FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission File Number 33-24235
SECURED INVESTMENT RESOURCES FUND, L.P. III
(Exact name of registrant as specified in its charter)
Missouri 48-6291172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5453 W. 61st Place, Mission, Kansas 66205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, (913) 384-5700
including area code
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests ("Units")
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 such shorter periods 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>
SECURED INVESTMENT RESOURCES FUND, L.P. III
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Balance Sheets -- June 30, 1995
and December 31, 1994 3-4
Statements of Operations -- Three and Six
Months Ended June, 1995 and 1994 5
Statements of Partnership Capital --
Six Months Ended June 30, 1995 and
the Years Ended December 31, 1994 and 1993 6
Statements of Cash Flows -- Six Months
Ended June 30, 1995 and 1994 7
Notes to Financial Statements 8-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. III
BALANCE SHEETS
June 30,
1995 December 31,
(Unaudited) 1994
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 14,557,719 $ 14,539,780
Furniture, fixtures, and equipment 1,299,883 1,235,233
---------- ----------
15,857,602 15,775,013
Less accumulated depreciation 3,942,692 3,695,423
---------- ----------
11,914,910 12,079,590
---------- ----------
RESTRICTED DEPOSIT
Certificate of Accrual on
Treasury Security 795,020 762,531
---------- ----------
OTHER ASSETS
Cash 306,796 144,737
Rents and other receivables, less
allowance of $10,950 in 1995 and
$7,814 in 1994 75,201 51,184
Prepaid expenses and deposits 20,977 49,317
Due from related parties--Notes
D and E
Note Receivable 593,384 607,104
Syndication Costs 483,419 483,419
Debt issuance costs, net of
accumulated amortization of
$28,542 in 1995 and $26,042
in 1994 46,458 48,958
---------- ----------
1,526,235 1,384,719
---------- ----------
$ 14,236,165 $ 14,226,840
---------- ----------
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
BALANCE SHEETS--CONT'D.
June 30,
1995 December 31,
(Unaudited) 1994
LIABILITIES AND PARTNERSHIP DEFICIT
Mortgage debt--Note B $ 13,705,124 $ 13,737,201
Notes payable - insurance --- 9,833
Accounts payable and
accrued expenses 816,362 586,076
Accrued interest 291,247 347,175
Unearned revenue 16,974 9,959
Tenant security deposits 81,112 72,459
---------- ----------
TOTAL LIABILITIES 14,910,819 14,762,703
---------- ----------
PARTNERSHIP DEFICIT
General Partners
Capital contributions 2,000 2,000
Partnership deficit (45,902) (44,514)
---------- ----------
(43,902) (42,514)
---------- ----------
Limited Partners
Capital contributions 3,915,084 3,915,084
Partnership deficit (3,284,332) (4,408,433)
---------- ----------
(630,752) (493,349)
---------- ----------
TOTAL PARTNERSHIP DEFICIT (674,654) (535,863)
---------- ----------
$ 14,236,165 $ 14,226,840
---------- ----------
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUES
Rents $ 1,278,546 $ 1,118,798 $ 660,471 $ 580,215
Interest 49,823 30,396 19,513 6,693
--------- --------- --------- ---------
1,328,369 1,149,194 679,984 586,908
--------- --------- --------- ---------
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 622,033 583,657 325,692 304,539
General and
administrative
expenses 35,256 30,377 18,411 12,970
Professional services 21,246 47,876 11,482 20,279
Management Fees 63,791 55,561 33,180 28,422
--------- --------- --------- ---------
742,326 717,471 388,765 366,210
--------- --------- --------- ---------
NET OPERATING INCOME 586,043 431,723 291,219 220,698
NON-OPERATING EXPENSES
Interest 475,064 444,903 238,592 222,348
Depreciation and
amortization 249,770 353,723 124,886 176,220
--------- --------- --------- ---------
724,834 798,626 363,478 398,568
--------- --------- --------- ---------
PARTNERSHIP LOSS $ (138,791) $ (366,903) $ (72,259) $ (177,870)
--------- --------- --------- ---------
Allocation of loss:
General Partners (1,388) (3,669) (723) (1,779)
Limited Partners (137,403) (363,234) (71,536) (176,091)
--------- --------- --------- ---------
$ (138,791) $ (366,903) $ (72,259) $ (177,870)
--------- --------- --------- ---------
Partnership loss per
limited partnership
unit $ (14.19) $ (37.50) $ ( 7.39) $ (18.18)
--------- --------- --------- ---------
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
STATEMENTS OF PARTNERSHIP DEFICIT
Six Months Ended June 30, 1995 (Unaudited)
and the Years Ended December 31, 1994 and 1993
General Limited
Partners Partners Total
Balances at January 1, 1993 $ (30,420) $ 703,971 $ 673,551
Partnership loss (5,810) (575,230) (581,040)
-------- -------- --------
Balances at December 31, 1993 (36,230) 128,741 92,511
Partnership loss (6,284) (622,090) (628,374)
-------- -------- --------
Balances at December 31, 1994 (42,514) (493,349) (535,863)
Partnership loss (1,388) (137,403) (138,791)
-------- -------- --------
Balances at June 30, 1995 $ (43,902) $ (630,752) $(674,654)
-------- -------- --------
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30,
1995 1994
OPERATING ACTIVITIES
Partnership loss $ (138,791) $ (366,903)
Adjustments to reconcile
partnership loss to net
cash provided by (used in)
operating activities:
Depreciation and
amortization 249,770 353,723
Provision for losses on rents
and other receivables 3,136 ---
Changes in assets and liabilities:
Rent and other receivables (27,153) 15,455
Prepaid expenses and deposits 28,339 14,324
Note payable - insurance ( 9,833) ---
Accounts payable and
accrued expenses 230,287 99,903
Accrued interest (55,927) 31,663
Unearned revenue 7,014 1,386
Tenant security deposits 8,653 641
------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 295,495 150,192
------- --------
INVESTING ACTIVITIES
Purchase of and improvements to
investment properties (82,589) (29,894)
Interest earned on certificate
of accrual on Treasury Security (32,489) (25,592)
------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (115,078) (55,486)
------- --------
FINANCING ACTIVITIES
Principal payments on
long-term borrowings (32,076) (20,578)
Note Receivable from Related Party 13,718 10,415
------- --------
NET CASH (USED IN) FINANCING ACTIVITIES (18,358) ( 10,163)
------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 162,059 84,543
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 144,737 194,104
------- --------
CASH AND CASH EQUIVALENTS END
OF PERIOD $ 306,796 $ 278,647
------- --------
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1994.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
June 30, December 31,
1995 1994
Collateralized by Investment
Property
KC Club Apartments $ 4,433,974 $ 4,466,051
Greenhills Bicycle Club
Apartments 9,271,150 9,271,150
---------- ----------
$13,705,124 $13,737,201
---------- ----------
Interest paid totaled $530,991 and $413,240 during the first half of
1995 and 1994, respectively.
NOTE C--SYNDICATION COSTS, MISC. RECEIVABLES AND OTHER RELATED
PARTY TRANSACTIONS
Affiliates of the General Partners are entitled to receive payments
from the Partnership for management and other services. Specs, Inc.
(a corporation in which the General Partner has a minority interest)
receives property management fees for providing property management
services and direct cost reimbursements based upon time allocated to
performing certain Partnership functions. Amounts paid by the
Partnership to affiliates of the General Partners are as follows:
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE C--SYNDICATION COSTS, MISC. RECEIVABLES AND OTHER RELATED
PARTY TRANSACTIONS--CONT'D.
June 30,
1995 1994
Property management fees $ 63,791 $ 55,561
------ -------
The General Partners are entitled to receive a Partnership Management
Fee equal to 5% of Cash Flow From Operations (as defined) for managing
the normal operations of the Partnership. There was no management fee
due for the years ending December 31, 1994 or 1993.
NOTE D--RELATED PARTY--RECEIVABLES
On April 12, 1995, the Hoyt Partners III, L.P. executed a note in the
amount of $522,004. This note consolidated several smaller notes.
The 1994 interest earnings of $44,821 are expected to be received in
the third quarter of 1995. Principal repayments of $35,000 per year
plus 9% interest will begin on December 31, 1995. Funds advanced to
Secured Investment Resources Fund, L.P. will be repaid at the rate of
$3,000 per month beginning May 1, 1995 including 9% interest.
Amounts due from related parties consist of the following:
June 30, December 31,
1995 1994
Hoyt Partners III, L.P. $ 511,033 $ 522,004
Secured Investment Resources
Fund, L.P. 82,351 85,100
------- -------
$ 593,384 $ 607,104
------- -------
Because of many factors, the Partnership did not raise the level of
capital anticipated during the offering period. As a result,
syndication and acquisition costs exceeded the amount allowed per the
Partnership Agreement. The General Partners are obligated to
reimburse these excess costs/fees.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE E--SYNDICATION COSTS AND ACQUISITION FEES
Hoyt Partners III, L.P., a General Partner of the Partnership (or its
assignee) has been paid an acquisition fee of $680,000. This fee was
for selecting, evaluating, negotiating and closing services on the
acquisition of KC Club Apartments and Greenhills Bicycle Club
Apartments. As stated in the Prospectus, acquisition fees may not
exceed 11.5% of the gross proceeds of limited partnership interests
issued ($556,888). The General Partners are obligated to reimburse
these excess costs/fees.
June 30, December 31,
1995 1994
General Partners--Excess
Syndication Costs:
Paid by the Partnership $ 365,057 $ 365,057
Excess acquisition fees 118,362 118,362
------- -------
Total $ 483,419 $ 483,419
------- -------
NOTE F--CASH DISTRIBUTIONS
No distributions have been made since July 1990. Future distributions
will only be made from excess cash flow not needed for working capital
reserves.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Total revenues for the first six months increased $179,000
(15.6%) when compared to the same period in 1994. This increase
is due to a stronger rental market, which allowed the Partnership
to increase rental rates upon lease renewals. These higher
market rates are being achieved, with fewer rent concessions, and
should continue through the remainder of 1995 and into 1996.
Due to the higher rental rates, the properties have experienced a
higher resident turnover rate, resulting in higher operating
expenses. Operating and administrative expenses increased
$43,255 (7.0%) when comparing first six months' results with the
same period of 1994. Property operating expenses increased
$38,000 (6.5%) due to increased repair, contracted services and
payroll expenses. Professional services declined $27,000 (56%)
when compared to the first six months of last year because of
declined need for legal services.
Interest expense increased $30,000 (6.8%) primarily due to the
increase in the interest rates. Depreciation and amortization
declined $104,000 (29.4%) from the first six months of last year,
due to the fact that older assets are becoming fully depreciated.
The Partnership anticipates that the operating results for the
first six months will be approximate the performance for the
remaining portion of the year.
Liquidity and Capital Resources
During the first six months of 1995, $295,495 of working capital
was provided by operations, $83,000 was consumed in investing
activities and $32,000 was used for debt repayment. The
partnership has used this increased cash to reduce delinquent
real estate taxes and make additional capital improvements to the
properties.
The Partnership is currently past due on the mortgage secured by
K C Club apartments. Cash generated by increased occupancy will
be used to service this mortgage. The second mortgage at Bicycle
Club Apartments matured on October 15, 1994. The General Partner
is currently negotiating with the lender on this mortgage for a
loan modification and extension.
As of May 1, 1995, the partnership began receiving $3,000 per
month as repayment of funds advanced to Secured Investment
Resources Fund, L.P. Prior to 1995, the Partnership loaned funds
via a note receivable to the Corporate General Partner, Hoyt
Partners III, L.P. The Partnership is scheduled to receive an
annual $35,000
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Cont'd.
Liquidity & Capital Resources
principal reduction on this note plus interest at 9% beginning
December 31, 1995. These notes, however, are due on demand and
are available to fund working capital needs of the Partnership,
as considered necessary by the General Partners.
Based upon the above, General Partners feel that adequate working
capital is available to maintain the solvency of this entity. In
addition, the General Partners also anticipate that 1995 cash
flow from operations will continue to improve because of strong
occupancy, rental rate increases, and stabilized expenses.
The General Partners have determined it prudent to discontinue
cash distributions until such time that adequate working capital
and capital improvements reserves are in place.
(The remainder of this page intentionally left blank.)
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION
Inapplicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
The Partnership filed no report on Form 8-K
during the Quarter ended June 30, 1995.
<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.
SECURED INVESTMENT RESOURCES FUND, L.P. III
A Missouri Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: August 15, 1995
By: Hoyt Partners III, L.P.
as General Partner
By:
James R. Hoyt
as Individual General Partner
Date: August 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 306,796
<SECURITIES> 795,020
<RECEIVABLES> 86,151
<ALLOWANCES> 10,950
<INVENTORY> 0
<CURRENT-ASSETS> 1,526,235
<PP&E> 15,857,602
<DEPRECIATION> 3,942,692
<TOTAL-ASSETS> 14,236,165
<CURRENT-LIABILITIES> 12,057
<BONDS> 13,705,124
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,236,165
<SALES> 0
<TOTAL-REVENUES> 1,328,369
<CGS> 0
<TOTAL-COSTS> 742,327
<OTHER-EXPENSES> 249,770
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 475,064
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (138,792)
<EPS-PRIMARY> (14.19)
<EPS-DILUTED> 0
</TABLE>
