FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
March 31, 1998 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, 1998, 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, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended March 31, 1998 and 1997 4
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Statements of Partners' (Deficit) Capital -
Three Months Ended March 31, 1998 6
Notes to Financial Statements 7 - 17
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF
----------------------------------
OPERATIONS 18- 20
----------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
ASSETS
- ------
<S> <C> <C>
Property, at cost:
Land $ 777,709 $ 777,709
Buildings and improvements 10,657,568 10,649,818
Furniture and fixtures 959,752 959,752
---------------- -----------------
12,395,029 12,387,279
Less accumulated depreciation 5,653,338 5,544,716
---------------- -----------------
Property, net 6,741,691 6,842,563
Cash 760,841 857,649
Cash - security deposits 54,665 -
Investment in money market account 1,513,653 2,507,650
Escrow deposits 243,575 255,867
Accounts receivable, net of allowance for doubtful
accounts of $441,914 and $431,151, respectively 38,057 35,942
Mortgage costs, net of accumulated amortization
of $145,890 and $128,058, respectively 160,887 178,719
Other assets 56,410 78,731
---------------- -----------------
Total Assets $ 9,569,779 $ 10,757,121
================ =================
LIABILITIES AND PARTNERS' (DEFICIT)
- ----------------------------------
Liabilities:
Mortgages payable $ 4,951,414 $ 6,216,763
Accounts payable and accrued expenses 192,474 192,702
Accounts payable - affiliates 23,240 35,707
Accrued interest 199,496 199,407
Security deposits and prepaid rents 171,380 184,878
---------------- -----------------
Total Liabilities 5,538,004 6,829,457
---------------- -----------------
Partners' (Deficit) Capital:
General partners (34,502) (37,625)
Limited partners 4,066,277 3,965,289
---------------- -----------------
Total Partners' (Deficit) 4,031,775 3,927,664
---------------- -----------------
Total Liabilities and Partners' (Deficit) $ 9,569,779 $ 10,757,121
================ =================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 476,848 $ 723,947
Interest and other income 239,161 63,115
---------------- -----------------
Total income 716,009 787,062
---------------- -----------------
Expenses:
Property operations 249,915 586,983
Interest:
Paid to affiliates 27,118 26,410
Other 104,164 241,969
Depreciation and amortization 126,928 26,104
Administrative:
Paid to affiliates 26,860 73,941
Other 76,913 101,776
---------------- -----------------
Total expenses 611,898 1,057,183
---------------- -----------------
Loss before allocated loss from joint venture 104,111 (270,121)
Allocated loss from joint venture - (39,051)
---------------- -----------------
Net loss $ 104,111 $ (309,172)
================ =================
Loss per limited partnership unit $ 6.49 $ (19.28)
================ =================
Distributions per limited partnership unit $ - $ -
================ =================
Weighted average number of
limited partnership units
outstanding 15,551 15,551
================ =================
</TABLE>
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ 104,111 $ (309,172)
Adjustments to reconcile net loss to
net cash (used in) operating activities:
Depreciation and amortization 126,454 186,902
Loss from joint venture - 3,525
Changes in operating assets and liabilities:
Cash - security deposits (54,665) -
Investment in money market account 993,997 -
Escrow deposits 12,292 -
Accounts receivable (2,115) 2,999
Other assets
22,321 (34,368)
Accounts payable and accrued expenses (228) 59,675
Accrued interest 89 7,984
Security deposits and prepaid rent (13,498) 13,066
---------------- -----------------
Net cash (used in) operating activities 1,188,758 (69,389)
---------------- -----------------
Cash flow from investing activities:
Capital expenditures (7,750) (10,411)
Distributions from joint venture - -
---------------- -----------------
Net cash (used in) investing activities (7,750) (10,411)
---------------- -----------------
Cash flows from financing activities:
Cash overdraft - (32,909)
Accounts payable - affiliates (12,467) 107,230
Principal payments on mortgages and notes (1,626,114) (32,346)
Proceeds from mortgage refinancing 360,765 -
Net cash provided by financing activities (1,277,816) 41,975
---------------- -----------------
(Decrease) in cash (96,808) (37,825)
Cash - beginning of period 857,649 -
---------------- -----------------
Cash - end of period $ 760,841 $ (37,825)
================ =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 131,193 $ 364,566
================ =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
-----------------------------------------
Three Months Ended March 31, 1998
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
Balance, January 1, 1998 $ (37,625) 15,551 $ 3,965,289
Net income (loss) 3,123 - 100,988
--------------- --------------- -----------------
Balance, March 31, 1998 $ (34,502) 15,551 $ 4,066,277
=============== =============== =================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(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, 1998 and 1997 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
--------------------------------------
RealmarkProperty 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
------------------------------------------
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.
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).
-8-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------
Property and depreciation
-------------------------
Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets totaling $232,606 and
$449,241 for the years ended December 31, 1997 and 1996, respectively.
The estimated useful lives of the Partnership's assets is from 5 to 25
years. 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.
Investments in Mutual Funds
---------------------------
The investment in mutual funds are stated at fair value, which
approximates cost, at December 31, 1997.
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 February 1985 the Partnership acquired a 190 unit apartment complex
(Castle Dore) in Indianapolis, Indiana for a purchase price of
$3,711,683, 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
$3,845,064, which included acquisition fees of $371,233.
-9-
<PAGE>
ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
----------------------------------------------------------
In June 1985 the Partnership acquired a 200 unit apartment complex
(Williamsburg South Apartments) in Atlanta, Georgia for a purchase
price of $4,764,200, which included acquisition fees of $368,745. 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 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.
In November 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 $6,423,391, which included acquisition fees of
$646,424.
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 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 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.
In December 1997, the Partnership sold the Castle Dore Apartments for a
sale price of $5,160,000 less related fees of approximately $174,000.
The sales generated a total net gain of $3,095,376 for financial
statement purposes. This property contributed revenues of $1,064,908
and incurred expenses totaling $1,612,066 during the year ended
December 31, 1997.
-10-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
-------------------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS ---- ----
- ------
<S> <C> <C>
Property, at cost:
Land $ 177,710 $ 177,709
Land improvements 262,257 262,257
Buildings and improvements 3,098,474 3,090,727
Equipment 8,466 8,466
Furniture and fixtures 2,101 2,101
--------------- ---------------
3,549,008 3,541,260
Less accumulated depreciation 1,373,137 1,339,394
--------------- ---------------
Property, net 2,175,871 2,201,866
Cash and cash equivalents - -
Deferred debt expense, net of accumulated
amortization of $0 and $293,490, respectively 87,428 109,766
Other assets - 128,377
--------------- ---------------
Total Assets 2,263,299 2,440,009
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Liabilities:
Cash overdraft $ 588,900 $ 668,633
Bonds payable - -
Mortgage payable 1,856,129 1,861,778
Accounts payable and accrued expenses 47,277 43,787
Accounts payable - affiliates 7,155 -
--------------- ---------------
Total Liabilities 2,499,461 2,574,198
--------------- ---------------
Partners' Capital:
The Partnership (137,495) (134,189)
Other joint venturer (174) -
--------------- ---------------
Total Partners' Capital (137,669) (134,189)
--------------- ---------------
Total Liabilities and Partners' Capital $ 2,361,792 $ 2,440,009
=============== ===============
</TABLE>
-11-
<PAGE>
INDUCON JOINT VENTURE - AMHERST
-------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 118,022 $ 110,206
Interest and other income 27 4,165
--------------- ---------------
Total income 118,049 114,371
--------------- ---------------
Expenses:
Property operations 36,450 45,774
Interest 40,098 41,663
Depreciation and amortization 38,019 35,621
Administrative 6,962 32,419
--------------- ---------------
Total expenses 121,529 155,477
--------------- ---------------
Net loss $ (3,480) $ (41,106)
=============== ===============
Allocation of net loss:
The Partnership $ (3,306) $ (39,051)
Other Joint Venturer
(174) (2,055)
--------------- ---------------
$ (3,480) $ (41,106)
=============== ===============
</TABLE>
A reconciliation of the Partnership's investment in the joint venture for the
three month periods ended March 31, 1998 is as follows:
1998
----
Investment in joint venture - beginning of period $ -
Allocated loss (3,306)
---------------
Investment in joint venture - end of period $ (3,306)
===============
-12-
<PAGE>
5. MORTGAGES AND NOTES PAYABLE
---------------------------
Castle Dore
-----------
A 7.5 US Housing and Urban Development (HUD) guaranteed mortgage which
provides for monthly principal and interest payments of $18,002 payable
in equal monthly installments through February 1, 2010. The carrying
amount of the mortgage was $0 and $0 at March 31, 1998 and December 31,
1997, respectively reflecting an unamortized discount of $0 for 1998.
This property was sold in December 1997 and the outstanding mortgage
was paid in full.
Perrymont
---------
A mortgage which provided for interest rates and monthly installments
through December 1998 as follows:
Year Rate Payment
---- ---- -------
1997 8.5% $ 10,187 (Principal and interest)
1998 8.5% $ 10,187 (Principal and interest)
The outstanding balance was $0 and $1,259,701 at March 31, 1998 and
December 31, 1997. The mortgage was scheduled to mature in January
1999. As of December 31, 1997 the property was in default of the
mortgage and was assigned a receiver by the lender. The mortgage
obligation was satisfied in March 1998.
Ambassador Towers (Formerly Cedar Ridge)
---------------------------------------
The previous three mortgages were refinanced in March 1997 with a
variable rate mortgage for $3,095,284. This provides for payments of
interest only through August 1998 and monthly installment of principal
and interest thereafter through maturityat 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 Unites States
Treasury Securities, adjusted to a constant maturity of five years. The
mortgage has a balance of $3,130,049.
-13-
<PAGE>
MORTGAGE AND NOTES PAYABLE (CONTINUED)
--------------------------------------
The aggregate maturities of the mortgages for each of the next five
years and thereafter are as follows:
Year Amount
---- ------
1998 $ 70,574
1999 72,993
2000 98,990
2001 107,698
2002 117,122
Thereafter 4,484,037
--------------
TOTAL $ 4,951,414
==============
INDUCON AMHERST
---------------
A mortgage with a balance of $1,856,129 at March 31, 1998. The mortgage
provides for monthly principal and interest payment of $15,250 at a
rate of 8.62%. The remaining balance is due March 2022.
6. 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.
7. 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 adjusted capital contributions. No
such fee has been paid or accrued by the Partnership for the three
months ended March 31, 1998 and 1997.
-14-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
--------------------------------------
Pursuantto 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.
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%.
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 $26,860 and $73,941 for the three months ended March 31,
1998 and 1997, respectively.
Accountspayable - affiliates amounted to $23,240 at March 31, 1998. The
payable represents fees due to the general partner or to affiliates of
the general partner.
Computerservice 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 $8,295 and $8,640 for the three months
ended March 31, 1998 and 1997.
-15-
<PAGE>
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 income(loss) for the three month periods
ended March 31, 1998 and 1997 as reported in the statements of
operations, and as would be reported for tax purposes respectively, is
as follows:
March 31, March 31,
1998 1997
---- ----
Net income (loss) -
Statement of operations $ 104,111 $ (309,172)
(Add to) deduct from:
Difference in depreciation (22,660) (25,000)
Difference in amortization 2,115 16,431
Non-deductible expenses 12,467 62,000
Difference in loss of joint venture 0 8,500
---------- --------------
Net income(loss) for tax purposes $ (96,033) $ (247,241)
========== ==============
-16-
<PAGE>
INCOME TAXES (CONTINUED)
-----------------------
The reconciliation of partner's (deficit) capital at March 31, 1998 and
December 31, 1997 as reported in the balance sheets, and as reported
for tax purposes, is as follows:
March 31, December 31,
1998 1997
---- ----
Partner's (Deficit) Capital -
balance sheet $ 4,031,775 $ 3,927,664
Add to (deduct from):
Accumulated difference in
depreciation (4,409,155) (4,386,495)
Accumulated difference in
amortization 79,553 77,418
Syndication fees and selling
expenses 1,842,060 1,842,060
Gain on sale of property 1,009,847 1,009,847
Other non-deductible expenses 85,192 72,725
Difference in book and tax
depreciable cost basis 915,085 915,085
Difference in book and tax
basis of investments (596,400) (596,400)
Other (69,286) ( 69,286)
--------------- ---------------
Partner's (Deficit) Capital -
tax return $ 2,888,671 $ 2,792,618
=============== ===============
-17-
<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 31,1998 and
1997. 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 income of $104,111 or $6.49 per limited
partnership unit for the period ended March 31,1998 versus a net loss of
$309,172 or $19.28 per unit for quarter ended March 31, 1997.
Partnership revenue for the quarter ended March 31, 1998 totaled $716,009 which
is down $71,053 from 1997 revenue of $787,062. Perrymont Office Building
continued to suffer from poor occupancy, which resulted in lower revenues for
the Partnership.
For the quarter ended March 31, 1998, Partnership expenses amounted to $249,915,
decreasing approximately $586,983 from the 1997 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. Capital
improvements are being scheduled for the completion prior to the "peak" rental
season.
-18-
<PAGE>
Results of Operations (Continued):
- ---------------------------------
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.
On a tax basis, the partnership had a loss of $96,033 or $6.17 per limited
partner unit for the three months period ended March 31, 1998 versus a tax loss
of $247,241 or $15.42 per unit for the quarter ended March 31, 1997.
-19-
<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.
-20-
<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 May 20, 1998
---------------------------- -------------------------
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 May 20, 1998
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer May 20, 1998
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 815,506
<SECURITIES> 0
<RECEIVABLES> 911,122
<ALLOWANCES> 873,065
<INVENTORY> 0
<CURRENT-ASSETS> 2,629,144
<PP&E> 12,395,029
<DEPRECIATION> 5,653,338
<TOTAL-ASSETS> 9,569,779
<CURRENT-LIABILITIES> 589,590
<BONDS> 4,951,414
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,569,779
<SALES> 0
<TOTAL-REVENUES> 716,009
<CGS> 0
<TOTAL-COSTS> 611,898
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131,282
<INCOME-PRETAX> 104,111
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,111
<EPS-PRIMARY> 6.49
<EPS-DILUTED> 0
</TABLE>
