UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
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 0-14466
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Connecticut 06-1115374
(State of Organization) (I.R.S. Employer Identification
No.)
900 Cottage Grove Road, South Building
Bloomfield, Connecticut 06002
(Address of principal executive offices)
Telephone Number: (203) 726-6000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 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
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Balance Sheets
September 30, December 31,
1995 1994
Assets (Unaudited) (Audited)
Property and improvements, at cost:
Land and land improvements $ 6,065,816 $ 6,029,006
Buildings 30,548,015 30,507,857
Furniture and fixtures 2,197,169 2,113,119
38,811,000 38,649,982
Less accumulated depreciation 12,484,159 11,629,808
Net property and improvements 26,326,841 27,020,174
Cash and cash equivalents 2,308,358 1,662,708
Accounts receivable (net of allowance of $14,413
in 1995 and $10,353 in 1994) 9,230 87,264
Escrow deposits 305,104 171,265
Prepaid insurance -- 44,265
Deferred charges 1,378,426 1,415,350
Debt service fund escrow 506,660 506,660
Other assets 1,266 97,371
Total $30,835,885 $31,005,057
Liabilities and Partners' Capital (Deficit)
Liabilities:
Notes and mortgages payable $29,396,654 $29,487,591
Accounts payable and accrued expenses
(including $40,612 in 1995 and $8,067
in 1994 due to affiliates) 354,441 270,002
Accrued interest payable (including
$17,000 due to affiliates in 1995
and 1994) 73,561 72,946
Tenant security deposits 170,943 169,144
Unearned income 25,962 25,693
Total liabilities 30,021,561 30,025,376
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net loss (102,311) (100,657)
Cumulative cash distributions (13,355) (13,355)
(114,666) (113,012)
Limited partners (24,856 Units)
Capital contributions, net of
offering costs 22,408,052 22,408,052
Cumulative net loss (20,152,902) (19,989,199)
Cumulative cash distributions (1,326,160) (1,326,160)
928,990 1,092,693
Total partners' capital 814,324 979,681
Total $30,835,885 $31,005,057
<FN>
The Notes to Financial Statements are an integral part of these statements.
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Income:
Rental income $1,385,732 $1,566,665 $4,062,608 $4,733,521
Other income 51,593 82,206 159,553 219,844
Interest income 40,562 24,412 109,635 53,468
1,477,887 1,673,283 4,331,796 5,006,833
Expenses:
Property operating expenses 416,303 505,103 1,175,428 1,398,737
General and administrative 193,389 243,479 585,873 653,729
Fees and reimbursements to
affiliates 30,880 24,569 75,459 80,412
Interest expense (includes $17,000 and
$51,000 for 1995 and $17,000 and
$49,313 for 1994 to affiliates) 554,513 849,546 1,664,108 2,264,098
Depreciation and amortization 334,981 387,035 996,285 1,203,249
1,530,066 2,009,732 4,497,153 5,600,225
Loss from operations (52,179) (336,449) (165,357) (593,392)
Gain on sale of property -- 24,837 -- 24,837
Net loss $ (52,179) $(311,612) $ (165,357) $(568,555)
Net loss:
General Partner $ (522) $ 21,472 $ (1,654) $ 18,903
Limited partners (51,657) (333,084) (163,703) (587,458)
$ (52,179) $(311,612) $(165,357) $(568,555)
Net loss per Unit $(2.08) $(13.40) $(6.59) $(23.63)
<FN>
The Notes to Financial Statements are an integral part of these statements.
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
1995 1994
Cash flows from operating activities:
Net loss $(165,357) $(568,555)
Adjustment to reconcile net loss to net
cash provided by operating activities:
Gain on sale of property -- (24,837)
Depreciation and amortization 996,285 1,203,249
Accounts receivable 78,034 127,973
Accounts payable and accrued expenses 92,141 19,153
Accrued interest payable 615 (64,962)
Other, net 8,599 (159,508)
Net cash provided by operating
activities 1,010,317 532,513
Cash flows from investing activities:
Purchase of property and improvements (165,048) (149,126)
Payment of leasing commissions -- (22,502)
Proceeds from sale of property -- 6,572,000
Payment of closing costs related to
sale of property -- (307,206)
Net cash (used in) provided by
investing activities (165,048) 6,093,166
Cash flows from financing activities:
Proceeds from mortgage loan 5,300,000 4,200,000
Repayment of notes and mortgage loans (5,390,937) (10,017,352)
Payment of financing costs (105,010) (24,251)
Cash distribution for limited partners (3,672) (1,683)
Net cash used in financing activities (199,619) (5,843,286)
Net increase in cash and cash equivalents 645,650 782,393
Cash and cash equivalents, beginning of year 1,662,708 1,150,033
Cash and cash equivalents, end of period $2,308,358 $1,932,426
Supplemental disclosures of cash information:
Interest paid during period $1,663,493 $2,329,060
Supplemental disclosure of non-cash information:
Accrued purchases of property and
improvements $2,620 $--
<FN>
The Notes to Financial Statements are an integral part of these statements.
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Notes to Financial Statements
(Unaudited)
Readers of this quarterly report should refer to CONNECTICUT
GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP'S (the "Partnership")
audited financial statements for the year ended December 31, 1994 which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
1. Basis of Accounting
a) Basis of Presentation: The accompanying financial statements were
prepared in accordance with generally accepted accounting
principles. It is the opinion of management that the financial
statements presented reflect all the adjustments necessary for a
fair presentation of the financial condition and results of
operations. Certain amounts in the 1994 financial statements have
been reclassified to conform to the 1995 presentation.
b) Cash and Cash Equivalents: Short term investments with a maturity
of three months or less at the time of purchase are reported as
cash equivalents.
c) Escrow Deposits: Escrow deposits consist of funds held to pay
property taxes and insurance, as required by the first mortgage
lender for Stewart's Glen, Versailles and Waterford, maintenance
escrows, as required by the first mortgage lender for Waterford and
Stonebridge Manor, and a utility deposit for Stonebridge Manor.
2. Notes and Mortgages Payable
On March 31, 1995, the Partnership refinanced the Stonebridge Manor
Apartment's first mortgage note which was scheduled to mature on April 1,
1995. The new mortgage note is in the amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest and twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year.
During 1994, the Partnership refinanced the debt for Stewart's Glen
III with the existing lender. The maturity date has been extended from
February 1995 to April 1996 and the interest rate was lowered to 8.55%.
The Partnership will likely sell the property in early 1996 at debt
maturity.
3. Deferred Charges
Deferred charges consist of the following:
September 30, December 31,
1995 1994
Surety fee - Waterford Apartments
mortgage note $963,910 $963,910
Costs of obtaining financing 845,127 740,117
1,809,037 1,704,027
Accumulated amortization (430,611) (288,677)
$1,378,426 $1,415,350
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Noted to Financial Statements (Continued)
(Unaudited)
4. Transactions with Affiliates
The recourse promissory notes for Promenades Plaza Shopping Center
and Stonebridge Manor were guaranteed by an affiliate of the General
Partner for an annual fee of 2% and 1.25% on the outstanding balance,
respectively, prior to consolidation, modification and extension effective
on March 25, 1994. After consolidation, the note guarantee carries an
annual fee of 2% of the outstanding balance.
Other fees and expenses related to the General Partner or its
affiliates are as follows:
Three Months Ended Nine Months Ended Unpaid at
September 30, September 30, September 30,
1995 1994 1995 1994 1995
Property management fee (a) $ 11,401 $12,442 $32,976 $40,745 $ 7,665
Reimbursement (at cost) for
out-of-pocket expenses 19,479 12,127 42,483 39,667 32,947
$30,880 $24,569 $75,459 $80,412 $40,612
<FN>
(a) Does not include property management fees earned by independent
property management companies of $60,287 and $83,873 for the three
months ended September 30, 1995 and 1994 respectively and $175,344
and $227,168 for the nine months ended September 30, 1995 and 1994,
respectively. Certain property management services have been
contracted by an affiliate of the General Partner on behalf of the
Partnership and are paid directly by the Partnership to the third
party companies.
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(a Connecticut limited partnership)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1995, the Partnership had $2,308,358 in cash and
cash equivalents which will be used to fund working capital requirements
and the Partnership's reserves. The portfolio generated positive adjusted
cash from operations after debt service, capital improvements and
partnership expenses for the three and nine months ended September 30,
1995.
Each of the apartment properties has produced positive results in
the third quarter of 1995 for the Partnership. Cash generated from
property operations after Partnership expenses will supplement reserves.
Distributions to partners will not resume until the Partnership retires the
$3,400,000 recourse note obligation. For the third quarter of 1995,
adjusted cash from operations approximated $192,000 after capital
improvements and partnership level expenses. Net of the Stonebridge 1995
refinance costs, approximately $475,000 of cash from operations had been
added to Partnership cash reserves for the nine months ended September 30,
1995.
The first mortgage note for Stonebridge matured April 1, 1995. The
Partnership completed a refinance with Hibernia National Bank on March 31,
1995. The new loan is in the principal amount of $5,300,000 with a term of
three years and monthly payments at 10.15% interest with twenty year
amortization. Prepayment is closed for the first year, open at 1% during
the second year and open without penalty during the third year. The new
loan approximated the principal balance of the loan in which it replaced.
Origination fees and closing costs totalled approximately $105,000. The
refinance positions the property for a sale in late 1997 or early 1998
prior to debt maturity.
During the fourth quarter, the Partnership expects to receive
$28,500 from an escrow account set up as part of the Waterford debt
refinance in December of 1993. As part of the requirements of the bond
related financing, funds were set aside for minor repairs to the property
totaling $28,500. During 1995, the repairs were completed and a request
for release of the funds is now pending.
During 1994, the Partnership refinanced the debt for Stewart's Glen
III with the existing lender. The maturity date was extended from February
1995 to April 1996. The Partnership's current strategy assumes a sale in
early 1996 at debt maturity. During the third quarter a sales broker was
selected and a sales price was formulated. During the fourth quarter
finalization of an asking price and execution of the brokerage agreement
will begin the marketing process. The cash residual from the sale, after
payment of the property's first mortgage, will be added to Partnership
reserves for payment of the Partnership's recourse promissory note upon its
maturity. The net proceeds from the property sale added to the
Partnership's 1995 cash flow from operations and the Partnership's cash
reserves should be sufficient to retire the $3,400,000 promissory note upon
maturity.
Results of Operations
Generally, decreases in the income statement accounts are the
result of the Promenades Plaza sale on September 22, 1994. For the nine
months ended September 30, 1994, Promenades Plaza accounted for
approximately $804,000 of rental income, $117,000 of other income, $303,000
of property operating expenses, $112,000 of general and administrative
expenses, $538,000 of interest expense and $250,000 of depreciation and
amortization. For the three months ended September 30, 1994, Promenades
Plaza accounted for approximately $234,000 of rental income, $45,000 of
other income, $119,000 of property operating expenses, $50,000 of general
and administrative expenses, $279,000 of interest expense and $62,000 of
depreciation and amortization. The following analytical comments have been
limited to the Partnership's four remaining properties.
Rental income increased approximately $53,000 and $133,000 for the
three and nine months ended September 30, 1995, respectively, as compared
with the same periods of 1994. Stonebridge Manor rental income increased
approximately $23,000 and $70,000 and Versailles Village rental income
increased approximately $5,000 and $31,000 for the three and nine months,
respectively, as a result of rental rate increases. Stewarts Glen's rental
rate increases offset a nominal decline in average occupancy producing a
net increase in rental income of approximately $9,000 and $13,000 for the
three and nine months, respectively. At Waterford Apartments, an increase
in third quarter average occupancy led to an increase in rental income of
approximately $16,000 and $19,000 for the three and nine months,
respectively.
The increase in other income for the nine months ended September
30, 1995, as compared with the same periods of 1994, resulted from
collecting approximately $40,000 of additional 1994 expense recapture and
percentage rent from tenants at Promenades after the property sale.
The increase in interest income for the three and nine months ended
September 30, 1995, as compared with the same periods of 1994, was the
result of an increase in interest rates on short term investments combined
with higher average cash balances. In addition, Waterford earned
additional interest on the trust accounts associated with its bond related
financing.
Overall, property operating expenses increased for the three and
nine months ended September 30, 1995, as compared with the same periods of
1994, due to a greater number of carpet replacements at Stewart's Glen and
a rise in insurance costs at each of the properties. In addition,
Waterford incurred nonroutine maintenance expenditures for extensive
landscaping work. Stonebridge incurred costs for dryer vent replacements
and fireplace cleaning offset by fewer carpet replacements and utility
reimbursements from corporate tenants. Expenses decreased at Versailles
from a nonrecurring real estate tax consulting fee in 1994 and a drop in
utility usage in 1995 due to the milder winter and a repair of a water
leak.
The increase in general and administrative expense for the three
and nine months ended September 30, 1995, as compared with the same periods
of 1994, was the result of increased payroll related costs at Waterford,
Stonebridge and Stewart's Glen. In addition, advertising costs were
increased at Waterford in an effort to increase occupancy.
The decrease in interest expense for the three and nine months
ended September 30, 1995, as compared with 1994, was the result of the
November 1, 1994 Stewart's Glen refinance which decreased the interest rate
from 9.94% to 8.55%. In addition, the March 30, 1994 Versailles Village
first mortgage refinance lowered the interest rate from 10% to 8%.
The increase in depreciation and amortization for the three and
nine months ended September 30, 1995, as compared with the same periods of
1994, was the result of a change in the amortization period for financing
costs of Waterford's bond financing. In addition, amortization expense
increased from amortizing financing costs of the April 1, 1995 Stonebridge
Manor first mortgage refinance.
Occupancy
The following is a listing of approximate physical occupancy levels
by quarter for the Partnership's investment properties:
1994 1995
At 3/31 At 6/30 At 9/30 At 12/31 At 3/31 At 6/30 At 9/30
1. Versailles Village Apartments
Forest Park, Ohio 94% 97% 99% 96% 97% 99% 96%
2. Promenades Plaza Shopping Ctr.
Port Charlotte, Florida (a) 82% 82% N/A N/A N/A N/A N/A
3. Waterford Apartments
Tulsa, Oklahoma 88% 93% 94% 83% 90% 96% 98%
4. Stonebridge Manor Apartments
New Orleans, Louisiana 96% 97% 95% 97% 96% 97% 96%
5. Stewart's Glen Apts. Phase III
Willowbrook, Illinois 100% 99% 93% 98% 96% 89% 98%
<FN>
(a) Promenades Plaza was sold during the third quarter 1994.
Part II- Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended
September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONNECTICUT GENERAL REALTY INVESTORS III
LIMITED PARTNERSHIP
By: CIGNA Realty Resources, Inc. - Fifth,
General Partner
Date: November 10, 1995 By: /s/ John D. Carey
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)