FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1994 Commission file number 0-19197
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. III
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1435854
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201-3RD AVENUE, SUITE 2200, SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)206-624-8100
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 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
Part I, Item 1: Balance Sheets (unaudited)
Sept. 30, Dec. 31,
1994 1993
----------- -----------
Assets:
Cash and short-term investments $ 1,356,833 $ 723,114
Storage centers, net 35,417,314 34,910,768
Other assets 230,517 207,376
Amortizable assets 955,234 682,961
Land held for resale 201,835 201,835
----------- -----------
Total assets $36,161,733 $36,726,054
=========== ===========
Liabilities and Partners' Equity (Deficit):
Liabilities
Accounts payable and other accrued
expenses $ 563,633 $ 443,440
Notes payable 12,322,746 10,821,000
----------- -----------
Total liabilities $12,886,379 $11,264,440
----------- -----------
Partners' equity (deficit)
Limited partners 25,336,898 25,513,844
General partner (61,544) (52,230)
----------- -----------
Total Partners' Equity (Deficit) 25,275,354 25,461,614
----------- -----------
Total Liabilities and Partners'
Equity (Deficit) $38,161,733 $36,726,054
=========== ===========
Part I, Item 1: Statements of Earnings (unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------ -------------------
1994 1993 1994 1993
--------- -------- --------- --------
Revenues
Rental $1,755,673 $1,172,456 $4,898,273 $2,726,648
Interest Income and
other revenue 11,442 41,966 47,015 177,243
---------- ---------- ---------- ----------
Total Revenues $1,767,115 $1,214,422 $4,945,288 $2,903,891
---------- ---------- ---------- ----------
Expenses
Operating and
administrative 465,911 362,292 1,292,360 887,013
Property management fees 108,213 70,386 293,897 163,599
Depreciation 233,347 180,896 699,401 434,964
Real estate taxes 114,128 104,327 366,072 251,266
Interest 239,281 57,774 577,633 57,774
Amortization 80,634 66,647 255,140 100,333
---------- ---------- ---------- ----------
Total Expenses $1,241,514 $ 842,322 $3,484,503 $1,894,949
---------- ---------- ---------- ----------
Earnings $ 525,601 $ 372,100 $1,460,785 $1,008,942
========== ========== ========== ==========
Earnings per unit of limited
partnership interest $ 4.19 $ 2.97 $ 11.64 $ 8.04
========== ========== ========== ==========
Distributions per unit
of limited partnership
interest $ 4.53 $ 3.75 $ 13.12 $ 11.25
========== ========== ========== ==========
Part I, Item 1: Statements of Cash Flows (unaudited)
Nine Months Ended Sept. 30,
--------------------------
1994 1993
------------- ------------
Operating activities:
Earnings $ 1,460,785 $ 1,008,942
Adjustments to reconcile earnings to net
cash provided by operating activities:
Depreciation and amortization 954,541 535,297
Changes in operating accounts:
Other assets (23,141) (99,638)
Accounts payable and other
accrued expenses 120,193 218,346
---------- -----------
Net cash provided by operating activities 2,512,378 1,662,947
---------- -----------
Investing activities:
Purchase of and improvements
to storage centers (531,947) (6,397,656)
Consideration for amortizable assets (300,498) (746,506)
--------- -----------
Net cash used in investing activities (832,445) (7,144,162)
--------- -----------
Financing activities:
Proceeds from notes payable 1,500,000
Payments on notes payable (672,254) (865,000)
Payments on loan costs (226,915)
Distributions to partners (1,647,045) (1,411,752)
--------- -----------
Net cash used in financing activities (1,046,214) (2,276,752)
--------- -----------
Increase (decrease) in cash and
short-term investments 633,719 (7,757,967)
Cash and short-term investments at
beginning of year 723,114 8,532,738
----------- -----------
Cash and short-term investments at
end of period $ 1,356,833 $ 774,771
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during period for interest $ 338,352 $ 18,120
=========== ===========
Supplemental disclosures of non-cash investing activities
Liabilities incurred in connection with
the acquisition of and security interest
in storage centers $ --- $11,686,000
=========== ===========
Part I, Item 1: Notes to Financial Statements
Note A -- Financial Statements Preparation:
The interim financial statements are unaudited but reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. These
adjustments consist primarily of normal recurring accruals. The interim
financial statements should be read in conjunction with the audited
financial statements contained in the 1993 Annual Report. The results of
operations for interim periods will not necessarily be indicative of the
operating results for the fiscal year. Certain amounts have been reclassified
to conform to the current year presentation.
Distributions and earnings per unit of limited partnership interest
are based on the total amounts distributed and allocated to limited
partners divided by the number of units outstanding during the period
(119,215 for the three and nine months ended September 30, 1994 and 1993).
Note B -- Acquisition of Storage Centers:
On February 10, 1994, the Partnership purchased two storage centers
in northern California from sellers unaffiliated with the Partnership for
$5,739,000. The purchase price was funded through notes payable to the
seller of $674,000, a previously obtained note payable, and cash.
Additionally, on May 3, 1994, the Partnership purchased an office
building in northern California for $500,000 cash.
Note C -- Note Payable:
On March 31, 1994, the Partnership consolidated outstanding notes
payable totaling $8 million and borrowed an additional $1.5 million.
This new note matures April 1, 2001, and bears an initial interest rate
of 7% until November 1, 1994, at which time the rate changes to at 8.125%
until May 1, 1995. The terms of this new note provide the Partnership
the option to borrow up to $12.5 million.
Subsequent to the end of the quarter, the Partnership made the final
payment of $270,000 on the seller's note secured by the Tracy facility.
Part I, Item 1: Management's Discussion & Analysis
Operating Results: The addition of six new storage centers over the
past year, as well as the improved operations from previously existing
storage locations have increased the quarters earnings by 41% compared to
the prior year. The additional centers provided $678,000 in revenues and
$455,000 in earnings during the third quarter. Revenue for centers owned
in 1993 increased 13% compared to last year's third quarter, while
corresponding operating expenses remained stable. The facilities that
showed impressive increases in revenue over last year were Gilbert,
Rochester and Windcrest. The average occupancy for September 1994 was
94%, up one percentage point from September 1993. Additionally, the
average rental rate per square foot increased 19% from the third quarter
of 1993 to the same period in 1994.
Investing and Financing Activities: On February 10, 1994, the
Partnership purchased two new properties, Sacramento and San Lorenzo,
located in northern California. The purchase price, as well as
prorations and closing costs, were funded through notes payable to the
seller of $674,000, a previously obtained note payable to a commercial
bank and cash. Under the purchase and sale agreements, these properties
provide the Partnership with a 10% return on funds invested for the first
three years. Additionally, on May 3, 1994, the Partnership purchased a
$500,000 office building in northern California from the same sellers.
On March 31, 1994, the Partnership consolidated outstanding notes
payable totaling $8 million and borrowed an additional $1.5 million.
This new note matures April 1, 2001, and bears an initial interest rate
of 7% until November 1, 1994, at which time the rate changes to 8.125%
until May 1, 1995. The terms of this new note provide the Partnership
the option to borrow up to $12.5 million. Cash proceeds from this note
were used to make $580,000 in required payments on the seller's notes
taken during 1993.
Subsequent to the end of the quarter, the Partnership made the final
payment of $270,000 on the seller's note secured by the Tracy facility.
This payment was funded out of operating cash flow.
Cash Distributions: Earnings continue to improve and the
Partnership has maintained a healthy cash position. This has enabled us
to raise cash distributions for the third quarter of 1994 to an
annualized rate of return of 7.5% compared to 7.25% last quarter. The
Partnership plans to continue to retain a portion of each quarter's
operating cashflow in order to fund its repayment obligations on the
remaining $2,645,000 of seller's notes. Through this strategy, the
Partnership will minimize interest expense and maximize cash
distributions for the long term.
SIGNATURE
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.
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. III
Date: November 14, 1994 By: HARRELL BECK
Harrell Beck
Chief Financial Officer and Authorized Signatory
Shurgard General Partner, Inc.
General Partner
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