FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 2-95502
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(Exact name of small business issuer as specified in its charter)
New York 13-3251176
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
850 Third Avenue, Nineteenth Floor
New York, New York 10022
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (212) 822-2246
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
BALANCE SHEET
(Unaudited)
June 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,998,077
Restricted--tenant security deposits 19,982
Certificate of deposit at cost
plus accrued interest 1,118,669
Accounts receivable 261,004
Prepaid expenses 82,787
Real and personal property:
Land and improvements $ 9,102,865
Buildings and improvements 19,785,842
Furniture, fixtures and equipment 3,936,959
32,825,666
Less accumulated depreciation (13,462,801) 19,362,865
Deferred charges 150,147
Deferred rent receivable 96,728
Escrows and other assets 257,239
$ 23,347,498
Liabilities and Partners' Equity (Deficit)
Liabilities
Accounts payable $ 308,550
Accrued liabilities:
Interest $ 102,479
Property and other taxes 294,301
Professional fees 82,314
Other 161,156 640,250
Demand note payable - related party 25,000
Deposits and other liabilities 55,549
Mortgages payable 15,289,478
Total liabilities
Partners' equity (deficit)
General partner (114,552)
Limited partners 7,143,223 7,028,671
$23,347,498
See Notes to Financial Statements
b) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Hotel operations $1,807,125 $1,822,982 $4,259,566 $4,251,648
Rental operations 386,189 380,216 831,633 754,299
Other income 4,554 327 10,434 327
Interest income 38,591 35,591 60,102 72,016
Total revenues 2,236,459 2,239,116 5,161,735 5,078,290
Expenses:
Hotel operations 1,472,555 1,427,565 2,941,160 2,922,603
Rental operations 121,429 97,974 225,092 204,900
Depreciation and
amortization 336,070 307,699 632,546 615,398
Mortgage interest 363,278 357,632 723,952 714,938
Management fees to related
parties (Note 3) 66,481 69,707 155,084 157,553
General and administrative 33,193 36,467 62,490 66,466
Total expenses 2,393,006 2,297,044 4,740,324 4,681,858
Net (loss) income $ (156,547) $ (57,928) $ 421,411 $ 396,432
Net (loss) income per limited
partnership unit (based on
59,905 limited partnership
units outstanding) $ (2.59) $ (.96) $ 6.96 $ 6.55
<FN>
</TABLE>
See Notes to Financial Statements
c) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Partners' equity (deficit) at
December 31, 1995 $(118,766) $6,726,026 $6,607,260
Net income for the six months ended
June 30, 1996 $ 4,214 $ 417,197 $ 421,411
Partners' equity (deficit) at
June 30, 1996 $(114,552) $7,143,223 $7,028,671
<FN>
See Notes to Financial Statements
</TABLE>
d) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 421,411 $ 396,432
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 632,546 615,398
Change in accounts:
Restricted cash -- 1,452
Accrued interest receivable (8,258) (728)
Accounts receivable (21,108) 16,729
Prepaid expenses 59,310 23,213
Escrows and other assets (165,061) (37,998)
Deferred charges (9,043) (18,624)
Deferred rent receivable 1,975 (1,927)
Accounts payable 66,011 (155,724)
Accrued liabilities 40,603 26,990
Deposits and other tenant liabilities (8,468) (18,139)
Net cash provided by
operating activities 1,009,918 847,074
Cash flows from investing activities:
Property improvements and replacements (172,115) (129,293)
Purchases of certificates of deposit (20,614) (27,594)
Net cash used by
investing activities (192,729) (156,887)
Cash flows from financing activities:
Principal payments on mortgages payable (49,693) (40,942)
Partners' distributions paid (599,050) (599,050)
Net cash used by financing activities (648,743) (639,992)
Net increase in cash and cash equivalents 168,446 50,195
Cash and cash equivalents at beginning of period 1,829,631 2,375,076
Cash and cash equivalents at end of period $1,998,077 $ 2,425,271
Supplemental disclosure of cash flow information:
Cash paid for interest $ 724,072 $ 715,222
<FN>
See Notes to Financial Statements
</TABLE>
e) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1995.
Note 2 - Basis of Accounting
The financial statements include the accounts of the Partnership, and the
assets, liabilities, equity, income and expenses of its joint ventures in DBL
Airport Valley Limited Partnership ("DBLAV") and Shallowford Corners Shopping
Center ("Shallowford") and, its operating division, Perimeter Square Shopping
Center ("Perimeter Square").
Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.
Note 3 - Related Party Transactions
For the six months ended June 30, 1996 and 1995, management fees paid to
related parties are as follows:
1996 1995
The Wynnewood Company, Inc. $51,625 $ 52,279
Paragon Group 18,922 19,653
Capstar Hotels 84,537 85,621
$155,084 $157,553
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the six months ended June 30, 1996, the Partnership realized net income
of $421,411, compared to net income of $396,432 for the six months ended June
30, 1995. A net loss of $156,547 was realized for the three months ended June
30, 1996, compared to a net loss of $57,928 for the three months ended June 30,
1995. The increase in total revenues for the six months ending June 30, 1996,
was primarily due to increases in rental operations and other income. The
increase in rental operations was primarily due to revenue increases at
Shallowford Corners Shopping Center and Perimeter Square. The Shallowford
Corners revenue increase was due to several new tenants paying higher base rents
moving in since June 1995. The revenue increase at Perimeter Square resulted
from increases in tenant reimbursements over the second quarter of 1995. The
increase in other income was primarily due to approximately $6,000 in settlement
proceeds received from a lawsuit initiated in previous years. The increase in
rental operations and other income was partially offset by a decrease in
interest income for the six months ended June 30, 1996, compared to the six
months ended June 30, 1995. This decrease was due to decreases in the average
balance of short-term investments outstanding for the six months ended June 30,
1996, compared to the corresponding period of 1995.
The increase in rental operations expense resulted from increases in
maintenance, landscaping and leasing costs at Shallowford Corners Shopping
Center. These increases were incurred in efforts to improve the physical
appearance of this property while the Partnership markets the property for sale.
Liquidity and Capital Resources
At June 30, 1996, the Partnership held cash (including shares of money market
funds and certificates of deposit) of $3,116,746. The present cash reserves of
the Partnership are believed to be sufficient to meet the foreseeable needs of
the Partnership.
Occupancy at Shallowford Corners Shopping Center was approximately 88% at
June 30, 1996. Management has completed a number of physical improvements to
this property from operating cash and is marketing the center for sale.
Management has recently executed a letter of intent with a purchaser for the
sale of the property subject to several outstanding issues including execution
of a mutually satisfactory purchase and sale agreement. The Perimeter Square
Shopping Center is currently 94% occupied. Both the Tucson Hotel and Green
Valley Hotel are performing in line with expectations.
Management has commenced the installment of a sprinkler system at the hotel
in Green Valley, Arizona, at an estimated total cost of approximately $132,000.
The installation costs are being funded from existing cash reserves.
Other than the items referred to above, the Partnership has not entered into
any material commitments for capital expenditures at any of its properties as of
June 30, 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(Registrant)
By: DBL Properties Corporation
(General Partner)
By: /s/William D. Clements
William D. Clements
President
Date: August 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule conatins summary financial information extracted from Drexel
Burnham Lambert Real Estate Associates III 1996 Second Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000761657
<NAME> DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,998,077
<SECURITIES> 0
<RECEIVABLES> 261,004
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,825,666
<DEPRECIATION> (13,462,801)
<TOTAL-ASSETS> 23,347,498
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 15,289,478
0
0
<COMMON> 0
<OTHER-SE> 7,028,671
<TOTAL-LIABILITY-AND-EQUITY> 23,347,498
<SALES> 0
<TOTAL-REVENUES> 5,161,735
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,740,324
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 723,952
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,411
<EPS-PRIMARY> 6.96
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
