SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 0-15348
MRI Business Properties Fund, Ltd. III
(Exact name of Registrant as specified in its charter)
California 94-2969782
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether 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
------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date .
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1 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
March 31, September 30,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 5,534,000 $ 4,045,000
Accounts receivable and other assets 921,000 791,000
Real Estate:
Real estate 48,837,000 48,352,000
Accumulated depreciation (16,214,000) (15,432,000)
------------- -------------
Real estate, net 32,623,000 32,920,000
------------- -------------
Total assets $ 39,078,000 $ 37,756,000
============= =============
Liabilities and Partners' Equity
Accounts payable and other liabilities $ 1,016,000 $ 1,240,000
Due to unconsolidated joint venture 446,000 339,000
Notes payable 15,653,000 15,791,000
------------- -------------
Total liabilities 17,115,000 17,370,000
------------- -------------
Partners' Equity:
General partners (deficit) (1,901,000) (1,933,000)
Limited partners equity (109,027 assignee
units outstanding at March 31, 1995
and September 1994) 23,864,000 22,319,000
------------- -------------
Total partners' equity 21,963,000 20,386,000
------------- -------------
Total liabilities and partners' equity $ 39,078,000 $ 37,756,000
============= =============
See notes to financial statements.
2 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Statements of Operations (Unaudited)
For the Six Months Ended
March 31, 1995 March 31, 1994
Revenues:
Room revenue $ 7,459,000 $ 12,945,000
Food and beverage revenue - 2,593,000
Other operating revenues 474,000 955,000
Interest income 95,000 130,000
Gain on sale of joint venture interests - 1,467,000
------------- -------------
Total revenues 8,028,000 18,090,000
------------- -------------
Expenses:
Room expenses 1,638,000 3,098,000
Food and beverage expenses - 2,331,000
Other operating expenses 3,181,000 6,653,000
Depreciation 782,000 878,000
Interest 509,000 942,000
Equity in unconsolidated joint
venture's operations 107,000 152,000
General and administrative 234,000 257,000
------------- -------------
Total expenses 6,451,000 14,311,000
------------- -------------
Income before minority interest in joint
ventures' operations 1,577,000 3,779,000
Minority interest in joint
ventures' operation - (404,000)
------------- -------------
Net income $ 1,577,000 $ 3,375,000
============= =============
Net income per limited partnership
assignee unit $ 14 $ 30
============= =============
See notes to financial statements.
3 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Statements of Operations (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues:
Room revenue $ 4,234,000 $ 6,016,000
Food and beverage revenue - 816,000
Other operating revenue 242,000 418,000
Interest income 52,000 76,000
Gain on sale of joint venture interests - 1,467,000
------------- -------------
Total revenues 4,528,000 8,793,000
------------- -------------
Expenses:
Room expenses 836,000 1,406,000
Food and beverage expenses - 832,000
Other operating expenses 1,569,000 3,189,000
Depreciation 391,000 492,000
Interest 254,000 435,000
Equity in unconsolidated joint
venture's operations 24,000 46,000
General and administrative 111,000 132,000
------------- -------------
Total expenses 3,185,000 6,532,000
------------- -------------
Income before minority interest in joint
ventures' operations 1,343,000 2,261,000
Minority interest in joint
ventures' operations - 41,000
------------- -------------
Net income $ 1,343,000 $ 2,302,000
============= =============
Net income per limited partnership
assignee unit $ 12 $ 21
============= =============
See notes to financial statements.
4 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Statements of Partners' Equity (Unaudited)
For the Six Months Ended March 31, 1995
General Limited Total
partners' partners' partners'
(deficit) equity equity
Balance - October 1, 1994 $ (1,933,000) $ 22,319,000 $ 20,386,000
Net income 32,000 1,545,000 1,577,000
------------- ------------- -------------
Balance - March 31, 1995 $ (1,901,000) $ 23,864,000 $ 21,963,000
============= ============= =============
See notes to financial statements.
5 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Statements of Cash Flows (Unaudited)
For the Six Months Ended
March 31, 1995 March 31, 1994
Operating Activities:
Net income $ 1,577,000 $ 3,375,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 796,000 939,000
Minority interest in joint ventures' operations - 404,000
Gain on sale of joint venture interests - (1,467,000)
Equity in unconsolidated joint
venture's operations 107,000 152,000
Changes in operating assets and liabilities:
Accounts receivable and other assets (144,000) (65,000)
Accounts payable and other liabilities (224,000) (413,000)
------------- -------------
Net cash provided by operating activities 2,112,000 2,925,000
------------- -------------
Investing Activities:
Net proceeds from sale of joint
venture interests - 2,000
Properties and improvements additions (485,000) (912,000)
Unconsolidated joint venture contributions - (150,000)
Proceeds from cash investments - 5,842,000
Purchase of cash investments - (2,375,000)
------------- -------------
Net cash (used in) provided by
investing activities (485,000) 2,407,000
------------- -------------
Financing Activities:
Notes payable principal payments (138,000) (122,000)
------------- -------------
Cash (used in) financing activities (138,000) (122,000)
------------- -------------
Increase in Cash and Cash Equivalents 1,489,000 5,210,000
Cash and Cash Equivalents at
Beginning of Period 4,045,000 5,088,000
------------- -------------
Cash and Cash Equivalents at
End of Period $ 5,534,000 $ 10,298,000
============= =============
Supplemental Disclosure of Cash Flow
Information:
Interest paid in cash during the period $ 495,000 $ 875,000
============= =============
Supplemental Disclosure of Non-Cash Investing and
Financing Activities:
Gain on sale of joint venture interests in 1994 - See Note 3.
See notes to financial statements.
6 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
NOTES TO FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's Annual Report for the year ended
September 30, 1994. The Partnership sold its remaining joint venture
interests in March 1994. The statement of operations for the six months and
three months ended March 31, 1994 have consolidated joint ventures in which
the Partnership had a controlling interest. Certain accounts have been
reclassified in order to conform to the current period.
The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature, except as discussed in Note 3.
At March 31, 1995, the Partnership had approximately $3,459,000 invested
in overnight repurchase agreements earning approximately 6% per annum.
The results of operations for the six and three months ended March 31,
1995 and 1994 are not necessarily indicative of the results to be expected for
the full year.
2. Transactions with Related Parties
An affiliate of NPI, Inc. received reimbursements of administrative
expenses amounting to $80,000 and $21,000 during the six months ended March
31, 1995 and 1994, respectively. These reimbursements are primarily included
in general and administrative expenses.
An affiliate of NPI, Inc. was paid a fee of $26,000 relating to a
successful real estate tax appeal on the Partnership's Embassy Suites - Tempe
hotel during the six months ended March 31, 1995. The tax appeal fee is
included in operating expenses.
3. Gain on Sale of Joint Venture Interests
On March 7, 1994, the Partnership sold its 60 percent interest in the Park
Hyatt Water Tower Associates Joint Venture, which owned the Park Hyatt Hotel,
located in Chicago, Illinois to an affiliate of the joint venture partner.
The sales price of $5,831,000 is comprised of the following: (1) the
assumption of the purchase money note payable to an affiliate of the joint
venture partner in the amount of $2,500,000, (2) accrued and unpaid interest
to an affiliate of the joint venture partner of $1,581,000 assumed by the
buyer, and (3) cash of $1,750,000. The sale resulted in a gain of
approximately $543,000. The Partnership had recorded a provision for
impairment of value of $6,985,000 during fiscal year 1992.
On March 15, 1994, the Partnership sold its 65 percent interest in the
Washington Park Hotel Associates Joint Venture, which owned the Radisson Park
Terrace Hotel, located in Washington, D.C. for $1,455,000 in cash, to its
joint venture partner. The sale, after expenses, resulted in a gain of
$924,000. The Partnership had recorded a provision for impairment of value of
$7,363,000, of which $2,755,000 was recognized in fiscal year 1990 and the
remaining $4,608,000 was recognized in fiscal year 1992.
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MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
NOTES TO FINANCIAL STATEMENTS
4. Subsequent Event
On April 28, 1995, the Partnership entered into an agreement to sell the
Embassy Suites - Tempe property for approximately $19,600,000. The sale is
subject to the purchaser completing its due diligence review. If the sale is
consummated, the Partnership would receive net proceeds of approximately
$19,500,000 and recognize a substantial gain on the sale.
8 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
NOTES TO FINANCIAL STATEMENTS
5. Investment in Unconsolidated Joint Venture
The following are the condensed balance sheets as of March 31, 1995
and September 30, 1994 and condensed statements of operations for
the six and the three months ended March 31, 1995 and 1994 of the
unconsolidated joint venture:
MRI BUSINESS PROPERTIES COMBINED FUND NO. 1
CONDENSED BALANCE SHEETS
March 31, September 30,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 938,000 $ 561,000
Restricted cash 278,000 564,000
Accounts receivable and other assets 1,634,000 1,323,000
Real Estate:
Real estate 63,116,000 62,898,000
Accumulated depreciation (17,135,000) (16,335,000)
Allowance for impairment of value (11,962,000) (11,962,000)
------------- -------------
Real estate, net 34,019,000 34,601,000
------------- -------------
Total assets $ 36,869,000 $ 37,049,000
============= =============
Liabilities and Partners' Deficiency
Accounts payable and other liabilities $ 2,786,000 $ 2,320,000
Due to affiliates 1,878,000 2,095,000
Note payable 34,000,000 34,000,000
------------- -------------
Total liabilities 38,664,000 38,415,000
------------- -------------
Minority interest in joint venture (904,000) (689,000)
------------- -------------
Partners' Deficiency:
MRI BPF, LTD. II (445,000) (338,000)
MRI BPF, LTD. III (446,000) (339,000)
------------- -------------
Total partners' deficiency (891,000) (677,000)
------------- -------------
Total liabilities and
partners' deficiency $ 36,869,000 $ 37,049,000
============= =============
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MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
NOTES TO FINANCIAL STATEMENTS
5. Investment in Unconsolidated Joint Venture (Continued)
MRI BUSINESS PROPERTIES COMBINED FUND NO. 1
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended
March 31, 1995 March 31, 1994
Revenues $ 10,122,000 $ 10,152,000
Expenses 10,551,000 10,759,000
------------- -------------
Loss before minority interest in joint
venture's operations (429,000) (607,000)
Minority interest in joint venture's
operations 215,000 303,000
------------- -------------
Net loss $ (214,000) $ (304,000)
============= =============
Allocation of net loss:
MRI BPF, Ltd. II $ (107,000) $ (152,000)
MRI BPF, Ltd. III (107,000) (152,000)
------------- -------------
Net loss $ (214,000) $ (304,000)
============= =============
The six months ended March 31, 1994 contained twenty-seven weeks.
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues $ 5,251,000 $ 5,024,000
Expense 5,346,000 5,210,000
------------- -------------
Loss before minority interest in joint
venture's operations (95,000) (186,000)
Minority interest in joint venture's
operations 48,000 95,000
------------- -------------
Net loss $ (47,000) $ (91,000)
============= =============
Allocation of net loss:
MRI BPF, Ltd. II $ (23,000) $ (45,000)
MRI BPF, Ltd. III (24,000) (46,000)
------------- -------------
Net loss $ (47,000) $ (91,000)
============= =============
10 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Financial Statements and
other Items contained elsewhere in this Report.
Liquidity and Capital Resources
All of Registrant's properties are hotels. Registrant receives hotel
operating revenues and is responsible for operating expenses, administrative
expenses, capital improvements and debt service payments. Registrant uses
working capital reserves provided from any undistributed cash flow from
operations and sales proceeds as its primary source of liquidity. During the
six months ended March 31, 1995, all of Registrant's hotels generated positive
cash flow. Guest room renovations continue at Registrant's 25% owned
unconsolidated joint venture, the Holiday Inn Crowne Plaza. During the six
months ended March 31, 1995, $218,000 was spent on room renovations.
Management anticipates spending approximately $750,000 to complete the
renovations. The renovations will be funded by working capital and replacement
reserves (restricted cash). To preserve working capital reserves required for
necessary capital improvements to properties and provide resources for debt
restructuring, cash distributions from operations remained suspended during
the six months ended March 31, 1995. On April 28, 1995, Registrant entered
into an agreement to sell the Embassy Suites - Tempe property for
approximately $19,600,000. The sale is subject to the purchaser completing
its due diligence review. If the sale is consummated, Registrant would
receive net proceeds of approximately $19,500,000 and recognize a substantial
gain on the sale. Registrant intends to distribute the net proceeds from the
sale, if consummated.
The level of liquidity based upon cash and cash equivalents experienced a
$1,489,000 increase at March 31, 1995, as compared to September 30, 1994.
Registrant's $2,112,000 from operating activities was only partially offset by
$485,000 of fixed asset purchases (investing activities) and $138,000 of notes
payable principal payments (financing activities). Net cash provided by
operating activities declined at March 31, 1995, as compared to 1994,
primarily due to the disposition of Registrant's joint venture interests
during the second quarter of fiscal year ended September 30, 1994. All other
increases (decreases) in certain assets and liabilities are the result of the
timing of receipt and payment of various operating activities.
Working capital reserves are invested in money market accounts and repurchase
agreements secured by United States Treasury obligations. The Managing
General Partner believes that, if market conditions remain relatively stable,
cash flow from operations, when combined with working capital reserves, will
be sufficient to fund essential capital improvements and debt service payments
in the remainder of 1995 and the foreseeable future. Balloon payments on
mortgages encumbering Registrant's properties are due in September 1997 and
October 1997. The mortgage encumbering Registrant's unconsolidated joint
venture, the Holiday Inn Crowne Plaza, matures in July 1995. The mortgage
agreement provides an option to extend the maturity date to June 1999. The
new interest rate on the loan, if extended, would be approximately 12%. The
Managing General Partner believes that each property generates sufficient cash
flow to allow all mortgages to be refinanced in an orderly fashion.
Pursuant to the terms of a Settlement Agreement entered into in connection
with the Ruben and Andrews actions, DeForest Ventures I L.P. will make a
tender offer for an aggregate number of units of Registrant (including the
units purchased in the initial tender) constituting up to 49% of the total
11 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
number of units of Registrant at a price equal to the initial tender price
plus 15% less attorney's fees and expenses. In addition, pursuant to the
terms of the proposed settlement, the Managing General Partner will agree to
provide Registrant a credit line of $150,000 per property, borrowings under
which would bear interest at the lesser of prime plus 1% or the rate permitted
by the Partnership Agreement of Registrant. A hearing for final approval of
the settlement is scheduled for May 19, 1995. See Part II - Other
Information, "Item 1 - Legal Proceedings". If the settlement receives final
Court approval, it is expected that the tender offer will commence on or about
June 19, 1995. The Managing General Partner believes that the settlement will
not have an adverse effect on Registrant.
At this time, it appears that the investment objective of capital growth will
not be attained and that a significant portion of invested capital will not be
returned to investors. The extent to which invested capital is returned to
investors is dependent upon the performance of Registrant's remaining
properties and the markets in which such properties are located and on the
sales price of the remaining properties.
Real Estate Market
The income and expenses of operating the properties owned by Registrant are
subject to factors outside of Registrant's control, such as over-supply of
similar properties resulting from over-building, increases in unemployment,
population shifts or changes in patterns or needs of users. Expenses, such as
local real estate taxes and miscellaneous expenses, are subject to change and
cannot always be reflected in room rate increases due to market conditions.
In addition, there are risks inherent in owning and operating lodging
facilities because such properties are management and labor intensive and
especially susceptible to the impact of economic and other conditions outside
the control of Registrant.
There have been, and it is possible there may be other Federal, state and
local legislation and regulations enacted relating to the protection of the
environment. Registrant is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the
properties still owned by Registrant.
Results of Operations
Six Months Ended March 31, 1995 vs. March 31, 1994
Operating results, before minority interest in joint venture's operations,
declined by $2,202,000 for the six months ended March 31, 1995, as compared to
1994. Operating results declined primarily due to the gain on sale of
Registrant's joint venture interests in 1994.
Revenues declined by $10,062,000 for the six months ended March 31, 1995, as
compared to 1994, due to the sale of Registrant's joint venture interests.
With respect to the remaining properties, revenues increased by $597,000 due
to increases in room revenues of $545,000 and other operating revenue of
$62,000, which were slightly offset by a decrease in interest income of
$10,000.
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MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Six Months Ended March 31, 1995 vs. March 31, 1994 (Continued)
Room revenue increased at Registrant's remaining properties, except for the
Residence Inn - Sacramento, where a decline in occupancy offset an increase in
average daily room rates. The largest increase was at Registrant's Embassy
Suites - Tempe property, due to a significant increase in average daily room
rates, which was only partially offset by a decline in occupancy. Other
operating revenues increased due to increases in other income and telephone
revenue at Registrant's Embassy Suites - Tempe property. Interest income
decreased due to the decline in average working capital reserves available for
investment.
Expenses decreased by $7,860,000 for the six months ended March 31, 1995, as
compared to 1994, due to the sale of Registrant's joint venture interests.
With respect to the remaining properties, expenses declined by $38,000 due to
decreases in interest expense of $317,000 and equity in unconsolidated joint
venture operations of $45,000, which were partially offset by increases in
other operating expenses of $258,000, room expenses of $47,000 and
depreciation of $19,000. General and administrative expenses decreased by
$23,000.
Interest expense decreased primarily due to Registrant prepaying on June 2,
1994, in full satisfaction, the note encumbering Registrant's Embassy Suites
property, coupled with the reduction in the interest on the loan encumbering
Registrant's Residence Inn - Orlando property. The loss from Registrant's
unconsolidated joint venture property (the Holiday Inn Crowne Plaza) decreased
due to improved operations at the hotel. Room expenses remained relatively
constant. Other operating expenses increased primarily at Registrant's Embassy
Suites property. Depreciation expense increased due to an under accrual in
the prior year comparative period. General and administrative expenses
decreased due to a reduction in asset management costs.
Three Months Ended March 31, 1995 vs. March 31, 1994
Operating results, before the minority interest in joint venture operations,
declined by $918,000 for the three months ended March 31, 1995, as compared to
1994. Operating results declined due to the gain on sale of Registrant's
joint venture interests in 1994.
Revenues declined by $4,265,000 for the three months ended March 31, 1995, as
compared to 1994, due to the sale of Registrant's joint venture interests.
With respect to the remaining properties, revenues increased by $339,000 due
to increases in room revenue of $313,000 and other operating revenue of
$41,000, which were only slightly offset by a decrease in interest income of
$15,000.
Room revenue increased at Registrant's remaining properties, except for the
Residence Inn - Sacramento, where a decline in occupancy offset an increase in
average daily room rates. The largest increase was at Registrant's Embassy
Suites - Tempe property, due to a significant increase in average daily room
rates, which was only partially offset by a decline in occupancy. Other
operating revenues increased due to increases in other income and telephone
revenue at Registrant's Embassy Suites - Tempe property. Interest income
decreased due to the decline in average working capital reserves available for
investment.
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MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended March 31, 1995 vs. March 31, 1994 (Continued)
Expenses decreased by $3,347,000 for the three months ended March 31, 1995, as
compared to 1994, due to the sale of Registrant's joint venture interest.
With respect to the remaining properties, expenses declined by $71,000 due to
decreases in interest expense of $77,000, equity in unconsolidated joint
venture operations of $22,000 and other operating expenses of $21,000, which
were partially offset by increases in room expenses of $35,000 and
depreciation expense of $14,000. General and administrative expenses decreased
by $21,000.
Interest expense decreased primarily due to Registrant prepaying on June 2,
1994, in full satisfaction, the note encumbering Registrant's Embassy Suites
property, coupled with the reduction in the interest on the loan encumbering
Registrant's Residence Inn - Orlando property. The loss from Registrant's
unconsolidated joint venture property (the Holiday Inn Crowne Plaza) decreased
due to improved operations at the hotel. Other operating expenses and room
expenses remained relatively constant. Depreciation expense increased due to
an under accrual in the prior year comparative period. General and
administrative expenses decreased due to a reduction in asset management
costs.
Unconsolidated Joint Venture Operations
(MRI BPF Combined Fund No. 1)
Six Months Ended March 31, 1995 vs. March 31, 1994
Operating results, prior to the minority interest, improved by $178,000 for
the six months ended March 31, 1995, as compared to 1994, due to a decrease in
expenses which was partially offset by a decrease in revenues.
Three Months Ended March 31, 1995 vs. March 31, 1994
Operating results, prior to minority interest, improved by $91,000 for the
three months ended March 31, 1995, due to the increase in revenues which was
partially offset by an increase in expenses. The increase in revenue is
attributable to higher average room rates.
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MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties
A description of the hotel properties in which Registrant has an ownership
interest, together with occupancy and room rate data, follows:
MRI BUSINESS PROPERTIES FUND, LTD. III
OCCUPANCY AND ROOM RATE SUMMARY
<TABLE>
<CAPTION>
Average Average
Occupancy Rate (%) Daily Room Rate ($)
Six Months Three Months Six Months Three Months
Date Ended Ended Ended Ended
of March 31, March 31, March 31, March 31,
Name and Location Rooms Purchase 1995 1994 1995 1994 1995 1994 1995 1994
- - ---------------- ----- -------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Holiday Inn Crowne
Plaza (1)
Atlanta, Georgia 492 03/86 73 72 75 76 95.85 89.78 102.50 92.03
Embassy Suites - Tempe
Tempe, Arizona 224 12/86 80 85 85 90 105.79 88.06 119.81 96.77
Residence Inn - Orlando
Orlando, Florida 176 09/87 81 71 90 84 76.33 84.16 76.25 89.41
Residence Inn - Sacramento,
California 176 09/87 75 83 77 87 80.80 77.53 83.23 77.59
Radisson Park Terrace Hotel (2)
Washington, D.C. 219 09/86 - 72 - 69 - 87.52 - 88.53
Park Hyatt Hotel (3)
Chicago, Illinois 255 12/86 - 63 - 53 - 149.37 - 141.24
</TABLE>
(1) Registrant and an affiliated partnership, MRI Business Properties
Fund, Ltd. II, own the hotel through a joint venture which has a 50
percent interest in this property.
(2) Registrant sold its 65% interest in this property on March 15, 1994.
(3) Registrant sold its 60% interest in this property on March 7, 1994.
15 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Lawrence M. Whiteside, on behalf of himself and all other similarly
situated, v. Fox Capital Management Corporation, et al., Superior Court of the
State of California, San Mateo County, Case No. 390018 ("Whiteside").
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all
others similarly situated, v. DeForest Ventures I L.P., et al., United States
District Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-2983-JEC ("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated
persons v. DeForest Ventures I L.P., et al., Circuit Court of Cook County,
County Departments, Chancery Division, State of Illinois, Case No. 94CH0100592
("Vernon").
James Andrews, et al., on behalf of themselves and all other similarly
situated v. Fox Capital Management Corporation, et al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-3351-JEC ("Andrews").
On March 16, 1995 the United States District Court for the Northern
District of Georgia, Atlanta Division, entered an order which granted
preliminary approval to a settlement agreement in the Ruben and Andrews
actions, conditionally certified two classes for purpose of settlement, and
authorized the parties to give notice to the classes of the terms of the
proposed settlement. Plaintiffs counsel in the Vernon and Whiteside action
have joined in the Settlement Agreement as well. The two certified classes
constitute all limited partners of Registrant and the eighteen other
affiliated partnerships who either tendered their units in connection with the
October tender offers or continue to hold their units in Registrant and the
other affiliated partnerships. Pursuant to the terms of the proposed
settlement, which are described in the notice sent to the class members in
March 1995, (and more fully described in the Amended Stipulation of Settlement
submitted to the court on March 14, 1995) all claims which either were made or
could have been asserted in any of the class actions would be dismissed with
prejudice and/or released. In consideration for the dismissal and/or release
of such claims, among other things, DeForest I would pay to each unit holder
who tendered their units in Registrant an amount equal to 15% of the original
tender offer price less attorney's fees and expenses. In addition, DeForest I
will commence a second tender offer for an aggregate number of units of
Registrant (including the units purchased in the initial tender) constituting
up to 49% of the total number of units of Registrant at a price equal to the
initial tender price plus 15% less attorney's fees and expenses. Furthermore,
under the terms of the proposed settlement, the Managing General Partner would
agree, among other things, to provide Registrant a credit line of $150,000 per
property which would bear interest at the lesser of prime rate plus 1% and the
rate permitted under the partnership agreement of Registrant. A hearing on
the final approval of the settlement is scheduled for May 19, 1995.
Item 6. Exhibits and Reports on Form 8-K.
No report on Form 8-K was required to be filed for the three months
ended March 31, 1995.
16 of 17
MRI BUSINESS PROPERTIES FUND, LTD. III - FORM 10-Q - MARCH 31, 1995
SIGNATURE
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.
MRI BUSINESS PROPERTIES FUND, LTD. III
By: MONTGOMERY REALTY COMPANY - 85,
its Managing General Partner
By: FOX REALTY INVESTORS,
the managing general partner of
the Managing General Partner
By: NPI Equity Investments II, Inc. ("NPI")
managing partner
----------------------------------
ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
17 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from MRI Business
Properties Fund, Ltd. III and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 5,534,000
<SECURITIES> 0
<RECEIVABLES> 921,000 <F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 48,837,000
<DEPRECIATION> (16,214,000)
<TOTAL-ASSETS> 39,078,000
<CURRENT-LIABILITIES> 0
<BONDS> 15,653,000
<COMMON> 0
0
0
<OTHER-SE> 21,963,000
<TOTAL-LIABILITY-AND-EQUITY> 39,078,000
<SALES> 0
<TOTAL-REVENUES> 7,933,000
<CGS> 0
<TOTAL-COSTS> 5,601,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 509,000
<INCOME-PRETAX> 1,577,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,577,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,577,000
<EPS-PRIMARY> 14
<EPS-DILUTED> 14
<FN>
<F1> Receivables include $248,000 of other assets.
</FN>
</TABLE>
