<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 2, 1998
REAL ESTATE ASSOCIATES LIMITED III
--------------------------------------------------
(Exact name of Registrant as specified in charter)
California 2-68983 95-3547611
- --------------- ----------- -------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
9090 Wilshire Boulevard
Suite 201
Beverly Hills, California 90211
Address of Principal Executive Offices
Registrant's telephone number, including area code: 310/278-2191
Page 1 of 3
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Registrant recently became aware through several of its
limited partners that an entity identified as Bond Purchase, L.L.C. was
apparently conducting tender offers for units in the Registrant pursuant to an
"Offer to Purchase Limited Partnership Interests For $610.00" dated March 2,
1998 and pursuant to an "Offer to Purchase Limited Partnership Interests For
$312.00" dated June 26, 1998. Registrant has no further information about these
"Offers to Purchase" or Bond Purchase, L.L.C. By letters dated March 11, 1998
and July 15, 1998, the Registrant's general partners, on behalf of the
Registrant, advised the limited partners to consult with their tax advisors
about the tax consequences that could result from a sale of their units. Copies
of the "Offers to Purchase" and the Registrant's letters are attached hereto as
exhibits.
EXHIBITS
The following exhibits are attached to this Current Report and thereby
made a part thereof:
1. Copy of the "Offer to Purchase" documents dated March 2, 1998 as
received from Registrant's limited partners.
2. Copy of Registrant's letter to its limited partners dated March
11, 1998.
3. Copy of the "Offer to Purchase" documents dated June 26, 1998 as
received from Registrant's limited partners.
4. Copy of Registrant's letter to its limited partners dated July 15,
1998.
Page 2 of 3
<PAGE> 3
SIGNATURES
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 hereunto duly authorized.
DATED: August 9, 1998
REAL ESTATE ASSOCIATES LIMITED III,
A CALIFORNIA LIMITED PARTNERSHIP
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.,
A CALIFORNIA CORPORATION,
ITS GENERAL PARTNER
By: /s/ Bruce E. Nelson
-----------------------------
Its: President
------------------------
Page 3 of 3
<PAGE> 1
BOND PURCHASE L.L.C.
PO. Box 26730
Kansas City, MO 64196
March 2, 1998
To the Holders of Limited Partnership Interests in Real Estate
Associates Limited III.
RE: OFFER TO PURCHASE LIMITED PARTNERSHIP INTERESTS FOR $610.00
Dear Investor:
We are offering you an opportunity to sell your limited partnership
interests (the "Units") in Real Estate Associates Limited III (the
Partnership") for cash in the amount of $610.00 per Unit (which amount will be
reduced by any cash distributions declared by the Partnership after the date
of this letter). Our offer provides you with an opportunity to sell your
Units now without the costly transfer fees and commission costs (typically up
to 10%) usually paid by the seller in secondary market sales. ALL TRANSFER
COSTS AND FEES WILL BE PAID BY BOND PURCHASE, L.L.C.
We believe that it is appropriate for investors to have financial choices.
Our offer gives you, the investor, the ability to make a decision about your
continued involvement with the Partnership. You may no longer wish to continue
with your investment in the Partnership for a number of reasons, including:
* NO FURTHER IRS FILING
* HIGHEST OFFER - This offer is higher than the last reported trade of $304
(October 1, 1997 to December 31, 1997) in the secondary market.
* If you sell your units, 1998 will be the final year for which you receive
a K-1 tax form from the partnership.
* You may be able to realize a tax loss that would reduce your taxes for
1998.
* The Partnership was closed seventeen years ago in 1981. Your money has
been tied up for this long period with minimal return.
* More immediate use for the cash tied up in your investment in the Units.
* The absence of a formal trading market for the Units and their resulting
relative illiquidity.
<PAGE> 2
* The lack of any current cash distributions.
* General disenchantment with real estate investments, particularly long-
term investments in limited partnerships;
Our offer is limited to 570 of the 11,456 outstanding Units. If we were to
acquire more than this amount, the administrative costs of our offer would
become burdensome.
We will accept for purchase properly documented Units on a "first-received,
first-buy" basis. You will be paid promptly following confirmation of a valid,
properly executed Agreement of Transfer and other required transfer documents.
We will pay for all Partnership transfer fees and costs. All tenders of Units
will be irrevocable and may not be rescinded or withdrawn.
We are real estate investors who are not affiliated with the Partnership or
the General Partners. The General Partners of the Partnership have not
analyzed, approved, endorsed or made any recommendation as to acceptance of
the offer. The purchase offer has been determined solely at the discretion of
Bond Purchase, L.L.C. and does not necessarily represent the true market value
of each unit. We are seeking to acquire Units for investment purposes only and
not with a view to their resale.
An Agreement of Transfer is enclosed which you can use to accept our offer.
Please execute page 3 of this document, as well as the Power of Attorney.
Obtain all other required signatures and return the documentation in the
enclosed envelope. Please note that all signatures must be medallion
guaranteed. The transfer cannot be processed without signatures that are
medallion guaranteed and failure to obtain them will result in needless
delays. In addition, place your Unit Certificate in the enclosed envelope. We
encourage you to act immediately if you are interested in accepting or offer
as only 570 Units will be purchased.
OUR OFFER WILL EXPIRE AT 5:00 PM ON APRIL 30, 1998, UNLESS EXTENDED.
Please call William Teel at (816) 421-4670 if you have any questions.
Sincerely,
Bond Purchase, L.L.C.
<PAGE> 3
AGREEMENT OF TRANSFER
FOR LIMITED PARTNERSHIP INTERESTS IN
REAL ESTATE ASSOCIATES LIMITED III
Subject to and effective upon acceptance for payment, the
undersigned (the "Seller") hereby sells, assigns, transfers, conveys and
delivers and irrevocably directs any custodian or trustee to sell, assign,
transfer, convey and deliver (the "Transfer") to Bond Purchase, LLC or its
assigns, a Missouri limited liability company (the "Purchaser"), all of the
Seller's right, title and interest in Partnership Units (the "Units") of Real
Estate Associates Limited III, (the "Partnership"), for $610.00 per Unit, net
to the Seller in cash, which amount shall be reduced by any distributions
declared by the Partnership after March 2, 1998.
Such Transfer shall include, without limitation, all rights in, and
claims to, any Partnership profits and losses, cash distributions, voting
rights and other benefits of any nature whatsoever distributable or allocable
to such Units under the Partnership's Certificate and Agreement of Limited
Partnership, as amended (the "Partnership Agreement"). The Seller hereby
irrevocably constitutes and appoints the Purchaser as the true and lawful
agent and attorney-in-fact of the Seller with respect to such Units, with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to vote, inspect Partnership
books and records or act in such manner as any such attorney-in-fact shall, in
its sole discretion, deem proper with respect to such Units, to deliver such
Units and transfer ownership of such Units on the Partnership's books
maintained by the General Partner of the Partnership, together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Purchaser of the purchase price, to receive all benefits and cash
distributions, endorse Partnership checks payable to Seller and otherwise
exercise all rights of beneficial ownership of such Units. The Purchaser shall
not be required to post bond of any nature in connection with this power of
attorney.
The Seller hereby represents and warrants to the Purchaser that the
Seller owns such Units and has full power and authority to validly sell,
assign, transfer, convey and deliver such Units to the Purchaser, and that
when any such Units are accepted for payment by the Purchaser, the Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear
of all options, liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
such Units will not be subject to any adverse claim. The Seller further
represents and warrants that the Seller is a "United States person", as
defined in Section 7701 (a)(30) of the Internal Revenue Code of 1986, as
amended, or if the Seller is not a United States person, that the Seller does
not own beneficially or of record more than 5% of the outstanding Units.
<PAGE> 4
Agreement of Transfer
Page 2
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity or liquidation of the Seller and any
obligations of the Seller shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. This agreement
is irrevocable and may not be withdrawn or rescinded.
Upon request, the Seller will execute and deliver, and irrevocably
directs any custodian to execute and deliver, any additional documents deemed
by the Purchaser to be necessary or desirable to complete the assignment,
transfer and purchase of such Units.
The Seller releases and discharges the General Partners, any IRA or
KEOGH Custodian, and their respective officers, shareholders, directors,
employees and agents from all causes of action, claims, or demands the Seller
has or may have against them resulting from their reliance on this Agreement
of Transfer or any of the terms and conditions contained herein
The Seller hereby certifies, under penalties of perjury, that (1)
the number shown below on this form and the Sellers Taxpayer Identification
Number is correct and (2) Seller is not subject to backup withholding either
because Seller has not been notified by the Internal Revenue Service (the
"IRS") that Seller is subject to backup withholding as a result of a failure
to report all interest on dividends, or the IRS has notified Seller that
Seller is no longer subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that
the Seller, if an individual, is not a nonresident alien for purposes of U.S.
income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations). The Seller
understands that this certification may be disclosed to the IRS by the
Purchaser and that any false statements contained herein could be punished by
fine, imprisonment, or both.
<PAGE> 5
Agreement of Transfer
Page 3
Date: ________ 1998
<TABLE>
<S> <C>
__________________________________________ ____________________________________
(Specify Number of Units Tendered: (Signature of Owner)
Indicate "ALL" if Number Not Available)
_____________________________________
Place Medallion Guarantee Stamp Here
__________________________________________ ______________________________________
(Your Telephone Number) (Signature of Co-Owner)
____________________________________
Place Medallion Guarantee Stamp Here
__________________________________________
(Your Social Security or Taxpayer ID Bond Purchase, LLC
Number) P.O. Box 26730
Kansas City, MO 64196
(816) 4214670
FAX (816) 221-1829
_____________________________________________ Bond Purchase, LLC
(Name of IRA Custodian, if applicable)
BY: __________________________________
Its Authorized Representative
</TABLE>
NOTE: All signatures on this agreement must be guaranteed by a member from
a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank, savings bank,
credit union, savings and loan association or trust company having an office,
branch or agency in the United States, which is a participant in the Security
Transfer Agent Medallion Program.
<PAGE> 6
POWER OF ATTORNEY/PROXY
In conjunction with the Assignor's (seller's) Assignment of Partnership Units
dated as of even date herewith, Seller irrevocably constitutes and appoints
David L. Johnson and William Teel, or any of them, to be Seller's true and
lawful special attorneys-in-fact, with full power of substitution to exercise
in the name, place and stead of Seller any and all rights, interests, powers,
and duties with respect to or arising out of the Seller's interest in:
REAL ESTATE ASSOCIATES LIMITED III
which Units have been assigned to Bond Purchase. L.L.C. (the"Buyer") pursuant
to the Agreement of Transfer. This Power of Attorney shall include with
limitation, (1) the right to execute on behalf of Seller, all assignments,
certificates, documents and instruments that may be required for the purpose
of transferring the Units owned by the Seller, (2) the right to vote the Units
or to require or receive an information or report with respect to the
partnerships' books and records, (3) the right to endorse and cash any check
made payable by the partnership to Seller on or after the date hereof, and (4)
the right, if the Units are held in an IRA account or pension account, to
contact the Seller's custodian and direct him to facilitate in the transfer of
the Units from the Seller to Buyer Fund. This Power of Attorney is part of and
hereby incorporated in the application for transfer. This Power of Attorney
shall not be affected by the subsequent mental disability of the undersigned
as principal, is irrevocable and coupled with an interest, and Buyer shall not
be required to post bond in any nature in connection with this Power of
Attorney. This Power of Attorney shall also serve as a Letter of Authorization
directing the Assignor's custodian(s) and trustee(s) to sign any documents
necessary to facilitate the transfer of the units being assigned in
conjunction with this Power of Attorney as required by the herein named
attomeys-in-fact.
<TABLE>
<S> <C>
__________________________________ _________________________________________
PRINT Assignor (Registered Name) PRINT Joint Assignor or Custodian/Trustee
__________________________________ _________________________________________
SIGNATURE of Assignor SIGNATURE Int. Assignor or Custodian/Trustee
DATE ____________ ,199__ DATE ____________________ 199__
Signature Medallion Guarantee Signature Medallion Guarantee
__________________________________ _________________________________________
</TABLE>
<PAGE> 1
[REAL ESTATE ASSOCIATES LIMITED III LETTERHEAD]
March 11, 1998
RE: REAL ESTATE ASSOCIATES LIMITED III
Dear Investor:
Several limited partners have called or written us to tell us that
they have received an unsolicited tender offer to buy their interests in REAL
III. The buyers, Bond Purchase LLC, represent that these purchases would be
for investment purposes only.
The General Partners are unable to value the interests because of a
lack of market for them, and therefore cannot comment on the fairness of Bond
Purchase LLC's offer. Limited Partners should also be aware that a sale of
their interests in REAL III will have tax consequences that should be
evaluated in consultation with each Limited Partner's own tax advisor.
In addition, the General Partners of REAL III expect to solicit the
consent of the Limited Partners to a proposed transaction pursuant to which
several of the properties in which REAL III has invested would be sold to a
real estate investment trust (the "REIT") to be organized by affiliates of the
General Partners of REAL III. Proxy materials have not yet been filed with the
Securities and Exchange Commission and solicitation of consents is not
expected to commence until the second quarter of 1998. If the REIT transaction
is consummated, limited partners would receive distributions of net sales
proceeds according to their interests in the Partnership. It should be noted
that the REIT transaction will be subject to a number of conditions in
addition to approval by limited partners of REAL III, including completion of
a proposed private placement of shares of the REIT. Accordingly, there can be
no assurance that the proposed purchases by the REIT of the REAL III
properties will be consummated or that, if consummated, would be on the
currently proposed terms.
Most of the limited partners have negative capital account balances
with respect to their interests in REAL III. Our accountants tell us that on
average, the negative capital account balance for a $5,000 investor at the end
of December 1997 was approximately $8,100. This means that an investor would
recognize gain from the sale of his REAL III interest in an amount equal to
approximately $8,710 (the $8,100 negative capital account balance plus the
$615 cash sales price). This gain would be "passive" and would be offset by
passive losses which such investor may have from REAL III (suspended from
prior years) or other sources. Unless a limited partner has suspended or
current losses from other sources, a substantial portion of the gain would
still be subject to tax liability.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE
ON YOUR OWN PARTICULAR SITUATION.
[LOGO]
CORPORATE GENERAL PARTNER: National Partnership Investments Corp.
<PAGE> 2
Page 2
REAL III
The General Partners urge each investor to carefully consider the
foregoing information before tendering his or her units to Bond Purchase LLC.
Although the offer letter states that investors cannot withdraw units which
may already have been tendered, you should consult with your attorney to
determine if this requirement is enforceable should you wish to reconsider
your decision to tender.
Sincerely,
National Partnership Investments Corp.
/s/ CHARLES H. BOXENBAUM /s/ BRUCE E. NELSON
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
<PAGE> 1
BOND PURCHASE L.L.C.
P.O. Box 26730
Kansas City, MO 64196
June 26, 1998
To the Holders of Limited Partnership Interests in Real Estate
Associates Limited III.
RE: OFFER TO PURCHASE LIMITED PARTNERSHIP INTERESTS FOR $312.00
Dear Investor:
We are offering you an opportunity to sell your limited partnership
interests (the "Units") in Real Estate Associates Limited III (the
"Partnership") for cash in the amount of $312.00 per Unit (which amount will be
reduced by any cash distributions declared by the Partnership after the date of
this letter). Our offer provides you with an opportunity to sell your Units now
without the costly transfer fees and commission costs (typically up to 10%)
usually paid by the seller in secondary market sales. ALL TRANSFER COSTS AND
FEES WILL BE PAID BY BOND PURCHASE, L.L.C.
We believe that it is appropriate for investors to have financial choices.
Our offer gives you, the investor, the ability to make a decision about your
continued involvement with the Partnership. You may no longer wish to continue
with your investment in the Partnership for a number of reasons, including:
* NO FURTHER IRS FILING.
* HIGHEST OFFER - This offer is higher than the last reported trade of $304
(October 1, 1997 to December 31, 1997) in the secondary market.
* If you sell your units, 1998 will be the final year for which you receive
a K-1 tax form from the partnership.
* You may be able to realize a tax loss that would reduce your taxes for
1998.
* The Partnership was closed seventeen years ago in 1981. Your money has
been tied up for this long period with minimal return.
* More immediate use for the cash tied up in your investment in the Units.
* The absence of a formal trading market for the Units and their resulting
relative illiquidity.
<PAGE> 2
* The lack of any current cash distributions.
* General disenchantment with real estate investments, particularly
long-term investments in limited partnerships;
Our offer is limited to 570 of the 11,456 outstanding Units. If we were to
acquire more than this amount, the administrative costs of our offer would
become burdensome.
We will accept for purchase properly documented Units on a
"first-received, first-buy" basis. You will be paid promptly following
confirmation of a valid, properly executed Agreement of Transfer and other
required transfer documents. We will pay for all Partnership transfer fees and
costs. All tenders of Units will be irrevocable and may not be rescinded or
withdrawn.
We are real estate investors who are not affiliated with the Partnership
or the General Partners. The General Partners of the Partnership have not
analyzed, approved, endorsed or made any recommendation as to acceptance of the
offer. The purchase offer has been determined solely at the discretion of Bond
Purchase, L.L.C. and does not necessarily represent the true market value of
each unit. We are seeking to acquire Units for investment purposes only and not
with a view to their resale.
An Agreement of Transfer is enclosed which you can use to accept our
offer. Please execute page 3 of this document, as well as the Power of
Attorney. Obtain all other required signatures and return the documentation in
the enclosed envelope. Please note that all signatures must be medallion
guaranteed. The transfer cannot be processed without signatures that are
medallion guaranteed and failure to obtain them will result in needless delays.
In addition, place your Unit Certificate in the enclosed envelope. We encourage
you to act immediately if you are interested in accepting or offer as only 570
Units will be purchased.
OUR OFFER WILL EXPIRE AT 5:00 PM ON JULY 31, 1998, UNLESS EXTENDED.
Please call John Katzer at (816) 421-4670 if you have any questions.
Sincerely,
Bond Purchase, L.L.C.
<PAGE> 3
AGREEMENT OF TRANSFER
FOR LIMITED PARTNERSHIP INTERESTS IN
REAL ESTATE ASSOCIATES LIMITED III
Subject to and effective upon acceptance for payment, the undersigned (the
"Seller") hereby sells, assigns, transfers, conveys and delivers and irrevocably
directs any custodian or trustee to sell, assign, transfer, convey and deliver
(the "Transfer") to Bond Purchase, LLC or it's assigns, a Missouri limited
liability company (the "Purchaser"), all of the Seller's right, title and
interest in Partnership Units (the "Units") of Real Estate Associates Limited
III, (the "Partnership"), for $312.00 per Unit, net to the Seller in cash, which
amount shall be reduced by any distributions declared by the Partnership after
June 26, 1998.
Such Transfer shall include, without limitation, all rights in, and claims
to, any Partnership profits and losses, cash distributions, voting rights and
other benefits of any nature whatsoever distributable or allocable to such Units
under the Partnership's Certificate and Agreement of Limited Partnership, as
mended (the "Partnership Agreement"). The Seller hereby irrevocably constitutes
and appoints the Purchaser as the true and lawful agent and attorney-in-fact of
the Seller with respect to such Units, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to vote, inspect Partnership books and records or act in such manner
as any such attorney-in-fact shall, in its sole discretion, deem proper with
respect to such Units, to deliver such Units and transfer ownership of such
Units on the Partnership's books maintained by the General Partner of the
Partnership, together with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Purchaser of the purchase price, to
receive all benefits and cash distributions, endorse Partnership checks payable
to Seller and otherwise exercise all rights of beneficial ownership of such
Units. The Purchaser shall not be required to post bond of any nature in
connection with this power of attorney.
The Seller hereby represents and warrants to the Purchaser that the Seller
owns such Units and has full power and authority to validly sell, assign,
transfer, convey and deliver such Units to the Purchaser, and that when any such
Units are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all options,
liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, and such Units will
not be subject to any adverse claim. The Seller further represents and warrants
that the Seller is a "United States person", as defined in Section 7701 (a)(30)
of the Internal Revenue Code of 1986, as amended, or if the Seller is not a
United States person, that the Seller does not own beneficially or of record
more than 5% of the outstanding Units.
<PAGE> 4
Agreement of Transfer
Page 2
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. This agreement is irrevocable and may not be
withdrawn or rescinded.
Upon request, the Seller will execute and deliver, and irrevocably directs
any custodian to execute and deliver, any additional documents deemed by the
Purchaser to be necessary or desirable to complete the assignment, transfer and
purchase of such Units.
The Seller releases and discharges the General Partners, any IRA or KEOGH
Custodian, and their respective officers, shareholders, directors, employees
and agents from all causes of action, claims, or demands the Seller has or may
have against them resulting from their reliance on this Agreement of Transfer
or any of the terms and conditions contained herein.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on this form and the Sellers Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest on dividends or the IRS has notified Seller that Seller is no longer
subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the
Seller, if an individual, is not a nonresident alien for purposes of U.S.
income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations). The Seller
understands that this certification may be disclosed to the IRS by the
Purchaser and that any false statements contained herein could be punished by
fine, imprisonment, or both.
<PAGE> 5
Agreement of Transfer
Page 3
Date: ________ 1998
__________________________________ __________________________________
(Specify Number of Units Tendered: (Signature of Owner)
Indicate "ALL" if Number Not Available)
__________________________________
Place Medallion Guarantee
Stamp Here
__________________________________ __________________________________
(Your Telephone Number) (Signature of Co-Owner)
__________________________________
Place Medallion Guarantee
Stamp Here
__________________________________
(Your Social Security or Taxpayer ID Bond Purchase, LLC
Number) P.O. Box 26730
Kansas City, MO 64196
(816) 421-4670
FAX (816) 221-1829
__________________________________ Bond Purchase, LLC
(Name of IRA Custodian,
if applicable) BY: _______________________________
Its Authorized Representative
NOTE: All signatures on this agreement must be guaranteed by a member
from a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank, savings bank,
credit union, savings and loan association or trust company having an office,
branch or agency in the United States, which is a participant in the Security
Transfer Agent Medallion Program.
<PAGE> 6
POWER OF ATTORNEY/PROXY
In conjunction with the Assignor's (seller's) Assignment of Partnership Units
dated as of even date herewith, Seller irrevocably constitutes and appoints
David L. Johnson, William C. Teel and Christine Robinson, or any of them, to be
Seller's true and lawful special attorneys-in-fact, with full power of
substitution to exercise in the name, place and stead of Seller any and all
rights, interests, powers, and duties with respect to or arising out of the
Seller's interest in:
REAL ESTATE ASSOCIATES LIMITED III
which Units have been assigned to Bond Purchase. L.L.C. (the "Buyer") pursuant
to the Agreement of Transfer. This Power of Attorney shall include with
limitation, (1) the right to execute on behalf of Seller, all assignments,
certificates, documents and instruments that may be required for the purpose of
transferring the Units owned by the Seller, (2) the right to vote the Units or
to require or receive an information or report with respect to the
partnerships' books and records, (3) the right to endorse and cash any check
made payable by the partnership to Seller on or after the date hereof and (4)
the right, if the Units are held in an IRA account or pension account, to
contact the Seller's custodian and direct him to facilitate in the transfer of
the Units from the Seller to Buyer Fund. This Power of Attorney is part of and
hereby incorporated in the application for transfer. This Power of Attorney
shall not be affected by the subsequent mental disability of the undersigned as
principal, is irrevocable and coupled with an interest, and Buyer shall not be
required to post bond in any nature in connection with this Power of Attorney.
This Power of Attorney shall also serve as a Letter of Authorization directing
the Assignor's custodian(s) and trustee(s) to sign any documents necessary to
facilitate the transfer of the units being assigned in conjunction with this
Power of Attorney as required by the herein named attorneys-in-fact.
- -------------------------------- --------------------------------------------
PRINT Assignor (Registered Name) PRINT Joint Assignor or Custodian/Trustee
- -------------------------------- --------------------------------------------
SIGNATURE of Assignor SIGNATURE Jnt. Assignor or Custodian/Trustee
DATE , 199 DATE , 199
-------------- --- ------------- --
Signature Medallion Guarantee Signature Medallion Guarantee
- -------------------------------- --------------------------------------------
<PAGE> 1
[REAL ESTATE ASSOCIATES LIMITED III LETTERHEAD]
July 15, 1998
RE: REAL ESTATE ASSOCIATES LIMITED III
Dear Investor:
Several limited partners have called or written us to tell us that they
have received an unsolicited tender offer to buy their interests in REAL III
from Bond Purchase LLC for $312 per $5,000 unit. The buyers represent that these
purchases would be for investment purposes only.
The General Partners are unable to value the interests because of a lack
of market for them, and therefore cannot comment on the fairness of Bond
Purchase LLC's offer. Limited Partners should also be aware that a sale of
their interests in REAL III will have tax consequences that should be evaluated
in consultation with each Limited Partner's own tax advisor.
In addition, the General Partners of REAL III expect to solicit the
consent of the Limited Partners to a proposed transaction pursuant to which
several of the properties in which REAL III has invested would be sold to a real
estate investment trust (the "REIT") to be organized by affiliates of the
General Partners of REAL III. Proxy materials have not yet been filed with the
Securities and Exchange Commission and solicitation of consents is not expected
to commence until the third quarter of 1998. If the REIT transaction is
consummated, limited partners would receive distributions of net sales
proceeds according to their interests in the Partnership. It should be noted
that the REIT transaction will be subject to a number of conditions in addition
to approval by limited partners of REAL III, including completion of a proposed
private placement of shares of the REIT. Accordingly, there can be no assurance
that the proposed purchases by the REIT of the REAL III properties will be
consummated or that, if consummated, would be on the currently proposed terms.
Most of the limited partners have negative capital account balances with
respect to their interests in REAL III. Our accountants tell us that on
average, the negative capital account balance for a $5,000 investor at the end
of December 1997 was approximately $8,100. This means that an investor who sold
his or her unit on December 31, 1997 would recognize gain from the sale of his
or her REAL III unit in an amount equal to approximately $8,412 (the $8,100
negative capital account balance plus the $312 cash sales price). This gain
would be "passive" and would be offset by passive losses which such investor
may have from REAL III (suspended from prior years) or other sources. Unless a
limited partner has suspended or current losses available, a substantial
portion of the gain would still be subject to tax liability.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE ON
YOUR OWN PARTICULAR SITUATION.
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REAL III
The General Partners urge each investor to carefully consider the
foregoing information before tendering his or her units to the Bond Purchase
LLC. Although the offer letter states that investors cannot withdraw units
which may already have been tendered, you should consult with your attorney to
determine if this requirement is enforceable should you wish to reconsider your
decision to tender.
Sincerely,
National Partnership Investments Corp.
/s/ CHARLES BOXENBAUM /s/ BRUCE E. NELSON
- ------------------------ ---------------------
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
