FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 March 31, 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 0-14187
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
(Exact name of small business issuer as specified in its charter)
California 94-2940208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant'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 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 5,195
Receivables and deposits 351
Restricted escrows 625
Other assets 627
Investment properties:
Land $ 8,641
Buildings and related personal property 45,037
53,678
Less accumulated depreciation (17,925) 35,753
$ 42,551
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 223
Due to general partner 125
Tenant security deposit liabilities 293
Accrued property taxes 256
Other liabilities 410
Mortgage notes payable 27,925
Partners' (Deficit) Capital
General partner $ (707)
Limited partners (383,033 units outstanding) 14,026 13,319
$ 42,551
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues: (restated)
Rental income $ 3,141 $ 2,965
Other income 209 242
Total revenues 3,350 3,207
Expenses:
Operating 1,214 1,244
General and administrative 153 145
Depreciation 716 626
Interest 523 524
Property taxes 179 157
Total expenses 2,785 2,696
Income from continuing operations 565 511
(Loss) income from discontinued operations (11) 117
Net income $ 554 $ 628
Net income allocated to general partner (1%) 6 6
Net income allocated to limited partners (99%) 548 622
$ 554 $ 628
Per limited partnership unit:
Income from continuing operations $ 1.46 $ 1.32
(Loss) income from discontinued operations (0.03) 0.30
Net income $ 1.43 $ 1.62
Distributions per limited partnership unit $ 3.87 $25.59
See Accompanying Notes to Financial Statements
<PAGE>
c)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 383,033 $ 1 $95,758 $95,759
Partners' (deficit) capital
at December 31, 1999 383,033 $ (698) $14,960 $14,262
Distribution to partners -- (15) (1,482) (1,497)
Net income for the three months
ended March 31, 2000 -- 6 548 554
Partners' (deficit) capital at
March 31, 2000 383,033 $ (707) $14,026 $13,319
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 554 $ 628
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 716 702
Amortization of lease commissions and loan costs 22 32
Loss on disposal of property -- 40
Change in accounts:
Receivables and deposits 202 95
Other assets (62) (67)
Accounts payable (90) 39
Due to affiliate -- (465)
Tenant security deposit liabilities 12 (14)
Accrued property taxes 69 (6)
Other liabilities (40) 46
Net cash provided by operating activities 1,383 1,030
Cash flows from investing activities:
Property improvements and replacements (385) (443)
Net receipts from restricted escrows 243 85
Net cash used in investing activities (142) (358)
Cash flows used in financing activities:
Distributions to partners (1,497) (9,900)
Net decrease in cash and cash equivalents (256) (9,228)
Cash and cash equivalents at beginning of period 5,451 14,189
Cash and cash equivalents at end of period $ 5,195 $ 4,961
Supplemental disclosure of cash flow information:
Cash paid for interest $ 501 $ 501
</TABLE>
At December 31, 1999 and March 31, 2000, accounts payable and property
improvements and replacements were adjusted by approximately $91,000.
See Accompanying Notes to Financial Statements
<PAGE>
e)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Consolidated Capital
Institutional Properties/3 (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 ConCap Equities, Inc. (the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 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 financial statements and footnotes thereto
included in the Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.
Certain reclassifications have been made to the 1999 information to conform to
the 2000 presentation.
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 and 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 General Partner. The 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 - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and/or
its affiliates for the management and administration of all Partnership
activities. The limited partnership agreement ("Partnership Agreement") provides
for payments to affiliates for property management services based on a
percentage of revenue. The Partnership Agreement also provides for reimbursement
to the General Partner and its affiliates for costs incurred in connection with
the administration of Partnership activities.
The following amounts were paid or accrued to the General Partner and affiliates
during each of the three month periods ended March 31, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $166 $156
Reimbursements for services of affiliates (included in
investment properties, general and administrative
expenses, and operating expenses) 81 93
During the three months ended March 31, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all the Partnership's
residential properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $166,000 and
$156,000 for management fees for the three months ended March 31, 2000 and 1999,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $81,000 and $93,000 for the
three month periods ended March 31, 2000 and 1999, respectively.
For acting as real estate broker in connection with the sale of Corporate Center
in October 1999, the General Partner earned a real estate commission of
approximately $125,000. This amount is included in "Due to General Partner" on
the accompanying balance sheet. For acting as real estate broker in connection
with the sale of City Heights in November 1998, the General Partner earned a
real estate commission of approximately $465,000. The commission was accrued at
December 31, 1998, and was paid during the first quarter of 1999.
AIMCO and its affiliates currently own 177,904.5 limited partnership units in
the Partnership representing 46.446% 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. As a result of its
ownership of 46.446% of the outstanding units, AIMCO is in a position to
significantly 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 General Partner because of their
affiliation with the General Partner.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined in the Partnership Agreement. In the event expenditures are made from
this reserve, operating revenue shall be allocated to such reserve to the extent
necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totaling approximately $5.2 million were greater
than the reserve requirement of approximately $2.6 million at March 31, 2000.
Note E - Distributions
The Partnership paid distributions of cash generated from operations of
approximately $1,497,000 (approximately $1,482,000 to the limited partners or
$3.87 per limited partnership unit) for the three months ended March 31, 2000.
The Partnership distributed cash generated from operations of approximately
$4,113,000 (approximately $4,072,000 to the limited partners or $10.63 per
limited partnership unit) and approximately $5,787,000 (approximately $5,729,000
to the limited partners or $14.96 per limited partnership unit) of sales
proceeds from City Heights for the three months ended March 31, 1999.
Note F - Discontinued Operations
South City Business Center and Corporate Center were the last commercial
properties in the commercial segment of the Partnership. Due to the sale of the
properties in June 1999 and October 1999, respectively, the income of both of
the properties has been classified as "Income from discontinued operations" for
the three months ended March 31, 2000 and 1999. Revenues of these properties
were approximately $441,000 for the three months ended March 31, 1999. There was
a loss from discontinued operations of approximately $11,000 for the three
months ended March 31, 2000 and income from discontinued operations of
approximately $117,000 for the three months ended March 31, 1999, respectively.
Note G - Segment Reporting
The Partnership had two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of seven apartment complexes one in each of Colorado, Florida, Michigan, North
Carolina, and Utah and two in Washington. The Partnership rents apartment units
to tenants or terms that are typically twelve months or less. The commercial
property segment consisted of two business parks, one located in Florida and one
in California. These properties leased space to a variety of businesses at terms
ranging from month to month to ten years. On October 4, 1999, the final
commercial property held by the Partnership was sold to an unrelated party.
Therefore, the commerical segment is reflected as discontinued operations.
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segments are the same as
those described in the Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
The Partnership's reportable segments are investment properties that offer
different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.
Segment information for the three months ended March 31, 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 segments
(in thousands).
<TABLE>
<CAPTION>
2000 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 3,141 $ -- $ -- $ 3,141
Other income 191 -- 18 209
Interest expense 523 -- -- 523
Depreciation 716 -- -- 716
General and administrative
expenses -- -- 153 153
Loss from discontinued
operations -- (11) -- (11)
Segment profit (loss) 700 (11) (135) 554
Total assets 28,330 -- 14,221 42,551
Capital expenditures for
investment properties 294 -- -- 294
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 2,965 $ -- $ -- $ 2,965
Other income 158 -- 84 242
Interest expense 524 -- -- 524
Depreciation 626 -- -- 626
General and administrative
expenses -- -- 145 145
Income from discontinued
operations -- 117 -- 117
Segment profit (loss) 572 117 (61) 628
Total assets 27,354 6,837 16,916 51,107
Capital expenditures for
investment properties 412 31 -- 443
</TABLE>
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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the 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 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 own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The 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.
<PAGE>
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
operations. 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 at March 31, 2000 consisted of seven
apartment complexes. The following table sets forth the average occupancy of the
properties for each of the three month periods ended March 31, 2000 and 1999:
Average Occupancy
Property 2000 1999
Cedar Rim 93% 91%
New Castle, Washington
Hidden Cove by the Lake 95% 88%
Belleville, Michigan
Lamplighter Park 97% 95%
Bellevue, Washington
Park Capital 94% 97%
Salt Lake City, Utah
Sandpiper I and II 98% 94%
St. Petersburg, Florida
Tamarac Village I, II, III, IV 97% 97%
Denver, Colorado
Williamsburg Manor 96% 97%
Cary, North Carolina
The General Partner attributes the occupancy increase at Hidden Cove by the Lake
to the rental of the damaged units from the ice storm in 1999 that are now
repaired. The decrease in occupancy at Park Capital is due to several rental
rate increases and increased competition in the area. The increase in occupancy
at Sandpiper I and II is due to increased marketing and advertising and
increased traffic in the area of the property.
Results of Operations
The Partnership had net income of approximately $554,000 for the three months
ended March 31, 2000, compared to approximately $628,000 for the three months
ended March 31, 1999. Net income decreased due to the sale of South City
Business Center and Corporate Center during the second and fourth quarters of
1999, respectively. As the result of the sale of South City Business Center and
Corporate Center in 1999, as discussed below, the results of operations of these
two commercial properties were classified as "Income (loss) from discontinued
operations" on the statements of operations.
Excluding the results of the discontinued operations discussed above, the
Partnership had income from continuing operations of approximately $565,000 for
the three months ended March 31, 2000, compared to approximately $511,000 for
the year ended March 31, 1999. The increase in income from continuing operations
is due to increased total revenues which was offset by increased total expenses.
Total revenues increased due to an increase in rental income which was partially
offset by a decrease in other income. Rental income increased due to increased
average rental rates at all of the Partnership's properties and decreased
concession costs at Sandpiper I and II and Hidden Cove by the Lake. Decreased
occupancy at Park Capital and Williamsburg Manor was offset by increased
occupancy at Cedar Rim, Hidden Cove by the Lake, Lamplighter Park, and Sandpiper
I and II. Other income decreased due to decreased interest income due to
decreased cash balances in interest bearing accounts.
Total expenses increased due primarily to increased depreciation and property
tax expenses which were partially offset by decreased operating expenses.
Depreciation expense increased due to capital improvements completed during the
past twelve months which are now being depreciated. Property tax expense
increased primarily due to an increase in assessed value at Cedar Rim and a
refund received during 1999 at City Heights, which was sold in November 1998, of
taxes paid in prior years. Operating expenses decreased primarily due to the
decrease in the write-off of fixed assets due to an ice storm at Hidden Cove by
the Lake during 1999 and decreased maintenance expenses at Tamarac Village
during 2000. These decreases were partially offset by increased sewer charges
and manager salaries primarily at Tamarac Village.
General and administrative expenses remained relatively constant. Included in
general and administrative expenses at March 31, 2000 and 1999, are
reimbursements to the General Partner allowed under the Partnership Agreement
associated with its management of the Partnership. In addition, costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement are
included.
South City Business Center and Corporate Center were the last commercial
properties in the commercial segment of the Partnership. Due to the sale of the
properties in June 1999 and October 1999, respectively, the income of both of
the properties has been classified as "Income (loss) from discontinued
operations" for the three months ended March 31, 2000 and 1999. Revenues of
these properties were approximately $441,000 for the three months ended March
31, 1999. There was a loss from discontinued operations of approximately $11,000
for the three months ended March 31, 2000 and income from discontinued
operations of approximately $117,000 for the three months ended March 31, 1999,
respectively.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of 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 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
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2000, the Partnership held cash and cash equivalents of
approximately $5,195,000 compared to approximately $4,961,000 at March 31, 1999.
The decrease in cash and cash equivalents for the three months ended March 31,
2000, from the Partnership's year ended December 31, 1999, was approximately
$256,000. This decrease is due to approximately $1,497,000 of cash used in
financing activities and approximately $142,000 of cash used in investing
activities which was partially offset by approximately $1,383,000 of cash
provided by operating activities. Cash used in financing activities consisted of
distributions to the partners. Cash used in investing activities consisted of
property improvements and replacements which was partially offset by net
receipts from restricted escrows. The Partnership invests its working capital
reserves in money market accounts.
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 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 each of the Registrant's properties are detailed below.
Cedar Rim
During the three months ended March 31, 2000, the Partnership completed
approximately $18,000 on capital improvements at the property, consisting
primarily of sewer replacement, carpet replacement, interior decorating,
building structural improvements, and appliances. These improvements were funded
primarily from the property's operating cash flow. The Partnership evaluated the
capital improvement needs of the property for the year. The amount budgeted is
approximately $56,000, consisting primarily of appliances, carpet and vinyl
replacements, and plumbing upgrades. Additional improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.
Hidden Cove by the Lake
During the three months ended March 31, 2000, the Partnership completed
approximately $26,000 on capital improvements, consisting primarily of building
structural improvements, plumbing fixtures, carpet replacement, heating
upgrades, and appliances. These improvements were funded from the property's
replacement reserves and operating cash flow. The Partnership evaluated the
capital improvement needs of the property for the year. The amount budgeted is
approximately $47,000, consisting primarily of swimming pool upgrades, air
conditioning unit replacement, appliances, carpet replacement, and major
landscaping. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Lamplighter Park
During the three months ended March 31, 2000, the Partnership completed
approximately $20,000 on capital improvements, consisting primarily of carpet
and vinyl replacement, maintenance equipment, appliances, plumbing upgrades, and
other building improvements. These improvements were funded from replacement
reserves and operating cash flow. The Partnership evaluated the capital
improvement needs of the property for the year. The amount budgeted is
approximately $82,000, consisting primarily of plumbing upgrades, carpet and
vinyl replacement, and heating improvements. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Park Capital
During the three months ended March 31, 2000, the Partnership completed
approximately $33,000 on capital improvements, consisting primarily of carpet
and vinyl replacement, parking lot enhancements, and appliances. These
improvements were funded from replacement reserves and operating cash flow. The
Partnership evaluated the capital improvement needs of the property for the
year. The amount budgeted is approximately $56,000, consisting primarily of
appliances, carpet and vinyl replacement, and parking lot enhancements.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Tamarac Village
During the three months ended March 31, 2000, the Partnership completed
approximately $37,000 on capital improvements, consisting primarily of carpet
and vinyl replacement, golf carts, electrical upgrades, exterior painting, and
recreational facilities. These improvements were funded from replacement
reserves. The Partnership evaluated the capital improvement needs of the
property for the year. The amount budgeted is approximately $952,000, consisting
primarily of carpet and vinyl replacement, structural improvements, and plumbing
upgrades. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Williamsburg Manor
During the three months ended March 31, 2000, the Partnership completed
approximately $26,000 on capital improvements, consisting primarily of cabinet
replacements, carpet and vinyl replacement, major landscaping, and appliances.
These expenditures were funded from operating cash flow. The Partnership
evaluated the capital improvement needs of the property for the year. The amount
budgeted is approximately $55,000, consisting primarily of appliances, air
conditioning unit replacement, and carpet and vinyl replacements. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Sandpiper I and II
During the three months ended March 31, 2000, the Partnership completed
approximately $134,000 on capital improvements consisting primarily of carpet
and vinyl replacement, plumbing upgrades, structural improvements, roof
replacement, and cabinet replacement. These improvements were funded from
replacement reserves. The Partnership evaluated the capital improvement needs of
the property for the year. The amount budgeted is approximately $204,000,
consisting primarily of air conditioning unit replacement, cabinet replacement,
carpet and vinyl replacement, and pluming upgrades. Additional improvements may
be considered and will depend on the physical condition of the property as well
as replacement reserves and anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
form operations or from Partnership reserves. To the extent that such budgeted
capital improvements are required, the Registrant's distributable cash flow, if
any, may be adversely affected.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital
as defined by the Partnership Agreement. In the event expenditures are made from
this reserve, operating revenue shall be allocated to such reserve to the extent
necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totaling approximately $5.2 million were greater
than the reserve requirement of approximately $2.6 million.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of $27,925,000 has maturity dates ranging from 2003 to 2005. The
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 may risk losing such properties
through foreclosure.
During the three months ended March 31, 2000 the Partnership declared and paid
distributions in the amount of approximately $1,497,000 (approximately
$1,482,000 to the limited partners or $3.87 per limited partnership unit) from
operations. During the three months ended March 31, 1999, the Partnership made a
distribution in the amount of approximately $4,113,000 (approximately $4,072,000
to the limited partners or $10.63 per limited partnership unit) from operations
and approximately $5,787,000 (approximately $5,729,000 to the limited partners
or $14.96 per limited partnership unit) of sales proceeds from City Heights.
Future cash distributions will depend on the levels of cash generated from
operations, timing of debt maturities, refinancings, and/or property sales, and
the availability of cash reserves. The Partnership's distribution policy is
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital expenditures to permit further distributions to its partners during the
remainder of 2000 or subsequent periods.
<PAGE>
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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). The plaintiffs seek monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the 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 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 own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, 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
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
General Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The 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 filed during the first quarter of 2000:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
By: CONCAP EQUITIES, INC.
Its 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:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties 3 2000 First Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000768890
<NAME> CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,195
<SECURITIES> 0
<RECEIVABLES> 351
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 53,678
<DEPRECIATION> (17,925)
<TOTAL-ASSETS> 42,551
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 27,925
0
0
<COMMON> 0
<OTHER-SE> 13,319
<TOTAL-LIABILITY-AND-EQUITY> 42,551
<SALES> 0
<TOTAL-REVENUES> 3,350
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,785
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 554
<EPS-BASIC> 1.43 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
