<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 September 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
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Winthrop Residential Associates III, A Limited Partnership
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(Exact name of small business issuer
as specified in its charter)
Maryland 04-2782016
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Five Cambridge Center, Cambridge, MA 02142-1493
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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 SEPTEMBER 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets (Unaudited)
September 30, December 31,
(In Thousands, Except Unit Data) 1997 1996
------------ ----------
Assets
- ------
Investments in Local Limited Partnerships $ 404 $ 390
Cash and Cash Equivalents 1,248 980
Other Assets 162 64
Real Estate (net of accumulated depreciation
of $2,661 in 1997 and $2,528 in 1996) 2,313 2,446
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Total Assets $ 4,127 $ 3,880
=========== ============
Liabilities and Partners' Capital
- ---------------------------------
Liabilities:
Accounts Payable and Accrued Expenses $ 149 $ 128
Distribution Payable 27 27
Mortgage Payable 2,599 2,636
Subordinated Loan Payable 133 133
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Total Liabilities 2,908 2,924
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Partners' Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per unit; 25,005 units
authorized, issued and outstanding 2,525 2,282
General Partners (deficit) (1,306) (1,326)
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Total Partners' Capital 1,219 956
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Total Liabilities and Partners' Capital $ 4,127 $ 3,880
=========== ============
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Consolidated Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
Income:
<S> <C> <C> <C> <C>
Rental income $ 269 $ -- $ 796 $ --
Income from Local Limited Partnership
cash distributions -- -- 335 287
Equity in income of Local Limited
Partnerships 2 2 18 18
Interest 16 19 44 55
Other 6 -- 17 --
-------- ------- -------- --------
Total Income 293 21 1,210 360
-------- ------- -------- --------
Expenses:
Operating 192 -- 513 --
Interest 53 -- 160 --
Depreciation and amortization 46 1 137 3
General and administrative 21 17 56 62
-------- ------- -------- --------
Total Expenses 312 18 866 65
-------- ------- -------- --------
Net (loss) income $ (19) $ 3 $ 344 $ 295
======== ======= ======== ========
Net (loss) income allocated to General
Partners $ (1) $ -- $ 26 $ 22
======== ======= ======== ========
Net (loss) income allocated to Limited
Partners $ (18) $ 3 $ 318 $ 273
======== ======= ======== ========
Net (loss) Income per Unit of Limited
Partnership Interest $ (.72) $ .12 $ 12.72 $ 10.92
======== ======= ======== ========
Distributions per Unit of Limited
Partnership Interest $ 1.00 $ 1.00 $ 3.00 $ 11.00
======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 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 (6) (75) (81)
Net income 26 318 344
----------- --------- ---------- --------
Balance - September 30, 1997 25,005 $ (1,306) $ 2,525 $1,219
=========== ========= ========== ========
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, September 30,
(In Thousands) 1997 1996
------------ -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 344 $ 295
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 133 --
Amortization 4 3
Equity in income of Local Limited Partnership (18) (18)
Changes in assets and liabilities:
(Increase) decrease in other assets (98) 7
Increase in accounts payable and accrued
expenses 21 --
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Net cash provided by operating activities 386 287
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Cash Flows From Financing Activities:
Mortgage principal payments (37) --
Cash distributions (81) (459)
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Cash used in financing activities (118) (459)
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Net increase (decrease) in cash and cash
equivalents 268 (172)
Cash and cash equivalents, beginning of period 980 1,609
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Cash and cash equivalents, end of period $ 1,248 $ 1,437
============= =============
Supplemental Disclosure of Cash Flow Information
Interest paid in cash $ 147 $ --
============= =============
Supplemental Disclosure of Non-Cash
Investing Activities
Accrued Distributions to Partners $ 27 $ 27
============= =============
</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 September 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 nine months ended September 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. TRANSACTIONS WITH RELATED PARTIES
An affiliate of the Managing General Partner received approximately
$51,000 in management fees from Local Limited Partnerships during
1997. Another affiliate was also entitled to receive 25% or
approximately $9,000 of the Clear Creek property management fee.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
ITEM 2. 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 September 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 September 30, 1997, the Partnership had cash and
cash equivalents of $1,248,000, 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. The Partnership did not fund any operating
deficits to any Local Limited Partnerships during the nine months
ended September 30, 1997.
The level of liquidity based on cash and cash equivalents
experienced a $268,000 increase at September 30, 1997, as compared
to December 31, 1996. The Partnership's $386,000 of cash provided
by operating activities was partially offset by $37,000 of mortgage
principal payments and $81,000 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 SEPTEMBER 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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(CONTINUED)
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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. At September 30, 1997, the
managing general partner estimates the default to be $100,000. If
the Partnership is unable to reach an agreement with the existing
general partner, the Dunhaven property could be lost through
foreclosure.
As of September 30, 1997, Partnership distributions (paid or
accrued) aggregated $75,000 ($3.00 per Unit) to its limited
partners and $6,000 to the general partners.
Results of Operations
---------------------
Net income increased for the nine months ended September 30, 1997
by $49,000, as compared to the nine months ended September 30,
1996, due to the recognition of Clear Creek's net income of $21,000
for the period January through September 1997, and an increase in
Local Limited Partnership distributions of $48,000, which was
partially offset by a decline in interest income of $11,000. The
Local Limited Partnership owning Village Square Apartments
distributed $335,000 during the nine months ended September 30,
1997, as compared to $287,000 during the comparable 1996 period.
Interest income declined due to a decrease in average working
capital available for investment.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
PART II - OTHER INFORMATION
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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 September 30, 1997.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
SIGNATURES
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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.
WINTHROP RESIDENTIAL ASSOCIATES III,
------------------------------------
A LIMITED PARTNERSHIP
---------------------
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: November 12, 1997
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 30, 1997
Exhibit Index
Exhibit Page No.
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27. Financial Data Schedule -
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
11 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,248,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,974,000
<DEPRECIATION> 2,661,000
<TOTAL-ASSETS> 4,127,000
<CURRENT-LIABILITIES> 0
<BONDS> 2,599,000
<COMMON> 0
0
0
<OTHER-SE> 1,219,000
<TOTAL-LIABILITY-AND-EQUITY> 4,127,000
<SALES> 0
<TOTAL-REVENUES> 1,166,000
<CGS> 0
<TOTAL-COSTS> 650,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160,000
<INCOME-PRETAX> 344,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 344,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 344,000
<EPS-PRIMARY> 12.72
<EPS-DILUTED> 12.72
</TABLE>
<PAGE>
EXHIBIT 99
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB SEPTEMBER 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
September 30, 1997:
Net Loss $ (19,000)
Add: Depreciation and amortization 46,000
Cash from reserves 2,000
Less: Equity in income of Local Limited Partnerships (2,000)
-------------
Cash Available for Distributions $ 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
September 30, 1997:
<TABLE>
<CAPTION>
Entity Receiving Form of
Compensation Compensation Amount
---------------- ------------------------------------------- -----------
<S> <C> <C>
General Partners Interest in Cash Available for Distribution $ 2,000
WFC Realty Co., Inc.
(Initial Limited Partner) Interest in Cash Available for Distribution $ 5
</TABLE>
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