FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934. (NO FEE REQUIRED)
Commission File Number 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) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
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-K or any
amendment to this Form 10-K.(X)
DOCUMENTS INCORPORATED BY REFERENCE
See page 13 for a list of all documents incorporated by reference
<PAGE>
PART I
ITEM 1: BUSINESS
- - ------- --------
The Registrant, Realmark Property Investors Limited Partnership-III (the
"Partnership"), is a Delaware Limited Partnership organized in 1983, pursuant to
an Agreement and Certificate of Limited Partnership (the "Partnership
Agreement"), under the Revised Delaware Uniform Limited Partnership Act. The
Partnership's general partners are Realmark Properties, Inc. (the "Corporate
General Partner"), a Delaware corporation, and Joseph M. Jayson (the "Individual
General Partner").
The Registrant commenced the public offering of its Limited Partnership
Units, registered with the Securities and Exchange Commission under the
Securities Act of 1933 as amended on February 1, 1984, and concluded the
offering on January 31, 1985, having raised a total of $15,551,000 before
deducting sales commissions and expenses of the offering.
The Partnership's primary business and its only industry segment is to own
and operate income-producing real property for the benefit of its limited
partners. The Partnership's investment objectives are to (1) provide a return of
capital plus capital gains from the sale of appreciated properties; (2) provide
partners with cash distributions until properties are sold; (3) preserve and
protect partners capital and; (4) achieve a build-up of equity through the
reduction of mortgage loans.
In December 1996, the Partnership sold the Williamsburg South Apartments, a
200 unit apartment complex located in Atlanta, Georgia, and the Pleasant Run
Farms Apartments and Townhouses, a 130 unit complex located in Cincinnati, Ohio.
The Williamsburg South Apartments were purchased in June 1985, and the Pleasant
Run Farms Apartments were purchased by the Partnership in November 1985. The
sale of these properties generated a gain for financial statement purposes of
$3,501,323 for the period ended December 31, 1996.
As of December 31, 1996, the Partnership owned two (2) apartment complexes
with a total of 470 units and an office building containing approximately 40,000
square feet of net rentable space, and was a 50% owner in a joint venture of
four (4) single-story office/warehouse buildings with 84,960 total square feet
of rentable space. Each of the complexes is managed for the Partnership by
Realmark Corporation, an affiliate of the General Partners.
Occupancy for each complex as of December 31, 1996, 1995 and 1994 was as
follows:
1996 1995 1994
---- ---- ----
Castle Dore 96 % 96 % 96 %
Williamsburg South -- 97 % 96 %
Pleasant Run -- 90 % 90 %
Ambassador Towers (formerly Cedar Ridge) 90 % 85 % 87 %
Perrymont 63 % 65 % 83 %
2
<PAGE>
PART I
ITEM 1: BUSINESS (Con't.)
For financial statement purposes, the operations of the Partnership's four
apartment complexes and one commercial office building are consolidated. The
operations of the joint venture office building are recorded separately. The
following chart lists the percentage of total Partnership revenue generated by
each complex for the year indicated:
1996 1995 1994
---- ---- ----
Castle Dore 24 % 24 % 24 %
Williamsburg South 24 % 21 % 21 %
Pleasant Run 15 % 16 % 15 %
Ambassador Towers (formerly Cedar Ridge) 32 % 33 % 33 %
Perrymont 5 % 6 % 7 %
The business of the Partnership is not seasonal. As of December 31, 1996,
the Partnership did not directly employ any persons in a full-time position. All
persons who regularly rendered services on behalf of the Partnership through
December 31, 1996 were employees of the Corporate General Partner or its
affiliates.
ITEM 2: PROPERTIES
- - ------- ----------
Following is a listing of properties and joint ventures owned by the Partnership
at December 31, 1996:
Name
and Location General Character of Property Purchase Date
- - ------------ ----------------------------- -------------
Castle Dore Apts. Apartment complex; 18 buildings on February 1985
Indianapolis, IN 16 acres; 190 units. The outstanding
mortgage balance at December 31, 1996 was
$1,536,666, maturing February 2010 and
payable monthly at $18,002, including
interest at 7.5%. This mortgage balance
reflects an unamortized discount of
$579,685, which is based on an imputed
interest rate of 12.5%.
3
<PAGE>
ITEM 2: PROPERTIES (Con't.)
- - ---------------------------
Name
and Location General Character of Property Purchase Date
- - ------------ ----------------------------- -------------
Ambassador Towers Apartment complex; 6 buildings on December 1985
(formerly Cedar 11.6 acres; 280 units. The outstanding
Ridge Apts.) mortgages at December 31, 1996 are as follows:
Monroeville, PA a $467,891 mortgage, maturing April 1998
with monthly payments of $8,980, including
interest at 7.75%. The carrying amount of
this mortgage reflects an unamortized
discount of $42,300, which is based in an
imputed interest rate of 11%. A $1,177,329
mortgage, maturing May 2004 with monthly
payments of $20,455 including interest at
8.75%. The carrying amount of this mortgage
reflects an unamortized discount of $84,414,
which is based on an imputed interest rate
of 11%. A $989,413 mortgage, that matured
November 1, 1996, with monthly payments of
$9,621, including interest at 10.75%. These
mortgages were refinanced in February 1997
with a variable rate mortgage for
$3,263,000. The new mortgage provides for
payments of interest only through August
1998 and monthly installments of principal
and interest thereafter through maturity at
February 1, 2004.
Perrymont Office Bldg. Office building; one building on August 1985
McCandless, PA 2.3 acres; 40,000 square feet. The
outstanding mortgage balance at December 31,
1996 was $1,259,701. The mortgage provides
for interest rates and monthly payments
through December 1998 as follows: during
1996 monthly payments of $9,660, including
interest of 7.875%; during 1997 and 1998,
monthly payments of $10,187, including
interest at 8.5%. The mortgage matures
January 1999.
4
<PAGE>
ITEM 2: PROPERTIES (Con't.)
- - ---------------------------
Name
and Location General Character of Property Purchase Date
- - ------------ ----------------------------- -------------
Inducon Joint Venture - Four office/warehouse buildings on June 1985
Amherst 4 acres with 84,960 square feet of rentable
Amherst, NY space; the Partnership is a 50% owner; the
complex is managed by the other Joint
Venture Partner. The outstanding mortgage
balance at December 31, 1996 was $260,450
maturing November 1996; the mortgage
matured and is currently payable on demand
including interest at 10.5%. The Venture
also has a demand note outstanding of
$1,849,245 at December 31, 1996.
Interest on the note is between 7.125 -
7.25%. Both instruments were refinanced
in March 1997 with an 8.62% fixed rate
mortgage for $1,875,000; the new mortgage
will mature March 1, 2004.
ITEM 3: LEGAL PROCEEDINGS
- - ------- -----------------
The Partnership is not a party to, nor are any of the Partnership's
properties the subject of, any material pending legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
- - ------- -------------------------------------------
HOLDERS.
--------
None.
PART II
ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED
- - ------- ----------------------------------------
PARTNERSHIP INTEREST.
---------------------
There is currently no established trading market for the units of Limited
Partnership Interest of the Partnership and it is not anticipated that any will
develop in the future.
There were no distributions during the years ended December 31, 1996, 1995
and 1994. The Partnership does not anticipate resuming distributions until it is
able to generate sufficient excess cash flow.
As of December 31, 1996, there were 1,954 record holders of units of
Limited Partnership Interest.
5
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Realmark Properties Investors Limited Partnership-III
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total assets $ 8,869,221 $ 12,403,691 $ 13,195,397 $ 13,757,093 $ 16,852,848
============ ============ ============ ============ ============
Notes payable and
long-term obligations $ 5,431,000 $ 10,276,248 $ 10,492,540 $ 10,408,867 $ 12,632,576
============ ============ ============ ============ ============
__________________________________________________________________________________________________________
Revenue $ 4,429,043 $ 4,632,199 $ 4,505,896 $ 4,642,864 $ 4,563,296
Expenses 5,357,211 5,931,484 5,549,133 5,586,582 5,172,546
Loss from
joint venture (142,165) (93,698) (164,510) (69,136) (73,614)
------------ ------------ ------------ ------------ ------------
Loss from
operations (1,070,333) (1,392,983) (1,207,747) (1,012,854) (682,864)
Gain on sale of property 3,501,323 -- -- -- --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 2,430,990 ($ 1,392,983) ($ 1,207,747) ($ 1,012,854) ($ 682,864)
============ ============ ============ ============ ============
__________________________________________________________________________________________________________
Net cash (used in)
provided by operating
activities ($ 275,818) ($ 229,343) ($ 406,562) ($ 169,323) $ 285,923
Principal payments on
long-term debt net of
proceeds from mortgage
refinancing/mortgage
receivable (4,905,905) (216,292) 19,684 82,564 (252,089)
------------ ------------ ------------ ------------ ------------
Net cash (used in) provided
by operating activities
less principal payments ($ 5,181,723) ($ 445,635) ($ 386,878) ($ 86,759) $ 33,834
============ ============ ============ ============ ============
__________________________________________________________________________________________________________
Income (loss) per limited
partnership unit 141.68 (86.89) (75.33) (63.18) (42.59)
============ ============ ============ ============ ============
Distributions per limited
partnership unit $ -- $ -- $ -- 4.33 4.38
============ ============ ============ ============ ============
Weighted average number
of Limited Partnership
units outstanding 15,551 15,551 15,551 15,551 15,551
============ ============ ============ ============ ============
</TABLE>
6
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- - -------------------------------
Through much of 1996, the Corporate General Partner continued to advance
funds to the Partnership to fund cash flow shortages needed for operations. Such
advances were and continue to be payable on demand and accrue interest at a rate
of 11%. At December 31, 1996, the advances outstanding totaled $208,156, a
decrease of over $1 million from the prior year.
Decreases in occupancy at Ambassador Towers (formerly Cedar Ridge),
Pleasant Run and Perrymont caused the Partnership to struggle financially
through the year. In the last quarter of the year, Ambassador Towers occupancy
increased by a considerable amount; Perrymont, unfortunately, has not reached
this point yet; its occupancy at the end of 1996 was only 63%. At that level,
and without a significant reduction in expenses, the property could be in
default concerning its mortgage. Occupancy at Castle Dore and Williamsburg South
remained fairly high through much of 1996 (i.e. in the 90 to 95% range).
The General Partners were successful in selling two properties during 1996:
Williamsburg South and Pleasant Run. The properties came under contract for sale
during July 1996. Upon the completion of all due diligence on the part of the
purchaser, the sales closed in December of 1996 at sales prices of $4,831,000
and $3,350,000, respectively. The completed sales brought the Partnership the
influx of cash which it needed for so long to make improvements to the remaining
properties, as well as to pay back the advances from the General Partners and
their affiliates which had been building through the past several years. The
General Partners believe the sales were in the best interest of the Limited
Partners. There are also signed contracts for the sale of Castle Dore and
Ambassador Towers (formerly Cedar Ridge Apartments) which were signed in July of
1996. The sales are subject to a number of contingencies and are cancelable by
the purchaser. Until such time as all of the buyers due diligence is performed,
no closing date can be estimated.
Management has once again implemented corrective action plans in response
to the going concern consideration discussed in Note 11 to the financial
statements, as well as to deal with the United States Department of Housing and
Urban Development (HUD) noncompliance detailed in the notes to the financial
statements. These plans include tighter cash management through the closer
monitoring of expenses such as payroll, advertising and maintenance, which have
typically been the expenses that have increased from year to year. Additionally,
tighter credit policies have been put into place as a means of avoiding the
collection problems which were incurred during the past year. The HUD
noncompliance detailed in the notes technically puts the Partnership in default
of the mortgage which could result in fines or interest charges being levied, or
the take over of the property by HUD. A concerted effort at correcting the
noncompliance should lead to the ultimate cure of such default.
Subsequent to December 31, 1996, the General Partners were successful in
refinancing two properties' mortgages: Ambassador Towers and Inducon - Amherst.
The refinancings extended the mortgages, two of which matured during 1996 and
were temporarily extended by the lenders, and also gave the Partnership lower
interest rates which will ultimately improve cash flow in the Partnership.
The Partnership made no distributions in the years ended December 31, 1996, 1995
and 1994. Management hopes to make a distribution in the coming year, but at
this date, all available cash is going to be utilized to fund necessary
improvements to the properties.
7
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations
- - ---------------------
For the year ended December 31, 1996, the Partnership earned net income of
$2,430,990 or $141.68 per limited partnership unit. The income is a result of
the previously detailed sales of Williamsburg South and Pleasant Run. The
Partnership had a net loss before the gain recognized upon the sale of
$1,070,333. This compares to the years ended December 31, 1995 and 1994 when
losses incurred totaled $1,392,983 or $86.89 per limited partnership unit and
$1,207,747 or $75.33 per limited partnership unit, respectively.
Partnership revenues for the year ended December 31, 1996 totaled
$4,429,043, consisting of rental income of $4,004,140 and other income, which
includes interest, laundry income, and other miscellaneous sources of income of
$424,903. The decrease in rental revenue from that of the two previous years may
be attributed to the low occupancy levels throughout much of the year at
Ambassador Towers and Pleasant Run, and the recurrent struggle with low
occupancy at Perrymont. Rental revenues in the year ended December 31, 1995
amounted to $4,336,896 and in the year ended December 31, 1994 totaled
$4,280,064. There was a considerable increase in other income during the year
ended December 31, 1996, in part due to increased laundry revenue at the
residential properties and real estate tax refunds received for tax appeals at
Ambassador Towers. Increasing occupancy, as well as decreasing delinquencies,
remains the major focus of management. Tighter credit policies and extended and
attractive incentive programs continue to be management's means of reaching the
income levels needed to improve the cash flow in the Partnership.
Partnership expenses for the year ended December 31, 1996 totaled
$5,357,211, a significant decrease from the expenses for the years ended
December 31, 1995 and 1994 which were $5,931,484 and $5,549,133, respectively.
The most prominent decrease can be seen in property operations. There was a
decrease of approximately $381,306 or almost 13% between the years ended
December 31, 1996 and 1995. Management has exercised strict cost controlling
factors which have resulted in more control over expenses related to payroll and
associated costs, repairs and maintenance and contracted services. This was done
in response to the cash flow difficulties which the Partnership has suffered
through for the past several years. Interest paid to affiliates increased from
previous years due to the higher carrying value of the advances from the General
Partner(s) and their affiliates during most of the year. Administrative
expenses, other than those paid to affiliates, totaled $438,560 for 1996 which
is fairly constant as compared to the year ended December 31, 1995 when they
totaled $436,109 and the year ended December 31, 1994 when they totaled
$442,213. The decrease in administrative expenses paid to affiliates is the
result of decreased accounting and portfolio management fees and decreased
management fees due to the vacancy and collection problems at several of the
properties in the Partnership.
Management has plans to use the cash received from the sales to make
necessary improvements to the remaining properties in the Partnership.
Improvements such as interior and exterior painting, new carpets and appliances,
and roof and paving repairs are all scheduled for the coming year. Management
feels these improvements are needed to attract new tenants as well as to retain
existing tenants. Although this work is necessary in order to increase rental
revenue(s) generated in the Partnership, all work is being done with the cash
flow of the Partnership always in mind; expenditures will be closely monitored
so as not to reverse the trend (i.e. decreasing expenses) that was set during
1996. One means of controlling such expenses has been management's success at
obtaining large price discounts on paint, carpeting and appliances through
negotiations with large national companies, such as Whirlpool.
8
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Con't.)
------------------------------------------------------
Results of Operations (Con't.):
- - -------------------------------
The Partnership agreement provides for the taxable income or losses from
operations to be allocated 97% to the Limited Partners and 3% to the General
Partners. Income and losses from the sale(s) of properties is to be allocated
first to the Limited Partners to the extent they receive their average adjusted
capital balances plus a preferential return of 7% and an additional 5%; after
this, the income is to be allocated 87% to the Limited Partners and 13% to the
General Partners.
Inducon Joint Venture - Amherst generated a net loss of $149,647 for the
year ended December 31, 1996 as compared to the loss which resulted in the years
ended December 31, 1995 and 1994 of $98,629 and $173,168, respectively. In
accordance with the joint venture agreement, 95% of the income or losses are
passed through to the Partnership and the remaining 5% is allocated to other
joint venture partner.
For the year ended December 31, 1996, the tax basis income was $2,940,564
or $183.42 per limited partnership unit compared to a tax loss of $1,154,994 or
$72.04 per unit for the year ended December 31, 1995 and a tax loss of
$1,216,345 or $75.87 per limited partnership unit for the year ended December
31, 1994. The gain from the sale of Williamsburg South and Pleasant Run for tax
purposes amounted to $4,467,961.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- - ------- --------------------------------------------
Listed under Item 14 of the report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- - ------- ---------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
---------------------------------------
None.
9
<PAGE>
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE
- - -------- ---------------------------------------
REGISTRANT.
-----------
The Partnership, as an entity, does not have any directors or officers. The
Individual General Partner of the Partnership is Joseph M. Jayson. The directors
and executive officers of Realmark Properties, Inc., the Partnership's Corporate
General Partner, as of March 1, 1996, are listed below. Each director is subject
to election on an annual basis.
Title of All Positions Year First
Name Held With the Company Elected Director
- - ---- --------------------- ----------------
Joseph M. Jayson President and Director 1979
Judith P. Jayson Vice President and Director 1979
Michael J. Colmerauer Secretary
Joseph M. Jayson, President and Director of Realmark Properties, Inc. and
Judith P. Jayson, Vice President and Director of Realmark Properties, Inc., are
married to each other.
The Director and Executive Officers of the Corporate General Partner and
their principal occupations and affiliations during the last five years or more
are as follows:
Joseph M. Jayson, age 58, is Chairman and Director and sole stockholder of
J.M. Jayson & Company, Inc. and certain of its affiliated companies:
Westmoreland Capital Corporation, Oilmark Corporation and U.S. Energy
Development Corporation. In addition, Mr. Jayson is President and Director of
Realmark Corporation and Realmark Properties, Inc., wholly owned subsidiaries of
J.M. Jayson & Company, Inc. and co-General Partner of Realmark Properties
Investors Limited Partnership, Realmark Properties Investors Limited
Partnership-II, Realmark Properties Investors Limited Partnership-III, Realmark
Properties Investors Limited Partnership-IV, Realmark Properties Investors
Limited Partnership-V, Realmark Properties Investors Limited Partnership-VI A
and Realmark Properties Investors Limited Partnership-VI B. Mr. Jayson is a
member of the Investment Advisory Board of the Corporate General Partner. Mr.
Jayson has been engaged in real estate business for the last 34 years and is a
Certified Property Manager as designated by the Institute of Real Estate
Management ("I.R.E.M."). Mr. Jayson received a B.S. Degree in Education in 1961
from Indiana University, a Masters Degree from the University of Buffalo in
1963, and has served on the Educational Faculty of the Institute of Real Estate
Management. Mr. Jayson has for the last 34 years been engaged in various aspects
of real estate brokerage and investment. He brokered residential properties from
1962 to 1964, commercial and investment properties from 1964 to 1967, and in
1967 left commercial real estate to form his own investment firm. Since that
time, Mr. Jayson and J.M. Jayson & Company, Inc. have formed, or participated in
various ways in forming, over 30 real estate related limited partnerships. For
the past sixteen years, Mr. Jayson and J.M. Jayson & Company, Inc. and an
affiliate have also engaged in developmental drilling for gas and oil.
10
<PAGE>
Judith P. Jayson, age 57, is currently Vice-President and Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 35 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York high school
system. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration. Mrs. Jayson is the wife of
Joseph M. Jayson, the Individual General Partner.
Michael J. Colmerauer, 39, is Secretary and in-house legal counsel for J.M.
Jayson & Company, Inc., Realmark Corporation, Realmark Properties, Inc. and
other companies affiliated with the General Partners. He received a Bachelor's
Degree (BA) from Canisius College in 1980 and a Juris Doctors (J.D.) from the
University of Tulsa in 1983. Mr. Colmerauer is a member of the American and Erie
County Bar Association and has been employed by the Jayson group of companies
for the last 13 years.
ITEM 11: EXECUTIVE COMPENSATION.
- - -------- -----------------------
No direct remuneration was paid or payable by the Partnership to directors
and officers (since it has no directors or officers) for its fiscal years ended
December 31, 1996, 1995 and 1994 nor was any direct remuneration paid or payable
by the Partnership to directors or officers of Realmark Properties, Inc., the
Corporate General Partner and sponsor for the years ended December 31, 1996,
1995 and 1994.
The following table sets forth for the years ended December 31, 1996, 1995
and 1994 the compensation paid by the Partnership, directly or indirectly, to
affiliates of the General Partners:
<TABLE>
<CAPTION>
Entity Receiving Type of
Compensation Compensation 1996 1995 1994
------------ ------------ ---- ---- ----
<S> <C> <C> <C> <C>
Realmark Properties, Inc.
(The Corporate
General Partner) Interest charged on
accounts payable -
affiliates $149,954 $101,378 $45,590
----------- ----------- ----------
Reimbursements for
allocated expenses of the
General Partners:
Investor Services Fees 18,746 8,731 9,373
Brokerage 11,936 13,353 14,704
Portfolio Management
& Accounting Fees 147,690 247,152 91,156
Partnership Management Fee - - 2,925
Realmark Corporation Property Management Fees 217,095 227,134 223,083
Computer Service Fees 14,040 14,040 14,040
----------- ----------- ----------
409,507 510,410 355,281
----------- ----------- ----------
Total $559,461 $611,788 $400,871
=========== =========== ==========
</TABLE>
11
<PAGE>
The Corporate General Partner is entitled to a continuing Partnership
Management Fee equal to 7% of net cash flow (as defined in the Partnership
Agreement), of which 2% is subordinated to the receipt by the Limited Partners
of a noncumulative annual cash return equal to 7% of the average of their
adjusted capital contributions (as defined in the Partnership Agreement). The
Corporate General Partner is paid its 5% Partnership Management Fee annually as
cash flow allows. The 2% subordinated fee will not be paid or accrued until such
time as the Limited Partners have received their 7% return and payment of the
fee becomes probable. The General Partners are also entitled to 3% of
Distributable Cash (as defined in the Partnership Agreement) and to certain
expense reimbursements with respect to Partnership operations.
The General Partners are allowed to collect property disposition fees upon
the 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 sale 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 a cumulative amount
equal to their capital contributions. The fees earned on the sale of Bryn Mawr
Apartments in 1986 and Parc Bordeau Apartments in 1988 and the two properties in
the current year will not be recorded as a liability in the Partnership's
financial statements until such time as payment is probable.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- - -------- -----------------------------------------------
AND MANAGEMENT.
---------------
No person is known to the Partnership to own of record or beneficially more
than five percent (5%) of the Units of Limited Partnership Interest of the
Partnership. Excluding the General Partners' interest in the Partnership ($1,000
initial capital contribution), the General Partners as of December 31, 1996
owned no Units of Limited Partnership Interest.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
- - -------- -----------------------------------------------
(a) Transactions with Management and Others.
----------------------------------------
No transactions have occurred between the Partnership and those in the
management of Realmark Properties, Inc. All transactions between the Partnership
and Realmark Properties, Inc. (the Corporate General Partner) and any other
affiliated organization are described in Item 11 of this report and in Notes 6
and 7 to the financial statements.
11
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K.
(a) Financial Statements and Schedules.
-----------------------------------
FINANCIAL STATEMENTS PAGE
-------------------- ----
(i) Independent Auditors' Report 15
(ii) Balance Sheets at December 31, 1996 and 1995 16
(iii) Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 17
(iv) Statements of Partners' Capital (Deficit) for the
years ended December 31, 1996, 1995 and 1994 18
(v) Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 19
(vi) Notes to Financial Statements 20 - 34
FINANCIAL STATEMENT SCHEDULES
-----------------------------
(i) Schedule II - Valuation and Qualifying Accounts 35
(ii) Schedule III - Real Estate and Accumulated Depreciation 36 - 37
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
(b) Reports on Form 8-K.
--------------------
None
(c) Exhibits
--------
4. Instruments defining the rights of security holder, including
indentures
(a) Certificate of Limited Partners filed with the Registration
Statement of the Registrant Form S-11, filed November 21,
1983, and subsequently amended incorporated herein by
reference.
13
<PAGE>
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
- - -------- ---------------------------------------------
REPORTS ON FORM 8-K (Con't.).
-----------------------------
10. Material contracts
(a) Property Management Agreement with Realmark Corporation
included with the Registration Statement of the Registrant as
filed and amended to date incorporated herein by reference.
(b) Partnership Agreement included with the Registration Statement
of the Registrant as filed and amended to date incorporated
herein by reference.
(c) Partnership sales agreements with unrelated third-parties
included with the third quarter Form 10Q incorporated herein
by reference.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Realmark Property Investors Limited Partnership - III:
We have audited the accompanying balance sheets of Realmark Property Investors
Limited Partnership-III as of December 31, 1996 and 1995, and the related
statements of operations, partners' capital (deficit), and cash flows for each
of the three years in the period ended December 31, 1996. Our audits also
included the financial statement schedules listed in the Index at Item 14. These
financial statements and financial statement schedules are the responsibility of
the General Partners. Our responsibility is to express an opinion on the
financial statements and the financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the General Partners, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Realmark Property Investors Limited
Partnership-III at December 31, 1996 and 1995 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
The accompanying financial statements and financial statement schedules have
been prepared assuming that the Partnership will continue as a going concern. As
discussed in Note 11 the Partnership's failure to meet its Department of Housing
and Urban Development regulatory agreement requirements, its recurring losses
from operations, and its continuing operating cash flow difficulties, raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 11. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
DELOITTE & TOUCHE, LLP
Buffalo, New York
March 25, 1997
15
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------------ ------------
<S> <C> <C>
Property, at cost (including assets held for sale, see Note 3):
Land $ 935,000 $ 1,410,000
Buildings and improvements 10,032,459 17,238,605
Furniture and fixtures 1,481,974 2,275,548
------------ ------------
12,449,433 20,924,153
Less accumulated depreciation 5,837,777 9,283,886
------------ ------------
Property, net 6,611,656 11,640,267
Investment in joint venture 25,156 167,321
Cash 1,811,962 --
Cash - security deposits 56,086 53,989
Trade accounts receivable, net of allowance for doubtful accounts
of $584,097 and $800,839 for 1996 and 1995, respectively 69 21,238
Other assets 364,292 520,876
------------ ------------
Total Assets $ 8,869,221 $ 12,403,691
============ ============
Liabilities and Partners' (Deficit) Capital
Liabilities:
Cash overdraft $ -- $ 36,921
Mortgages payable 5,431,000 10,276,248
Accounts payable and accrued expenses 713,233 777,976
Accounts payable - affiliates 208,156 1,258,243
Interest payable 100,327 88,868
Security deposits and prepaid rents 289,671 269,591
------------ ------------
Total Liabilities 6,742,387 12,707,847
------------ ------------
Partners' (deficit) capital:
General partners (199,668) (427,399)
Limited partners 2,326,502 123,243
------------ ------------
Total partners' capital (deficit) 2,126,834 (304,156)
------------ ------------
Total Liabilities and Partners' (Deficit) Capital $ 8,869,221 $ 12,403,691
============ ============
</TABLE>
See notes to financial statements
16
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental $ 4,004,140 $ 4,336,896 $ 4,280,064
Interest and other 424,903 295,303 225,832
----------- ----------- -----------
Total income 4,429,043 4,632,199 4,505,896
----------- ----------- -----------
Expenses:
Property operations 2,584,892 2,966,198 2,814,851
Interest:
Paid to affiliates 149,954 101,378 45,590
Other 1,165,193 1,137,438 1,135,957
Depreciation and amortization 609,105 779,951 755,241
Administrative:
Paid to affiliates 409,507 510,410 355,281
Other 438,560 436,109 442,213
----------- ----------- -----------
Total expenses 5,357,211 5,931,484 5,549,133
----------- ----------- -----------
Loss before allocated loss from joint venture
and gain on sale of properties (928,168) (1,299,285) (1,043,237)
Allocated loss from joint venture (142,165) (93,698) (164,510)
Gain on sale of properties 3,501,323 -- --
----------- ----------- -----------
Net income (loss) $ 2,430,990 ($1,392,983) ($1,207,747)
=========== =========== ===========
Income (loss) per limited partnership unit $ 141.68 ($ 86.89) ($ 75.33)
=========== =========== ===========
Distributions per limited partnership unit $ -- $ -- $ --
=========== =========== ===========
Weighted average number of limited partnership
units outstanding 15,551 15,551 15,551
=========== =========== ===========
</TABLE>
See notes to financial statements
17
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
General Limited Partners
Partners ----------------
Amount Units Amount
------ ----- ------
Balance, January 1, 1994 ($ 349,378) 15,551 $ 2,645,952
Net loss (36,232) -- (1,171,515)
----------- ----------- -----------
Balance, December 31, 1994 (385,610) 15,551 1,474,437
Net loss (41,789) -- (1,351,194)
----------- ----------- -----------
Balance, December 31, 1995 (427,399) 15,551 123,243
Net income 227,731 -- 2,203,259
----------- ----------- -----------
Balance, December 31, 1996 ($ 199,668) 15,551 $ 2,326,502
=========== =========== ===========
See notes to financial statements
18
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from operating activities:
Net income (loss) $ 2,430,990 ($1,392,983) ($1,207,747)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 609,105 779,951 755,241
Amortization of mortgage discounts 60,657 65,723 63,989
Loss from joint venture 142,165 93,698 164,510
Gain on sale of properties (3,501,323) -- --
Changes in operating assets and liabilities:
Cash - security deposits (2,097) (1,664) (1,524)
Trade accounts receivable 21,169 13,518 (20,910)
Other assets (3,280) 69,355 (175,517)
Accounts payable and accrued expenses (64,743) 184,183 (26,681)
Interest payable 11,459 (482) (2,490)
Security deposits and prepaid rents 20,080 25,081 44,567
----------- ----------- -----------
Net cash used in operating activities (275,818) (163,620) (406,562)
----------- ----------- -----------
Cash flows from investing activities:
Property acquisitions and additions (7,307) (171,686) (198,553)
Distributions from joint venture -- -- 15,000
Proceeds from dispositions of properties 8,088,000 -- --
----------- ----------- -----------
Net cash provided by (used in) investing activities 8,080,693 (171,686) (183,553)
----------- ----------- -----------
Cash flows from financing activities:
(Decrease) increase in cash overdraft (36,921) 36,921 --
(Decrease) increase in accounts payable - affiliates (1,050,087) 571,866 546,982
Proceeds from mortgage refinancing -- -- 2,250,000
Principal payments on mortgages (4,905,905) (282,015) (2,230,316)
----------- ----------- -----------
Net cash (used in) provided by financing activities (5,992,913) 326,772 566,666
----------- ----------- -----------
Increase (decrease) in cash 1,811,962 (8,534) (23,449)
Cash - beginning of year -- 8,534 31,983
----------- ----------- -----------
Cash - end of year $ 1,811,962 $ -- $ 8,534
=========== =========== ===========
</TABLE>
See notes to financial statements
19
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
1. FORMATION AND OPERATION OF PARTNERSHIP:
---------------------------------------
Realmark Property Investors Limited Partnership-III (the "Partnership"), a
Delaware Limited Partnership, was formed on November 18, 1983, to invest in a
diversified portfolio of income-producing real estate investments.
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 of the public offering of
limited partnership units, which occurred on April 26, 1984. All items of income
and expense arose subsequent to this date. The maximum offering of the
Partnership was $20,000,000 (20,000 units). The offer terminated January 31,
1985 with gross offering proceeds of $15,551,000 (15,551 units). The General
Partners are Realmark Properties, Inc., a wholly-owned subsidiary of J.M. Jayson
& Company, Inc. (JMJ) and Joseph M. Jayson, the Individual General Partner.
Joseph M. Jayson is the sole shareholder of JMJ.
Under the partnership agreement, the general partners and their affiliates
can receive compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership (see Note 7).
The partnership agreement also provides that distribution of funds,
revenues, costs and expenses arising from partnership activities, exclusive of
any sale or refinancing activities, are to be allocated 97% to the Limited
Partners and 3% to the General Partners. Net income or losses and proceeds
arising from a sale or refinancing shall be distributed first to the Limited
Partners in amounts equivalent to a 7% return on their average adjusted capital
balances, plus an amount equal to their capital contributions. The Agreement
also provides for payment of property disposition fees to Realmark Properties,
Inc., prior to additional distributions to limited partners in amounts
equivalent to 5% of their average adjusted capital balances. Additional proceeds
shall then be allocated to all partners in amounts equal to their respective
positive capital account balances and the remainder, if any, in the ratio of 87%
to the Limited Partners and 13% to the General Partners. Income and losses from
the sale(s) of properties is to be allocated first to the Limited Partners to
the extent they receive their average adjusted capital balances plus a
preferential return of 7% and an additional 5%; after this, the income is to be
allocated 87% to the Limited Partners and 13% to the General Partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- - -- -------------------------------------------
(a) Use of Estimates
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
20
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Con't.):
----------------------------------------------------
(b) Property and Depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. The estimated useful lives of the
Partnership's assets range from 5 to 25 years. Depreciation expense totaled
$449,241, $732,342 and $755,241 for the years ended December 31, 1996, 1995 and
1994, respectively. For further discussion, see Footnote No. 3.
Expenditures for maintenance and repairs are expensed as incurred, and major
renewals and betterments are capitalized.
The Accelerated Cost Recovery System and Modified Accelerated Cost Recovery
System are used to calculate depreciation expense for tax purposes.
(c) 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.
(d) Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
(e) Cash - Security Deposits
------------------------
Cash - security deposits represents cash on deposit at Castle Dore, 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).
(f) Interest in Joint Venture
-------------------------
The Partnership's interest in affiliated joint venture is accounted for on
the equity method.
21
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. ACQUISITION AND DISPOSITIONS 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 February 1985, the Partnership acquired a 190 unit apartment complex
(Castle Dore), located in Indianapolis, Indiana for a purchase price of
$3,711,683, which included $414,279 in acquisition fees. In connection with this
acquisition, the Partnership assumed a mortgage of approximately $2,578,000. The
mortgage bears interest at 7.5% and matures on September 1, 2014.
In February 1985, the Partnership acquired a 208 unit apartment complex
(Parc Bordeaux), located in Indianapolis, Indiana, for a purchase price of
$3,845,064, which included $371,233 in acquisition fees.
In June 1985, the Partnership acquired a 200 unit apartment complex
(Williamsburg South Apartments) located in Atlanta, Georgia, for a purchase
price of $4,764,200, which included $368,745 in acquisition fees. In connection
with this acquisition, the Partnership obtained from the seller a Purchase Money
Mortgage in the amount of $3,300,000.
In August 1985, the Partnership acquired an office complex containing
approximately 40,000 net rentable square feet (Perrymont Office Building)
located in Pittsburgh, Pennsylvania, for a purchase price of $2,078,697, which
included $168,697 in acquisition fees.
In November 1985, the Partnership acquired a 130 unit apartment complex
(Pleasant Run Farms) located in Cincinnati, Ohio, for a purchase price of
$3,434,728, which included $267,228 in acquisition fees.
In December 1985, the Partnership acquired a 280 unit apartment complex
(Ambassador Towers, formerly Cedar Ridge) located in Monroeville, Pennsylvania
for a purchase price of $6,423,391, which included $646,424 in acquisition fees.
In August 1986, the Partnership sold the Bryn Mawr Apartments for a sale
price of $3,110,000 which generated a total net gain for financial statement
purposes of $1,475,313. For income tax purposes, the gain was recognized under
the installment method.
In December 1988, the Partnership sold the 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 was
recognized under the installment method.
In December 1996, the Partnership sold the Williamsburg South Apartments
and Pleasant Run Farms Apartments for a sales price of $4,831,000 and
$3,350,000, respectively, less related fees of $93,000. The sales generated a
total net gain of $3,501,323 for financial statement purposes.
22
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. ACQUISITION AND DISPOSITIONS OF RENTAL PROPERTY (Con't):
--------------------------------------------------------
In July of 1996, the Partnership entered into a plan to dispose of the
property, plant and equipment of Castle Dore Apartments and Ambassador Towers
with carrying amounts of $1,891,232 and $3,482,903 at December 31, 1996,
respectively. Management has determined that a sale of the properties is in the
best interests of the investors of RPILP III. As of December 31, 1996,
agreements, cancelable by the buyer, have been signed with anticipated sales
prices of $5,500,000 and $5,800,000, respectively. It is anticipated that the
sales will take place during 1997. Castle Dore earned net income of $10,614, and
Ambassador Towers incurred a net loss of $207,810 during the year ended December
31, 1996.
Financial Accounting Standards Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of (the
"Statement") requires that assets to be disposed of, be recorded at the lower of
carrying value or fair value, less costs to sell. The Statement also requires
that such assets not be depreciated during the disposal period, as the assets
will be recovered through sale rather than through operations. In accordance
with this Statement, the long-lived assets of the properties are recorded at the
carrying amount which is the lower of carrying value or fair value less costs to
sell, and have not been depreciated during the disposal period. Depreciation
expense, not recorded during the disposal period, for the year ended December
31, 1996 totaled approximately $133,000.
4. MORTGAGES PAYABLE:
------------------
The Partnership has the following mortgages payable:
Castle Dore
-----------
A 7.5% U.S. Housing and Urban Development (HUD) guaranteed mortgage which
provides for annual principal and interest payments of $216,024 payable in equal
monthly installments through February 1, 2010. The carrying amount of the
mortgage was $1,536,666 and $1,560,337 at December 31, 1996 and 1995,
respectively, reflecting an unamortized discount of $579,685 for 1996 and
$611,052 for 1995. The discount is based on an imputed rate of 12.5% and is
being amortized using the interest method over the remaining term of the
mortgage.
Williamsburg South
------------------
A 12.85% mortgage which provides for annual principal and interest payments
of $341,604 payable in equal monthly installments through December 1999. The
mortgage has a balance of $0 and $2,423,287 at December 31, 1996 and 1995,
respectively. This property was sold in December of 1996 and the outstanding
balance of the mortgage was paid in full.
23
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. MORTGAGES PAYABLE (Con't.):
---------------------------
Perrymont
---------
A mortgage which provides for interest rates and monthly installments
through December 1998 is as follows:
Year Rate Payment
---- ---- -------
1996 7.875 % $ 9,660 (Principal and interest)
1997 - 1998 8.5 % $10,187 (Principal and interest)
The outstanding balance was $1,259,701 and $1,265,185 at December 31, 1996
and 1995, respectively. The mortgage matures in January 1999.
Ambassador Towers (formerly Cedar Ridge)
----------------------------------------
A 7.75% mortgage which provides for annual principal and interest payments
of $107,760 payable in equal monthly installments through April 1, 1998. The
carrying amount of the mortgage of $467,891 and $520,759 at December 31, 1996
and 1995, respectively reflects an unamortized discount of $42,300 for 1996 and
$54,168 for 1995. The discount is based on an imputed rate of 11% and is being
amortized using the interest method over the remaining term of the mortgage.
A 8.75% mortgage which provides for annual principal and interest payments
of $245,460 payable in equal monthly installments through May 2004. The carrying
amount of the mortgage of $1,177,329 and $1,285,661 at December 31, 1996 and
1995, respectively, reflects an unamortized discount of $84,414 for 1996 and
$101,835 for 1995. The discount is based on an imputed rate of 11% and is being
amortized using the interest method over the remaining term of the mortgage.
A mortgage with a balance of $989,413 and $997,994 at December 31, 1996 and
1995, respectively, which was due November 1996. The mortgage calls for
principal and interest payments of $9,621 at a rate of 10.75%.
The previous three mortgages were refinanced in March 1997 with a variable
rate mortgage for $3,263,000. The new mortgage provides for payments of interest
only through August 1998 and monthly installments of principal and interest
thereafter through maturity at February 1, 2004. The interest rate is 8.275%
during the first loan year and is to be adjusted at the beginning of the second
and seventh loan years to a rate equal to 2.40% plus the weekly average yield on
United States Treasury Securities, adjusted to a constant maturity of five
years.
24
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. MORTGAGES PAYABLE (Con't.):
Pleasant Run Farms
A 10.0% mortgage which provides for annual principal and interest payments
of $245,352 payable in equal monthly installments through August 1, 1998. The
mortgage has a balance of $0 and $2,223,025 at December 31, 1996 and 1995,
respectively. This property was sold in December of 1996 and the outstanding
balance of the mortgage was paid in full.
The above mortgages are secured by the properties to which they relate.
The aggregate maturities of mortgages and notes payable, after giving
effect to the refinancing, for each of the next five years are as follows:
Year Amount
1997 $ 84,466
1998 95,166
1999 1,327,466
2000 119,873
2001 129,559
Thereafter 4,882,522
--------------
6,639,052
Unamortized discount (579,685)
--------------
TOTAL $6,059,367
==============
5. FAIR VALUE OF FINANCIAL INSTRUMENTS:
------------------------------------
Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value of certain financial instruments. The fair value of accounts
receivable, accounts payable, accrued expenses, deposit liabilities approximate
the carrying value due to the short-term nature of these instruments.
The fair value of the mortgage payable on Castle Dore, with a carrying
value of $1,536,666, cannot be determined because it is uncertain if a
comparable mortgage could be obtained in the current market. See Note 4 for a
description of the terms of the mortgage payable.
The fair value of the mortgage payable on Perrymont, with a carrying value
of $1,259,701, cannot be determined because it is uncertain if a comparable
mortgage could be obtained in the current market due to the poor occupancy level
at the property.
25
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FAIR VALUE OF FINANCIAL INSTRUMENTS (Con't.):
---------------------------------------------
Management has estimated fair value of the mortgages payable on the
following properties, based on currently available rates.
Carrying
Property Value
Ambassador Towers (formerly Cedar Ridge) (due April 1998) $ 467,891
Ambassador Towers (formerly Cedar Ridge) (due May 2004) 1,177,321
Management has estimated that the fair value of the mortgage payable on
Ambassador Towers (formerly Cedar Ridge) (due 1996) approximates its carrying
value of $989,413 due to its short-term nature.
The fair value of Accounts Payable - Affiliates, with a carrying value of
$208,156, cannot be determined because it is uncertain if a comparable
instrument could be obtained in the current market given the financial condition
of RPILP-III.
6. INVESTMENT IN JOINT VENTURE:
----------------------------
In April 1985, the Partnership entered into an agreement and formed 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, manufacture, salvage, repair,
exhibit, repacking, relabeling, and re-export. Under the terms of the Joint
Venture Agreement, the Partnership supplied capital to acquire the land and
undertake initial development, to the extent of $545,000 in Phase I and an
additional $275,000 on Phase II.
The Other Joint Venturer delivered or completed on behalf of the Joint
Venture all plans, specifications, maps, surveys, accounting proformas 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 received or loss incurred.
Net cash flow from the Joint Venture is to be distributed as follows:
o To the Partnership until it has received a return of 7% per annum on
its underwritten equity. To the extent a 7% return is not received from
year to year, it will accumulate and be paid from the next available
cash flow.
26
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. INVESTMENT IN JOINT VENTURE (Con't.):
o To the Other Joint Venturer in an amount equal to that paid to the
Partnership. No amount will accumulate in favor of the Other Joint
Venturer.
o Any remaining amount will be divided equally.
o To the extent there are net proceeds from any sale or refinancing of
the subject property, said net proceeds will be payable in the
following order of priority:
o To the Partnership until it has received a cumulative 20% per year
return on its total underwritten equity.
o Next to the Partnership until it has received an amount equal to its
total underwritten equity, reduced by any prior distribution of sale,
finance or refinancing proceeds.
o Thereafter, any remaining net proceeds will be divided 50% to the
Partnership and 50% to the Other Joint Venturer.
o A summary of the assets, liabilities, and partners' capital of the
Joint Venture as of December 31, 1996 and 1995 and the results of its
operations for the years ended December 31, 1996, 1995 and 1994 is as
follows:
27
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. INVESTMENT IN JOINT VENTURE (Con't.):
-------------------------------------
INDUCON JOINT VENTURE - AMHERST
BALANCE SHEETS
December 31, 1996 and 1995
Assets 1996 1995
---------- ----------
Land, at cost $ 177,709 $ 177,709
Land improvements 246,232 221,399
Building 3,074,733 3,072,913
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
---------- ----------
3,509,241 3,482,588
Less accumulated depreciation 1,205,207 1,074,688
---------- ----------
Property, net 2,304,034 2,407,900
Cash and cash equivalents -- 157,789
Other assets 41,665 39,925
Deferred debt expense, net of accumulated
amortization of $293,490 and $266,350,
respectively 23,315 28,841
---------- ----------
Total assets $2,369,014 $2,634,455
========== ==========
Liabilities and Partners' Capital
Liabilities:
Cash overdraft $ 34,817 $ --
Bonds payable 1,849,245 2,040,000
Mortgage payable 260,450 292,033
Accounts payable and accrued expenses 128,072 87,679
Amounts due to affiliates 63,240 31,906
---------- ----------
Total liabilities 2,335,824 2,451,618
---------- ----------
Partners' Capital:
The Partnership 25,156 167,321
The Other Joint Venturer 8,034 15,516
---------- ----------
Total Partners' Capital 33,190 182,837
---------- ----------
Total Liabilities and Partners' Capital $2,369,014 $2,634,455
========== ==========
28
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. INVESTMENT IN JOINT VENTURE (Con't.):
INDUCON JOINT VENTURE - AMHERST
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
--------- --------- ---------
Income:
Rental $ 444,649 $ 458,357 $ 400,690
Interest and other 23,696 11,391 8,626
--------- --------- ---------
Total Income 468,345 469,748 409,316
--------- --------- ---------
Expenses:
Property operations 148,652 164,069 220,117
Interest
Paid to affiliates 5,573 -- --
Other 208,744 183,104 187,821
Depreciation and amortization 191,839 187,248 171,382
Administrative:
Paid to affiliates 20,348 27,049 --
Other 42,836 6,907 3,164
--------- --------- ---------
Total Expenses 617,992 568,377 582,484
--------- --------- ---------
Net loss (149,647) (98,629) (173,168)
========= ========= =========
Allocation of net loss:
The Partnership (142,165) (93,698) (164,510)
Other Joint Venturer (7,482) (4,931) (8,658)
--------- --------- ---------
($149,647) ($ 98,629) ($173,168)
========= ========= =========
A reconciliation of the Partnership's investment in the Joint Venture is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Investment in joint venture at beginning of year $ 167,321 $ 261,019 $ 440,529
Distributions -- -- (15,000)
Allocation of net loss (142,165) (93,698) (164,510)
--------- --------- ---------
Investment in joint venture at end of year $ 25,156 $ 167,321 $ 261,019
========= ========= =========
</TABLE>
29
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. PROPERTY MANAGEMENT FEES AND RELATED PARTY TRANSACTIONS:
--------------------------------------------------------
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
average adjusted capital contributions. This fee totaled $2,925 for the year
ended December 31, 1994. There were no such fees for 1996 and 1995.
The General Partners are also allowed to collect property disposition fees
upon the 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 of 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 the Bryn Mawr Apartments or Parc Bordeaux, as the Limited Partners of
the Partnership have not received a return of 7% on their average adjusted
capital or their original capital as defined in the partnership agreement. The
fee earned in the sale of the Bryn Mawr Apartments, Parc Bordeaux Apartments,
Williamsburg South Apartments and Pleasant Run Apartments will not be recorded
as liabilities in the partnership financial statements until such time as
payment is probable.
Management fees for the properties are paid to an affiliate of the General
Partners. The management agreement provides for 5% of gross monthly receipts of
the properties to be paid as fees for administering the operations of the
properties. These fees totaled $217,095, $227,134 and $223,083 for the years
ended December 31, 1996, 1995 and 1994, respectively.
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partners. The fee is based upon the number of apartment
units and totaled $14,040 for each of the years ended December 31, 1996, 1995
and 1994.
30
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. PROPERTY MANAGEMENT FEES AND RELATED PARTY TRANSACTIONS (Con't.):
-----------------------------------------------------------------
Pursuant to the terms of the partnership agreement, the Corporate General
Partner charged 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 such costs and expenses which include payroll, legal, rent,
depreciation, printing, mailing, travel, and communication costs related to
partnership accounting, partner communication and relations, property marketing,
and refinancing and are included in property operations. Additionally,
Partnership accounting and portfolio management fees, investor services fees and
brokerage fees are allocated based on total assets, number of partners and
number of units, respectively. Such charges totaled $178,372, $269,236 and
$115,233, respectively.
The Corporate General Partner is entitled to a continuing Partnership
Management Fee equal to 7% of net cash flow (as defined in the Partnership
Agreement), of which 2% is subordinated to the receipt by the Limited Partners
of a non-cumulative annual cash return equal to 7% of the average of their
adjusted Capital Contributions (as defined in the Partnership Agreement). The
Corporate General Partner is paid its 5% Partnership Management Fee annually as
cash flow allows. The 2% subordinated fee will not be paid or accrued until such
time as the Limited Partners have received their 7% return and payment of the
fee becomes probable. No fee was paid for December 31, 1996 and 1995. The fee
totaled $2,925 for December 31, 1994.
Accounts payable to affiliates amounted to $208,156 and $1,258,243 at
December 31,1996 and 1995, respectively. The payables represent fees due and
advances from the Corporate General partner or an affiliate of the Corporate
General Partner. Interest charged on amounts due affiliates totaled $149,954,
$101,378 and $45,590 for the years ended December 31, 1996, 1995 and 1994, and
was calculated at a rate of 11% of the average balance. All amounts payable to
affiliates are payable upon demand.
8. LEASES:
-------
In connection with its commercial property, the partnership has entered
into lease agreements with terms of one to five years. Minimum future rentals to
be received for each of the next five years under noncancelable operating leases
are as follows:
Year Amount
1997 $195,324
1998 121,599
1999 55,704
2000 18,700
2001 7,792
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
9. 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 the
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 years ended December 31, 1996, 1995
and 1994, as reported in the statement of operations, and as reported for tax
return purposes is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) -
Statements of operations $ 2,430,990 $(1,392,983) $(1,207,747)
Add to (deduct from):
Difference in depreciation (310,146) (85,765) (159,067)
Difference in amortization 65,724 65,723 63,989
Difference in gain on sale of properties 966,637 -- --
Non deductible expenses / non taxable income (246,668) 251,582 64,333
Difference in loss of joint venture 34,027 6,449 22,147
----------- ----------- -----------
Net income (loss) - tax return purposes $ 2,940,564 $(1,154,994) $(1,216,345)
=========== =========== ===========
</TABLE>
32
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
9. INCOME TAXES (Con't.):
----------------------
The reconciliation of Partners' (Deficit) Capital for the years ended
December 31, 1996, 1995 and 1994, as reported in the balance sheet and as
reported for tax return purposes, is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Partners' Capital (Deficit) - Balance Sheet $ 2,126,834 $ (304,156) $ 1,088,827
Add to (deduct from):
Accumulated difference in depreciation (4,234,796) (3,924,650) (3,838,885)
Accumulated amortization of
mortgage discounts 77,418 11,694 (54,030)
Syndication fees and selling expenses 1,842,060 1,842,060 1,842,060
Gain on sale of properties 149,545 (817,092) (817,092)
Other nondeductible expenses /
non taxable income 560,087 806,755 555,173
Difference in book and tax
depreciable cost basis 915,085 915,085 915,085
Difference in book and tax
basis of investments (709,573) (743,600) (750,049)
Other (69,286) (69,286) (69,286)
----------- ----------- -----------
Partners' Capital (Deficit) - tax return
purposes $ 657,374 $(2,283,190) $(1,128,197)
=========== =========== ===========
</TABLE>
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
-------------------------------------------------
1996 1995 1994
---------- ---------- ----------
Cash paid for interest $1,153,734 $1,072,197 $1,074,458
========== ========== ==========
11. GOING CONCERN CONSIDERATIONS:
-----------------------------
The Partnership's failure to meet its Department of Housing and Urban
Development (HUD) regulatory agreement requirements, its recurring losses from
operations, and continuing cash flow difficulties raise substantial doubt about
the Partnership's ability to continue as a going concern.
The consequences of the HUD non-compliance could include sanctions such as
fines or interest charges. Additionally, the violation of the regulatory
agreement could be deemed an event of default by the Partnership.
33
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
NOTES TO FINANCIAL STATEMENTS
(Continued)
11. GOING CONCERN CONSIDERATIONS (Con't.):
--------------------------------------
Because of the uncertainty surrounding the default on the HUD guaranteed
mortgage, the Partnership's recurring losses from operations and operating cash
flow difficulties, substantial doubt exists about the Partnership's ability to
continue as a going concern.
Management is continuing its efforts to reduce expenses and increase rents.
In addition, management is currently negotiating a sale of the assets of the
Castle Dore Apartments and Ambassador Towers as discussed in Footnote 3, and has
responded to HUD regarding the aforementioned noncompliance including its
intentions to remedy the situation.
12. RECLASSIFICATIONS:
------------------
Certain reclassifications have been made to the 1994 balances to conform
with the classifications used in 1995.
34
<PAGE>
SCHEDULE II
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
Valuation and Qualifying Accounts
For the Year Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Additions
------------------------
Charged to
Balance Charged to Other Balance
Beginning Costs and Accounts - Deductions - at End of
Description of Period Expenses Described Described Period
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996
Unamortized discounts on
mortgages payable $ 767,055 $ - $ - $ 60,656 (1) $ 706,399 (2)
========= ========= =========== ======== =========
Year ended December 31, 1995
Unamortized discounts on
mortgages payable $ 832,778 $ - $ - $ 65,723 (1) $ 767,055 (2)
========= ========= =========== ======== =========
Year ended December 31, 1994
Unamortized discounts on
mortgages payable $896,767 $ - $ - $ 63,989 (1) $ 832,778 (2)
========= ========= =========== ======== =========
</TABLE>
(1) Amortization charged to operations
(2) Discounts to be amortized over the remaining term of the mortgage.
35
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Depreciation
Initial Cost to Gross amounts at which In Latest
Partnership Cost Carried at Close of Period Statement
------------------- Capitalized ----------------------------- (3)(4) Of
Property Subsequent to (1)(2) Accumulated Date of Operations
Description Encumbrances Land Buildings Acquisition Land Buildings Total Depreciation Construction Is Computed
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Castle Dore Apts.
Indianapolis, IN $1,536,666 $335,000 $2,837,932 $27,348 $335,000 $2,865,280 $3,200,280 $1,309,048 2/85 25 Years
Perrymont Office
Bldg.
Pittsburgh, PA 1,259,701 100,000 1,978,788 56,138 100,000 2,034,926 2,134,926 912,829 8/85 25 Years
Ambassador Towers
(formerly Cedar
Ridge Apts.)
Pittsburgh, PA 2,634,633 500,000 5,001,729 130,528 500,000 5,132,253 5,632,253 2,149,353 12/85 25 Years
------------ -------- ---------- ---------- --------- ----------- ----------- -----------
$5,431,000 $935,000 $9,818,449 $214,014 $935,000 $10,032,459 $10,967,459 $4,371,230
============ ======== ========== ========== ========= =========== =========== ===========
Inducon Joint
Venture - Amherst
Amherst, NY $2,109,695 $177,709 $ - $3,320,965 $177,709 $3,320,965 $3,498,674 $1,194,639 4/85 25 Years
============ ======== ========== ========== ========= =========== =========== ===========
</TABLE>
36
<PAGE>
SCHEDULE III
(Continued)
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(1) Cost for Federal income tax purposes is $10,967,459.
(2) A reconciliation of the carrying amount of land, buildings and improvements
as of December 31, 1996, 1995 and 1994 is as follows:
Partnership Properties
1996 1995 1994
------------ ------------ ------------
Balance at beginning of period $ 18,648,605 $ 18,476,919 $ 18,278,366
Additions 7,307 171,686 198,553
Dispositions (7,688,453) -- --
------------ ------------ ------------
Balance at end of period $ 10,967,459 $ 18,648,605 $ 18,476,919
============ ============ ============
Joint Venture Property
1996 1995 1994
------------ ------------ ------------
Balance at beginning of period $ 3,472,021 $ 3,454,909 $ 3,452,506
Additions 26,653 17,112 2,403
------------ ------------ ------------
Balance at end of period $ 3,498,674 $ 3,472,021 $ 3,454,909
============ ============ ============
(3) A reconciliation of accumulated depreciation for the years ended December
31, 1996, 1995 and 1994 is as follows:
Partnership Properties
1996 1995 1994
------------ ------------ ------------
Balance at beginning of period $ 7,061,771 $ 6,349,299 $ 5,674,528
Additions charged to cost and expenses
during the period 449,241 712,472 674,771
Dispositions (3,139,782) -- --
------------ ------------ ------------
Balance at end of period $ 4,371,230 $ 7,061,771 $ 6,349,299
=========== =========== ===========
Joint Venture Property
1996 1995 1994
----------- ----------- -----------
Balance at beginning of period $ 1,062,437 $ 939,174 $ 807,595
Additions charged to cost and expenses
during the period 132,202 123,263 131,579
----------- ----------- -----------
Balance at end of period $ 1,194,639 $ 1,062,437 $ 939,174
=========== =========== ===========
(4) Balance applies entirely to buildings and improvements.
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 3/28/97
------------------------------------------- ---------------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By: /s/ Joseph M. Jayson 3/28/97
-------------------------------------------- ---------------
JOSEPH M. JAYSON, President Date
Principal Executive Officer and Director
/s/ Michael J. Colmerauer 3/28/97
-------------------------------------------- ---------------
MICHAEL J. COLMERAUER, Date
Secretary
By: _____________________________ ____________________
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below 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
------------------------------- --------------------
JOSEPH M. JAYSON, Date
President and Director
------------------------------- --------------------
MICHAEL J. COLMERAUER Date
Secretary
38
<PAGE>
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
The form 10-K is sent to security holders. No other annual report is
distributed. No proxy statement, form of proxy or other proxy soliciting
material was sent to any of the registrant's security holders with respect to
any annual or other meeting of security holders.
39
<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
TWELVE MONTHS ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-30-1996
<CASH> 1,868,048
<SECURITIES> 0
<RECEIVABLES> 584,166
<ALLOWANCES> 584,097
<INVENTORY> 0
<CURRENT-ASSETS> 2,232,409
<PP&E> 12,449,443
<DEPRECIATION> 5,837,777
<TOTAL-ASSETS> 8,869,221
<CURRENT-LIABILITIES> 1,311,387
<BONDS> 5,431,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,869,221
<SALES> 0
<TOTAL-REVENUES> 4,429,043
<CGS> 0
<TOTAL-COSTS> 5,357,211
<OTHER-EXPENSES> 142,165
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,315,147
<INCOME-PRETAX> (928,168)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 3,501,323
<CHANGES> 0
<NET-INCOME> 2,430,990
<EPS-PRIMARY> (141.68)
<EPS-DILUTED> 0
</TABLE>
