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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, 2000
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
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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
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FORM 10-QSB SEPTEMBER 30, 2000
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT UNIT DATA) 2000 1999
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<S> <C> <C>
Assets
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Cash and cash equivalents $ 2,821 $ 2,683
Other assets 122 91
Real estate (net of accumulated depreciation
of $3,214 in 2000 and $3,073 in 1999) 2,023 2,055
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Total Assets $ 4,966 $ 4,829
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Liabilities and Partners' Capital
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Liabilities:
Accounts payable and accrued expenses $ 105 $ 82
Distributions payable 54 502
Mortgage payable 2,429 2,475
Accrued interest - Subordinated Loan Payable 83 73
Subordinated Loan Payable 133 133
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Total Liabilities 2,804 3,265
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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 3,343 2,790
General Partners' deficit (1,181) (1,226)
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Total Partners' Capital 2,162 1,564
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Total Liabilities and Partners' Capital $ 4,966 $ 4,829
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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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,
2000 1999 2000 1999
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental income $ 298 $ 278 $ 880 $ 843
Income from Local Limited Partnership cash distributions - 1,017 576 1,321
Equity in loss of Local Limited Partnership - (15) - (47)
Interest 30 20 89 52
Other 14 10 36 37
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Total Income 342 1,310 1,581 2,206
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Expenses:
Operating 187 182 541 567
Interest 49 50 148 151
Depreciation and amortization 47 45 141 136
General and administrative 24 26 72 63
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Total Expenses 307 303 902 917
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Net income $ 35 $ 1,007 $ 679 $ 1,289
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Net income allocated to General Partners $ 3 $ 76 $ 51 $ 97
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Net income allocated to Limited Partners $ 32 $ 931 $ 628 $ 1,192
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Net income per Unit of Limited Partnership Interest $ 1.28 $ 37.23 $ 25.11 $ 47.67
================ ================ ============== ==============
Distributions per Unit of Limited Partnership Interest $ 1.00 $ 1.00 $ 3.00 $ 3.00
================ ================ ============== ==============
</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT UNIT DATA) UNITS OF
LIMITED GENERAL LIMITED TOTAL
PARTNERSHIP PARTNERS' PARTNERS' PARTNERS'
INTEREST DEFICIT CAPITAL CAPITAL
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 25,005 $ (1,226) $ 2,790 $ 1,564
Net income 51 628 679
Distributions (6) (75) (81)
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Balance - September 30, 2000 25,005 $ (1,181) $ 3,343 $ 2,162
============ ============ =========== ===========
</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN THOUSANDS) 2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 679 $ 1,289
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 141 133
Amortization - 3
Equity in loss of Local Limited Partnership - 47
Income from Local Limited Partnership Cash Distribution (576) (1,321)
Changes in assets and liabilities:
Increase in other assets (31) (53)
Increase (decrease) in accounts payable
and accrued expenses 23 (22)
Increase in accrued interest payable on subordinated loan 10 10
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Net cash provided by operating activities 246 86
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Cash Flows From Investing Activities:
Distributions received from Local Limited Partnerships 576 1,348
Property Improvements (109) -
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Cash provided by investing activities 467 1,348
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Cash Flows From Financing Activities:
Mortgage principal payments (46) (43)
Distributions to partners (529) (331)
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Cash used in financing activities (575) (374)
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Net increase in cash and cash equivalents 138 1,060
Cash and cash equivalents, beginning of period 2,683 1,723
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Cash and cash equivalents, end of period $ 2,821 $ 2,783
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Supplemental Disclosure of Cash Flow Information
Interest paid in cash $ 138 $ 141
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Supplemental Disclosure of Non-Cash
Investing Activities
Accrued Distributions to Partners $ 54 $ 27
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</TABLE>
See notes to consolidated financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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, 1999.
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, 2000 presentation. The balance sheet at December 31, 1999,
was derived from audited financial statements at such date.
The results of operations for the three and nine months ended September 30,
2000 and 1999, are not necessarily indicative of the results to be expected
for the full year.
2. CONSOLIDATION
The accompanying financial statements have been prepared on a consolidated
basis, including the accounts of Clear Creek Ltd. ("Clear Creek"). All
significant intercompany transactions and balances have been eliminated.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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The matters discussed in this Form 10-QSB contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form 10-QSB
and the other filings with the Securities and Exchange Commission made
by the Partnership from time to time. The discussion of the
Partnership's liquidity, capital resources and results of operations,
including forward-looking statements pertaining to such matters, does
not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
This Item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
Liquidity and Capital Resources
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As of September 30, 2000, the Partnership retained an equity interest in
five Local Limited Partnerships, each of which owns a single apartment
complex. The Partnership also owns an 88.5% interest in Clear Creek Ltd.
("Clear Creek"), a partnership in which an affiliate of the
Partnership's general partner is the sole general partner. 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,
for general and administrative expenses and 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 date, all cash requirements have been satisfied by interest income
earned on short-term investments, rental income from Clear Creek 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, 2000, the Partnership had
cash and cash equivalents of $2,821,000, as compared to $2,683,000 at
December 31, 1999. 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
Local Limited Partnerships in 2000 and 1999.
The level of liquidity based on cash and cash equivalents experienced a
$138,000 increase at September 30, 2000, as compared to December 31,
1999. The Partnership's $576,000 of distributions received from Local
Limited Partnerships (investing activities) and $246,000 of net cash
provided by operating activities was partially offset by $109,000 of
property improvements (investing activities), $46,000 of mortgage
principal payments and $529,000 of cash distributed to partners
(financing activities). Village Square Associates, a Local Limited
Partnership ("Village Square") refinanced its mortgage and distributed
$942,000 of the proceeds to the Partnership in September 1999. At
December 31,1999, the Partnership
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Liquidity and Capital Resources (Continued)
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recorded an accrued distribution of $475,000 related to the refinancing
proceeds which was distributed in the quarter ended March 31, 2000. In
addition, as of September 30, 2000, Partnership distributions (paid or
accrued) aggregated approximately $75,000 ($3.00 per Unit) to its
limited partners and $6,000 to the general partners.
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.
In 1999, the Department of Housing and Urban Development foreclosed on
the mortgage for Dunhaven Apartments Phase II ("Dunhaven"). For
financial reporting purposes, the Partnership's investment in this Local
Limited Partnership had previously been written down to zero. For tax
reporting purposes, the Partnership will incur a tax liability in 2000
due to the recapture of tax benefits taken in prior years in proportion
to its ownership interest in the Local Limited Partnership.
Clear Creek had two housing assistance contracts with the Department of
Housing and Urban Development, which account for approximately 20% of
the units in the apartment complex. These contracts expired in 1999 and
were not renewed. Management replaced the housing assistance contracts
with subsidized payments from a local subsidy contract.
Results of Operations
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Net income decreased by $610,000 for the nine months ended September 30,
2000, as compared to the nine months ended September 30, 1999. The
decrease is due to a decrease in income of $625,000 which was partially
offset by a decrease in expenses of $15,000. Net income for the three
months ended September 30, 2000 decreased by $972,000 as compared to
1999.
The decrease in income for the nine months ended September 30, 2000, as
compared to 1999, is due to a decrease of $745,000 of cash received from
Local Limited Partnerships which was partially offset by a decrease of
$47,000 of equity in loss of Local Limited Partnership, an increase in
interest income of $37,000 and an increase in rental income of $37,000.
During the nine months ended September 30, 2000, the Local Limited
Partnerships owning Village Square Apartments, Maple Manor Apartments
and The Groves Apartments distributed $489,000, $48,000 and $39,000,
respectively. During the nine months ended September 30, 1999, the Local
Limited Partnerships owning Village Square Apartments and The Groves
Apartments distributed $1,308,000 and $13,000, respectively. All other
items of income and expense remained relatively constant.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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PART II - OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
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(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 period ended
September 30, 2000.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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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,
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A LIMITED PARTNERSHIP
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BY: TWO WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
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Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas Staples
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Thomas Staples
Chief Financial Officer
Dated: November 10, 2000
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB SEPTEMBER 30, 2000
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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
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