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, 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 -- June 30, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations -- Three
and Six Months Ended June 30, 1997
and 1996 5
Consolidated Statements of Partnership Capital --
Six Months Ended June 30, 1997 and
the Years Ended December 31, 1996 and 1995 6
Consolidated Statements of Cash Flows -- Six
Months Ended June 30, 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
June 30,
1997 December 31,
(Unaudited) 1996
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 14,573,829 $ 14,569,699
Furniture, fixtures, and equipment 1,493,411 1,471,943
16,067,240 16,041,642
Less accumulated depreciation (5,000,885) 4,732,073
11,066,355 11,309,569
RESTRICTED DEPOSIT
Certificate of Accrual on
Treasury Security 933,280 898,023
Restricted Reserve Fund 63,594 34,490
996,874 932,513
OTHER ASSETS
Cash 217,379 82,985
Rents and other receivables, less
allowance of $31,400 in 1997 and
$12,000 in 1996 13,553 5,106
Prepaid expenses, deposits and other 59,612 29,161
Due from related parties (Note C)
Note Receivable 81,937 78,345
Syndication Costs 21,751 21,751
Debt issuance costs, net of
accumulated amortization of
$63,254 in 1997 and $31,627
in 1996 274,786 289,913
669,018 507,261
TOTAL ASSETS $ 12,732,247 $ 12,749,343
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS--CONT'D.
June 30,
1997 December 31,
(Unaudited) 1996
LIABILITIES AND PARTNERSHIP DEFICIT
Mortgage debt (Note B) $ 12,905,614 $ 12,931,003
Accounts payable and
accrued expenses 300,656 244,253
Accrued interest 608,240 527,106
Unearned revenue 22,480 30,360
Tenant security deposits 100,126 102,050
TOTAL LIABILITIES 13,937,116 13,834,772
PARTNERSHIP DEFICIT
General Partners
Capital contributions 2,000 2,000
Partnership deficit (51,203) (50,009)
(49,203) (48,009)
Limited Partners
Capital contributions 3,915,084 3,915,084
Partnership deficit (5,070,750) (4,952,504)
(1,155,666) (1,037,420)
TOTAL PARTNERSHIP DEFICIT (1,204,869) (1,085,429)
$ 12,732,247 $ 12,749,343
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
REVENUES
Rents $ 1,395,189 $ 1,355,789 $ 696,239 $ 674,155
Interest 39,351 47,414 19,875 23,155
1,434,540 1,403,203 716,114 697,310
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 544,691 595,754 285,731 311,378
General and
administrative
expenses 23,876 36,777 10,802 21,848
Professional services 43,870 73,397 22,902 33,872
Management Fees 68,464 67,437 34,166 33,856
680,901 773,365 353,601 400,954
NET OPERATING INCOME 753,639 629,838 362,513 296,356
NON-OPERATING EXPENSES
Interest 572,640 447,925 283,440 214,670
Depreciation and
amortization 300,439 262,756 150,219 131,297
873,079 710,681 433,659 345,967
PARTNERSHIP LOSS $ (119,440) $ (80,843) $ (71,146) $(49,611)
Allocation of loss:
General Partners (1,194) (808) (711) (496)
Limited Partners (118,246) (80,035) (70,435) (49,115)
$ (119,440) $ (80,843) $ (71,146) $(49,611)
Partnership loss per
limited partnership
unit $ (12.21) $ (8.26) $ (7.27) $ (5.07)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF PARTNERSHIP DEFICIT
Six months Ended June 30, 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 (1,194) (118,246) (119,440)
Balances at June 30, 1997 $ (49,203) $(1,155,666) $(1,204,869)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
March 31,
1997 1996
OPERATING ACTIVITIES
Partnership loss $ (119,440) $ (80,843)
Adjustments to reconcile partnership
loss to net cash provided by
operating activities:
Depreciation and amortization 300,440 262,756
Provision for losses on rents
and other receivables 19,400 5,100
Changes in assets and liabilities:
Rent and other receivables (27,847) (7,362)
Prepaid expenses, deposits, and other (30,452) (29,223)
Accounts payable and
accrued expenses 56,403 (88,341)
Accrued interest 81,133 (57,545)
Unearned revenue (7,880) (513)
Tenant security deposits (1,924) 14,079
NET CASH PROVIDED BY OPERATING ACTIVITIES 269,833 18,108
INVESTING ACTIVITIES
Purchase of and improvements to
investment properties (25,598) (53,908)
Restricted Reserve Funds (29,104) ---
Interest earned on certificate
of accrual on Treasury Security (35,257) (35,257)
NET CASH USED IN INVESTING ACTIVITIES (89,959) (89,165)
FINANCING ACTIVITIES
Note Receivable from Related Party (3,592) 2,440
Principal payments on long-term debt (25,388) 0
Debt issuance costs (16,500) (74,425)
NET CASH USED IN FINANCING ACTIVITIES (45,480) (71,985)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (134,394) (143,042)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 82,985 486,886
CASH AND CASH EQUIVALENTS END
OF PERIOD $ 217,379 $ 343,844
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 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 six month period ended June 30, 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:
June 30, December 31,
1997 1996
Collateralized by Investment
Property:
First Mortgages:
Greenhills Bicycle Club
Apartments $ 8,054,232 $ 8,082,102
KC Club Apartments 4,451,382 4,451,382
Second Mortgage:
Greenhills Bicycle Club
Apartments 400,000 397,519
$12,905,614 $12,931,003
Interest expense totaled $572,640 and $447,925 during the first six months
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:
June 30,
1997 1996
Property management fees $ 68,464 $ 67,437
Amounts due from related parties consist of the following:
September 30, December 31,
1997 1996
General Partners -- Excess
Syndication Costs $ 21,751 $ 21,751
Secured Investment Resources
Fund, L.P. 81,937 78,345
$ 103,688 $ 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 six months increased $31,300 (2.2%) 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 $12,900 (35.1%) and
property operating expenses decreased $51,100 (8.6%) when compared to
the first six months of last year.
Interest expense increased $124,700 (27.8%) and depreciation and
amortization increased $37,700 (14.3%) when compared to the first six
months of last year.
The Partnership anticipates that the operating results for the first
six months will be representative of the results for the remaining
portion of the year.
Liquidity and Capital Resources
During the first six months of 1997, $269,800 of working capital was
provided by operations, $90,000 was consumed in investing activities
and $45,500 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 June 30, 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: August 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By:
James R. Hoyt
as Individual General Partner
Date: August 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: August 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: August 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 217,379
<SECURITIES> 996,874
<RECEIVABLES> 44,953
<ALLOWANCES> (31,400)
<INVENTORY> 0
<CURRENT-ASSETS> 669,018
<PP&E> 16,067,240
<DEPRECIATION> 5,00,885
<TOTAL-ASSETS> 12,732,247
<CURRENT-LIABILITIES> 1,031,502
<BONDS> 12,905,614
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,732,247
<SALES> 0
<TOTAL-REVENUES> 1,434,540
<CGS> 0
<TOTAL-COSTS> 680,901
<OTHER-EXPENSES> 300,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 572,640
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,440)
<EPS-PRIMARY> (12.21)
<EPS-DILUTED> 0
</TABLE>
