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 March 31, 1997
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 -- March 31, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations -- Three
Ended March 31, 1997 and 1996 5
Consolidated Statements of Partnership Capital --
Three Months Ended March 31, 1997 and
the Years Ended December 31, 1996 and 1995 6
Consolidated Statements of Cash Flows -- Three
Months Ended March 31, 1997 and 1996 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
March 31,
1997 December 31,
(Unaudited) 1996
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 14,569,699 $ 14,569,699
Furniture, fixtures, and equipment 1,481,980 1,471,943
16,051,679 16,041,642
Less accumulated depreciation 4,866,480 4,732,073
11,185,199 11,309,569
RESTRICTED DEPOSIT
Certificate of Accrual on
Treasury Security 915,651 898,023
Restricted Reserve Fund 48,947 34,490
964,598 932,513
OTHER ASSETS
Cash 160,582 82,985
Rents and other receivables, less
allowance of $27,950 in 1997 and
$12,000 in 1996 10,102 5,106
Prepaid expenses, deposits and other 16,363 29,161
Due from related parties (Note C)
Note Receivable 80,121 78,345
Syndication Costs 21,751 21,751
Debt issuance costs, net of
accumulated amortization of
$47,440 in 1997 and $31,647
in 1996 281,599 289,913
570,518 507,261
TOTAL ASSETS $ 12,720,315 $ 12,749,343
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS--CONT'D.
March 31,
1997 December 31,
(Unaudited) 1996
LIABILITIES AND PARTNERSHIP DEFICIT
Mortgage debt (Note B) $ 12,919,705 $ 12,931,003
Accounts payable and
accrued expenses 231,415 244,253
Accrued interest 571,769 527,106
Unearned revenue 26,175 30,360
Tenant security deposits 104,974 102,050
TOTAL LIABILITIES 13,854,038 13,834,772
PARTNERSHIP DEFICIT
General Partners
Capital contributions 2,000 2,000
Partnership deficit (50,492) (50,009)
(48,492) (48,009)
Limited Partners
Capital contributions 3,915,084 3,915,084
Partnership deficit (5,000,315) (4,952,504)
(1,085,231) (1,037,420)
TOTAL PARTNERSHIP DEFICIT (1,133,723) (1,085,429)
$ 12,720,315 $ 12,749,343
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
1997 1996
REVENUES
Rents $ 698,950 $ 681,634
Interest 19,476 24,259
718,426 705,893
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 258,960 284,376
General and
administrative
expenses 13,074 14,929
Professional services 20,968 39,525
Management Fees 34,298 33,581
327,300 372,411
NET OPERATING INCOME 391,126 333,482
NON-OPERATING EXPENSES
Interest 289,200 233,255
Depreciation and
amortization 150,220 131,459
439,420 364,714
PARTNERSHIP LOSS $ (48,294) $ (31,232)
Allocation of loss:
General Partners (483) (312)
Limited Partners (47,811) (30,920)
$ (48,294) $ (31,232)
Partnership loss per
limited partnership
unit $ (4.94) $ (3.19)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF PARTNERSHIP DEFICIT
Three Months Ended March 31, 1997 (Unaudited)
and the Years Ended December 31, 1996 and 1995
General Limited
Partners Partners Total
Balances at January 1, 1995 $ (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 (3,780) (374,227) (378,007)
Balances at December 31, 1996 (48,009) (1,037,420) (1,085,429)
Partnership loss (483) (47,811) (48,294)
Balances at March 31, 1997 $ (48,492) $ (1,085,231) $(1,133,723)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
1997 1996
OPERATING ACTIVITIES
Partnership loss $ (48,294) $ (31,232)
Adjustments to reconcile partnership
loss to net cash provided by
operating activities:
Depreciation and amortization 150,218 131,459
Provision for losses on rents
and other receivables 15,950 (250)
Changes in assets and liabilities:
Rent and other receivables (20,946) 735
Prepaid expenses, deposits, and other 12,798 9,989
Accounts payable and
accrued expenses (12,837) (868)
Accrued interest 44,663 (15,339)
Unearned revenue (4,184) (5,680)
Tenant security deposits 2,924 1,484
NET CASH PROVIDED BY OPERATING ACTIVITIES 140,292 90,298
INVESTING ACTIVITIES
Purchase of and improvements to
investment properties (10,036) (26,813)
Restricted Reserve Funds (14,457) 0
Interest earned on certificate
of accrual on Treasury Security (17,629) (17,629)
NET CASH USED IN INVESTING ACTIVITIES (42,122) (44,442)
FINANCING ACTIVITIES
Note Receivable from Related Party (1,776) 2,440
Principal payments on long-term debt (11,297) 0
Debt issuance costs (7,500) (57,500)
NET CASH USED IN FINANCING ACTIVITIES (20,573) (55,060)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 77,597 (9,204)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 82,985 486,886
CASH AND CASH EQUIVALENTS END
OF PERIOD $ 160,582 $ 477,682
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
March 31, 1997
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 three month period
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. 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, 1996.
NOTE B--MORTGAGE DEBT
Mortgage debt consists of the following:
March 31, December 31,
1997 1996
Collateralized by Investment
Property:
First Mortgages:
Greenhills Bicycle Club
Apartments $ 8,068,323 $ 8,082,102
KC Club Apartments 4,451,382 4,451,382
Second Mortgage:
Greenhills Bicycle Club
Apartments 400,000 397,519
$12,919,705 $12,931,003
Interest expense totaled $289,200 and $233,255 during the first quarter of
1997 and 1996, respectively.
On July 8, 1996 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:
March 31,
1997 1996
Property management fees $ 34,298 $ 33,581
Amounts due from related parties consist of the following:
March 31, December 31,
1997 1996
General Partners -- Excess
Syndication Costs $ 21,751 $ 21,751
Secured Investment Resources
Fund, L.P. 80,871 78,345
$ 101,872 $ 100,096
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 three months increased $13,000 (1.8%)
when compared to the same period in 1996. 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 1997.
General and administrative expenses decreased $2,000 (0.1%) and
property operating expenses decreased $25,000 (8.9%) when compared to
the first three months of last year.
Interest expense increased $56,000 (24.0%) and depreciation and
amortization increased $19,000 (14.3%) when compared to the first
three months of last year.
The Partnership anticipates that the operating results for the first
three months will be representative of the results for the remaining
portion of the year.
Liquidity and Capital Resources
During the first three months of 1997, $140,300 of working capital
was provided by operations, $42,000 was consumed in investing
activities and $20,600 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 1997.
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 1997 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 March 31, 1997.
<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: May 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By:
James R. Hoyt
as Individual General Partner
Date: May 15, 1997
<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: May 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: May 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 160,582
<SECURITIES> 964,598
<RECEIVABLES> 38,052
<ALLOWANCES> (27,950)
<INVENTORY> 0
<CURRENT-ASSETS> 570,518
<PP&E> 16,051,679
<DEPRECIATION> 4,866,480
<TOTAL-ASSETS> 12,720,315
<CURRENT-LIABILITIES> 934,333
<BONDS> 12,919,705
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,720,315
<SALES> 0
<TOTAL-REVENUES> 718,426
<CGS> 0
<TOTAL-COSTS> 327,300
<OTHER-EXPENSES> 150,220
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 289,200
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,294)
<EPS-PRIMARY> (4.94)
<EPS-DILUTED> 0
</TABLE>
