UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
- ------ SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended
December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
- ------ THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number
0-15677
-------
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
--------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1546907
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
20875 Crossroads Circle
Suite 800
Waukesha, Wisconsin 53186
- ------------------------------- -----------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (414) 798-0900
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
-----------------------------
(Title of Class)
Indicate by 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 requirement
for the past 90 days.
Yes X No
--------- ---------
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
1997 FORM 10-K
TABLE OF CONTENTS
-----------------
Part I
Item 1 Business
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of
Security Holders
Part II
Item 5 Market for Registrant's Common Equity and
Related Stockholder Matters
Item 6 Selected Financial Data
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 8 Financial Statements and Supplementary
Data
Item 9 Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
Part III
Item 10 Directors and Executive Officers of the
Registrant
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial
Owners and Management
Item 13 Certain Relationships and Related
Transactions
Part IV
Item 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
Financial Statements and Supplementary Data
Signatures
PART 1
Item 1. BUSINESS
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP (the "registrant" or
"Partnership") is a Wisconsin Limited Partnership formed on April
29, 1985, under the Wisconsin Revised Uniform Limited Partnership
Act. The Registrant was organized to acquire, for cash (no debt),
real estate projects, including real estate for restaurants, mobile
home communities and other commercial properties. The Partnership
sold $13,725,000 in Limited Partnership Interests (13,725 Interests
at $1,000 per unit) from August 27, 1985, through December 12,
1986, pursuant to a registration statement on Form S-11 under the
Securities Act of 1933. The Partnership registered with the
Securities and Exchange Commission a total of 15,000 units of
Limited Partnership Interests ("Interests") for sale to the public.
The Partnership utilized the net offering proceeds to acquire the
real property investments as described under "Properties"
(Item 2).
The Registrant originally acquired fifteen real property
investments, utilizing the net offering proceeds available for
investment. The Registrant sold five of the original properties
during 1993, one commercial property during 1994, and two
commercial properties in 1996.
<TABLE>
Provided below is certain financial information for the three years
covered by this report:
<CAPTION>
Mobile Home Parks Commercial Properties
----------------- ---------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross rental
revenues(000's) $596 $585 $597 $166 $276 $371
Revenues from
restaurant(000's) $--- $--- $--- $620 $587 $578
</TABLE>
The officers and employees of RAL Asset Management Group, a
Wisconsin general partnership, and its affiliates, performed
services for the Registrant through June 1, 1993. RAL Asset
Management Group is controlled by the General Partners of the
Partnership. Effective June 1, 1993 the Partnership made separate
property and partnership management agreements.
The partnership management agreement is with an unrelated
management company. The property management agreement is with a
related entity with the same general partners as the Partnership.
The related property management firm simultaneously subcontracted
with the same unrelated management company handling the partnership
management. The terms and conditions of these agreements are
similar to the above related party agreements, which they replace.
The Partnership itself employs individual on-site managers and
maintenance personnel in the three mobile home parks it owns, as
well as personnel to run the partnership-operated restaurant. As
of March 27, 1998 the Partnership employed 40, thirty-four of which
are employed by the restaurant. These individuals are directed and
managed by personnel of First Financial Realty Management (FFRM).
Item 2. PROPERTIES
As of March 27, 1998, the Registrant owned the following
properties:
Property Name Approximate Size
- ----------------------------- ------------------------------
Pizza Hut Restaurant A 2,870 square foot building
Land and Building on approximately 46,200 square
Minnetonka, MN feet of land
Rocky Rococo Restaurant A 3,470 square foot building
Land and Building on approximately 21,000 square
Milwaukee, WI feet of land
Forest Junction Mobile 82 mobile home sites on 35
Home Park acres of land
Brillion, WI*
Pizza Hut Restaurant A 3,467 square foot building
Land and Building on 37,400 square feet of land
Normal, IL
Wendy's Restaurant A 3,700 square foot building
Land and Building on 48,500 square feet of land
Waukesha, WI
Shamrock 31 mobile home sites on 4
Mobile Home Park acres of land
Albany, MN
Cloverleaf 172 mobile home sites on 25
Mobile Home Park acres of land
St. Cloud, MN*
*Denotes a material property, having gross revenues greater than
10% of total revenues.
All of the properties were unencumbered as of March 27, 1998.
Leases on Investment Properties:
At December 31, 1997, the Partnership had three (3) restaurant
properties available for lease, all of which are occupied. The
restaurant properties are generally leased under 10-20 year lease
terms with two five-year options to renew the leases at the end of
the original term. Rent, which is payable monthly, is equal to the
greater of a percentage of gross sales or a minimum base rental
stated in the lease.
All of the restaurant leases described above are "triple net" to
the partnership. Thus, the lessees are responsible for all
occupancy costs such as maintenance, insurance, taxes and
utilities. The warehouse property lease provides for the tenant to
pay real estate taxes, utilities, and maintenance.
The restaurant property located in Milwaukee, Wisconsin is being
operated by the Partnership. It opened for business in September,
1994. Any excess cash flow from this restaurant is contributed to
the Partnership.
The partnership also operates three (3) mobile home parks. As of
December 31, 1997 approximately 94% of the spaces were leased. The
mobile home parks receive income on a monthly basis from tenant
leases which normally have lease terms of one year or less.
The real estate business is highly competitive and the Partnership
competes with many other real estate investment entities many of
which have greater financial resources. No one firm or group of
firms, in the opinion of the General Partners, is dominant in the
industry. The Partnership, therefore, faces substantial
competition from a variety of sources for attracting and retaining
tenants.
Any commercial, residential or mobile home property acquired by the
Partnership has competition for tenants from similar properties in
the vicinity. To the extent that the Partnership owns commercial
properties, such as restaurants, which have leases entitling the
Partnership to participate in gross receipts of tenants above fixed
minimum amounts, the success of the Partnership will depend in part
on the success of its tenants in competing with similar businesses
in the vicinity.
In the opinion of management of the Partnership, all properties are
adequately covered by insurance.
MATERIAL PROPERTIES
- -------------------
Following is information with respect to each property whose
revenues are greater than 10% of total revenues as denoted above.
<TABLE>
The following is a listing of the approximate average physical
occupancy rates for the Partnership's material properties during
each of the last five years:
<CAPTION>
Occupancy Rate
---------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cloverleaf MHP 91% 88% 89% 91% 93%
Forest Junction MHP 93% 90% 97% 98% 100%
</TABLE>
<TABLE>
The following is a listing of the average annual per unit rental
rates for the two larger mobile home parks during each of the last
five years:
<CAPTION>
Annual Per Unit Rental Rate
---------------------------------
Mobile Home Park 1997 1996 1995 1994 1993
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cloverleaf $2,525 2,467 2,401 2,288 2,270
Forest Junction $1,846 1,776 1,668 1,610 1,554
</TABLE>
The Federal tax basis for each of the material properties is
identical to the book basis as listed in Schedule III on page F-14
of this report. Depreciation information on all properties is as
follows:
Type of Asset Rate Method Depreciable Life
------------- ---- ------ ----------------
Land Improvements SL ACRS 15/19/20 Year
Building SL ACRS 19/31.5/39/40 Year
Equipment DDB ACRS/MACRS 5/7/12 Year
<TABLE>
Real estate tax information for the three years covered by this
report for material properties is as follows:
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cloverleaf MHP
Tax rate (per 1,000) .033230 .032333 .029511
Real estate taxes $36,154 35,178 34,286
Forest Junction MHP
Tax rate (per 1,000) .023332 .033311 .035714
Real estate taxes $10,042 11,762 13,493
</TABLE>
Item 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
action.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders
during 1997.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) & (b) As of December 31, 1997, there were approximately 2,000
record holders of Interests of the Partnership. There
is no public market for Interests and it is not
anticipated that a public market for Interests will
develop. The General Partners will not redeem or
repurchase Interests.
(c) All cash available for distribution other than sale or
refinancing proceeds is distributed to the Limited Partners.
The Partnership makes distributions, to Limited Partners, of
cash available for distribution within 45 days after the end
of each quarter in which such cash is available. See
attached financial statements and footnotes for a detailed
discussion of amounts and timing of distributions to Limited
Partners.
Item 6. SELECTED FINANCIAL DATA FOR THE YEARS ENDED DECEMBER 31,
1997, 1996, 1995, 1994 AND 1993
<TABLE>
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total
Revenues $1,381,569 $1,817,357 $1,546,286 $1,115,256 $1,830,302
Net Income
(Loss) 324,969 785,968 417,054 (120,028) 913,991
Total Assets 4,276,486 4,509,092 6,111,282 6,308,733 8,633,811
Long Term
Obligations 0 0 0 0 0
Distributions to Limited
Partners 591,630 2,269,622 642,110 2,203,638 2,292,503
Per Interest Data (1):
Net Income (Loss)
23.44 56.69 30.08 (8.66) 65.93
Distributions 43.11 165.36 46.78 160.56 167.03
Gain (Loss) on Sale of
Investment Property
0 26.87 0 (19.65) 39.31
<FN>
The above selected financial data should be read in conjunction
with financial statements and related footnotes elsewhere herein.
(1) The Net Income and Distributions per Interest are based on
total Interests of 13,725 outstanding during the year.
</FN>
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP (the "Partnership") is
a Wisconsin Limited Partnership formed on April 29, 1985, under the
Wisconsin Revised Uniform Limited Partnership Act. The Partnership
was organized to acquire new and existing income producing
properties for cash. These properties consist primarily of
restaurants (including land and building) to be leased on a "triple
net" lease basis (i.e. for the tenant to pay for maintenance,
repairs, real estate taxes and insurance) to chain restaurants,
including Wendy's and Pizza Hut. Beginning in 1994 the Partnership
began operating a Rocky Rococo restaurant at a previously vacant
commercial site in Milwaukee, Wisconsin. The Partnership also owns
and operates three mobile home communities located in Wisconsin and
Minnesota. The Partnership's offering of limited partnership
interests to the public pursuant to the Securities Act of 1933
raised $13,725,000, in which the above-described properties were
purchased for cash.
Liquidity and Capital Resources:
Properties acquired by the Partnership are generally intended to be
held from seven to ten years. Since the Partnership has purchased
the Properties for cash, liquidity is not reduced by debt service
payments. During the Properties' holding periods, the investment
strategy is to maintain (on the "triple net lease" restaurant
properties) and improve (on the mobile home parks) occupancy rates
through the application of professional property management
(including selective capital improvements). The Partnership also
accumulates working capital reserves for normal repairs,
replacements, working capital, and contingencies.
Net cash flow provided by operating activities was $499,000 in
1997, $503,000 in 1996, and $738,000 in 1995, primarily from
earnings and depreciation (amortization), net of increases in
receivables. In addition, the Partnership generated $1,685,000 of
cash flow in 1996 due to the sale of a commercial warehouse and a
mobile home park.
As of December 31, 1997, the Partnership had cash of approximately
$257,000 representing undistributed cash flow, working capital and
tenants' security deposits. Current liabilities amounted to
approximately $172,000.
The Partnership has not experienced, and is not currently
experiencing any liquidity problems. It is not expected that the
Partnership will experience liquidity problems due to the nature of
the current liabilities. Approximately $60,000 of the current
liabilities represent tenant security deposits. The majority of
the remaining current liabilities are accrued and escrowed real
estate taxes payable in installments, in 1998. The Partnership
expects to meet all of its obligations as they come due.
Results of Operations:
Gross rental revenues was $762,000 in 1997 versus $862,000 in 1996
and $968,000 in 1995. The decrease in 1997 and 1996 from 1995 was
due to the sale of one of the commercial properties in June of 1996
and one of the mobile home parks in May of 1996.
Total operating expenses, exclusive of restaurant operations, were
$586,000 in 1997, $628,000 in 1996, and $724,000 in 1995. The
decrease from 1995 to 1996 and again in 1997, was primarily a
result of the sale of the warehouse property and one of the mobile
home parks during 1996 and also a decrease in administrative
expenses.
In September, 1994 the Partnership opened a previously vacant
restaurant as a Rocky Rococo. During 1997, 1996 and 1995, the
restaurant had revenue of $620,000, $587,000 and $578,000
respectively and expenses of $515,000, $466,000 and $447,000,
respectively. The restaurant had approximately $105,000, $121,000
and $137,000 of annual cash flow in 1997, 1996 and 1995
respectively.
Interest and other income was $45,000 in 1997, $62,000 in 1996,
and $41,000 in 1995.
Total income was $325,000 in 1997, $786,000 in 1996, and
$417,000 in 1995. The large amount of net income in 1996 is a
result of the gains on the sales of the commercial property and
mobile home park. The decrease from 1997 to 1996 is also a result
of loss of income from properties sold in 1996.
Inflation:
Due to the comparatively low level of inflation since the
Partnership commenced operations, the effect of inflation on the
Partnership has not been material to date. Should the rate of
inflation increase substantially over the life of the Partnership,
it is likely to influence ongoing operations, in particular, the
operating expenses of the Partnership. Most of the commercial
leases contain clauses permitting pass-through of certain increased
operating costs. Residential leases are typically of one year or
less in duration; this allows the Partnership to react quickly
(through rental increases) to changes in the level of inflation.
These factors should serve to reduce, to a certain degree, any
impact of rising costs on the Partnership.
Potential Sale of Partnership Properties
The Partnership has received an offer from a prospective purchaser
for all or substantially all of the Partnership's properties.
Accordingly, the Partnership has entered into an asset purchase
agreement with the potential purchaser subject to Securities and
Exchange Commission review of the necessary proxy statement/consent
document, approval of the limited partners and the receipt of an
acceptable fairness opinion.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedule
on page F-1, incorporated herein by reference.
The supplemental financial information specified by Item 302 of
Regulation S-K is not applicable.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
a. None.
b. None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The General Partners of RAL YIELD + EQUITIES III LIMITED
PARTNERSHIP (the "Partnership") are Robert A. Long, John A. Hanson,
Thomas R. Brophy, and Bart Starr. The General Partners manage and
control the Partnership's affairs and have the general
responsibility and the ultimate authority in all matters
affecting the Partnership's business. The Partnership has
available to it the services, personnel, and experience of certain
other organizations affiliated with the General Partners, including
RAL Asset Management Group. The General Partners are also General
Partners of an affiliate, RAL Asset Management Group. The
relationship of the General Partners to their affiliates is
described under the caption "Conflicts of Interest" on pages 9
through 12 of the Prospectus, a copy of which is filed with Form
S-11 for this Partnership and is hereby incorporated herein by
reference.
The names, ages and business experience of the executive officers
and the significant employee of First Financial Realty Management
are as follows:
Position with RAL Asset
-----------------------
Name Management Group
- ---- -----------------
Robert A. Long General Partner
John A. Hanson General Partner
Thomas R. Brophy General Partner
Bart Starr General Partner
Douglas C. Heston President (FFRM)
There is no family relationship among any of the foregoing
officers. The business experience of the General Partners and
significant employees includes the following:
Robert A. Long, age 56, has, since January 1982, been a partner in
RAL Asset Management Group. He is co-founder of RAL Asset
Management Group. Since 1966 Mr. Long has been involved in real
estate consulting, development and syndication. Mr. Long is a
licensed securities agent. Since 1981 Mr. Long has been involved
as an individual, general partner, or affiliate in ownership and
management of twenty-six (26) mobile home parks totaling over
2,600 pads in the states of Wisconsin and Minnesota. Prior to
1981, Mr. Long developed or purchased over 200 commercial
properties in six states and currently owns individually or through
partnerships over 50 restaurants (land and building) leased to
restaurant operators, including Pizza Hut, Hardee's, Taco Bell, and
Rocky Rococo (or their franchisees). Mr. Long also played
professional football for the Green Bay Packers, Atlanta Falcons,
and Washington Redskins. Mr. Long received a Bachelor of Science
Degree in Business from Wichita State University in 1965 and is
currently Executive Director of the Vince Lombardi Scholarship Fund
for Wichita State University. Mr. Long is also on the Board of
Directors of Roundy's Inc., a major Midwest food distributor and
originator of the Pick 'N Save stores.
John A. Hanson, age 56, has, since March 1982, been a partner in
RAL Asset Management Group. Mr. Hanson is involved individually,
as a general partner, or as an affiliate, in the ownership and
management of twenty-six (26) mobile home parks in the states of
Wisconsin and Minnesota. Mr. Hanson has been involved in pension
and profit-sharing and tax consulting for 25 years. In 1975 he
founded, and since that time has been president of Pension
Designers, Inc., of Appleton, Wisconsin, a firm that specializes in
structuring and consulting with respect to qualified retirement
plans, estate planning, investment sales and sales of life, health
and disability insurance products to individuals, groups or
corporations. From 1966 to 1971 Mr. Hanson was engaged in tax
consulting, having management and tax accounting responsibilities
for a farm management firm with approximately 200 clients.
Mr. Hanson is past president of the Fox River Valley Association of
Life Underwriters, and the General Agents and Managers Association,
an associate member of the American Society of Pension Actuaries,
a member of the International Association of Financial Planners, a
qualifying and life member of the Million Dollar Round Table, and
a registered principal with the National Association of Securities
Dealers. Mr. Hanson received his Bachelor of Science Degree in
Agri-Business from the University of Wisconsin - River Falls in
1966. Mr. Hanson is a licensed securities agent.
Thomas R. Brophy, CLU, ChFC., age 52, has, since March 1982, been
a partner of RAL Asset Management Group. Mr. Brophy is involved
individually, as a general partner, or as an affiliate in the
ownership and management of twenty-six (26) mobile home parks in
the states of Wisconsin and Minnesota which total approximately
2,600 pads. Mr. Brophy has been a NASD registered securities
representative since 1969, active in the marketing and sales of
mutual funds, unit investment trusts, stocks, bonds, limited
partnerships and private ventures. Since 1967 Mr. Brophy has also
been active in the marketing, selling, training, supervising and
managing of personnel, with respect to qualified retirement plans
and personal or business life, health and disability insurance
plans. He is active in the financial planning field, having been
conferred the degree of Chartered Financial Consultant, by
the American College, Bryn Mawr, PA, in 1984. He is also
associated with the Principal Financial Group. Mr. Brophy is an
active member of the National and Wisconsin Association of Life
Underwriters, Million Dollar Round Table, Fox Valley Estate
Planning Council and International Association of Financial
Planners. He is recipient of the Fox River Valley Association of
Life Underwriters' 1983 "Agent of the Year" award. A 1967 Bachelor
of Science graduate from Marquette University, Mr. Brophy went on
for advanced studies in insurance, receiving his Chartered Life
Underwriter (CLU) degree from the American College, Bryn Mawr, PA,
in 1975. Mr. Brophy is a licensed securities agent.
Bart Starr, age 65, has, since January 1984, been a partner in RAL
Asset Management Group. He is a University of Alabama graduate
with a B.S. Degree in Education. Since 1970, he has been a partner
in the Bart Starr Motor Company, Birmingham, Alabama. Since 1979 he
has been a member of the Board of Directors of the Sentry Insurance
Company, Stevens Point, Wisconsin. He was a Green Bay Packer
football player from 1956-1972, the Green Bay Packer Head Coach
from 1975-1983, the NFL Most Valuable Player in 1966, and the Most
Valuable Player in Super Bowls I and II. Mr. Starr was a CBS Game
Analyst in 1973 and 1974 and the first winner of the Byron White
Award in 1967. Mr. Starr has been the recipient of numerous civic
and sports awards and is actively engaged in many charitable
and public service organizations.
The following individual is an employee of the unaffiliated
property management firm who make significant contributions to the
business of the Partnership:
Douglas C. Heston, age 44, is President of First Financial Realty
Management (FFRM). FFRM and affiliates own and/or manage over 50
investment properties. Mr. Heston received a B.A. degree from Duke
University (North Carolina) with a double major in Economics and
Public Policy Analysis (Statistics) in 1975. He received an M.S.
degree in Real Estate Investment Analysis from the University of
Wisconsin in 1979. Previously he worked for real estate appraisal
firms in Atlanta and Milwaukee. He co-founded RAL Asset Management
Group in 1982 and left at the end of 1984 to found his current
firm.
Item 11. EXECUTIVE COMPENSATION
(a,b,c, and d)
The Registrant has not paid and does not propose to pay any
executive compensation to the General Partners or any of their
affiliates (other than described in Item 13 below).
(e) There are no compensatory plans or arrangements regarding
termination of employment or change of control.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) No person owns of record or is known by the Registrant to own
beneficially more than 5% of the outstanding Interests of the
Registrant as of March 27, 1998.
<TABLE>
(b) As of March 27, 1998, the following General Partners owned
or had beneficial ownership of the following Interests in the
Partnership:
<CAPTION>
Title of Class Name of Partner Percent of Class
- -------------- --------------- ----------------
<S> <C> <C>
General Partnership Robert A. Long 46.73%
Interests John A. Hanson 22.14
Thomas R. Brophy 19.68
Bart Starr 11.45
------
100.00
=======
</TABLE>
<TABLE>
As of March 27, 1998, the General Partners owned, as a group,
the following Limited Partnership Interests of the Registrant:
<CAPTION>
Title of Class Amount Beneficially Owned Percent of Class
- -------------- ------------------------- ----------------
<S> <C> <C>
Limited Partnership 49 Interests Less than 1%
Interests
The General Partners or their affiliates, except as noted above, do
not own any other interest in the Registrant.
(c) None
</TABLE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a and b)
The Partnership sold Village Terrace Mobile Home Park to Wisconsin
Homesites III Limited Partnership. Doug Heston is the President of
the Corporate General Partner of Wisconsin Homesites III. Mr.
Heston is also the President of First Financial Realty Management,
the company which now manages RAL Yield & Equities III.
Certain General Partners own or control businesses which have
agreed to perform a variety of services for the Partnership.
In consideration for these services, the General Partners and
related parties receive certain compensation at amounts which are
provided by the Partnership agreement. The following table sets
forth the types, amounts and recipients of compensation paid
annually to related parties.
Real estate commissions payable to The total compensation
RAL Asset Management Group or other paid all persons for the
related party on sale of Partnership sale of properties is
properties. limited to 6% of the
contract price. An
affiliate may receive
up to one-half of such
compensation, where it
provides brokerage
services, subject to
certain limitations based
on a minimum return to
limited partners. During
1996, a commission of
$9,600 was paid to First
Financial Realty Manage-
ment on the sale of the
mobile home park.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1 and 2) See Index to Financial Statements and Financial
Statement Schedule on Page F-1.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit 27
(d) Financial Statement Schedule
See Index to Financial Statements and Financial Statement
Schedule on Page F-1.
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
COVERED BY REPORTS OF INDEPENDENT ACCOUNTANTS
Item 14(a)
Reference
- ---------
Report of Independent Accountants F-2
Balance Sheets at December 31, 1997 and 1996 F-3
Statements of Income for the years ended
December 31, 1997, 1996 and 1995 F-4
Statements of Partners' Equity for the
years ended December 31, 1997, 1996 and 1995 F-5
Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 F-6
Notes to Financial Statements F-7 to F-13
Financial Statement Schedule: III - Real Estate
and Accumulated Depreciation F-14 to F-18
Schedules, other than those listed, are omitted for the reason that
they are inapplicable or equivalent information has been included
elsewhere herein.
F-1
INDEPENDENT AUDITOR'S REPORT
----------------------------
February 6, 1998
To the Partners of
RAL Yield + Equities III Limited Partnership
We have audited the accompanying Balance Sheets of RAL Yield +
Equities III Limited Partnership (a Wisconsin Limited partnership)
as of December 31, 1997 and 1996, and the related Statements of
Income, Partners' Equity and Cash Flows for each of the three years
in the period ended December 31, 1997. Our audit also included the
financial statement schedule listed in the Index at Item 14. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RAL
Yield + Equities III Limited Partnership as of December 31, 1997
and 1996, and the results of its operations and cash flows for each
of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.
Kolb Lauwasser & Co., S.C.
Milwaukee, Wisconsin
F-2
<TABLE>
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
Balance Sheets
--------------
As of December 31,
<CAPTION>
ASSETS 1997 1996
------ --------- ---------
<S> <C> <C>
Income-Producing Properties - Notes #1, #3, and #4
- ---------------------------
Buildings and land improvements 4,322,756 4,296,640
Equipment 106,198 99,777
--------- ---------
4,428,954 4,396,417
Less: Accumulated depreciation 1,674,213 1,517,554
--------- ---------
2,754,741 2,878,863
Land 1,235,900 1,235,900
--------- ---------
Total Income-Producing Properties 3,990,641 4,114,763
--------- ---------
Other
- -----
Cash and cash equivalents - Note #1 256,608 383,182
Rent and other receivables - Note #1 5,584 1,820
Prepaid expenses 4,872 3,327
Deferred charges - Note #1 18,781 6,000
-------- --------
Total Other 285,845 394,329
-------- --------
Total Assets 4,276,486 4,509,092
========= =========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Liabilities
- -----------
Accounts payable and accrued expenses 107,458 74,711
Tenants' security deposits 60,195 56,495
Prepaid rent 4,567 6,959
--------- ---------
Total Liabilities 172,220 138,165
--------- ---------
Partners' Equity
- ----------------
General partners 50,529 47,279
Limited partners 4,053,737 4,323,648
--------- ---------
Total Partners' Equity 4,104,266 4,370,927
--------- ---------
Total Liabilities and
Partners' Equity 4,276,486 4,509,092
========= =========
<FN>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-3
</FN>
</TABLE>
<TABLE>
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
Statements of Income
--------------------
For the years ended December 31,
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues
- --------
Rental income 761,678 861,700 967,946
Restaurant income 619,891 586,906 578,340
Gain on sales of
investment properties - 368,751 -
--------- --------- ---------
Total Revenues 1,381,569 1,817,357 1,546,286
--------- --------- ---------
Expenses
- --------
Property management fees 45,619 50,566 56,848
Administrative expenses 116,975 121,556 126,773
Property operating expenses 260,481 263,451 257,468
Amortization and depreciation 161,355 190,443 280,647
Restaurant operating expenses 515,348 465,610 446,595
Other 1,919 1,889 1,983
--------- --------- ---------
Total Expenses 1,101,697 1,093,515 1,170,314
--------- --------- ---------
Income Before
Other Income 279,872 723,842 375,972
--------- --------- ---------
Other Income (Expense)
- ----------------------
Interest 23,499 36,281 24,087
Miscellaneous 20,098 25,845 18,820
Gain (Loss) on sale of
fixed assets 1,500 - (1,825)
--------- --------- ---------
Total Other Income 45,097 62,126 41,082
--------- --------- ---------
Net Income 324,969 785,968 417,054
========= ========= =========
Net income per limited
partner interest-Note #7 23.44 56.69 30.08
========= ========= =========
Allocation of Income
Limited partners 321,719 778,108 412,883
General partners 3,250 7,860 4,171
--------- --------- ---------
324,969 785,968 417,054
========= ========= =========
<FN>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-4
</FN>
</TABLE>
<TABLE>
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
Statements of Partners' Equity
------------------------------
For the years ended December 31,
<CAPTION>
<S> <C> <C> <C> <C> <C>
Limited General 1997 1996 1995
Partners Partners Total Total Total
---------- ------- ---------- ---------- ----------
Capital contributions:
Contributed cash
13,725,000 1,000 13,726,000 13,726,000 13,726,000
Less: Syndication
costs 1,232,840 - 1,232,840 1,232,840 1,232,840
---------- ------ ---------- ---------- ----------
Net contri-
butions 12,492,160 1,000 12,493,160 12,493,160 12,493,160
---------- ------ ---------- ---------- ----------
Accumulated income:
Balance, begin-
ning 5,344,885 46,279 5,391,164 4,605,196 4,188,142
Current net income
321,719 3,250 324,969 785,968 417,054
---------- ------ ---------- ---------- ----------
Balance,
ending 5,666,604 49,529 5,716,133 5,391,164 4,605,196
---------- ------ ---------- ---------- ----------
Accumulated distributions:
Balance, beginning
(13,513,397) - (13,513,397)(11,243,775)(10,601,665)
Current distributions
(591,630) - (591,630) (2,269,622) (642,110)
---------- ------ ---------- ---------- ----------
Balance,
ending (14,105,027) - (14,105,027)(13,513,397)(11,243,775)
---------- ------ ---------- ---------- ----------
Total Partners'
Equity 4,053,737 50,529 4,104,266 4,370,927 5,854,581
========== ====== ========== ========== ==========
<FN>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-5
</FN>
</TABLE>
<TABLE>
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
Statements of Cash Flows
------------------------
For the years ended December 31,
<CAPTION>
Cash Increase or (Decrease)
--------------------------------
1997 1996 1995
------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------
Net income 324,969 785,968 417,054
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization and depreciation 161,355 190,443 280,647
(Gain) loss on sale of investment
properties and fixed assets (1,500) (368,751) 1,825
Reduction to reserve for
doubtful accounts (396) (363) (6,843)
Decrease (increase) in
----------------------
Rent and other receivables, net (3,368) 12,809 19,813
Prepaid expenses (1,545) 1,839 (2,079)
Deferred charges (14,281) - -
Increase (decrease) in
----------------------
Accounts payable and accrued
expenses 32,747 (105,749) 17,334
Tenants' security deposits 3,700 (13,376) 5,563
Prepaid rent (2,392) 589 4,708
------- --------- ---------
Net Cash Provided by
Operating Activities 499,289 503,409 738,022
------- --------- ---------
Cash Flows From Investing Activities
- ------------------------------------
Additions to income-
producing properties (35,733) (37,626) (9,675)
Proceeds from sale of income-
producing properties 1,500 1,684,888 -
Proceeds from sale of fixed assets - - 425
---------- --------- ---------
Net Cash (Used) by
Investing Activities (34,233) 1,647,262 (9,250)
---------- --------- ---------
Cash Flows From Financing Activities
- ------------------------------------
Distributions to partners (591,630) (2,269,622) (642,110)
--------- --------- ---------
Net (Decrease) Increase in Cash
(126,574) (118,951) 86,662
Cash and cash equivalents -
Beginning of Year 383,182 502,133 415,471
-------- --------- ---------
Cash and cash equivalents -
End of Year 256,608 383,182 502,133
======== ========= =========
<FN>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-6
</FN>
</TABLE>
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
Notes to Financial Statements
-----------------------------
For the years ended December 31, 1997, 1996 and 1995
Note #1 Nature of Business and Summary of Significant Accounting
- ------- --------------------------------------------------------
Policies
--------
A. Nature of Business
------------------
RAL Yield + Equities III Limited Partnership (the Partnership) is
a Wisconsin limited partnership formed on March 5, 1984 under the
provisions of the Wisconsin Uniform Limited Partnership Act, to
acquire for cash, operate, lease, develop and eventually sell
income-producing real estate properties. Currently, the
Partnership owns seven properties. It operates three mobile home
parks and one restaurant. It also leases three commercial
properties to restaurant franchisees. These properties are located
primarily in southeastern Wisconsin. The Partnership will terminate
December 31, 2014, except in the event of prior sale of the
Partnership's properties, action by a majority interest of the
Limited Partners or certain other events.
Effective December 12, 1986, the Partnership completed its offering
of limited partnership interests. A total of 13,725 interests were
sold for an aggregate contribution of $13,725,000. In connection
with the sale of the limited partnership interests, the Partnership
incurred approximately $1,233,000 of costs to raise capital,
including sales commissions of $1,098,000 and other offering costs
of $135,000, which were charged against partners' equity.
B. Method of Accounting
--------------------
Assets, liabilities, revenue and expenses are recognized on the
accrual basis method of accounting.
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 these estimates.
C. Income-Producing Properties
---------------------------
Income-producing properties are carried at the lower of cost less
accumulated depreciation or fair value. Cost includes acquisition
fees paid to RAL Asset Management Group. Management periodically
evaluates a property's fair value based upon occupancy rate and
comparison to similar properties in the same geographic area.
Adjustments to those values are made by management when deemed
appropriate. F-7
<TABLE>
For financial statement purposes, depreciation is determined using
the straight-line method. For income tax reporting purposes,
building and land improvements are depreciated using the
straight-line method while equipment is depreciated using
accelerated methods. Depreciable lives for financial statement and
income tax purposes are set forth below:
<CAPTION>
Depreciable Lives
-----------------------------
Financial Income Tax
Reporting Reporting
--------- -------------
<S> <C> <C>
Land improvements 30 years 15-31.5 years
Buildings 30 years 15-39.0 years
Equipment 5-7 years 3-7 years
</TABLE>
D. Allowance for Doubtful Accounts
-------------------------------
Receivables are reviewed periodically by management to determine
the adequacy of the allowance for doubtful accounts. Based upon
management's evaluation, an allowance for doubtful accounts of
$60,031 and $60,427 was necessary as of December 31, 1997 and 1996,
respectively.
E. Deferred Charges
----------------
Costs incurred with respect to organizing the Partnership were
deferred and have been fully amortized. Prepaid management fees
incurred in the initial public offering were amortized to expense
on the straight-line method over the term (ten years) of the
management agreement and have been fully amortized. Commission
fees incurred to lease the properties have been deferred and
amortized over the respective lease term.
<TABLE>
Deferred charges consist of the following at December 31,
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Professional fees - Note #6 14,281 -
Lease commissions 15,000 15,000
------ ------
29,281 15,000
Less: Accumulated amortization 10,500 9,000
------ ------
18,781 6,000
====== ======
</TABLE>
F-8
F. Leases
------
The Partnership has determined that all leases relating to the
income-producing properties are properly classified as operating
leases; therefore, rental income is reported when earned and the
cost of each of the properties, excluding cost of land, is
depreciated over its estimated useful life.
G. Income Taxes
------------
No income taxes will be payable or provided for by the Partnership
since net income or loss is includable in the respective tax
returns of the partners. The Partnership files its income tax
return on the accrual basis of accounting. The following
reconciles the income reported in the accompanying Statements of
Income to that reported in the tax returns:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Net income per Statements
of Income 324,969 785,968 417,054
Book bad debt reserve in excess of
tax bad debt reserve 363 - 157
Tax gain on sale of investment
properties in excess of book - 194,675 -
Other book/tax differences (principally
depreciation and amortization) (49,294) (79,282) (95,606)
------- ------- -------
Net income for tax purposes 276,038 901,361 321,605
======= ======= =======
</TABLE>
H. Cash and Cash Equivalents
-------------------------
For purposes of the Statements of Cash Flows, the Partnership
considers all short-term investments in interest-bearing bank
accounts and certificates of deposits with a maturity of three
months or less, to be equivalent to cash. Several demand deposit
accounts are at one financial institution. Such funds on deposit
exceeded the federally insured limit by $97,323 and $273,082 for
the years ended December 31, 1997 and 1996, respectively.
I. Fair Value of Financial Instruments
-----------------------------------
Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of
which are held for trading purposes) approximate the carrying
values of such amounts.
F-9
Note #2 General Provision of the Limited Partnership Agreement
- ------- ------------------------------------------------------
Pursuant to the terms of the partnership agreement, net income or
losses of the Partnership from operations and losses on sale of
income-producing properties are allocated 99% to the limited
partners and 1% to the general partners.
In general, profits from the sale of income-producing properties
will be allocated first to limited partners to the extent necessary
to eliminate any deficit in their capital accounts, and then to the
general partners to the extent necessary to eliminate any deficit
in their capital accounts, and finally, to each limited partner
until they have received distributions equal to their original
capital contribution less previous distributions. The remainder of
the profits will be allocated 75% to the limited partners and 25%
to the general partners provided that general partners will be
allocated at least 1% of the total profits from the sale of income-
producing properties. The general partners' share of sale or
refinancing proceeds is subject to the limited partners earning
specified noncompounded rates of return on their original
investment. The priority rates of return for limited partners are
dependent upon when they acquired their interest in the
Partnership.
The partnership agreement requires that distributions to limited
partners of Cash Available for Distribution (as defined in the
Prospectus dated August 27, 1985) shall be made in such amounts and
at such times as the general partners may determine, but not less
frequently than semi-annually.
Note #3 Income-Producing Properties
- ------- ---------------------------
<TABLE>
A summary of income-producing properties as of December 31
follows:
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Mobile home parks (three in 1997
and 1996) 2,889,402 2,856,865
Restaurant properties
(four in 1997 and 1996) 2,775,452 2,775,452
--------- ---------
5,664,854 5,632,317
Less: Accumulated depreciation 1,674,213 1,517,554
--------- ---------
3,990,641 4,114,763
========= =========
</TABLE>
F-10
During 1996, the Partnership recorded a gain on the sale of one
mobile home park and the warehouse building in the amount of
$368,751.
Note #4 Leases of Income-Producing Properties
- ------- -------------------------------------
At December 31, 1996, the Partnership owned three restaurant
properties, all of which are currently leased. The fourth
restaurant property is operated by the Partnership. The restaurant
properties are generally leased under fourteen to twenty year lease
terms with two five-year options to renew the leases at the end of
the original term. Rent, which is payable monthly, is equal to the
greater of a percentage of gross sales or a minimum base rental
stated in the lease.
All of the restaurant leases described above are "triple net" to
the Partnership. Thus, the lessees are responsible for all
occupancy costs such as maintenance, insurance, taxes and
utilities. The Partnership, however, is contingently liable for
real estate taxes that are owed by its tenants. All rents received
to date are based on the minimum rentals as none of the properties
have exceeded the gross sales levels as defined in the leases.
The approximate minimum annual rental commitments under long-term
lease agreements in effect at December 31, 1997 are as follows:
1998 174,000
1999 177,000
2000 166,000
2001 154,000
2002 157,000
After 2002 37,000
---------
865,000
=========
The Partnership also operates three mobile home parks which have a
total of 284 rental spaces. As of December 31, 1997 and 1996, a
total of 268 and 253 spaces, respectively, were leased. The mobile
home parks receive income on a monthly basis from tenant leases
which normally have lease terms of one year or less. Rental
revenue for the parks was approximately $596,000, $585,000 and
$597,000 in 1997, 1996 and 1995, respectively.
F-11
Note #5 Notes Receivable
- ------- ----------------
Des Moines, Iowa Property
- -------------------------
In 1989, the Partnership received a $53,439 promissory note from
the Dannig Corporation, an unrelated entity, for past due rent
of a restaurant property. The terms of the note required monthly
interest payments at 10%, with the unpaid principal and interest
due July 31, 1992. An officer of the Dannig Corporation
personally guaranteed the note with his 38 shares in Pizza Slices,
Inc., the officers of which are general partners in the
Partnership. Subsequently, the Dannig Corporation filed
bankruptcy. Independent of the bankruptcy, the officer sold his
shares to the officers of Pizza Slices, Inc., who had tendered an
offer to purchase all outstanding corporate shares. Upon
notification by the Partnership of its rights in those shares
purchased, subsequent payments for the shares were sent directly to
the Partnership by the officers. Payments received in 1997 and
1996 on this note of $4,840 and $4,807, respectively, were for
interest only. As of December 31, 1997, the outstanding principal
of $44,439 and interest of $15,592 had been fully reserved for, due
to the uncertainty of collection.
Note #6 Potential Sale of Partnership Properties
- ------- ----------------------------------------
The Partnership has received an offer from a prospective purchaser
for all or substantially all of the Partnership's properties.
Accordingly, the Partnership has entered into an asset purchase
agreement with the potential purchaser subject to Securities and
Exchange Commission review of the necessary proxy statement/consent
document, approval of the limited partners and the receipt of an
acceptable fairness opinion.
The professional fees included as an asset in deferred charges on
the balance sheet (Note #1E) were included as a result of this
potential sale.
<TABLE>
F-12
Note #7 Earnings per Share Disclosures
- ------- ------------------------------
The following illustrates the calculation of the basic earnings per
share calculation for the years ended December 31,
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Income available to limited
partners (numerator) 321,719 778,108 412,883
======= ======= =======
Limited partners interests
(denominator) 13,725 13,725 13,725
======= ======= =======
Per-share amount 23.44 56.69 30.08
======= ======= ======
F-13
</TABLE>
<TABLE>
RAL-YIELD EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
Schedule of Real Estate and Accumulated Depreciation
December 31, 1997
<CAPTION>
Col. A Col. B Col. C Col. D
- -------------------- ------- ----------------------- ------------
Initial cost to Costs
Partnership Capitalized
----------------------- Subsequent to
Acquisition
Encum- Buildings & -------------
Description brances Land Improvements
Improvements(b)
- -------------------- ------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Rocky Rococo Rest.
Milwaukee, WI (a) $300,000 $382,632 $179,923
Pizza Hut Restaurant
Minnetonka, MN (a) 196,400 485,358 2,740
Forest Junction MHP
Town of Brillon, WI (a) 99,500 390,179 133,787
Vacant Restaurant
Des Moines, IA (a) 225,000 332,080 (557,080)
Vacant Restaurant
West Des Moines, IA (a) 245,000 399,600 (644,600)
Net Lease Warehouse
Fond du Lac, WI (a) 73,600 1,589,475 (1,663,075)
Pizza Hut Restaurant
Normal, IL (a) 260,000 362,900 0
Hardee's Restaurant
Chaska, MN (a) 200,000 372,860 (572,860)
Wendy's Restaurant
Waukesha, WI (a) 180,000 425,499 0
Coach Lite MHP
Green Lake, WI (a) 30,000 208,629 (238,629)
Village Terrace MHP
Johnson Creek, WI (a) 100,000 1,010,133 (1,110,133)
Shamrock MHP
Albany, MN (a) 20,000 187,500 23,854
Cloverleaf MHP
St. Cloud, MN (a) 180,000 1,686,339 168,243
Hardee's Restaurant
Eagan, MN (a) 221,620 386,000 (607,620)
Hardee's Restaurant
Coon Rapids, MN (a) 209,010 304,418 (513,428)
---------- ---------- ----------
Total 2,540,130 8,523,602 (5,398,878)
========= ========= =========
</TABLE>
F-14
<TABLE>
RAL-YIELD EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
Schedule of Real Estate and Accumulated Depreciation
FILE: RESCH3 December 31, 1997
<CAPTION>
Col. A Col. E
- ---------------------- --------------------------------------------
Gross Amount at which Carried
at Close of Period
--------------------------------------------
Buildings and
Description Land Improvements(b) Total
- ---------------------- --------- --------------- -----------
<S> <C> <C> <C>
Rocky Rococo Restaurant
Milwaukee, WI $300,000 $562,555 $862,555
Pizza Hut Restaurant
Minnetonka, MN 196,400 488,098 684,498
Forest Junction MHP
Town of Brillon, WI 99,500 523,966 623,466
Vacant Restaurant
Des Moines, IA 0 0 0
Vacant Restaurant
West Des Moines, IA 0 0 0
Net Lease Warehouse
Fond du Lac, WI 0 0 0
Pizza Hut Restaurant
Normal, IL 260,000 362,900 622,900
Hardee's Restaurant
Chaska, MN 0 0 0
Wendy's Restaurant
Waukesha, WI 180,000 425,499 605,499
Coach Lite MHP
Green Lake, WI 0 0 0
Village Terrace MHP
Johnson Creek, WI 0 0 0
Shamrock MHP
Albany, MN 20,000 211,354 231,354
Cloverleaf MHP
St. Cloud, MN 180,000 1,854,582 2,034,582
Hardee's Restaurant
Eagan, MN 0 0 0
Hardee's Restaurant
Coon Rapids, MN 0 0 0
--------- ---------- ---------
Total 1,235,900 4,428,954 5,664,854
========= ========== ==========
</TABLE>
F-15
<TABLE>
RAL-YIELD EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
Schedule of Real Estate and Accumulated Depreciation
FILE: RESCH3 December 31, 1997
<CAPTION>
Col. A Col. F Col. G Col. H Col. I
- ----------------- ------------ ---------- ----------- --------
Depreciable
Accumulated Date Life per
Depreciation Date of Acquired by Income
Description (Book basis) Construction Partnership Statement
- ----------------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Rocky Rococo Restaurant
Milwaukee, WI $217,433 1985 11/01/85 (d)
Pizza Hut Restaurant
Minnetonka, MN 199,307 1985 10/28/85 (d)
Forest Junction MHP
Town of Brillon, WI 209,739 VAR 12/10/85 (d)
Vacant Restaurant
Des Moines, IA 0 1985 02/04/86 (d)
Vacant Restaurant
West Des Moines, IA 0 1985 03/05/86 (d)
Net Lease Warehouse
Fond du Lac, WI 0 1978 05/12/86 (d)
Pizza Hut Restaurant
Normal, IL 139,114 1985 07/31/86 (d)
Hardee's Restaurant
Chaska, MN 0 1984 08/01/86 (d)
Wendy's Restaurant
Waukesha, WI 160,742 1986 09/05/86 (d)
Coach Lite MHP
Green Lake, WI 0 VAR 10/24/86 (d)
Village Terrace MHP
Johnson Creek, WI 0 VAR 11/12/86 (d)
Shamrock MHP
Albany, MN 74,027 VAR 11/20/86 (d)
Cloverleaf MHP
St. Cloud, MN 673,851 VAR 11/20/86 (d)
Hardee's Restaurant
Eagan, MN 0 1984 02/12/87 (d)
Hardee's Restaurant
Coon Rapids, MN 0 1983 02/12/87 (d)
---------
Total 1,674,213
=========
</TABLE>
F-16
RAL-YIELD EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
NOTES TO SCHEDULE III
(a) All properties are unencumbered at December 31, 1997.
(b) Includes personal property.
(c) The aggregate cost of land, buildings and improvements for
Federal Income Tax purposes is the same as for book purposes.
<TABLE>
(d) Depreciation expense is computed based upon the following
estimated useful lives:
<CAPTION>
Years
------------------------
Financial Income
Statement Tax
Purposed Purposes
--------- --------
<S> <C> <C>
Buildings and Improvements 30 15-40
Personal Property 5-15 5-12
</TABLE>
<TABLE>
(e) Reconciliation of Real Estate
------------------------------------------
<S> <C>
Balance at January 1, 1995 7,518,860
Acquisitions 0
Improvements 9,675
Cost of investment property sold (3,349)
----------
Balance at December 31, 1995 7,525,186
Acquisitions 0
Improvements 37,626
Cost of investment property sold (1,930,495)
----------
Balance at December 31, 1996 5,632,317
Acquisitions 0
Improvements 35,733
Cost of investment property sold (3,196)
----------
Balance at December 31, 1997 $5,664,854
==========
</TABLE>
F-17
<TABLE>
RAL-YIELD EQUITIES III LIMITED PARTNERSHIP
(A Wisconsin Limited Partnership)
Reconciliation of Accumulated Depreciation
<CAPTION>
<S> <C>
Balance at January 1, 1995 $1,724,368
Depreciation expense for the period 219,701
Sale of investment property (1,100)
----------
Balance at December 31, 1995 1,942,969
Depreciation expense for the period 188,943
Sale of investment property (614,358)
----------
Balance at December 31, 1996 1,517,554
Depreciation expense for the period 159,855
Sale of investment property (3,196)
----------
Balance at December 31, 1997 $1,674,213
==========
</TABLE>
F-18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
BY: Robert A. Long
-------------------------------
Robert A. Long, General Partner
DATE: March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
- ------------------------------------------------------------------
Robert A. Long General Partner of RAL 03/27/98
- -------------------- Yield + Equities III -------
Robert A. Long Limited Partnership
John A. Hanson General Partner of RAL 03/27/98
- ------------------ Yield + Equities III -------
John A. Hanson Limited Partnership
Douglas C. Heston President, First Financial 03/27/98
- -------------------- Realty Management -------
Douglas C. Heston
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 256,608
<SECURITIES> 0
<RECEIVABLES> 5,584
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 285,845
<PP&E> 5,664,854
<DEPRECIATION> 1,674,213
<TOTAL-ASSETS> 4,276,486
<CURRENT-LIABILITIES> 172,220
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,104,266
<TOTAL-LIABILITY-AND-EQUITY> 4,276,486
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<TOTAL-REVENUES> 1,426,666
<CGS> 0
<TOTAL-COSTS> 1,101,697
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 324,969
<INCOME-TAX> 0
<INCOME-CONTINUING> 324,969
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 324,969
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
