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 September 30, 1996, the issuer had 15,551 units of limited partnership
interest outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
September 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended September 30, 1996 and 1995 4
Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 5
Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 6
Statements of Partners' (Deficit) Capital -
Nine Months Ended September 30, 1996 and 1995 7
Notes to Financial Statements 8 - 19
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20 - 21
---------------------------------------------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 1,410,000 $ 1,410,000
Buildings and improvements 17,238,605 17,238,605
Furniture and fixtures 2,275,548 2,275,548
------------ ------------
20,924,153 20,924,153
Less accumulated depreciation 9,816,340 9,283,886
------------ ------------
Property, net 11,107,813 11,640,267
Investment in joint venture 107,996 167,321
Cash -- --
Cash - security deposits 54,944 53,989
Accounts receivable, net of allowance for doubtful
accounts of $1,006,977 and $800,839, respectively 23,352 21,238
Other assets 777,536 520,876
------------ ------------
Total Assets $ 12,071,642 $ 12,403,691
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 27,979 $ 36,921
Mortgages payable 10,103,269 10,276,248
Accounts payable and accrued expenses 1,153,016 777,976
Accounts payable - affiliates 1,511,072 1,258,243
Accrued interest 110,786 88,868
Security deposits and prepaid rents 379,755 269,591
------------ ------------
Total Liabilities 13,285,877 12,707,847
------------ ------------
Partners' (Deficit) Capital:
General partners (454,701) (427,399)
Limited partners (759,533) 123,243
------------ ------------
Total Partners' (Deficit) (1,214,235) (304,156)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 12,071,642 $ 12,403,691
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Income:
Rental $ 960,342 $ 1,180,685
Interest and other income 90,424 41,351
----------- -----------
Total income 1,050,766 1,222,036
----------- -----------
Expenses:
Property operations 720,759 779,418
Interest:
Paid to affiliates 35,150 24,163
Other 305,847 310,633
Depreciation and amortization 186,488 187,387
Administrative:
Paid to affiliates 153,307 227,704
Other 73,685 3,524
----------- -----------
Total expenses 1,475,236 1,532,829
----------- -----------
Loss before allocated loss from joint venture (424,470) (310,793)
Allocated loss from joint venture (39,703) (11,296)
----------- -----------
Net loss $ (464,173) $ (322,089)
=========== ===========
Loss per limited partnership unit $ (28.95) $ (20.09)
=========== ===========
Distributions per limited partnership unit $ -- $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 15,551 15,551
=========== ===========
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
Income:
Rental $ 3,015,990 $ 3,437,309
Interest and other income 228,914 167,068
----------- -----------
Total income 3,244,904 3,604,377
----------- -----------
Expenses:
Property operations 1,926,737 2,325,416
Interest:
Paid to affiliates 107,978 64,774
Other 870,577 923,872
Depreciation and amortization 559,164 560,002
Administrative:
Paid to affiliates 298,417 485,010
Other 332,785 288,461
----------- -----------
Total expenses 4,095,658 4,647,535
----------- -----------
Loss before allocated loss from joint venture (850,754) (1,043,158)
Allocated loss from joint venture (59,325) (53,867)
----------- -----------
Net loss $ (910,079) $(1,097,025)
=========== ===========
Loss per limited partnership unit $ (56.77) $ (68.43)
=========== ===========
Distributions per limited partnership unit $ -- $ --
=========== ===========
Weighted average number of
limited partnership units
outstanding 15,551 15,551
=========== ===========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (910,079) $(1,097,025)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 559,164 560,002
Loss from joint venture 59,325 53,868
Changes in operating assets and liabilities:
Cash - security deposits (955) 2,543
Accounts receivable (2,114) (4,257)
Other assets (283,370) (161,678)
Accounts payable and accrued expenses 375,040 508,947
Accrued interest 21,918 --
Security deposits and prepaid rent 110,164 (31,462)
----------- -----------
Net cash provided by (used in) operating activities (70,907) (169,062)
----------- -----------
Cash flow from investing activities:
Capital expenditures -- --
Distributions from joint venture -- --
----------- -----------
Net cash provided by investing activities -- --
----------- -----------
Cash flows from financing activities:
Cash overdraft (8,942) --
Accounts payable - affiliates 252,829 377,795
Principal payments on mortgages and notes (172,979) (213,828)
Distributions to partners -- --
----------- -----------
Net cash (used in) provided by financing activities 70,907 163,967
----------- -----------
Increase (decrease) in cash -- (5,095)
Cash - beginning of period -- 8,534
----------- -----------
Cash - end of period $ -- $ 3,439
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 848,659 $ 923,872
=========== ===========
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1995 $ (385,610) 15,551 $ 1,474,437
Net loss (32,911) -- (1,064,114)
----------- ----------- -----------
Balance, September 30, 1995 $ (418,521) 15,551 $ 410,323
=========== =========== ===========
Balance, January 1, 1996 $ (427,399) 15,551 $ 123,243
Net loss (27,302) -- (882,776)
----------- ----------- -----------
Balance, September 30, 1996 $ (454,701) 15,551 $ (759,533)
=========== =========== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1. GENERAL PARTNER'S DISCLOSURE
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership III, all adjustments necessary for the fair
presentation of the Partnership's financial position, results of
operations, and changes in cash flows for the nine months ended September
30, 1996 and 1995 have been made in the financial statements. The financial
statements are unaudited and subject to any year-end adjustments which may
be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
Realmark Property Investors Limited Partnership III (the "Partnership"), a
Delaware Limited Partnership, was formed November 18, 1983, to invest in a
diversified portfolio of income-producing real estate.
In February 1984 the Partnership commenced the public offering of units of
limited partnership interest. Other than matters relating to organization,
it had no business activities and, accordingly, had not incurred any
expenses or earned any income until the first interim closing (minimum
closing) of the offering which occurred April 26, 1984. All items of income
and expense arose subsequent to this date. On January 31, 1985 the offering
was concluded, at which time 15,551 units of limited partnership interest
were outstanding. The General Partners are Realmark Properties, Inc., a
Delaware corporation, the corporate General Partner, and Mr. Joseph M.
Jayson, the individual General Partner. Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc. (JMJ) and Realmark Properties,
Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc.
Under the Partnership agreement, the General Partners and affiliates can
receive compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership.
-8-
<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.
-9-
<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.
-10-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
In October 1985 the Partnership acquired a 130 unit apartment complex
(Pleasant Run) in Cincinnati, Ohio for a purchase price of $3,434,728,
which included acquisition fees of $267,228.
In December 1985 the Partnership acquired a 280 unit apartment complex
(Ambassador Towers, formerly Cedar Ridge) in Monroeville, Pennsylvania for
a purchase price of $6,766,424, which included acquisition fees of
$646,424.
5. INVESTMENT IN JOINT VENTURES
In April 1985 the Partnership entered into an agreement and formed the
Inducon Joint Venture - Amherst (the Joint Venture), for the primary
purpose of constructing office/warehouse buildings in Erie County, New York
as income producing property. The site is part of the Amherst Foreign Trade
Zone. This is U.S. Customs Territory under federal supervision, where
foreign and domestic merchandise is brought for storage, manufacturing,
salvage, repair, exhibit, repacking, relabeling or re-export. Under the
terms of the joint venture agreement, the Partnership supplied $545,000 of
capital to acquire the land and undertake initial development of Phase I
and $275,000 for Phase II. The other Joint Venturer delivered and completed
on behalf of the Joint Venture all plans, specifications, maps, surveys,
accounting pro-formas for construction, initial leasing and operations, and
cost estimates with respect to development.
Ownership of the Joint Venture is divided equally between the Partnership
and the other Joint Venturer. The Joint Venture agreement provides that the
Partnership will be allocated 95% of any income or loss.
Net cash flow from the Joint Venture is to be distributed as follows:
To the Partnership until has received a return of 7% per annum on its
underwritten syndicated equity. To the extent a 7% return is not received
from year to year, it will accrue and be paid from the next available cash
flow.
To the other Joint Venturer in an amount equal to that paid to the
Partnership. No amount will accumulate in favor of the other investor.
Any remaining amount will be divided equally.
-11-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
To the extent there are net proceeds from any sale or refinancing of the
subject property, the proceeds will be paid in the following order of
priority:
To the Partnership to the extent the 7% per annum returned on its
underwritten equity is unpaid.
Next to the Partnership until it has received an overall 9% cumulative
return on its underwritten equity.
Next to the Partnership until it has received an amount equal to its total
underwritten equity, reduced by any prior distribution of sale, financing
or refinancing proceeds.
Next to the Partnership until it has received a cumulative 20% per year
return on its total underwritten equity.
Thereafter any remaining net proceeds will be divided 50% to the
Partnership and 50% to the other joint venturer.
A summary of the assets, liabilities and capital of the joint venture as of
September 30, 1996 and December 31, 1995 and the results of its operations
for the nine months ended September 30, 1996 and 1995 is as follows:
-12-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
BALANCE SHEETS
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 177,709 $ 177,709
Land improvements 221,399 221,399
Buildings and improvements 3,070,246 3,072,913
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
---------- ----------
3,479,921 3,482,588
Less accumulated depreciation 1,171,299 1,074,688
---------- ----------
Property, net 2,308,622 2,407,900
Cash and cash equivalents -- 157,789
Other assets 53,196 39,925
Deferred debt expense, net of accumulated
amortization of $287,416 and $273,372, respectively 48,966 28,841
---------- ----------
Total Assets $2,410,784 $2,634,455
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Cash overdraft $ 52,261 $ --
Bonds payable -- 2,040,000
Mortgage payable 283,976 292,033
Notes payable 1,852,602 --
Accounts payable and accrued expenses 63,720 87,679
Accounts payable - affiliates 37,835 31,906
---------- ----------
Total Liabilities 2,290,394 2,451,618
---------- ----------
Partners' Capital:
The Partnership 107,996 167,321
Other joint venturer 12,394 15,516
---------- ----------
Total Partners' Capital 120,390 182,837
---------- ----------
Total Liabilities and Partners' Capital $2,410,784 $2,634,455
========== ==========
</TABLE>
-13-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Income:
Rental $ 330,077 $ 296,275
Interest and other income 10,061 5,138
--------- ---------
Total income 340,138 301,413
--------- ---------
Expenses:
Property operations 74,804 66,491
Interest 157,087 135,194
Depreciation and amortization 124,242 131,334
Administrative 46,452 25,097
--------- ---------
Total expenses 402,585 358,116
--------- ---------
Net loss $ (62,447) $ (56,703)
========= =========
Allocation of net loss:
The Partnership $ (59,325) $ (53,868)
Other Joint Venturer (3,122) (2,835)
--------- ---------
$ (62,447) $ (56,703)
========= =========
A reconciliation of the Partnership's investment in the joint venture for the
nine month period ended September 30, 1996 is as follows:
1996
----
Investment in joint venture - beginning of period $ 167,321
Allocated loss (59,325)
---------
Investment in joint venture - end of period $ 107,996
=========
-14-
<PAGE>
6. MORTGAGES AND NOTES PAYABLE
Castle Dore
-----------
A mortgage of $2,137,621 and $2,184,518 at September 30, 1996 and 1995,
respectively, bearing interest at 7.50%. The mortgage provides for annual
principal and interest payments of $216,026 payable in equal monthly
installments through September 1, 2014. The carrying amount of the mortgage
of $1,550,076 and $1,565,602 at September 30, 1996 and 1995, respectively,
reflects an unamortized mortgage discount of $587,545 and $618,916 at
September 30, 1996 and 1995, respectively. The discount is based on an
imputed interest rate of 12.5% and will be amortized using the interest
method over the remaining term of the mortgage.
Williamsburg South
A 12.85% mortgage which provides for annual principal and interest payments
of $341,602 payable in equal monthly installments through December 1999.
The mortgage had a balance of $2,404,770 at September 30, 1996.
Perrymont
---------
A mortgage which provides for interest rates and monthly installments
through December 1998 as follows:
Year Rate Payment
---- ---- -------
1995 7.50% $ 7,907 (Interest only)
1996 7.875% $ 9,660 (Principal and interest)
1997 - 1998 8.50% $ 10,187 (Principal and interest)
The outstanding balance at September 30, 1996 and 1995 respectively was
$1,262,275 and $1,265,185 (principal payments have just begun being made
this quarter).
Pleasant Run
------------
A 10% mortgage with a balance of $2,205,152 at September 30, 1996,
providing for annual principal and interest payments of $245,349 payable in
equal monthly installments, with the remaining balance due August 1, 1998.
-15-
<PAGE>
MORTGAGES AND NOTES PAYABLE (CONTINUED)
Ambassador Towers (formerly Cedar Ridge)
----------------------------------------
A mortgage with a balance of $449,089 and $475,922 at September 30, 1996
and 1995, respectively, bearing interest at 7.75%. The mortgage provides
for monthly principal and interest payments of $8,980 through April 1,
2002.
A mortgage with a balance of $1,238,107 and $1,477,232 at September 30,
1996 and 1995, respectively, bearing interest at 8.75%. The mortgage
provides for monthly principal and interest payments of $20,455 through
October 1, 2003.
A mortgage with a balance of $993,799 and $1,000,000 at September 30, 1996
and 1995, respectively which provides for interest payments at prime rate
plus 2% (10.25% at September 30, 1996). The mortgage was originally due in
September 1994, but in September 1995 the General Partner negotiated an
extension until May 1996. The Partnership continues to utilize a temporary
extension while it seeks refinancing for the loan.
The aggregate maturities of the mortgages for each of the next five years
and thereafter are as follows:
Year Amount
---- ------
1996 $ 1,319,177
1997 349,132
1998 2,525,632
1999 3,849,622
2000 74,225
Thereafter 2,925,584
-------------
11,043,303
(Unamortized discount) ( 767,055)
-------------
TOTAL $ 10,276,248
============
-16-
<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 $169,200
and $114,739 for the nine months ended September 30, 1996 and 1995,
respectively.
According to the terms of the Partnership agreement, the general partners
are entitled to receive a Partnership management fee equal to 7% of net
cash flow (as defined in the Partnership agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their adjusted capital contributions. No such fee has been
paid or accrued by the Partnership for the nine months ended September 30,
1996 and 1995.
The general partners are also allowed to collect property disposition fees
upon sale of acquired properties. This fee is not to exceed the lesser of
50% of amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties or 2.75% of the sales
price. The property disposition fee is subordinate to payments to the
limited partners of a cumulative annual return (not compounded) equal to 7%
of their average adjusted capital balances and to repayment to the limited
partners of an amount equal to their capital contributions.
The general partners have not to date received a disposition fee on the
sale of Bryn Mawr or Parc Bordeaux, as the limited partners have not
received a return of 7% on their average adjusted capital or their original
capital as defined in the Partnership agreement. Once the limited partners
receive their original capital and a 7% return, the general partners will
be entitled to disposition fees of 2.75%.
Accounts payable - affiliates amounted to $1,511,072 and $1,064,172 at
September 30, 1996 and 1995, respectively. The payable represents fees due
to the general partner or to affiliates of the general partner. Interest
charged on amounts due affiliates totaled $107,978 and $64,774 for the nine
month periods ended September 30, 1996 and 1995.
-17-
<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 $7,020 for the nine months ended September 30,
1996 and 1995.
8. INCOME TAXES
No provision has been made for income taxes since the income or loss of the
Partnership is to be included in the tax returns of the individual
partners.
The tax returns of the Partnership are subject to examination by federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded
varying interpretations and, accordingly, reported Partnership amounts
could be changed as a result of any such examination.
The reconciliation of net loss for the nine month periods ended September
30, 1996 and 1995 as reported in the statements of operations, and as would
be reported for tax purposes respectively, is as follows:
September 30, September 30,
1996 1995
---- ----
Net loss -
Statement of operations $ (910,079) $(1,097,025)
(Add to) deduct from:
Difference in depreciation ( 64,323) ( 62,800)
Difference in amortization 49,293 32,861
Non-deductible expenses 188,688 41,853
Difference in loss of joint venture 4,836 10,400
----------- -----------
Net loss for tax purposes $ (731,585) $(1,074,711)
========== ===========
-18-
<PAGE>
INCOME TAXES (CONTINUED)
The reconciliation of partner's (deficit) capital at September 30, 1996 and
December 31, 1995 as reported in the balance sheets, and as reported for
tax purposes, is as follows:
September 30, December 31,
1996 1995
---- ----
Partner's (Deficit) Capital -
balance sheet $ (1,214,235) $ (304,156)
Add to (deduct from):
Accumulated difference in
depreciation (3,988,973) (3,924,650)
Accumulated difference in
amortization 60,987 11,694
Syndication fees and selling
expenses 1,842,060 1,842,060
Gain on sale of property ( 817,092) ( 817,092)
Other non-deductible expenses 995,443 806,755
Difference in book and tax
depreciable cost basis 915,085 915,085
Difference in book and tax
basis of investments (738,764) (743,600)
Other ( 69,286) ( 69,286)
-------------- -------------
Partner's (Deficit) Capital -
tax return $ (3,014,775) $ (2,283,190)
============== ============
9. PENDING SALES
On July 16, 1996 the Corporate General Partner entered into a contract on
behalf of the Partnership to sell Castle Dore Apartments, Ambassador Towers
(formerly Cedar Ridge Apartments), Pleasant Run Apartments and Williamsburg
South Apartments at sales prices of $5,500,000, $5,800,000, $3,350,000 and
$4,831,000, respectively. The contract is subject to a number of
contingencies as were described in Form 8-K filed on July 31, 1996. No firm
closing date on the sale has been established to date.
-19-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The General Partner continues to fund the Partnership's shortfalls in cash flow,
although under no obligation to do so. In the first nine months of 1996, the
General Partner advances have increased by over $252,000. Such advances to the
Partnership are considered payable on demand to the General Partner, and at this
point in time, there is no assurance that these advances will continue. The
Partnership once again did not make any distributions during the third quarter
of 1996, and is not likely to make any in the future until all Partnership
obligations are satisfied and the General Partner is reimbursed for the advances
it has made to the Partnership.
Low occupancy at several properties in this partnership continues to be
problematic; economic occupancy levels at Ambassador Towers (formerly Cedar
Ridge), Pleasant Run and Perrymont Office Building declined from last quarter to
this quarter. At Ambassador Towers and Pleasant Run, occupancy averaged merely
70% during the third quarter of 1996. In an effort to turn this situation around
and rent up the buildings, management has not only made personnel changes at
those sights which are struggling, but also changed their marketing and
advertising strategy.
Management is optimistic that occupancy levels at the properties in this
Partnership will begin seeing an improvement in the next quarter as the "peak"
rental season reaches its conclusion. Attractive incentive plans have been put
in place to bring in new tenants; plans for capital improvements, such as
exterior painting and repairs to woodwork, are also in place. Management is also
hopeful that the pending sale(s) of various of the properties in this
partnership will continue to move closer to finality.
Results of Operations:
- ----------------------
Net loss for the three month period ended September 30, 1996 amounted to
$464,173 or $28.95 per limited partnership unit versus a net loss for the three
month period ended September 30, 1995 of $322,089 or $20.09 per limited
partnership unit. For the nine month period ended September 30, 1996 the net
loss incurred was $910,079 versus a loss of $1,097,025 for the nine month period
ended September 30, 1995.
On a tax basis, the Partnership generated a loss of $731,585 or $45.63 per
limited partnership unit for the nine month period ended September 30, 1996 as
compared to a tax loss of $1,074,711 or $67.04 per limited partnership unit for
the nine month period ended September 30, 1995.
-20-
<PAGE>
Results of Operations (continued):
- --------------------- ------------
Partnership revenue for the quarter ended September 30, 1996 totaled $1,050,766,
a decrease of $171,270 from the same period in 1995. For the nine month period
ended September 30, 1996 total income decreased by over $359,000 from the
corresponding period in 1995. Rental income for the nine month period ended
September 30, 1996, totaled $3,015,990, which was a decrease of over $421,000
over the same time period in 1995. The decrease is directly related to the
decrease in occupancy at several of the complexes, such as Ambassador Towers
(formerly Cedar Ridge) and the Perrymont Office Building. Additionally, in order
to boost occupancies, significant rental concessions are being offered thus
contributing to the drop in income. Other income increased by approximately
$62,000 between the nine month periods ended September 30, 1996 and September
30, 1995 primarily due to increased laundry income at the residential
properties.
For the three month period ended September 30, 1996, the Partnership expenses
totaled $1,475,236, a decrease of over $57,000 from the quarter ended September
30, 1995. For the nine months ended September 30, 1996, the Partnership expenses
totaled $4,095,658, decreasing over $551,000 from corresponding quarter in 1995.
The majority of the decrease in expenses is a direct result of a cost
controlling factors in property operations. Payroll and associated costs,
repairs and maintenance and contracted service expenses are being closely
monitored at all complexes. As has been the pattern with virtually all expenses
in the Partnership, administrative costs continue to decrease; the decrease is
primarily related to the decrease in investor service and portfolio management
charges. Depreciation and amortization expense continues to remain fairly
consistent with that of the prior year.
Management is confident that the Partnership will be able to continue
controlling its costs, and it is now making every effort to increase occupancies
in those complexes that are struggling with lower levels. Management feels that
the last quarter of 1996 will show additional improvements in the occupancies,
as well as continual declines in property expenditures.
-21-
<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
- -----------------------------------------
Exhibit 27 - Financial Data Schedule (Electronic filing only)
Reports on Form 8-K - None.
-22-
<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 January 2, 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 January 2, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer January 2, 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
NINE MONTHS ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 54,944
<SECURITIES> 0
<RECEIVABLES> 1,030,329
<ALLOWANCES> 1,006,977
<INVENTORY> 0
<CURRENT-ASSETS> 963,828
<PP&E> 20,924,153
<DEPRECIATION> 9,816,340
<TOTAL-ASSETS> 12,071,642
<CURRENT-LIABILITIES> 3,182,608
<BONDS> 10,103,269
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,071,642
<SALES> 0
<TOTAL-REVENUES> 3,244,904
<CGS> 0
<TOTAL-COSTS> 4,095,658
<OTHER-EXPENSES> 59,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 978,555
<INCOME-PRETAX> (910,079)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (910,079)
<EPS-PRIMARY> (56.77)
<EPS-DILUTED> 0
</TABLE>
