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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-15699
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WINDSOR PARK PROPERTIES 3, A CALIFORNIA LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
California 333-0115651
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6160 So. Syracuse Way, Greenwood Village, Colorado 80111
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(Address of principal executive offices)
(303) 741-3707
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(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 ( )
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Transitional small business disclosure format (check one): Yes [ ] No [X]
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TABLE OF CONTENTS
PART I
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Page
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Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II
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Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURE 10
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PART I
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Certain matters discussed under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Quarterly
Report on Form 10-QSB may constitute forward-looking statements, and as such
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Windsor Park Properties 3, A
California Limited Partnership, to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements.
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Item 1. Financial Statements
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WINDSOR PARK PROPERTIES 3
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(A California Limited Partnership)
BALANCE SHEET
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ASSETS March 31, 2000
- ------ --------------
Property held for sale, net $3,286,600
Investments in joint ventures and limited partnerships
held for sale 1,128,500
Cash and cash equivalents 209,600
Deferred financing costs, net 22,400
Other assets 319,600
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Total Assets $4,966,700
==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $1,170,400
Term loan payable 400,000
Accrued expenses 221,100
Accounts payable 11,600
Tenant deposits and other liabilities 39,800
Due to general partners and affiliates 210,500
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Total Liabilities 2,053,400
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Partners' Equity:
Limited partners 2,915,600
General partners (2,300)
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Total Partners' Equity 2,913,300
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Total Liabilities and Partners' Equity $4,966,700
==========
See accompanying notes to financial statements.
2
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WINDSOR PARK PROPERTIES 3
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(A California Limited Partnership)
STATEMENTS OF OPERATIONS
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REVENUES Three Months Ended March 31,
- -------- ----------------------------
2000 1999
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Rent and utilities $ 394,100 $ 431,300
Equity in earnings of joint ventures 13,100 200
and limited partnerships 100 6,000
Interest 9,400 9,000
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416,700 446,500
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COSTS AND EXPENSES
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Property operating expenses 213,300 245,900
Interest 34,700 70,000
Depreciation 63,500 57,800
General and administrative:
Related parties 5,800 6,600
Other 42,600 16,700
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359,900 397,000
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Net income $ 56,800 $ 49,500
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Net income - general partners $ 600 $ 500
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Net income - limited partners $ 56,200 $ 49,000
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Basic and diluted earnings per
limited partnership unit $ 0.30 $ 0.26
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See accompanying notes to financial statements.
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WINDSOR PARK PROPERTIES 3
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(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
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REVENUES Three Months Ended March 31,
- -------- ----------------------------
2000 1999
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Cash flows from operating activities:
Net income $ 56,800 $ 49,500
Adjustments to reconcile net income to net cash
provided by oeprating activities:
Depreciation 63,500 57,800
Equity in earnings of joint ventures and
limited partnerships (13,100) (200)
Joint ventures' and limited partnerships
cash distributions 13,100 200
Amortization of deferred financing costs 1,600 4,900
Changes in operating assets and liabilities
Increase in other assets (82,400) (16,800)
Increase (decrease) in accounts payable 11,600 (5,200)
Increase in accrued expenses 32,700 28,400
Increase (decrease) in other liabilities 1,700 (100)
Increase in due to general partner and affiliates 108,700 43,500
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Net cash provided by operating activities 194,200 162,000
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Cash flows from investing activities:
Increase in property held for sale (26,300) (56,500)
Joint ventures' and limited partnerships' cash
distributions 28,800 25,800
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Net cash provided by investing activities 2,500 (30,700)
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Cash flows from investing activities:
Cash distributions to partners -- (140,600)
Repurchase of limited partnership units -- (3,900)
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Net cash used in financing activiites -- (144,500)
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Net increase (decrease) in cash and cash equivalents 196,700 (13,200)
Cash and cash equivalents at beginning of period 12,900 640,800
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Cash and cash equivalents at end of period $ 209,600 $ 627,600
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See accompanying notes to financial statements.
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WINDSOR PARK PROPERTIES 3
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(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. THE PARTNERSHIP
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Windsor Park Properties 3, A California Limited Partnership (the "Partnership"),
was formed in August 1985 for the purpose of acquiring and holding existing
manufactured home communities for investment. The general partners of the
Partnership are The Windsor Corporation, a California corporation ("TWC"), and
John A. Coseo, Jr. (together with TWC, the "General Partners"). In September
1997, Chateau Communities, Inc., a publicly held real estate investment trust
("Chateau"), purchased 100% of the outstanding shares of capital stock of TWC.
Pursuant to the Agreement of Limited Partnership (the "Partnership Agreement")
of the Partnership, the term of the Partnership expired on December 31, 1999.
As a result, in accordance with the terms of the Partnership Agreement and
California law, the General Partners were required (i) to develop a plan of
liquidation for the Partnership's assets and to liquidate and dissolve the
Partnership or (ii) to take such steps as are necessary to extend the term of
the Partnership in order to enable it to continue as a going concern.
Accordingly, the General Partners have approved, and recommend that the
Partnership proceed with, a plan of liquidation (the "Plan of Liquidation"),
pursuant to which the Partnership will sell its four wholly-owned properties and
its partial ownership interests in four other properties (collectively, the
"Properties") to N'Tandem Trust, a California business trust ("N'Tandem"), and,
thereafter, make liquidating distributions to the partners in accordance with
the terms of the Partnership Agreement (the "Proposed Transactions"). On March
22, 2000, the General Partners mailed to the Limited Partners a Consent
Solicitation Statement describing the Proposed Transactions and requesting the
consent of such Limited Partners to the Proposed Transactions. The consummation
of the Proposed Transactions was subject to the satisfaction of certain
conditions, including the approval of a majority-in-interest of the
Partnership's Limited Partners. On April 28, 2000, the Limited Partners
approved the Proposed Transactions. The General Partners anticipate that the
sale of the Properties will close on or before May 31, 2000 and that final
liquidating distributions to the partners will be made on or before June 30,
2000.
NOTE 2. BASIS OF PRESENTATION
---------------------
The balance sheet at March 31, 2000 and the related statements of operations for
the three months ended March 31, 2000 and 1999 and the statements of cash flows
for the three months ended March 31, 2000 and 1999 are unaudited. However, in
the opinion of the General Partners, they contain all adjustments, of a normal
recurring nature, necessary for a fair presentation of such financial
statements. Interim results are not necessarily indicative of results for a
full year.
The financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Partnership's annual
financial statements and notes on Form 10-KSB for the year ended December 31,
1999.
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NOTE 3. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
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The Partnership's investments in joint ventures and limited partnerships consist
of interests in four manufactured home communities at March 31, 2000. The
combined condensed results of operations of the joint venture and limited
partnership properties for the three months ended March 31, 2000 and 1999 are as
follows:
2000 1999
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Property revenues $ 473,600 $ 435,200
Expenses:
Property operating 229,200 224,700
Depreciation 124,000 117,700
Interest 93,800 94,700
General and administrative 1,000 2,100
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448,000 439,200
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Net income (loss) $ 25,600 $ (4,000)
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NOTE 4. BASIC AND DILUTED EARNINGS PER LIMITED PARTNERSHIP UNIT
-------------------------------------------------------
Basic and diluted earnings per limited partnership unit is calculated based on
the weighted average number of limited partnership units outstanding during the
period and the net income allocated to the Limited Partners. The weighted
average number of limited partnership units outstanding during the three months
ended March 31, 2000 and 1999 was 188,296 and 189,512 respectively.
NOTE 5. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to Limited
Partners are considered a return of capital. There were no distributions to
Limited Partners in the first quarter of 2000 due to the pending liquidation of
the partnership which will result in the payment of final liquidating
distributions to Limited Partners. A breakdown of cash distributions to Limited
Partners for the three months ended March 31, 1999 is as follows:
1999
-----------------------
Per
Amount Unit
-------- -----
Net income
Limited Partners $ 49,000 $0.26
Return of capital 84,300 0.44
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Total Distribution $133,300 $0.70
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Item 2.
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three months ended March 31, 2000 as compared to three months ended March 31,
- -----------------------------------------------------------------------------
1999
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The following discussion should be read in conjunction with the financial
statements and Notes thereto included elsewhere in this Form 10-QSB.
Results of Operations
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The results of operations for the three months ended March 31, 2000 and 1999 are
not directly comparable due to the sale of the Little Eagle property in April
1999. The Partnership realized net income of $56,800 and $49,500 for the three
months ended March 31, 2000 and 1999, respectively. Net income per limited
partnership unit was $0.30 in 2000 and $0.26 in 1999.
Rent and utilities revenues decreased from $431,300 in 1999 to $394,100 in 2000
due to the sale of Little Eagle.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of four manufactured home communities in
2000. Equity in earnings of joint ventures and limited partnerships increased
from $200 in 1999 to $13,100 in 2000 due to rental increases at the communities
and an increase in utility income.
Interest income decreased from $6,000 in 1999 to $100 in 2000 due to lower
investment balances maintained by the Partnership.
Interest expense decreased from $70,000 in 1999 to $34,700 due to the pay off of
the $1.8 million mortgage payable in connection with the sale of the Little
Eagle property.
General and administrative costs increased from $23,300 in 1999 to $48,400 in
2000 primarily due to an increase in legal fees.
Liquidity and Capital Resources
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The Partnership's principal sources of liquidity during the three months ended
March 31, 2000 were its cash flow generated from the operation of its
communities, and distributions from investments in joint ventures and limited
partnerships. Net cash provided by operating activities was $194,200 and
$162,000 for the three months ended March 31, 2000 and 1999, respectively. At
March 31, 2000, the Partnership's cash amounted to $209,600.
The Partnership's principal long-term liquidity requirement will be the
repayment of principal on its outstanding mortgage debt. At March 31, 2000, the
Partnership's total mortgage debt, including its proportionate share of joint
venture and limited partnership debt, was $2,730,400, consisting of $1,470,400
of fixed rate debt and $1,260,000 of variable rate debt. The average rate of
interest on the fixed and variable rate debt was 8.50% and 7.98%, respectively,
at March 31, 2000. The Partnership and the affiliated entities are contingently
liable for the full amounts of the loans obtained jointly through joint ventures
and limited partnerships.
The future sources of liquidity for the Partnership will be provided from
property operations, cash reserves and ultimately from the sale of its
communities and investments in joint ventures and limited partnerships. The
Partnership expects to meet its short-term liquidity requirements, including
capital expenditures,
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administration expenses, debt service, and distributions to partners, from cash
flow provided from property operations and distributions from investments in
joint ventures and limited partnerships. The Partnership expects to meet its
long-term liquidity requirement through the sale of its communities and
investments in joint ventures and limited partnerships, and cash reserves.
Inflation
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All of the leases or terms of tenants' occupancies at the properties allow for
at least annual rental adjustments. In addition, all of the leases are month-
to-month and enable the Partnership to seek market rentals upon reletting the
sites. Such leases generally minimize the risk to the Partnership of any
adverse effect of inflation.
PART II
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Item 3. LEGAL PROCEEDINGS
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On May 10, 1999, Ira Gaines, a limited partner of Windsor Park Properties 4, a
California Limited Partnership ("Windsor 4"), filed a purported class action and
derivative complaint (the "Complaint"), on behalf of himself and other similarly
situated limited partners, against the General Partners, in their capacity as
the general partners of Windsor 4, and the Directors and the President of TWC,
the managing General Partner of Windsor 4, in the Superior Court of the State of
California, County of San Diego. The Complaint asserted causes of action
arising out of the sale by Windsor 4 of its properties and other assets to
N'Tandem and the subsequent liquidation of Windsor 4 in accordance with its
partnership agreement and alleged the following: (i) wrongful failure to
liquidate timely Windsor 4 in that its term expired on December 31, 1997, thus
allegedly tying up the limited partners' money for longer than was contemplated
or allowed under the agreement of limited partnership of Windsor 4; (ii) breach
of fiduciary duty owed by the defendants to Windsor 4 and its limited partners
by allegedly failing to take steps to assure the entire fairness of the
transaction and that the selling prices for Windsor 4's assets fairly and
adequately represented their present value; and (iii) breach of the agreement of
limited partnership of Windsor 4 by allegedly proposing to sell partnership
assets to a sponsor of Windsor 4 without prior consent of the limited partners.
On December 3, 1999, Mr. Gaines, also a limited partner of the Partnership and
Windsor Park Properties 6, a California Limited Partnership ("Windsor 6"),
amended the Complaint, in response to the Proposed Transactions of the
Partnership and similar transactions separately proposed with respect to Windsor
6, by filing an amended purported class action and derivative complaint (the
"Amended Complaint") in the Superior Court of the State of California, County of
San Diego, on behalf of himself and other similarly situated limited partners,
against the General Partners, in their capacity as the general partners of the
Partnership, Windsor 4 and Windsor 6, and the Directors and the President of
TWC. In addition to the original allegations set forth in the Complaint
concerning Windsor 4, the Amended Complaint also alleges generally breach of
fiduciary duty and contractual duties owed by the defendants to the Partnership
and Windsor 6 and their limited partners by allegedly failing to take steps to
ensure the entire fairness of the transactions by proposing to sell such
partnerships' assets at prices that were improperly discounted from their
appraised values and without taking steps to seek out alternative purchasers or
otherwise maximize value to the limited partners. The Complaint and the Amended
Complaint both sought monetary damages, an award of expenses, dissolution of
Windsor 4, and the appointment of an independent liquidating trustee to
liquidate Windsor 4's assets.
Although the General Partners dispute each claim set forth in the Complaint and
Amended Complaint, they concluded that the further defense of this action would
be protracted, expensive and distracting to their operations. To that end, on
February 17, 2000, the General Partners executed a settlement agreement with Mr.
Gaines and the class he sought to represent providing for the total payment by
the defendants of more than $1 million, plus the costs of administering the
settlement fund (including the mailing of notice to class members), in return
for releases from all actual and potential claims concerning the management or
operation of the Partnership, Windsor 4 and Windsor 6 against all of the
defendants and any affiliated persons or entities. On May 2, 2000, the Superior
Court approved the settlement and entered a Final Order
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and Judgment discharging all claims and enjoining the class from commencing suit
at any time on any claim related to the operation or management of the
Partnership, Windsor 4 and Windsor 6. In connection with the settlement, the
Court awarded plaintiffs' counsel one-third of the aggregate settlement amount
as attorney's fees, plus expenses. As a result, the General Partners estimate
that those Limited Partners who did not elect to exclude themselves from the
class will receive, after payment of estimated attorney's fees and expenses to
plaintiffs' counsel, an amount of approximately $.76 per unit of limited partner
interest.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
On March 22, 2000, the General Partners mailed to the Limited Partners a Consent
Solicitation Statement describing the Proposed Transactions and requesting the
consent of such Limited Partners to the Proposed Transactions (the
"Solicitation"). In the Solicitation, the General Partners sought the consent
of the Limited Partners to the proposed sale of the Partnership's Properties
(the "Sales") to N'Tandem and the proposed liquidation of the Partnership
pursuant to a plan of liquidation (the "Plan of Liquidation") following such
Sales.
On April 28, 2000, the Limited Partners approved the Proposed Transactions. The
results of the Solicitation as of the close of the solicitation period were as
follows: (i) Limited Partners holding 118,832 units of limited partner interest
in the Partnership ("Units"), representing 62.99% of all issued and outstanding
Units, returned consent forms, (ii) Limited Partners holding 94.04% of all Units
for which consent forms were received consented to the Sales, (iii) Limited
Partners holding 93.91% of all Units for which consent forms were received
consented to the Plan of Liquidation, (iv) Limited Partners holding 4.21% of all
Units for which consent forms were received withheld their consent to the Sales,
(v) Limited Partners holding 4.17% of Units for which consent forms were
received withheld their consent to the Plan of Liquidation, (vi) Limited
Partners holding 1.76% of all Units for which consent forms were received
abstained from consenting to the Sales, and (vii) Limited Partners holding 1.79%
of all Units for which consent forms were received abstained from consenting to
the Plan of Liquidation.
The General Partners anticipate that the Sales will close on or before May 31,
2000 and that, in accordance with the Plan of Liquidation, final liquidating
distributions to partners will be made on or about June 30, 2000.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
9
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SIGNATURE
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.
WINDSOR PARK PROPERTIES 3,
A California Limited Partnership
By The Windsor Corporation, its Managing General Partner
By /s/ Steven G. Waite
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STEVEN G. WAITE
President
Date: May 15, 2000
10
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 209,600
<SECURITIES> 0
<RECEIVABLES> 319,600
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 3,286,600
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0
0
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