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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 June 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
incorporation or organization) Identification No.)
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 JUNE 30, 2000
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PART I - FINANCIAL INFORMATION
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 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 $ 2,792 $ 2,683
Other assets 179 91
Real estate (net of accumulated depreciation
of $3,167 in 2000 and $3,073 in 1999) 1,961 2,055
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Total Assets $ 4,932 $ 4,829
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Liabilities and Partners' Capital
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Liabilities:
Accounts payable and accrued expenses $ 94 $ 82
Distributions payable 27 502
Mortgage payable 2,444 2,475
Accrued interest - Subordinated Loan Payable 80 73
Subordinated Loan Payable 133 133
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Total Liabilities 2,778 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 3,336 2,790
General Partners' deficit (1,182) (1,226)
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Total Partners' Capital 2,154 1,564
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Total Liabilities and Partners' Capital $ 4,932 $ 4,829
===================== ====================
</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 JUNE 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 SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Income:
Rental income $ 293 $ 284 $ 582 $ 565
Income from Local Limited Partnership cash distributions 489 304 576 304
Equity in loss of Local Limited Partnership - (33) - (32)
Interest 31 17 59 32
Other 13 14 22 27
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Total Income 826 586 1,239 896
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Expenses:
Operating 190 202 354 385
Interest 49 50 99 101
Depreciation and amortization 47 46 94 91
General and administrative 28 22 48 37
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Total Expenses 314 320 595 614
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Net income $ 512 $ 266 $ 644 $ 282
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Net income allocated to General Partners $ 38 $ 20 $ 48 $ 21
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Net income allocated to Limited Partners $ 474 $ 246 $ 596 $ 261
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Net income per Unit of Limited Partnership Interest $ 18.96 $ 9.84 $ 23.84 $ 10.44
=========== =========== =========== ===========
Distributions per Unit of Limited Partnership Interest $ 1.00 $ 1.00 $ 2.00 $ 2.00
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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 JUNE 30, 2000
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CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
UNITS OF
LIMITED LIMITED GENERAL TOTAL
PARTNERSHIP PARTNERS' PARTNERS' PARTNERS'
INTEREST CAPITAL DEFICIT CAPITAL
------------------ ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Balance - January 1, 2000 25,005 $ 2,790 $ (1,226) $ 1,564
Net income 596 48 644
Distributions (50) (4) (54)
------------------ ------------------- ------------------- ---------------------
Balance - June 30, 2000 25,005 $ 3,336 $ (1,182) $ 2,154
================== =================== =================== =====================
</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 JUNE 30, 2000
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS) 2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 644 $ 282
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 94 89
Amortization - 2
Equity in loss of Local Limited Partnership - 32
Income from Local Limited Partnership cash distributions (576) (277)
Changes in assets and liabilities:
Increase in other assets (88) (57)
Increase (decrease) in accounts payable
and accrued expenses 12 (19)
Increase in accrued interest payable on
subordinated loan 7 6
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Net cash provided by operating activities 93 58
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Cash Flows From Investing Activities:
Distribution received from Local Limited Partnerships 576 304
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Cash provided by investing activities 576 304
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Cash Flows From Financing Activities:
Mortgage principal payments (31) (29)
Distributions to partners (529) (304)
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Cash used in financing activities (560) (333)
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Net increase in cash and cash equivalents 109 29
Cash and cash equivalents, beginning of period 2,683 1,723
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Cash and cash equivalents, end of period $ 2,792 $ 1,752
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Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 92 $ 95
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Supplemental Disclosure of Non-Cash:
Investing Activities
Accrued Distributions to Partners $ 27 $ 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 JUNE 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
June 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 six months ended June 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 JUNE 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 June 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 June 30, 2000, the
Partnership had cash and cash equivalents of $2,792,000, 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 $109,000 increase at June 30, 2000, as compared to December 31,
1999. The Partnership's $576,000 of distributions received from Local
Limited Partnerships (investing activities) and $93,000 of net cash
provided by operating activities was partially offset by $31,000 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 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 June 30, 2000, Partnership distributions (paid or accrued)
aggregated approximately $50,000 ($2.00 per Unit) to its limited
partners and $4,000 to the general partners.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 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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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 assist
contracts with subsidized payments from a local subsidy contract.
Results of Operations
---------------------
Net income increased by $362,000 for the six months ended June 30,
2000, as compared to the six months ended June 30, 1999. The increase
is due to an increase in income of $343,000 and a decrease in
expenses of $19,000. Net income for the three months ended June 30,
2000 increased by $246,000 as compared to 1999.
The increase in income for the six months ended June 30, 2000, as
compared to 1999, is due to an increase of $272,000 of cash received
from Local Limited Partnerships, a decrease of $32,000 of equity in
loss of Local Limited Partnership, an increase in interest income of
$27,000 and an increase in rental income of $17,000. During the six
months ended June 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 six months ended June 30, 1999, the Local Limited
Partnerships owning Village Square Apartments and The Groves
Apartments distributed $291,000 and $13,000, respectively. Rental
income increased primarily due to higher occupancy in 2000 as
compared to 1999. The decrease in expenses is primarily due to a
decrease in operating expenses of $31,000, due to a decrease in
utilities and maintenance expenses, which was partially offset by an
increase in general administrative expenses of $11,000. 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 JUNE 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 June
30, 2000.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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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.
WINTHROP RESIDENTIAL ASSOCIATES III,
A LIMITED PARTNERSHIP
BY: TWO WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
-----------------------------------
Michael L. Ashner
Chief Executive Officer
BY: /s/ Thomas Staples
-----------------------------------
Thomas Staples
Chief Financial Officer
Dated: August 14, 2000
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 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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EXHIBIT 99
WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
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FORM 10-QSB JUNE 30, 2000
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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, 2000:
Net Income $ 512,000
Add: Depreciation and amortization 47,000
Less: Cash to reserves (532,000)
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Cash Available for Distribution $ 27,000
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Distributions allocated to General Partners $ 2,000
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Distributions allocated to Limited Partners $ 25,000
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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, 2000:
<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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