FORM 10-QSB - QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ......... to ........
Commission file number 0-10255
SHELTER PROPERTIES I
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0707398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No____
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
SHELTER PROPERTIES I
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except per unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 391
Receivables and deposits 117
Restricted escrows 186
Other assets 309
Investment properties:
Land $ 1,189
Buildings and related personal property 17,376
18,565
Less accumulated depreciation (13,087) 5,478
$ 6,481
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 45
Tenant security deposit liabilities 127
Accrued property taxes 63
Other liabilities 302
Mortgage notes payable 12,664
Partners' Deficit
General partners $ (53)
Limited partners (15,000 units issued and
outstanding) (6,667) (6,720)
$ 6,481
See Accompanying Notes to Consolidated Financial Statements
b)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $1,214 $1,312
Other income 70 77
Total revenues 1,284 1,389
Expenses:
Operating 466 524
General and administrative 62 49
Depreciation 160 184
Interest 240 233
Property taxes 64 77
Total expenses 992 1,067
Net income $ 292 $ 322
Net income allocated to general partners (1%) $ 3 $ 3
Net income allocated to limited partners (99%) 289 319
$ 292 $ 322
Net income per limited partnership unit $19.27 $21.27
Distributions per limited partnership unit $60.00 $33.00
See Accompanying Notes to Consolidated Financial Statements
c)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 15,000 $ 2 $15,000 $15,002
Partners' deficit at
December 31, 2000 15,000 $ (47) $(6,056) $(6,103)
Distributions to partners -- (9) (900) (909)
Net income for the three months
ended March 31, 2001 -- 3 289 292
Partners' deficit at
March 31, 2001 15,000 $ (53) $(6,667) $(6,720)
See Accompanying Notes to Consolidated Financial Statements
d)
SHELTER PROPERTIES I
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $ 292 $ 322
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 160 184
Amortization of discounts and loan costs 9 22
Change in accounts:
Receivables and deposits 505 32
Other assets (43) (24)
Accounts payable (53) 35
Tenant security deposit liabilities 7 --
Accrued property taxes (10) 14
Other liabilities 50 (29)
Net cash provided by operating activities 917 556
Cash flows from investing activities:
Property improvements and replacements (103) (260)
Net deposits to restricted escrows (15) (136)
Net cash used in investing activities (118) (396)
Cash flows from financing activities:
Payments on mortgage notes payable (26) (39)
Distributions to partners (909) (500)
Net cash used in financing activities (935) (539)
Net decrease in cash and cash equivalents (136) (379)
Cash and cash equivalents at beginning of period 527 1,748
Cash and cash equivalents at end of period $ 391 $ 1,369
Supplemental disclosure of cash flow information:
Cash paid for interest $ 189 $ 211
Supplemental disclosure of non-cash flow information:
At December 31, 2000 accounts payable and fixed assets were adjusted $45,000 for
non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
e)
SHELTER PROPERTIES I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Shelter
Properties I (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Article 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The general partner responsible for management of the
Partnership's business is Shelter Realty I Corporation, a South Carolina
corporation (the "Corporate General Partner"). The Corporate General Partner is
a subsidiary of Apartment Investment and Management Company ("AIMCO"), a
publicly traded real estate investment trust. In the opinion of the Corporate
General Partner, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2001, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB
for the year ended December 31, 2000.
Principles of Consolidation
The Registrant's financial statements include all of the accounts of the
Registrant and its 99.99% owned partnership. The General Partner of the
consolidated partnership is Shelter Realty I Corporation. Shelter Realty I
Corporation may be removed by the Registrant; therefore, the consolidated
partnership is controlled and consolidated by the Registrant. All significant
interpartnership transactions have been eliminated.
Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The Corporate General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the consolidated financial statements as currently presented.
Note B - Reconciliation of Cash Flows
The following is a reconciliation of the subtotal on the accompanying
consolidated statements of cash flows captioned "net cash provided by operating
activities" to "net cash provided by operations", as defined in the Partnership
Agreement. However, "net cash provided by operations" should not be considered
an alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
For the Three Months Ended
March 31,
(in thousands)
2001 2000
Net cash provided by operating activities $ 917 $ 556
Payments on mortgage notes payable (26) (39)
Property improvements and replacements (103) (260)
Change in restricted escrows, net (15) (136)
Changes in reserves for net operating
liabilities (456) (28)
Additional reserves (103) (93)
Net cash provided by operations $ 214 $ --
At March 31, 2001 and 2000, the Corporate General Partner reserved an additional
$103,000 and $93,000, respectively to fund continuing capital improvements and
repairs at the Partnership's three investment properties.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following payments were
paid or accrued to the Corporate General Partner and affiliates during the three
months ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in
operating expenses) $ 63 $ 71
Reimbursement for services of affiliates
(included in operating and general and
administrative expense and investment properties) 48 26
Due to Corporate General Partner 132 101
During the three months ended March 31, 2001 and 2000, affiliates of the
Corporate General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $63,000 and $71,000 for the
three months ended March 31, 2001 and 2000, respectively.
An affiliate of the Corporate General Partner received reimbursement of
accountable administrative expenses amounting to approximately $48,000 and
$26,000 for the three months ended March 31, 2001 and 2000, respectively.
Related to the sale of Heritage Pointe Apartments, approximately $31,000 of
commissions to the Corporate General Partner was accrued and is included in
other liabilities on the accompanying consolidated balance sheet at March 31,
2001 along with unpaid commissions from past sales of approximately $101,000.
These commissions are payable when certain levels of return are received by the
limited partners.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 11,773 limited partnership
units in the Partnership representing 78.49% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 78.49% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.
Note D - Distributions
During the three months ended March 31, 2001, the Partnership declared and paid
approximately $909,000 from operations (approximately $900,000 to the limited
partners, or approximately $60.00 per limited partnership unit). During the
three months ended March 31, 2000, the Partnership declared and paid cash
distributions from operations of approximately $500,000 ($495,000 to the limited
partners or $33.00 per limited partnership unit). Subsequent to March 31, 2001,
the Partnership declared and paid a distribution of approximately $214,000
(approximately $212,000 to the limited partners, or $14.13 per limited
partnership unit) of cash from operations, and approximately $58,000 all to the
limited partners from the refinancing proceeds of Windsor Hills Apartments
(approximately $3.87 per limited partnership unit).
Note E - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Corporate General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Corporate General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Corporate General Partner does
not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for each
of the three months ended March 31, 2001 and 2000:
Average
Occupancy
Property 2001 2000
Quail Hollow Apartments
West Columbia, South Carolina 96% 90%
Windsor Hills Apartments
Blacksburg, Virginia 99% 96%
Stone Mountain West Apartments
Stone Mountain, Georgia 93% 96%
The Corporate General Partner attributes the increase in occupancy at Quail
Hollow Apartments and Windsor Hills Apartments to a change in demographics of
the market areas in which the properties compete and improved marketing
efforts. The Corporate General Partner attributes the decrease in occupancy
at Stone Mountain West Apartments to the purchase of new homes by tenants due
to low interest rates.
Results of Operations
The Partnership had net income of approximately $292,000 for the three months
ended March 31, 2001, versus net income of approximately $322,000 for the three
months ended March 31, 2000. The decrease in net income is due to a decrease in
total revenues, partially offset by a decrease in total expenses. The decrease
in total revenues is largely due to the sale of Heritage Pointe Apartments in
September 2000. Excluding the impact of the sale and operations of Heritage
Pointe Apartments, the Partnership had net income of approximately $292,000 for
the three months ended March 31, 2001, versus net income of approximately
$303,000 for the three months ended March 31, 2000. The decrease in net income
is primarily due to an increase in total expenses which more than offset an
increase in total revenues. Total expenses on the remaining properties increased
primarily due to an increase in operating expenses, depreciation expense,
general and administrative and interest expense. Operating expense increased as
a result of an increase in property expenses, which more than offset a decrease
in maintenance expenses. Property expenses increased due to an increase in
utility expenses at Stone Mountain West and Windsor Hills Apartments due to an
increase in gas rates and an increase in employee salaries and related employee
benefits at all of the Partnership's investment properties. Depreciation expense
increased due to property improvements and replacements placed in service during
the preceding twelve months. The increase in interest expense was primarily due
to the Partnership refinancing the mortgage notes payable encumbering Windsor
Hills Apartments in December 2000.
Total revenues for the Partnership's remaining properties increased due to an
increase in rental income and, to a lesser extent, other income. Rental income
increased due to an increase in average rental rates at all three of the
Registrant's remaining investment properties and an increase in occupancy at
Quail Hollow Apartments and Windsor Hills Apartments as discussed above. Other
income increased primarily due to increased interest income at all of the
Partnership's investment properties as a result of higher average cash balances
being maintained in interest-bearing accounts.
General and administrative expenses increased as a result of an increase in
management reimbursements to the Corporate General Partner allowed under the
Partnership Agreement. Also included in general and administrative expense were
costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
As part of the ongoing business plan of the Registrant, the Corporate General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Registrant from increases in expenses. As part of this
plan, the Corporate General Partner attempts to protect the Registrant from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Corporate General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $391,000 as compared to approximately $1,369,000 at March 31,
2000. Cash and cash equivalents decreased approximately $136,000 for the three
months ended March 31, 2001 from the Partnership's year end of December 31,
2000. The decrease was due to approximately $935,000 of cash used in financing
activities and approximately $118,000 of cash used in investing activities,
which was partially offset by approximately $917,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
distributions to partners, and to a lesser extent, payments of principal on the
mortgages encumbering the Partnership's properties. Cash used in investing
activities consisted of net deposits to restricted escrows maintained by the
mortgage lender and property improvements and replacements. Cash provided by
operating activities for the three months ended March 31, 2001 includes the
refund of approximately $300,000 of escrows held by the prior lender of the
Windsor Hills indebtedness, in addition to the refund of approximately $140,000
for a rate lock fee paid in 2000 associated with the Windsor Hills refinancing.
The Partnership invests its working capital reserves in interest bearing
accounts.
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 other operating needs of the Registrant and to comply with Federal,
state, local, legal, and regulatory requirements. Capital improvements planned
for each of the Registrant's properties are detailed below.
Quail Hollow Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $10,000 consisting primarily of floor covering replacements and
furniture and fixture upgrades. These improvements were funded from operating
cash flow and replacement reserves. The Partnership has budgeted approximately
$63,000 for capital improvements at Quail Hollow Apartments consisting primarily
of floor covering and appliance replacements, and air conditioning upgrades.
Stone Mountain West Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $14,000 consisting primarily of floor covering replacements. These
improvements were funded from operating cash flow. The Partnership has budgeted
approximately $39,000 for capital improvements at Stone Mountain West Apartments
consisting primarily of floor covering and appliance replacements.
Windsor Hills Apartments
During the three months ended March 31, 2001, the Partnership spent
approximately $34,000 consisting primarily of floor covering and appliance
replacements. These improvements were funded from Partnership reserves and
operating cash flow. The Partnership has budgeted approximately $102,000 for
capital improvements at Windsor Hills Apartments consisting primarily of
plumbing improvements, floor covering and appliance replacements, interior
decoration and air conditioning unit replacements.
The additional capital improvements will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $12,664,000 is amortized over varying periods
ranging from November 1, 2003 to January 1, 2021. The Corporate General Partner
will attempt to refinance such indebtedness and/or sell the properties prior to
such maturity date. If the properties cannot be refinanced or sold for a
sufficient amount, the Registrant will risk losing such properties through
foreclosure.
During the three months ended March 31, 2001, the Partnership declared and paid
approximately $909,000 from operations (approximately $900,000 to the limited
partners, or approximately $60.00 per limited partnership unit). During the
three months ended March 31, 2000, the Partnership declared and paid cash
distributions from operations of approximately $500,000 ($495,000 to the limited
partners or $33.00 per limited partnership unit). Subsequent to March 31, 2001,
the Partnership declared and paid a distribution of approximately $214,000
(approximately $212,000 to the limited partners, or $14.13 per limited
partnership unit) of cash from operations, and approximately $58,000 all to the
limited partners from the refinancing proceeds of Windsor Hills Apartments
(approximately $3.87 per limited partnership unit). The Registrant's
distribution policy is reviewed on a monthly basis. Future cash distributions
will depend on the levels of net cash generated from operations, the
availability of cash reserves, and the timing of debt maturities, refinancings,
and/or property sales. There can be no assurance that the Registrant will
generate sufficient funds from operations to permit further distributions to its
partners in 2001 or subsequent periods. Distributions may be further restricted
by the requirement to deposit net operating income (as described in the mortgage
notes) into a Reserve Account until the Reserve Account is funded in an amount
equal to $300 to $325 per apartment unit for Quail Hollow Apartments and Stone
Mountain West Apartments for a total of $107,100 to $116,000. As of March 31,
2001, the Partnership had deposits of approximately $181,000 in its Reserve
Accounts.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 11,773 limited partnership
units in the Partnership representing 78.49% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 78.49% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Corporate General Partner because of its
affiliation with the Corporate General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Corporate General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Corporate General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Corporate General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Corporate General Partner does
not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K filed during the quarter ended March 31,
2001:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES I
By: Shelter Realty I Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President and Director
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: May 14, 2001