Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2015 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | DTRPIII |
Entity Registrant Name | DEL TACO RESTAURANT PROPERTIES III |
Entity Central Index Key | 786,360 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 47,261 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $ 388,495 | $ 346,478 |
Receivable from Del Taco LLC | 96,870 | 93,384 |
Other current assets | 1,818 | 2,065 |
Total current assets | 487,183 | 441,927 |
RESTRICTED CASH | 86,017 | 86,017 |
PROPERTY AND EQUIPMENT | ||
Land | 3,284,629 | 3,284,629 |
Land improvements | 494,254 | 494,254 |
Buildings and improvements | 2,534,393 | 2,534,393 |
Machinery and equipment | 1,306,171 | 1,306,171 |
Property and equipment, gross | 7,619,447 | 7,619,447 |
Less - accumulated depreciation | 3,806,931 | 3,752,622 |
Property and equipment, net | 3,812,516 | 3,866,825 |
Total assets | 4,385,716 | 4,394,769 |
CURRENT LIABILITIES | ||
Payable to limited partners | 102,101 | 93,425 |
Accounts payable | 60,733 | 28,251 |
Total current liabilities | 162,834 | 121,676 |
OBLIGATION TO GENERAL PARTNER | 577,510 | 577,510 |
PARTNERS' EQUITY | ||
Limited partners; 47,261 units outstanding at September 30, 2015 and December 31, 2014 | 3,692,014 | 3,741,723 |
General partner-Del Taco LLC | (46,642) | (46,140) |
Total partners' equity | 3,645,372 | 3,695,583 |
Total liabilities and partners' equity | $ 4,385,716 | $ 4,394,769 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Limited partners, units outstanding | 47,261 | 47,261 |
Condensed Statements of Income
Condensed Statements of Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
RENTAL REVENUES | $ 293,556 | $ 278,710 | $ 859,722 | $ 807,513 |
EXPENSES | ||||
General and administrative | 41,713 | 25,708 | 174,969 | 88,620 |
Depreciation | 18,103 | 18,103 | 54,309 | 54,309 |
Total expenses | 59,816 | 43,811 | 229,278 | 142,929 |
Operating income | 233,740 | 234,899 | 630,444 | 664,584 |
OTHER INCOME | ||||
Interest | 152 | 154 | 432 | 435 |
Other | 1,750 | 3,425 | 5,150 | 7,175 |
Net income | $ 235,642 | $ 238,478 | $ 636,026 | $ 672,194 |
Net income per limited partnership unit (Note 3) | $ 4.94 | $ 5 | $ 13.32 | $ 14.08 |
Number of units used in computing per unit amounts | 47,261 | 47,261 | 47,261 | 47,261 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 636,026 | $ 672,194 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 54,309 | 54,309 |
Changes in operating assets and liabilities: | ||
Receivable from Del Taco LLC | (3,486) | (3,942) |
Other current assets | 247 | 169 |
Payable to limited partners | 8,676 | 5,740 |
Accounts payable | 32,482 | 13,791 |
Net cash provided by operating activities | 728,254 | 742,261 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash distributions to partners | (686,237) | (729,729) |
Net cash used in financing activities | (686,237) | (729,729) |
Net change in cash | 42,017 | 12,532 |
Beginning cash balance | 346,478 | 335,901 |
Ending cash balance | $ 388,495 | $ 348,433 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the annual report on Form 10-K for the year ended December 31, 2014 for Del Taco Restaurant Properties III (the Partnership or the Company). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Partnership’s financial position at September 30, 2015, the results of operations for the three and nine month periods ended September 30, 2015 and 2014 and cash flows for the nine month periods ended September 30, 2015 and 2014 have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. Amounts related to disclosure of December 31, 2014 balances within these condensed financial statements were derived from the 2014 audited financial statements. Management has evaluated events subsequent to September 30, 2015 through the date that the accompanying condensed financial statements were filed with the Securities and Exchange Commission (“SEC”) for transactions and other events which may require adjustment of and/or disclosure in such financial statements. |
Restricted Cash
Restricted Cash | 9 Months Ended |
Sep. 30, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash | NOTE 2 - RESTRICTED CASH At September 30, 2015 and December 31, 2014, the Partnership had a restricted cash balance of $86,017. The restricted cash results from a death and disability fund that the Company is required to maintain under the terms of the Partnership agreement. Such fund is maintained in an interest bearing account at a major commercial bank. A limited partner has the right, under certain circumstances involving such limited partner’s death or disability, to tender to the Partnership for redemption all of the units owned of record by such limited partner. The redemption price will be equal to the partners’ capital account balance as of the redemption date. The death and disability fund was established in 1987. The fund was limited to two percent of the gross proceeds from sale of the limited partnership units. Requests for redemption made after the funds in the death and disability fund are depleted will not be accepted. |
Net Income Per Limited Partners
Net Income Per Limited Partnership Unit | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Net Income Per Limited Partnership Unit | NOTE 3 - NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is based on net income attributable to the limited partners (after one percent allocation to the general partner) using the weighted average number of units outstanding during the periods presented which amounted to 47,261 in 2015 and 2014. Pursuant to the partnership agreement, annual partnership income or loss is allocated one percent to Del Taco LLC, formerly known as Del Taco, Inc. (Del Taco or the General Partner) and 99 percent to the limited partners. Partnership gains from any sale or refinancing will be allocated to the limited partners until the limited partners receive their unrecovered portion of capital contributions as defined in the partnership agreement and then allocated one percent to the General Partner and 99 percent to the limited partners until the limited partners receive their priority return as defined in the partnership agreement. |
Leasing Activities
Leasing Activities | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Leasing Activities | NOTE 4 - LEASING ACTIVITIES The Partnership leases eight properties for operation of restaurants to Del Taco on a triple net basis. The leases are for terms of 35 years commencing with the completion of the restaurant facility located on each property and require monthly rentals equal to 12 percent of the gross sales of the restaurants. The leases expire in the years 2022 to 2024. Pursuant to the lease agreements, minimum rentals of $3,500 per month are due to the Partnership during the first six months of any non-operating period caused by an insured casualty loss. For the three months ended September 30, 2015, the restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $2,446,301 and unaudited net income of $94,834 as compared to unaudited sales of $2,322,587 and unaudited net income of $9,346, respectively, for the corresponding period in 2014. Net income or loss of each restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the increase in net income from the corresponding period of the prior year primarily relates to increases in sales and reduced interest expense. For the nine months ended September 30, 2015, the restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $7,164,352 and unaudited net income of $212,987 as compared to unaudited sales of $6,729,276 and unaudited net income of $4,498 for the corresponding period in 2014. Net income or loss of each restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the increase in net income from the corresponding period of the prior year primarily relates to increases in sales and reduced interest expense. |
Transactions with Del Taco
Transactions with Del Taco | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Transactions with Del Taco | NOTE 5 - TRANSACTIONS WITH DEL TACO The receivable from Del Taco consists primarily of rent accrued for the month of September 2015. The September rent receivable was collected in October 2015. Del Taco serves in the capacity of general partner in other partnerships which are engaged in the business of operating restaurants, and three other partnerships which were formed for the purpose of acquiring real property in California for construction of Mexican-American restaurants for lease under long-term agreements to Del Taco for operation under the Del Taco trade name. In addition, see Note 6 with respect to certain distributions to the General Partner. |
Distributions
Distributions | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Distributions | NOTE 6 - DISTRIBUTIONS Total cash distributions declared and paid in February, June and August 2015 were $236,363, $183,996 and $265,878, respectively. On October 26, 2015, a distribution to the limited partners of $235,824, or approximately $4.98 per limited partnership unit, was approved. Such distribution was paid on November 5, 2015. The General Partner also received a distribution of $2,382 with respect to its one percent partnership interest in November 2015. |
Payable to Limited Partners
Payable to Limited Partners | 9 Months Ended |
Sep. 30, 2015 | |
Other Liabilities Disclosure [Abstract] | |
Payable to Limited Partners | NOTE 7 - PAYABLE TO LIMITED PARTNERS Payable to limited partners represents a reclassification from cash for distribution checks made to limited partners that have remained outstanding for six months or longer. |
Concentration of Risk
Concentration of Risk | 9 Months Ended |
Sep. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentration of Risk | NOTE 8 - CONCENTRATION OF RISK The restaurants leased to Del Taco make up all of the income producing assets of the Partnership and contributed all of the Partnership’s rental revenues during the three and nine months ended September 30, 2015 and 2014. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties. The Partnership maintains substantially all of its cash and cash equivalents at one major commercial bank. Although the Partnership at times maintains balances that exceed the federally insured limit, it has not experienced any losses related to these balances and management believes the credit risk to be minimal. |
Purchase and Sale Agreement
Purchase and Sale Agreement | 9 Months Ended |
Sep. 30, 2015 | |
Text Block [Abstract] | |
Purchase and Sale Agreement | NOTE 9 - PURCHASE AND SALE AGREEMENT On July 24, 2015, the Partnership entered into a purchase and sale agreement (the “Agreement”) with Orion Buying Corp. (“Orion”), an unrelated party, which is subject to approval as described below. Pursuant to the Agreement, and upon the terms and subject to the conditions described therein, Orion agreed to purchase all eight properties owned by the Partnership (the “Properties”) on an “as is, where is” basis for a total purchase price of $15,809,000 in cash. Pursuant to the terms of the Agreement, Orion is obligated to deposit funds in escrow in an aggregate amount of $375,000. If the Partnership is in default, and Orion is not in default, in the performance of any of its representations, warranties or covenants under the Agreement, and Orion has satisfied all of its obligations, then Orion may either (i) terminate the Agreement and receive a refund of its deposits and also recover from the Partnership its reasonable out-of-pocket costs in connection with the Agreement (but not to exceed $50,000) as liquidated damages, or (ii) bring a suit for specific performance. If a contingency to the Partnership closing set forth in the Agreement is not satisfied by December 17, 2015, then the Partnership may terminate the Agreement and Orion will be refunded its deposits. However, if Orion is in default, and the Partnership is not in default, in the performance of any of its representations, warranties or covenants under the Agreement, and the Partnership has satisfied all of its obligations, then the Partnership may terminate the Agreement and receive Orion’s deposits as liquidated damages. Following completion of the transaction, the current leases on the Properties will be terminated and the General Partner will lease the Properties from Orion. The sale of the Properties pursuant to the terms and conditions of the Agreement is subject to approval of a majority interest of the limited partners of the Partnership and other customary closing conditions related to the sale of real property. A Special Meeting of the limited partners is scheduled for November 23, 2015 for the purpose of considering a proposal to sell all of the properties owned by the partnership. If the transaction is consummated, CBRE, Inc., the real estate broker for the sale of the properties by the Partnership, will receive a commission of 1.5% of the purchase price. If the sale is approved by the majority interest of limited partners of the Partnership, the sale is expected to close during the fourth quarter of 2015. On September 18, 2015, MacKenzie Realty Capital, Inc. (“MacKenzie”), a limited partner, filed a Schedule TO initiating a tender offer to purchase all units of the Partnership. This MacKenzie tender offer is unrelated to purchase and sale agreement with Orion. On September 25, 2015, the Partnership filed a Schedule 14D-9 solicitation/recommendation statements in response to the Schedule TO. On November 5, 2015 MacKenzie filed an amendment to its Schedule TO reporting that 472 units have been tendered and following purchase of all the tendered units, the purchasers will own an aggregate of approximately 3,218 units, or approximately 6.8% of the total outstanding units. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the annual report on Form 10-K for the year ended December 31, 2014 for Del Taco Restaurant Properties III (the Partnership or the Company). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Partnership’s financial position at September 30, 2015, the results of operations for the three and nine month periods ended September 30, 2015 and 2014 and cash flows for the nine month periods ended September 30, 2015 and 2014 have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. Amounts related to disclosure of December 31, 2014 balances within these condensed financial statements were derived from the 2014 audited financial statements. Management has evaluated events subsequent to September 30, 2015 through the date that the accompanying condensed financial statements were filed with the Securities and Exchange Commission (“SEC”) for transactions and other events which may require adjustment of and/or disclosure in such financial statements. |
Net Income Per Limited Partnership Unit | NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partnership unit is based on net income attributable to the limited partners (after one percent allocation to the general partner) using the weighted average number of units outstanding during the periods presented which amounted to 47,261 in 2015 and 2014. Pursuant to the partnership agreement, annual partnership income or loss is allocated one percent to Del Taco LLC, formerly known as Del Taco, Inc. (Del Taco or the General Partner) and 99 percent to the limited partners. Partnership gains from any sale or refinancing will be allocated to the limited partners until the limited partners receive their unrecovered portion of capital contributions as defined in the partnership agreement and then allocated one percent to the General Partner and 99 percent to the limited partners until the limited partners receive their priority return as defined in the partnership agreement. |
Concentration of Risk | CONCENTRATION OF RISK The restaurants leased to Del Taco make up all of the income producing assets of the Partnership and contributed all of the Partnership’s rental revenues during the three and nine months ended September 30, 2015 and 2014. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties. The Partnership maintains substantially all of its cash and cash equivalents at one major commercial bank. Although the Partnership at times maintains balances that exceed the federally insured limit, it has not experienced any losses related to these balances and management believes the credit risk to be minimal. |
Restricted Cash - Additional In
Restricted Cash - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Restricted Cash and Investments [Abstract] | ||
Restricted cash balance | $ 86,017 | $ 86,017 |
Percentage of gross proceeds from sale | 2.00% | 2.00% |
Net Income Per Limited Partne17
Net Income Per Limited Partnership Unit - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Line Items] | ||||
Percentage of net income allocated to general partner | 1.00% | |||
Weighted average number of units outstanding to limited partners | 47,261 | 47,261 | 47,261 | 47,261 |
General Partner [Member] | ||||
Earnings Per Share [Line Items] | ||||
Percentage of net income allocated to general partner | 1.00% | |||
Percentage of gain on sale and refinancing allocated to General Partner | 1.00% | |||
Limited Partners [Member] | ||||
Earnings Per Share [Line Items] | ||||
Percentage of net income attributable limited partners | 99.00% | |||
Percentage of gain on sale and refinancing allocated to limited partners | 99.00% |
Leasing Activities - Additional
Leasing Activities - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)Restaurants | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Restaurants | Sep. 30, 2014USD ($) | |
Leases [Abstract] | ||||
Number of restaurants leased to Del Taco | Restaurants | 8 | 8 | ||
Number of lease years | 35 years | |||
Percentage of gross sales of the restaurants | 12.00% | |||
Leases expiration period | 2022 to 2024 | |||
Minimum rentals due to Partnership | $ 3,500 | |||
Combined unaudited sales | $ 2,446,301 | $ 2,322,587 | 7,164,352 | $ 6,729,276 |
Combined unaudited net income (losses) | $ 94,834 | $ 9,346 | $ 212,987 | $ 4,498 |
Transactions with Del Taco - Ad
Transactions with Del Taco - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2015Acquisition | |
Related Party Transactions [Abstract] | |
Number of other partnerships formed for acquisition | 3 |
Distributions - Additional Info
Distributions - Additional Information (Detail) - USD ($) | Oct. 26, 2015 | Nov. 30, 2015 | Aug. 31, 2015 | Jun. 30, 2015 | Feb. 28, 2015 | Sep. 30, 2015 |
Distribution Made to General and Limited Partner [Line Items] | ||||||
Total cash distributions declared and paid | $ 265,878 | $ 183,996 | $ 236,363 | |||
Distribution to limited partner, approved date | Oct. 26, 2015 | |||||
Distribution to limited partner, distribution date | Nov. 5, 2015 | |||||
Distribution to general partner, distribution date | Nov. 30, 2015 | |||||
Scenario, Forecast [Member] | ||||||
Distribution Made to General and Limited Partner [Line Items] | ||||||
Distributions to general partner | $ 2,382 | |||||
General partner, partnership interest percentage | 1.00% | |||||
Subsequent Events [Member] | ||||||
Distribution Made to General and Limited Partner [Line Items] | ||||||
Distribution to limited partners amount approved | $ 235,824 | |||||
Distribution to limited partner, per unit amount approved | $ 4.98 |
Payable to Limited Partners - A
Payable to Limited Partners - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Period of payable outstanding to limited partners | Six months or longer |
Concentration of Risk - Additio
Concentration of Risk - Additional Information (Detail) | Sep. 30, 2015CommercialBank |
Risks and Uncertainties [Abstract] | |
Commercial bank | 1 |
Purchase and Sale Agreement - A
Purchase and Sale Agreement - Additional Information (Detail) - Purchase and Sale Agreement [Member] | Nov. 05, 2015shares | Jul. 24, 2015USD ($)Property | Sep. 30, 2015 |
Subsequent Events [Member] | |||
Purchase And Sale Agreement [Line Items] | |||
Number of units tendered | shares | 472 | ||
Purchase of aggregate number of units owned | shares | 3,218 | ||
Percentage of total units outstanding | 6.80% | ||
Orion Buying Corp [Member] | |||
Purchase And Sale Agreement [Line Items] | |||
Number of properties to be sold | Property | 8 | ||
Total purchase price | $ 15,809,000 | ||
Deposit funds in escrow | $ 375,000 | ||
Agreement termination description | If the Partnership is in default, and Orion is not in default, in the performance of any of its representations, warranties or covenants under the Agreement, and Orion has satisfied all of its obligations, then Orion may either (i) terminate the Agreement and receive a refund of its deposits and also recover from the Partnership its reasonable out-of-pocket costs in connection with the Agreement (but not to exceed $50,000) as liquidated damages, or (ii) bring a suit for specific performance. If a contingency to the Partnership closing set forth in the Agreement is not satisfied by December 17, 2015, then the Partnership may terminate the Agreement and Orion will be refunded its deposits. However, if Orion is in default, and the Partnership is not in default, in the performance of any of its representations, warranties or covenants under the Agreement, and the Partnership has satisfied all of its obligations, then the Partnership may terminate the Agreement and receive Orion’s deposits as liquidated damages. Following completion of the transaction, the current leases on the Properties will be terminated and the General Partner will lease the Properties from Orion. The sale of the Properties pursuant to the terms and conditions of the Agreement is subject to approval of a majority interest of the limited partners of the Partnership and other customary closing conditions related to the sale of real property. A Special Meeting of the limited partners is scheduled for November 23, 2015 for the purpose of considering a proposal to sell all of the properties owned by the partnership. If the transaction is consummated, CBRE, Inc., the real estate broker for the sale of the properties by the Partnership, will receive a commission of 1.5% of the purchase price. If the sale is approved by the majority interest of limited partners of the Partnership, the sale is expected to close during the fourth quarter of 2015. | ||
CBRE, Inc. [Member] | |||
Purchase And Sale Agreement [Line Items] | |||
Percentage of brokerage commission on total purchase price | 1.50% | ||
Maximum [Member] | Orion Buying Corp [Member] | |||
Purchase And Sale Agreement [Line Items] | |||
Liquidated damages | $ 50,000 |