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
December 31, 1997 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.)
77 West Wacker Drive
Chicago, Illinois 60601
- --------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 574-6000
-----------------------------
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
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INDEX
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Page
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PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets -
December 31, 1997 and September 30, 1997 3
Statements of Operations -
Three months ended December 31, 1997 and 1996 4
Statement of Partners' Capital -
Three months ended December 31, 1997 5
Statements of Cash Flows -
Three months ended December 31, 1997 and 1996 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART III. Other Information
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 18
2
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
December 31, September 30,
1997 1997
------------ -------------
Assets
------
Real estate held for sale, at cost $5,769,761 $5,769,761
Cash and cash equivalents at cost, which
approximates market value 806,812 855,739
Accounts receivable and other assets 171,669 172,824
Debt issuance costs, net of accumulated
amortization of $49,583 and $47,083,
respectively - 2,500
---------- ----------
$6,748,242 $6,800,824
========== ==========
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $836 and $1,673,
respectively $3,132,231 $3,169,358
Payable to managing general partner 150,507 195,003
Accounts payable and accrued expenses 300,756 282,163
Property taxes payable - 21,238
Tenants' deposits 36,638 36,638
Unearned rental income 4,658 5,670
---------- ----------
Total liabilities 3,624,790 3,710,070
---------- ----------
Partners' capital (deficit)
General partners (109,049) (109,376)
Limited partners 3,232,501 3,200,130
---------- ----------
Total partners' capital 3,123,452 3,090,754
---------- ----------
$6,748,242 $6,800,824
========== ==========
See accompanying notes to financial statements.
3
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Operations
Three Months Ended December 31, 1997 and 1996
(Unaudited)
Three Months Ended
------------------
1997 1996
-------- --------
Revenue:
Rental income $183,425 $206,920
Tenant reimbursements for
common area charges,
insurance and taxes 67,709 75,329
Other income 11,961 29,955
-------- --------
263,095 312,204
-------- --------
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 86,075 96,728
Property taxes 19,111 21,844
Fees and reimbursements to
managing general partner 23,970 25,744
Other management fees 12,678 12,391
Repairs and maintenance 25,556 38,227
Utilities 8,067 10,409
Other administrative 46,756 40,480
Environmental costs 8,184 3,874
-------- --------
230,397 240,661
-------- --------
Net income $ 32,698 $ 71,543
======== ========
Net income per limited partnership unit,
using the weighted average number of
limited partnership units outstanding
of 22,000 $ 1.49 $ 3.22
======== ========
See accompanying notes to financial statements.
4
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statement of Partners' Capital
Three Months ended December 31, 1997
(Unaudited)
General Limited Partners'
Partners Partners Capital
---------- --------- ---------
Capital (deficit) at October 1, 1997 $(109,376) 3,200,130 3,090,754
Net income for the three months
ended December 31, 1997 327 32,371 32,698
--------- --------- ---------
Capital (deficit) at December 31, 1997 $(109,049) 3,232,501 3,123,452
========= ========= =========
See accompanying notes to financial statements.
5
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Three Months Ended December 31, 1997 and 1996
(Unaudited)
Three Months Ended
December 31,
----------------------
1997 1996
--------- ----------
Cash flows from operating activities:
Net income $ 32,698 $ 71,543
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 2,500 4,078
Change in assets and liabilities:
(Increase) decrease in accounts receivable
and other assets 1,155 (5,495)
Increase (decrease) in payable to Managing General Partner (44,496) 51,712
Decrease in property taxes payable (21,238) (21,238)
Decrease in accrued interest payable - (490)
Decrease in unearned rental income (1,012) (2,361)
Increase (decrease) in accounts payable and other liabilities 18,593 (17,380)
-------- ----------
Net cash provided by (used by) operating activities (11,800) 80,369
-------- ----------
Cash flows used in investing activities:
Additions to real estate investments - -
Increase in deferred leasing costs - (2,829)
-------- ----------
Net cash used in investing activities - (2,829)
-------- ----------
Cash flows used in financing activities:
Reductions in mortgage principal (37,127) (30,543)
-------- ----------
Net increase (decrease) in cash and cash equivalents (48,927) 46,997
Cash and cash equivalents at September 30 855,739 1,240,077
-------- ----------
Cash and cash equivalents at December 31 $806,812 $1,287,074
======== ==========
Supplemental disclosure of cash flow information:
Interest paid in cash during the period $ 86,075 $ 92,651
======== ==========
See accompanying notes to financial statements.
6
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(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. The Managing General Partner 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, 1997 Annual Report.
(2) Significant Accounting Principles
---------------------------------
Organization and Allocation of Income and Losses
------------------------------------------------
Boettcher Western Properties III Ltd. (the "Partnership") is a limited
partnership formed on March 18, 1983 for the purpose of investing in
improved and unimproved real property. Limited Partnership Interests (the
"Units") were sold through a public offering and currently 22,000 Units at
$1,000 per Unit are outstanding.
The managing general partner of the Partnership is Boettcher Properties,
Ltd. ("BPL"), and the associate general partner is Boettcher 1983
Associates, Ltd.
The Partnership Agreement provides for the net operating income of the
Partnership to be allocated as follows: (i) to the limited partners to the
extent necessary to satisfy the 8% Current Distribution Preference, as
defined (an amount equal to 8% of the daily average aggregate adjusted
capital contributions of the limited partners) and (ii) 1% of the remainder
to the General Partners and 99% to the limited partners. Net operating
losses are allocated 1% to the General Partners and 99% to the limited
partners.
The Partnership Agreement provides for net capital income from the sale or
other disposition of Partnership properties to be allocated on a cumulative
basis as follows: (i) 1% to the General Partner and 99% to the limited
partners to the extent of depreciation deductions taken from the inception
of the Partnership, (ii) to the limited partners to the extent necessary to
satisfy the Net Proceeds Distribution Preference, as defined (an amount
equal to the sum of limited partner capital contributions not yet returned
and any unsatisfied 8% current Distribution Preference from prior periods)
and (iii) 25% of the remainder to the General Partners and 75% to the
limited partners. Net capital loss is allocated 1% to the General Partners
and 99% to the limited partners.
7
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(Unaudited)
Basis of Accounting
-------------------
The Partnership uses the accrual method of accounting. As discussed in
Note 6, the Partnership has begun the process of winding up its activities,
liquidating its assets, and dissolving, as provided for in the Partnership
Agreement. The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles on a basis
consistent with prior years and do not reflect liquidation accounting.
Environmental Remediation Liabilities
-------------------------------------
Liabilities for loss contingencies, including environmental remediation
costs, arising from claims, assessments, litigation, fines and penalties,
and other sources are recorded when it is probable that a liability has
been incurred and the amount of the assessment and/or remediation can be
reasonable estimated. The costs of site clean-up are recorded in the
amount of the cash payments made or for future estimated costs for that
site when fixed or reliably determinable based upon information derived
from the remediation plan for that site. Recoveries from third parties
which are probable of realization are separately recorded, and are not
offset against the related environmental liability.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 96-1, Environmental Remediation
Liabilities. SOP 96-1 was adopted by the Partnership during fiscal 1997
and requires, among other things, environmental remediation liabilities be
accrued when the criteria of SFAS No. 5, Accounting for Contingencies, have
been met. The SOP also provides guidance with respect to the measurement
of the remediation liabilities. Such accounting is consistent with the
Partnership's current method of accounting for environmental remediation
costs and therefore, adoption of this Statement did not have a material
impact on the Partnership's financial position, results of operations, or
liquidity.
Financial Instruments
---------------------
The fair value of the Partnership's financial instruments approximate their
carrying values due to the short maturities of those instruments or due to
the interest rates of those instruments approximating interest rates for
similar issues.
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 Held for Sale
-------------------------
Properties held for sale are recorded at the lower of cost or fair value
based upon independent appraised values less estimated selling costs.
8
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(Unaudited)
Effective October 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the impairment of long-lived
assets and for long-lived assets expected to be disposed of ("SFAS 121").
The adoption of SFAS 121 resulted in the Partnership no longer recording
depreciation and amortization expense on its real estate held for sale.
Debt Discount and Debt Issuance Costs
-------------------------------------
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 or the
extension period.
Debt discount is amortized to interest expense using the level-interest-
yield method over the term of the related debt.
Statements of Cash Flows
------------------------
For purposes of the Statements of Cash Flows, cash and cash equivalents
include highly liquid debt instruments purchased with an original maturity
of three months or less. Cash and cash equivalents are comprised of the
following at December 31:
1997 1996
-------- ----------
Money Market $655,680 $1,220,842
Operating Cash 151,132 66,232
-------- ----------
Cash and Cash Equivalents $806,812 $1,287,074
======== ==========
Use of Estimates
----------------
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
Reclassification
----------------
Certain prior year amounts have been reclassified to conform with current
year financial statement presentation.
(3) Transactions with Related Parties
---------------------------------
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
Partnership Agreement. Payments may be made for the lesser of 15 years or
until the limit on payments is reached. For the quarter ended December 31,
1997, the amount earned by the Managing General Partner was $19,650.
9
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(Unaudited)
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 December 31, 1997,
no fees were earned by the Managing General Partner.
Direct Services: The Managing General Partner 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 December 31, 1997, such reimbursements
totaled $4,320.
(4) Liquidity and Debt Maturities
-----------------------------
The Partnership is required under its Partnership Agreement to maintain
cash reserves of not less than 3% of aggregate capital contributions for
normal repairs, replacements, working capital and other contingencies. As
of December 31, 1997, the Partnership had cash reserves of $806,812, while
the required minimum amount was $660,000. During the first quarter of
fiscal 1998, the payable to Managing General Partner decreased by $44,496
to a total of $150,507 as of December 31, 1997. This decrease is the net
result of a payment to the Managing General Partner of $100,000, additional
cash advances of $31,535, and the accrual of fees and reimbursements earned
by the Managing General Partner in the first quarter of fiscal 1998 in the
amount of $218,973.
On February 18, 1998, upon closing of the sale of Venetian Square Shopping
Center (the "Remaining Property", or "Venetian") the Partnership received
net proceeds of approximately $3.3 million. The Partnership intends to make
an initial distribution of $160 per limited partnership unit ("Unit") out
of the Partnership's cash reserves prior to March 15, 1998. The Partnership
will retain approximately $550,000 as a reserve for the payment of the
Partnership's remaining debts and liabilities, to cover contingent
liabilities resulting from the Partnership's previous ownership of the
Remaining Property, and to cover the costs and expenses associated with the
Partnership's liquidation and dissolution. The Partnership may make one or
more interim distributions during its winding up process as contingent
liabilities lapse and the time of the liquidation and dissolution becomes
more certain. Upon liquidation and dissolution the Partnership will make a
final distribution of its remaining cash, constituting the remaining asset
of the Partnership, to the limited partners. See Note 6 for further
discussion on the sale of the Remaining Property.
10
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(Unaudited)
(5) Environmental Remediation Costs
-------------------------------
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 has
spent approximately $318,000 to date in connection with the remediation
program and has an accrual of $25,000 as a provision for possible
additional remediation expenses at December 31, 1997. Amounts expended to
date have been for the evaluation, monitoring, and remediation of the
petroleum contamination. On December 31, 1997, the Partnership received
from the County Health Division a "no further action required" letter,
confirming completion of the remediation effort at Venetian.
From time to time the Partnership has analyzed potential sources of
reimbursement for environmental remediation expenses. As a result, the
Partnership made an inquiry to the California State Water Resources Control
Board as to a potential reimbursement claim.
On January 6, 1998, the Partnership received correspondence from the
California State Water Resources Control Board indicating that the
Partnership's claim for reimbursement filed under the Underground Storage
Tank Cleanup Fund Program has been accepted for review. The Partnership is
currently working on submitting all of the required information within the
prescribed preliminary filing guidelines. The Managing General Partner is
unable at this time to determine the amount of reimbursement, if any, that
the Partnership may receive as a result of this filing, and is unable to
determine the timing of the reimbursement, if any. Accordingly, no
adjustments have been made to the financial statements contained herein.
(6) Sale of Real Estate and Dissolution of the Partnership
------------------------------------------------------
The Partnership attempted to sell the Remaining Property in the fiscal year
ended September 30, 1997. The existence of environmental contamination
limited the potential buyers of the Remaining Property to entrepreneurial
investors. Despite the limited marketability of the Remaining Property,
the Partnership entered into the Purchase and Sale Agreement, which became
effective on July 17, 1997, for the sale of the Remaining Property for a
sale price of $7,275,000. Certain contingencies delayed the expected sale
closing date into the early part of 1998. On February 18, 1998, the
Partnership closed on the sale of the Remaining Property and repaid the
mortgage secured by the Remaining Property and certain other customary
closing expenses.
Prior to March 15, 1998, the Partnership plans to make an initial
distribution of $160 per Unit out of the Partnership's available cash. The
Partnership plans to retain approximately $550,000 to establish reserves
for the payment of the Partnership's remaining debts and liabilities to
cover contingent liabilities resulting from the Partnership's
11
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1997
(Unaudited)
previous ownership of the Remaining Property, and to cover the costs and
expenses associated with the Partnership's liquidation and dissolution.
The Partnership may make one or more interim distributions during its
winding up process as contingent liabilities lapse and the time of the
liquidation and dissolution becomes more certain. Upon liquidation
the Partnership will make a final distribution of its remaining
cash, constituting the remaining asset of the Partnership, to the limited
partners and dissolve the Partnership.
12
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations Results of Operations
The Partnership, pursuant to the Purchase and Sale Agreement, closed the sale of
the Remaining Property on February 18, 1998 and the Partnership is currently in
the process of liquidating and dissolving (i.e. "winding up" its business and
affairs). Management's Discussion and Analysis of Financial Condition and
Results of Operations is qualified in its entirety by the occurrence of the sale
and the Partnership's winding up process.
For the three months ended December 31, 1997, the Partnership generated total
revenue of $263,095 and incurred total expenses of $230,397, resulting in net
income of $32,698, which represents a decrease of $38,845 (54%) when compared
with the corresponding quarter of fiscal 1997. A summary of the Partnership's
operations and period-to-period comparisons is presented below:
Three Months Ended December 31,
(In Thousands)
----------------------------------
Amount
of %
1997 1996 Change Change
---- ---- ------ ------
Total revenue $263 312 (49) (16%)
Total expenses 230 241 (11) (5%)
---- --- ---
Net income (loss) $ 33 71 (38) (54%)
==== === ===
For the three months ended December 31, 1997, the Partnership reported decreased
revenues in all categories when compared to the first quarter of fiscal 1997,
primarily due to a 7% decrease in average occupancy at the Partnership's
Remaining Property.
Venetian achieved a weighted average occupancy of 77%, a decrease of 7% when
compared to the first quarter of fiscal 1997. The average effective rental rate
also decreased $.22 to $8.18 when compared with the same period in fiscal 1997.
As a result, rental income decreased $23,495 (11%) to $183,425 for the first
quarter of fiscal 1998 compared to $206,920 in the first quarter of fiscal 1997.
Tenant reimbursement income also decreased, from $75,329 in the first quarter of
fiscal 1997 to $67,709 in the first quarter of fiscal 1998, a direct result of
the decreased vacancies at the Remaining Property. Other income decreased
$17,994 (60%) for the first quarter of fiscal 1998 when compared with the same
period of fiscal 1997, primarily the result of the receipt in fiscal 1997 of an
insurance refund related to a prior year's premium over-payment.
A comparative summary of the average occupancies and average effective rental
rates generated by the Remaining Property is presented below:
First Quarter
Fiscal 1998 Fiscal 1997
-------------- ------------
Commercial
- ----------
Venetian Square Shopping Center
(117,107 net rentable square feet)
Average occupancy 77% 84%
Retail - Average effective
rental rate (1) (2) $8.18 $8.40
13
(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.
Total expenses incurred by the Partnership for the three months ended December
31, 1997 amounted to $230,397. Total Partnership expenses decreased $10,264
(4%) for the three months ended December 31, 1997 when compared with the three
months ended December 31, 1996. While the majority of expense categories
decreased, the most significant changes in operating expenses, when comparing
the first quarter of fiscal 1998 to the first quarter of fiscal 1997, were in
interest expense, repairs and maintenance, administrative fees and environmental
expenses. All other expense categories remained relatively constant. Interest
expense decreased $10,653 (11%) to $86,075 for the three months ended December
31, 1997 from $96,728 for the corresponding period in fiscal 1997. This
decrease is due to an increase in the amount of principal paid down on the
Partnership's first mortgage in the current fiscal quarter. Repairs and
maintenance expense decreased $12,671 (33%) for the first quarter of fiscal 1998
when compared to the corresponding period in fiscal 1997. This decrease is
primarily the result of sewer line repairs and roof work at Venetian completed
in fiscal 1997. Administrative fees increased $6,276 (16%) to $46,756 from
$40,480 for the three months ended December 31, 1997 when compared to the
corresponding period in fiscal 1997. This increase is due to increased legal
fees in the current fiscal quarter incurred in connection with the Partnership's
proxy solicitation that was completed in December 1997. Environmental expenses
increased $4,310 to $8,184 for the three months ended December 31, 1997 from
$3,874 in the corresponding period of fiscal 1997. This increase is directly
related to the completion of required environmental remediation at Venetian in
the first quarter of fiscal 1998. See Note 5 of the Notes to the Financial
Statements in Item 1 of this report for further discussion of the environmental
remediation status.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalent balances which represent Partnership reserves
amounted to $806,812 at December 31, 1997, which represents a decrease of
$48,927 when compared with fiscal 1997 year-end balances. Net cash used by
operating activities for the three months ended December 31, 1997 amounted to
$11,800. The most significant change in assets and liabilities in the first
quarter of fiscal 1998 related to a decrease in the payable to the Managing
General Partner of $44,496. This decrease is the net result of $100,000
reimbursement of direct advances from, and accrual of fees and administrative
reimbursements to the Managing General Partner in the first quarter of fiscal
1998. Other changes in assets and liabilities included an increase in accounts
payable and other liabilities of $18,593; and a decrease in property tax payable
of $21,238, due to the payment of property taxes in the current quarter.
14
Net cash used by financing activities for the three months ended December
31, 1997 amounted to $37,127, and is comprised solely of reductions in mortgage
principal.
The Partnership is required under its Partnership Agreement to maintain
cash reserves of 3% of aggregate capital contributions ($660,000). As of
December 31, 1997, the Partnership had $806,812 in cash reserves.
The Partnership attempted to sell the Remaining Property in the fiscal year
ended September 30, 1997. The existence of environmental contamination limited
the potential buyers of the Remaining Property to entrepreneurial investors.
Despite the limited marketability of the Remaining Property, the Partnership
entered into the Purchase and Sale Agreement, which became effective on July 17,
1997, for the sale of the Remaining Property for a sale price of $7,275,000.
Certain contingencies delayed the expected sale closing date into the early part
of 1998. On February 18, 1998, the Partnership closed on the sale of the
Remaining Property and repaid the mortgage secured by the Remaining Property and
certain other customary closing expenses.
Prior to March 15, 1998, the Partnership plans to make an initial
distribution of $160 per Unit out of the Partnership's available cash. The
Partnership plans to retain approximately $550,000 to establish reserves for the
payment of the Partnership's remaining debts and liabilities to cover contingent
liabilities resulting from the Partnership's previous ownership of the Remaining
Property, and to cover the costs and expenses associated with the Partnership's
liquidation and dissolution. The Partnership may make one or more interim
distributions during its winding up process as contingent liabilities lapse and
the time of the liquidation and dissolution becomes more certain. Upon
liquidation and dissolution the Partnership will make a final distribution of
its remaining cash, constituting the remaining asset of the Partnership, to the
limited partners.
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 has spent approximately $318,000 to
date in connection with the remediation program and has an accrual of $25,000 as
a provision for possible additional remediation expenses at December 31, 1997.
Amounts expended to date have been for the evaluation, monitoring, and
remediation of the petroleum contamination. On December 31, 1997, the
Partnership received from the County Health Division a "no further action
required" letter, confirming completion of the remediation effort at Venetian.
From time to time the Partnership has analyzed potential sources of
reimbursement for environmental remediation expenses. As a result, the
Partnership made an inquiry to the California State Water Resources Control
Board as to a potential reimbursement claim.
On January 6, 1998, the Partnership received correspondence from the
California State Water Resources Control Board indicating that the Partnership's
claim for reimbursement filed
15
under the Underground Storage Tank Cleanup Fund Program has been accepted for
review. The Partnership is currently working on submitting all of the required
information within the prescribed preliminary filing guidelines. The Managing
General Partner is unable at this time to determine the amount of reimbursement,
if any, that the Partnership may receive as a result of this filing, and is
unable to determine the timing of the reimbursement, if any. Accordingly, no
adjustments have been made to the financial statements contained in Item 1 of
this report.
16
PART III. OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K dated October 7,
1997 with regard to the sale of Venetian Square Shopping
Center.
17
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: February 20, 1998 By: /s/ Thomas M. Mansheim
------------------------------
Thomas M. Mansheim
Treasurer; Principal
Financial and Accounting
Officer of the Partnership
18