FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] 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 0-14369
SHELTER PROPERTIES VII LIMITED PARTNERSHIP (Exact name of
small business issuer as specified in its charter)
South Carolina 57-0784852
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except per unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 275
Receivables and deposits 186
Restricted escrows 77
Other assets 140
Investment properties:
Land $ 1,774
Buildings and related personal property 21,580
23,354
Less accumulated depreciation (12,163) 11,191
$ 11,869
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 158
Tenant security deposit liabilities 87
Accrued property taxes 125
Other liabilities 177
Mortgage notes payable 10,566
Partners' (Deficit) Capital
General partners $ (142)
Limited partners (17,343 units issued and
outstanding) 898 756
$ 11,869
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b)
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 926 $ 968 $ 2,791 $ 2,865
Other income 84 42 196 136
Total revenues 1,010 1,010 2,987 3,001
Expenses:
Operating 400 282 1,150 920
General and administrative 70 58 149 161
Depreciation 205 209 626 624
Interest 214 216 630 659
Property taxes 92 21 253 82
Total expenses 981 786 2,808 2,446
Net income $ 29 $ 224 $ 179 $ 555
Net income allocated
to general partners (1%) $ -- $ 2 $ 2 $ 6
Net income allocated
to limited partners (99%) 29 222 177 549
$ 29 $ 224 $ 179 $ 555
Net income per limited
partnership unit $ 1.68 $12.80 $10.21 $31.66
Distributions per limited
partnership unit $ -- $22.83 $11.42 $57.08
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 17,343 $ 2 $17,343 $17,345
Partners' (deficit) capital at
December 31, 1999 17,343 $ (142) $ 919 $ 777
Distributions to partners -- (2) (198) (200)
Net income for the nine months
ended September 30, 2000 -- 2 177 179
Partners' (deficit) capital at
September 30, 2000 17,343 $ (142) $ 898 $ 756
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 179 $ 555
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 626 624
Amortization of discounts and loan costs 33 34
Change in accounts:
Receivables and deposits 38 19
Other assets (42) (44)
Accounts payable 85 (11)
Tenant security deposit liabilities 8 2
Accrued property taxes (95) (102)
Other liabilities (12) 26
Net cash provided by operating activities 820 1,103
Cash flows from investing activities:
Property improvements and replacements (612) (385)
Net (deposits to) withdrawals from restricted escrows (38) 51
Net cash used in investing activities (650) (334)
Cash flows from financing activities:
Payments on mortgage notes payable (169) (155)
Distributions to partners (200) (999)
Net cash used in financing activities (369) (1,154)
Net decrease in cash and cash equivalents (199) (385)
Cash and cash equivalents at beginning of period 474 1,201
Cash and cash equivalents at end of period $ 275 $ 816
Supplemental disclosure of cash flow information:
Cash paid for interest $ 612 $ 625
Supplemental disclosure of non-cash information:
Property improvements and replacements, accumulated depreciation and receivables
and deposits were adjusted by $92,000, $48,000 and $44,000 respectively
resulting from a May 2000 casualty at Hickory Ridge Apartments.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
Properties VII Limited Partnership (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Shelter Realty VII Corporation (the
"Corporate General Partner"), all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended September 30, 2000,
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999.
Principles of Consolidation:
The Registrant's financial statements include all the accounts of the Registrant
and its 99.9% owned partnership. The general partner of the consolidated
partnership is Shelter Realty VII Corporation. Shelter Realty VII Corporation
may be removed by the Registrant; therefore, the consolidated partnership is
controlled and consolidated by the Registrant. All significant interpartnership
transactions have been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Corporate General Partner. The Corporate General Partner does not believe
that this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash used in operations", as defined in the Partnership
Agreement. However, "net cash used in operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
<TABLE>
Nine Months Ended
September 30,
2000 1999
(in thousands)
<S> <C> <C>
Net cash provided by operating activities $ 820 $ 1,103
Payments on mortgage notes payable (169) (155)
Property improvements and replacements (612) (385)
Change in restricted escrows, net (38) 51
Changes in reserves for net operating
liabilities 18 110
Additional reserves (19) (724)
Net cash used in operations $ -- $ --
</TABLE>
The Corporate General Partner reserved approximately $19,000 and $724,000 at
September 30, 2000 and 1999, respectively, to fund capital improvements and
repairs at the Partnership's two investment properties.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Corporate General Partner and affiliates during the nine
months ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in
operating expenses) $155 $151
Reimbursements for services of affiliates
(included in general and administrative
and operating expenses and investment properties) 94 58
During the nine months ended September 30, 2000 and 1999, affiliates of the
Corporate General Partner were entitled to receive 5% of gross receipts from
both of the Registrant's properties for providing property management services.
The Registrant paid to such affiliates approximately $155,000 and $151,000 for
the nine months ended September 30, 2000 and 1999, respectively.
An affiliate of the Corporate General Partner received reimbursements of
accountable administrative expenses amounting to approximately $94,000 and
$58,000 for the nine months ended September 30, 2000 and 1999, respectively.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 10,122 limited partnership
units in the Partnership representing 58.364% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 58.364% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of
their affiliation with the Corporate General Partner.
Note E - Distributions
During the nine months ended September 30, 2000, the Partnership paid a
distribution of approximately $200,000 (approximately $198,000 to the limited
partners or $11.42 per limited partnership unit) from operations. During the
nine months ended September 30, 1999, the Partnership paid a distribution of
approximately $999,000 (approximately $990,000 to the limited partners or $57.08
per limited partnership unit) from operations.
Note F - Casualty Event
During May 2000, a large fire occurred at Hickory Ridge Apartments which damaged
five apartment units. It is anticipated that costs to repair the damage will
approximate $148,000 and that they will be covered by insurance. As of September
30, 2000 the Partnership does not anticipate incurring a loss related to this
casualty.
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of two apartment complexes,
one each located in Tennessee and Colorado. The Partnership rents apartment
units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three and nine month periods ended September 30,
2000 and 1999 is shown in the tables below. The "Other" column includes
partnership administration related items and income and expense not allocated to
the reportable segment.
Three Months Ended September 30, 2000 Residential Other Total
(in thousands)
Rental income $ 926 $ -- $ 926
Other income 83 1 84
Interest expense 214 -- 214
Depreciation 205 -- 205
General and administrative expense -- 70 70
Segment profit (loss) 98 (69) 29
Nine Months Ended September 30, 2000 Residential Other Total
(in thousands)
Rental income $ 2,791 $ -- $ 2,791
Other income 193 3 196
Interest expense 630 -- 630
Depreciation 626 -- 626
General and administrative expense -- 149 149
Segment profit (loss) 325 (146) 179
Total assets 11,786 83 11,869
Capital expenditures 612 -- 612
Three Months Ended September 30, 1999 Residential Other Total
(in thousands)
Rental income $ 968 $ -- $ 968
Other income 40 2 42
Interest expense 216 -- 216
Depreciation 209 -- 209
General and administrative expense -- 58 58
Segment profit (loss) 280 (56) 224
Nine Months Ended September 30, 1999 Residential Other Total
(in thousands)
Rental income $ 2,865 $ -- $ 2,865
Other income 129 7 136
Interest expense 659 -- 659
Depreciation 624 -- 624
General and administrative expense -- 161 161
Segment profit (loss) 709 (154) 555
Total assets 12,135 75 12,210
Capital expenditures 385 -- 385
Note H - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Corporate General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Corporate General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Corporate General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2000 and 1999:
Average
Occupancy
Property 2000 1999
Hickory Ridge Apartments 94% 95%
Memphis, Tennessee
Governor's Park Apartments 92% 96%
Ft. Collins, Colorado
The decrease in occupancy at Governor's Park Apartments is attributable to
increased competition in the local market area.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
2000 was approximately $29,000 and $179,000, respectively, as compared to
approximately $224,000 and $555,000, respectively for the three and nine months
ended September 30, 1999. The decrease in net income for both periods is due to
an increase in total expenses and a slight decrease in total revenues for the
nine months ended September 30, 2000. Total revenues decreased primarily due to
a decrease in rental revenue which was partially offset by an increase in other
income. The decrease in rental income was due primarily to a decrease in
occupancy at both Governor's Park Apartments and Hickory Ridge Apartments which
was partially offset by an increase in average rental rates at both of the
properties. Other income increased due to an increase in late charges at both
Governor's Park Apartments and Hickory Ridge Apartments.
Total expenses increased during the comparable periods due to increases in
operating and property tax expenses which were partially offset by a decrease in
interest expense for the three months ended September 30, 2000 and decreases in
both interest and general and administrative expenses for the nine months ended
September 30, 2000. Depreciation expense remained relatively constant for both
periods. The increase in operating expense was due primarily to an increase in
courtesy patrol costs and property office costs at Hickory Ridge Apartments and
payroll costs at both properties. The increase in property tax expense was due
to the City of Memphis annexing Hickory Ridge Apartments into the city limits
during the last quarter of 1999. The annexation of Hickory Ridge Apartments
resulted in the property being responsible for city taxes during the nine months
ended September 30, 2000 which were not applicable during the nine months ended
September 30, 1999. Interest expense decreased as a result of decreasing
balances on the mortgage principal as a result of monthly mortgage payments.
General and administrative expense decreased primarily as a result of a decrease
in legal costs for the nine month period ended September 30, 2000 as compared to
the nine month period ended September 30, 1999, due to the Partnership's portion
of settlement costs disclosed in previous quarters. This decrease was partially
offset by an increase in management reimbursements due to an increase in the
services and the cost of such services provided by the Corporate General Partner
to the Partnership. Included in general and administrative expense at both
September 30, 2000 and 1999 are management reimbursements to the Corporate
General Partner allowed under the Partnership Agreement. In addition, costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit and appraisals required by the
Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of both its investment properties
to assess the feasibility of increasing rents, maintaining or increasing
occupancy levels and protecting the Partnership from increases in expenses. As
part of this plan, the Corporate General Partner attempts to protect the
Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due to
changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Corporate General Partner will be able to sustain such a
plan.
Liquidity and Capital Resources
At September 30, 2000, the Registrant had cash and cash equivalents of
approximately $275,000 compared to approximately $816,000 at September 30, 1999.
The decrease in cash and cash equivalents of approximately $199,000 for the nine
months ended September 30, 2000, from the Partnership's year end, is due to
approximately $650,000 of cash used in investing activities and approximately
$369,000 of cash used in financing activities which was partially offset by
approximately $820,000 of cash provided by operating activities. Cash used in
financing activities consisted of principal payments made on the mortgages
encumbering the Registrant's properties, and distributions to the partners. Cash
used in investing activities consisted of property improvements and replacements
and, to lesser extent, net deposits to escrow accounts maintained by the
mortgage lender. The Registrant invests its working capital reserves in a money
market account.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at both of the properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
planned for both of the Registrant's properties are detailed below.
Hickory Ridge Apartments: The Partnership has budgeted approximately $362,000
for the year 2000 for capital improvements, consisting primarily of air
conditioning upgrades, floor covering, fencing improvements, and appliance
replacements. The Partnership completed approximately $476,000 in budgeted and
non-budgeted capital expenditures at Hickory Ridge Apartments as of September
30, 2000, consisting primarily of floor covering replacements, appliances,
fencing improvements, and other building improvements. These improvements were
funded primarily from operations.
Governor's Park Apartments: The Partnership has budgeted approximately $112,000
for the year 2000 for capital improvements, consisting primarily of plumbing
enhancements and appliance and floor covering replacements. The Partnership
completed approximately $136,000 in budgeted and non-budgeted capital
expenditures at Governor's Park Apartments as of September 30, 2000, consisting
primarily of plumbing enhancements, and carpet and appliance replacements. These
improvements were funded primarily from operations and replacement reserves.
The additional capital improvements planned for 2000 at the Partnership's
properties will be incurred only if cash is available from operations or from
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Registrant's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $10,566,000, net of discount, is amortized over
varying periods with balloon payments due at maturity, March 1, 2001 and October
15, 2003. The Corporate General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such properties through foreclosure.
In June 2000, the Partnership distributed approximately $198,000 from operations
(approximately $11.42 per limited partnership unit) to the limited partners and
approximately $2,000 to the general partners. In 1999, the Partnership
distributed approximately $990,000 from operations (approximately $57.08 per
limited partnership unit) to the limited partners and approximately $9,000 to
the general partners. The Registrant's distribution policy is reviewed on a
semi-annual basis. Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves, and the
timing of debt maturities, refinancings, and/or property sales. There can be no
assurance, however, that the Registrant will generate sufficient funds from
operations after required capital expenditures to permit any additional
distributions to its partners in 2000 or subsequent periods. Distributions may
also be restricted by the requirement to deposit net operating income (as
defined in the mortgage note) into the reserve account until the reserve account
is funded by an amount equal to $200 per apartment unit or $37,600 in total at
Governor's Park. The reserve account is currently fully funded.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Corporate General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Corporate General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Corporate General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES VII LIMITED PARTNERSHIP
By: Shelter Realty VII Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
