FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
March 31, 1996 0-13331
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
(Exact Name of Registrant as specified in its Charter)
Delaware 16-1234990
- ------------------- --------------------------------
(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a check mark whether the 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
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of March 31, 1996, the issuer had 15,551 units of limited partnership
interest outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
INDEX
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
March 31, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended March 31, 1996 and 1995 4
Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
Statements of Partners' (Deficit) -
Three Months Ended March 31, 1996 and 1995 6
Notes to Financial Statements 7 - 18
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS 19 - 20
---------------------------------------------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Property, at cost:
Land $ 1,410,000 $ 1,410,000
Buildings and improvements 17,249,016 17,238,605
Furniture and fixtures 2,275,548 2,275,548
------------ ------------
20,934,564 20,924,153
Less accumulated depreciation 9,461,434 9,283,886
------------ ------------
Property, net 11,473,130 11,640,267
Investment in joint venture 163,796 167,321
Cash -- --
Cash - security deposits 53,989 53,989
Accounts receivable, net of allowance for doubtful
accounts of $895,282 and $800,839, respectively 18,239 21,238
Other assets 545,890 520,876
------------ ------------
Total Assets $ 12,255,043 $ 12,403,691
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
Liabilities:
Cash overdraft $ 4,012 $ 36,921
Mortgages payable 10,243,902 10,276,248
Accounts payable and accrued expenses 837,651 777,976
Accounts payable - affiliates 1,365,473 1,258,243
Accrued interest 96,852 88,868
Security deposits and prepaid rents 282,657 269,591
------------ ------------
Total Liabilities 12,830,546 12,707,847
------------ ------------
Partners' (Deficit) Capital:
General partners (435,539) (427,399)
Limited partners (139,963) 123,243
------------ ------------
Total Partners' (Deficit) (575,503) (304,156)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 12,255,043 $ 12,403,691
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
--------- ---------
Income:
Rental $ 1,035,749 $ 1,106,761
Interest and other income 94,803 56,960
----------- -----------
Total income 1,130,552 1,163,721
----------- -----------
Expenses:
Property operations 611,873 671,554
Interest:
Paid to affiliates 35,587 19,037
Other 372,550 329,298
Depreciation and amortization 186,902 178,112
Administrative:
Paid to affiliates 69,381 111,006
Other 122,081 166,132
----------- -----------
Total expenses 1,398,374 1,475,139
----------- -----------
Loss before allocated loss from joint venture (267,822) (311,418)
Allocated loss from joint venture (3,525) (24,606)
----------- -----------
Net loss $ (271,347) $ (336,024)
=========== ===========
Loss per limited partnership unit $ (16.93) $ (20.96)
=========== ===========
Distributions per limited partnership unit $ -- $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 15,551 15,551
=========== ===========
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
--------- ---------
Cash flow from operating activities:
Net loss $(271,347) $(336,024)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 186,902 178,112
Loss from joint venture 3,525 24,606
Changes in operating assets and liabilities:
Cash - security deposits -- --
Accounts receivable 2,999 16,871
Other assets (34,368) 15,388
Accounts payable and accrued expenses 59,675 25,555
Accrued interest 7,984 --
Security deposits and prepaid rent 13,066 16,826
--------- ---------
Net cash (used in) operating activities (31,563) (58,666)
--------- ---------
Cash flow from investing activities:
Capital expenditures (10,411) (126,164)
Distributions from joint venture -- --
--------- ---------
Net cash (used in) investing activities (10,411) (126,164)
--------- ---------
Cash flows from financing activities:
Cash overdraft (32,909) 16,180
Accounts payable - affiliates 107,230 169,279
Principal payments on mortgages and notes (32,346) (9,163)
Distributions to partners -- --
--------- ---------
Net cash provided by financing activities 41,974 176,296
--------- ---------
Increase (decrease) in cash -- (8,534)
Cash - beginning of period -- 8,534
--------- ---------
Cash - end of period $ -- $ --
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 364,566 $ 300,171
========= =========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Three Months Ended March 31, 1996 and 1995
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1995 $ (385,610) 15,551 $ 1,474,437
Net loss (10,081) -- (325,943)
----------- ----------- -----------
Balance, March 31, 1995 $ (395,691) 15,551 $ 1,148,494
=========== =========== ===========
Balance, January 1, 1996 $ (427,399) 15,551 $ 123,243
Net loss (8,140) -- (263,206)
----------- ----------- -----------
Balance, March 31, 1996 $ (435,539) 15,551 $ (139,963)
=========== =========== ===========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
NOTES TO FINANCIAL STATEMENTS
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1. GENERAL PARTNER'S DISCLOSURE
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership III, all adjustments necessary for the fair
presentation of the Partnership's financial position, results of
operations, and changes in cash flows for the three months ended March 31,
1996 and 1995 have been made in the financial statements. The financial
statements are unaudited and subject to any year-end adjustments which may
be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
Realmark Property Investors Limited Partnership III (the "Partnership"), a
Delaware Limited Partnership, was formed November 18, 1983, to invest in a
diversified portfolio of income-producing real estate.
In February 1984 the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering which occurred April 26, 1984. All items of income
and expense arose subsequent to this date. On January 31, 1985 the offering
was concluded, at which time 15,551 units of limited partnership interest
were outstanding. The General Partners are Realmark Properties, Inc., a
Delaware corporation, the corporate General Partner, and Mr. Joseph M.
Jayson, the individual General Partner. Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc. (JMJ) and Realmark Properties,
Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
Under the Partnership agreement, the General Partners and affiliates can
receive compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership.
-7-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
Net income or loss arising from the sale or refinancing shall be
distributed first to the limited partners in an amount equivalent to a 7%
return on the average of their adjusted capital contributions, then in an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances, and finally, in
the ratio of 87% to the limited partners and 13% to the general partners.
Partnership income or loss not arising from sale or refinancing shall be
allocated 97% to the limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Cash - security deposits
------------------------
Cash - security deposits represents cash on deposit in accordance with
terms of a U.S. Department of Housing and Urban Development (HUD)
regulatory agreement for multi-family housing projects under Section
223(f).
Property and depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System are used to calculate
depreciation expense for tax purposes.
Rental income
-------------
Leases for residential properties have terms of one year or less.
Commercial leases generally have terms of one to five years. Rental income
is recognized on the straight-line method over the term of the lease.
-8-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment in Joint Venture
---------------------------
The interest in joint venture is accounted for on the equity method.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
In August 1984 the Partnership acquired a 112 unit apartment complex (Bryn
Mawr) located in Ypsilanti, Michigan for a purchase price of $1,833,554,
which included $134,857 in acquisition fees. In 1985 the acquisition fees
related to the purchase of Bryn Mawr were reduced by $18,600 and
reallocated to properties by the Partnership that year.
In August 1986 the Bryn Mawr Apartments were sold for $3,110,000. The net
cash proceeds of approximately $667,000 from the sale were distributed to
the investors on a pro rata basis. The Partnership recognized a gain for
financial statement purposes of $1,475,313. For income tax purposes, the
gain will be recognized under the installment sale method.
In February 1985 the Partnership acquired a 190 unit apartment complex
(Castle Dore) in Indianapolis, Indiana for a purchase price of $4,601,233,
which included acquisition fees of $414,279.
In February 1985 the Partnership acquired a 208 unit apartment complex
(Parc Bordeaux) in Indianapolis, Indiana for a purchase price of
$2,845,064, which included acquisition fees of $371,233.
In December 1988 the Partnership sold Parc Bordeaux Apartments for a sale
price of $5,300,000 which generated a total net gain for financial
statement purposes of $2,338,067. For income tax purposes, the gain will be
recognized under the installment sale method.
In June 1985 the Partnership acquired a 200 unit apartment complex
(Williamsburg South Apartments) in Atlanta, Georgia for a purchase price of
$5,138,745, which included acquisition fees of $368,745.
In August 1985 the Partnership acquired a 38,500 square foot office
complex (Perrymont) in Pittsburgh, Pennsylvania for a purchase price of
$2,078,697, which included acquisition fees of $168,697.
-9-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
In October 1985 the Partnership acquired a 130 unit apartment complex
(Pleasant Run) in Cincinnati, Ohio for a purchase price of $3,434,728,
which included acquisition fees of $267,228.
In December 1985 the Partnership acquired a 280 unit apartment complex
(Ambassador Towers, formerly Cedar Ridge) in Monroeville, Pennsylvania for
a purchase price of $6,766,424, which included acquisition fees of
$646,424.
5. INVESTMENT IN JOINT VENTURES
In April 1985 the Partnership entered into an agreement and formed the
Inducon Joint Venture - Amherst (the Joint Venture), for the primary
purpose of constructing office/warehouse buildings in Erie County, New York
as income producing property. The site is part of the Amherst Foreign Trade
Zone. This is U.S. Customs Territory under federal supervision, where
foreign and domestic merchandise is brought for storage, manufacturing,
salvage, repair, exhibit, repacking, relabeling or re-export. Under the
terms of the joint venture agreement, the Partnership supplied $545,000 of
capital to acquire the land and undertake initial development of Phase I
and $275,000 for Phase II. The other Joint Venturer delivered and completed
on behalf of the Joint Venture all plans, specifications, maps, surveys,
accounting pro-formas for construction, initial leasing and operations, and
cost estimates with respect to development.
Ownership of the Joint Venture is divided equally between the Partnership
and the other Joint Venturer. The Joint Venture agreement provides that the
Partnership will be allocated 95% of any income or loss.
Net cash flow from the Joint Venture is to be distributed as follows:
To the Partnership until has received a return of 7% per annum on its
underwritten syndicated equity. To the extent a 7% return is not received
from year to year, it will accrue and be paid from the next available cash
flow.
To the other Joint Venturer in an amount equal to that paid to the
Partnership. No amount will accumulate in favor of the other investor.
Any remaining amount will be divided equally.
-10-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
To the extent there are net proceeds from any sale or refinancing of the
subject property, the proceeds will be paid in the following order of
priority:
To the Partnership to the extent the 7% per annum returned on its
underwritten equity is unpaid.
Next to the Partnership until it has received an overall 9% cumulative
return on its underwritten equity.
Next to the Partnership until it has received an amount equal to its total
underwritten equity, reduced by any prior distribution of sale, financing
or refinancing proceeds.
Next to the Partnership until it has received a cumulative 20% per year
return on its total underwritten equity.
Thereafter any remaining net proceeds will be divided 50% to the
Partnership and 50% to the other joint venturer.
A summary of the assets, liabilities and capital of the joint venture as
of March 31, 1996 and December 31, 1995 and the results of its operations
for the three months ended March 31, 1996 and 1995 is as follows:
-11-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
BALANCE SHEETS
March 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Property, at cost:
Land $ 177,709 $ 177,709
Land improvements 221,399 221,399
Buildings and improvements 3,072,913 3,072,913
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
---------- ----------
3,482,588 3,482,588
Less accumulated depreciation 1,107,590 1,074,688
---------- ----------
Property, net 2,374,998 2,407,900
Cash and cash equivalents 202,881 157,789
Other assets 60,718 39,925
Deferred debt expense, net of accumulated
amortization of $273,372 and $266,350, respectively 36,093 28,841
---------- ----------
Total Assets $2,674,690 $2,634,455
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Bonds payable $2,040,000 $2,040,000
Mortgage payable 290,110 292,033
Accounts payable and accrued expenses 124,474 87,679
Accounts payable - affiliates 40,979 31,906
---------- ----------
Total Liabilities 2,495,563 2,451,618
---------- ----------
Partners' Capital:
The Partnership 163,796 167,321
Other joint venturer 15,330 15,516
---------- ----------
Total Partners' Capital 179,126 182,837
---------- ----------
Total Liabilities and Partners' Capital $2,674,690 $2,634,455
========== ==========
</TABLE>
-12-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
--------- ---------
Income:
Rental $ 129,134 $ 98,846
Interest and other income 130 4,008
--------- ---------
Total income 129,264 102,854
--------- ---------
Expenses:
Property operations 29,464 31,686
Interest 46,849 45,970
Depreciation and amortization 43,778 43,778
Administrative 12,883 7,321
--------- ---------
Total expenses 132,975 128,755
--------- ---------
Net loss $ (3,711) $ (25,901)
========= =========
Allocation of net loss:
The Partnership $ (3,525) $ (24,606)
Other Joint Venturer (186) (1,295)
--------- ---------
$ (3,711) $ (25,901)
========= =========
A reconciliation of the Partnership's investment in the joint venture for the
three month periods ended March 31, 1996 and 1995 is as follows:
1996 1995
---- ----
Investment in joint venture - beginning of period $ 167,321 $ 261,019
Allocated loss (3,525) (24,606)
--------- ---------
Investment in joint venture - end of period $ 163,796 $ 236,413
========= =========
-13-
<PAGE>
6. MORTGAGES AND NOTES PAYABLE
Castle Dore
-----------
A mortgage of $2,158,012 and $2,210,050 at March 31, 1996 and 1995,
respectively, bearing interest at 7.50%. The mortgage provides for annual
principal and interest payments of $216,026 payable in equal monthly
installments through September 1, 2014. The carrying amount of the mortgage
of $1,562,089 and $1,575,414 at March 31, 1996 and 1995, respectively,
reflects an unamortized mortgage discount of $603,046 and $665,731 at March
31, 1996 and 1995, respectively. The discount is based on an imputed
interest rate of 12.5% and will be amortized using the interest method over
the remaining term of the mortgage.
Williamsburg
------------
A 12.85% mortgage which provides for annual principal and interest
payments of $341,602 payable in equal monthly installments through December
1999. The mortgage had a balance of $2,415,683 at March 31, 1996.
Perrymont
---------
A mortgage which provides for interest rates and monthly installments
through December 1998 as follows:
Year Rate Payment
---- ---- -------
1995 7.50% $ 7,907 (Interest only)
1996 7.875% $ 9,660 (Principal and interest)
1997 - 1998 8.50% $ 10,187 (Principal and interest)
The outstanding balance at March 31, 1996 and March 31, 1995 respectively
was $1,265,185 and $1,265,185 (to date no principal has been paid).
Pleasant Run
------------
A 10% mortgage with a balance of $2,217,214 at March 31, 1996, providing
for annual principal and interest payments of $245,349 payable in equal
monthly installments, with the remaining balance due August 1, 1998.
-14-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
Ambassador Towers (formerly Cedar Ridge)
----------------------------------------
A mortgage with a balance of $559,024 and $620,929 at March 31, 1996 and
1995, respectively, bearing interest at 7.75%. The mortgage provides for
monthly principal and interest payments of $8,980 through April 1, 2002.
A mortgage with a balance of $1,356,255 and $1,477,232 at March 31, 1996
and 1995, respectively, bearing interest at 8.75%. The mortgage provides
for monthly principal and interest payments of $20,455 through October 1,
2003.
A mortgage with a balance of $1,000,000 at March 31, 1996 and 1995 which
provides for interest only payments at prime rate plus 2% (10.75% at March
31, 1996). The mortgage was originally due in September 1994, but in
September 1995 the General Partner negotiated an extension until May 1996.
The Partnership has been utilizing a temporary extension while it seeks
refinancing for the loan.
The aggregate maturities of the mortgages for each of the next five years
and thereafter are as follows:
Year Amount
---- ------
1996 $ 1,319,177
1997 349,132
1998 2,525,632
1999 3,849,622
2000 74,225
Thereafter 2,925,584
--------------
11,043,303
(Unamortized discount) ( 767,055)
---------------
TOTAL $ 10,276,248
-15-
<PAGE>
7. RELATED PARTY TRANSACTIONS
Management fees for the management of Partnership's properties are paid to
an affiliate of the General Partner. The management agreement provides for
5% of gross monthly rental receipts of the complex to be paid as fees for
administering the operations of the property. These fees totaled $60,150
and $57,119 for the three months ended March 31, 1996 and 1995,
respectively.
According to the terms of the Partnership agreement, the general partners
are entitled to receive a Partnership management fee equal to 7% of net
cash flow (as defined in the Partnership agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their adjusted capital contributions. No such fee has been
paid or accrued by the Partnership for the three months ended March 31,
1996 and 1995.
The general partners are also allowed to collect property disposition fees
upon sale of acquired properties. This fee is not to exceed the lesser of
50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties or 2.75% of the sales
price. The property disposition fee is subordinate to payments to the
limited partners of a cumulative annual return (not compounded) equal to 7%
of their average adjusted capital balances and to repayment to the limited
partners of an amount equal to their capital contributions.
The general partners have not to date received a disposition fee on the
sale of Bryn Mawr or Parc Bordeaux, as the limited partners have not
received a return of 7% on their average adjusted capital or their original
capital as defined in the Partnership agreement. Once the limited partners
receive their original capital and a 7% return, the general partners will
be entitled to disposition fees of 2.75%.
Accounts payable - affiliates amounted to $1,365,473 at March 31, 1996.
The payable represents fees due to the general partner or to affiliates of
the general partner. Interest charged on amounts due affiliates totaled
$35,488 for the three month period ended March 31, 1996.
-16-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
Pursuant to the terms of the Partnership agreement, the corporate general
partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the corporate general partner and its affiliates in
connection with the administration of the Partnership. These charges were
for the Partnership's allocated share of costs and expenses such as
payroll, travel and communication, costs related to partnership accounting,
and partner's communication and relations.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $ 3,510 for the three months ended March 31,
1996 and 1995.
8. INCOME TAXES
No provision has been made for income taxes since the income or loss of
the Partnership is to be included in the tax returns of the individual
partners.
The tax returns of the Partnership are subject to examination by federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded
varying interpretations and, accordingly, reported Partnership amounts
could be changed as a result of any such examination.
The reconciliation of net loss for the three month periods ended March 31,
1996 and 1995 as reported in the statements of operations, and as would be
reported for tax purposes respectively, is as follows:
March 31, March 31,
1996 1995
---- ----
Net loss -
Statement of operations $ (273,214) $ (336,024)
(Add to) deduct from:
Difference in depreciation ( 21,441) ( 39,820)
Difference in amortization 16,431 9,419
Non-deductible expenses 62,896 5,895
Difference in loss of joint venture 1,612 5,200
---------- -----------
Net loss for tax purposes $ (213,716) $ (355,330)
-17-
<PAGE>
INCOME TAXES (CONTINUED)
The reconciliation of partner's (deficit) capital at March 31, 1996 and
December 31, 1995 as reported in the balance sheets, and as reported for
tax purposes, is as follows:
March 31, December 31,
1996 1995
---- ----
Partner's (Deficit) Capital -
balance sheet $ (577,370) $ (304,156)
Add to (deduct from):
Accumulated difference in
depreciation (3,946,091) (3,924,650)
Accumulated difference in
amortization 28,125 11,694
Syndication fees and selling
expenses 1,842,060 1,842,060
Gain on sale of property ( 817,092) ( 817,092)
Other non-deductible expenses 869,651 806,755
Difference in book and tax
depreciable cost basis 915,085 915,085
Difference in book and tax
basis of investments (741,988) (743,600)
Other ( 69,286) ( 69,286)
------------- ------------
Partner's (Deficit) Capital -
tax return $ (2,496,906) $ (2,283,190)
-18-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Unable to regain the momentum it had in previous years, the Partnership
encountered an other disappointing quarter. Operating revenue decreased
approximately $33,000, and total expenses also decrease $77,000. Management is
hopeful that the decrease in expenses will continue as we are getting a better
handle on our expenditures. The Partnership has implemented a rental increase
toward the end of this quarter. The positive effects of these increase will not
be noticed until future quarters. The General Partner meanwhile, continues to
advance funds to the Partnership, although under no obligation to do so. The
Partnership continues to encounter cash flow difficulties, with General Partner
advances helping to fund the shortfall. There is no assurance that the General
Partner will continue to do so
The partnership continues to review the possibility of refinancing mortgages, in
order to reduces interest rates and increase cash flow. Management is presently
focusing on Ambassador Towers (formerly known as Cedar Ridge Apartments) and
Inducon Joint Venture Amherst. Ambassador Towers $1,000,000 loan is schedule to
mature in May 1996. Currently we are in the application process of refinancing
Inducon - Amherst.
There were no distributions for the three month periods ended March 31,1996 and
1995. The Partnership does not expect to resume distribution until it is able to
generate sufficient excess cash flow and repay the General Partner advances.
Results of Operations:
- ----------------------
The partnership experienced a net loss of $ 273,214 or $17.04 per limited
partnership unit for the period ended March 31,1996 versus a net loss of
$395,691 or 20.96 per unit for quarter ended March 31, 1995.
Partnership revenue for the quarter ended March 31, 1996 totaled $1,130,552
which is a down $33,000 from 1995 revenue of $1,163,721. The decrease in rental
revenue can be attributed to falling economic occupancy levels at Ambassador
Towers (formerly Cedar Ridge). Compared to the prior year, physical occupancy
dropped, while rental concessions and delinquencies increased. This more than
offset any occupancy gains at the other partnership properties.
-19-
<PAGE>
For the quarter ended March 31, 1996, Partnership expenses amounted to
$1,398,374, decreasing approximately $77,000 from the 1995 quarter end amount.
There was a concentrated effort made to decrease payroll, repairs, maintenance,
contracted services and property improvements throughout the partnership which
accounts expenses. There was also a decrease in legal fees and portfolio
management and accounting charges. As property performance improves, expenses
will continue to level off. Total interest expense increased due to the
significantly higher balance of the accounts payable-affiliate, while
depreciation and amortization increase slightly due to major capital
improvements that accrued in prior periods.
The Partnership began to see an increase in some occupancy levels, which should
ultimately lead to increased revenue amounts in the near future. Partnership
properties are starting to reestablish themselves in the marketplace and as
vacancy levels decrease, rental rates increase, rental concessions will
diminish, and an improving tenant profile will allow for an increase in
collections. These factors should allow for a rather gradual increase in
revenue.
On a tax basis, the partnership had a loss of $(213,716) or $13.33 per limited
partner unit for the three months period ended March 31, 1996 versus a tax loss
of $355,330 or $22.16 per unit for the quarter ended March 31, 1995.
-20-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not a party to, nor are any of the Partnership's properties
subject to any material pending legal proceedings other than ordinary, routine
litigation incidental to the Partnership's business.
Items 2, 3, 4 and 5
- -------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
a) Exhibits - Financial data schedule (Electronic filing only).
b) Reports on Form 8-K - None.
-21-
<PAGE>
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, thereunto duly authorized.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP III
By: /s/Joseph M. Jayson July 12, 1996
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson July 12, 1996
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer July 12, 1996
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III FOR
THE QUARTER ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 53,989
<SECURITIES> 0
<RECEIVABLES> 913,521
<ALLOWANCES> 895,252
<INVENTORY> 0
<CURRENT-ASSETS> 781,913
<PP&E> 20,934,564
<DEPRECIATION> 9,461,434
<TOTAL-ASSETS> 12,255,043
<CURRENT-LIABILITIES> 2,586,644
<BONDS> 10,243,902
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,255,043
<SALES> 0
<TOTAL-REVENUES> 1,130,552
<CGS> 0
<TOTAL-COSTS> 1,398,394
<OTHER-EXPENSES> 3,525
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 408,137
<INCOME-PRETAX> (271,347)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (271,347)
<EPS-PRIMARY> (16.93)
<EPS-DILUTED> 0
</TABLE>
