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 September 30, 1996
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):
Consolidated Balance Sheets -- September 30, 1996
and December 31, 1995 3-4
Consolidated Statements of Operations -- Three
and Nine Months Ended September 30, 1996
and 1995 5
Consolidated Statements of Partnership Capital --
Nine Months Ended September 30, 1996 and
the Years Ended December 31, 1995 and 1994 6
Consolidated Statements of Cash Flows -- Nine
Months Ended September 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS
September 30,
1996 December 31,
(Unaudited) 1995
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 14,565,907 $ 14,561,536
Furniture, fixtures, and equipment 1,450,808 1,377,961
---------- ----------
16,016,715 15,939,497
Less accumulated depreciation (4,592,967) 4,202,665
---------- ----------
11,423,748 11,736,832
---------- ----------
RESTRICTED DEPOSIT
Certificate of Accrual on
Treasury Security 880,394 827,509
Restricted Reserve Fund 15,225
---------- ----------
895,619 827,509
OTHER ASSETS
Cash 140,887 486,886
Rents and other receivables, less
allowance of $12,700 in 1996 and
$7,150 in 1995 11,136 3,785
Prepaid expenses, deposits and other 40,118 27,169
Due from related parties--Note C
Note Receivable 76,621 74,643
Syndication Costs 21,751 21,751
Debt issuance costs, net of
accumulated amortization of
$48,917 in 1996 and $31,042
in 1995 349,497 44,193
---------- ----------
640,010 658,427
---------- ----------
TOTAL ASSETS $ 12,959,377 $ 13,222,768
---------- ----------
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS--CONT'D.
September 30,
1996 December 31,
(Unaudited) 1995
LIABILITIES AND PARTNERSHIP DEFICIT
Mortgage debt--Note B $ 12,946,957 $ 12,851,382
Accounts payable and
accrued expenses 327,823 583,739
Accrued interest 518,813 385,380
Unearned revenue 26,633 27,479
Tenant security deposits 103,182 82,210
---------- ----------
TOTAL LIABILITIES 13,923,408 13,930,190
---------- ----------
PARTNERSHIP DEFICIT
General Partners
Capital contributions 2,000 2,000
Partnership deficit (48,795) (46,229)
---------- ----------
(46,795) (44,229)
---------- ----------
Limited Partners
Capital contributions 3,915,084 3,915,084
Partnership deficit (4,832,320) (4,578,277)
---------- ----------
(917,236) (663,193)
---------- ----------
TOTAL PARTNERSHIP DEFICIT (964,031) (707,422)
---------- ----------
$ 12,959,377 $ 13,222,768
---------- ----------
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
REVENUES
Rents $ 2,072,300 $ 1,931,677 $ 716,511 $ 653,131
Interest 70,994 69,531 23,580 19,707
--------- --------- --------- ---------
2,143,294 2,001,208 740,091 672,838
--------- --------- --------- ---------
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 894,770 929,181 299,016 307,147
General and
administrative
expenses 54,883 51,895 18,106 16,640
Professional services 89,710 46,994 16,313 25,747
Management Fees 102,890 96,358 35,453 32,567
--------- --------- --------- ---------
1,142,253 1,124,428 368,888 382,101
--------- --------- --------- ---------
NET OPERATING INCOME 1,001,041 876,780 371,203 290,737
NON-OPERATING EXPENSES
Interest 849,473 708,447 401,548 233,383
Depreciation and
amortization 408,177 374,655 145,421 124,885
--------- --------- --------- ---------
1,257,650 1,083,102 546,969 358,268
--------- --------- --------- ---------
PARTNERSHIP LOSS $ (256,609) $ (206,322) $(175,766) $ (67,531)
--------- --------- --------- ---------
Allocation of loss:
General Partners (2,566) (2,063) (1,758) (675)
Limited Partners (254,043) (204,259) (174,008) (66,856)
--------- --------- --------- ---------
$ 256,609) $ (206,322) $(175,766) $ (67,531)
--------- --------- --------- ---------
Partnership loss per
limited partnership
unit $ (26.23) $ (21.09) $ (17.97) $ (6.90)
--------- --------- --------- ---------
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF PARTNERSHIP DEFICIT
Nine Months Ended September 30, 1996 (Unaudited)
and the Years Ended December 31, 1995 and 1994
General Limited
Partners Partners Total
Balances at January 1, 1994 $ (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 (1,715) (169,844) (171,559)
--------- --------- ---------
Balances at December 31, 1995 (44,229) (663,193) (707,422)
Partnership loss (2,566) (254,043) (256,609)
--------- --------- ---------
Balances at September 30, 1996 $ (46,795) $ (917,236) $ (964,031)
--------- --------- ---------
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30,
1996 1995
OPERATING ACTIVITIES
Partnership loss $ (256,609) $ (206,322)
Adjustments to reconcile partnership
loss to net cash provided by
operating activities:
Depreciation and amortization 408,176 374,654
Provision for losses on rents
and other receivables 5,550 686
Changes in assets and liabilities:
Rent and other receivables (12,900) (23,879)
Prepaid expenses, deposits, and other (12,948) 15,614
Note Payable-Insurance (791) (9,833)
Accounts payable and
accrued expenses (255,125) 339,890
Accrued interest 133,433 73,951
Unearned revenue (846) 8,284
Tenant security deposits 20,971 6,907
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 28,911 579,952
------- -------
INVESTING ACTIVITIES
Purchase of and improvements to
investment properties (77,218) (121,407)
Restricted Reserve Funds (15,225) ---
Interest earned on certificate
of accrual on Treasury Security (52,886) (48,733)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (145,329) (170,140)
------- -------
FINANCING ACTIVITIES
Note Receivable from Related Party (1,978) 20,919
Principal payments on long-term debt (8,404,424) (43,650)
Proceeds from issuance of debt 8,500,000 ---
Debt issuance costs (323,179) ---
------- -------
NET CASH USED IN FINANCING ACTIVITIES (229,581) (22,731)
------- -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (345,999) 387,081
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 486,886 144,737
------- -------
CASH AND CASH EQUIVALENTS END
OF PERIOD $ 140,887 $ 531,818
------- -------
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 1996
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 nine month period ended September 30, 1996 are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1996. 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, 1995.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
September 30, December 31,
1996 1995
Collateralized by Investment
Property:
First Mortgages:
Greenhills Bicycle Club
Apartments $ 8,095,576 $ 8,400,000
KC Club Apartments 4,451,382 4,451,382
Second Mortgage:
Greenhills Bicycle Club
Apartments 400,000 ---
---------- ----------
$12,946,958 $12,851,382
---------- ----------
Interest expense totaled $849,473 and $708,447 during the first nine
months of 1996 and 1995, respectively.
On July 8, 1965 the partnership refinanced the matured $8,400,000 first
mortgage on Greenhills Bicycle Club Apartments. The terms of the new
mortgage are $8,100,000 at 9.0% interest with monthly principal and
interest payments in the amount of $65,000 through the loan maturity date
of August 1, 2001 (5 years).
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE B--MORTGAGE DEBT--CONT'D.
In addition, a second mortgage note was signed by the Partnership. The
terms of the new note are $400,000 with interest paid monthly at the rate
of 9% with a maturity date of July 31, 2001 at which time the principal
shall be due. The past due real estate taxes on Greenhills Bicycle Club
Apartments were paid in full from a portion of the proceeds of this note.
NOTE C--RELATED PARTY TRANSACTIONS
SPECS, Inc., a Kansas Corporation in which the individual General Partner
has a minority interest, receives property management fees for providing
property management services. SPECS, Inc. also performs various
professional services for the Partnership, primarily tax accounting, audit
preparation, SEC 10Q and 10K preparation, and investor services. Property
management fees paid by the Partnership to SPECS, Inc. are as follows:
September 30,
1996 1995
Property management fees $ 102,890 $ 96,358
-------- ---------
Amounts due from related parties consist of the following:
September 30, December 31,
1996 1995
SIR Partners III $ 21,751 $ 21,751
Secured Investment Resources
Fund, L.P. 76,621 74,643
-------- ---------
$ 98,372 $ 96,394
-------- ---------
NOTE D--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 nine months increased $142,000 (7.1%)
when compared to the same period in 1995. 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 1996.
General and administrative expenses increased $3,000 (5.8%) and
property operating expenses decreased $34,400 (3.7%) when compared to
the first nine months of last year.
Interest expense increased $141,000 (19.9%) and depreciation and
amortization increased $34,000 (8.9%) when compared to the first nine
months of last year.
The Partnership anticipates that the operating results for the first
nine months will be representative of the results for the remaining
portion of the year.
Liquidity and Capital Resources
During the first nine months of 1996, $28,900 of working capital was
provided by operations, $145,000 was consumed in investing activities
and $230,000 was used for financing activities.
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 Partnership is engaged in
negotiations related to the restructure of this debt and it is
anticipated that a restructure will be completed in 1996.
Based upon the above, the General Partners feel that adequate working
capital is available to maintain the solvency of this entity. In
addition, the General Partners also anticipate that 1996 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.
<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 September 30, 1996.
<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: November 15, 1996
By: Hoyt Partners III, L.P.
as General Partner
By:
James R. Hoyt
as Individual General Partner
Date: November 15, 1996
<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: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: November 15, 1996
By: Hoyt Partners III, L.P.
as General Partner
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: November 15, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 140,887
<SECURITIES> 895,619
<RECEIVABLES> 23,836
<ALLOWANCES> 12,700
<INVENTORY> 0
<CURRENT-ASSETS> 640,010
<PP&E> 16,016,715
<DEPRECIATION> 4,592,967
<TOTAL-ASSETS> 12,959,377
<CURRENT-LIABILITIES> 976,451
<BONDS> 12,946,957
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,959,377
<SALES> 0
<TOTAL-REVENUES> 2,143,294
<CGS> 0
<TOTAL-COSTS> 1,142,253
<OTHER-EXPENSES> 408,177
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 849,473
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (256,609)
<EPS-PRIMARY> (26.23)
<EPS-DILUTED> 0
</TABLE>
