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
September 30, 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, 1997, 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, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended March 31, 1997 and 1996 4
Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 5
Statements of Partners' (Deficit) Capital -
Three Months Ended March 31, 1997 and 1996 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, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Property, at cost:
Land $ 935,000 $ 935,000
Buildings and improvements 10,032,459 10,032,459
Furniture and fixtures 1,481,974 1,481,974
------------ ------------
12,449,433 12,449,433
Less accumulated depreciation 5,860,076 5,837,777
------------ ------------
Property, net 6,589,357 6,611,656
Investment in joint venture 0 25,156
Cash 1,212,010 1,811,962
Cash - security deposits 58,129 56,086
Accounts receivable, net of allowance for doubtful
accounts of $607,574 and $895,282, respectively 15,260 69
Mortgage costs, net of accumulated amortization
of $219,077 and $215,272, respectively 92,061 18,421
Other assets 627,629 345,871
------------ ------------
Total Assets $ 8,594,446 $ 8,869,221
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
Liabilities:
Mortgages payable $ 5,749,955 $ 5,431,000
Accounts payable and accrued expenses 583,379 713,233
Accounts payable - affiliates 57,341 208,156
Accrued interest 113,525 100,327
Security deposits and prepaid rents 272,584 289,671
------------ ------------
Total Liabilities 6,776,784 6,742,387
------------ ------------
Deficit investment in joint venture 13,895 0
Partners' (Deficit) Capital:
General partners (208,943) (199,668)
Limited partners 2,026,605 2,326,502
------------ ------------
Total Partners' (Deficit) 1,817,662 2,126,834
------------ ------------
Total Liabilities and Partners' (Deficit) $ 8,594,446 $ 8,869,221
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Income:
Rental $ 723,947 $ 1,035,749
Interest and other income 63,115 94,803
----------- -----------
Total income 787,062 1,130,552
----------- -----------
Expenses:
Property operations 586,983 611,873
Interest:
Paid to affiliates 26,410 35,587
Other 241,969 372,550
Depreciation and amortization 26,104 186,902
Administrative:
Paid to affiliates 73,941 69,381
Other 101,776 122,081
----------- -----------
Total expenses 1,057,183 1,398,374
----------- -----------
Loss before allocated loss from joint venture (270,121) (267,822)
Allocated loss from joint venture (39,051) (3,525)
----------- -----------
Net loss ($ 309,172) ($ 271,347)
=========== ===========
Loss per limited partnership unit ($ 19.28) ($ 16.93)
=========== ===========
Distributions per limited partnership unit $ 0.00 $ 0.00
=========== ===========
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, 1997 and 1996
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Cash flow from operating activities:
Net loss ($ 309,172) ($ 271,347)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 26,104 186,902
Loss from joint venture 39,051 3,525
Changes in operating assets and liabilities:
Cash - security deposits (2,043) 0
Accounts receivable (15,191) 2,999
Other assets (281,758) (34,368)
Accounts payable and accrued expenses (129,854) 59,675
Accrued interest 13,198 7,984
Security deposits and prepaid rent (17,087) 13,066
----------- -----------
Net cash (used in) operating activities (676,752) (31,564)
----------- -----------
Cash flow from investing activities:
Capital expenditures 0 (10,411)
Distributions from joint venture 0 0
----------- -----------
Net cash (used in) investing activities 0 (10,411)
----------- -----------
Cash flows from financing activities:
Cash overdraft 0 (32,909)
Accounts payable - affiliates (150,815) 107,230
Principal payments on mortgages and notes (41,810) (32,346)
Proceeds from mortgage refinancing 360,765 0
Mortgage costs (91,340) 0
----------- -----------
Net cash provided by financing activities 76,800 41,975
----------- -----------
(Decrease) in cash (599,952) 0
Cash - beginning of period 1,811,962 0
----------- -----------
Cash - end of period $ 1,212,010 $ 0
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 255,181 $ 364,566
=========== ===========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Three Months Ended March 31, 1997 and 1996
(Unaudited)
General Limited Partners
Partners ------------------------
Amount Units Amount
------ ----- ------
Balance, January 1, 1996 ($ 427,399) 15,551 $ 123,243
Net loss (8,140) 0 (263,206)
----------- ----------- -----------
Balance, March 31, 1996 ($ 435,539) 15,551 ($ 139,963)
=========== =========== ===========
Balance, January 1, 1997 ($ 199,668) 15,551 $ 2,326,502
Net loss (9,275) 0 (299,897)
----------- ----------- -----------
Balance, March 31, 1997 ($ 208,943) 15,551 $ 2,026,605
=========== =========== ===========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
NOTES TO FINANCIAL STATEMENTS
Three Months Ended March 31, 1997 and 1996
(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,
1997 and 1996 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.
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.
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.
-10-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
----------------------------------------
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.
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, 1997 and December 31, 1996 and the results of its operations for
the three months ended March 31, 1997 and 1996 is as follows:
-11-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
BALANCE SHEETS
March 31, 1997 and December 31, 1996
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Property, at cost:
Land $ 177,709 $ 177,709
Land improvements 246,232 246,232
Buildings and improvements 3,079,593 3,074,733
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
----------- -----------
3,514,101 3,509,241
Less accumulated depreciation 1,239,213 1,205,207
----------- -----------
Property, net 2,274,888 2,304,034
Cash and cash equivalents 0 0
Deferred debt expense, net of accumulated
amortization of $0 and $293,490, respectively 161,991 23,315
Other assets 85,113 41,665
----------- -----------
Total Assets $ 2,521,992 $ 2,369,014
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash overdraft $ 513,527 $ 34,817
Bonds payable 0 1,849,245
Mortgage payable 1,875,000 260,450
Accounts payable and accrued expenses 75,593 128,072
Accounts payable - affiliates 65,788 63,240
----------- -----------
Total Liabilities 2,529,908 2,335,824
----------- -----------
Partners' Capital:
The Partnership (13,895) 25,156
Other joint venturer 5,979 8,034
----------- -----------
Total Partners' Capital (7,916) 33,190
----------- -----------
Total Liabilities and Partners' Capital $ 2,521,992 $ 2,369,014
=========== ===========
</TABLE>
-12-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Income:
Rental $ 110,206 $ 129,134
Interest and other income 4,165 130
--------- ---------
Total income 114,371 129,264
--------- ---------
Expenses:
Property operations 45,774 29,464
Interest 41,663 46,849
Depreciation and amortization 35,621 43,778
Administrative 32,419 12,883
--------- ---------
Total expenses 155,477 132,975
--------- ---------
Net loss ($ 41,106) ($ 3,711)
========= =========
Allocation of net loss:
The Partnership ($ 39,051) ($ 3,525)
Other Joint Venturer (2,055) (186)
--------- ---------
($ 41,106) ($ 3,711)
========= =========
A reconciliation of the Partnership's investment in the joint venture for the
three month periods ended March 31, 1997 and 1996 is as follows:
1997 1996
Investment in joint venture - beginning of period $ 25,156 $ 167,321
Allocated loss (39,051) (3,525)
--------- ---------
Investment in joint venture - end of period ($ 13,895) $ 163,796
========= =========
-13-
<PAGE>
6. MORTGAGES AND NOTES PAYABLE
---------------------------
Castle Dore
-----------
A mortgage of $1,530,110 and $1,562,089 at March 31, 1997 and 1996,
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.
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 $0 and $2,415,683 at March 31, 1997 and 1996,
respectively. This property was sold in December of 1996 and the
outstanding balance of the mortgage was paid in full.
Perrymont
---------
A mortgage which provides for interest rates and monthly installments
through December 1998 as follows:
Year Rate Payment
---- ---- -------
1996 7.875% $ 9,660 (Principal and interest)
1997 - 1998 8.50% $ 10,187 (Principal and interest)
The outstanding balance at March 31, 1997 and March 31, 1996 respectively
was $1,259,701 and $1,265,185.
Pleasant Run
------------
A 10% mortgage with a balance of $0 and $2,217,214 at March 31, 1997 and
1996, respectively providing for annual principal and interest payments of
$245,349 payable in equal monthly installments, with the remaining balance
due August 1, 1998. This property was sold in December of 1996 and the
outstanding balance of the mortgage was paid in full.
-14-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
---------------------------------------
Ambassador Towers (formerly Cedar Ridge)
----------------------------------------
A mortgage with a balance of $465,566 and $559,024 at March 31, 1997 and
1996, 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 $1,148,779 and $1,356,255 at March 31, 1997
and 1996, 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 $987,891 and $1,000,000 at March 31, 1997 and
1996 which provides for interest only payments at prime rate plus 2%
(10.25% at March 31, 1997). 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
---- ------
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
============
-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 $39,741
and $60,150 for the three months ended March 31, 1997 and 1996,
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,
1997 and 1996.
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 $57,341 at March 31, 1997. The
payable represents fees due to the general partner or to affiliates of the
general partner. Interest charged on amounts due affiliates totaled $26,410
for the three month period ended March 31, 1997.
-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,
1997 and 1996.
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,
1997 and 1996 as reported in the statements of operations, and as would be
reported for tax purposes respectively, is as follows:
March 31, March 31,
1997 1996
---- ----
Net loss -
Statement of operations $ (309,172) $ (273,214)
(Add to) deduct from:
Difference in depreciation ( 25,000) ( 21,441)
Difference in amortization 16,431 16,431
Non-deductible expenses 62,000 62,896
Difference in loss of joint venture 8,500 1,612
----------- -----------
Net loss for tax purposes $ (247,241) $ (213,716)
=========== ===========
-17-
<PAGE>
INCOME TAXES (CONTINUED)
------------------------
The reconciliation of partner's (deficit) capital at March 31, 1997 and
December 31, 1996 as reported in the balance sheets, and as reported for
tax purposes, is as follows:
March 31, December 31,
1997 1996
---- ----
Partner's (Deficit) Capital -
balance sheet $ 1,817,662 $ 2,126,834
Add to (deduct from):
Accumulated difference in
depreciation (4,259,796) (4,234,796)
Accumulated difference in
amortization 93,849 77,418
Syndication fees and selling
expenses 1,842,060 1,842,060
Gain on sale of property 149,545 149,545
Other non-deductible expenses 622,087 560,087
Difference in book and tax
depreciable cost basis 915,085 915,085
Difference in book and tax
basis of investments (701,073) (709,573)
Other ( 69,286) ( 69,286)
----------- ----------
Partner's (Deficit) Capital -
tax return $ 410,133 $ 657,374
=========== ==========
-18-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
Due to the sales of both Williamsburg South Apartments and Pleasant Run Farms
Apartments in December of 1996, the Partnership now has sufficient cash to
enable it to not only fund current operations, but also to provide for future
capital improvements. The Partnership had significant negative cash flow from
operations during the first quarter of 1997, primarily due to the setting up of
escrow accounts (replacement, etc.) with lenders. Also as a result of the sales,
the advances made by the General Partner were returned; this will result in a
substantial decrease in interest expense for the future.
The partnership continues to view the refinancing of current mortgages as a
viable means of increasing cash flow by obtaining lower interest rates.
There were no distributions for the three month periods ended March 31,1997 and
1996. The Partnership does expect to resume distributions once it is able to
generate sufficient excess cash flow to complete all capital improvements which
are scheduled and adequate reserves are set up for future such work.
Results of Operations:
- ----------------------
The partnership experienced a net loss of $309,172 or $19.28 per limited
partnership unit for the period ended March 31,1997 versus a net loss of
$271,347 or $16.93 per unit for quarter ended March 31, 1996.
Partnership revenue for the quarter ended March 31, 1997 totaled $787,062 which
is down $343,500 from 1996 revenue of $1,130,552. The decrease in rental revenue
can be attributed to the sale of two properties in December 1996: Williamsburg
South Apartments and Pleasant Run Farms Apartments. Perrymont Office Building
continued to suffer from poor occupancy, which also resulted in lower revenues
for the Partnership. Ambassador Towers (formerly Cedar Ridge) is rebounding from
previously low occupancies, and by mid-1997 is expected to almost completely
leased. Initially, however, rental concessions need to be offered to increase
the occupancies up to levels where management feels they should be, so revenue
will most likely not increase immediately to.
-19-
<PAGE>
Results of Operations (continued):
- --------------------- ------------
For the quarter ended March 31, 1997, Partnership expenses amounted to
$1,057,1831, decreasing approximately $341,000 from the 1996 quarter end amount.
Obviously a large portion of the decrease in expenses is due to the sale of the
two properties previously mentioned. Additionally though, management continues
to put forth great efforts in looking for ways to decrease payroll, repairs,
maintenance, contracted services and property improvements throughout the
partnership. As an example, on-site maintenance staff is doing more repair and
replacement work as opposed to contracting the work to an outside source. As
property performance improves, expenses will continue to level off. Total
interest expense is expected to decrease on Ambassador Towers as the property is
scheduled to be refinanced at a lower interest rate in the coming quarter.
Capital improvements are being scheduled for the completion prior to the "peak"
rental season.
Tighter collection policies continue to be put into place and reinforced with
all on-site and management staff. This should allow for a rather gradual
increase in revenue in the coming quarters.
Inducon Joint Venture - Amherst generated a net loss of $41,106 for the three
month period ended March 31, 1997. Net loss for the joint venture for the three
month period ended March 31, 1996 amounted to $3,711. This property was
refinanced during the first quarter of 1997.
On a tax basis, the partnership had a loss of $247,241 or $15.42 per limited
partner unit for the three months period ended March 31, 1997 versus a tax loss
of $213,716 or $13.33 per unit for the quarter ended March 31, 1996.
-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 - None.
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 14, 1997
------------------------------ ------------------------
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 14, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer July 14, 1997
------------------------------ ------------------------
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
THREE MONTHS ENDED MARCH 31, 1997, 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,212,010
<SECURITIES> 0
<RECEIVABLES> 622,834
<ALLOWANCES> 607,574
<INVENTORY> 0
<CURRENT-ASSETS> 1,913,028
<PP&E> 12,449,433
<DEPRECIATION> 5,860,076
<TOTAL-ASSETS> 8,594,446
<CURRENT-LIABILITIES> 1,026,829
<BONDS> 5,749,955
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,594,446
<SALES> 0
<TOTAL-REVENUES> 787,062
<CGS> 0
<TOTAL-COSTS> 1,057,183
<OTHER-EXPENSES> 39,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 268,379
<INCOME-PRETAX> (309,172)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (309,172)
<EPS-PRIMARY> (19.28)
<EPS-DILUTED> 0
</TABLE>
