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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-16816
SUMMIT TAX EXEMPT L.P. III
(Exact names of registrant as specified in its charter)
Delaware 13-3442249
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(unaudited)
============ ============
March 31, December 31,
1997 1996
------------ ------------
ASSETS
Participating first mortgage bonds-at fair value $ 44,769,792 $ 44,769,792
Temporary investments 100,000 300,000
Cash and cash equivalents 274,370 59,832
Interest receivable, net 127,677 164,883
Deferred bond selection fees, net 652,347 667,755
Other assets 3,869 0
------------ ------------
Total assets $ 45,928,055 $ 45,962,262
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 118,813 $ 124,106
Due to affiliates 214,341 100,261
------------ ------------
Total liabilities 333,154 224,367
------------ ----------
Contingencies
Partners' capital (deficit):
BUC$holders (3,081,625 BUC$
issued and outstanding) 48,949,762 49,089,896
General Partners (174,653) (171,793)
Net unrealized loss on participating first
mortgage bonds (3,180,208) (3,180,208)
------------ ------------
Total partners' capital 45,594,901 45,737,895
------------ ------------
Total liabilities and partners' capital $ 45,928,055 $ 45,962,262
============ ============
See accompanying notes to financial statements
2
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
STATEMENTS OF INCOME
(unaudited)
=======================
Three Months Ended
March 31,
-----------------------
1997 1996
-----------------------
REVENUES:
Interest income:
Participating first mortgage bonds $705,517 $699,417
Temporary investments 2,393 3,314
-------- --------
Total revenues 707,910 702,731
-------- --------
EXPENSES:
General and administrative 46,706 46,690
Loan servicing fees 32,332 32,691
Amortization of deferred bond
selection fees 15,408 15,407
-------- --------
Total expenses 94,446 94,788
-------- --------
Net Income $613,464 $607,943
======== ========
ALLOCATION OF NET INCOME:
BUC$holders $537,824 $531,709
======== ========
General Partners:
Special distribution $ 64,664 $ 65,383
Other 10,976 10,851
-------- --------
$ 75,640 $ 76,234
======== ========
Net Income per BUC $ .17 $ .17
======== ========
See accompanying notes to financial statements
3
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(unaudited)
<TABLE>
<CAPTION>
==================================================================================
Net Unrealized
Loss on
General Participating First
Total BUC$holders Partners Mortgage Bonds
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Partners' capital (deficit) -
January 1, 1997 $ 45,737,895 $ 49,089,896 $ (171,793) $ (3,180,208)
Net income 613,464 537,824 75,640 0
Distributions (756,458) (677,958) (78,500) 0
Partners' capital (deficit) - $ 45,594,901 $ 48,949,762 $ (174,653) $ (3,180,208)
March 31, 1997
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
STATEMENTS OF CASH FLOWS
(unaudited)
=======================
Three Months Ended
March 31,
-----------------------
1997 1996
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received, net $ 745,116 $ 702,731
Amount received which is due to affiliate 0 39,517
Fees and expenses paid (38,784) (14,760)
--------- ---------
Net cash provided by operating activities 706,332 727,488
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sale of temporary investments 200,000 25,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid (691,794) (691,794)
--------- ---------
Net increase in cash and cash equivalents 214,538 60,694
Cash and cash equivalents at beginning of period 59,832 347,908
--------- ---------
Cash and cash equivalents at end of period $ 274,370 $ 408,602
========= =========
SCHEDULE RECONCILING NET INCOME TO NET CASH
FLOW PROVIDED BY OPERATING ACTIVITIES:
Net income $ 613,464 $ 607,943
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred bond selection fees 15,408 15,407
Changes in:
Interest receivable, net 37,206 0
Other assets (3,869) 4,209
Accounts payable and accrued expenses (5,293) 15,961
Due to affiliates 49,416 83,968
--------- ---------
Total adjustments 92,868 119,545
--------- ---------
Net cash provided by operating activities $ 706,332 $ 727,488
========= =========
SUPPLEMENTAL SCHEDULE OF FINANCING ACTIVITIES
Distributions to partners $(756,458) $(757,177)
Increase in distributions payable 64,664 65,383
--------- ---------
Distributions paid to partners $(691,794) $(691,794)
========= =========
See accompanying notes to financial statements
5
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 1 - General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Summit Tax Exempt L.P. III (the "Partnership") as of March 31, 1997
and the results of its operations and its cash flows for the three months ended
March 31, 1997 and 1996. However, the operating results for the interim periods
may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Partnership's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1996.
NOTE 2 - Participating First Mortgage Bonds ("FMBs")
The Partnership accounts for its investments in the FMBs as "available for
sale" debt securities under the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). Accordingly, investments in FMBs are carried at their
estimated fair values, with unrealized gains and losses reported in a separate
component of partners' capital.
Because the FMBs are not readily marketable, the Partnership estimates fair
value for each bond as the present value of its expected cash flows using a
discount rate for comparable tax-exempt investments. This process is based upon
projections of future economic events affecting the real estate collateralizing
the bonds, such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates, and upon determination of an
appropriate market rate of interest, all of which are based on good faith
estimates and assumptions developed by the Partnership's management. Changes in
market conditions and circumstances may occur which would cause these estimates
and assumptions to change, therefore, actual results may vary from the estimates
and the variance may be material.
Effective January 1, 1997, a forbearance agreement with respect to the
Players Club FMB was modified and extended due to a continuous weak rental
market and to ensure that real estate tax payments and capital improvements are
made. The minimum pay rate for Players Club was reduced to 6.5% and 6.25% for
the periods January 1, 1997 through January 31, 1997 and February 1, 1997
through December 31, 1997, respectively. Thereafter, it is expected that the
stated rate of 8% will be reinstated.
With respect to all FMBs, the difference between the stated interest rates
and the actual rates paid (whether deferred and payable out of future cash flow
or, ultimately, from sale or refinancing proceeds) on FMBs is not accrued for
financial statement purposes. Unrecorded contractual interest income was
approximately $407,000 and $417,000 for the three months ended March 31, 1997
and 1996, respectively.-
The cost basis of the FMBs was $47,950,000 at March 31, 1997 and December
31, 1996. The net unrealized loss on FMBs consists of gross unrealized gains and
losses of $0 and $3,180,208, respectively, at both March 31, 1997 and December
31, 1996.
6
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 2 - Participating First Mortgage Bonds ("FMBs") (continued)
Descriptions of the various FMBs owned by the Partnership at March 31, 1997 are
as follows:
<TABLE>
<CAPTION>
Annualized
Interest Rate
Paid for the Minimum
three months Annual Carrying
ended Pay Rate at Stated Amount at
March 31, March Interest Maturity March 31,
Property Location 1997* 31, 1997* Rate* Call Date Date Face Amount 1997(C)
- - -------- -------- ------------- ----------- -------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Player's Club(A) Fort Myers, FL 6.42% 6.25% 8.00% Aug. 1999 Aug. 2007 $ 7,200,000 $ 6,843,428
Lakepointe Stone Mountain, GA 6.00 6.00 8.50 Jan. 2000 Oct. 2007 15,100,000 14,159,707
Sunset Village Lancaster, CA 4.01 (B) 8.50 Mar. 2000 Mar. 2008 11,375,000 9,085,396
Sunset Creek Lancaster, CA 4.40 (B) 8.50 Mar. 2000 Mar. 2008 8,275,000 6,004,427
Orchard Mill Atlanta, GA 7.53(D) 5.00 9.00 Apr. 2001 Mar. 2008 10,500,000 8,676,834
----------- ------------
$52,450,000 $ 44,769,792
=========== ============
</TABLE>
*The annualized interest rate paid represents the interest recorded by the
Partnership while the stated interest rate represents the coupon rate of the FMB
and the minimum annual pay rate represents the minimum rate required to be paid
under the respective forbearance agreements.
(A) Summit Tax Exempt L.P. II, of which the general partners are either the
same or affiliates of the General Partners of the Partnership, acquired the
other $2,500,000 of the Player's Club Bond issue.
(B) Interest on this FMB is paid to the extent of the property's net cash flow.
(C) FMBs are carried at their estimated fair values at March 31, 1997.
(D) Includes receipt of deferred base interest related to prior periods.
7
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 3 - Related Parties
Prudential-Bache Properties, Inc. ("PBP") and the Related General Partner
(collectively, the "General Partners") and their affiliates perform services for
the Partnership which include, but are not limited to: accounting and financial
management; registrar, transfer and assignment functions; asset management;
investor communications; printing and other administrative services. The General
Partners and their affiliates receive reimbursements for costs incurred in
connection with these services, the amount of which is limited by the provisions
of the Agreement of Limited Partnership (the "Partnership Agreement"). The costs
and expenses were:
Three Months Ended
March 31,
---------------------
1997 1996
---------------------
PBP and affiliates:
General and administrative $10,683 $15,112
------- -------
Related General Partner and affiliates:
Loan servicing fees 32,332 32,691
General and administrative 6,345 15,000
------- -------
38,677 47,691
------- -------
$49,360 $62,803
======= =======
An affiliate of the Related General Partner receives loan servicing fees
(see above) in an amount of .25% per annum of the principal amount outstanding
of mortgage loans serviced by the affiliate.
During January 1996, a division of Prudential Securities Incorporated
("PSI"), an affiliate of PBP, was responsible for the purchase, sale and
safekeeping of the Partnership's temporary investments. This account was
maintained in accordance with the Partnership Agreement.
PSI owns 17,700 BUC$ at March 31, 1997.
The Player's Club property (securing a $7,200,000 FMB in this Partnership)
also secures an FMB for $2,500,000 held by Summit Tax Exempt L.P. II, of which
the general partners are either the same or affiliates of the General Partners
of this Partnership. The original owner of the FMB is an affiliate of the
Related General Partner.
Effective as of August 1, 1995, the original owner and obligor of the
Sunset Creek and Sunset Village FMBs transferred the deeds to the underlying
properties to an affiliate of the Related General Partner for limited
consideration. Purusant to the agreement, the Related General Partner's
affiliate, who has not made an equity investment in the underlying property,
assumed the day-to-day responsibilities and obligations of operating the
properties.
8
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 4 - Contingencies
On or about October 18, 1993, a putative class action, captioned Kinnes et
al. v. Prudential Securities Group, Inc. et al. (CV-93-654), was filed in the
United States District Court for the District of Arizona, purportedly on behalf
of investors in the Partnership, against the Partnership, PBP, PSI and a number
of other defendants. On November 16, 1993, a putative class action captioned
Connelly et al. v. Prudential-Bache Securities Inc. et al. (93 Civ. 713) , was
filed in the United States District Court for the District of Arizona ,
purportedly on behalf of investors in the Partnership against the Partnership,
PBP, PSI and a number of other defendants. On January 3, 1992, a putative class
action, captioned Levine v. Prudential-Bache Properties Inc. et al. (92 Civ.
52), was filed in the United States District Court for the Northern District of
Illinois purportedly on behalf of investors in the Partnership against the
General Partners, PSI and a number of other defendants. Subsequently, the
Related General Partner was dismissed from the Levine litigation.
By order of the Judicial Panel on Multidistrict Litigation dated April 14,
1994, the Kinnes case, by order dated May 4, 1994, the Connelly case and by
order dated July 13, 1994, the Levine case, were transferred to a single judge
of the United States District Court for the Southern District of New York (the
"Court") and consolidated for pretrial proceedings under the caption In re
Prudential Securities Incorporated Limited Partnerships Litigation (MDL Docket
1005) (the "Class Action"). On June 8, 1994, plaintiffs in the transferred cases
filed a complaint that consolidated the previously filed complaints and named as
defendants, among others, PSI, certain of its present and former employees and
the General Partners. The Partnership was not named a defendant in the
consolidated complaint, but the name of the Partnership was listed as being
among the limited partnerships at issue in the case.
On August 9, 1995 PBP, PSI and other Prudential defendants entered into a
Stipulation and Agreement of Partial Compromise and Settlement with legal
counsel representing plaintiffs in the consolidated actions. The court
preliminarily approved the settlement agreement by order dated August 29, 1995
and, following a hearing held November 17, 1995, found that the agreement was
fair, reasonable, adequate and in the best interests of the plaintiff class. The
Court gave final approval to the settlement, certified a class of purchasers of
specific limited partnerships, including the Partnership, released all settled
claims by members of the class against the PSI settling defendants and
permanently barred and enjoined class members from instituting, commencing or
prosecuting any settled claim against the released parties. The full amount due
under the settlement agreement has been paid by PSI. The Levine and Connelly
cases were dismissed with prejudice as to the Prudential defendants by court
order dated October 25, 1996. The consolidated action remains pending against
the Related General Partner and certain of its affiliates.
On December 31, 1996, the Court issued a preliminary approval order (the
"Order") with respect to settlement (the "Related Settlement") of the Class
Action against the Related General Partner and certain of its affiliates.
Pursuant to the stipulation of settlement entered into with counsel for the
class on December 24, 1996, the proposed Related Settlement contemplates, among
other matters, the reorganization (the "Reorganization") of the Partnership and
two other partnerships co-sponsored by affiliates of the Related General Partner
and PBP.
9
<PAGE>
SUMMIT TAX EXEMPT L.P. III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
NOTE 4 - Contingencies (continued)
The proposed Related Settlement and Reorganization are subject to
objections by the BUC$holders and limited partners of the Partnership as well as
each of the other concerned partnerships and final approval of the Court after
review of the proposals at a fairness hearing.
Under the proposed Reorganization plan, the BUC$holders of the Partnership,
and Summit Tax Exempt Bond Fund L.P. and Summit Tax Exempt L.P. II, will receive
shares in a newly formed business trust. It is anticipated that the shares will
be allocated proportionately among the partnerships and their respective
investors based upon appraisals and other factors as supported by a third-party
fairness opinion. Detailed information about the proposed Related Settlement and
Reorganization will be sent to BUC$holders in the near future. The terms of the
Reorganization include, among other matters, the acquisition by affiliates of
the Related Capital Company ("RCC") of PBP's general partner interest (the "PBP
Interest"), transfer to the BUC$holders of one-half of the PBP Interest,
reduction of the sum of the aggregate annual fees currently payable to both
General Partners by 25%, filing an application to list the new company's shares
on an exchange and the creation of an infinite, as opposed to finite,
life-operating business.
In connection with the proposed Related Settlement and Reorganization, on
December 19, 1996, PBP and RCC entered into an agreement for the purchase by RCC
or its affiliates of the PBP Interest. The agreement is subject to numerous
conditions, including the effectiveness of the Related Settlement of the Class
Action and the approval of the sale and withdrawal of PBP as a general partner
of the Partnership by the Court.
Pending final approval of the Related Settlement, the Court's Order
prohibits class members (including the BUC$holders) from, among other matters,
(i) transferring their BUC$ unless the transferee agrees to be bound by the
Related Settlement; (ii) granting a proxy to object to the Reorganization; or
(iii) commencing a tender offer for the BUC$. In addition, the General Partners
are enjoined from (i) recording any transfers made in violation of the Order and
(ii) providing the list of investors in any of the partnerships which are the
subject of the Reorganization to any person conducting a tender offer.
There can be no assurance that the conditions to the closing of the
proposed Related Settlement and Reorganization will be satisfied nor as to the
time frame in which a closing may occur. In the event a settlement cannot be
reached, the Related General Partner believes it has meritorious defenses to the
consolidated complaint and intends to vigorously defend this action.
NOTE 5 - Subsequent Events
On May 12, 1997, Summit Tax Exempt L.P. II, of which the general partners
are either the same or affiliates of the General Partners of this Partnership,
loaned the obligor of the Players Club $280,000 to cover the shortfall on its
1996 real estate tax payment and to fund a capital improvement account. The note
will be self-amortizing at an annual interest rate of 8% for a term of 48
months.
In May 1997, a distribution of approximately $678,000 and $14,000 was paid
to the BUC$holders and General Partners, respectively, for the quarter ended
March 31, 1997.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
Summit Tax Exempt L.P. III (the "Partnership") has invested in five
tax-exempt participating first mortgage bonds ("FMBs") issued by various state
or local governments or their agencies or authorities. The FMBs are secured by
participating first mortgage loans on the properties.
At the beginning of the year, the Partnership had cash and temporary
investments of approximately $360,000. After receipt of the net cash flow from
operations of approximately $706,000 and the payment of distributions of
approximately $693,000, the Partnership had approximately $374,000 in cash and
temporary investments at March 31, 1997. The first quarter distribution of
$678,000 ($.22 per BUC) was paid to BUC$holders in May 1997 from cash flow from
operations. Interest payments from FMBs are anticipated to provide sufficient
liquidity to fund in future years the Partnership's operating expenditures, debt
service and distributions. The restructuring of the FMBs in prior years and any
future restructurings may result in the General Partners reducing the
distributions to BUC$holders in future periods.
Effective January 1, 1997, a forbearance agreement with respect to the
Players Club FMB was modified and extended due to a continuous weak rental
market and to ensure that real estate tax payments and capital improvements are
made. The minimum pay rate for Players Club was reduced to 6.5% and 6.25% for
the periods January 1, 1997 through January 31, 1997 and February 1, 1997
through December 31, 1997, respectively. Thereafter, it is expected that the
stated rate of 8% will be reinstated.
For a discussion of the proposed settlement of the Class Action relating to
the Partnership, see Note 4 to the financial statements.
Management is not aware of any trends or events, commitments or
uncertainties, which have not otherwise been disclosed that will or are likely
to impact liquidity in a material way. The Partnership's investments in FMBs are
secured by a Partnership interest in properties which are diversified by
location so that if one area of the country is experiencing downturns in the
economy, the remaining properties may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.
Results of Operations
Net income increased approximately $6,000 for the three months ended March
31, 1997 as compared to the corresponding period in 1996 for the reason
discussed below.
Interest income from FMBs increased approximately $6,000 for the three
months ended March 31, 1997, as compared to the corresponding period in 1996
primarily due to increased debt service payments received from the Orchard Mill
(including the receipt of deferred base interest relating to prior periods) and
Sunset Creek FMBs, partially offest by a decrease in debt service payments
received from the Player's Club FMB.
General
The determination as to whether it is in the best interest of the
Partnership to enter into forbearance agreements on the FMBs or, alternatively,
to pursue its remedies under the loan documents, including foreclosure, is based
upon several factors including, but not limited to, property performance, owner
cooperation and projected legal costs.
11
<PAGE>
From time to time, certain property owners have elected to supplement the
cash flow generated by the properties to meet the required FMB interest
payments. There can be no assurance that in the future any property owner will
elect to supplement property cash flow to satisfy bond interest requirements, if
necessary. No property owner made supplementary payments during the three months
ended March 31, 1997 and 1996.
Property Information
The following table lists the FMBs the Partnership owns together with occupancy
rates of the underlying properties as of March 31, 1997:
<TABLE>
<CAPTION>
Annualized
Interest Minimum
Rate Paid Annual
for the three Pay Rate
Stated months ended at
Interest March 31, March 31,
Property Face Amount Occupancy Rate* 1997* 1997*
- - -------- ----------- --------- ----- ------------ ---------
<S> <C> <C> <C> <C> <C>
Player's Club, Fort Myers, FL (A) $ 7,200,000 82.0% 8.00% 6.42% 6.25%
Lakepointe, Stone Mountain, GA 15,100,000 89.7 8.50 6.00 6.00
Sunset Village, Lancaster, CA 11,375,000 95.0 8.50 4.01 (B)
Sunset Creek, Lancaster, CA 8,275,000 93.0 8.50 4.40 (B)
Orchard Mill, Atlanta, GA 10,500,000 96.0 9.00 7.53(C) 5.00
------------
$ 52,450,000
============
</TABLE>
*The annualized interest rate paid represents the interest recorded by the
Partnership while the stated interest rate represents the coupon rate of the FMB
and the minimum annual pay rate represents the minimum rate required to be paid
under the respective forbearance agreements.
(A) Summit Tax Exempt L.P. II, of which the general partners are either the
same or affiliates of the General Partners of the Partnership, acquired the
other $2,500,000 of the Player's Club Bond issue.
(B) Interest on this FMB is paid to the extent of the property's net cash flow.
(C) Includes receipt of deferred base interest related to prior periods.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - Incorporated by reference to Note 4 to the financial
statements filed herewith in Item 1 of Part 1 of the Registrant's Quarterly
Report.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
Thomas F. Lynch, III ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and Director of Prudential-Bache Properties,
Inc. effective May 2, 1997. Effective May 2, 1997, Brian J. Martin was elected
President, Chief Executive Officer, Chairman of the Board of Directors and
Director of Prudential-Bache Properties, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4(a) Partnership Agreement, incorporated by reference to Exhibit A to
the Prospectus of Registrant, dated February 25, 1987, filed
pursuant to Rule 424(b) under the Securities Act of 1933, File No.
33-13184.
4(b) Certificate of Limited Partnership is incorporated by reference to
Exhibit 4 to the Registration Statement on Form S-11, File No.
33-13184.
10(n) Amended Forbearance Agreement for the Players Club First Mortgage
Bond dated December 1, 1996 (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K
Current report on Form 8-K dated December 31, 1996, was filed on January
10, 1997 relating to a preliminary approval order with respect to the settlement
of class action litigation.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUMMIT TAX EXEMPT L.P. III
By: Related Tax Exempt Associates III, Inc.
A Delaware corporation, General Partner
Date: May 14, 1997 By: /s/Alan P. Hirmes
----------------------------------
Alan P. Hirmes
Vice President
(Principal Financial Officer)
Date: May 14, 1997 By: /s/Richard A. Palermo
----------------------------------
Richard A. Palermo
Treasurer
(Principal Accounting Officer)
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
Date: May 14, 1997 By:/s/Eugene D. Burak
----------------------------------
Eugene D. Burak
Vice President
14
[Letterhead of Summit Tax Exempt L.P. II]
December 1, 1996
Players Club at Fort Myers, Ltd.
c/o H/R Florida Associates, L. P.
625 Madison Avenue
New York, NY 10022
Gentlemen:
Players Club at Fort Myers, Ltd., a California limited partnership organized and
existing in the State of California (the "Developer), is the Developer and Owner
of a 288-unit multifamily residential rental housing development known as
Players Club Apartments, located in Lee County, Florida (the "Project"). The
cost of acquiring, constructing, improving and equipping the Project was
financed by the Florida Housing Finance Agency (the "Issuer"), by the issuance
of its Multi-Family Housing Revenue Bonds, 1987 Series C (Players Club at Fort
Myers Project), in the principal amount of $9,700,000 pursuant to a series of
Bond Resolutions adopted on September 13, 1985; September 17, 1985; October
15, 1985; and June 26, 1987.
The terms of the Bonds, the security therefor, the rights and remedies of the
holders thereof, and various other matters in connection therewith were
prescribed pursuant to a Trust Indenture between the Issuer and Southeast Bank,
N.A. (the "Trustee"), dated as of July 1, 1987 (the "Trust Indenture").
Proceeds of the Bonds were loaned to the Developer pursuant to a Loan Agreement
between the Issuer and the Developer dated as of July 1, 1987 (the "Loan
Agreement"), evidenced by the Developer's Promissory Note (the "Note") in the
amount of $9,700,000. The obligations of the Developer under the Loan Agreement
and the Note are secured by a Mortgage and Security Agreement, dated as of July
1, 1987, and various other loan documents defined in the Loan Agreement
(collectively, the "Loan Documents").
All of the Bonds issued pursuant to the Trust Indenture were purchased and are
owned as of this date by Summit Tax Exempt L.P. II and Summit Tax Exempt L.P.
III
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Two
(collectively referred to as "Summit"), both of which are limited partnerships
organized and existing under the laws of the State of Delaware.
As of February 1, 1992, the Project's cash flow was inadequate to provide for
certain capital improvements required to be made and for certain other expenses
being incurred; accordingly, the Developer requested that a portion of the Base
Interest on the Note ("Base Interest"), required to be paid monthly in
accordance with the terms of the Trust Indenture and Bonds, be temporarily
deferred. The failure to pay any portion of the required Base Interest when due
would constitute an Event of Default pursuant to various provisions of the Trust
Indenture, Bonds and Loan Documents. Pursuant to Section 9.02 (a) of the Trust
Indenture, Summit, as the single owner of the Bonds, is the designated "Acting
Party" with the sole authority to take actions in respect of any Event of
Default. In response to the Developer's request, the Developer and Summit
entered into a letter agreement dated as of February 1,1992 (the "1992 Letter
Agreement"), whereby Summit agreed to forbear from enforcing its remedies under
the various default and remedies provisions of the Trust Indenture, Bonds and
Loan Documents (the "Remedies Provisions") based upon the payment of portions of
the Base Interest, and on various other terms and conditions, all as set forth
therein. Pursuant to the 1992 Letter Agreement, certain portions of the Base
Interest which would have been due and payable between January 1, 1992 and
December 31, 1993, were deferred in accordance with the terms and conditions
thereof.
As of December 1, 1993, the Developer requested a continuation of Summit's
agreement to forbear from enforcing its remedies under the Remedies Provisions
upon the occurrence of further defaults for the non-payment of Base Interest
when due, from and after December 31,1993. In response to the Developer's
request, the Developer and Summit entered into a second letter agreement dated
as of December 1, 1993 (the 1993 Letter Agreement".) pursuant to which certain
portions of the Base Interest which would have been due and payable between
January 1, 1994 and December 31, 1994, were deferred in accordance with the
terms and conditions thereof.
As of December 1, 1994, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence of
further defaults for the non-payment of Base Interest when due, from and after
December 31, 1994, again conditioned on the payment of certain portions of such
interest when due. In response to the Developer's request, the Developer and
Summit entered into a third letter agreement dated as of December 1, 1994 (the
1994 Letter Agreement") pursuant to which certain portions of the Base Interest
which would have been due and payable between January 1, 1995 and December 31,
1995, were deferred in accordance with the terms and conditions thereof.
As of December 1, 1995, the Developer requested that Summit agree to forbear
from enforcing its remedies under the Remedies Provisions upon the occurrence of
further
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Three
defaults for the non-payment of Base Interest when due, from and after December
31, 1995, again conditioned on the payment of certain portions of such interest
when due. In response to the Developer's request, the Developer and Summit
entered into a fourth letter agreement dated as of December 1, 1995 (the "1995
Letter Agreement") pursuant to which certain portions of the Base Interest which
would have been due and payable between January 1, 1996 and December 31, 1996,
were deferred in accordance with the terms and conditions thereof.
As of this date, the Developer has requested that Summit agree to forbear from
enforcing its remedies under the Remedies Provisions upon the occurrence of
further defaults for the non-payment of Base Interest when due, from and after
December 31, 1996, again conditioned on the payment of certain portions of such
interest when due.
In addition, the parties desire to correct an error in Paragraph 2(e) of the
1994 Letter Agreement, dealing with the interest rate applicable to accrued and
unpaid Base Interest outstanding from time to time.
Accordingly, Summit and the Developer agree as follows:
1. Extension and Modification of "Time Period" and "Minimum Pay Rate."
The "Time Period" and "Minimum Pay Rate" set forth in Paragraph 2(d) of the
1994 Letter Agreement, as previously extended pursuant to the 1995 Letter
Agreement, are further extended and modified as follows:
Time Period Minimum Pay Rate
----------- ----------------
01/01/97-01/31/97 6.50% per annum
02/01/97-12/31/97 6.25% per annum
2. Interest on Unpaid Amounts.
Paragraph 2(e) of the 1994 Letter Agreement is amended by striking "Section
7.10" and by inserting "Section 3.03 (c)(1)" in lieu thereof.
Except as specifically extended and modified herein, Summit and the Developer
agree that all the provisions, terms and conditions of the 1994 Letter
Agreement, as extended by the 1995 Letter Agreement, are hereby ratified and
confirmed, and shall remain in full force and effect.
<PAGE>
Players Club at Fort Myers
December 1, 1996
Page Four
If the above accurately sets forth the extension and modification on which we
have agreed, please return to us five (5) copies of this letter executed by you
in the space provided below, at which time this letter shall constitute a
binding amendment to the 1994 and 1995 Letter Agreements.
Very truly yours,
SUMMIT TAX EXEMPT L.P. II
By: Related Tax Exempt Associates II, Inc.,
a general partner
By: /s/Alan Hirmes
-------------------------------------
(Title)
SUMMIT TAX EXEMPT L.P. III
By: Related Tax Exempt Associates 111, Inc.,
a general partner
By:/s/Alan Hirmes
-------------------------------------
(Title)
Accepted and Agreed to as of the
18th day of December, 1996:
PLAYERS CLUB AT FORT MYERS, LTD.,
A California limited partnership
By: H/R FLORIDA ASSOCIATES L.P.,
a Delaware limited partnership,
a general partner
By: A General Partner RELATED ADVANTAGED
RESIDENTIAL ASSOCIATES, INC.,
a Delaware Corporation
By: /s/Max Schlopy
-----------------------
Max Schlopy
Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information
extracted from the financial statements for Summit
Tax Exempt L.P. III and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<CIK> 0000812220
<NAME> Summit Tax Exempt L.P. III
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 274,370
<SECURITIES> 44,869,792
<RECEIVABLES> 127,677
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,869
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,928,055
<CURRENT-LIABILITIES> 333,154
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 45,594,901
<TOTAL-LIABILITY-AND-EQUITY> 45,928,055
<SALES> 0
<TOTAL-REVENUES> 707,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 613,464
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 613,464
<EPS-PRIMARY> .17
<EPS-DILUTED> 0
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