SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission File No. 0-18531
Berry and Boyle Development Partners III
(A Massachusetts Limited Partnership)
(Exact name of registrant as specified in its charter)
Massachusetts 04-3017036
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
57 River Street, Wellesley Hills, MA 02181
(Address of principal executive offices) (Zip Code)
(617) 237-0544
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period 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>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<PAGE>
<TABLE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------
ASSETS
September 30,
1995 December 31,
(Unaudited) 1994
Property, at cost (Notes 2, 3, 5, and 6):
<S> <C> <C>
Land $2,976,100 $2,976,100
Buildings and improvements 7,648,060 7,648,060
Equipment, furnishings and fixtures 801,066 792,123
11,425,226 11,416,283
Less accumulated depreciation (1,661,606) (1,399,386)
9,763,620 10,016,897
Cash and cash equivalents (Notes 2 and 4) 492,196 112,235
Short-term investments (Note 2) 591,014 1,016,689
Real estate tax escrow 39,381 27,433
Deferred expenses, net of accumulated
amortization of $72888 and $56,068 (Note 2)+A59 39,241 56,061
Total assets $10,925,452 $11,229,315
LIABILITIES AND PARTNERS' EQUITY
Mortgage note payable (Note 6) 7,020,256 7,093,963
Accounts payable and accrued expenses 119,774 92,902
Due to affiliates (Note 8) 2,143 11,871
Tenant security deposits 33,085 34,260
Deferred rental income - 101
Total liabilities 7,175,258 7,233,097
Minority Interest (Note 5) 1,536,649 1,625,623
Partners' equity (Note 7) 2,213,545 2,370,595
Total liabilities and partners' equity $10,925,452 $11,229,315
<PAGE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
-------------
Three Months Ended Nine Months
Ended
September 30, September 30,
1995 1994 1995 1994
Revenue:
<S> <C> <C> <C> <C>
Rental income $333,734 $343,496 $1,106,142 $1,089,551
Interest income 14,358 9,694 48,355 29,002
Other income 11,033 19,158 47,103 42,946
Total revenue 359,125 372,348 1,201,600 1,161,499
Expenses:
General and administrative (Note 8) 17,123 11,881 46,966 39,076
Operations 148,682 131,890 444,416 401,382
Depreciation and amortization 93,012 93,273 279,038 279,821
Interest 160,437 162,629 482,999 489,428
Total expenses 419,254 399,673 1,253,419 1,209,707
Net income (loss) before minority interest (60,129) (27,325) (51,819) (48,208)
Minority interests' equity in
subsidiary (income) loss (Note 5) 23,064 9,250 12,221 10,095
Net income (loss) ($37,065) ($18,075) ($39,598) ($38,113)
Net income (loss) allocated to:
General Partners ($371) ($181) ($396) ($381)
Per unit of Investor Limited
Partner interest:
7,401 Units issued (4.96) (2.42) (5.30) (5.10)
<PAGE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(Unaudited)
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1993 ($10,110) $2,537,694 $2,527,584
Cash distributions (10,554) (121,376) (131,930)
Net income (loss) (251) (24,808) (25,059)
Balance at December 31, 1994 (20,915) 2,391,510 2,370,595
Cash distributions (9,396) (108,056) (117,452)
Net income (loss) (396) (39,202) (39,598)
Balance at September 30,1995 ($30,707) $2,244,252 $2,213,545
<PAGE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(Unaudited)
-------------
Nine Months
Ended
September 30,
1995 1994
Cash flows from operating activities:
<S> <C> <C>
Interest received $37,565 $24,720
Cash received from rents 1,104,866 1,090,786
Cash received from other income 47,103 42,946
Administrative expenses (59,713) (35,511)
Rental operations expenses (426,193) (404,249)
Interest paid (483,279) (489,684)
Net cash provided by operating activities 220,349 229,008
Cash flows from investing activities:
Purchase of fixed assets (8,943) -
Purchase of short-term investments 436,466 59,017
Net cash provided (used) by investing activities 427,523 59,017
Cash flows from financing activities:
Distributions to partners (117,452) (109,407)
Payments on mortgage note payable (73,707) (67,303)
Distributions paid to DPI and DPII (76,752) (102,960)
Net cash provided (used) by financing activities (267,911) (279,670)
Net increase (decrease) in cash and cash equivalents 379,961 8,355
Cash and cash equivalents at beginning of period 112,235 205,916
Cash and cash equivalents at end of period $492,196 $214,271
<PAGE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(Unaudited)
-------------
Reconciliation of net income (loss) to net cash provided by operating
activities:
Nine Months
Ended
September 30,
1995 1994
<S> <C> <C>
Net income (loss) ($39,598) ($38,113)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 279,038 279,821
Minority interests' equity in subsidiary loss (12,221) (10,095)
Change in assets and liabilities net of effects from investing and financing
activities:
Decrease (increase) in accounts
and interest receivable (10,790) (5,433)
Decrease (increase) in real estate tax escrow (11,948) (23,347)
Increase (decrease) in accounts
payable and accrued expenses 26,872 15,489
Increase (decrease) in due to affiliates (9,728) 9,451
Increase (decrease) in deferred rental income (101) -
Increase (decrease) in tenant security deposits (1,175) 1,235
Net cash provided by operating activities $220,349 $229,008
</TABLE>
<PAGE>
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------
1. Organization of Partnership
Berry and Boyle Development Partners III (A Massachusetts Limited Partnership)
(the "Partnership") was formed on July 11, 1988. Berry and Boyle Management, a
California Limited Partnership ("Management"), Richard G. Berry and Stephen B.
Boyle are the General Partners. Except under certain limited circumstances upon
termination of the Partnership, the General Partners are not required to make
any additional capital contributions. The General Partners or their affiliates
will receive various fees for services and reimbursement for various
organizational and selling costs incurred on behalf of the Partnership.
On January 13, 1989 the Securities and Exchange Commission declared the
Partnership's public offering (the "Prospectus") of up to 80,000 units of
Limited Partnership Interests at $500 per unit (the "Units") effective and the
marketing and sale of the Units commenced shortly thereafter. The initial
closing of the offering took place on December 28, 1989 at which time the
holders of 3,048 Units were admitted into the Partnership. The Partnership
continued to admit subscribers monthly thereafter until December 27, 1991, its
last closing date. The Partnership terminated the offering on January 13, 1992
having admitted 289 investors acquiring 7,401 Units totaling $3,700,500.
The accompanying consolidated financial statements present the activity of the
Partnership for the nine months ended September 30, 1995 and 1994.
The Partnership will continue until December 31, 2018, unless earlier terminated
by the sale of all, or substantially all, of the assets of the Partnership, by
the dissolution and liquidation of the joint ventures or as otherwise provided
in the Partnership Agreement.
2. Significant Accounting Policies
A. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiary Casabella Associates. All intercompany
accounts and transactions have been eliminated in consolidation. The
Partnership follows the accrual basis of accounting.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
C. Depreciation
Depreciation is provided for by the use of the straight-line method
over the estimated useful lives as follows:
Buildings and improvements 40 years
Equipment, furnishings and fixtures 5 years
D. Deferred Expenses
Costs of obtaining the mortgage on Casabella are being amortized over
the term of the related mortgage note payable using the straight-line
method. Any unamortized costs remaining at the date of refinancing are
expensed in the year of refinancing.
E. Organization Costs
Costs in connection with the organization of the Partnership are being
amortized over a 5-year period using the straight-line method.
F. Offering Costs
Costs in connection with the offering of Units were charged to Limited
Partners' equity upon the sale of the related Units.
G. Income Taxes
The Partnership is not liable for Federal or state income taxes because
Partnership income or loss is allocated to the Partners for income tax
purposes. If the Partnership's tax returns are examined by the Internal
Revenue Service or state taxing authority and such an examination
results in a change in Partnership taxable income (loss), such change
will be reported to the Partners.
H. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
<PAGE>
<TABLE>
3. Property:
Property, at cost, consisted of the following at September 30, 1995:
Initial Cost Costs Capitalized
to Partnership Subsequent to Acquisition
Buildings Equipment, Buildings Equipment,
Property and Furnishings and Furnishings
Description Land Improv. & Fixtures Land Improv. & Fixtures
Casabella, Phase I,
a 61-unit residential
rental complex located
<S> <C> <C> <C> <C> <C>
in Scottsdale, Arizona $1,308,130 $3,512,100 $374,047 - $3,525 $7,242
Casabella, Phase II,
a 93-unit residential
rental complex located
in Scottsdale, Arizona 1,667,970 4,127,060 408,737 - 5,375 11,040
$2,976,100 $7,639,160 $782,784 - $8,900 $18,282
Depreciation expense for the six months ended September 30, 1995 and 1994 and accumulated depreciation
at September 30, 1995 and December 31, 1994 consisted of the following:
Accumulated
Depreciation
Depreciation Sept. 30, December 31,
Expense
1994 1993 1995 1994
<S> <C> <C> <C> <C>
Buildings and improvements $143,402 $143,402 $911,582 $768,180
Equipment, furnishings and fixtures 118,818 117,501 750,024 631,206
$262,220 $260,903 $1,661,606 $1,399,386
Casabella is encumbered by a nonrecourse mortgage note payable (see Note 6).
Casabella Phase I and II were combined in April 1991 and are now being operated as one 154-unit property known as
Casabella.
3. Property (continued):
Property, at cost, consisted of the following at September 30, 1995:
Gross Amount At Which Carried
At Close of Period
Buildings Equipment,
Property and Furnishings
Description Land Improv. & Fixtures Total
Casabella, Phase I,
a 61-unit residential
rental complex located
<S> <C> <C> <C> <C>
in Scottsdale, Arizona $1,308,130 $3,515,625 $381,289 $5,205,044
Casabella, Phase II,
a 93-unit residential
rental complex located
in Scottsdale, Arizona 1,667,970 4,132,435 419,777 6,220,182
$2,976,100 $7,648,060 $801,066 $11,425,226
</TABLE>
<PAGE>
4. Cash and cash equivalents
Cash and cash equivalents at September 30, 1995 and December 31, 1994 consisted
of the following:
Sept. 30, Dec. 31,
1995 1994
Cash on hand ............................. $ 8,822 $ 4,569
Money market accounts .................... 483,374 107,666
$492,196 $112,235
5. Joint Venture and Partnership Acquisitions
On September 28, 1990, the Partnership acquired a majority interest in Casabella
Associates, a general partnership comprised of the Partnership, Berry and Boyle
Development Partners (A Massachusetts Limited Partnership) ("DPI") and Berry and
Boyle Development Partners II (A Massachusetts Limited Partnership) ("DPII").
Casabella Associates was formed to acquire a majority interest in the Casabella
Joint Venture which owns Casabella, a 154-unit residential property located in
Scottsdale, Arizona. Since the Partnership owns a majority interest in Casabella
Associates, the accounts and operations of Casabella Associates (including the
accounts and operations relating to Casabella Associates' majority interest in
the Casabella Joint Venture) have been consolidated into those of the
Partnership.
At September 30, 1995, the Partnership, DPI and DPII had contributed $2,500,000,
$400,000 and $1,800,000, respectively to Casabella Associates. $3,845,154 of
this amount was used to purchase the majority interest in the Casabella Joint
Venture referred to in the preceding paragraph and $500,000 was used to fund an
escrow account maintained by the permanent lender (see Note 6). In addition to
the $4,700,000 of cash contributions referred to above, the Partnership, DPI and
DPII collectively incurred $215,564 of acquisition costs which have been
recorded as additional capital contributions to Casabella Associates.
Cash distributions and allocations of income and loss from Casabella Associates
are governed by the partnership agreement and are generally based on the ratio
of capital contributed by each of the joint venture partners.
Net cash from operations of the Casabella Joint Venture, to the extent
available, shall be distributed not less often than quarterly with respect to
each fiscal year, as follows:
(A) First, to Associates, an amount equal to a 10.6% per annum
(computed on a simple noncompounded daily basis from the date
of the closing) of their capital investment;
(B) Second, the balance 70% to Associates and 30% to the property
developer.
All losses from operation and depreciation for the Casabella Joint Venture are
allocated 99.5% to Associates and 0.5% to the property developer.
All profits from operations of the Casabella Joint Venture are allocated in
accordance with distributions of net cash from operations with respect to such
fiscal year; provided, however, that if with respect to any fiscal year there is
no net cash from operations distributable, profits will be allocated 99.5% to
Associates and 0.5% to the property developer.
In the case of certain capital transactions and distributions as defined in the
Casabella joint venture agreement, the allocation of related profits, losses and
cash distributions, if any, would be different than as described above and would
be effected by the relative balance in the individual partners' capital
accounts.
6. Mortgage Note Payable
All of the property owned by the Partnership is pledged as collateral for the
nonrecourse mortgage note payable pertaining to Casabella in the original
principal amount of $7,320,000. On June 30, 1992, Casabella Joint Venture
refinanced its original $7,320,000 permanent loan using the proceeds of a new
first mortgage loan in the amount of $7,300,000. Under the terms of the new
note, monthly principal and interest payments of $61,887, based on a fixed
interest rate of 9.125%, are required over the term of the loan. The balance of
the note will be due on July 15, 1997.
Accrued interest at September 30, 1995 and December 31, 1994 consisted of
$26,692 and $26,972, respectively, all pertaining to Casabella.
The aggregate principal amounts of long term borrowings due during the calendar
years 1995 through 1997, respectively, are as follows, $99,414, $108,875 and
$6,885,674.
7. Partners' Equity
Under the terms of the Partnership Agreement, as amended, profits are allocated
92% to the Limited Partners and 8% to the General Partners; losses are allocated
99% to the Limited Partners and 1% to the General Partners.
Cash distributions to the partners are governed by the Partnership Agreement and
are made, to the extent available, 92% to the Limited Partners and 8% to the
General Partners.
In the case of certain events as defined in the Partnership Agreement, such as
the sale of an investment property or an interest in a joint venture
partnership, the allocation of the related profits, losses, and distributions,
if any, would be different than described above .
8. Related Party Transactions
Due to affiliates at September 30, 1995 and December 31, 1994 consisted of
$2,143 and $11,871 of reimbursable costs payable to Berry and Boyle Inc.
For the nine months ended September 30, 1995 and 1994, general and
administrative expenses included $16,430 and $16,429, respectively, of salary
reimbursements paid to the General Partners for certain administrative and
accounting personnel who performed services for the Partnership.
The officers and principal shareholders of Evans Withycombe, Inc., the developer
and property manager of Casabella, together hold a two and one half percent
cumulative profit or partnership voting interest in Berry and Boyle. During the
nine months ended September 30, 1995 and 1994, $58,538 and $53,272,
respectively, of property management fees were paid or accrued to Evans
Withycombe, Inc.
<PAGE>
-14-
-13-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity; Capital Resources
The Partnership admitted 289 investors who purchased a total of 7,401 Units
aggregating $3,700,500. These offering proceeds, net of organizational and
offering costs of $555,075, provided $3,145,425 of net proceeds to be used for
the purchase of income-producing residential properties, including related fees
and expenses, and working capital reserves. The Partnership has expended (1)
$2,780,930 to acquire its interest in Casabella Associates and to pay
acquisition expenses, including an acquisition fee to the General Partners and
(2) $52,768 to cover costs associated with discontinued acquisitions . The
remaining net proceeds of $311,727 have been used to establish working capital
reserves sufficient to meet the needs of the Partnership, including
contributions that may be required at the joint venture level, as determined by
the General Partners.
The working capital reserves of the Partnership consist of cash and cash
equivalents and short-term investments. These reserves provide the Partnership
with the necessary liquidity to carry on its day-to-day operations and to make
necessary contributions to Casabella. Thus far in 1995, the aggregate net
decrease in working capital reserves was $45,714. This increase resulted
primarily from cash provided by operations of $220,349, offset by distributions
to partners of $117,452, distributions paid to DPI and DPII of $76,752 and
$73,707 of principal payments on mortgage notes payable.
Property Status
Casabella
As of September 30, 1995, the property was 90% occupied, compared to 88%
approximately one year ago. At September 30, 1995 and 1994, the average monthly
rents collected for the various unit types were as follows:
Unit Type 1995 1994
One bedroom two bath w/den ................... $ 805 $ 775
Two bedroom two bath ......................... 930 895
Two bedroom two bath w/den ................... 1,136 1,068
Results of Operations
The Partnership's operating results for the three months ended September 30,
1995 consisted of interest earned on short-term investments of $14,079, general
and administrative expenses of $15,323, and the income (loss) allocated from
Casabella consisting of the following:
Revenue $345,046
Expenses:
General and administrative 1,800
Operations 148,682
Depreciation and amortization 93,012
Interest 160,437
403,931
Net income (loss) ($58,885)
The Partnership's operating results for the three months ended September 30,
1994 consisted of interest earned on short-term investments of $9,474, general
and administrative expenses of $10,204, amortization expense of $700, and the
income (loss) allocated from Casabella consisting of the following:
Revenue $362,874
Expenses:
General and administrative 1,677
Operations 131,890
Depreciation and amortization 92,573
Interest 162,629
388,769
Net income (loss) ($25,895)
The Partnership's operating results for the nine months ended September 30, 1995
consisted of interest earned on short-term investments of $47,292, general and
administrative expenses of $41,566, and the income (loss) allocated from
Casabella consisting of the following:
Revenue $1,154,308
Expenses:
General and administrative 5,400
Operations 444,416
Depreciation and amortization 279,038
Interest 482,999
1,211,853
Net income (loss) ($57,545)
The Partnership's operating results for the nine months ended September 30, 1994
consisted of interest earned on short-term investments of $28,115, general and
administrative expenses of $34,045, amortization expense of $2,100, and the
income (loss) allocated from Casabella consisting of the following:
Revenue $1,133,384
Expenses:
General and administrative 5,031
Operations 401,382
Depreciation and amortization 277,721
Interest 489,428
1,173,562
Net income (loss) ($40,178)
Comparison of Operating Results for the Nine Months Ended September 30, 1995 and
1994:
Interest income increased 67% over the prior period as a result of higher
interest rates on the Partnership's short term investments. General and
administrative expenses increased 20% due to increased legal expense and
printing and mailing expense. Operating expenses increased 11% as a result of
increases in repairs and maintenance, salaries and wages, and advertising and
promotion.
Thus far in 1995, the Partnership has made the following cash distributions to
its Partners:
Feb 15 May 15 Aug. 15 Total
Limited Partners ........... $41,446 $33,305 $33,305 $74,751
General Partners ........... 3,604 2,896 2,896 6,500
$45,050 $36,201 $36,201 $81,251
<PAGE>
PART II - OTHER INFORMATION
-----------------
ITEM 1. Legal Proceedings
Response: None
ITEM 2. Changes in Securities
Response: None
ITEM 3. Defaults Upon Senior Securities
Response: None
ITEM 4. Submission of Matters to a Vote of Security Holders
Response: None
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
Response: None
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.
BERRY AND BOYLE DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
(Registrant)
BY: BERRY AND BOYLE MANAGEMENT
A General Partner
BY: BERRY AND BOYLE INC.
A General Partner
BY:
James E. Glynn, Treasurer
Date:November 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Sep-30-1995
<CASH> 492,196
<SECURITIES> 591,014
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,425,226
<DEPRECIATION> 1,661,606
<TOTAL-ASSETS> 10,925,452
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,750,194
<TOTAL-LIABILITY-AND-EQUITY> 10,925,452
<SALES> 0
<TOTAL-REVENUES> 1,201,600
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 758,199
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 482,999
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,598
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
