FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT
Under Section 13 or 15(d)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended December 31, 1996
or
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-18419
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
(Name of small business issuer in its charter)
Delaware 31-1266850
(State or other jurisdiction of (I.R.S. 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
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $1,819,000.
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1996: Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is management's belief that such trading would
not exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Prospectus of Registrant dated May 12, 1989 (included in
Registration Statement, No. 33-27407, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Brunner Companies Income Properties L.P. III (the "Partnership" or "Registrant")
is a Delaware limited partnership formed in March 1989. The Partnership will
continue in existence until December 31, 2008, unless earlier dissolved or
terminated. Brunner Management Limited Partnership ("General Partner"), an Ohio
limited partnership formed in February 1988, is the sole general partner of the
Partnership. 104 Management, Inc. ("Managing General Partner"), an Ohio
corporation formed in February 1988, is the sole general partner of the General
Partner, and in that capacity manages the business of the Partnership.
As of December 31, 1996, the Partnership had 850,900 units of Class A Limited
Partnership Interest ("Units") and 8,600 units of Class B Limited Partnership
Interest ("Subordinated Interest") issued and outstanding. The Subordinated
Interest was sold to the Managing General Partner. Holders of the Units are
referred to as "Unitholders," holders of the units of Subordinated Interest are
referred to as "Subordinated Limited Partners," and Unitholders and Subordinated
Limited Partners are collectively referred to as "Limited Partners." Limited
Partners are not required to make any additional capital contributions. There
are only two differences between the Class A and Class B limited partnership
interests. First, the holders of Class A units are entitled to receive their
Class A Priority Return before the holders of Class B units are entitled to
receive any portion of their Class B Priority Return. Second, holders of Class B
units, if such holders are affiliates of the General Partners, are not entitled
to vote upon the removal of the General Partner or upon consideration of a sale
of any Retail Center to the General Partner or any affiliate of the General
Partner.
The offering terminated in September 1989. Upon termination of the offering,
the Partnership had accepted subscriptions for 851,400 Units of Class A Interest
and 8,600 units of Class B Interest purchased by the General Partner for
aggregate gross proceeds of $8,506,170. During 1994, the number of Class A
Limited Partnership units decreased by 500 units due to Class A Limited Partners
abandoning their units. The Partnership invested substantially all of the net
offering proceeds in four Retail Centers which were acquired on September 22,
1989. During 1995, two of these Retail Centers were foreclosed upon by the
lender. (See "Note K" to the Notes to Financial Statements in "Item 7"). The
Partnership will not acquire or invest in any other properties or debt or equity
securities of any other issuers (other than short term investments of cash in
high grade United States government obligations during interim periods between
the receipt of revenues and the distribution of cash to the Limited Partners and
pending payment of operating expenses of the Partnership) and will not issue any
additional limited partnership interests or other equity securities in the
Partnership. The policies of the Partnership noted above can only be changed by
an affirmative vote of limited partners owning a majority in interest and the
General Partner.
The General Partner, the Managing General Partner and the Subordinated Limited
Partners are all affiliates of a related group of corporations and partnerships
engaged generally in the real estate development business. Pursuant to an
agreement effective December 31, 1992, IBGP, Inc., an affiliate of Insignia
Financial Group, Inc. ("Insignia"), acquired a majority of the outstanding stock
of 104 Management Inc. on March 5, 1993. IBGP, Inc. is an indirect wholly-owned
subsidiary of Metropolitan Asset Enhancement, L.P.("MAE"), an affiliate of
Insignia. As a result of this transaction, IBGP, Inc. effectively controls the
General Partner. The Partnership is in the business of owning and operating for
investment two regional shopping centers: Gateway Plaza, Mt. Sterling, Kentucky;
and Highpoint Village, Bellefontaine, Ohio (the "Retail Centers"). During 1995,
two of the Partnership's investment properties, Forest Ridge and Bay Village,
were foreclosed upon, leaving the Partnership with the two remaining shopping
centers mentioned previously. See "Item 2. Description of Properties" for
additional information regarding the Retail Centers and the foreclosures.
The real estate business is highly competitive. The Registrant's real property
investments are subject to competition from similar types of properties in the
vicinities in which they are located and the Partnership is not a significant
factor in its industry. In addition, various limited partnerships have been
formed by related parties to engage in businesses which may be competitive with
the Registrant.
The Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia. The property manager is responsible for
the day-to-day operations of each property. The Managing General Partner has
also selected affiliates of Insignia to provide real estate advisory and asset
management services to the Partnership. As advisor, such affiliates provide all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing. For a further
discussion of property and partnership management, see "Item 12", which
descriptions are herein incorporated by reference.
ITEM 2. DESCRIPTION OF PROPERTIES
The Partnership was formed for the purpose of acquiring and operating the Retail
Centers. Under the Partnership Agreement, the Partnership will not invest in
the securities of any other issuer, lend funds to other persons or entities or
engage in the purchase or sale of any investments other than the Retail Centers
and properties directly related to the Retail Centers and short-term liquid
investments of cash. The policies of the Partnership noted above can only be
changed by an affirmative vote of limited partners owning a majority in interest
and the General Partner.
The following table sets forth the Partnership's investments in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Gateway Plaza 09/22/89 Fee ownership, subject to Retail Center
Mt. Sterling, Kentucky first mortgage 160,021 sq.ft.(1)
Highpoint Village 09/22/89 Fee ownership, subject to Retail Center
Bellefontaine, Ohio first mortgage 153,267 sq.ft.
<FN>
(1) During 1996, the complex size increased by 2,880 square feet as Food Lion
expanded by 5,280 square feet, including 2,400 of previously vacant space.
</TABLE>
A significant feature of all the retail centers is the fact that approximately
76% of the leasable space is, in the aggregate, leased to anchor tenants with
national or regional name recognition. Although such anchor tenants generally
pay lower base rents than smaller tenants, anchor tenants offer greater security
and stability of long-term leases from well-established and more credit worthy
tenants and tend to attract greater traffic to the retail centers.
On January 5, 1995, the lender foreclosed on Forest Ridge Shopping Center,
located in Asheville, North Carolina. The Partnership recorded a valuation
write-down of approximately $415,000 to reduce the carrying costs of the Forest
Ridge assets to their estimated market value and an extraordinary gain on the
foreclosure of approximately $844,000. The $7,200,000 mortgage had matured
January 1, 1994, and was in default. The lender granted forebearances through
June 30, 1994, while refinancing discussions continued between the Partnership
and the lender. These discussions did not ultimately produce an agreement to
either refinance or sell the property. In the Managing General Partner's
opinion, it was not in the Partnership's best interests to contest the
foreclosure action or file for reorganization under the bankruptcy laws.
On December 4, 1995, the lender foreclosed on Bay Village Shopping Center,
located in Conway, South Carolina. The $5,300,000 mortgage matured January 1,
1994, and had been in default since that date. The lender granted forebearances
through June 30, 1994, while refinancing discussions continued between the
Partnership and the lender. These discussions did not ultimately produce an
agreement to either refinance or sell the property and the lender foreclosed on
the property. In the Managing General Partner's opinion, it was not in the
Partnership's best interests to contest the foreclosure action or file
bankruptcy. The estimated fair value of Bay Village approximated the amount
payable to the mortgage holder; therefore, a gain on the disposal of the
property in foreclosure of $16,000, the difference between the carrying value of
the property and the debt to the mortgage holder, was recorded.
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
<S> <C> <C> <C> <C> <C>
Gateway Plaza $ 6,170 $ 1,423 22.5-31.5 yrs S/L $ 6,847
Highpoint Village 8,263 1,743 5-31.5 yrs S/L 6,227
$14,433 $ 3,166 $13,074
</TABLE>
See "Note A" of the Notes to Financial Statements included in "Item 7" for a
description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance At Stated Balance
December 31, Interest Maturity Due At
Property 1996 Rate Date Maturity
Gateway Plaza $ 5,471 9.25% 01/01/08 $ 3,498
Highpoint Village 6,424 9.25% 10/01/08 3,770
Total $11,895
The notes are cross-collateralized and cross-defaulted.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual
Rental Rates Average Annual
(per Square Foot) Occupancy
1996 1995 1996 1995
Gateway Plaza $4.80 $4.80 96% 95%
Highpoint Village 5.57 5.58 94% 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, no tenants have exercised this
option. However, it is unknown to what extent this vacancy will negatively
impact the performance of the shopping center in the future.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other commercial buildings in the area. Management believes
that all of the properties are adequately insured.
The following is a schedule of the lease expirations for the years 1997-2006:
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
(in thousands)
Gateway Plaza
1997 2 5,600 $ 39 5.1%
1998 5 8,900 77 10.2%
1999 5 14,930 96 12.7%
2000 1 3,600 32 4.3%
2001-2006 0 0 0 0.0%
Highpoint Village
1997 6 17,800 $ 155 18.8%
1998 1 2,400 23 2.8%
1999 3 4,500 40 4.8%
2000 0 0 0 0.0%
2001 2 5,500 38 4.6%
2002-2006 0 0 0 0.0%
The following schedule reflects information on tenants occupying 10% or more
of the leasable square feet for each property:
<TABLE>
<CAPTION>
Square Footage Annual Rent Lease
Nature of Business Leased Per Square Foot Expiration
<S> <C> <C> <C> <C>
Gateway Plaza Discount Store 65,930 $3.45 02/01/08
Clothing Store 22,731 3.76 02/28/09
Grocery Store 30,280 5.30 05/09/16
Highpoint Village Discount Store 65,930 $3.41 10/14/08
Grocery Store 52,337 6.60 01/14/10
</TABLE>
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1996 1996
Taxes Rate
Gateway Plaza $44 1.00%
Highpoint Village 54 4.24%
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Registrant believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1996, no matters
were submitted to a vote of the Unitholders through the solicitation of proxies
or otherwise.
PART II
ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of December 31, 1996, the number of holders of record of Limited Partnership
Units and Subordinated Interest Units was 656 and one, respectively. Neither
the Units nor the Subordinated Interest are traded on any established public
trading market, and it is not anticipated that such a market will develop in the
future.
No cash distributions were paid during 1996 or 1995. Future distributions will
depend on the levels of 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
The Partnership's net loss for the year ended December 31, 1996, was $209,000
compared to net income of $176,000 for the year ended December 31, 1995. The
decrease in net income for the year ended December 31, 1996, is primarily due to
the foreclosure of Forest Ridge Shopping Center in January 1995. This
foreclosure resulted in an extraordinary gain on foreclosure of $844,000, offset
by a write-down of the property of $415,000. In addition, the decreases for the
year ended December 31, 1996, in rental income, depreciation, interest expense
and property taxes were primarily a result of the foreclosure of Bay Village in
December 1995. General and administrative expenses decreased for the year ended
December 31, 1996, due to a decrease of $18,000 in the annual audit expense and
an $8,000 decrease in legal expenses due to non-recurring legal costs in 1995
relating to the refinancing of Gateway and Highpoint. Other income decreased
for the year ended December 31, 1996, as a result of a non-recurring easement
fee paid by Wal-Mart at Gateway Plaza in 1995. Operating expenses increased for
the year ended December 31, 1996, due to major parking lot repairs of $58,000 at
Highpoint Village.
Liquidity and Capital Resources
At December 31, 1996, the Partnership held unrestricted cash of $964,000
compared to $700,000 at December 31, 1995. Net cash provided by operations
increased primarily due to increased collections of accounts receivable and
decreased interest payments at both properties. Net cash used in financing
activities decreased due to the absence of non-recurring loan costs which were
paid in 1995 relating to the loan extension on the Highpoint and Gateway notes.
On January 5, 1995, the lender foreclosed on Forest Ridge Shopping Center. The
$7,200,000 mortgage matured January 1, 1994, and was in default. The lender
granted forebearances through June 30, 1994, while refinancing discussions
continued between the Partnership and the lender. These discussions did not
ultimately produce an agreement to either refinance or sell the property. In
the Managing General Partner's opinion, it was not in the Partnership's best
interest to contest the foreclosure action or file for reorganization under the
bankruptcy laws. On January 5, 1995, the Partnership recorded a valuation
write-down of $415,000, to reduce the carrying costs of the Forest Ridge assets
to their estimated market value, and an extraordinary gain on the foreclosure of
$844,000.
On December 4, 1995, Aetna Life Insurance Company, the lender, foreclosed on Bay
Village Shopping Center, located in Conway, South Carolina. The $5,300,000
mortgage matured January 1, 1994, and had been in default since that date. The
lender granted forebearances through June 30, 1994, while refinancing
discussions continued between the Partnership and the lender. These discussions
did not ultimately produce an agreement to either refinance or sell the property
and the lender foreclosed on the property. In the Managing General Partner's
opinion, it was not in the Partnership's best interest to contest the
foreclosure action or file bankruptcy. The Partnership recognized a gain on
disposal of the property in foreclosure of $16,000.
The mortgage notes payable for Highpoint and Gateway matured on March 1, 1995.
The Partnership successfully obtained a long-term extension related to the
Highpoint and Gateway notes in May of 1995. The Highpoint note now matures
October 1, 2008, and the Gateway note now matures January 1, 2008. Both notes
are cross-collateralized and cross-defaulted and have an interest rate of 9.25%.
Loan costs of $30,000 were paid in conjunction with the extension of these notes
during 1995. These loan costs will be amortized over the term of the respective
loans.
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 1995 or 1996 and 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.
ITEM 7. FINANCIAL STATEMENTS
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors
Balance Sheet - December 31, 1996
Statements of Operations - Years ended December 31, 1996 and 1995
Statements of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1996 and 1995
Statements of Cash Flows - Years ended December 31, 1996 and 1995
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Brunner Companies Income Properties L.P. III
We have audited the accompanying balance sheet of Brunner Companies Income
Properties L.P. III as of December 31, 1996, and the related statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the two years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our respon-
sibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by the Partnership's management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brunner Companies Income
Properties L.P. III as of December 31, 1996, and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 10, 1997
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
BALANCE SHEET
(in thousands, except unit data)
December 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 964
Restricted-tenant security deposits 6
Accounts receivable 133
Escrows for taxes and insurance 57
Other assets 95
Investment properties (Notes A, C and J):
Land $ 1,525
Buildings and related personal property 12,908
14,433
Less accumulated depreciation (3,166) 11,267
$ 12,522
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 20
Tenant security deposits 6
Accrued taxes 56
Other liabilities 135
Mortgage notes payable (Note C) 11,895
Partners' Capital (Deficit)
General Partner (deficit) $ (56)
Class A Limited Partners - 850,900 units 445
Class B Limited Partners - 8,600 units 21 410
$ 12,522
See Accompanying Notes to Financial Statements
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 1,781 $ 2,358
Other income 38 47
Total revenues 1,819 2,405
Expenses:
Operating 324 289
General and administrative 69 106
Depreciation 426 582
Interest 1,112 1,543
Property taxes 97 154
Write-down of properties (Note G) -- 415
Gain on disposal of property in foreclosure (Note K) -- (16)
Total expenses 2,028 3,073
Net loss before extraordinary item (209) (668)
Extraordinary gain on extinguishment of debt (Note K) -- 844
Net (loss) income $ (209) $ 176
Net (loss) income allocated to general
partner (1%) $ (2) $ 2
Net (loss) income allocated to Class A
limited partners (98.01%) (205) 172
Net (loss) income allocated to Class B
limited partners (.99%) (2) 2
$ (209) $ 176
Net loss before extraordinary item per Class A
limited partnership unit $ (.24) $ (.77)
Extraordinary gain per Class A limited
partnership unit -- .97
Net (loss) income per Class A limited
partnership unit $ (.24) $ .20
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(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
Partners' capital (deficit) at
December 31, 1994 $ (56) $ 478 $ 21 $ 443
Net income for the year ended
December 31, 1995 2 172 2 176
Partners' capital (deficit) at
December 31, 1995 (54) 650 23 619
Net loss for the year ended
December 31, 1996 (2) (205) (2) (209)
Partners' capital (deficit) at
December 31, 1996 $ (56) $ 445 $ 21 $ 410
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1996 1995
Cash flows from operating activities:
Net (loss) income $ (209) $ 176
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation 426 582
Amortization of loan costs and leasing
commissions 19 21
Extraordinary gain on extinguishment of debt -- (844)
Write-down of properties -- 415
Gain on disposal of property in foreclosure -- (16)
Change in accounts:
Restricted cash (2) 5
Accounts receivable 115 (107)
Escrows for taxes and insurance 13 59
Other assets (6) (18)
Accounts payable (1) (3)
Tenant security deposit liabilities 2 (5)
Accrued taxes (1) (51)
Other liabilities 116 9
Net cash provided by operating activities 472 223
Cash flows from investing activities:
Property improvements and replacements (7) --
Deposits to restricted escrow -- (106)
Withdrawals from restricted escrow -- 106
Net cash used in investing activities (7) --
Cash flows from financing activities:
Payments on mortgage notes payable (201) (226)
Loan extension costs -- (30)
Net cash used in financing activities (201) (256)
Net increase (decrease) in cash and cash equivalents 264 (33)
Cash and cash equivalents at beginning of year 700 733
Cash and cash equivalents at end of year $ 964 $ 700
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,018 $ 1,634
See Accompanying Notes to Financial Statements
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES (continued)
Foreclosure
During 1995, Forest Ridge Shopping Center and Bay Village Shopping Center were
foreclosed upon by the mortgage holders. In connection with these foreclosures,
the following balance sheet accounts were adjusted by the non-cash amounts noted
below:
Forest Ridge Bay Village
Accounts receivable $ (25) $ (27)
Other assets (32) (4)
Investment properties (6,423) (5,143)
Accrued taxes 67 --
Accounts payable -- (5)
Other liabilities 57 2
Mortgage notes payable 7,200 5,193
Gain on disposal of properties $ 844 $ 16
See Accompanying Notes to Financial Statements
BRUNNER COMPANIES INCOME PROPERTIES L.P. III
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Brunner Companies Income Properties L.P. III (the "Partnership"
or "Registrant"), a Delaware limited partnership, was formed on March 10, 1989,
for the purpose of acquiring and operating the following retail centers: Bay
Village, a 133,474 square foot retail center in Conway, South Carolina; Forest
Ridge, a 164,672 square foot retail center in Asheville, North Carolina; Gateway
Plaza, a 160,021 square foot retail center in Mt. Sterling, Kentucky; and
Highpoint Village, a 153,267 square foot retail center in Bellefontaine, Ohio
(collectively referred to as the "Retail Centers"). The Seller of these Retail
Centers was related to the then general partners of the Partnership. On January
5, 1995, and December 4, 1995, the mortgage holders on the Forest Ridge Shopping
Center and Bay Village Shopping Center foreclosed on the properties,
respectively. Refer to "Note K" of the Notes to Financial Statements for a
further discussion of the foreclosure transactions.
The general partner of the Partnership is Brunner Management Limited Partnership
("General Partner"). The General Partner is an Ohio limited partnership whose
general partner is 104 Management, Inc. ("Managing General Partner") and whose
limited partner is a shareholder of 104 Management, Inc. On March 5, 1993,
IBGP, Inc., an affiliate of Insignia Brunner L.P., acquired a majority of the
outstanding stock of 104 Management, Inc. IBGP, Inc. is an indirect wholly-
owned subsidiary of Metropolitan Asset Enhancement L.P., an affiliate of
Insignia Financial Group, Inc. ("Insignia"). As a result of this transaction,
IBGP, Inc. effectively controls the Managing General Partner of the Partnership.
The Partnership shall continue in existence until December 31, 2008, unless it
is earlier dissolved and terminated pursuant to the provisions of the
partnership agreement.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Investment Properties: During 1995, the Partnership adopted "FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", which requires impairment losses to be recognized for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows are not sufficient to recover the assets'
carrying amount. The impairment loss is measured by comparing the fair value of
the asset to its carrying amount. The adoption of "FASB No. 121" did not have a
material effect on the Partnership's financial statements.
Buildings and improvements are depreciated on the straight-line basis over an
estimated useful life of 5 to 31.5 years. Tenant improvements are depreciated
over the term of the applicable lease.
For Federal income tax purposes, the Partnership depreciates a portion (90
percent attributable to non tax-exempt investors) of the property's basis using
the straight-line method over thirty-one and one-half years and the balance (10
percent attributable to tax-exempt investors) using the straight-line method
over forty years.
Advertising: The Partnership expenses the costs of advertising as incurred.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. For leases with fixed rental increases, rents are
recognized on a straight-line basis over the terms of the lease. This straight-
line basis recognized $19,000 more in rental income than has been collected in
1996 and prior years. This amount is expected to be collected in future years
as cash collections under the terms of the leases exceed the straight-line basis
of revenue recognition. For all other leases, minimum rents are recognized over
the terms of the leases as received.
Lease Commissions: Lease commissions are capitalized and amortized by the
straight-line method over the term of the applicable lease. Lease commissions
of $68,000, net of accumulated amortization of $29,000, are included in other
assets.
Loan Costs: Loan costs of $26,000, net of accumulated amortization of $4,000,
are included in other assets and are being amortized on a straight-line basis
over the terms of the respective loans.
Cash and cash equivalents:
Unrestricted - Unrestricted cash includes cash on hand and in banks and money
market funds and certificates of deposit with original maturities of three
months or less. At certain times the amount of cash deposited at a bank may
exceed the limit on insured deposits.
Restricted cash - tenant security deposits - The Partnership requires security
deposits from new lessees for the duration of the lease with such deposits being
considered restricted cash. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Fair Value: In 1995, the Partnership implemented "Statement of Financial
Accounting Standards No. 107, Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
Partnership estimates the fair value of its fixed rate mortgage by discounted
cash flow analysis, based on estimated borrowing rates currently available to
the Partnership.
Reclassifications: Certain reclassifications have been made to the 1995
information to conform to the 1996 presentation.
NOTE B - PARTNERSHIP ALLOCATIONS, CONTRIBUTIONS AND DISTRIBUTIONS
Distributions of operating cash flow, as defined in the partnership agreement,
will be distributed as follows:
First, to the Class A Limited Partners until they have received a
cumulative noncompounded annual cash return of 10% (Class A priority
return) of their adjusted capital contributions;
Second, to the Class B Limited Partners until they have received a
cumulative noncompounded annual cash return of 10% (Class B priority
return) of their adjusted capital contributions;
Third, to the General Partner to the extent that taxable income for the
fiscal year is allocated to the General Partner; and
Fourth, to the Class A Limited Partners and to the Class B Limited
Partners an amount equal to 99% and 1%, respectively, of the balance, if
any, remaining.
Taxable income or loss from operations will be allocated 98.01% to the Class A
Limited Partners, .99% to the Class B Limited Partners and 1% to the General
Partner.
All excess proceeds from sales and debt refinancings generally will be
distributed in the following order:
First, to the Class A Limited Partners until their adjusted capital
contributions are reduced to zero;
Second, to the Class B Limited Partners until their adjusted capital
contributions are reduced to zero;
Third, to the Class A Limited Partners for any unpaid priority return of
cash distributions of operating cash flows;
Fourth, to the Class B Limited Partners for any unpaid priority return of
cash distributions of operating cash flows;
Fifth, to the General Partner until its original capital contribution is
reduced to zero; and
The balance, if any, 74.25% to the Class A Limited Partners, .75% to the
Class B Limited Partners and 25% to the General Partner.
As of December 31, 1996, the Partnership had an undeclared distribution
arrearage of $4,593,000 or $5.40 per Class A unit and $62,000 or $7.25 per Class
B unit of the cumulative annual 10% cash returns.
NOTE C - MORTGAGE NOTES PAYABLE
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Principal Monthly
Balance At Principal Stated Balance
December 31, and Interest Interest Maturity Due At
Property 1996 Payment Rate Date Maturity
<S> <C> <C> <C> <C> <C>
Gateway Plaza $ 5,471 $ 51 9.25% 01/01/08 $3,498
Highpoint Village 6,424 60 9.25% 10/01/08 3,770
Total $11,895 $111
</TABLE>
The estimated fair values of the Partnership's aggregate debt approximates the
carrying value.
The mortgage notes payable are cross-collateralized and cross defaulted and are
secured by the properties and by a pledge of the revenues from the respective
properties.
Schedule of principal payments of mortgage notes payable subsequent to December
31, 1996, are as follows (in thousands):
1997 $ 240
1998 263
1999 288
2000 316
2001 346
Thereafter 10,442
$11,895
NOTE D - OPERATING LEASES
Tenants are responsible for their own utilities and maintenance of their space,
and payment of their proportionate share of common area maintenance, utilities,
insurance and real estate taxes. Real estate taxes, insurance, and common area
maintenance expenses are paid directly by the Partnership. The Partnership is
then reimbursed by the tenants for their proportionate share. The expenses paid
by the Partnership are included in the accompanying Statements of Operations as
property taxes and operating expenses.
The future minimum rental payments to be received under operating leases that
have initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1996, are as follows (in thousands):
1997 $ 1,352
1998 1,316
1999 1,185
2000 1,087
2001 1,074
Thereafter 8,607
$14,621
Three anchor tenants represent $12,786,000 of the above minimum future rentals
under leases expiring in 2008, 2010 and 2016.
NOTE E - MAJOR TENANTS
(dollar values in thousands)
Rent from tenants (excluding tenant reimbursements) representing at least 10% of
rental income were as follows (in thousands):
1996 1995
Amount Percent Amount Percent
Wal-Mart Stores $ 452 29% $ 655 31%
Kroger 345 22% 345 16%
Food Lion 161 10% -- --
NOTE F - CONTINGENCIES
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
NOTE G - VALUATION ADJUSTMENTS
During the first quarter of 1995, the Forest Ridge Shopping Center was
foreclosed on by the mortgage note holder. As part of the foreclosure
transaction, the Partnership recorded a valuation write-down of $415,000 to
reduce the carrying cost of Forest Ridge to its estimated market value and an
extraordinary gain on extinguishment of debt in the foreclosure of this property
of $844,000.
The estimated fair value of Bay Village approximated the amount payable to the
mortgage holder; therefore, a gain on the disposal of the property in
foreclosure of $16,000, the difference between the carrying values of the
property and the debt for the mortgage holder, was recorded.
NOTE H - INCOME TAXES
(in thousands, except unit data)
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in
the income tax returns of its partners.
Differences between the net (loss) income as reported and Federal taxable loss
result primarily from (1) gains and losses on foreclosures, (2) depreciation
over different methods and lives and on differing cost bases of investment
properties, and (3) change in rental income received in advance. The following
is a reconciliation of reported net (loss) income and Federal taxable loss:
1996 1995
Net (loss) income as reported $ (209) $ 176
Add (deduct):
Depreciation differences (28) (47)
Unearned income 3 5
Miscellaneous 28 (4)
Loss on foreclosure -- (1,965)
Federal taxable loss $ (206) $(1,835)
Federal taxable loss per Class A
limited partnership unit $ (.24) $ (2.11)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities:
Net assets as reported $ 410
Land and buildings 1,872
Accumulated depreciation (65)
Syndication costs 830
Other 34
Net assets - Federal tax basis $ 3,081
NOTE I - 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 in 1996 and 1995 (in thousands):
Twelve Months Ended
December 31,
1996 1995
Property management fees $54 $69
Reimbursement for services of affiliates 26 35
Additionally, the Partnership paid $7,000 and $28,000 during the years ended
December 31, 1996 and 1995, respectively, to an affiliate of the Managing
General Partner for lease commissions related to new leases of the Partnership's
commercial properties. These lease commissions are included in other assets and
amortized over the term of the respective leases.
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Managing General Partner. An affiliate of the
Managing 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 Managing 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
Managing General Partner by virtue of the agent's obligations is not
significant.
NOTE J - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Retail Centers
<S> <C> <C> <C> <C>
Gateway Plaza $ 5,471 $1,021 $ 6,591 $(1,442)
36
Highpoint Village 6,424 721 7,848 (342)
Totals $11,895 $1,742 $14,439 $ (1,748)
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1996
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Gateway Plaza $ 835 $ 5,335 $ 6,170 $ 1,423 09/22/89 22.5-31.5
Highpoint Village 690 7,573 8,263 1,743 09/22/89 5-31.5
Totals $1,525 $ 12,908 $14,433 $ 3,166
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
1996 1995
Investment Properties
Balance at beginning of year $14,426 $28,667
Property improvements 7 --
Write-down of properties -- (415)
Foreclosure of Forest Ridge -- (7,587)
Foreclosure of Bay Village -- (6,239)
Balance at End of Year $14,433 $14,426
Accumulated Depreciation
Balance at beginning of year $ 2,740 $ 4,417
Additions charged to expense 426 582
Foreclosure of Forest Ridge -- (1,163)
Foreclosure of Bay Village -- (1,096)
Balance at End of Year $ 3,166 $ 2,740
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996 is $16,305,000. The accumulated depreciation balance for
Federal income tax purposes at December 31, 1996, is $3,231,000.
NOTE K - FORECLOSURE OF FOREST RIDGE AND BAY VILLAGE
On January 5, 1995, the lender foreclosed on Forest Ridge Shopping Center. The
$7,200,000 mortgage matured January 1, 1994, and was in default. The lender
granted forebearances through June 30, 1994, while refinancing discussions
continued between the Partnership and the lender. These discussions did not
ultimately produce an agreement to either refinance or sell the property. In
the Managing General Partner's opinion, it was not in the Partnership's best
interests to contest the foreclosure action or file bankruptcy. On January 5,
1995, the Partnership recorded a valuation write-down of $415,000 to reduce the
carrying costs of the Forest Ridge assets to their estimated market value and an
extraordinary gain on extinguishment of debt in the foreclosure of $844,000.
On December 4, 1995, the lender foreclosed on Bay Village Shopping Center,
located in Conway, South Carolina. The $5,300,000 mortgage matured January 1,
1994, and had been in default since that date. The lender granted forebearances
through June 30, 1994, while refinancing discussions continued between the
Partnership and the lender. These discussions did not ultimately produce an
agreement to either refinance or sell the property and the lender foreclosed on
the property. In the Managing General Partner's opinion, it was not in the
Partnership's best interest to contest the foreclosure action or file
bankruptcy.
The estimated fair value of Bay Village approximated the amount payable to the
mortgage holder; therefore, a gain on the disposal of the property in
foreclosure of $16,000, the difference between the carrying value of the
property and the debt to the mortgage holder, was recorded.
Operating revenues and expenses from Forest Ridge and Bay Village were
approximately $588,000 and $620,000, respectively, in 1995.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant has no officers or directors. The General Partner manages and
controls the Registrant and has general responsibility and authority in all
matters affecting its business.
The names of the directors and executive officers of 104 Management, Inc., the
Partnership's General Partner, as of December 31, 1996, their ages and the
nature of all positions with 104 Management, Inc. presently held by them are set
forth below. There are no family relationships between or among any officers and
directors.
Name Age Position
Carroll D. Vinson 56 President, Director
William H. Jarrard, Jr. 50 Vice President
Robert D. Long, Jr. 29 Controller, Principal
Accounting Officer
John K. Lines 37 Secretary
Kelley M. Buechler 39 Assistant Secretary
Carroll D. Vinson has been President of the General Partner and Metropolitan
Asset Enhancement, L.P. ("MAE") subsidiaries since August 1994. Prior to that,
during 1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes & Co.
(regional CPA firm) and engaged in various other investment and consulting
activities. Briefly, in early 1993, Mr. Vinson served as President and Chief
Executive Officer of Angeles Corporation, a real estate investment firm. From
1991 to 1993 Mr. Vinson was employed by Insignia in various capacities including
Managing Director-President during 1991.
William H. Jarrard, Jr. has been Vice President of the General Partner since
March 1993 and Managing Director - Partnership Administration of Insignia since
January 1991. Mr. Jarrard served as Managing Director - Partnership
Administration & Asset Management from July 1994 until January 1996.
Robert D. Long, Jr. is Controller and Principal Accounting Officer of the
General Partner and MAE subsidiaries. Prior to joining MAE in February 1994, he
was an auditor for the State of Tennessee and was associated with the accounting
firm of Harshman Lewis and Associates. He is a graduate of the University of
Memphis.
John K. Lines has been Secretary of the General Partner and MAE subsidiaries
since August 1994 and General Counsel and Secretary of Insignia since July 1994.
From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and
Vice President of Ocwen Financial Corporation in West Palm Beach, Florida. From
October 1991 until April 1993, Mr. Lines was a Senior Attorney with Banc One
Corporation in Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was
employed as an associate with Squire Sanders & Dempsey in Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of the General Partner and MAE
subsidiaries and Assistant Secretary of Insignia. During the five years prior
to joining Insignia in 1991, she served in a similar capacity for U.S. Shelter.
ITEM 10. EXECUTIVE COMPENSATION
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1996, there were 850,900 Units and 8,600 units of
Subordinated Interest issued and outstanding. The following table sets forth
certain information, as of December 31, 1996, (except to the extent otherwise
indicated), with respect to the ownership of Units and units of Subordinated
Interest by: (i) any person or group who is known to the Partnership to be the
beneficial owner of more than 5% of either the Units or units of Subordinated
Interest; (ii) the directors and officers of the General Partner, naming them;
and (iii) the directors and officers of the General Partner as a group.
Units of Subordinated
Name and Address Units (1) Interest (1)
or Group Amount Percent Amount Percent
Insignia Brunner L.P. -- -- 8,600 100%
One Insignia Financial Plaza
Greenville, SC 29602
Alexander Hamilton Life 106,383(2) 12.5% -- --
Insurance Company
of America
33045 Hamilton Boulevard
Farmington Hills,
Michigan 48018
Cosmo Plastics Company 50,000 5.9% -- --
30201 Aurora Road
Cleveland, OH 44139
All directors and officers -- -- -- --
of the General
Partner (5 persons) as a group
(1) The Limited Partners have no right or authority to participate in the
management or control of the Partnership or its business. However,
Limited Partners do have limited rights to approve or disapprove certain
fundamental Partnership matters as provided in "Article 7" of the
Partnership Agreement. Transfer of Units are subject to certain
restrictions set forth in "Article 9" of the Partnership Agreement.
(2) To the best knowledge of the Partnership, these Units are held with sole
voting and investment power (see Note (1) above).
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner did not receive cash distributions from or with respect to
the fiscal years ended December 31, 1996 and 1995. For a description of the
share of cash distributions from operations, if any, to which the General
Partner is entitled, see "Note B" of the Notes to Financial Statements included
in "Item 7" of this report.
The Registrant has a property management agreement with affiliates of Insignia
pursuant to which such affiliates have assumed direct responsibility for day-to-
day management of the Partnership's properties. This service includes the
supervision of leasing, rent collection, maintenance, budgeting, employment of
personnel, payment of operating expenses, etc. Insignia's affiliate received a
property management fee equal to 3% of gross revenues from all tenants.
Insignia's affiliate was property manager of Highpoint and Gateway for all of
1996 and 1995 and provided property management services for Bay Village and
Forest Ridge from November 1, 1993, until the date of their foreclosure. During
the years ended December 31, 1996 and 1995, an affiliate of Insignia received
$54,000 and $69,000 in fees for property management, respectively.
Section 6.4 of the Partnership Agreement provides that the Partnership shall
reimburse the General Partner and its affiliates for all out-of-pocket costs and
expenses incurred by the General Partner and it affiliates in connection with
the operation of the Partnership's business, including, without limitation,
legal and accounting fees and the cost of other administrative services
performed by them for the benefit of the Partnership; provided that any such
reimbursement shall be in an amount equal to the lesser of the General Partner's
or affiliates' actual cost with respect thereto or the amount which the
Partnership would be required to pay to an independent person for comparable
services in the same geographic location; and further provided that no
reimbursement is permitted with respect to, among other things, salaries, fringe
benefits, travel expenses and other administrative items incurred or allocated
to any controlling persons of the General Partner or any affiliate. During the
years ended December 31, 1996 and 1995, affiliates of Insignia received $26,000
and $35,000, respectively, of reimbursements for such services.
If the Partnership requires additional funds, the General Partner or its
affiliates may, but are not obligated to, lend funds to the Partnership. Any
such loan and any disposition, re-negotiation or other subsequent transaction
involving such loan, shall be made only upon receipt from an independent and
qualified advisor of an opinion letter to the effect that such proposed loan or
disposition, re-negotiation or subsequent transaction is fair and at least as
favorable to the Partnership as a loan to an unaffiliated borrower in similar
circumstances. The advisor's compensation must be paid by the General Partner
and is not reimbursable by the Partnership. No such loan has yet been made by
the General Partner.
A commission of up to 2% of the sale price may be paid to Brunner Management
Limited Partnership upon the sale of each of the Retail Centers, if it performs
substantial services in connection with the sale. Any such commission paid to
the Brunner Management Limited Partnership will be subordinated to the Limited
Partners' priority distributions. Total commissions paid will not exceed those
reasonable, customary and competitive in light of the size and location of the
Retail Center sold.
See "Note I" of the Notes to Financial Statements for further discussion of
transactions with related parties and certain other parties.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K: None
SIGNATURES
In accordance with Section 13 or 15(d) 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 General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
Date: March 28, 1997
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/ Carroll D. Vinson President March 28, 1997
Carroll D. Vinson
/s/ Robert D. Long, Jr. Controller and March 28, 1997
Robert D. Long, Jr. Principal Accounting
Officer
INDEX OF EXHIBITS
Exhibit No.
3.1 Partnership Agreement of Brunner Companies Income Properties
L.P. III (the "Partnership"); [included as Exhibit B to the
Prospectus of Registrant dated May 12, 1989 contained in
Registration Statement No. 33-27407 of Registrant filed May
12, 1989 (the "Prospectus") and incorporated herein by
reference.]
3.2 Certificate of Limited Partnership for the Partnership;
incorporated by reference to Exhibit 3.2 to Registration
Statement No. 33-27407 on Form S-11
4.1 Form of Unitholder Certificate for the Partnership;
incorporated by reference to Exhibit 4.1 to Registration
Statement No. 33-27407 on Form S-11
4.2 Form of Subordinated Interest Certificate for the Partnership;
incorporated by reference to Exhibit 4.2 to Registration
Statement No. 33-27407 on Form S-11
10.1 Purchase Agreement for Forest Ridge; incorporated by reference
to Exhibit 19.1 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.2 Purchase Agreement for Bay Village; incorporated by reference
to Exhibit 19.2 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.3 Purchase Agreement for Gateway Plaza; incorporated by
reference to Exhibit 19.3 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.4 First Amendment to Real Property Purchase Agreement for
Gateway Plaza, dated September 22, 1989 between Tennessee &
Associates - IV ("T&A-IV") and the Partnership; incorporated
by reference to Exhibit 10.4 to Form 10-K for fiscal year
ended December 31, 1989
10.5 Second Amendment to Real Property Purchase Agreement for
Gateway Plaza, dated March 23, 1990, between T&A-IV and the
Partnership; incorporated by reference to Exhibit 10.5 to Form
10-K for fiscal year ended December 31, 1989
10.6 Purchase Agreement for Highpoint Village; incorporated by
reference to Exhibit 19.4 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.7 First Amendment to Real Property Purchase Agreement for
Highpoint Village, dated September 22, 1989, between Tennessee
& Associates-VII ("T&A-VII") and the Partnership; incorporated
by reference to Exhibit 10.7 to Form 10-K for fiscal year
ended December 31, 1989
10.8 Second Amendment to Real Property Purchase Agreement for
Highpoint Village, dated March 23, 1990 between T&A-VII and
the Partnership; incorporated by reference to Exhibit 10.8 to
Form 10-K for fiscal year ended December 31, 1989
10.9 Management Agreement for Forest Ridge; incorporated by
reference to Exhibit 10.6 to Registration Statement No. 33-
27407 on Form S-11
10.10 Amendment to Management Agreement for Forest Ridge;
incorporated by reference to Exhibit 19.5 to Form 10-Q for the
fiscal quarter ended September 30, 1989
10.11 Management Agreement for Bay Village; incorporated by
reference to Exhibit 10.5 to Registration Statement No. 33-
27407 on Form S-11
10.12 Amendment to Management Agreement for Bay Village;
incorporated by reference to Exhibit 19.6 to Form 10-Q for the
fiscal quarter ended September 30, 1989
10.13 Management Agreement for Gateway Plaza; incorporated by
reference to Exhibit 10.7 to Registration Statement No. 33-
27407 on Form S-11
10.14 Assignment of Management Agreement to HCI Management for
Gateway Plaza; incorporated by reference to Exhibit 19.7 to
Form 10-Q for the fiscal quarter ended September 30, 1989
10.15 Amended and restated Management Agreement for Gateway Plaza;
incorporated by reference to Exhibit 19.9 to Form 10-Q for the
fiscal quarter ended September 30, 1989
10.16 Management Agreement for Gateway Plaza with Lane Consultants,
Inc. by reference to Exhibit 10.16 to Form 10-K for fiscal
year ended December 31, 1990
10.17 Management Agreement for Highpoint Village; incorporated by
reference to Exhibit 10.8 to Registration Statement No. 33-
27407 on Form S-11
10.18 Assignment of Management Agreement to HCI Management for
Highpoint Village; incorporated by reference to Exhibit 19.8
to Form 10-Q for the fiscal quarter ended September 30, 1989
10.19 Amended and Restated Management Agreement for Highpoint
Village; incorporated by reference to Exhibit 19.10 to Form
10-Q for the fiscal quarter ended September 30, 1989
10.20 Bay Village Lease with Wal-Mart Stores, Inc.; incorporated by
reference to Exhibit 10.9 to Registration Statement No. 33-
27407 on Form S-11
10.21 Bay Village Lease with Consolidated Stores International
Corporation d/b/a Odd Lots; incorporated by reference to
Exhibit 10.10 to Registration Statement No. 33-27407 on Form
S-11
10.22 Forest Ridge Lease with Wal-Mart Stores, Inc.; incorporated by
reference to Exhibit 10.12 to Registration Statement No. 33-
27407 on Form S-11
10.23 Forest Ridge Lease with Goody's Family Clothing Inc.;
incorporate by reference to Exhibit 10.13 to Registration
Statement No. 33-27407 on Form S-11
10.24 Gateway Plaza Lease with Wal-Mart Stores, Inc.; incorporated
by reference to Exhibit 10.15 to Registration Statement No.
33-27407 on Form S-11
10.25 Gateway Plaza Lease with J.C. Penny Company, Inc.,
incorporated by reference to Exhibit 10.16 to Registration
Statement No. 33-27407 on Form S-11
10.26 Gateway Plaza Lease with Food Lion, Inc.; incorporated by
reference to Exhibit 10.17 to Registration Statement No. 33-
27407 on Form S-11
10.27 Highpoint Village Lease with Wal-Mart Stores, Inc.;
incorporated by reference to Exhibit 10.18 to Registration
Statement No. 33-27407 on Form S-11
10.28 Second Amendment to Highpoint Village Lease with Wal-Mart
Stores, Inc.; incorporated by reference to Exhibit 10.27 to
Form 10-K for fiscal year ended December 31, 1989
10.29 Highpoint Village Lease with James R. Keen and Alfred E.
Lefeld d/b/a Warehouse Paint Center; incorporated by reference
to Exhibit 10.19 to Registration Statement No. 33-27407 on
Form S-11
10.30 Highpoint Village Lease with The Kroger Co.; incorporated by
reference to Exhibit 10.20 to Registration Statement No. 33-
27407 on Form S-11
10.31 Bay Village Lease with Dayton & Associates- XIX ("D&A-XIX");
incorporated by reference to Exhibit 19.12 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.32 Forest Ridge Ground Lease with Dayton & Associates-XVIII
("D&A-XVIII"); incorporated by reference to Exhibit 19.11 to
Form 10-Q for the fiscal quarter ended September 30, 1989
10.33 Modification and Termination of Ground Lease and Agreement to
Acquire Assets for Forest Ridge, dated as of March 1, 1990;
incorporated by reference to Exhibit 10.32 to Form 10-K for
fiscal year ended December 31, 1989
10.34 Bill of Sale from D&A-XVIII to the Partnership dated as of
March 1, 1990; incorporated by reference to Exhibit 10.33 to
Form 10-K for fiscal year ended December 31, 1989
10.35 Assignment of Leases and Rents from D&A-XVIII to the
Partnership, dated as of March 1, 1990; incorporated by
reference to Exhibit 10.34 to Form 10-K for fiscal year ended
December 31, 1989
10.36 Assignment of Warranties from D&A-XVIII to the Partnership,
dated as of March 1, 1990; incorporated by reference to
Exhibit 10.35 to Form 10-K for fiscal year ended December 31,
1989
10.37 Rent Guarantee and Escrow Agreement, dated as of March 1,
1990, between D&A-XVIII and the Partnership; incorporated by
reference to Exhibit 10.36 to Form 10-K for fiscal year ended
December 31, 1989
10.38 Promissory Note in the amount of $170,000.00, dated March 1,
1990, between D&A-XVIII and the Partnership, incorporated by
reference to Exhibit 10.37 to Form 10-K for fiscal year ended
December 31, 1989
10.39 Second Priority Assignment of Leases and Rents from the
Partnership in favor of D&A-XVIII dated March 1, 1990,
securing the Note of even date; incorporated by reference to
Exhibit 10.38 to Form 10-K for fiscal year ended December 31,
1989
10.40 Loan Application with Aetna Casualty and Surety Company
("Aetna"), incorporated by reference to Exhibit 10.21 to
Registration Statement No. 33-27407 on Form S-11
10.41 Supplemental Letter of Aetna, dated September 12, 1988;
incorporated by reference to Exhibit 10.22 to Registration
Statement No. 33-27407 on Form S-11
10.42 Supplemental Letter of Aetna, dated October 14, 1988;
incorporated by reference to Exhibit 10.23 to Registration
Statement No. 33-27404 on Form S-11
10.43 Supplemental Letter of Aetna, dated October 26, 1988;
incorporated by reference to Exhibit 10.24 to Registration
Statement No. 33-27404 on Form S-11
10.44 Promissory Note secured by a Mortgage on Bay Village, with
Aetna as Payee; incorporated by reference to Exhibit 10.25 to
Registration Statement No. 33-27407 on Form S-11
10.45 Promissory Note secured by a Deed of Trust on Forest Ridge,
with Aetna as Payee; incorporated by reference to Exhibit
10.26 to Registration Statement No. 33-27407 on Form S-11
10.46 Mortgage, Assignment of Rents and Security Agreement for Bay
Village to Aetna; incorporated by reference to Exhibit 10.27
to Registration Statement No. 33-27407 on Form S-11
10.47 Deed of Trust, Assignment of Rents and Security Agreement for
Forest Ridge to a Trustee for the benefit of Aetna;
incorporated by reference to Exhibit 10.28 to Registration
Statement No. 33-27407 on Form S-11
10.48 Assignment of Rents and Leases for Bay Village to Aetna;
incorporated by reference to Exhibit 10.29 to Registration
Statement No. 33-27407 on Form S-11
10.49 Assignment of Rents and Leases for Forest Ridge to Aetna;
incorporated by reference to Exhibit 10.30 to Registration
Statement No. 33-27407 on Form S-11
10.50 Supplemental Letter of Aetna, dated November 30, 1988;
incorporated by reference to Exhibit 19.13 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.51 Modification and Assumption Agreement dated September 22,
1989, between Aetna, Seller, and the Partnership concerning
D&A-XVIII; incorporated by reference to Exhibit 19.14 to Form
10-Q for the fiscal quarter ended September 30, 1989
10.52 Modification and Assumption Agreement dated September 22,
1989, between Aetna, Seller, and the Partnership concerning
D&A-XIX; incorporated by reference to Exhibit 19.15 to Form
10-Q for the fiscal quarter ended September 30, 1989
10.53 Second Modification Agreement dated March 1, 1990, between
Aetna, Seller, and the Partnership concerning D&A-XVIII;
incorporated by reference to Exhibit 10.52 to Form 10-K for
fiscal year ended December 31, 1989
10.54 Second Modification Agreement dated March 1, 1990, between
Aetna, Seller, and the Partnership concerning D&A-XIX;
incorporated by reference to Exhibit 10.53 to Form 10-K for
fiscal year ended December 31, 1989
10.55 Commitment from Aetna to Increase Mortgage for Forest Ridge,
dated January 31, 1990; incorporated by reference to Exhibit
10.54 to Form 10-K for fiscal year ended December 31, 1989
10.56 Mortgage Loan Application/Commitment with Capital Holding
Corporation for Highpoint Village; incorporated by reference
to Exhibit 10.33 to Registration Statement No. 33-27407 on
Form S-11
10.57 Mortgage Loan Application/Commitment with Capital Holding
Corporation for Gateway Plaza; incorporated by reference to
Exhibit 10.34 to Registration Statement No. 33-27407 on Form
S-11
10.58 Amendment to Gateway Plaza Mortgage Loan Applica-
tion/Commitment, dated March 6, 1989; incorporated by
reference to Exhibit 19.16 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.59 Amendment to Gateway Plaza Mortgage Loan Applica-
tion/Commitment, dated March 9, 1989; incorporated by
reference to Exhibit 19.17 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.60 Amendment to Gateway Plaza Mortgage Loan Applica-
tion/Commitment, dated May 1, 1989; incorporated by reference
to Exhibit 19.18 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.61 Amendment to Gateway Plaza Mortgage Loan Applica-
tion/Commitment, dated May 3, 1989; incorporated by reference
to Exhibit 19.19 to Form 10-Q for the fiscal quarter ended
September 30,1 989
10.62 Amendment to Gateway Plaza Mortgage Loan Applica-
tion/Commitment, dated June 21, 1989; incorporated by
reference to Exhibit 19.20 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.63 Amendment to Highpoint Village Mortgage Loan Applica-
tion/Commitment, dated March 6, 1989; incorporated by
reference to Exhibit 19.21 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.64 Amendment to Highpoint Village Mortgage Loan Applica-
tion/Commitment, dated March 9, 1989; incorporated by
reference to Exhibit 19.22 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.65 Amendment to Highpoint Village Mortgage Loan Applica-
tion/Commitment, dated May 1, 1989; incorporated by reference
to Exhibit 19.23 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.66 Amendment to Highpoint Village Mortgage Loan
Application/Commitment, dated May 3, 1989; incorporated by
reference to exhibit 19.24 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.67 Amendment to Highpoint Village Mortgage Loan
Application/Commitment, dated June 21, 1989; incorporated by
reference to Exhibit 19.25 to Form 10-A for the fiscal quarter
ended September 30, 1989
10.68 Promissory Note for $5,850,000 secured by a Mortgage on
Gateway Plaza, with Commonwealth Life Insurance Company as
Payee, incorporated by reference to Exhibit 19.26 to Form 10-Q
for the fiscal quarter ended September 30, 1989
10.69 Promissory Note for $6,600,000 secured by a Mortgage on
Highpoint Village, with Commonwealth Life Insurance Company as
Payee; incorporated by reference to Exhibit 19.27 to Form 10-Q
for the fiscal quarter ended September 30, 1989
10.70 Mortgage, Assignment of Rents and Security Agreement for
Gateway Plaza to Commonwealth Life Insurance Company;
incorporated by reference to Exhibit 19.28 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.71 Mortgage, Assignment of Rents and Security Agreement for
Highpoint Village to Commonwealth Insurance Company;
incorporated by reference to Exhibit 19.29 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.72 Assignment of Rents and Leases for Gateway Plaza to
Commonwealth Insurance Company; incorporated by reference
Exhibit 19.30 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.73 Assignment of Rents and Leases for Highpoint Village to
Commonwealth Insurance Company; incorporated by reference to
Exhibit 19.31 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.74 Application and Agreement for Irrevocable Letter of Credit
from Fleet National Bank dated May 8, 1989; incorporated by
reference to Exhibit 19.32 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.75 Letter of Credit, issued May 11, 1989, from Fleet National
Bank in the amount of $5,850,000; incorporated by reference to
Exhibit 19.33 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.76 First Amendment to $5,850,000 Letter of Credit, dated July 21,
1989, extending the expiration date of the Letter of Credit;
incorporated by reference to Exhibit 19.34 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.77 Second Amendment to $5,850,000 Letter of Credit, dated
September 25, 1989, reducing the amount of the letter of
credit to $2,050,000; incorporated by reference to Exhibit
19.35 to Form 10-Q for the fiscal quarter ended September 30,
1989
10.78 Modification of Promissory Note, Mortgage and Security
Agreement and Security Documents for Gateway Plaza between
T&A-IV and Fleet National Bank, dated May 12, 1989;
incorporated by reference to Exhibit 19.36 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.79 Intercreditor Agreement dated May 12, 1989, among Commonwealth
Life Insurance Company, Fleet National Bank, Capital Holding
Corporation, Fidelity Land Title Agency and T&A-IV;
incorporated by reference to Exhibit 19.37 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.80 Loan Agreement, dated May 12, 1989, between Fleet National
Bank and T&A-IV; incorporated by reference to exhibit 19.38 to
Form 10-Q for the fiscal quarter ended September 30, 1989
10.81 Third Amendment to $2,050,000.00 Letter of Credit, dated
November 14,1989, extending the expiration date of the Letter
of Credit; incorporated by reference to Exhibit 10.80 to Form
10-K for fiscal year ended December 31, 1989
10.82 Intercreditor Agreement dated May 12, 1989, between
Commonwealth Life Insurance Company and Banc Ohio National
Bank regarding T&A-VII; incorporated by reference to Exhibit
19.39 to Form 10-Q for the fiscal quarter ended September 30,
1989
10.83 Amendment to Intercreditor Agreement of May 12, 1989, dated
September 22, 1989; incorporated by reference to Exhibit 19.40
to Form 10-Q for the fiscal quarter ended September 30, 1989
10.84 Mortgage Note made by T&A-VII with Banc Ohio as Payee, in the
amount of $3,400,000; incorporated by reference to Exhibit
19.41 to Form 10-Q for the fiscal quarter ended September 30,
1989
10.85 Open-end Mortgage, Assignment of Rents and Security Agreement
between T&A-VII, Mortgagor and Banc Ohio National Bank,
Mortgagee, dated September 22, 1989; incorporated by reference
to Exhibit 19.42 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.86 Application for Letter of Credit from Banc Ohio in the amount
of $3,400,000, dated September 22, 1989; incorporated by
reference to Exhibit 19.43 to Form 10-Q for the fiscal quarter
ended September, 1989
10.87 Letter of Credit from Banc Ohio in the amount of $3,400,000,
dated September 22, 1989; incorporated by reference to Exhibit
19.44 to Form 10-Q for the fiscal quarter ended September 30,
1989
10.88 Letter of Credit Loan Agreement for the $3,400,000 Letter of
Credit, dated September 22, 1989; incorporated by reference to
Exhibit 19.45 to Form 10-Q for the fiscal quarter ended
September 30, 1989
10.89 Construction Escrow Agreement, dated September 22, 1989,
between Banc Ohio National Bank and T&A-VII; incorporated by
reference to Exhibit 19.46 to Form 10-Q for the fiscal quarter
ended September 30, 1989
10.90 Letter amending Letter of Credit Loan Agreement and
Construction Escrow Agreement, dated September 22, 1989;
incorporated by reference to Exhibit 19.47 to Form 10-Q for
the fiscal quarter ended September 30, 1989
10.91 Partial Release of Mortgage and Security Instrument, dated
October 10, 1989, by Banc Ohio National Bank, regarding T&A-
VII; incorporated by reference to Exhibit 19.48 to Form 10-Q
for the fiscal quarter ended September 30, 1989
10.92 Consent to Reduction of Fleet Letter of Credit dated March 21,
1990, from Commonwealth Life Insurance Company to Fleet;
incorporated by reference to Exhibit 10.91 to Form 10-K for
fiscal year ended December 31, 1989
10.93 Fourth Amendment to $2,050,000.00 Letter of Credit, dated
March 23, 1990, reducing the amount of the Letter of Credit to
$800,000; incorporated by reference to Exhibit 10.92 to Form
10-K for fiscal year ended December 31, 1989
10.94 Release of Mortgage, dated March 30, 1990, releasing the
Mortgage held by Fleet National Bank on the Food Lion parcel;
incorporated by reference to Exhibit 10.93 to Form 10-K for
fiscal year ended December 31, 1989
10.95 Amendment to Highpoint Village Mortgage Loan
Application/Commitment, dated March 14, 1990, incorporated by
reference to Exhibit 10.94 to Form 10-K for fiscal year ended
December 31, 1989
10.96 Amendment to Gateway Plaza Mortgage Loan
Application/Commitment, dated March 14, 1990; incorporated by
reference to Exhibit 10.95 to From 10-K for fiscal year ended
December 31, 1989
10.97 First Amendment to Intercreditor Agreement, dated March 30,
1990, among Commonwealth Life Insurance Company, Fleet
National Bank, T&A-IV, Capital Holding Corporation, and
Fidelity Land Title Agency, Inc.; incorporated by reference to
Exhibit 10.96 to Form 10-K for fiscal year ended December 31,
1989
10.98 Amendment to Banc Ohio Letter of Credit, dated March 28, 1990,
extending the expiration date to September 30, 1990;
incorporated by reference to Exhibit 10.97 to Form 10-K for
fiscal year ended December 31, 1989
10.99 Modification of Note, Mortgage, Construction Escrow Agreement,
Pledge Agreement and Guaranty, dated March 29, 1990, among
Banc Ohio, T&A-VII, and Guarantors; incorporated by reference
to Exhibit 10.98 to Form 10-K for fiscal year ended December
31, 1989
10.100 Promissory Note dated March 26, 1991 in the principal amount
of $234,000 from Tennessee & Associates - IV relating to
Gateway Plaza by reference to Exhibit 10.100 to Form 10-K for
fiscal year ended December 31, 1990
10.101 Promissory Note dated March 1, 1990 in the principal amount of
$170,000 from Dayton & Associated - XVIII relating to Forest
Ridge by reference to Exhibit 10.101 to Form 10-K for fiscal
year ended December 31, 1990
10.102 Memorandum of Deal Terms For Restructure of Rent Guaranty and
Related Obligations dated March 1, 1991, among Tennessee &
Associates - IV, Tennessee & Associates - VII, Dayton &
Associates - XVIII, Dayton & Associates - XIX, Dayton Partners
Limited Partnership, Dayton Partners, J. Brett Hutchens, and
the Partnership by reference to Exhibit 10.102 to Form 10-K
for fiscal year ended December 31, 1990
10.103 Advisory Agreement made as of September 1, 1991 between
Brunner Companies Income Properties L.P. III and Insignia GP
Corporation and Insignia Financial Group, Inc. by reference to
Form 10-Q for fiscal quarter ended September 30, 1991
10.104 First Amendment to Advisory Agreement changing effective date
from September 1, 1991 to October 1, 1991 by reference to Form
10-Q for the fiscal quarter ended September 30, 1991
10.105 Transfer Agent Agreement between Brunner Companies Income
Properties L.P. III and Insignia GP Corporation incorporated
by reference to exhibit 10.105 to Form 10-K for fiscal year
ended December 31, 1991
10.106 Property Management Agreement for Highpoint Village
incorporated by reference to exhibit 10.106 to Form 10-K for
fiscal year ended December 31, 1991
10.107 Property Management Agreement for Gateway Plaza incorporated
by reference to exhibit 10.107 to Form 10-K for fiscal year
ended December 31, 1991
10.108 Lease Termination Agreement between Brunner Companies Income
Properties LP III and Warehouse Paint at Highpoint Village
dated March 19, 1992 incorporated by reference to exhibit
10.108 to Form 10-K for fiscal year ended December 31, 1991
10.109 Restructure of Rent Guarantee and Related Obligations
Agreement among Tennessee & Associates - IV, Tennessee &
Associates - VII, Dayton & Associates - XVIII, Dayton &
Associates - XIX, Dayton Partners Limited Partnership, Dayton
Partners, J. Brett Hutchens, and the Partnership incorporated
by reference to exhibit 10.109 to Form 10-K for fiscal year
ended December 31, 1991
10.110 Closing Agreement dated October 16, 1992 showing the
acquisition of a majority of the outstanding stock of 104
Management, Inc. by IBGP, Inc. incorporated by reference to
exhibit 2 to Form 8-K dated March 5, 1993
16.1 Letter from the Registrant's former independent accountant
regarding its concurrence with the statements made by the
Registrant is incorporated by reference to the exhibit filed
with Form 8-K dated January 12, 1993
27 Financial Data Schedule
99.1 Foreclosure Master's Deed and Satisfaction of Mortgage made as
of the 4th day of December, 1995 by and between Aetna Life
Insurance Company and Brunner Companies Income Properties L.P.
III, a Delaware Limited Partnership
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Brunner
Companies Income Properties, L.P. II 1996 Year-End 10-KSB and is qualified in
its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000847319
<NAME> BRUNNER COMPANIES INCOME PROPERTIES L.P. III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 964
<SECURITIES> 0
<RECEIVABLES> 133
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,433
<DEPRECIATION> 3,166
<TOTAL-ASSETS> 12,522
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,895
0
0
<COMMON> 0
<OTHER-SE> 410
<TOTAL-LIABILITY-AND-EQUITY> 12,522
<SALES> 0
<TOTAL-REVENUES> 1,819
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,028
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,112
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (209)
<EPS-PRIMARY> (.24)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
