1
Total # of Pages: 17
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, 1996 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO ________
Commission File Number 0-11502
----------------------------------------------------------
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
--- ---
2
INDEX
PAGE
----
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets -
December 31, 1996 and September 30, 1996 3
Statements of Operations -
Three months ended December 31, 1996 and 1995 4
Statement of Partners' Capital -
Three months ended December 31, 1996 5
Statements of Cash Flows -
Three months ended December 31, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART III. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURE 17
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3
PART 1. Financial Information
Item 1:Financial Statements
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
December 31, September 30,
1996 1996
------------ -------------
Assets
------
Real estate investments:
Properties held for sale at cost $ 8,771,101 $ 8,771,101
Less discount on related debt (778,407) (778,407)
------------ -------------
7,992,694 7,992,694
Less accumulated depreciation (2,652,929) (2,599,948)
------------ -------------
5,339,765 5,392,746
Cash and cash equivalents at cost, which
approximates market value 1,287,074 1,240,077
Accounts receivable and other assets 95,641 90,146
Debt issuance costs, net of accumulated
amortization of $36,855 and $33,446,
respectively 10,228 13,637
Deferred leasing costs, net of accumulated
amortization of $473,058 and $464,022,
respectively 167,806 174,013
------------ -------------
$ 6,900,514 $ 6,910,619
============ =============
Liabilities and Partners' Capital
---------------------------------
Mortgages payable, net of unamortized debt
discount of $3,857 and $4,525,
respectively $ 3,273,811 $ 3,303,685
Payable to managing general partner 654,035 602,323
Accounts payable and accrued expenses 279,177 296,557
Property taxes payable - 21,238
Tenants' deposits 39,339 39,339
Unearned rental income 3,195 5,556
Accrued interest payable - 490
------------ -------------
Total liabilities 4,249,557 4,269,188
------------ -------------
Commitments and contingencies
Partners' capital (deficit)
General partners (113,774) (113,869)
Limited partners 2,764,731 2,755,300
------------ -------------
Total partners' capital 2,650,957 2,641,431
------------ -------------
$ 6,900,514 $ 6,910,619
============ =============
See accompanying notes to financial statements.
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4
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Operations
Three Months Ended December 31, 1996 and 1995
(Unaudited)
Three Months Ended
--------------------
1996 1995
--------- ---------
Revenue:
Rental income $ 206,920 $ 517,215
Tenant reimbursements for
common area charges,
insurance and taxes 75,329 82,820
Other income 29,955 18,324
--------- ---------
312,204 618,359
--------- ---------
Expenses:
Interest, including amortization of debt
discount and debt issuance costs 96,728 189,767
Depreciation 52,981 116,135
Property taxes 21,844 62,458
Fees and reimbursements to
managing general partner 25,744 44,636
Other management fees 12,391 28,850
Salaries of on-site property managers - 31,475
Repairs and maintenance 38,227 51,355
Utilities 10,409 34,852
Other administrative 40,480 63,085
Environmental costs 3,874 3,901
--------- ---------
302,678 626,514
--------- ---------
Net income (loss) $ 9,526 $ (8,155)
========= =========
Net income (loss) per limited partnership unit, using the
weighted average number of limited partnership units
outstanding of 22,000 $.43 $(.37)
========= =========
See accompanying notes to financial statements.
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5
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statement of Partners' Capital
Three Months ended December 31, 1996
(Unaudited)
Total
General Limited Partners'
Partners Partners Capital
---------- --------- ---------
Capital (deficit) at October 1, 1996 $(113,869) 2,755,300 2,641,431
Net income for the three months
ended December 31, 1996 95 9,431 9,526
---------- --------- ---------
Capital (deficit) at December 31, 1996 $(113,774) 2,764,731 2,650,957
========== ========= =========
See accompanying notes to financial statements.
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6
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Statements of Cash Flows
Three Months Ended December 31, 1996 and 1995
(Unaudited)
Three Months Ended
December 31,
---------------------
1996 1995
---------- ---------
Cash flows from operating activities:
Net income (loss) $ 9,526 $ (8,155)
Adjustments to reconcile net income (loss) to
net cash used by operating
activities:
Depreciation and amortization 66,095 136,655
Change in assets and liabilities:
(Increase) decrease in accounts receivable
and other assets (5,495) 6,613
Decrease in property tax
and other escrow deposits - 77,329
Increase (decrease) in payable to managing general
partner 51,712 (112,631)
Decrease in property taxes payable (21,238) (108,002)
Increase (decrease) in tenants' deposits - 7,956
Decrease in accrued interest payable (490) (27)
Decrease in unearned rental income (2,361) (16,004)
Decrease in accounts payable and
other liabilities (17,380) (34,149)
---------- ---------
Net cash provided by (used by) operating activities 80,369 (50,415)
---------- ---------
Cash flows used in investing activities:
Additions to real estate investments - (18,014)
Increase in deferred leasing costs (2,829) (26,774)
---------- ---------
Net cash used in investing activities (2,829) (44,788)
---------- ---------
Cash flows used in financing activities-
Reductions in mortgage principal (30,543) (82,328)
---------- ---------
Net increase (decrease in) cash and
cash equivalents 46,997 (177,531)
Cash and cash equivalents at September 30 1,240,077 836,140
---------- ---------
Cash and cash equivalents at December 31 $1,287,074 $ 658,609
========== =========
Supplemental disclosure of cash flow information:
Interest paid in cash during the period $ 92,651 $ 179,742
========== =========
See accompanying notes to financial statements.
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7
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(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, 1996 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. These
costs are comprised of lease commissions and construction costs related
to the buildout of tenant space.
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 will be adopted by the Partnership during fiscal
1997 and will require, among other things, environmental remediation
liabilities to 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 new Statement will not have a material impact on the Partnership's
financial position, results of operations, or liquidity.
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8
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
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 Investments
Properties held for sale are recorded at the lower of cost or fair value
based upon independent appraised values less estimated selling costs.
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
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:
1996 1995
---------- --------
Money Market $1,220,842 $564,606
Operating Cash 66,232 94,003
---------- --------
Cash and Cash Equivalents $1,287,074 $658,609
========== ========
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9
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
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.
(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, 1996, the amount earned by the Managing General Partner was
$19,650.
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, 1996, the fee earned by the Managing General Partner
was $1,774.
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, 1996, 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, 1996, the Partnership had cash reserves of $1,287,074,
while the required minimum amount was $660,000. During the first quarter
of fiscal 1997, the payable to managing general partner increased by
$51,712 to a total of $654,035 as of December 31, 1996. This increase is
the net result of advances from the Managing General Partner totaling
$25,968, and the accrual of fees and reimbursements earned by the
Managing General Partner in the first quarter of fiscal 1997 in the
amount of $25,744. The Managing General Partner intends to apply cash
flow generated from Partnership operations in fiscal 1997, if any, to
maintain the minimum
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10
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
required cash reserves, as necessary, 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 $48,930, $12,960 and $592,145,
respectively, as of December 31, 1996.
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investment in fiscal 1997. However, there can be
no assurances that the Partnership will sell such property in 1997. As
of December 31, 1996, the Partnership has recorded its remaining real
estate investment as property held for sale. The Partnership has 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 Managing General Partner believes that this sale will provide net
proceeds to the Partnership after the payment of sales costs, closing
costs and mortgages payable; however, this sale transaction 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 minimum required cash reserves, as necessary, 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 a final distribution to limited partners.
On October 24, 1995, the Partnership entered into a letter 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, 1997. Under the agreement, the Partnership was
obligated to pay a $20,000 fee, the interest rate was increased to 10.5%
and the monthly payment was increased to $39,098.
(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 $305,000 to date in connection with the remediation program
and since fiscal 1993 has maintained an accrual of $250,000 as a
provision for possible additional remediation expenses. Management is
unable at this time to estimate the full extent of additional expenses
that may be incurred. Due to groundwater contamination, the Partnership
may incur significant additional remediation costs. The estimate of
costs and their timing of
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11
BOETTCHER WESTERN PROPERTIES III LTD.
(A Limited Partnership)
Notes to Financial Statements, Continued
December 31, 1996
(Unaudited)
payment could change as a result of (1) changes to a remediation plan
required by the State Environmental Agency, (2) changes in technology
available to treat the site, (3) unforeseen circumstances existing at the
site and (4) differences between actual inflation rates and rates assumed
in preparing the estimate. As a result of these factors, it is not
possible for the Partnership to reasonably estimate the amount by which
remediation costs may exceed amounts that the Partnership has accrued.
The ultimate resolution of this matter and its impact on the
Partnership's financial statements is uncertain.
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12
Item 2:
Management's Discussion and Analysis of Financial Condition and Results of
Operations Results of Operations
For the three months ended December 31, 1996, the Partnership generated total
revenue of $312,204 and incurred total expenses of $302,678, resulting in net
income of $9,526, which represents an improvement of $17,681 (217%) when
compared with the corresponding quarter of fiscal 1996. The Partnership's
first quarter fiscal 1996 results include the operations of LaRisa Apartments
("LaRisa") which was sold in the second quarter of fiscal 1996. Due to the
absence of this operating property in fiscal 1997 results, the Partnership
generated decreased total revenue, primarily rental income, and decreased total
expenses in all categories. A summary of the Partnership's operations and
period-to-period comparisons is presented below:
Three Months Ended December 31,
(In Thousands)
-------------------------------
Amount
of %
1996 1995 Change Change
------ ------ ------ ------
Total revenue $ 312 $ 618 $ (306) (51%)
Total expenses 303 626 323 52%
------ ------ ------
Net income (loss) $ 9 $ (8) $ 17 217%
====== ====== ====== ======
When making period-to-period comparisons, the exclusion of the operations of
LaRisa from the prior fiscal quarters' results allows for a more meaningful
analysis of the operations of the Partnership's remaining investment. For
comparison purposes only, the results of operations of LaRisa have been
excluded from the three months ended December 31, 1995 in the table below.
Three Months Ended December 31,
(In Thousands)
-------------------------------
Pro Amount
Forma of %
1996 1995 Change Change
------ ------ ------ ------
Total revenue $ 312 $ 305 $ 7 2%
Total expenses 303 296 (7) 2%
------ ------ ------
Net income (loss) $ 9 $ 9 $ - -
====== ====== ====== ======
Based upon the proforma amounts presented above, total revenue generated by the
Partnership amounted to $312,204, representing an increase of $7,096 (2%) from
$305,108 for the three months ended December 31, 1995. The Partnership's
remaining property generated rental income of $206,920 for the three months
ended December 31, 1996, which represents a decrease of $9,175 (4%) when
compared with the same period in fiscal 1996. Venetian Square Shopping Center
achieved a weighted average occupancy of 84%, a decrease of 7% when compared to
the first quarter of fiscal 1996. However, the average effective rental rate
increased $.28 when compared with the same period in fiscal 1996. Tenant
reimbursement income also decreased, from $82,820 in the
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first quarter of fiscal 1996 to $75,329 in the first quarter of fiscal 1997, a
direct result of the increased vacancies at the remaining property. Other
income increased $23,762 for the first quarter of fiscal 1997 when compared
with the same period of fiscal 1996, primarily the result of the receipt of an
insurance refund by the Partnership related to a past years premium over-
payment and increased interest income due to the maintenance of higher cash
reserve balances.
A comparative summary of the average occupancies and average effective rental
rates generated by the properties is presented below:
First Quarter
Apartments Fiscal 1997 Fiscal 1996
- ---------- ----------- -----------
LaRisa (254 units)
Average occupancy (3) N/A 93%
Average effective rental
rate per unit per month (2) (3) N/A $425
Commercial
- ----------
Venetian Square Shopping Center
(117,115 net rentable square feet)
Average occupancy 84% 91%
Retail - Average effective
rental rate (1) (2) $8.40 $8.12
(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.
(2) Average effective rental rates for apartments are stated in terms of an
average effective rental rate per unit per month and for commercial
properties they are stated in terms of an average annual effective rental
rate per square foot. Effective rental rates take into account the
effect of leasing concessions and bad debts.
(3) The computations give effect to the sale of LaRisa Apartments on
February 29, 1996.
Based upon the proforma amounts previously presented, total expenses incurred
by the Partnership for the three months ended December 31, 1996 amounted to
$302,678. Total Partnership expenses increased $6,374 (2%) on a proforma basis
for the three months ended December 31, 1996 when compared with the three
months ended December 31, 1995. The most significant changes in operating
expenses, when comparing the first quarter of fiscal 1997 to the first quarter
of fiscal 1996, were in repairs and maintenance, fees paid to the Managing
General Partner and interest expense. All other expense categories remained
relatively constant. Repairs and maintenance expense increased $15,795 (70%)
for the first quarter of fiscal 1997 when compared to the corresponding period
in fiscal 1996. This increase is primarily the result of increased sewer line
repairs and roof work at Venetian Square Shopping Center completed in
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fiscal 1997. Fees paid to the Managing General Partner decreased $18,892 (42%)
for the three months ended December 31, 1996 when compared to the corresponding
period in fiscal 1996, primarily due to a reduction in fees paid to the
Managing General Partner due to the sale of LaRisa Apartments in fiscal 1996.
Interest expense increased $13,999 (17%) in the first quarter of 1997 when
compared to the corresponding period in fiscal 1996. This represents the
increased interest rate that went into effect upon execution of the loan
extension agreement in the middle of the first quarter of fiscal 1996. For
additional information refer to Note 4 to the Financial Statements as contained
in Item 1 of this report.
Liquidity and Capital Resources
Cash and cash equivalent balances which represent Partnership reserves
amounted to $1,287,074 at December 31, 1996, which represents an increase of
$46,997 when compared with fiscal 1996 year-end balances. Net cash provided by
operating activities for the three months ended December 31, 1996 amounted to
$80,369. The most significant change in assets and liabilities in the first
quarter of fiscal 1997 related to a decrease in property taxes payable of
$21,238. This decrease is a result of the final payment of 1996 property tax
liabilities at Venetian Square Shopping Center in the first quarter of fiscal
1997. Other changes in assets and liabilities included a decrease in accounts
payable and other liabilities of $17,380. The payable to managing general
partner increased $51,712. This increase is the result of direct advances
from, and accrual of fees and administrative reimbursements to, the Managing
General Partner in the first quarter of fiscal 1997.
Net cash used in investing activities in the first quarter of fiscal 1997
amounted to $2,829, and are comprised solely of deferred leasing costs. The
Partnership's fiscal 1997 deferred leasing costs include costs associated with
repair of tenant space at Venetian Square Shopping Center.
Net cash used by financing activities for the three months ended December
31, 1996 amounted to $30,543, 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, 1996, the Partnership had $1,287,074 in cash reserves. The
Partnership intends to apply any cash flow generated from Partnership
operations in fiscal 1997 to maintain minimum required cash reserves, including
any additional reserves deemed necessary by the Managing General Partner to
cover potential remediation costs of the petroleum contamination at Venetian
Square Shopping Center as discussed below. 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 totaled $48,930, $12,960 and
$592,145, respectively, as of December 31, 1996.
To the knowledge of the Managing General Partner the remaining property is
in good physical condition. In fiscal 1997, other than tenant finish and lease
commissions associated with the ongoing leasing efforts at Venetian Square
Shopping Center, there are no other planned capital improvements.
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15
The Managing General Partner is attempting to sell the Partnership's
remaining real estate investment in fiscal 1997. However, there can be no
assurances that the Partnership will sell such property in 1997. As of
December 31, 1996, the Partnership has recorded its remaining real estate
investment as property held for sale. The Partnership has entered into a
listing agreement with an unrelated real estate brokerage firm to act as the
exclusive selling agent for the remaining property. The Managing General
Partner believes that this sale will provide net proceeds to the Partnership
after the payment of sales costs, closing costs and mortgages payable; however,
this 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 minimum required cash reserves, as necessary, 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 a final distribution to limited partners.
On October 24, 1995, the Partnership entered into a letter 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, 1997. Under the agreement, the Partnership was obligated to pay a
$20,000 fee, the interest rate was increased to 10.5% and the monthly payment
was increased to $39,098.
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 $305,000 to date in
connection with the remediation program and since fiscal 1993 has maintained an
accrual of $250,000 as a provision for possible additional remediation
expenses. Management is unable at this time to estimate the full extent of
additional expenses that may be incurred. Due to groundwater contamination,
the Partnership may incur significant additional remediation costs. The
estimate of costs and their timing of payment could change as a result of (1)
changes to a remediation plan required by the State Environmental Agency, (2)
changes in technology available to treat the site, (3) unforeseen circumstances
existing at the site and (4) differences between actual inflation rates and
rates assumed in preparing the estimate. As a result of these factors, it is
not possible for the Partnership to reasonably estimate the amount by which
remediation costs may exceed amounts that the Partnership has accrued. The
ultimate resolution of this matter and its impact on the Partnership's
financial statements is uncertain.
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PART III. 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.
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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 14, 1997 By: /s/ Thomas M. Mansheim
------------------------
Thomas M. Mansheim
Treasurer; Principal
Financial and Accounting
Officer of the Partnership
17