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, 2000 0-13331
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
(Exact Name of Registrant as specified in its charter)
Delaware 16-1234990
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(State of Formation) (IRS Employer Identification Number)
2350 North Forest Road
Suite 12A
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 [ ]
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Form 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
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Item 1. Financial Statements
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Operations - Three months ended March 31, 2000 and 1999 4
Statement of Partners' Equity - Three months ended March 31, 2000 5
Statements of Cash Flows - Three months ended March 31, 2000 and 1999 6
Notes to Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2 - 5. Not applicable 10
Item 6. Exhibits and Reports on Form 8-K 10
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PART I - Item 1. Financial Statements
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
Assets 2000 1999
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Property and equipment:
Land $ 777,709 777,709
Buildings and improvements 11,238,232 11,196,329
Furniture and fixtures 976,539 973,753
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12,992,480 12,947,791
Less accumulated depreciation 6,231,802 6,116,411
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Net property and equipment 6,760,678 6,831,380
Cash and cash equivalents 1,042,570 1,079,974
Trade accounts receivable, net of allowance for doubtful
accounts of $349,068 in 2000 and $340,735 in 1999 43,711 53,417
Receivables from affiliated parties 131,434 119,923
Escrow deposits 339,638 322,484
Other assets 138,429 156,864
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Total assets $ 8,456,460 8,564,042
============ ============
Liabilities and Partners' Equity
Liabilities:
Mortgage loans payable 4,922,077 4,935,851
Accounts payable and accrued expenses 166,780 134,675
Accrued interest payable 55,562 55,614
Security deposits and prepaid rents 121,163 121,218
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Total liabilities 5,265,582 5,247,358
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Partners' equity (deficit):
General partners (59,728) (55,954)
Limited partners 3,250,606 3,372,638
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Total partners' equity 3,190,878 3,316,684
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Contingency
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Total liabilities and partners' equity $ 8,456,460 8,564,042
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See accompanying notes to financial statements.
3
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Statements of Operations
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
------------------
(As restated)
March 31, March 31,
2000 1999
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Income:
Rental $ 621,820 576,791
Interest and other income 66,828 68,663
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Total income 688,648 645,454
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Expenses:
Property operations 467,743 526,747
Interest 111,390 126,578
Depreciation 115,391 53,142
Administrative:
Affiliated parties 64,551 41,838
Other 55,379 86,814
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Total expenses 814,454 835,119
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Net loss $(125,806) (189,665)
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Net loss per limited partnership unit $ (7.85) (11.83)
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Weighted average number of limited partnership
units outstanding 15,551 15,551
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See accompanying notes to financial statements.
4
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Statement of Partners' Equity
Three months ended March 31, 2000
(Unaudited)
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General Limited Partners
Partners Units Amount
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Balances at January 1, 2000 $ (55,954) 15,551 3,372,638
Net loss (3,774) -- (122,032)
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Balances at March 31, 2000 $ (59,728) 15,551 3,250,606
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See accompanying notes to financial statements
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months ended
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(As restated)
March 31, March 31,
2000 1999
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Cash flows from operating activities:
Net loss $ (125,806) (189,665)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 123,004 71,448
Changes in:
Trade accounts receivable 9,706 (8,583)
Receivables from affiliated parties (11,511) (12,095)
Escrow deposits (17,154) (82,522)
Other assets 10,822 11,232
Accounts payable and accrued expenses 32,105 33,377
Accrued interest payable (52) 21,759
Security deposits and prepaid rents (55) 11,102
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Net cash provided by (used in)
operating activities 21,059 (143,947)
Cash flows from investing activities - additions to property
and equipment (44,689) --
Cash flows from financing activities - principal payments
on mortgage loans (13,774) (3,461)
----------- -----------
Net decrease in cash and cash equivalents (37,404) (147,408)
Cash and cash equivalents at beginning of period 1,079,974 1,778,425
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Cash and cash equivalents at end of period $ 1,042,570 1,631,017
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Supplemental disclosure of cash flow information -
cash paid during the period for interest $ 103,830 86,513
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See accompanying notes to financial statements.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Notes to Financial Statements
Three months ended March 31, 2000 and 1999
(Unaudited)
(1) Basis of Presentation
--------------------------
The accompanying interim financial statements have been prepared in
accordance with generally accepted accounting principles and, in the
opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set
forth in its December 31, 1999 Form 10-K. The interim financial
statements should be read in conjunction with the financial statements
included therein. The interim results should not be considered
indicative of the annual results. Certain reclassifications of prior
period numbers may have been made to conform to the current period
presentation.
(2) Organization
-----------------
Realmark Property Investors Limited Partnership - III (the
Partnership), a Delaware limited partnership, was formed on November
18, 1983, to invest in a diversified portfolio of income-producing real
estate investments. The general partners are Realmark Properties, Inc.
(the corporate general partner) and Joseph M. Jayson (the individual
general partner). Joseph M. Jayson is the sole shareholder of J.M.
Jayson & Company, Inc. Realmark Properties, Inc. is a wholly-owned
subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates can receive
compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership.
(3) Property and Equipment
---------------------------
During the first six months of 1999 (through June 30, 1999), management
continued its plans to sell the assets of Ambassador Towers. Effective
July 1, 1999, management discontinued its plans to sell the property,
as this was determined to be in the best interests of the investors.
The assets of Ambassador Towers are carried at the lower of depreciated
cost or fair value less costs to sell and have not been depreciated
during the disposal period. Depreciation expense not recorded for the
three months ended March 31, 1999 was approximately $55,500.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
Notes to Financial Statements, Continued
(4) Current Accounting Pronouncements
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In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 - "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an Amendment of
Statement No. 133" which amends certain provisions of Statement of
Financial Accounting Standards No. 133 - "Accounting for Derivative
Instruments and Hedging Activities". These statements establish
accounting and financial reporting for derivative instruments and
hedging activities. These statements become effective for the
Partnership on January 1, 2001. The effect, if any, that Statements No.
133 and 138 will have on the Partnership's operations and financial
position will not be material.
(5) Prior Period Adjustment
----------------------------
The net loss for the quarter ended March 31, 1999 has been corrected to
give effect to a year-end 1999 adjustment as follows:
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As previously reported $ (245,143)
Elimination of depreciation expense on Ambassador
Towers held for disposal during the quarter 55,478
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As restated $ (189,665)
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The net loss per limited partnership unit decreased $3.46 to $11.83.
(6) Subsequent Event - Contingency
-----------------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the General
Partners, the liquidation of the Partnership and the appointment of a
receiver to supervise the liquidation, and damages. The General
Partners and the officers and directors of the Corporate General
Partner have filed a motion to dismiss the first complaint and are
presently reviewing the second complaint and intend to vigorously
pursue their defense.
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PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
-------------------------------
Although the Partnership showed a small cash shortfall for the first three
months of 2000, management believes there is sufficient cash to complete
scheduled capital improvements and maintenance at the three properties remaining
in the Partnership, while also funding the properties' operating activities.
Management continues to be optimistic that expenses will decrease as tighter
control is being exercised over expenditures. Management is also focusing its
efforts heavily on ways to increase operating revenue.
The General Partner is completing substantial capital improvement work at the
Perrymont Office Building including re-facing the exterior of the building,
resealing of the parking lot, replacement of hallway carpeting, redecorating of
all common area restrooms, relandscaping the front of the building, new
entrances, and new signage. The work will cost approximately $450,000 and will
be completed during the fall of 2000. It is believed that the physical
improvements to the exterior of the building and the common parts of the
interior will greatly increase its curb appeal and attract new tenants; and
hopefully increase the value of the building.
While there were no cash distributions to partners in the three month periods
ended March 31, 2000 and 1999, the General Partner plans to resume distributions
in the future.
Results of Operations
---------------------
In the quarter ended March 31, 2000, the Partnership's net loss was
approximately $64,000 less than the net loss for the quarter ended March 31,
1999.
The improvement was due to both income increases and expense reductions. Rent
revenue for the quarter ended March 31, 2000 increased approximately $45,000
primarily due to increased occupancy at Ambassador Towers. At March 31, 2000,
occupancy at this complex was almost 93%. This complex has seen a steady
increase in its occupancy due to various "new and innovative" ideas for services
that are now being provided to residents as well as improvements recently made
in 1999 and continued improvements in 2000 in upgrading hallways and common
areas. The Perrymont Office Building had a decrease in income in the three
months ended March 31, 2000. Improvements to the property should result in
increased occupancy and improved cash flow by the end of 2000. Inducon Amherst
income increased in the three months ended March 31, 2000 because of improved
collections.
Property operations expenses decreased by approximately 11% in the three months
ended March 31, 2000. The majority of this decrease is attributed to the
decrease in replacement expense at Ambassador Towers when many upgrades of
appliance, carpet, and wallpaper were completed in 1999.
Partnership administrative expenses to affiliates increased by approximately
$22,000 in the quarter ended March 31, 2000 as the result of increased
accounting and portfolio management expenses charged and/or incurred on behalf
of the Partnership. Other partnership administrative costs decreased in 2000 due
to decreased professional fees.
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PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's cash equivalents are short term, interest bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered into
any derivative contracts. Therefore, it has no market risk exposure.
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
--------------------------
The Partnership, as a nominal defendant, the General Partners of the
Partnership and the three individuals constituting the officers and
directors of the Corporate General Partner, as defendants, were served
with a Summons and Complaint on April 19, 2000 in a class and
derivative action instituted by Ira Gaines and on August 21, 2000 in a
class and derivative action instituted by Sean O'Reilly and Louise
Homburger, each in Supreme Court, County of Erie, State of New York.
The actions allege breaches of contract and breaches of fiduciary duty
and seek, among other things, an accounting, the removal of the General
Partners, the liquidation of the Partnership and the appointment of a
receiver to supervise the liquidation, and damages. The General
Partners and the officers and directors of the Corporate General
Partner have filed a motion to dismiss the first complaint and are
presently reviewing the second complaint and intend to vigorously
pursue their defense.
Items 2, 3, 4 and 5
-------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
The Partnership reported a change in independent accountants under item 4
of Form 8-K, filed on January 19, 2000 and amended on February 3, 2000,
April 17, 2000 and May 2, 2000.
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SIGNATURES
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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 PARTNERHIP III
By: /s/ Joseph M. Jayson 11/15/2000
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Joseph M. Jayson, Date
Individual General Partner and
Principal Financial Officer
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