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 March 31, 1996
or
[ ] 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.)
230 Park Avenue, Suite 2400
New York, New York 10169
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (212) 697-2330
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)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,707,752
Restricted--tenant security deposits 22,886
Certificate of deposit at cost
plus accrued interest 1,095,360
Accounts receivable 495,562
Prepaid expenses 132,282
Real and personal property:
Land and improvements $ 9,102,865
Buildings and improvements 19,750,459
Furniture, fixtures and equipment 3,835,431
32,688,755
Less accumulated depreciation (13,171,071) 19,517,684
Deferred charges 193,878
Deferred rent receivable 102,356
Escrows and other assets 191,638
$23,459,398
Liabilities and Partners' Equity (Deficit)
Liabilities
Accounts payable $ 292,426
Accrued liabilities:
Interest $ 102,540
Property and other taxes 239,570
Professional fees 106,590
Other 127,149 575,849
Demand note payable - related party 25,000
Deposits and other 66,269
Mortgages payable 15,314,636
Total liabilities 16,274,180
Partners' equity (deficit)
General partner $ (112,986)
Limited partners 7,298,204 7,185,218
$23,459,398
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
March 31,
1996 1995
<S> <C> <C>
Revenues:
Hotel operations $ 2,452,441 $ 2,428,666
Rental operations 445,444 374,083
Other income 5,880 --
Interest income 21,511 36,425
Total revenue 2,925,276 2,839,174
Expenses:
Hotel operations 1,468,605 1,495,038
Rental operations 103,663 106,926
Depreciation and amortization 296,476 307,699
Mortgage interest 360,674 357,306
Management fees to related parties (note 3) 88,603 87,846
General and administrative 29,297 29,999
Total expenses 2,347,318 2,384,814
Net income $ 577,958 $ 454,360
Net income per limited partnership unit
(based on 59,905 limited partnership units
outstanding) $ 9.55 $ 7.51
<FN>
See Notes to Financial Statements
</TABLE>
c) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
(Unaudited)
For the three months ended March 31, 1996
General Limited
Partner Partners Total
Partners' equity (deficit) at
December 31, 1995 $(118,766) $6,726,026 $6,607,260
Net income for the three months
ended March 31, 1996 5,780 572,178 577,958
Partners' equity (deficit) at
March 31, 1996 $(112,986) $7,298,204 $7,185,218
See Notes to Financial Statements
d) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 577,958 $ 454,360
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 296,476 307,699
Change in accounts:
Restricted cash (2,904) --
Accrued interest receivable (5,563) (13,798)
Accounts receivable (255,666) (175,496)
Prepaid expenses 9,815 (4,552)
Escrows and other assets (99,460) (82,396)
Deferred charges (8,432) (12,597)
Deferred rent receivable (3,653) (964)
Accounts payable 49,887 28,932
Accrued liabilities (23,800) 107,233
Deposits and other 2,252 (12,019)
Net cash provided by operating activities 536,910 596,402
Cash flows from investing activities:
Property improvements and replacements (35,204) (31,578)
Net cash used by investing activities (35,204) (31,578)
Cash flows from financing activities:
Principal payments on mortgages payable (24,535) (28,993)
Distributions to partners (599,050) (599,050)
Net cash used by financing activities (623,585) (628,043)
Net decrease in cash and cash equivalents (121,879) (63,219)
Cash and cash equivalents at beginning of period 1,829,631 2,375,076
Cash and cash equivalents at end of period $ 1,707,752 $ 2,311,857
Supplemental disclosure of cash flow information:
Cash paid for interest $ 360,674 $ 357,554
<FN>
See Notes to Financial Statements
</TABLE>
e) DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES III
(A Limited Partnership)
Notes to Financial Statements
March 31, 1996
(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 month period
ended March 31, 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 three month periods ended March 31, 1996 and 1995, amounts paid to
related parties are as follows:
1996 1995
The Wynnewood Company, Inc.
Management Fees $29,532 $28,946
Paragon Group
Management Fees 9,924 9,933
Capstar Hotels
Management Fees 49,147 48,967
$88,603 $87,846
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the three months ended March 31, 1996, the Partnership realized net
income of $577,958 compared to net income of $454,360 for the three months ended
March 31, 1995. The increase in net income was primarily due to increased
rental operations at Shallowford Corners Shopping Center and Perimeter Square.
The increase at Shallowford Corners was due to several new tenants moving in
since March 1995 at higher base rents. The increase at Perimeter Square was the
result of an increase in tenant reimbursements over the first quarter of 1995.
Partially offsetting the increase in rental revenues was a decrease in interest
income directly related to a decrease in the average balance of short-term
investments outstanding for the period ended March 31, 1996, compared to the
corresponding period of 1995. Partnership operations were otherwise comparable
for the periods ended March 31, 1996 and 1995.
Liquidity and Capital Resources
At March 31, 1996, the partnership had cash on hand (including shares of
money market funds and certificates of deposit) of $2,803,112. 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% for
the three months ended March 31, 1996. Management has made a number of physical
improvements to this property from operating cash and is marketing the center
for sale. The Perimeter Square Shopping Center was 94% occupied for the quarter
ended March 31, 1996. Both the Tucson Hotel and Green Valley Hotel are
performing in line with expectations.
Management has executed an agreement to install a sprinkler system at the
Green Valley Hotel located in Arizona. The estimated cost is approximately
$132,000. The installation costs will be 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
March 31, 1996. In February 1996, the Partnership paid a distribution of $10
per partnership interest, totalling $599,050, from existing cash reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
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 March 31, 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: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extrataced from Drexel
Burnham Lambert Real Estate Associates III 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,707,752
<SECURITIES> 0
<RECEIVABLES> 495,562
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,688,755
<DEPRECIATION> (13,171,071)
<TOTAL-ASSETS> 23,459,398
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 15,314,636
0
0
<COMMON> 0
<OTHER-SE> 7,185,218
<TOTAL-LIABILITY-AND-EQUITY> 23,459,398
<SALES> 0
<TOTAL-REVENUES> 2,925,276
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,347,318
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 360,674
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 577,958
<EPS-PRIMARY> 9.55
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
