FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended June 30, 1996
Commission File Number: 0-13559
LDP-III
(Exact name of registrant as specified in its governing
instruments)
California 94-2911983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P. O. Box 130, Carbondale, Colorado 81623
(Address of principal executive offices)
(970) 963-8007
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: [X] No: [ ]
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LDP-III
CONSOLIDATED BALANCE SHEET, JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
(Dollars in thousands)
June 30, December 31,
1996 1995
INVESTMENTS IN REAL ESTATE:
Rental properties $12,336 $12,306
Accumulated depreciation (4,436) (4,264)
Rental properties - net 7,900 8,042
CASH AND CASH EQUIVALENTS (including interest
bearing deposits of $49 in 1996
and $104 in 1995) 129 212
OTHER ASSETS:
Short-term investment 198 198
Accounts receivable 30 24
Prepaid expenses and deposits 10 8
Deferred organization costs, loan costs
and leasing commissions (net of accumulated
amortization of $565 in 1996 and $536 in 1995) 145 152
Total other assets 383 382
TOTAL $8,412 $8,636
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $7,864 $7,871
Accounts payable 5 5
Other liabilities 83 81
Total liabilities 7,952 7,957
PARTNERS' EQUITY 460 679
TOTAL $8,412 $8,636
<FN>
See Financial Notes.
LDP-III
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
REVENUE:
Rental $ 307 $ 336 $ 653 $ 638
Interest 4 8 9 18
Total revenue 311 344 662 656
EXPENSE:
Interest 181 185 351 370
Operating 117 125 236 233
Depreciation and amortization 87 104 201 211
General and administrative 53 65 93 103
Total expense 438 479 881 917
NET INCOME (LOSS) $(127) $(135) $(219) $(261)
NET LOSS PER PARTNERSHIP UNIT $ (3) $ (4) $ (6) $ (7)
<FN>
See Financial Notes.
LDP-III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND THE YEAR ENDED
DECEMBER 31, 1995 (Unaudited)
(Dollars in thousands)
LIMITED PARTNERS
NUMBER OF GENERAL TOTAL
PARTNERSHIP PARTNER PARTNERS'
UNITS AMOUNT AMOUNT EQUITY
BALANCE, JANUARY 1, 1995 37,141 $1,013 $1,013
Net loss - 1995 (334) (334)
Abandonments (5)
BALANCE, DECEMBER 31, 1995 37,136 679 679
Net loss 219 219
BALANCE, JUNE 30, 1996 37,136 $ 460 $ 0 $ 460
<FN>
See Financial Notes.
LDP-III
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
(In thousands)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (219) $ (261)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 171 182
Change in operating assets and liabilities:
Increase in accounts receivable (6) (31)
Increase in prepaid expenses and deposits (2) (3)
Decrease in accounts payable 0 (20)
Increase in other liabilities 3 53
Net cash used in operating activities (53) (80)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (30) (27)
Decrease (increase) in deferred expenses 7 (5)
Net cash used in investing activities (23) (32)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (8) (258)
Net cash used in financing activities (8) (258)
Decrease in cash and cash equivalents (84) (370)
Cash and cash equivalents at beginning
of period 410 859
Cash and cash equivalents at end of period $ 326 $ 489
<FN>
See Financial Notes.
LDP-III
FINANCIAL NOTES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements
should be read in conjunction with the Partnership's 1995
Annual Report. These consolidated statements have been
prepared in accordance with the instructions to the
Securities and Exchange Commission Form 10-Q and do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements.
In the opinion of the general partner, all adjustments
(consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The
consolidated results of operations for the six months ended
June 30, 1996 and 1995, are not necessarily indicative of
the results that may be expected for the year ending
December 31, 1996.
For purposes of the consolidated statement of cash flows,
the Partnership considers all highly liquid investments with
a maturity of three months or less from the date of purchase
to be cash equivalents. The Partnership paid interest of
$351 and $370 for the six months ended June 30, 1996, and
1995, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
LDP-III is a California limited partnership formed in August
1983. The Partnership's business consists of a single segment --
equity investments in leveraged income-producing real estate.
The Partnership currently has an investment in LDP-III Realty
Service Corporation which owns one property, the 391 Forbes
Building in South San Francisco, California. For financial
reporting purposes, the Partnership's investment in LDP-III
Realty Service Corporation is presented on a consolidated basis.
The Partnership's current portfolio consists of fee title
ownership of three properties located in three geographic areas.
The Partnership's property investments are: Jefferson Place
Office Building, Boise, Idaho; 391 Forbes Building (Pacific
International Industrial Park), South San Francisco, California;
and 1201 Cadillac Court Building, Milpitas, California.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Partnership's consolidated cash balance
totaled $129,000. Cash not required for current operations is
placed in federally insured financial instruments and money
market funds which can be liquidated as needed.
The Partnership has invested $198,000 in short-term federally
insured certificates of deposit which mature on a date in excess
of 90 days or 3 months from the date of purchase. Due to this
characteristic, these deposits are classified as "short-term
investments" rather than as "cash and cash equivalents."
During the first six months of 1996, the Partnership experienced
a net decrease in cash of $84,000. Uses of cash included $30,000
for property capital expenditures and leasing commissions, $8,000
for principal payments on notes payable, and $46,000 for
operations. As of June 30, 1996, cash plus short-term
investments totaled $326,000 versus a balance of $410,000 at
December 31, 1995.
All sale and loan proceeds realized by the Partnership will be
used primarily to make cash distributions.
RESULTS OF OPERATIONS
The following represents the operations of those properties held
continuously during the first six months of 1996 and 1995:
1996 1995 % Change
Rental Revenue $ 653 $ 656 0%
Operating Expense 329 335 (2%)
Net Operating Income 324 321 1%
Interest Expense $ 351 $ 370 (5%)
Overall, there was a slight decrease in revenues for the six
months ended June 30, 1996 relative to the same period in 1995.
The Partnership's real estate assets in the Boise and San
Francisco Bay Area marketplace have experienced a significant
imbalance between supply and demand. A combination of historic
high building activity and recessionary economic activity caused
severe market pressures on rental rates and occupancy levels.
Property operating expenses decreased 2% for the six months ended
June 30, 1996 relative to the same period in 1995. This was
primarily due to greater efficiency of operations at the
commercial and apartment properties.
The Partnership general and administrative expense decreased 10%
in 1996 relative to the same period in 1995. The General Partner
continues to exercise general and administrative expense control.
Occupancy increased slightly during the quarter. 391 Forbes and
1201 Cadillac are fully occupied. The Jefferson Place office
building is currently 92% occupied.
PROPERTY SALE
During the second quarter, 391 Forbes was marketed for sale and
placed under contract. While the contract has some
contingencies, it is expected the property will be sold during
the third quarter.
INFLATION
In the past, the Partnership's rental revenues in certain over
built real estate markets, including Boise and San Francisco Bay
Area, have not followed the overall inflationary trends of the
economy. In the future, the General Partner believes market rate
rents in those areas will more closely follow or exceed
inflation. Operating costs for properties in most of the
Partnership's markets have continued to follow inflationary
trends. It is not expected that the Partnership will be
materially impacted by inflationary forces in the near term.
PART II. OTHER INFORMATION
All items in Part II have been omitted since they are
inapplicable or the answer is negative.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
LDP-III
Date: August 14, 1996 /s/ Gary K. Barr
Gary K. Barr, President
Landsing Equities Corporation
Managing Partner of the General Partner
Landsing Partners-III