<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 2-81033
Winthrop Residential Associates III, A Limited Partnership
(Exact name of small business issuer as specified in its charter)
Maryland 04-2782016
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
June 30, December 31,
(In Thousands, Except Unit Data) 1997 1996
------------ ------------
Assets
Investments in Local Limited Partnerships $ 404 $ 390
Cash and Cash Equivalents 1,256 980
Other Assets 146 64
Real Estate (net of accumulated depreciation
of $2,617 in 1997 and $2,528 in 1996) 2,357 2,446
------------ ------------
Total Assets $ 4,163 $ 3,880
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts Payable and Accrued Expenses $ 127 $ 128
Distribution Payable 27 27
Mortgage Payable 2,611 2,636
Subordinated Loan Payable 133 133
------------ ------------
Total Liabilities 2,898 2,924
------------ ------------
Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per unit;
25,005 units authorized,
issued and outstanding 2,568 2,282
General Partners (deficit) (1,303) (1,326)
------------ ------------
Total Partners' Capital 1,265 956
------------ ------------
Total Liabilities and Partners' Capital $ 4,163 $ 3,880
============ ============
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income:
Rental Income $ 266 $ - $ 527 $ -
Income from Local Limited Partnership
cash distributions 335 287 335 287
Equity in income of Local Limited
Partnerships 3 10 16 16
Interest 16 20 28 36
Other 3 - 11 -
-------- -------- -------- --------
Total Income 623 317 917 339
-------- -------- -------- --------
Expenses:
Operating 127 - 249 -
Interest 58 - 107 -
Depreciation and amortization 45 2 91 2
General and administrative 69 29 107 45
-------- -------- -------- --------
Total Expenses 299 31 554 47
-------- -------- -------- --------
Net income $ 324 $ 286 $ 363 $ 292
======== ======== ======== ========
Net income allocated to General Partners $ 24 $ 22 $ 27 $ 22
======== ======== ======== ========
Net income allocated to Limited Partners $ 300 $ 264 $ 336 $ 270
======== ======== ======== ========
Net Income per Unit of Limited Partnership $ 12.00 $ 10.56 $ 13.44 $ 10.80
======== ======== ======== ========
Distributions per Unit of Limited Partners $ 1.00 $ 5.00 $ 2.00 $ 10.00
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statement of Changes in Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- -------- -------
Balance-January 1, 1997 25,005 $ (1,326) $ 2,282 $ 956
Distributions (4) (50) (54)
Net income 27 336 363
----------- --------- -------- -------
Balance - June 30, 1997 25,005 $ (1,303) $ 2,568 $ 1,265
=========== ========= ======== =======
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, June 30,
(In Thousands) 1997 1996
-------- --------
Cash Flows from Operating Activities:
Net income $ 363 $ 292
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 91 2
Equity in income of Local Limited Partnership (16) (16)
Changes in assets and liabilities:
(Increase) decrease in other assets (82) 7
Decrease in accounts payable and accrued
expenses (1) -
-------- --------
Net cash provided by operating activities 355 285
-------- --------
Cash Flows From Financing Activities:
Mortgage principal payments (25) -
Cash distributions (54) (324)
-------- --------
Cash used in financing activities (79) (324)
-------- --------
Net increase (decrease) in cash and cash equivalents 276 (39)
Cash and cash equivalents, beginning of period 980 1,609
-------- --------
Cash and cash equivalents, end of period $ 1,256 $ 1,570
======== ========
Supplemental Disclosure of Cash Flow Information
Interest paid in cash $ 107 $ -
======== ========
Supplemental Disclosure of Non-Cash
Investing Activities
Accrued Distributions to Partners $ 27 $ 135
======== ========
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions
should be read in conjunction with the financial statements,
related footnotes and discussions contained in the Partnership's
annual report on Form 10-KSB for the year ended December 31, 1996.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments are of a normal recurring nature. Certain amounts have
been reclassified to conform to the June 30, 1997 presentation. The
balance sheet at December 31, 1996 was derived from audited
financial statements at such date.
The results of operations for the six months ended June 30, 1997
and 1996, are not necessarily indicative of the results to be
expected for the full year.
2. Consolidation
In conjunction with the October 1996 additional investment in and
transfer of control of Clear Creek Ltd. ("Clear Creek"), a Local
Limited Partnership in which the Partnership owns an 88.5% limited
partnership interest, to an affiliate of the Partnership's general
partner, the accompanying financial statements have been prepared
on a consolidated basis, including the accounts of Clear Creek,
from the date of transfer of control. All significant intercompany
transactions and balances have been eliminated. Prior to October
1996, Clear Creek was a Local Limited Partnership accounted for
under the equity method.
3. Transaction with Related Parties
An affiliate of the Managing General Partner received approximately
$34,000 in management fees from Local Limited Partnerships during
1997. Another affiliate was also entitled to receive 25% or
approximately $6,000 of the Clear Creek property management fee.
6 of 12
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
3. Management's Discussion and Analysis or Plan of Operation
This Item should be read in conjunction with the financial
statements and other items contained elsewhere in the report.
Liquidity and Capital Resources
As of June 30, 1997, the Partnership retained an equity interest in
six Local Limited Partnerships, each of which owns a single
apartment complex. The Partnership also owns an 88.5% interest in a
partnership in which an affiliate of the Partnership's general
partner became the sole general partner in October 1996. The
Partnership's primary sources of income are distributions from the
Local Limited Partnerships and rental income from Clear Creek
Apartments. The Partnership requires cash to pay the operating
expenses of Clear Creek, to make capital contributions and/or loans
to any of the Local Limited Partnerships which the Managing General
Partner deems to be in the Partnership's best interest to preserve
its ownership interest, as well as to pay its general and
administrative expenses.
To date, all cash requirements have been satisfied by interest
income earned on short-term investments and cash distributed to the
Partnership by the Local Limited Partnerships. If the Partnership
funds any operating deficits, it will use monies from its operating
reserves. As of June 30, 1997, the Partnership had cash and cash
equivalents of $1,256,000, as compared to $980,000 at December 31,
1996. The Managing General Partner's current policy is to maintain
a reserve balance sufficient to provide the Partnership the
flexibility to preserve its economic interest in the Local Limited
Partnerships. Therefore, a lack of cash distributed by the Local
Limited Partnerships to the Partnership in the future should not
deplete the reserves, though it may restrict the Partnership from
making distributions. The Partnership did not fund any operating
deficits to any Local Limited Partnerships during the six months
ended June 30, 1997.
The level of liquidity based on cash and cash equivalents
experienced a $276,000 increase at June 30, 1997, as compared to
December 31, 1996. The Partnership's $355,000 of cash provided by
operating activities was partially offset by $25,000 of mortgage
principal payments and $54,000 of cash distributed to partners
(financing activities).
The Partnership is not obligated to provide any additional funds to
the Local Limited Partnerships to fund operating deficits. The
Partnership determines on a case by case basis whether to fund any
operating deficits. If a Local Limited Partnership sustains
continuing operating deficits and has no other sources of funding,
it is likely that it will eventually default on its mortgage
obligations and risk a foreclosure on its property by the lender.
If a foreclosure were to occur, the Local Limited Partnership would
lose its investment in the property and would incur a tax liability
due to the recapture of tax benefits taken in prior years. The
Partnership, as an owner of the Local Limited Partnership, would
share these consequences in proportion to its ownership interest in
the Local Limited Partnership.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
3. Management's Discussion and Analysis or Plan of Operation
(Continued)
The loan encumbering Dunhaven Apartments Phase II, ("Dunhaven") is
in default. The Partnership is negotiating with the general partner
of the Local Limited Partnership which holds title to Dunhaven
pursuant to which the Partnership, or an affiliate of the
Partnership, would be appointed as general partner of the Dunhaven
Local Limited Partnership and the Partnership, or its affiliate,
would satisfy the default on the loan. If the Partnership is unable
to reach an agreement with the existing general partner, the
Dunhaven property could be lost through foreclosure.
As of June 30, 1997, Partnership distributions (paid or accrued)
aggregated $50,000 ($2.00 per Unit) to its limited partners and
$4,000 to the general partners.
Results of Operations
Net income increased for the six months ended June 30, 1997 by
$71,000, as compared to the six months ended June 30, 1996, due to
the recognition of Clear Creek's net income of $31,000 for the
period January through June 1997, and an increase in Local Limited
Partnership distributions of $48,000. The Local Limited Partnership
owning Village Square Apartments distributed $335,000 during the
six months ended June 30, 1997, as compared to $287,000 during the
comparable 1996 period.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months
ended June 30, 1997.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
-------------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Edward V. Williams
-------------------------------
Edward V. Williams
Chief Financial Officer
Dated: August 8, 1997
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 of 12
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Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1997
Supplementary information required pursuant to section 9.4 of the partnership
agreement:
1. Statement of cash available for distribution for the three months ended
June 30, 1997:
Net Income $ 324,000
Add: Depreciation and amortization 45,000
Less: Equity in income of Local Limited Partnerships (3,000)
Cash to reserves (339,000)
---------
Cash Available for Distribution $ 27,000
=========
Distributions allocated to General Partners $ 2,000
=========
Distributions allocated to Limited Partners $ 25,000
=========
2. Fees and other compensation paid or accrued by the Partnership to the
General Partners, or their affiliates, during the three months ended June
30, 1997:
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------------------------ ------
General Partners Interest in Cash Available for
Distribution $2,000
WFC Realty Co., Inc. Interest in Cash Available for
(Initial Limited Partner) Distribution $ 5
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Residential Associates III, A Limited Partnership and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,256,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,974,000
<DEPRECIATION> 2,617,000
<TOTAL-ASSETS> 4,163,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,611,000
<COMMON> 0
0
0
<OTHER-SE> 1,265,000
<TOTAL-LIABILITY-AND-EQUITY> 4,163,000
<SALES> 0
<TOTAL-REVENUES> 889,000
<CGS> 0
<TOTAL-COSTS> 340,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,000
<INCOME-PRETAX> 363,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 363,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 363,000
<EPS-PRIMARY> 13.44
<EPS-DILUTED> 13.44
</TABLE>
