Accounting 7,200 15,600 4,000
--Investor communications 3,100 6,900 1,100
--Legal 800 2,200
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$95,400 $141,600 $82,100
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</TABLE>
(a) As of June 30, 1996, the Partnership owed $40,300 to the General Partner
for real estate commissions earned in connection with the sales of
Partnership properties. These commissions have been accrued but not paid.
In accordance with the Partnership Agreement, the Partnership will not pay
the General Partner or any Affiliate a real estate commission from the sale
of a Partnership property until Limited Partners have received cumulative
distributions of Sale or Financing Proceeds equal to 100% of their Original
Capital Contribution, plus a cumulative return (including all Cash Flow (as
defined in the Partnership Agreement) which has been distributed to the
Limited Partners from the initial investment date) of 6% simple interest
per annum on their Capital Investment from the initial investment date.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and six months ended June 30, 1996
and 1995. The discussion following the table should be read in conjunction with
the Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results (a)
For the Quarters For the Six
Ended Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
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<S> <C> <C> <C> <C>
PARK PLAZA PROFESSIONAL BUILDING (50%)
Rental revenues $444,000 $413,100 $849,700 $857,600
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Property net income $ 77,900 $ 97,300 $168,100 $233,700
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Average occupancy 85% 88% 85% 88%
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ELLIS BUILDING (50%)
Rental revenues $294,200 $276,000 $582,200 $564,600
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Property net income $106,500 $ 76,300 $196,300 $154,200
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Average occupancy 94% 96% 94% 96%
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3120 SOUTHWEST FREEWAY OFFICE BUILDING (25%)
Rental revenues $ 49,700 $ 59,100 $103,900 $121,700
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Property net (loss) income $ (4,700) $ 2,600 $ 1,000 $ 8,400
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Average occupancy 81% 92% 82% 94%
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</TABLE>
(a) The above table excludes certain income and expense items which are either
not directly related to individual property operating results such as
interest income, general and administrative expenses and income from
participation in joint venture or are related to properties previously
owned by the Partnership.
Unless otherwise disclosed, discussions of fluctuations between 1996 and 1995
refer to both the quarters and six months ended June 30, 1996 and 1995.
Net income for the Partnership decreased $27,800 and $117,400, respectively,
for the quarter and six months ended June 30, 1996 when compared to the quarter
and six months ended June 30, 1995. These decreases were primarily the result
of: 1) diminished operating results at Park Plaza Professional Building ("Park
Plaza") and 3120 Southwest Freeway Office Building ("Southwest Freeway")
totaling $26,700 and $73,000 for the quarter and six months ended June 30, 1996
when compared to the quarter and six months ended June 30, 1995, respectively
and 2) decreased interest income of $62,900 and $87,900, respectively, for the
comparable quarterly and six-month periods due to a decrease in funds available
for the Partnership's short-term investments and to a lesser extent to a
decrease in rates available on such investments. Partially offsetting the
decreases in net income were: 1) improved operating results at the Ellis
Building ("Ellis") of $30,200 and $42,100, respectively, for the comparable
quarterly and six-month periods and 2) an increase in income from the
Partnership's equity investment in the joint venture which owns Holiday North
and South Office Park ("Holiday") of $29,600 and $21,200, respectively, for the
quarter and six month comparable periods.
Rental revenues increased $41,700 or 5.6% for the quarterly periods under
comparison. The primary factors which caused the increase in rental revenues
were increased tenant expense reimbursements for real estate taxes at Park
Plaza and Ellis and increased parking income generated by the parking facility
at Park Plaza. Partially offsetting the increases were decreased base rents at
Park Plaza and Southwest Freeway as a result of a decrease in the average
occupancy rate and decreased tenant expense reimbursements for real estate
taxes at Southwest Freeway. Rental revenues remained relatively stable for the
six-month periods.
Real estate tax expense increased $18,800 and $12,800, respectively, for the
quarter and six months ended June 30, 1996 when compared to the quarter and six
months ended June 30, 1995. The increase in real estate tax expense was
primarily due to an increase in the assessed valuation of Park Plaza.
Repairs and maintenance expense increased $16,700 and $40,000, respectively,
for the comparable quarterly and six-month periods. The primary factor which
caused the increase was increased expenditures associated with the parking
facility at Park Plaza.
Property operating expenses increased $26,800 and $35,500, respectively, for
the comparable quarterly and six-month periods. The primary reason for the
increase was increased personnel and security costs at Park Plaza.
The Partnership's share of net income from Holiday increased $29,600 and
$21,200, respectively, for the quarterly and six month periods under comparison
as a result of increased rental revenues due to an increase in occupancy and
decreased property operating expenses primarily resulting from a decrease in
utilities. Partially offsetting this increase was increased repairs and
maintenance and an increase in taxes paid.
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 1) implementation of marketing
programs, including hiring of third party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early renewal of existing tenants' leases and addressing
any expansion needs these tenants may have; 3) promotion of local broker events
and networking with local brokers; 4) cold-calling other businesses and tenants
in the market area and 5) providing rental concessions or competitively pricing
rental rates depending on market conditions.
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Partners from Partnership operations. To the extent cumulative
cash distributions exceed net income, such excess distributions are treated as
a return of capital. Cash Flow (as defined in the Partnership Agreement) is
generally not equal to net income or cash flows as defined by generally
accepted accounting principles ("GAAP"), since certain items are treated
differently under the Partnership Agreement than
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
under GAAP. Management believes that to facilitate a clear understanding of the
Partnership's operations, an analysis of Cash Flow (as defined in the
Partnership Agreement) should be examined in conjunction with an analysis of
net income or cash flows, as defined by GAAP. The following table includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as defined by GAAP. Such amounts are not
indicative of actual distributions to Partners and should not necessarily be
considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Statements of Cash Flows.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Six Months Ended
6/30/96 6/30/95
- --------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership
Agreement) $ 1,144,800 $ 1,202,900
Less: Cash Flow from joint venture (299,300) (170,000)
Items of reconciliation:
(Increase) decrease in current assets (36,500) 4,000
(Decrease) in current liabilities (159,300) (46,300)
- --------------------------------------------------------------------------
Net cash provided by operating activities $ 649,700 $ 990,600
- --------------------------------------------------------------------------
Net cash (used for) provided by investing
activities $ (4,203,200) $ 211,800
- --------------------------------------------------------------------------
Net cash (used for) financing activities $ (1,421,000) $ (1,195,700)
- --------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow (as defined in the Partnership Agreement) of $58,100
for the six months ended June 30, 1996 when compared to six months ended June
30, 1995 was primarily due to the decrease in net income, exclusive of
depreciation and amortization, as previously discussed.
The decrease in the Partnership's cash of $48,800 as of June 30, 1996 when
compared to December 31, 1995, was primarily the result of the investments in
debt securities, payments made for capital, tenant improvement and leasing
costs and distributions paid to Partners and exceeding net cash provided by
operating activities. Liquid assets (including cash, cash equivalents and
investments in debt securities) are comprised of undistributed Sales Proceeds
and amounts held for working capital purposes.
The decrease in net cash provided by operating activities of $340,900 for the
six months ended June 30, 1996 when compared to the six months ended June 30,
1995 was primarily due to the decrease in net income, excluding depreciation
and amortization, and the timing of the payment of certain Partnership
expenses.
Net cash provided by (used for) investing activities changed from $211,800 for
the six months ended June 30, 1995 to $(4,203,200) for the six months ended
June 30, 1996. The change was primarily due to the increase in investments in
debt securities, an increase in payments made for capital, tenant improvement
and leasing costs to the Partnership's properties and the timing of
distributions received from the Partnership's equity investment in joint
venture. The increase in investments in debt securities is a result of the
extension of the maturities of certain of the Partnership's short-term
investments in an effort to maximize the return on these amounts as they are
held for working capital. These investments are of investment-grade and
generally mature less than one year from their date of purchase. The
Partnership maintains working capital reserves to pay for capital expenditures
such as capital, tenant improvement and leasing costs. During the six months
ended June 30, 1996, the Partnership spent $169,300 for capital, tenant
improvement and leasing costs and has projected to spend approximately $375,000
during the remainder of 1996. Of the projected amount, approximately $280,000,
$70,000 and $25,000 relates to anticipated capital, tenant improvement and
leasing costs expected to be incurred at Park Plaza, Ellis and Southwest
Freeway, respectively. In addition, approximately $270,000 is projected at
Holiday for capital, tenant improvement and leasing costs, some of which may be
advanced by the Partnership. Actual amounts expended in 1996 may vary depending
on a number of factors including leasing activity and other market conditions
throughout the year. The General Partner believes these expenditures are
necessary to maintain occupancy levels in very competitive markets, maximize
rental rates charged to new and renewing tenants and prepare the remaining
properties for eventual disposition.
The increase in net cash used for financing activities of $225,300 for the six
months ended June 30, 1996 when compared to the six months ended June 30, 1995
was due primarily to an increase in distributions paid to Partners.
The General Partner continues to take a conservative approach to projections of
future rental income in its determination of adequate levels of cash reserves
due to the anticipated capital, tenant improvement and leasing costs necessary
to be made at the Partnership's properties during the next several years. For
the quarter ended June 30, 1996, the Partnership included $278,200 of
previously undistributed Cash Flow (as defined in the Partnership Agreement) in
its distribution to Partners.
Distributions to Limited Partners for the quarter ended June 30, 1996 were
declared in the amount of $640,400, or $14.00 per Unit. Cash distributions are
made 60 days after the last day of each fiscal quarter. The amount of future
distributions to Partners will ultimately be dependent upon the performance of
the Partnership's investments as well as the General Partner's determination of
the amount of cash necessary to supplement working capital reserves to meet
future liquidity requirements of the Partnership. Accordingly, there can be no
assurance as to the amounts and/or availability of cash for future distribution
to Partners.
As a result of the performance of the Partnership's remaining properties, the
General Partner has determined that Sales Proceeds previously reserved for
working capital purposes can be distributed to the Limited Partners.
Accordingly, the Partnership has declared a special distribution in the amount
of $2,000,000, or $43.73 per Unit to Limited Partners of record as of October
1, 1996. This special distribution will be included with the third quarter
distribution to Limited Partners on November 30, 1996.
7
<PAGE>
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended June
30, 1996.
<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.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 3
By: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: August 14, 1996 By: /s/ DOUGLAS CROCKER II
--------------- -----------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 14, 1996 By: /s/ NORMAN M. FIELD
--------------- -----------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
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