FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period.........to.........
Commission file number 0-18419
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
(Exact name of small business issuer as specified in its charter)
Delaware 31-1266850
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) BRUNNER COMPANIES INCOME PROPERTIES L.P. III
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 766
Restricted-tenant security deposits 8
Accounts receivable 169
Escrows for taxes and insurance 29
Other assets 90
Investment properties:
Land $ 1,525
Buildings and related personal property 12,908
14,433
Less accumulated depreciation (3,271) 11,162
$12,224
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 10
Tenant security deposits 8
Accrued taxes 26
Other liabilities 8
Mortgage notes payable 11,818
Partners' Capital (Deficit)
General Partner $ (57)
Class A Limited Partners - (850,900 units) 391
Class B Limited Partners - (8,600 units) 20 354
$12,224
See Accompanying Notes to Financial Statements
b) BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 435 $ 429
Other income 10 9
Total revenues 445 438
Expenses:
Operating 78 74
General and administrative 19 32
Depreciation 105 106
Interest 276 280
Property taxes 23 22
Total expenses 501 514
Net loss $ (56) $ (76)
Net loss allocated to general
partner (1%) $ (1) $ (1)
Net loss allocated to Class A
limited partners (98.01%) (54) (74)
Net loss allocated to Class B
limited partners (.99%) (1) (1)
$ (56) $ (76)
Net loss per Class A limited
partnership unit $ (.06) $ (.09)
See Accompanying Notes to Financial Statements
c) BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
General Limited Partners
Partner Class A Class B Total
<S> <C> <C> <C> <C>
Original capital contributions 1 $ 8,420 $ 86 $ 8,507
Partner's capital (deficit) at
December 31, 1996 $ (56) $ 445 $ 21 $ 410
Net loss for the three
months ended March 31, 1997 (1) (54) (1) (56)
Partners' capital (deficit)
at March 31, 1997 $ (57) $ 391 $ 20 $ 354
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
d) BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<aption>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (56) $ (76)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 105 106
Amortization of loan costs and leasing commissions 3 4
Change in accounts:
Restricted cash (2) --
Accounts receivable (36) 107
Escrows for taxes and insurance 28 2
Other assets 2 2
Accounts payable (10) (3)
Tenant security deposit liabilities 2 3
Accrued taxes (30) (5)
Other liabilities (127) 4
Net cash (used in) provided by operating
activities (121) 144
Cash flows from investing activities:
Net cash used in investing activities -- --
Cash flows from financing activities:
Mortgage principal payments (77) (53)
Net cash used in financing activities (77) (53)
Net (decrease) increase in cash and cash equivalents (198) 91
Cash and cash equivalents at beginning of period 964 700
Cash and cash equivalents at end of period $ 766 $ 791
Supplemental disclosure of cash flow information:
Cash paid for interest $ 367 $ 279
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
e) BRUNNER COMPANIES INCOME PROPERTIES L.P. III
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements for Brunner Companies Income
Properties LP. III (the "Partnership"), have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
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 the Managing General Partner (Brunner Management Limited
Partnership), 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 fiscal year ending
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-KSB
for the fiscal year ended December 31, 1996.
Reclassifications
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The partnership agreement provides for payments to
affiliates for services and for reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to
affiliates of the Managing General Partner for the three months ended March 31,
1997 and 1996 (in thousands):
1997 1996
Property management fees $13 $14
Reimbursement for services of affiliates 5 8
Leasing commissions 5 5
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the General Partner. An affiliate of the General
Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner who receives
payments on these obligations from the agent. The amount of the Partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two retail centers. The
following table sets forth the average occupancy of the properties for each of
the three months ended March 31, 1997 and 1996:
Average
Occupancy
1997 1996
Gateway Plaza
Mt. Sterling, Kentucky 96% 95%
Highpoint Village
Bellefontaine, Ohio 96% 95%
Wal-Mart, an anchor tenant, vacated Gateway Plaza in May of 1996. This tenant
is liable for, and the Partnership expects that it will pay, its rental payments
through the year 2008 when its lease expires. Certain tenants in the shopping
center have the option to pay a reduced rental rate based on tenant sales due to
the vacancy of this anchor tenant. To date, two tenants have exercised this
option, however, rental revenues have not been materially impacted. However, it
is unknown to what extent this vacancy will negatively impact the performance of
the shopping center in the future.
The Partnership realized a net loss of $56,000 for the three months ended March
31, 1997 compared to $76,000 for the three months ended March 31, 1996. The
decrease in net loss for the period ended March 31, 1997 is primarily due to
decreased general and administrative expenses. General and administrative
expenses decreased due to decreased professional fees for the three months ended
March 31, 1997 compared to the corresponding period of 1996.
At March 31, 1997, the Partnership held unrestricted cash of $766,000 compared
to $791,000 at March 31, 1996. Net cash used in operations increased primarily
due to increased interest payments and decreased collections of accounts
receivables. Interest payments increased due to interest for March being paid
for each property on March 31, 1997. Net cash used in financing activities
increased due to the early payment of the mortgage payment for both properties
on March 31, 1997 rather than April 1, the due date.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and meet other operating needs of the Partnership. Due to the successful
closing of the long-term financing on Highpoint and Gateway, the level of
existing liquid assets is believed to be sufficient to meet any near term needs
of the Partnership. No distributions were made in 1996 or during the first
quarter of 1997. Future cash distributions will depend on the levels of net
cash generated from operations, refinancings, property sales, and the
availability of cash reserves. At this time, the Managing General Partner does
not anticipate making a cash distribution during 1997.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27 , Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRUNNER COMPANIES INCOME PROPERTIES L. P. III,
a Delaware limited partnership
By: Brunner Management Limited
Partnership, an Ohio limited Partnership, its
General Partner
By: 104 Management, Inc., an Ohio corporation,
its Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: May 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Brunner
Companies Income Properties L.P. III 1997 First Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000847319
<NAME> BRUNNER COMPANIES INCOME PROPERTIES L.P. III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 766
<SECURITIES> 0
<RECEIVABLES> 169
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,433
<DEPRECIATION> 3,271
<TOTAL-ASSETS> 12,224
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,818
0
0
<COMMON> 0
<OTHER-SE> 354
<TOTAL-LIABILITY-AND-EQUITY> 12,224
<SALES> 0
<TOTAL-REVENUES> 445
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 276
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (56)
<EPS-PRIMARY> (.06)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multplier is 1.
</FN>
</TABLE>
