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, 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 -- September 30, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations -- Three
and Nine Months Ended September 30, 1997
and 1996 5
Consolidated Statements of Partnership Capital --
Nine Months Ended September 30, 1997 and
the Years Ended December 31, 1996 and 1995 6
Consolidated Statements of Cash Flows -- Nine
Months Ended September 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
September 30,
1997 December 31,
(Unaudited) 1996
ASSETS
INVESTMENT PROPERTIES
Land and buildings $ 14,587,617 $ 14,569,699
Furniture, fixtures, and equipment 1,502,974 1,471,943
16,090,591 16,041,642
Less accumulated depreciation 5,135,292 4,732,073
10,955,299 11,309,569
RESTRICTED DEPOSIT
Certificate of Accrual on
Treasury Security 950,908 898,023
Restricted Reserve Fund 78,481 34,490
1,029,389 932,513
OTHER ASSETS
Cash 263,551 82,985
Rents and other receivables, less
allowance of $39,200 in 1997 and
$12,000 in 1996 10,710 5,106
Prepaid expenses, deposits and other 42,810 29,161
Due from related parties (Note C)
Note Receivable 83,794 78,345
Syndication Costs 21,751 21,751
Debt issuance costs, net of
accumulated amortization of
$79,067 in 1997 and $31,627
in 1996 258,972 289,913
681,588 507,261
TOTAL ASSETS $ 12,666,276 $ 12,749,343
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS--CONT'D.
September 30,
1997 December 31,
(Unaudited) 1996
LIABILITIES AND PARTNERSHIP DEFICIT
Mortgage debt (Note B) $ 12,888,368 $ 12,931,003
Accounts payable and
accrued expenses 331,658 244,253
Accrued interest 622,168 527,106
Unearned revenue 20,991 30,360
Tenant security deposits 107,390 102,050
TOTAL LIABILITIES 13,970,575 13,834,772
PARTNERSHIP DEFICIT
General Partners
Capital contributions 2,000 2,000
Partnership deficit (52,198) (50,009)
(50,198) (48,009)
Limited Partners
Capital contributions 3,915,084 3,915,084
Partnership deficit (5,169,185) (4,952,504)
(1,254,101) (1,037,420)
TOTAL PARTNERSHIP DEFICIT (1,304,299) (1,085,429)
$ 12,666,276 $ 12,749,343
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,
1997 1996 1997 1996
REVENUES
Rents $ 2,070,788 $ 2,072,300 $ 675,599 $ 716,511
Interest 60,398 70,994 21,047 23,580
2,131,186 2,143,294 696,646 740,091
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 847,451 894,770 302,760 299,016
General and
administrative
expenses 38,919 54,883 15,043 18,106
Professional services 58,368 89,710 14,498 16,313
Management Fees 101,934 102,890 33,470 35,453
1,046,672 1,142,253 365,771 368,888
NET OPERATING INCOME 1,084,514 1,001,041 330,875 371,203
NON-OPERATING EXPENSES
Interest 852,725 849,473 280,085 401,548
Depreciation and
amortization 450,659 408,177 150,220 145,421
1,303,384 1,257,650 430,305 546,969
PARTNERSHIP LOSS $ (218,870) $ 256,609 $ (99,430) $(175,766)
Allocation of loss:
General Partners (2,189) (2,566) (994) (1,758)
Limited Partners (216,681) (254,043) (98,436) (174,008)
$ (218,870) $ (256,609) $ (99,430) $(175,766)
Partnership loss per
limited partnership
unit $ (22.37) $ (26.23) $ (10.16) $ (17.97)
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF PARTNERSHIP DEFICIT
Nine months Ended September 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 (2,189) (216,681) (218,870)
Balances at September 30, 1997 $ (50,198) $(1,254,101) $(1,304,299)
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,
1997 1996
OPERATING ACTIVITIES
Partnership loss $ (218,870) $ (256,609)
Adjustments to reconcile partnership
loss to net cash provided by
operating activities:
Depreciation and amortization 450,659 408,176
Provision for losses on rents
and other receivables 27,200 5,550
Changes in assets and liabilities:
Rent and other receivables (32,803) (12,900)
Prepaid expenses, deposits, and other (13,649) (12,948)
Accounts payable and
accrued expenses 87,405 (255,916)
Accrued interest 95,062 133,433
Unearned revenue (9,369) (846)
Tenant security deposits 5,340 20,971
NET CASH PROVIDED BY OPERATING ACTIVITIES 390,975 28,911
INVESTING ACTIVITIES
Purchase of and improvements to
investment properties (48,948) (77,218)
Restricted Reserve Funds (43,991) (15,225)
Interest earned on certificate
of accrual on Treasury Security (52,886) (52,886)
NET CASH USED IN INVESTING ACTIVITIES (145,825) (145,329)
FINANCING ACTIVITIES
Note Receivable from Related Party (5,450) (1,978)
Principal payments on long-term debt (42,634) (8,404,424)
Proceeds from issuance of debt 0 8,500,000
Debt issuance costs (16,500) (323,179)
NET CASH USED IN FINANCING ACTIVITIES (64,584) (229,581)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 180,566 (345,999)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 82,985 486,886
CASH AND CASH EQUIVALENTS END
OF PERIOD $ 263,551 $ 140,887
See notes to consolidated financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 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 nine month period ended September 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:
September 30, December 31,
1997 1996
Collateralized by Investment
Property:
First Mortgages:
Greenhills Bicycle Club
Apartments $ 8,039,822 $ 8,082,102
KC Club Apartments 4,451,382 4,451,382
Second Mortgage:
Greenhills Bicycle Club
Apartments 397,164 397,519
$12,888,368 $12,931,003
Interest expense totaled $852,725 and $849,473 during the first nine
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:
September 30,
1997 1996
Property management fees $ 101,934 $ 102,890
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. 83,794 78,345
$ 105,545 $ 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 nine months decreased $12,100 (0.6%)
when compared to the same period in 1996. This decrease is due to a
weaker rental market.
General and administrative expenses decreased $16,000 (29.1%) and
property operating expenses decreased $47,300 (5.3%) when compared to
the first nine months of last year.
Interest expense increased $3,300 (0.4%) and depreciation and
amortization increased $42,500 (10.4%) 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 1997, $391,000 of working capital was
provided by operations, $146,000 was consumed in investing activities
and $65,000 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 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 September 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: November 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By:
James R. Hoyt
as Individual General Partner
Date: November 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: November 15, 1997
By: Hoyt Partners III, L.P.
as General Partner
By: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: November 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 263,551
<SECURITIES> 1,029,389
<RECEIVABLES> 49,910
<ALLOWANCES> (39,200)
<INVENTORY> 0
<CURRENT-ASSETS> 681,588
<PP&E> 16,090,591
<DEPRECIATION> 5,135,292
<TOTAL-ASSETS> 12,666,276
<CURRENT-LIABILITIES> 1,082,207
<BONDS> 12,888,368
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,666,276
<SALES> 0
<TOTAL-REVENUES> 2,131,186
<CGS> 0
<TOTAL-COSTS> 1,046,672
<OTHER-EXPENSES> 450,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 852,725
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (218,870)
<EPS-PRIMARY> (22.37)
<EPS-DILUTED> 0
</TABLE>
