FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-10273
CONSOLIDATED CAPITAL PROPERTIES III
(Exact name of small business issuer as specified in its charter)
California 94-2653686
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
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) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except for unit data)
September 30, 1995
Assets
Cash and cash equivalents $ 4,720
Securities available for sale 9
Prepaid and other assets 586
Investment properties:
Land $ 1,828
Buildings and related personal property 16,552
18,380
Less accumulated depreciation (12,502) 5,878
$11,193
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 760
Notes and interest payable 6,742
Partners' Capital (Deficit)
General partner $ (1,918)
Limited partners (158,636 units
and outstanding) 5,609 3,691
$11,193
[CAPTION]
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Rental income $1,085 $1,097 $3,167 $ 4,873
Interest and dividend income 64 80 241 240
Total revenues 1,149 1,177 3,408 5,113
Expenses:
Property operations 716 966 2,019 3,387
Depreciation and amortization 281 290 834 1,332
Interest 197 257 622 1,395
Administrative 156 101 527 343
Total expenses 1,350 1,614 4,002 6,457
Loss from operations (201) (437) (594) (1,344)
Gain on sale of real estate (Note G) -- 1,395 -- 6,624
Gain on disposition of real estate
(Note H) -- 6,964
Loss on repayment of notes payable
(Note I) (99) (222) (99) (222)
Other income (Note C) -- -- -- 73
(Loss) income before extraordinary
item (300) 736 (693) 12,095
Extraordinary item (Note H) -- -- -- 1,769
Net (loss) income $ (300) $ 736 $ (693) $13,864
Net (loss) income allocated to
general partners (4%) $ (12) $ 29 $ (28) $ 555
Net (loss) income allocated to
limited partners (96%) (288) 707 (665) 13,309
Net (loss) income $ (300) $ 736 $ (693) $13,864
Net (loss) income per weighted
average limited partnership unit:
(Loss) income before extraordinary
item $(1.82) $4.45 $(4.19) $ 73.14
Extraordinary item -- -- -- 10.70
Net (loss) income $(1.82) $ 4.45 $(4.19) $ 83.84
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 158,945 $ 1 $79,473 $79,474
Partners' capital (deficit) at
December 31, 1994 158,636 $(1,890) $ 7,702 $ 5,812
Net loss for the nine months
ended September 30, 1995 -- (28) (665) (693)
Distributions paid -- -- (1,428) (1,428)
Partners' capital (deficit)
at September 30, 1995 158,636 $(1,918) $ 5,609 $ 3,691
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
Nine Months Ended
September 30,
1995 1994
Cash flows from operating activities:
Net (loss) income $ (693) $13,864
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Gain on sale of real estate -- (6,624)
Gain on disposition of real estate -- (6,964)
Loss on repayment of notes payable 99 222
Extraordinary item -- (1,769)
Depreciation and amortization of discounts,
loan costs and lease commissions 874 1,406
Change in accounts:
Prepaids and other assets (62) 326
Accounts payable and accrued expenses 324 15
Note interest payable 52 (138)
Net cash provided by operating activities 594 338
Cash flows from investing activities:
Property improvements and replacements (176) (177)
Purchase of securities available for sale (15,273) (3,266)
Proceeds from sale of securities available
for sale 18,292 1,969
Collection of note receivable 2,316 --
Proceeds from sale of real estate -- 4,310
Net cash provided by investing activities 5,159 2,836
Cash flows from financing activities:
Payments on notes payable (167) (259)
Repayment of notes payable (1,592) (2,577)
Partners' distributions (1,428) --
Net cash used in financing activities (3,187) (2,836)
Net increase in cash and cash equivalents 2,566 338
Cash and cash equivalents at beginning of period 2,154 1,663
Cash and cash equivalents at end of period $ 4,720 $ 2,001
Supplemental disclosure of cash flow information:
Cash paid for interest $ 530 $ 1,460
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL PROPERTIES III
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 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. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the annual report on Form 10-K for the fiscal year ended December 31, 1994, for
Consolidated Capital Properties III (the "Partnership").
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Consolidation
The Partnership's financial statements include the accounts of Sturbridge
Partners, Ltd., ConCap Mountain Plaza Associates, Ltd., CCP III Associates, Ltd.
and ConCap Village Green Associates, Ltd., four wholly-owned limited
partnerships. All intercompany transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents for purposes of reporting cash flows include cash
on hand, demand deposits and money market funds, and U.S. Treasury Bills with
original maturities of three months or less.
Net Loss Per Weighted Average Limited Partnership Unit
Net loss per weighted average Limited Partnership Unit is computed by
dividing net loss allocated to the Limited Partners by the number of Units
outstanding. Per Unit information has been computed based on weighted average
Units outstanding of 158,636 and 158,755 for the nine months ended September 30,
1995 and 1994, respectively.
Note B - Related Party Transactions
The Partnership has paid the property management fees noted below based upon
collected gross rental revenues ("Rental Revenues") for property management
services in each of the nine months ended September 30, 1995 and 1994,
respectively. For the nine months ended September 30, 1994, a portion of such
property management fees equal to 4% of Rental Revenues were paid to the
property management companies performing day-to-day property management services
and a portion equal to 1% of Rental Revenues was paid to Partnership Services,
Inc. ("PSI") or its predecessor for advisory services related to day-to-day
property operations. In July 1993, Coventry Properties, Inc. ("Coventry"), an
affiliate of the General Partner, assumed day-to-day property management
responsibilities for two of the Partnership's properties under the same
management fee arrangement as the unaffiliated management companies. Coventry
assumed day-to-day property management responsibilities for four additional
Partnership properties in January 1994. In late December 1994, an affiliate of
Insignia Financial Group, Inc. ("Insignia") assumed day-to-day property
management responsibilities for all of the Partnership's properties. Fees paid
to Insignia and affiliates for the nine months ended September 30, 1995, and
fees paid to PSI and Coventry for the nine months ended September 30, 1994,
have been reflected in the following table as compensation to related parties
in the applicable periods:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Property management fees $166 $136
The Partnership Agreement also provides for reimbursement to the General
Partner and its affiliates for costs incurred in connection with the
administration of Partnership activities. The General Partner and its
affiliates, which includes Coventry for the nine months ended September 30,
1994, received reimbursements as reflected in the following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $234 $175
In July 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner who
receives payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations is not significant.
Note C - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark Corporation's activities while it exercised
control (directly or indirectly through its affiliates) over the Partnership.
The Bankruptcy Court set the Partnership's and the other affiliated
partnerships' allowed claim at $11 million, in the aggregate. In March 1994,
the Partnership received 1,168 shares of Southmark Corporation Redeemable Series
A Preferred Stock and 8,545 shares of Southmark Corporation New Common Stock
with an aggregate market value on the date of receipt of approximately $9,000
and $64,000 in cash representing the Partnership's share of the recovery, based
on its pro rata share of the claims filed.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital for contingencies of not less than 5% of Net Invested Capital as defined
in the Partnership Agreement. In the event expenditures are made from these
reserves, operating revenue shall be allocated to such reserves to the extent
necessary to maintain the foregoing level. Reserves, including cash and cash
equivalents and securities available for sale totalling approximately $4.7
million at September 30, 1995, exceeded the Partnership's reserve requirement of
approximately $3.7 million.
Note E - Distributions
In January of 1995, the General Partner declared and paid distributions of
Surplus Funds, as defined in the partnership agreement, totalling approximately
$1.4 million or $9.00 per Unit to the Limited Partners.
Note F - Collection of Note Receivable
In October of 1988, the Partnership accepted a $2.1 million note receivable
in connection with the sale of the Columns of Castleton Apartments. In March of
1995, the Partnership received the outstanding principal balance of
approximately $2.3 million, which represented the original principal balance,
plus unpaid interest, in payment of the borrower's liability under the note
agreement.
Note G - Sale of Real Estate
In August 1994, the Partnership sold the Mission Village Apartments for net
sales proceeds of approximately $1.6 million, after closing costs and repayment
of approximately $485,000 of related mortgage debt. The Partnership realized a
gain of approximately $1.4 million on the sale during the third quarter of 1994.
Note G - Sale of Real Estate - continued
In June 1994, the Cascadian Apartments was sold for net sales proceeds of
approximately $2.7 million after repayment of $4.3 million of related mortgage
debt. The Partnership recognized a gain of approximately $5.2 million on the
sale.
The two sales transactions are summarized as follows (amounts in thousands):
Sales Value:
Cash proceeds received $ 4,310
Debt discharged (a) 4,647
Total sales value 8,957
Net real estate (b) (2,239)
Net other liabilities (94)
Gain on sale of real estate $ 6,624
(a) Amount is net of unamortized mortgage discount.
(b) Real estate at cost, net of accumulated depreciation of
approximately $6.1 million.
Note H - Disposition of Real Estate
In November 1989, the Partnership ceased making debt service payments on the
U.S. Department of Housing and Urban Development ("HUD") financed loan secured
by the Sturbridge Square Apartments because cash flow from property operations
did not support these scheduled payments, and in the General Partner's opinion,
the property was leveraged in excess of its economic value. The General Partner
informed HUD that it would cooperate with HUD's planned sale of the property,
and in June 1994, the property was foreclosed upon by HUD. The Partnership
recognized a gain of approximately $7 million on the disposition of the real
estate and an extraordinary gain of approximately $1.8 million on extinguishment
of the related debt.
Note H - Disposition of Real Estate - continued
The following noncash investing and financing amounts (in thousands) were
recorded in the consolidated financial statements at September 30, 1994:
Net real estate (a) $(1,862)
Net other assets 1
(1,861)
Debt discharged (b) 10,594
Net gain on foreclosure $ 8,733
Gain on disposition of real estate (c) 6,964
Extraordinary gain on extinguishment
of debt (d) 1,769
Net gain on foreclosure $ 8,733
(a) Amount is net of accumulated depreciation of approximately $6.6
million.
(b) Amount includes accrued interest.
(c) The gain on disposition of real estate represents the difference
between the carrying value of the real estate and the estimated fair
value of the property at disposition. The gain is included in "Gain
on disposition of real estate" in the accompanying consolidated
financial statements.
(d) The gain on extinguishment of debt represents the difference between
the estimated fair value of the property at foreclosure and the
amount of debt, including accrued interest, extinguished. The gain
is reflected as an extraordinary item in the accompanying
consolidated financial statements.
Note I - Repayment of Notes Payable
At December 31, 1994, the Partnership was obligated under two mortgage notes
payable aggregating $963,000, net of a $119,000 mortgage discount, secured by
the Professional Plaza Office Building. The $734,000 first lien note, with an
original maturity of April 1996, and the $301,000 second lien note, with an
original maturity of November 2000, were paid off in August 1995, in an effort
to retire debt with interest rates higher than the current market rate. The
Partnership realized a loss of $99,000 on the transactions, related to non-cash
expenses to amortize the remaining mortgage discounts associated with the
retired notes.
Note I - Repayment of Notes Payable - continued
At December 31, 1994, the Partnership was obligated under a mortgage note
payable in the amount of $615,000 secured by the Village Green Apartments. The
$557,000 first lien note, with an original maturity of May 1997, was paid off in
August 1995, in an effort to retire debt with interest rates higher than the
current market rate. No gain or loss was realized on this transaction.
At December 31, 1993, the Partnership was obligated under a $1.3 million
wraparound mortgage note secured by the Mission Village Apartments. The
$758,000 underlying first lien, originally maturing in July 1993, was extended
for 12 months in exchange for a principal payment of $100,000, and was repaid in
conjunction with the sale of the property noted in Note G. The Partnership
realized a loss of $222,000 on the note pay-off resulting from a non-cash
expense to amortize the remaining mortgage discount associated with that portion
of the retired debt.
At December 31, 1993, the Partnership was obligated under two mortgage notes
payable aggregating $2.5 million secured by The Village Green Apartments. One
of the notes, a $1.8 million second lien, was paid at par value at its maturity
in August 1994. No gain or loss was realized on the transaction.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of four apartment complexes
and one commercial property. The following table sets forth the average
occupancy of the properties for the nine months ended September 30, 1995 and
1994:
Average
Occupancy
1995 1994
Mountain Plaza Apartments
El Paso, TX 77% 88%
Professional Plaza Office Building
Salt Lake City, UT 96% 95%
Ventura Landing Apartments
Orlando, FL 91% 87%
Village Green Apartments
Altamonte Springs, FL 92% 93%
West Chase Apartments
Lexington, Ky 90% 89%
The decrease in occupancy at Mountain Plaza Apartments is due to increased
competition in the El Paso Market. The increase in occupancy at Ventura Landing
Apartments is due to the improved image of the property resulting from upgrading
the tenant population.
The Partnership realized a net loss from operations of $594,000 for the nine
months ended September 30, 1995, compared to a net loss from operations of
$1,344,000 for the nine months ended September 30, 1994. For the three months
ended September 30, 1995, the Partnership realized a net loss from operations of
$201,000 compared to a net loss from operations of $437,000 for the three months
ended September 30, 1994. The decreased net loss is due primarily to the sale
of the Cascadian and Mission Village Apartment properties and the foreclosure of
the Sturbridge Square Apartment property in the second quarter of 1994.
Rental income decreased for the nine months ended September 30, 1995,
compared to the nine months ended September 30, 1994, due primarily to the
property sales and foreclosure mentioned above. Lost revenues from foreclosed
and sold properties represented 99% of the total decrease in rental income for
the nine months ended September 30, 1995.
Property operations, depreciation and amortization and interest expense
decreased for the nine months ended September 30, 1995, compared to the nine
months ended September 30, 1994, due primarily to the disposition of Cascadian,
Mission Village and Sturbridge Square Apartments in the second quarter of 1994.
The decrease in interest expense was also impacted by the retirement of notes
payable secured by the Professional Plaza Office Building and the Village Green
Apartments in August 1995 (See Note I to the Consolidated Financial Statements
in Item 1). Administrative expenses increased for the nine months ended
September 30, 1995, compared to the nine months ended September 30, 1994, due to
increased legal, printing and postage costs associated with the Partnership's
required responses to various tender offers (See Part II Item 1. "Legal
Proceedings"). The increase in administrative expenses was also affected by
increased expense reimbursements related to the combined efforts of the Dallas
and Greenville partnership administration staffs during the transition period in
the first and second quarters of 1995. The reimbursements for the Dallas office
amounted to approximately $142,000 during the nine months ended September 30,
1995.
The increased costs related to the transition efforts were incurred to
minimize any disruption in the year-end reporting function including the
financial reporting and K-1 preparation and distribution. The General Partner
expects recurring administrative expenses to be reduced now that the management
transition is completed.
At December 31, 1994, the Partnership was obligated under two mortgage notes
payable aggregating $963,000, net of a $119,000 mortgage discount, secured by
the Professional Plaza Office Building. The $734,000 first lien note, with an
original maturity of April 1996, and the $301,000 second lien note, with an
original maturity of November 2000, were paid off in August 1995, in an effort
to retire debt with interest rates higher than the current market rate. The
Partnership realized a loss of $99,000 on the transactions, related to non-cash
expenses to amortize the remaining mortgage discounts associated with the
retired notes.
At December 31, 1994, the Partnership was obligated under a mortgage note
payable in the amount of $615,000 secured by the Village Green Apartments. The
$557,000 first lien note, with an original maturity of May 1997, was paid off in
August 1995, in an effort to retire debt with interest rates higher than the
current market rate. No gain or loss was realized on this transaction.
In June of 1994, the Cascadian Apartments was sold for net sales proceeds
of approximately $2,722,000 after repayment of $4,282,000 of related mortgage
debt, which resulted in a gain of $5,229,000 for the nine months ended September
30, 1994 (See Note G to the Consolidated Financial Statements in Item 1). Also
in June of 1994, HUD foreclosed upon the Sturbridge Square Apartments which
resulted in a gain of $6,964,000 on the disposition of the real estate and an
extraordinary gain of $1,769,000 on the extinguishment of the related debt (See
Note H to the Consolidated Financial Statements in Item 1).
At December 31, 1993, the Partnership was obligated under a $1.3 million
wraparound mortgage note secured by the Mission Village Apartments. The
$758,000 underlying first lien was repaid in July 1994. In August 1994, the
Partnership sold the Mission Village apartments for net sales proceeds of
approximately $1.6 million, after closing costs and repayment of approximately
$485,000 of related mortgage debt. The Partnership recognized a gain of
approximately $1.4 million on the sale during the third quarter of 1994 (See
Note G to the Consolidated Financial Statements in Item 1).
Other income realized in the nine months ended September 30, 1994, is due to
the receipt of the Partnership's pro rata share of the claims filed in
Southmark's Chapter 11 bankruptcy proceeding (See Note C to the Consolidated
Financial Statements in Item 1).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership 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
General Partner will be able to sustain such a plan.
As of September 30, 1995, the Partnership held cash and cash equivalents of
$4,720,000 compared to $2,001,000 at September 30, 1994. Net cash provided by
operating activities increased primarily due to the absence of negative cash
flows from the properties disposed of in 1994, as mentioned above. Net cash
provided by investing activities increased due to increased sales proceeds from
securities and the collection of the Columns of Castleton note receivable in
March of 1995 (See Note F to the Consolidated Financial Statements in Item 1).
The current year increase in cash provided by investing activities was partially
offset by the receipt of non-recurring proceeds from the sale of Cascadian
Apartments and Mission Village Apartments in 1994 (See Note G to the
Consolidated Financial Statements in Item 1). Net cash used in financing
activities increased due to the Partners' distribution in January of 1995 (See
Note E to the Consolidated Financial Statements in Item 1).
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 property to adequately maintain the physical assets
and meet other operating needs of the partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $6.7 million matures at various times
with balloon payments due at maturity, at which time the properties will either
be refinanced or sold. Future cash distributions will depend on the levels of
net cash generated from operations, capital expenditure requirements, property
sales and the availability of cash reserves. During the first nine months of
1995, distributions in the amount of $1,428,000 were declared and paid. No cash
distributions were made in 1994.
On January 20, 1995, an affiliate of the General Partner, Insignia CCP III
Acquisition, L.L.C., closed an offer to purchase Units (the "Tender Offer") for
a cash price of $50.00 per Unit from Limited Partners of record as of December
15, 1994. Approximately 2,260 Limited Partners holding 36,882 Units (23.24% of
total Units) accepted the Tender Offer and sold their Units to Insignia CCP III
Acquisition, L.L.C. effective January 20, 1995, for an aggregate sales price of
approximately $1.8 million.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
In November 1994, Robert Lewis filed an alleged class action in the United
States District Court for the Northern District of California seeking
declaratory and injunctive relief but not monetary damages in connection with a
tender offer by LP 4 Acceptance Corporation for limited partnership units of the
Partnership. The complaint named ConCap Equities, Inc., the general partner of
the Partnership, LP 4 Acceptance Corporation and one other party as defendants.
The tender offer was terminated in December 1994. In January 1995, the
Plaintiff amended the complaint to add Insignia, MAE, and MAE-ICC, Inc. as
additional defendants in connection with a new tender offer commenced by
Insignia CCP III Acquisition L.L.C. but the added defendants were not properly
served. The tender offer closed on January 20, 1995, and the offeror purchased
the tendered units. Plaintiff Lewis filed a Stipulation for Dismissal of Case
Without Prejudice in June of 1995 which requested the Court to dismiss the above
action without prejudice and without costs to any party. The Court approved the
stipulation on July 21, 1995.
In November of 1994, C.E. and Berniece Patterson, each of whom is a limited
partner of the Partnership, filed an action in the United States District Court
for the Northern District of California seeking declaratory and injunctive
relief, but not monetary damages, alleging, among other things, that a tender
offer by LP 4 Acceptance Corporation for limited partnership units of the
Partnership violated the federal securities laws and the partnership agreements
and breached the general partner's fiduciary duties. The complaint named ConCap
Equities, Inc., the general partner of the Partnership and others as
defendants. These actions were filed by the Pattersons as individuals and were
not class actions. The tender offer was terminated in December 1994. In
December 1994, the complaint in this action was amended to include Insignia,
MAE and MAE-ICC, Inc. and others as defendants in connection with a tender
offer commenced in December 1994 by Insignia CCP III Acquisition, L.L.C. for
limited partnership units of the Partnership. On January 20, 1995, the
District Court denied Plaintiffs' motion for a preliminary injunction to enjoin
the tender offer. The tender offer closed on January 20, 1995, and the offeror
purchased the tendered units. C.E. and Berniece Patterson had also initiated
other causes of action against two affiliated entities, which held limited
partnership units in Consolidated Capital Properties IV and Consolidated
Capital Properties VI regarding other tender offers. On March 31, 1995, the
parties to the above referenced actions entered into a settlement agreement and
a standstill agreement for all actions pursuant to which (i) Plaintiffs filed a
notice of dismissal with respect to the first amended complaints in the
actions; (ii) Plaintiffs and defendants released each other from all claims
which were or could have been asserted in connection with the first amended
complaints in the actions; (iii) Plaintiffs and MacKenzie Patterson, Inc.
("MacKenzie) will refrain from certain activities relating to the acquisition
of limited partnership units in any partnership of which Insignia or any of its
affiliates is a general partner; (iv) Plaintiffs and their affiliates granted
to a subsidiary of Insignia a right of first refusal in connection with the
sale of limited partnership interests in the Partnership by plaintiffs; and
(v) Plaintiffs and their affiliates will assign to a subsidiary of Insignia
irrevocable proxies to vote any limited partnership interests in Consolidated
Capital Properties VI acquired by MacKenzie as a result of the tender offer by
MacKenzie and affiliates to acquire limited partnership interests in
Consolidated Capital Properties VI or thereafter.
The Partnership is not a party to, nor are any of the Partnership's
properties the subject of, any material pending legal proceedings, other than
ordinary litigation routine to the Partnership's business (the "Proposals").
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 25, 1995, the General Partner proxied the Limited Partners to
modify the Partnership Agreement.
The General Partner formulated the Proposals as a means of increasing
operational flexibility and improving Partnership operations. The Proposals
seek to achieve these goals by amending the Partnership Agreement to modify
certain existing capital reserve and property disposition limitations. Proposal
1 would provide the General Partner with additional flexibility in establishing
the timing and amount of distributions by eliminating the requirements that the
Partnership maintain reserves equal to at least 5% of Invested Capital (which as
of September 30, 1995, required reserves of approximately $3,700,000) and
distribute any net economic gains realized upon the sale of any Partnership
assets within 90 days of the close of the fiscal year in which such gains are
realized. Proposal 2 would provide the General Partner with the authority to
take advantage of certain property disposition opportunities by authorizing the
General Partner to sell multiple properties that represent less than 50% of the
net book value of all of the Partnership's properties as of the end of the most
recently completed calendar quarter to the same purchaser or its affiliates in
any six-month period or any single Partnership property, without obtaining
Limited Partner approval. Importantly, Proposal 2 does not seek to modify the
Partnership Agreement provision prohibiting Partnership property sales to the
General Partner or its affiliates.
This matter was open until October 25, 1995. In regards to Proposal 1, the
unitholders voted 51% in favor of the matter, 9% opposed or abstained and 40%
did not respond. In regards to Proposal 2, the unitholders voted 51% in favor
of the matter, 9% opposed or abstained and 40% did not respond. Accordingly,
the proposals were adopted with a majority of the outstanding units approving
the proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K
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.
CONSOLIDATED CAPITAL PROPERTIES III
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 13, 1995