UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1996
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: (860) 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
MARCH 31, DECEMBER 31,
1996 1995
ASSETS (UNAUDITED) (AUDITED)
Property and improvements, at cost:
Land and land improvements $ 6,119,148 $ 6,119,148
Buildings 30,627,074 30,577,342
Furniture and fixtures 2,224,228 2,206,128
--------------- ---------------
38,970,450 38,902,618
Less accumulated depreciation 12,997,506 12,770,211
--------------- ---------------
Net property and improvements 25,972,944 26,132,407
Cash and cash equivalents 2,764,353 2,481,123
Accounts receivable (net of allowance of $5,767
in 1996 and $8,671 in 1995) 9,013 7,694
Escrow deposits 209,198 281,236
Prepaid insurance 19,012 --
Other asset 1,000 1,000
Deferred charges, net 1,279,853 1,329,140
Escrowed debt service funds 506,660 506,660
--------------- ---------------
Total $ 30,762,033 $ 30,739,260
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Notes and mortgages payable $ 29,277,578 $ 29,347,622
Accounts payable and accrued expenses (including $19,744
in 1996 and $10,001 in 1995 due to affiliates) 384,071 361,508
Accrued interest payable (including $17,000 due to affiliates
in 1996 and 1995) 72,946 72,946
Tenant security deposits 169,686 169,396
Unearned income 28,239 25,973
--------------- ---------------
Total liabilities 29,932,520 29,977,445
--------------- ---------------
Partners' capital (deficit):
General Partner:
Capital contributions 1,000 1,000
Cumulative net loss (102,088) (102,765)
Cumulative cash distributions (13,355) (13,355)
--------------- ---------------
(114,443) (115,120)
--------------- --------------
Limited partners (24,856 Units)
Capital contributions, net of offering costs 22,408,052 22,408,052
Cumulative net loss (20,130,946) (20,197,967)
Cumulative cash distributions (1,333,150) (1,333,150)
--------------- ---------------
943,956 876,935
--------------- ---------------
Total partners' capital 829,513 761,815
--------------- ---------------
Total $ 30,762,033 $ 30,739,260
=============== ===============
The Notes to Financial Statements are an integral
part of these statements.
2
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Income:
Rental income $ 1,385,250 $ 1,318,519
Other income 41,992 35,813
Interest income 40,069 31,297
--------------- ---------------
1,467,311 1,385,629
--------------- ---------------
Expenses:
Property operating expenses 361,735 369,983
General and administrative 186,289 191,328
Fees and reimbursements to affiliates 24,300 23,419
Interest expense (includes $17,000 for 1996 and 1995 to affiliates) 550,707 548,264
Depreciation and amortization 276,582 327,244
--------------- ---------------
1,399,613 1,460,238
--------------- ---------------
Net income (loss) $ 67,698 $ (74,609)
=============== ===============
Net income (loss):
General Partner $ 677 $ (746)
Limited partners 67,021 (73,863)
--------------- ---------------
$ 67,698 $ (74,609)
=============== ===============
Net income (loss) per Unit $ 2.70 $ (2.97)
=============== ===============
The Notes to Financial Statements are an integral
part of these statements.
3
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss) $ 67,698 $ (74,609)
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 276,582 327,244
Accounts receivable (1,319) 11,273
Accounts payable 17,475 45,954
Accrued interest payable -- (614)
Escrow deposits 72,038 (4,247)
Other, net (16,456) 60,047
--------------- ---------------
Net cash provided by operating activities 416,018 365,048
--------------- ---------------
Cash flows from investing activities:
Purchase of property and improvements (62,744) (81,136)
--------------- ---------------
Cash flows from financing activities:
Proceeds from notes and mortgage loans -- 5,300,000
Repayment of notes and mortgage loans (70,044) (5,325,991)
Payment of financing costs -- (99,398)
--------------- ---------------
Net cash used in financing activities (70,044) (125,389)
--------------- ---------------
Net increase in cash and cash equivalents 283,230 158,523
Cash and cash equivalents, beginning of year 2,481,123 1,662,708
--------------- ---------------
Cash and cash equivalents, end of period $ 2,764,353 $ 1,821,231
=============== ===============
Supplemental disclosure of cash information:
Interest paid during period $ 550,707 $ 548,878
=============== ===============
Supplemental disclosure of non-cash information:
Accrued purchases of property and improvements $ 51,029 $ --
=============== ==============
The Notes to Financial Statements are an integral
part of these statements.
4
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, 1995 which are included in the
Partnership's 1995 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, and reflect
management's estimates and assumptions that affect the reported amounts. 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.
B) RECENT ACCOUNTING PRONOUNCEMENT: In 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" (the "Statement"). The Statement requires a
writedown to fair value when long-lived assets to be held and used are
impaired. Long-lived assets to be disposed of, including real estate held
for sale, must be carried at the lower of cost or fair value less costs to
sell. In addition, the Statement prohibits depreciation of long-lived
assets to be disposed. The Partnership adopted the Statement in the first
quarter of 1996. During the first quarter, no depreciation was recorded for
the Partnership's property held for sale, Stewart's Glen III.
C) 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.
2. NOTES AND MORTGAGES PAYABLE
In March 1996, the mortgage note for Stewart's Glen III was extended from
April 1, 1996 to May 1, 1996 with an option for an additional extension to July
1, 1996 subject to certain conditions including the execution of a purchase and
sale agreement, in order for the Partnership to complete a sale of the property.
On April 30, 1996, the Partnership completed the sale of Stewart's Glen III and
retired the related mortgage note. The Partnership's $3,400,000 promissory note
was paid in full on May 15, 1996.
3. DEFERRED CHARGES
Deferred charges consist of the following:
March 31, December 31,
1996 1995
Surety fee - Waterford Apartments mortgage note $ 963,910 $ 963,910
Costs of obtaining financing 845,127 845,127
--------------- ---------------
1,809,037 1,809,037
Accumulated amortization (529,184) (479,897)
---------------- ----------------
$ 1,279,853 $ 1,329,140
=============== ===============
5
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
NOTED TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. TRANSACTIONS WITH AFFILIATES
The Partnership's promissory note payable is guaranteed by an affiliate of
the General Partner for an annual fee of 2% on the outstanding balance.
Other fees and expenses related to the General Partner or its affiliates
are as follows:
Three Months Ended Unpaid at
MARCH 31, MARCH 31,
--------- ---------
1996 1995 1996
---- ---- ----
Property management fee (a) $ 11,405 $ 10,509 $ 7,630
Reimbursement (at cost) for
out-of-pocket expenses 12,895 12,910 12,114
------------- ------------- -------------
$ 24,300 $ 23,419 $ 19,744
============= ============= =============
(a) Does not include on-site property management fees earned by independent
property management companies of $60,236 and $56,253 for the three months
ended March 31, 1996 and 1995 respectively. On-site 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.
5. SUBSEQUENT EVENT
On April 30, 1996, the Partnership completed the sale of Stewart's Glen III
to AMLI Residential Properties, L.P. for a gross sales price of $7,853,900.
After closing costs and payment of the first mortgage loan obligation, the
Partnership netted approximately $2,890,000. For book purposes, the property had
a carrying value of approximately $5,326,000 and the Partnership expects to
record a gain of approximately $2,426,000. The Partnership utilized the net
proceeds from the sale and the Partnership's cash and cash equivalents to retire
the Partnership's $3,400,000 promissory note on May 15, 1996.
6
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 March 31, 1996, the Partnership had $2,764,000 in cash and cash
equivalents which was available for working capital requirements, payment of
liabilities, and the Partnership's cash reserves. The portfolio generated
positive adjusted cash from operations after debt service, capital improvements
and partnership expenses for the three months ended March 31, 1996 of
approximately $200,000.
During the first quarter, the Partnership executed a letter of intent for
the sale of the Stewart's Glen Apartments. In addition, the Partnership arranged
a short-term extension of the Stewart's Glen mortgage maturity date to complete
the sale. The sale was completed on April 30, 1996 to AMLI Residential, L.P. for
a gross sales price of $7,853,900. After closing costs and payment of the first
mortgage, the Partnership netted approximately $2,890,000. The Partnership
expects to record a gain on the sale for both book and tax purposes.
On May 15, 1996, the Partnership utilized the net proceeds from the
Stewart's Glen sale together with approximately $510,000 from the Partnership's
cash reserves to retire the Partnership's $3,400,000 Mellon Bank promissory
note.
RESULTS OF OPERATIONS
Rental income increased approximately $67,000 for the three months ended
March 31, 1996, as compared with the same period of 1995. Higher average
occupancy and an increase in rental rates at Waterford Apartments, Stonebridge
Manor and Versailles Village led to increases in rental income of approximately
$38,000, $22,000 and $6,000, respectively. Modest rate increases offset a
nominal decrease in average occupancy at Stewart's Glen.
Other income increased for the three months ended March 31, 1996, as
compared with the same period of 1995, due to higher lease break fees at
Stewart's Glen and Stonebridge Manor.
The increase in interest income for the three months ended March 31, 1996,
as compared with the same period of 1995, was the result of a higher average
cash balance offset by a slight decrease in interest rates on short term
investments.
Property operating expenses decreased slightly for the three months ended
March 31, 1996, as compared with the same period of 1995, due to fewer carpet
and vinyl replacements at Stonebridge.
The decrease in general and administrative expense for the three months
ended March 31, 1996, as compared with the same period of 1995, was the result
of a net decrease in the provision for doubtful accounts.
Depreciation and amortization decreased for the three months ended March
31, 1996, as compared with the same period of 1995. Financial Accounting
Standards No. 121, adopted by the Partnership in the first quarter of 1996,
prohibits depreciation of long-lived assets to be disposed. Accordingly,
depreciation was not recorded for Stewart's Glen in the first quarter of 1996 as
the property was held for sale. Partially offsetting the decrease was increased
amortization of financing costs due to the April 1, 1995 Stonebridge Manor first
mortgage refinance.
7
CONNECTICUT GENERAL REALTY INVESTORS III LIMITED PARTNERSHIP
(A CONNECTICUT LIMITED PARTNERSHIP)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
OCCUPANCY
The following is a listing of approximate physical occupancy levels by
quarter for the Partnership's investment properties:
1995 1996
------------------------------------------------- -----------
AT 3/31 AT 6/30 AT 9/30 AT 12/31 AT 3/31
------- ------- ------- -------- -------
1. Versailles Village Apartments
Forest Park, Ohio 97% 99% 96% 94% 97%
2. Waterford Apartments
Tulsa, Oklahoma 90% 96% 98% 92% 94%
3. Stonebridge Manor Apartments
New Orleans, Louisiana 96% 97% 96% 98% 97%
4. Stewart's Glen Apts. Phase III
Willowbrook, Illinois 96% 89% 98% 97% 89%
PART II- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10(z) Agreement of Purchase and Sale for Stewart's Glen I, II and
III dated April 30, 1996 between CIGNA/Willowbrook Associates
Limited Partnership, CIGNA/Willowbrook II Associates Limited
Partnership, Connecticut General Realty Investors III Limited
Partnership and AMLI Residential, L.P.
27 Financial Data Schedules.
(b) No Form 8-Ks were filed during the three months ended March 31, 1996.
8
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: MAY 15, 1996 By: /S/ JOHN D. CAREY
------------- -----------------
John D. Carey, President and Controller
(Principal Executive Officer)
(Principal Accounting Officer)
9