<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-----------------------------------
For the Fiscal Year Ended DECEMBER 31, 1995
Commission File Number
2-68983
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REAL ESTATE ASSOCIATES LIMITED III
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-3547611
------------
9090 Wilshire Blvd., Suite 201, Beverly Hills, California 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve 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
------------- -------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS:
Real Estate Associates Limited III ("REAL III" or the "Partnership") is a
limited partnership which was formed under the laws of the State of California
on July 25, 1980. On January 5, 1981, Real Estate Associates Limited III
offered 3,000 units consisting of 6,000 Limited Partnership Interests and
Warrants to purchase a maximum of 6,000 Additional Limited Partnership
Interests through a public offering managed by Lehman Brothers Inc.
The general partners of Real Estate Associates Limited III are National
Partnership Investments Corp. ("NAPICO"), a California Corporation (the
"Corporate General Partner"), and Coast Housing Investments Associates, a
Limited Partnership formed under the California Limited Partnership Act and
consisting of Messrs. Nicholas G. Ciriello, an unrelated individual, as general
partner, and Charles H. Boxenbaum as limited partner. The business of REAL III
is conducted primarily by its general partners as REAL III has no employees of
its own.
Casden Investment Corporation ("CIC") owns 100 percent of NAPICO's stock. The
current members of NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce
E. Nelson, Alan I. Casden, Henry C. Casden and Brian D. Goldberg.
REAL III holds limited partnership interests in 26 local limited partnerships
as of December 31, 1995, and a general partner interest in Real Estate
Associates ("REA") which in turn holds limited partnership interests in an
additional 6 limited partnerships; therefore, REAL III holds directly or
indirectly through REA, investments in thirty-two local limited partnerships.
The general partners of REA are REAL III and NAPICO. Each of the limited
partnerships owns a low income housing project which is subsidized and/or has a
mortgage note payable to or insured by agencies of the federal or local
government.
In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of REAL III to vary its portfolio in
response to changing economic, financial and investment conditions; such
investments are also subject to changes in local economic circumstances and
housing patterns, as well as rising operating costs, vacancies, rent collection
difficulties, energy shortages and other factors which have an impact on real
estate values. These projects also require greater management expertise and
may have higher operating expenses than conventional housing projects.
The partnerships in which REAL III has invested were, at least initially,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. REAL III became the
principal limited partner in these local limited partnerships pursuant to
arm's-length negotiations with these developers, or others, who act as general
partners. As a limited partner, REAL III's liability for obligations of the
local limited partnership is limited to its investment. The local general
partner of the local limited partnership retains responsibility for developing,
constructing, maintaining, operating and managing the Project. Under certain
circumstances, REAL III has the right to replace the general partner of the
local limited partnerships.
Although each of the partnerships in which REAL III has invested generally owns
a project which must compete in the market place for tenants, interest
subsidies and rent supplements from governmental agencies make it possible to
offer these dwelling units to eligible "low income" tenants at a cost
significantly below the market rate for comparable conventionally financed
dwelling units in the area.
<PAGE> 3
During 1995, the projects in which REAL III had invested were substantially
rented. The following is a schedule of the status as of December 31, 1995, of
the projects owned by local limited partnerships in which REAL III is a limited
partner.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS AN INVESTMENT
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ------ ------------ -------- -----------
<S> <C> <C> <C> <C>
Bowin Place 193 191/0 190 98%
Detroit, MI
Casa de las Hermanitas 88 88/0 88 100%
Los Angeles, CA
Charlotte Lakeview, Riverview 553 114/153 533 100%
Residential Project
Rochester, NY
Creekview Apts. 80 80/0 78 98%
Stroudsburg, PA
Foothill Gardens 54 54/0 53 98%
Los Angeles, CA
Frazier Park Apts. 60 60/0 58 97%
Baldwin Park, CA
Gary Manor 198 198/0 196 99%
Gary, IN
Grandview Homes 26 26/0 26 100%
Los Angeles, CA
Hidden Pines Apts. 40 40/0 40 100%
Greenville, MI
Highlawn Place Apartments 133 133/0 133 100%
Huntington, WV
Jenks School Apts. 83 82/0 81 98%
Pawtucket, RI
</TABLE>
<PAGE> 4
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS AN INVESTMENT
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage
Name & Location Units Program Occupied Total Units
- --------------- ------ ------------ -------- -----------
<S> <C> <C> <C> <C>
Kern Villa 49 49/0 48 98%
Los Angeles, CA
Lakeside Apts. 32 0/13 31 97%
Stuart, FL
New Baltimore 101 101/0 101 100%
New Baltimore, MI
Panorama Park Apts. 66 66/0 65 98%
Bakersfield, CA
Ramblewood Apts. 64 0/13 57 89%
Fort Payne, AL
Santa Maria Apts. 86 86/0 85 99%
San German, Puerto Rico
Senior Chateau on the Hill 185 183/0 183 99%
Cincinnati, OH
Sheraton Towers 97 97/0 96 99%
High Point, NC
South Bay Villa 80 80/0 80 100%
Los Angeles, CA
Sunset Grove Apts. 22 22/0 22 100%
Carson City, MI
Sunshine Canyon 26 26/0 26 100%
Stanton, MI
Tujunga Gardens 53 53/0 53 100%
Los Angeles, CA
Twenty-nine Palms 47 47/0 46 98%
Twenty-nine Palms, CA
</TABLE>
<PAGE> 5
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS AN INVESTMENT
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage
Name & Location Units Program Occupied Total Units
- --------------- ------ ------------ -------- -----------
<S> <C> <C> <C> <C>
Village Apts. 51 51/0 50 98%
La Follette, TN
Village of Kaufman 68 68/0 68 100%
Kaufman, TX
Village Grove Apts. 104 None 100 96%
Corona, CA
Vincente Geigel 80 80/0 80 100%
Polanco Apts.
Isabela, Puerto Rico
Vista De Jagueyes 73 73/0 73 100%
Aguas Buenas, PR
Westgate Apts. 72 33/16 63 88%
Albertville, AL
Wilderness Trail Manor 124 124/0 124 100%
Pineville, KY
Wilkes Towers 72 72/0 70 97%
Wilkesboro, NC
----- --------- ----- -----
TOTALS 3,060 2,377/195 2,996 98%
===== ========= =====
</TABLE>
<PAGE> 6
ITEM 2. PROPERTIES:
Through its investment in local limited partnerships, REAL III holds interests
in real estate properties. See Item 1 and Schedule XI for information
pertaining to these properties.
ITEM 3. LEGAL PROCEEDINGS:
As of December 31, 1995, REAL III's Corporate General Partner was plaintiff or
defendant in several lawsuits. None of these suits were related to REAL III.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED
SECURITY HOLDER MATTERS
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by Lehman Brothers Inc. It is not
anticipated that any public market will develop for the purchase and sale of
any Partnership interest. Limited Partnership Interests may be transferred
only if certain requirements are satisfied. At December 31, 1995 there were
2,086 registered holders of units in REAL III. One distribution in the
aggregate amount of $3,345,000 (or $584 per unit) was made in 1989. This
represented the proceeds from the sale of one of the Partnership's real estate
investments. The Partnership has invested in certain government assisted
projects under programs which in many instances restrict the cash return
available to Project owners. The Partnership was not designed to provide cash
distributions to investors in circumstances other than refinancing or
disposition of its investment in the limited partnerships.
<PAGE> 7
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Loss From Partnership
Operations $ (567,421) $ (577,031) $ (586,269) $ (486,954) $ (404,992)
Distributions From
Limited Partnerships
Recognized as Income 765,514 683,491 987,697 378,194 573,783
Equity in Income of
Limited Partnerships
and Amortization of
Acquisition Costs 887,919 539,729 708,865 712,014 412,294
----------- ----------- ----------- ----------- -----------
Net Income $ 1,086,012 $ 646,189 $ 1,110,293 $ 603,254 $ 581,085
=========== =========== =========== =========== ===========
Net Income per Limited
Partnership Interest $ 95 $ 56 $ 96 $ 52 $ 50
=========== =========== =========== =========== ===========
Total assets $10,185,039 $ 9,095,839 $ 8,489,578 $ 7,496,667 $ 6,882,393
============ =========== =========== =========== ===========
Investments in Limited
Partnerships $ 930,576 $ 690,570 $ 679,271 $ 491,166 $ 430,557
=========== =========== =========== =========== ===========
Notes Payable $ 1,510,000 $ 1,510,000 $ 1,510,000 $ 1,510,000 $ 1,510,000
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
LIQUIDITY
The Partnership's primary sources of funds include interest income on money
market investments and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that
any of the local limited partnerships in which the Partnership has invested
will generate cash flow sufficient to provide for distributions to the
Partnership's limited partners in any material amount.
CAPITAL RESOURCES
REAL III received $14,320,000 in subscriptions for units of Limited Partnership
Interests (at $5,000 per unit) during the period March 31, l981 to October 30,
1981, pursuant to a registration statement on Form S-11. As of March 10, 1982,
REAL III received an additional $14,320,000 in subscriptions pursuant to the
exercise of warrants and the sale of Additional Limited Partnership Interests.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which REAL III has invested could produce tax losses for as long as 20 years.
The Partnership will seek to defer income taxes from capital gains by not
selling any projects or project interests within 10 years, except to qualified
tenant cooperatives, or when proceeds of the sale would supply sufficient cash
to enable the partners to pay applicable taxes.
Tax benefits will decline over time as the advantages of accelerated
depreciation are greatest in the earlier years, as deductions for interest
expense decrease as mortgage principal is amortized, and as the Tax Reform Act
of 1986 limits the deductions available.
The Partnership accounts for its investments in the local limited partnerships
on the equity method, thereby adjusting its investment balance by its
proportionate share of the income or loss of the local limited partnerships.
Losses incurred after the limited partnership investment account is reduced to
zero are not recognized.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent
distributions received are recognized as income. Overall distributions from
limited partnerships continue to be favorable. This primarily due, to improved
operating results at several of the properties.
Except for certificates of deposit and money market funds, the Partnership's
investments are entirely interests in other limited partnerships owning
government assisted projects. Funds temporarily not required for such
investments in projects are invested in certificates of deposit and money
market funds which provide substantial amounts of interest as reflected in the
statements of operations. These investments are converted to cash to meet
obligations as they arise. The Partnership intends to continue investing
available funds in this manner.
<PAGE> 9
A recurring Partnership expense is the annual management fee. The fee is
payable to the Corporate General Partner of the Partnership and is calculated
as a percentage of the Partnership's invested assets. The management fee is
paid to the corporate general partner for its continuing management of
Partnership affairs. The fee is payable beginning with the month following the
Partnership's initial investment in a local limited partnership.
Operating expenses, exclusive of management fees and interest of the
Partnership, consist substantially of professional fees for services rendered
to the Partnership. Operating expenses did not vary significantly for the
years presented.
The Partnership, as a Limited Partner in the local limited partnerships in
which it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and, accordingly, the
status of the national economy, including substantial unemployment and
concurrent inflation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the projects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE:
Not applicable.
<PAGE> 10
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
DECEMBER 31, 1995
<PAGE> 11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Real Estate Associates Limited III
(A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates
Limited III (a California limited partnership) as of December 31, 1995 and
1994, and the related statements of operations, partners' equity (deficiency)
and cash flows for each of the three years in period ended December 31, 1995.
Our audits also included the financial statement schedules listed in the index
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 3 percent and 8 percent of
total assets as of December 31, 1995 and 1994, respectively, and the equity in
income of these limited partnerships represents 33 percent, 34 percent and 31
percent of the total net income of the Partnership for the years ended December
31, 1995, 1994 and 1993, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these limited partnerships are audited by other
auditors. Their reports have been furnished to us and our opinion, insofar as
it relates to the amounts included for these limited partnerships, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Real Estate Associates Limited III as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also, in our
opinion, based on our audits and the reports of other auditors, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 29, 1996
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED III
(a California limited partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 930,576 $ 690,570
CASH AND CASH EQUIVALENTS (Note 1) 9,028,963 7,209,247
SHORT TERM INVESTMENTS (Note 1) 125,000 1,146,022
OTHER ASSETS 100,500 50,000
----------- ----------
TOTAL ASSETS $10,185,039 $9,095,839
=========== ==========
LIABILITIES AND PARTNERS' DEFICIENCY
LIABILITIES:
Notes payable (Notes 3 and 7) $ 1,510,000 $1,510,000
Interest payable (Notes 3 and 7) 344,762 344,007
Accounts payable 13,391 10,958
----------- ----------
1,868,153 1,864,965
----------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
PARTNERS' EQUITY (DEFICIENCY):
General partners (115,807) (126,667)
Limited partners 8,432,693 7,357,541
----------- ----------
8,316,886 7,230,874
----------- ----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIENCY) $10,185,039 $9,095,839
=========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED III
(a California limited partnership)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST AND OTHER INCOME $ 267,189 $ 181,750 $ 143,549
---------- ---------- ----------
OPERATING EXPENSES:
Legal and accounting 135,191 86,950 57,136
Management fees - general partner (Note 4) 454,800 454,800 454,800
Interest (Note 3) 151,000 151,000 151,000
Administrative (Note 4) 93,619 66,031 66,882
---------- ---------- ----------
Total operating expenses 834,610 758,781 729,818
---------- ---------- ----------
LOSS FROM OPERATIONS (567,421) (577,031) (586,269)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 765,514 683,491 987,697
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTI-
ZATION OF ACQUISITION
COSTS (Note 2) 887,919 539,729 708,865
---------- ---------- ----------
NET INCOME $1,086,012 $ 646,189 $1,110,293
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ 95 $ 56 $ 96
========== ========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 14
REAL ESTATE ASSOCIATES LIMITED III
(a California limited partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------- ------------ ------------
<S> <C> <C> <C>
EQUITY (DEFICIENCY),
January 1, 1993 $ (144,232) $ 5,618,624 $ 5,474,392
Net income for 1993 11,103 1,099,190 1,110,293
---------- ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1993 (133,129) 6,717,814 6,584,685
Net income for 1994 6,462 639,727 646,189
---------- ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1994 (126,667) 7,357,541 7,230,874
Net income for 1995 10,860 1,075,152 1,086,012
---------- ------------ ------------
EQUITY (DEFICIENCY),
December 31, 1995 $ (115,807) $ 8,432,693 $ 8,316,886
========== ============ ============
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 15
REAL ESTATE ASSOCIATES LIMITED III
(a California limited partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,086,012 $ 646,189 $ 1,110,293
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of limited partnerships and
amortization of acquisition costs (887,919) (539,729) (708,865)
Decrease (increase) in other assets (50,500) (50,000) 30,924
Increase (decrease) in interest and other payables 3,188 (39,928) (117,382)
----------- ---------- -----------
Net cash provided by operating activities 150,781 16,532 314,970
----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distribution from limited partnerships
recognized as return of capital 647,913 554,025 536,892
Capital contributions and advances
to limited partnerships 0 (25,595) (16,132)
Decrease (increase) in investments 1,021,022 53,978 (275,000)
----------- ---------- -----------
Net cash provided by investing activities 1,668,935 582,408 245,760
----------- ---------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 1,819,716 598,940 560,730
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 7,209,247 6,610,307 6,049,577
----------- ---------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 9,028,963 $7,209,247 $ 6,610,307
=========== ========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for interest $ 150,245 $ 186,216 $ 170,421
=========== ========== ===========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 16
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Real Estate Associates Limited III (the Partnership) was formed under
the California Limited Partnership Act on July 25, 1980. The
Partnership was formed to invest either directly or indirectly in
other partnerships which own and operate primarily federal, state and
local government-assisted housing projects. The general partners are
National Partnership Investments Corp. (NAPICO), the corporate general
partner, and Coast Housing Investment Associates (CHIA), a limited
partnership. Casden Investment Corporation owns 100 percent of
NAPICO's stock. The limited partner of CHIA is an officer of NAPICO.
The Partnership offered 3,000 units and issued 2,864 units of limited
partner interests through a public offering. Each unit was comprised
of two limited partner interests and a warrant granting the investor
the right to purchase two additional limited partner interests. An
additional 5,728 interests were issued from the exercise of the
warrants and the sale of interests associated with warrants not
exercised. The general partners have a 1 percent interest in profits
and losses of the Partnership. The limited partners have the
remaining 99 percent interest in proportion to their respective
investments.
The Partnership shall be dissolved only upon the expiration of 52
complete calendar years (December 31, 2032) from the date of the
formation of the Partnership or the occurrence of other events as
specified in the terms of the Partnership agreement.
Upon total or partial liquidation of the Partnership or the
disposition or partial disposition of a project or project interest
and distribution of the proceeds, the general partners will be
entitled to a liquidation fee as stipulated in the Partnership
agreement. The limited partners will have a priority return equal to
their invested capital attributable to the project(s) or project
interest(s) sold and shall receive from the sale of the project(s) or
project interest(s) an amount sufficient to pay state and federal
income taxes, if any, calculated at the maximum rate then in effect.
The general partners' liquidation fee may accrue but shall not be paid
until the limited partners have received distributions equal to 100
percent of their capital contributions.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Principles of Consolidation
These financial statements include the accounts of Real Estate
Associates Limited III and Real Estate Associates ("REA"), a
California general partnership in which the Partnership holds a 99.9
percent general partner interest. Losses in excess of the minority
interest is equity that would otherwise be attributed to the minority
interest are being allocated to the Partnership.
5
<PAGE> 17
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Method of Accounting for Investments in Limited Partnerships
The investments in limited partnerships are accounted for on the
equity method. Acquisition, selection and other costs related to the
acquisition of the projects are capitalized as part of the investment
account and are being amortized on a straight line basis over the
estimated lives of the underlying assets, which is generally 30 years.
Net Income Per Limited Partnership Interest
Net income per limited partnership interest was computed by dividing
the limited partners' share of net income by the number of limited
partnership interests outstanding during the year. The number of
limited partnership interests was 11,456 for all years presented.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and bank certificates of
deposit with an original maturity of three months or less.
Short Term Investments
Short term investments consist of bank certificates of deposit and
other securities with original maturities ranging from more than three
months to twelve months. The fair value of these securities, which
have been classified as held for sale, approximates their carrying
value.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 26 limited
partnerships. In addition, the Partnership holds a general partner
interest in REA. NAPICO is also a general partner in REA. REA, in
turn, holds limited partner interests in six additional limited
partnerships. In total, therefore, the Partnership holds interests,
either directly or indirectly through REA, in 32 partnerships which
own residential low income rental projects consisting of 3,062
apartment units. The mortgage loans of these projects are payable to
or insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to between 75
percent and 99 percent of the profits and losses of the limited
partnerships it has invested in directly. The Partnership is also
entitled to 99.9 percent of the profits and losses of REA. REA holds
a 99 percent interest in each of the limited partnerships in which it
has invested.
Equity in losses of limited partnerships is recognized in the
financial statements until the limited partnership investment account
is reduced to a zero balance. Losses incurred after the limited
partnership investment account is reduced to zero are not recognized.
The cumulative amount of the unrecognized equity in losses of certain
limited partnerships was approximately $19,672,000 and $18,810,000 as
of December 31, 1995 and 1994, respectively.
6
<PAGE> 18
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Distributions from limited partnerships are recognized as a reduction
of capital until the investment balance has been reduced to zero.
Subsequent distributions received are recognized as income.
The following is a summary of the investments in limited partnerships
and reconciliation to the limited partnership accounts:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Investment balance, beginning of year $ 690,570 $ 679,271
Equity in income of limited partnerships 893,892 543,481
Amortization of capitalized acquisition costs and fees (5,973) (3,752)
Capital contributions to limited partnerships - 25,595
Cash distributions recognized as return of capital (647,913) (554,025)
---------- ----------
Investment balance, end of year $ 930,576 $ 690,570
========== ==========
</TABLE>
The difference between the investment in the accompanying balance
sheets at December 31, 1995 and 1994, and the deficiency per the
limited partnerships' combined financial statements is due primarily to
the cumulative unrecognized equity in losses of certain limited
partnerships, costs capitalized to the investment account and
cumulative distributions recognized as income.
Selected financial information from the combined financial statements
at December 31, 1995 and 1994 and for each of the three years in the
period ended December 31, 1995, of the limited partnerships in which
the Partnership has invested directly or indirectly, is as follows:
Balance Sheets
<TABLE>
<CAPTION>
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 57,454 $ 59,971
======== ========
Total assets $ 71,818 $ 74,389
======== ========
Mortgages payable $ 90,573 $ 91,569
======== ========
Total liabilities $ 97,506 $ 98,601
======== ========
Deficiency of Real Estate Associates Limited III $(25,837) $(24,455)
======== ========
Equity of other partners $ 149 $ 243
======== ========
</TABLE>
7
<PAGE> 19
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Total revenue $22,082 $21,540 $21,407
======= ======= =======
Interest expense $ 6,914 $ 7,074 $ 7,326
======= ======= =======
Depreciation $ 3,722 $ 3,700 $ 3,771
======= ======= =======
Total expenses $22,278 $22,514 $21,909
======= ======= =======
Net loss $ (196) $ (974) $ (502)
======= ======= =======
Net loss allocable to the Partnership $ (184) $ (962) $ (271)
======= ======= =======
</TABLE>
Land and buildings, above, have been adjusted for the amount by which
the investments in the limited partnerships exceed the Partnership's
share of the net book value of the underlying net assets of the
investee which are recorded at historical costs. Depreciation on the
adjustment is provided for over the estimated remaining useful lives
of the properties.
An affiliate of NAPICO is the general partner in one of the limited
partnerships included above, and another affiliate receives property
management fees of 5 percent of its revenue. The affiliate received
property management fees of $16,128, $14,976 and $15,840 in 1995, 1994
and 1993, respectively. The following sets forth the significant data
for this partnership, reflected in the accompanying financial
statements using the equity method of accounting:
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $ 1,132 $ 1,130
========= =======
Total liabilities $ 1,834 $ 1,786
========= =======
Deficiency of Real Estate Associates
Limited III $ (826) $ (780)
========= =======
Equity of other partners $ 124 $ 124
========= =======
Total revenues $ 370 $ 378 $ 348
========= ======= =======
Net loss $ (46) $ (33) $ (104)
========= ======= =======
</TABLE>
8
<PAGE> 20
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
3. NOTES PAYABLE
Certain of the Partnership's investments involved purchases of
partnership interests from partners who subsequently withdrew from the
operating partnership. The Partnership is obligated on non-recourse
notes payable of $1,510,000, bearing interest at 10 percent, to the
sellers of the partnership interests. These notes are payable by the
Partnership through REA, and have principal maturity dates in June
2020 and March 2024 or upon the sale or refinancing of the underlying
partnership properties. These notes and the related interest are
collaterized by REA's investment in the respective limited
partnerships and are payable only out of cash distributions from the
investee partnerships, as defined in the notes. Unpaid interest is
due at maturity of the notes.
Maturity dates on the notes payable are as follows:
<TABLE>
<CAPTION>
Years Ending December 31
------------------------
<S> <C>
1996 $ -
1997 -
1998 -
1999 -
2000 -
Thereafter 1,510,000
----------
$1,510,000
==========
</TABLE>
4. FEES AND EXPENSES DUE GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partners, the Partnership is liable to NAPICO for an annual management
fee equal to .4 percent of the original invested assets of the limited
partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interest in the capital accounts of
the respective partnerships.
The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $29,927, $28,835 and $28,665 in 1995, 1994
and 1993, respectively, and is included in operating expenses.
5. CONTINGENCIES
The corporate general partner of the Partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business. In the
opinion of management and the corporate general partner, the claims
will not result in any material liability to the Partnership.
9
<PAGE> 21
REAL ESTATE ASSOCIATES LIMITED III
(A California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
6. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of
the individual partners. The major differences in tax and financial
reporting result from the use of different bases and depreciation
methods for the properties held by the limited partnerships.
Differences in tax and financial losses also arise as losses are not
recognized for financial reporting purposes when the investment
balance has been reduced to zero.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair
value information about financial instruments, when it is practicable
to estimate that value. The notes payable are collateralized by the
Partnership's investments in the investee limited partnerships and are
payable only out of cash distributions from the investee partnerships.
The operations generated by the investee limited partnerships are
subject to various government rules, regulations and restrictions
which make it impracticable to estimate the fair value of the notes
payable and related accrued interest. The carrying amount of other
assets and liabilities reported on the balance sheets that require
such disclosure approximates fair value due to their short-term
maturity.
8. FOURTH QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in income of limited
partnerships on a quarterly basis, using estimated financial
information furnished by the various local operating general partners.
The equity in income reflected in the accompanying annual financial
statements is based primarily upon audited financial statements of the
investee limited partnerships. The increase of approximately
$378,000, between the estimated nine-month equity in income and the
actual total for 1995 equity in income has been recorded in the fourth
quarter.
10
<PAGE> 22
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1995
--------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Bowin Place $ 365,973 $ $ (39,861) $ 193,848 $ 519,960
Casa de las Hermanitas (76,359) 97,530 21,171
Charlotte
Creekview Apartments
Foothill Gardens (23,532) 23,532
Frazier Park Apartments
Gary Manor
Grandview Homes (36,969) 36,969
Hidden Pines Apartments
Highlawn Place (122,066) 122,066
Jenks School Apartments 324,597 (36,972) 101,820 389,445
Kern Villa
Lakeside Apartments
New Baltimore Towers (53,207) 53,207
Panorama Park Apartments (14,448) 14,448
Ramblewood Apartments
Santa Maria Apartments
Senior Chateau (146,237) 146,237
Sheraton Towers
South Bay Villa (98,262) 98,262
Sunset Grove Apartments
Sunshine Canyon Apartments
Tujunga Gardens
Twenty-Nine Palms Apartments
Vicente Geigel Polanco Apts.
Village Apartments
</TABLE>
<PAGE> 23
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1995
--------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Village Apartments (Kaufman)
Village Grove Apartments
Vista De Jagueyes
Westgate Apartments
Wilderness Trail Manor
Wilkes Towers
--------- ------------ --------- -------- --------
TOTAL $ 690,570 $ - $(647,913) $887,919 $930,576
========= ============ ========= ======== ========
</TABLE>
<PAGE> 24
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1994
--------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Bowin Place $ 283,974 $ $ (39,861) $ 121,860 $ 365,973
Casa de las Hermanitas 106,770 (106,770)
Charlotte
Creekview Apartments
Foothill Gardens
Frazier Park Apartments (9,900) 9,900
Gary Manor
Grandview Homes (22,839) 22,839
Hidden Pines Apartments
Highlawn Place (184,826) 184,826
Jenks School Apartments 288,527 (78,002) 114,072 324,597
Kern Villa
Lakeside Apartments
New Baltimore Towers (69,370) 69,370
Panorama Park Apartments (17,888) 17,888
Ramblewood Apartments
Santa Maria Apartments
Senior Chateau (131,339) 131,339
Sheraton Towers
South Bay Villa
Sunset Grove Apartments
Sunshine Canyon Apartments
Tujunga Gardens
Twenty-Nine Palms Apartments 25,595 (25,595)
Vicente Geigel Polanco Apts.
Village Apartments
</TABLE>
<PAGE> 25
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1994
--------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Village Apartments (Kaufman)
Village Grove Apartments
Vista De Jagueyes
Westgate Apartments
Wilderness Trail Manor
Wilkes Towers
--------- --------- --------- -------- --------
TOTAL $ 679,271 $ 25,595 $(554,025) $539,729 $690,570
========= ========= ========= ======== ========
</TABLE>
<PAGE> 26
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1993
----------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Bowin Place $ 68,604 $ $ (39,861) $ 255,231 $ 283,974
Casa de las Hermanitas 129,478 (22,708) 106,770
Charlotte
Creekview Apartments
Foothill Gardens (17,177) 17,177
Frazier Park Apartments
Gary Manor
Grandview Homes (5,927) 5,927
Hidden Pines Apartments
Highlawn Place (191,747) 191,747
Jenks School Apartments 293,084 (65,534) 60,977 288,527
Kern Villa
Lakeside Apartments
New Baltimore Towers (62,940) 62,940
Panorama Park Apartments
Ramblewood Apartments
Santa Maria Apartments
Senior Chateau (123,528) 123,528
Sheraton Towers
South Bay Villa (7,015) 7,015
Sunset Grove Apartments
Sunshine Canyon Apartments
Tujunga Gardens (23,163) 23,163
Twenty-Nine Palms Apartments 16,132 (16,132)
Vicente Geigel Polanco Apts.
Village Apartments
</TABLE>
<PAGE> 27
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1993
----------------------------------------------------------------------------------
Cash Equity
Balance Distri- in Balance
January Capital butions Income December
Limited Partnerships 1, 1995 Contributions Received (Loss) 31, 1995
- -------------------- ------- ------------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Village Apartments (Kaufman)
Village Grove Apartments
Vista De Jagueyes
Westgate Apartments
Wilderness Trail Manor
Wilkes Towers
--------- ---------- --------- -------- ---------
TOTAL $ 491,166 $ 16,132 $(536,892) $708,865 $ 679,271
========= ========== ========= ======== =========
</TABLE>
<PAGE> 28
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED
DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Equity in losses of the limited partnerships represents the
Partnership's allocable share of the net loss from the limited
partnerships for the year. Equity in losses of the limited
partnerships will be recognized until the investment balance
is reduced to zero or below zero to an amount equal to future
capital contributions to be made by the Partnership.
2. Cash distributions from the local limited partnerships will be
treated as a return on the investment and will reduce the
investment balance until such time as the investment is
reduced to an amount equal to additional contributions.
Distributions subsequently received will be recognized as
income.
<PAGE> 29
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED III
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings, Furnishings
& Equipment - Initial
Cost to Partnership
Number Outstanding and Amount Carried
of Mortgage at Close of Accumulated Construction
Partnership/Location Units Loan Land Period Total Depreciation Period
-------------------- ------ ----------- ---------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Bowin Place 193 $ 5,329,476 $ 752,729 $ 5,708,192 $ 6,460,921 $ 3,694,172 (A)
Detroit, Michigan
Casa De Las Hermanitas 88 3,149,619 405,578 3,809,605 4,215,183 1,870,641 1981
Los Angeles, California
Charlotte Lakeview 553 12,786,375 551,500 18,261,984 18,813,484 13,603,472 (A)
Rochester, NY
Creekview Apartments 80 2,081,634 213,463 2,340,084 2,553,547 961,443 1981-1982
Stroudsburg, Pennsylvania
Foothill Gardens 54 2,038,353 309,626 2,447,512 2,757,138 1,256,810 1981
Los Angeles, California
Frazier Park Apartments 60 2,754,415 400,067 3,276,813 3,676,880 1,568,551 1981-1982
Baldwin Park, California
Gary Manor 198 5,654,325 399,715 6,905,472 7,305,187 4,415,777 (A)
Gary, Indiana
Grandview Homes 26 1,267,910 324,293 1,377,730 1,702,023 688,939 1981
Los Angeles, California
Hidden Pines Apartments 40 1,388,566 43,954 1,648,093 1,692,047 1,554,857 1981
Greenville, Michigan
Highlawn Place 133 2,922,636 310,653 3,307,393 3,618,046 2,252,600 (A)
Huntington, West Virginia
Jenks School Apartments 83 2,564,570 96,740 3,590,394 3,687,134 1,584,341 1981-1982
Pawtucket, Rhode Island
Kern Villa 49 2,369,360 311,811 2,868,195 3,180,006 1,386,027 1981-1982
Los Angeles, California
Lakeside Apartments 32 684,466 72,336 931,257 1,003,593 927,295 1980-1981
Stuart, Florida
New Baltimore Towers 101 2,320,549 455,282 3,121,602 3,576,884 2,265,029 (A)
New Baltimore, MD
Panorama Park Apartments 66 2,901,299 680,296 3,253,405 3,933,701 1,575,947 1981-1982
Bakersfield, California
Ramblewood Apartments 64 1,089,156 53,267 1,597,590 1,650,857 911,955 1980-1981
Fort Payne, Alabama
Santa Maria Apartments 86 2,879,690 86,106 3,216,936 3,303,042 1,730,058 1981-1982
San German, Puerto Rico
Senior Chateau 185 4,215,674 408,863 4,651,140 5,060,003 3,201,552 (A)
Cincinnati, Ohio
Sheraton Towers 97 2,858,916 50,546 3,484,037 3,534,583 1,274,787 1981-1982
High Point, North Carolina
South Bay Villa 80 3,620,263 365,333 4,609,170 4,974,503 2,282,970 1980-1981
San Pedro, California
Sunset Groove Apartments 22 672,088 19,432 800,585 820,017 744,874 1981-1982
Carson City, Michigan
Sunshine Canyon Apartments 26 850,546 20,262 991,762 1,012,024 913,610 1981-1982
Stanton, Michigan
The Village Apartments 68 1,761,365 152,573 1,955,814 2,108,387 750,812 1980-1981
Kaufman, Texas
Tujunga Gardens 54 2,017,669 325,492 2,390,317 2,715,809 1,200,986 1981
Los Angeles, California
Twenty-Nine Palms Apts. 48 1,616,750 111,617 1,921,064 2,032,681 1,099,215 1981-1982
Twenty-Nine Palms, California
Village Apartments 51 1,447,888 65,245 1,642,060 1,707,305 1,090,994 1981-1982
La Follette, Tennessee
Village Grove Apartments 104 3,509,131 416,000 4,559,583 4,975,583 2,396,019 1974
Corona, California
Vicente Geigel Polanco Apts. 80 2,609,221 107,685 2,837,393 2,945,078 1,524,659 1981-1982
Issabela, Puerto Rico
Vista De Jagueyes 73 2,665,461 102,554 3,241,985 3,344,539 1,798,836 1981-1982
Aguas Buenas, Puerto Rico
Westgate Apartments 72 1,122,708 80,000 1,476,168 1,556,168 656,511 1980-1981
Albertville, Alabama
Wilderness Trail Manor 124 5,361,107 191,542 6,506,682 6,698,224 3,723,818 1982
Pineville, Kentucky
Wilkes Towers 72 2,061,507 32,471 2,302,594 2,335,065 840,372 1981-1982
Wilkesboro, North Carolina
Additional basis of real estate
due to REAL III's capital
contribution to investee limited
partnership 769,172 9,502,360 10,271,532 6,019,146
----- ----------- ---------- ------------ ------------ -----------
TOTAL 3,062 $90,572,693 $8,686,203 $120,534,971 $129,221,174 $71,767,075
===== =========== ========== ============ ============ ===========
</TABLE>
(A) This project was completed when REAL III entered the Partnership.
<PAGE> 30
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS INVESTMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Each local limited partnership has developed, owns and
operates the housing project. Substantially all project
costs, including construction period interest expense, were
capitalized by the limited partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the Projects. The estimated
composite useful lives of the buildings are generally from 25
to 40 years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
Land and Equipment Total
-------- ------------- --------
<S> <C> <C> <C>
Balance, January 1, 1993 $8,537,253 $118,648,098 $127,185,351
Net additions during 1993 29,800 591,046 620,846
---------- ------------ ------------
Balance, December 31, 1993 8,567,053 119,239,144 127,806,197
Net additions during 1994 39,791 469,127 508,918
---------- ------------ ------------
Balance, December 31, 1994 8,606,844 119,708,271 128,315,115
Net additions during 1995 79,359 826,700 906,059
---------- ------------ ------------
Balance, December 31, 1995 $8,686,203 $120,534,971 $129,221,174
========== ============ ============
</TABLE>
<PAGE> 31
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED III
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL III HAS INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Equipment
---------
Accumulated Depreciation:
- ------------------------
<S> <C>
Balance, January 1, 1993 $60,909,456
Net additions during 1993 3,746,819
-----------
Balance, December 31, 1993 64,656,275
Net additions during 1994 3,687,594
-----------
Balance, December 31, 1994 68,343,869
Net additions during 1995 3,423,206
-----------
Balance, December 31, 1995 $71,767,075
===========
</TABLE>
<PAGE> 32
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
REAL ESTATE ASSOCIATES LIMITED III (the "Partnership") has no directors or
executive officers of its own.
National Partnership Investment Corp. ("NAPICO" or "the Managing General
Partner") is a wholly-owned subsidiary of Casden Investment Company, an
affiliate of The Casden Company. The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.
CHARLES H. BOXENBAUM, 66, Chairman of the Board of Directors and Chief
Executive Officer of NAPICO.
Mr. Boxenbaum has been associated with the NAPICO since its inception. He has
been active in the real estate industry since 1960, and prior to joining NAPICO
was a real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate
Association, National Institute of Real Estate Brokers, Appraisal Institute,
various mortgage banking seminars, and the North American Property Forum held
in London, England. In 1963, he was the winner of the Snyder Award, the
highest annual award offered by the National Association of Real Estate Boards
for Best Exchange. He is one of the founders and a past director of the First
Los Angeles Bank, organized in November 1974. Mr. Boxenbaum was a member of
the Board of Directors of the National Housing Council. Mr. Boxenbaum received
his Bachelor of Arts degree from the University of Chicago.
BRUCE E. NELSON, 44, President and a director of NAPICO.
Mr. Nelson joined the NAPICO in 1980 and became President in February 1989. He
is responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved
in the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his
Bachelor of Arts degree from the University of Wisconsin and is a graduate of
the University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 50, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.
Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Company. Prior to
that, he was the president and chairman of Mayer Group, Inc., which he joined
in 1975. He is also chairman of Mayer Management, Inc., a real estate
management firm. Mr. Casden has been involved in approximately $3 billion of
real estate financings and sales and has been responsible for the development
and construction of more than 12,000 apartment units and 5,000 single-family
homes and condominiums.
<PAGE> 33
Mr. Casden is a member of the American Institute of Certified Public
Accountants and of the California Society of Certified Public Accountants. Mr.
Casden is a member of the advisory board of the National Multi-Family Housing
Conference, the Multi-Family Housing Council, and the President's Council of
the California Building Industry Association. He also serves on the advisory
board to the School of Accounting of the University of Southern California. He
holds a Bachelor of Science and a Masters in Business Administration degree
from the University of Southern California.
HENRY C. CASDEN, 52, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.
Mr. Casden has been President and Chief Operating Officer of The Casden
Company, as well as a director of NAPICO since February 1988. He became
secretary of both companies in late 1994. From 1982 to 1988, Mr. Casden was of
counsel and a partner in the Los Angeles law firm of Troy, Casden & Gould.
From 1978 to 1981, he was of counsel and a partner in the Los Angeles law firm
of Loeb & Loeb. From 1972 to 1978, Mr. Casden was a member of the Beverly
Hills law firm of Fink & Casden, Professional Corporation.
Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.
BRIAN D. GOLDBERG, 32, Chief Financial Officer of The Casden Company and a
director of NAPICO.
Mr. Goldberg joined The Casden Company in 1990 as Vice President of Finance and
became Chief Financial Officer in March 1991. Prior to joining The Casden
Company, Mr. Goldberg was with Arthur Andersen & Co., an international public
accounting firm, from August 1985 until July 1990 in their Los Angeles office.
He received his bachelor of science degree in Accounting from the University of
Denver. Mr. Goldberg is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
SHAWN HORWITZ, 36, Executive Vice President and Chief Financial Officer.
Mr. Horwitz joined NAPICO in 1990 and is responsible for the financial affairs
of NAPICO and the limited partnerships sponsored by NAPICO. Prior to joining
NAPICO, Mr. Horwitz was President of Star Sub Shops, Inc., a corporation
engaged in the business of selling fast food franchises, for approximately one
year, was an audit manager in the real estate industry group for Altschuler,
Melvin & Glasser for six years, and was an auditor with Arthur Young & Co. for
3 years.
Mr. Horwitz received his Bachelor of Commerce degree in accounting from Rhodes
University in South Africa and is a member of the Illinois Society of Certified
Public Accountants, the American Institute of Certified Public Accountants and
the South African Institute of Chartered Accountants.
BOB SCHAFER, 54, Vice President and Corporate Controller.
Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years.
Mr. Schafer is a member of the California Society of Certified Public
Accountants. He holds a Bachelor of Science degree in accounting from Woodbury
University, Los Angeles.
<PAGE> 34
PATRICIA W. TOY, 66, Senior Vice President - Communications and Assistant
Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 35, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr.
Walther worked in the San Francisco law firm of Browne and Kahn which
specialized in construction litigation. Mr. Walther received his Bachelor of
Arts Degree in Political Science from the University of California, Santa
Barbara and is a graduate of the University of California, Davis, School of
Law. He is a member of the State Bar of Hawaii.
<PAGE> 35
ITEM 11. MANAGEMENT RENUMERATION AND TRANSACTIONS
Real Estate Associates Limited III has no officers, employees or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee The annual management fee is approximately equal to .4
percent of the invested assets, including the Partnership's allocable share of
the mortgages related to real estate properties held by local limited
partnerships is to be paid to the general partners. The fee is earned
beginning in the month the Partnership makes its initial contribution to the
limited partnership. In addition, the Partnership reimburses the Corporate
General Partner for certain expenses.
An affiliate of the Corporate General Partner is responsible for the on-site
property management for a property owned by a limited partnership in which the
Parntership has invested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The general partners own all of the outstanding general
partnership interests of REAL III; no person is known to own
beneficially in excess of 5% of the outstanding limited
partnership interests.
(b) At December 31, 1995, security ownership of management is as
listed:
<TABLE>
<CAPTION>
Amount and Percentage of
Nature of Outstanding
Name of Beneficial Limited
Title of Class Beneficial Owner Owner Partner Interests
- -------------- ---------------- ---------- -----------------
<S> <C> <C> <C>
Limited Partnership Interest Coast Housing Investments
Associates (CHIA)
9090 Wilshire Blvd., #201
Beverly Hills, CA 90211 30,000 *
Limited Partnership Interest Charles H. Boxenbaum
780 Latimer Road
Santa Monica, CA 90402 17,500 *
Limited Partnership Interest Bruce E. Nelson
7036 Grasswood Avenue
Malibu, CA 90265 5,000 *
</TABLE>
* Cumulative Limited Partnership interests owned by corporate officers
or the general partner is less than 1% interest of total outstanding
Limited Partnership interests.
<PAGE> 36
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The transactions with the Corporate General Partner are
primarily in the form of fees paid by the Partnership to the general partner
for services rendered to the Partnership, as discussed in Item 11 and in the
notes to the accompanying financial statements.
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORT ON FORM
8-K:
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the years ended December 31, 1995, 1994 and 1993.
Statements of Partners' Equity (Deficiency) for the years ended December 31,
1995, 1994 and 1993.
Statements of Cash Flow for the years ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED III, REAL ESTATE ASSOCIATES AND THE
LIMITED PARTNERSHIPS IN WHICH REAL ESTATE ASSOCIATES LIMITED III AND REAL ESTATE
ASSOCIATES HAVE INVESTMENTS:
Schedule - Investments in Limited Partnerships, December 31, 1995, 1994 and
1993.
Schedule III - Real estate and accumulated depreciation, December 31, 1995.
The remaining schedules are omitted because the required information is
included in the financial statements and notes thereto or they are not
applicable or not required.
EXHIBITS
<TABLE>
<S> <C>
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form
S-11 #268983 incorporated herein by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of
Limited Partnership dated January 5, 1981, and the thirty-three
contracts representing the Partnership investment directly or
indirectly in local limited partnerships as previously filed at the
Securities Exchange Commission, File 268983 which is hereby
incorporated by reference.
(13) Annual report to security holders: page 10.
</TABLE>
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,028,963
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,153,963
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,185,039
<CURRENT-LIABILITIES> 13,391
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,316,886
<TOTAL-LIABILITY-AND-EQUITY> 10,185,037
<SALES> 0
<TOTAL-REVENUES> 1,920,622
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 683,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 151,000
<INCOME-PRETAX> 1,086,012
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,086,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,086,012
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
