1
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 June 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 0-11502
BOETTCHER WESTERN PROPERTIES III LTD.
(Exact name of registrant as specified in its charter)
COLORADO 84-0911344
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
828 SEVENTEENTH STREET
DENVER, COLORADO 80202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 628-8000
Indicate by checkmark 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 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____
2
INDEX
Page
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets - June 30, 1995
and September 30, 1994 3
Statements of Operations - Three and nine months
ended June 30, 1995 and 1994 4
Statement of Partners' Capital (Deficit) - Nine
months ended June 30, 1995 5
Statements of Cash Flows - Nine months
ended June 30, 1995 and 1994 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
-2-
3
Item 1. Financial Statements
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
June 30, September 30,
Assets 1995 1994
------ ------------------ ------------------
Real Estate investments, at gross cost
Properties held for sale 16,322,205 16,233,194
Less discount on related debt (1,192,518) (1,192,518)
----------- -----------
15,129,687 15,040,676
Less Accumulated depreciation (4,719,422) (4,382,580)
----------- -----------
10,410,245 10,658,096
Cash and cash equivalents at cost, which
approximates market value 657,472 694,828
Accounts receivable and other assets 169,208 229,731
Property tax and other escrow deposits 70,213 88,318
Debt issuance costs, net of accumulated
amortization of $136,775 and $92,900,
respectively 23,747 19,224
Deferred leasing costs, net of accumulated
amortization of $417,248 and $383,878,
respectively 185,094 205,740
----------- ----------
$11,515,979 $11,895,937
=========== ===========
Liabilities and Partners' Deficit
---------------------------------
Mortgage payable, net of unamortized debt
discount of $7,815 and $16,013
respectively 7,193,235 7,339,842
Payable to managing general partner 1,464,465 1,400,769
Accounts payable and accrued expenses 285,068 335,727
Property taxes payable 77,679 141,246
Tenants' deposits 69,915 77,710
Unearned rental income 7,885 22,677
Accrued interest payable 33,339 33,842
------- --------
Total Liabilities 9,131,586 9,351,813
---------- ----------
Partners' capital (deficit):
General partners (126,438) (124,841)
Limited partners 2,510,831 2,668,965
---------- ----------
Total partners' capital 2,384,393 2,544,124
---------- ----------
Commitments and Contingencies $11,515,979 $11,895,937
=========== ===========
See accompanying notes to financial statements.
-3-
4
BOETTCHER WESTERN PROPERITIES III LTD.
(A Limited Partnership)
Statements of Operations
Three and Nine Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------- ----------------------------------------
Revenue: 1995 1994 1995 1994
-------- -------------- ------------- --------------
Rental income $ 533,743 1,046,793 1,599,025 3,483,147
Tenant reimbursements for
common area charges, insurance and taxes 48,702 79,962 187,449 226,619
Other income 21,243 47,984 70,197 143,658
-------- ---------- -------- -----------
603,688 1,174,739 1,856,671 3,853,424
-------- ---------- ---------- ----------
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 201,419 417,559 608,164 1,352,878
Depreciation 111,116 171,146 336,863 632,212
Property taxes 64,765 95,039 192,409 329,094
Fees and reimbursements to managing
general partner 49,881 76,735 138,645 254,131
Other managment fees 22,749 50,243 81,724 159,188
Salaries of on-site property managers 36,503 97,020 109,091 281,169
Repairs and maintenance 59,151 164,855 210,034 448,212
Utilities 29,170 122,645 91,305 443,165
Other administrative 49,119 75,929 184,795 292,115
Environmental Costs 2,205 - 63,372 -
-------- -------- -------- --------
626,078 1,271,171 2,016,402 4,192,164
-------- ---------- ---------- ----------
Operating loss before provision for estimated loss
and gain on sale of real estate investments $ (22,390) (96,432) (159,731) (338,740)
---------- --------- --------- ---------
Provision for estimated loss on operating property - (3,937) - (16,059)
Gain on sale of real estate investments - 1,441,947 - 1,441,947
---------- --------- --------- ---------
Net earnings (loss) $ (22,390) 1,341,578 (159,731) 1,087,148
========== ========= ========= =========
Net earnings (loss) per limited partnership unit,
using the weighted average number of limited
partnership units outstanding of 22,000 $ (1.01) 60.37 (7.18) 48.92
========== ========= ========== =========
See accompanying notes to financial statements.
-4-
5
BOETTCHER WESTERN PROERTIES III LTD.
(A Limited Partnership)
Statement of Partners' Capital (Deficit)
Nine Months ended June 30, 1995
(Unaudited)
Total
General Limited Partners'
Partners Partners Capital
-------------- ------------- -------------
Capital (deficit) at October 1, 1994 $ (124,841) 2,668,965 2,544,124
Net loss for the nine months
ended June 30, 1995 (1,597) (158,134) (159,731)
---------- --------- ---------
Capital (deficit) at June 30, 1995 $ (126,438) 2,510,831 2,384,393
========== ========= =========
See accompanying notes to financial statements.
-5-
6
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Nine Months Ended June 30, 1995 and 1994
(Unaudited)
Nine Months Ended
--------------------------------------------------
Cash flows from operating activities: 1995 1994
-------------- --------------
Net earnings (loss) $ (159,731) $1,087,148
Adjustments to reconcile net earnings (loss) to net
net cash provided by operating activities:
Depreciation and amortization 422,304 858,739
Provision for estimated loss on operating property - 16,059
Gain on sale of properties - (1,441,947)
Change in assets and liabilities:
Decrease in accounts receivable, interest receivable
and other assets 60,523 6,767
Decrease in property tax and other escrow deposits 18,105 31,309
Increase (decrease) in payable to managing general
partner relating to operations 63,696 (587,286)
(Decrease) in property taxes payable (63,567) (184,066)
(Decrease) in tenants' deposits (7,795) (37,763)
(Decrease) accrued interest payable (503) (973)
(Decrease) in unearned rental income (14,792) (36,907)
(Decrease) in accounts payable and other
accrued liabilities (50,659) (197,533)
--------- -----------
Net cash provided by (used by)
operating activities 267,581 (486,453)
--------- -----------
Cash flows provided by (used by) investing activities:
Additions to real estate investments (89,011) (169,307)
(Increase) in deferred leasing costs (12,724) (249,165)
Proceeds from sale of properties net of closing costs
and other costs of sale - 11,658,389
--------- -----------
Net cash provided by (used by)
investing activities (101,735) 11,239,917
--------- -----------
Cash flows used in financing activities:
Payments to managing general partner - (109,705)
Reductions in mortgage principal (154,804) (7,652,714)
Increase in debt issuance cost (48,398) (119,594)
Distributions to limited partners - (2,750,000)
--------- -----------
Net cash used in financing activities (203,202) (10,632,013)
--------- ------------
Net increase (decrease) in cash and cash equivalents (37,356) 121,451
Cash and cash equivalents at September 30 694,828 481,507
-------- --------
Cash and cash equivalents at June 30 $ 657,472 $ 602,958
========= ==========
Supplemental disclosure of cash flow information:
Interest paid in cash during the period $ 608,667 $1,158,958
========= ==========
See accompanying notes to financial statements.
-6-
7
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 1995
(Unaudited)
(1) Financial Statement Adjustments and Footnote Disclosure
The accompanying financial statements are unaudited. However,
Boettcher Properties, Ltd. (BPL), the Managing General Partner of
Boettcher Western Properties III Ltd. (the Partnership), believes all
material adjustments necessary for a fair presentation of the interim
financial statements have been made. Certain information and
footnotes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to Securities and Exchange Commission rules and
regulations. BPL believes the disclosures made are adequate to make
the information not misleading and suggests that the condensed
financial statements be read in conjunction with the financial
statements and notes thereto included in the Boettcher Western
Properties III Ltd. September 30, 1994 Annual Report.
(2) Significant Accounting Principles
Deferred Leasing Costs
Costs associated with the leasing of the Partnership's shopping center
are deferred and amortized over the life of the related leases and are
recorded at cost. These costs are comprised of lease commissions and
construction costs related to the buildout of tenant space.
Income Taxes
No provision has been made for federal income taxes, as the liability
for such taxes is that of the partners rather than the Partnership.
The Partnership reports certain transactions differently for tax and
financial statement purposes, primarily depreciation and debt
discount.
Real Estate Investments
Properties held for sale are recorded at the lower of cost or fair
market value based upon independent appraised values.
Buildings and improvements are depreciated using the straight-line
method over an estimated useful life of 30 years. Equipment and
furnishings are depreciated using the straight-line method over an
estimated useful life of 5 years. Renewals and betterments are
capitalized, and repairs and maintenance are charged to operations as
incurred.
Debt Discount and Debt Issuance Costs
Debt discount is amortized to interest expense using the
level-interest-yield method over the term of the related debt.
Costs incurred in arranging financing, such as loan origination fees,
commitment fees and extension fees, are deferred and amortized using
the level-interest-yield method over the term of the related debt.
-7-
8
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 1995
(Unaudited)
Statement of Cash Flows
For purposes of the Statement of Cash Flows, cash and cash equivalents
include highly liquid debt instruments purchased with a maturity of
three months or less. Cash and cash equivalents are comprised of the
following at June 30:
1995 1994
------------ ----------
Money Market Fund $565,546 526,499
Operating Cash 91,926 76,459
-------- --------
Cash and Cash Equivalents $657,472 $602,958
======== ========
(3) Transactions with Managing General Partner
Deferred Acquisition Fee: Pursuant to the Management Agreement, the
Managing General Partner receives an annual fee for acquisition
services provided to the Partnership for each fiscal year equal to (a)
2% of the average daily Aggregate Capital Investment Account plus (b)
1/2 of 1% of the average daily Capital Cash Account, as those terms
are defined in the Limited Partnership Agreement. Payments may be
made for the lesser of 15 years or until the limit on payments is
reached. For the quarter ended June 30, 1995 the amount earned by the
Managing General Partner was $35,091.
Property Management Fee: In accordance with the provisions of the
Management Agreement, property management fees are payable to the
Managing General Partner, regardless of the profitability of the
Partnership, equal to 5% of the actual gross receipts from the
properties reduced by management fees paid to others. For the quarter
ended June 30, 1995 the amount earned by the Managing General Partner
was $7,075.
Direct Services: the Managing General Partners and its affiliates
provide various services directly related to the operations of the
Partnership and its properties. The Partnership reimburses the
Managing General Partner for its allocable share of salaries of
nonmanagement and nonsupervisory personnel providing accounting,
investor reporting and communications, and legal services to the
Partnership; as well as allowable expenses related to the maintenance
and repair of data processing equipment used for or by the
Partnership. For the quarter ended June 30, 1995, such reimbursements
totalled $7,716.
(4) Liquidity and Debt Maturities
Based upon projected future net cash flow to be generated by the
Partnership's real estate investments, the Managing General Partner
believes that the Partnership's working capital position is sufficient
as of June 30, 1995.
-8-
9
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 1995
(Unaudited)
(4) Continued
For the nine months ended June 30, 1995, the payable to Managing
General Partner increased by $63,696 to a total of $1,464,465 as of
June 30, 1995. This increase is the net result of payments to the
Managing General Partner totalling $103,370, and the accrual of fees
and reimbursements earned by the Managing General Partner through the
first nine months of fiscal 1995 in the amount of $148,100 and cash
advances made to the Partnership from the Managing General Partner in
the amount of $18,966. The Managing General Partner intends to apply
cash flow generated from Partnership operations in fiscal 1995, if
any, to maintain sufficient cash reserves as determined by the
Managing General Partner, including any additional reserves to cover
remediation costs at Venetian Square Shopping Center. Thereafter, the
Partnership intends to pay the Managing General Partner all unpaid
cash advances made to the Partnership, all unpaid administrative
reimbursements and all deferred fees earned by the Managing General
Partner which total $18,966, $15,432 and $1,430,067, respectively, as
of June 30, 1995.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1995. However, there can
be no assurances that the Partnership will sell such properties in
1995. As of June 30, 1995, the Partnership has recorded its remaining
real estate investments as properties held for sale. On July 31, 1995
the Partnership entered into a contract to sell La Risa Apartments to
an unrelated third party. Closing under the contract is subject to
material contingencies including, without limitation, a due diligence
review by the buyer. The Partnership has also entered into a listing
agreement with an unrelated real estate brokerage firm to act as the
exclusive selling agent for Venetian Square Shopping Center, the
remaining property. The Managing General Partner believes that both
of these sales will provide net proceeds to the Partnership after the
payment of sales costs, closing costs and mortgages payable; however,
these sales transactions may include both cash at closing and deferred
payments to the Partnership. The ability of the Partnership to sell
Venetian Square Shopping Center may be adversely affected by the
potential remediation costs of the petroleum contamination on a parcel
of land adjacent to and part of the property. The Partnership
intends to apply net sales proceeds to maintain the Partnership's cash
reserves as determined by the Managing General Partner, including any
additional reserves to cover potential remediation costs. Thereafter,
the Partnership intends to pay amounts owed to the Managing General
Partner and to make distributions to limited partners.
On December 29, 1994, the Partnership obtained from MBL Life Assurance
Corporation ("MBL") an extension of the mortgage payable secured by
the La Risa Apartments to January 1, 1996. This additional extension
of the loan facilitates the Partnership's efforts to sell the property
in 1995, with a portion of the sales proceeds being utilized to pay
all principal and interest owed to MBL at that time. Under the
extension agreement, the annual interest rate (10 5/8%) and monthly
payment ($35,698) remain unchanged.
In December, 1994, the Partnership executed a loan extension agreement
with Great West Life Assurance Company ("Great West") to extend the
maturity date of the first mortgage payable secured by Venetian Square
Shopping Center to October 1, 1995. The Managing General
-9-
10
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements
June 30, 1995
(Unaudited)
(4) continued
Partner believes that the extension will help facilitate the
Partnership's effort to sell Venetian Square Shopping Center in 1995,
whereby a portion of the sales proceeds will be utilized to pay all
principal and interest owed to Great West at that time. The Managing
General Partner is currently working with Great West on an additional
loan extension and anticipates having this completed prior to
October 1, 1995.
(5) Environmental Contingency
From approximately 1979 through 1990, a card-lock fueling station had
been operated on a parcel of land adjacent to and part of Venetian
Square Shopping Center. In fiscal 1992, upon removal of the three
underground fuel storage tanks, leakage of petroleum contaminants was
discovered through performance of soil and groundwater tests. The
Partnership is in the process of determining the method, cost and
timing of required soil and groundwater remediation measures. The
Partnership has spent approximately $275,000 to date in evaluating the
remediation program. In addition, the Partnership accrued $250,000 of
environmental expense in 1994 for remediation purposes. Management
has not received any information that would indicate an additional
accrual for remediation is necessary. However, as additional testwork
is completed, the Partership may incur significant additional
remediation costs. Accordingly, the accompanying financial statements
do not include any adjustments that reflect the results of the
ultimate resolution of this uncertainty.
-10-
11
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the three and nine months ended June 30, 1995, the
Partnership generated total revenue of $603,688 and $1,856,671 and incurred
total expenses of $626,078 and $2,016,402, resulting in net losses of $23,390
and $159,731, respectively. The Partnership's operating losses decreased
$74,042 (77%) and $179,009 (53%) for the three and nine months ended June 30,
1995, when compared with the corresponding periods of fiscal 1994. The
Partnership generated decreased total revenue primarily rental income, and
decreased total expenses, in all categories with the exception of environmental
costs, primarily due to the sale of Los Compadres, La Paz and Maryland Villa
Apartments (the "Arizona Properties"), and the foreclosure of SouthCenter Plaza
in fiscal 1994. A summary of the Partnership's operations and period-to-period
comparisons is presented below:
Three Months Ended Nine Months Ended
June 30, June 30,
(In Thousands) (In Thousands)
--------------------------------------- --------------------------------------------
1995 1994 Change Change 1995 1994 Change Change
---- ---- ------ ------ ------ ----- ------ ------
Total revenue $604 1,175 571 (49)% $1,857 3,853 (1,816) (47)%
Total expenses 626 1,271 (645) (51)% 2,016 4,192 (2,176) (52)%
---- ------ ----- ------- ------ -------
Net loss $(22) (96) 74 $ (159) (339) 180
==== ====== ===== ====== ==== =====
When making period-to-period comparisons, the exclusion of the
operations of the Arizona Properties and SouthCenter Plaza from the prior
fiscal quarter's results allows for a more meaningful analysis of the
operations of the Partnership's remaining investments. For comparison purposes
only, the result of operations of the Arizona Properties and SouthCenter Plaza
have been exlcuded from the three and nine months ended June 30, 1995 in the
table below.
Three Months Ended Nine Months Ended
June 30, June 30,
(In Thousands) (In Thousands)
--------------------------------------- --------------------------------------------
Pro Pro
Forma Forma
1995 1994 Change Change 1995 1994 Change Change
---- ---- ------ ------ ------ ----- ------ ------
Total revenue $604 648 (44) (7)% $1,857 1,883 (26) (1)%
Total expenses 626 689 (63) (9)% 2,016 2,096 (80) (4)%
---- ---- ----- ------- ------ -----
Operating loss $(22) (41) 19 $ (159) (213) 54
==== ==== ===== ======= ====== =====
Based upon the pro forma amounts presented above, total revenue
generated by the Partnership for the three and nine monts ended June 30, 1995,
excluding the Arizona Properties and SouthCenter Plaza, amounted to $603,688
and $1,856,671, respectively, representing a decrease of $44,280 (7%) and
$25,958 (1%) when compared with the three and nine months ended June 30, 1994.
The Partnership's properties generated rental income of $533,743 and $1,599,025
for the three and nine months ended June 30, 1995, which represents a decrease
of $15,747 (3%) and $6,135 (.05%) for the three months and nine months ended
June 30, 1995, when compared with the same pro forma periods in fiscal 1994.
During the third quarter of fiscal 1995, La Risa Apartments achieved a weighted
average occupancy of 94% and a weighted average effective rental rate per
-11-
12
unit per month of $433, representing a decrease of 1% and an increase of $17
respectively, when compared with the third quarter of fiscal 1994. Rental
income at La Risa Apartments increased $9,346 (3%) for the nine months ended
June 30, 1995 when compared to the same period of fiscal 1994. Rental income
at Venetian Square Shopping Center decreased $25,093 (10%) for the nine months
ended June 30, 1995 when compared with the same period of fiscal 1994. Average
occupancy decreased 2% in fiscal 1995 at Venetian Square Shopping Center, and
the average effective rental rate decreased $.74 when compared with the same
period in fiscal 1994. Other income increased $2,345 (16%) and $9,933 (23%)
for the three and nine months ended June 30, 1995 when compared with the same
periods of fiscal 1994, primarily the result of the collection of an aged
receivable from a tenant at Venetian Square Shopping Center which had been
considered uncollectible in prior years.
Third Quarter
Apartments Fiscal 1995 Fiscal 1994
- ---------- ----------- -----------
La Risa (254 units) 94% 95%
Average Effective Rental
Rate per Unit per Month $433 $416
Commercial
- ----------
Venetian Square Shopping Center 91% 93%
(117,115 net rentable square feet)
Retail - Average Effective
Rental Rate(1) $8.38 $9.12
(1) The rates are "triple net". In addition to this base rent, the
majority of tenants pay their pro rata share of taxes, insurance and
common area maintenance expenses at the project.
Based upon the pro forma amounts, total expenses, excluding the Arizona
Properties and SouthCenter Plaza, incurred by the Partnership for the three and
nine months ended June 30, 1995 amounted to $626,078 and $2,016,402,
respectively. Total Partnership expenses decreased $62,828 (9%) and $79,927
(4%) for the three and nine months ended June 30, 1995, when compared with the
same periods in fiscal 1994. Fees and reimbursements to the Managing General
Partner decreased $26,853 (35%) and $115,486 (45%) for the three and nine
months ended June 30, 1995 when compared with the corresponding periods in
fiscal 1994. This decrease is primarily due to the elimination of the accrual
of deferred acquistion frees related to the Arizona Properties since the time
of sale in June, 1994. Repair and maintenance expense decreased $21,884 (27%)
and $1,599 (1%) in the three and nine months ended June 30, 1995, when compared
with fiscal 1994. This decrease is primarily the result of roof repairs,
parking lot repairs and security expense at Venetian Square Shopping Center
incurred in fiscal 1994. Utilities expense decreased $1,281 (5%) and $8,635
(9%) for the three and nine months ended June 30, 1995, when compared with the
same periods of fiscal 1994. This decrease is primarily the result of lower
utility consumption at La Risa Apartments due to milder weather in fiscal 1995.
Other administrative expenses increased $10,713 (6%) for the nine months ended
June 30, 1995, when compared with fiscal 1994. The increase is the result of
increased advertising at La Risa Apartments, increased legal and accounting
fees at Venetian Square Shopping Center, and increased audit fees and legal
fees for the Partnership. Environmental expense of $63,372 for the nine months
ended June 30, 1995 represents costs associated with the continued evaluation
of the soil and groundwater remediation program at Venetian Square Shopping
Center. For additional information refer to Note 5 to the Financial Statements
as contained in Item 1 of this report.
-12-
13
Liquidity and Capital Resources
Combined cash and cash equivalent balances, which represent
Partnership reserves, were $657,472 at June 30, 1995, representing a decrease
of $37,356 when compared with fiscal 1994 year-end balances. Net cash provided
by operating activities in fiscal 1995 amounted to $267,581. The most
significant change in assets and liabilities in fiscal 1995 relates to a
decrease in property taxes payable of $63,567. This decrease is a result of
both the payment of property tax liabilities in the first quarter of fiscal
1995 and the elimination of property tax liabilities related to the Arizona
Properties in fiscal 1995. Other significant changes in assets and
liabilities include an increase in payable to the Managing General Partner of
$63,696. This increase is the net result of payments to the Managing General
Partner totalling $103,370 and the accrual of fees and reimbursements earned
and cash advances made by the Managing General Partner of $148,100 and $18,966,
respectively.
Net cash used by investing activities for the nine months ended June
30, 1995 amounted to $101,735, and is comprised of additions to real estate
investements in the amount of $89,011 and deferred leasing costs of $12,724.
Capital improvements competed at La Risa Apartments in fiscal 1995 included
unit carpet, unit upgrades and appliance replacement as required. The
Partnership's fiscal 1995 deferred leasing costs include costs associated with
repair of tenant space at Venetian Square Shopping Center.
Net cash used by financing activities for the nine months ended June
30, 1995 amounted to $203,202, and is comprised of reductions in mortgage
principal of $154,804 and an increase in debt issuance costs of $48,398. The
increase in debt issuance costs is the result of fees paid by the Partnership
in order to extend the mortgages payable secured by La Risa Apartments and
Venetian Square Shopping Center. Additional cash was provided by direct
advances from the Managing General Partner in the amount of $15,432.
The Partnership is required under its Partnership Agreement to
maintain cash reserves of 3% of aggregate capital contributions ($660,00). As
of June 30, 1995, the Partnership had $657,472 in cash reserves. The
Partnership intends to apply any cash flow generated from Partnership
operations in fiscal 1995 to maintain sufficient cash reserves as determined by
the Managing General Partner, including any additional reserves deemed
necessary by the Managing Partner to cover potential remediation costs of the
petroleum contamination at Venetian Square Shopping Center as discussed below.
Thereafter, the Partnership inteds to pay the Managing General Partner all
unpaid cash advances made to the Partnership, all unpaid administrative
reimbursements and all deferred fees earned by the Managing General Partner,
which totalled $18,966, $15,432 and $1,430,067 as of June 30, 1995.
To the knowledge of the Managing General Partner, all Properties are
in good physical condition. In fiscal 1995, budgeted capital improvements,
tenant finish and lease commissions total approximately $45,000, $20,000 and
$20,000, respectively. Capital improvements primarily include carpet, unit
upgrades and appliance replacement, as required at La Risa Apartments. Tenant
finish costs and lease commissions are bugeted in anticipation of leasing
vacant space at Venetian Square Shopping Center.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investments in fiscal 1995. However, there can be no
assurances that the Partnership will sell such properties in 1995. As of June
30, 1995, the Partnership has recorded its remaining real estate investments as
properties held for sale. On July 31, 1995 the Partnership entered into a
contract to sell La Risa Apartments to an unrelated third party. Closing under
the contract is subject to material contingencies including, without limitation,
a due diligence review by the buyer. The Partnership has also entered into a
listing agreement with an unrelated real estate brokerage firm to act as the
exclusive selling agent for Venetian Square Shopping Center, the remaining
property. The Managing General Partner believes that both of these sales will
provide net proceeds to the Partnership after the payment of sales costs,
closing costs and mortgage payable; however, these sales transactions may
include both cash at closing and deferred paymets to the Partnership. The
ability of the Partnership to sell Venetian Square Shopping Center may be
adversely affected by the potential remediation costs of the petroleum
contamination on a parcel of land which is part of the
-13-
14
property. The Partnership intends to apply net sales proceeds to maintain the
Partnership's cash reserves, as determind by the Managing General Partner,
including any additional reserves to cover potential remediation costs.
Thereafter, the Partnership intends to pay amounts owed to the Managing General
Partner and make distributions to limited partners.
On December 29, 1994, the Partnership obtained from MBL Life Assurance
Corporation ("MBL") an extension of the mortgage payable secured by the La Risa
Apartments to January 1, 1996. This additional extension of the loan
facilitates the Partnership's efforts to sell the property in 1995, with a
portion of the sales proceeds being utilized to pay all principal and interest
owed to MBL at that time. Under the extension agreement, the annual interest
rate (10 5/8%) and monthly payment ($35,698) remain unchanged.
In December, 1994, the Partnership executed a loan extension agreement
with Great West Life Assurance Company ("Great West") to extend the maturity
date of the first mortgage payable secured by Venetian Square Shopping Center
to October 1, 1995. The Managing General Partner believes that the extension
will help facilitate the Partnership's effort to sell Venetian Square Shopping
Center in 1995, whereby a portion of the sales proceeds will be utilized to pay
all principal and interest owed to Great West at that time. The Managing
General Partner is currently working with Great West on an additional loan
extension and anticipates having this completed prior to October 1, 1995.
From approximately 1979 through 1990, a card-lock fueling station had
been operated on a parcel of land adjacent to and part of Venetian Square
Shopping Center. In fiscal 1992, upon removal of the three underground fuel
storage tanks, leakage of petroleum contaminants was discovered through
performance of soil and groundwater tests. The Partnership is in the process
of determining the method, cost and timing of required soil and groundwater
remediation measures. The Partnership has spent approximately $275,000 to date
in evaluating the remediation program. In addition, the Partnership accrued
$250,000 of environmental expense in 1994 for remediation purposes. Management
has not received any information that would indicate an additional accrual for
remediation is necessary. However, as additional testwork is completed, the
Partership may incur significant additional remediation cots. Accordingly, the
accompanying financial statements do not include any adjustments that reflect
the results of the ultimate resolution of this uncertainty.
-14-
15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8-K were required or filed by
Registrant during the period for which this report is filed.
-15-
16
SIGNATURE
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.
BOETTCHER WESTERN PROPERTIES III LTD.
(Registrant)
By: Boettcher Properties, Ltd., as
Managing General Partner
By: BPL Holdings, Inc., as
Managing General Partner
Dated: August 21, 1995 By: /s/Thomas M. Mansheim
Thomas M. Mansheim
Treasurer, Principal Financial
and Accounting Officer of the
Partnership
-16-