<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996 Commission file number 33-00152
AMRECORP REALTY FUND III
(Exact name of registrant as specified in its charter)
TEXAS 75-2045888
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
6210 Campbell Road Suite 140
Dallas, Texas 75248
(Address of principal executive offices)
Registrant's telephone number, including area code: (214)380-8000.
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 requirements for the past 90 days.
Yes: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Consolidated Balance Sheet as of March 31, 1996 and
December 31, 1995 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1996 and 1995
Page 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 Page 5
Notes to Consolidated Financial Statement Page 6
Item 2. Results of Operations and Management's Discussion
and Analysis of Financial Condition Page 7
Liquidity and Capital Resources Page 8
Other Information Page 9
Signatures Page 10
The statements, insofar as they relate to the period
subsequent to December 31, 1995, are Unaudited.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,000,000 $1,000,000
Buildings and improvements 6,084,005 6,084,005
7,084,005 7,084,005
Less: Accumulated depreciation (2,543,835) (2,479,835)
4,540,170 4,604,170
Cash including cash investments 63,948 35,124
Escrow deposits 73,364 135,501
Capital replacement reserve 101,838 144,515
Liquidity reserve 78,833 78,833
Other assets 5,430 12,220
TOTAL ASSETS $4,863,583 $5,010,363
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $3,151,458 $3,163,388
Note Payable - Affiliates 109,877 126,510
Real estate taxes payable 23,138 89,159
Security deposits 36,632 34,193
Accounts payable & accrued 52,386 47,783
expenses
3,373,491 3,461,033
Partners Capital (Deficit)
Limited Partners 1,629,326 1,688,451
General Partner (139,234) (139,121)
Total Partners Capital (Deficit) 1,490,092 1,549,330
Total Liability And Partners $4,863,583 $5,010,363
Equity
See notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months
Ended
March 31,
REVENUES 1996 1995
Rental income $350,895 $310,568
Other property 14,327 13,970
Total revenues 365,222 324,538
EXPENSES
Salaries & wages 62,876 63,426
Maintenance & repairs 65,255 50,372
Utilities 35,705 41,441
Real estate taxes 23,400 24,000
General administrative 15,598 4,786
Contract services 19,561 7,199
Insurance 6,791 7,145
Interest 64,293 65,224
Depreciation and amortization 64,000 66,926
Property management fees 19,067 16,219
Total expenses 376,546 346,738
NET INCOME (LOSS) ($11,324) ($22,200)
NET INCOME PER SHARE $ (4.75) $ (9.32)
See Notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Cash Flows
Three Months Ended
March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($11,324) ($22,200)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 64,000 62,000
Net Effect of changes in operating
accounts
Escrow deposits 62,137 (41,791)
Capital replacement reserve 42,677 84,606
Accrued real estate taxes (66,021) (71,338)
Security deposits 2,439 (1,409)
Accounts payable 4,603 (13,116)
Other assets 6,790 7,145
Net cash provided by operating activites 105,301 3,897
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (11,930) (10,999)
Note payable - affiliates (16,633) (1,857)
Distribution to special limited partner (47,914) 0
Net cash used by investing activities (76,477) (12,856)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 28,824 (8,959)
CASH AND CASH EQUIVALENTS, BEGINNING OF PEIOD 35,124 72,051
CASH AND CASH EQUIVALENTS, END OF PERIOD $63,948 $63,092
See Notes to Condensed Consolidated Financial Statements
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
the Partnership believes that the disclosures are adequate
to make the information presented not misleading. It is
suggested that these condensed financial statements be read
in conjunction with the financial statements and notes
thereto included in the Partnership's latest annual report
on Form 10-K.
<PAGE>
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
Results of Operations
At March 31, 1996 the Partnership owned Las Brisas
Apartment, a 376 unit apartment community located at 2010
South Clark Street, Abilene, Taylor County, Texas 79606. The
Partnership purchased a fee simple interest in Las Brisas
Apartments on July 30, 1986. The property contains
approximately 312,532 net rentable square feet, one
clubhouse, and five laundry facilities located on
approximately 19.11 acres of land.
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
Revenue from property operations increased $40,684, or
13.01%, for the first quarter of 1996, as compared to the
first quarter of 1995. Increased occupancy from 80.4% in
the first quarter of 1995 to 90.2% in the first quarter of
1996 accounted for this increase in rental income or $40,327
or 13.65%.
The following table illustrates the components
INCREASE
(DECREASE)
-------
Rental income 40,327
Other property 357
-------
40,684
=======
Property operating expenses: increased $35,169 or 8.63%from the first
quarter of 1995 to first quarter of 1996.
Maintenance and repair increased by $14,883 or 26.59%
due primarily to "make ready" expenditures necessitated by
the increased occupancy.
Utilities decreased by $5,736 or 15.39% due primarily
to decreased water charges following repairs to underground
plumbing system.
General administrative increased $10,812 or 87.52% due
primarily to increased accounting and advertising expenses.
The increase in contract services of $12,362 or 173.04%
is substantially the result of absorbing the cost of cable
television provided to residents.
The increase in property management fees of $2,848 or
17.47% is related to the increase in rental income.
<PAGE>
The following table illustrates the components by category:
Increase
(Decrease)
---------
Salaries & wages (550)
Maintenance & repairs 14,883
Utilities (5,736)
Real estate taxes (600)
General administrative 10,812
Contract services 12,362
Insurance (354)
Interest (931)
Depreciation and amortization (2,926)
Property management fees 2,848
------
Net Increase (Decrease) 29,808
======
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On July 31, 1986 the Partnership purchased the Las
Brisas Apartments. The purchase provided for the sellers to
receive cash at closing and notes totaling $660,000. On June
30, 1987 the principal balance due totaled $210,000. In
order to obtain the necessary proceeds to finally retire
these notes the General Partners offered 254 Units of the
Partnership to two investors at the price of $200,660. No
commissions were taken nor did the General Partner receive
any fees in connection with these interests. The Partnership
then obtained short term financing from Resource Savings
Association totaling $260,000, bearing interest at the rate
of 2% over prime and payable quarterly together with
principal payments of $15,000 each. Security for the loan
was provided by a $100,000 certificate of deposit and the
personal guaranties of the Partnership's General Partners.
The Resource Savings Association loan matured December
31,1983. In September, 1991 Mr. Werra paid $40,750 in
satisfaction of his personal guaranty of the Partnership
loan.
The Partnership defaulted in its debt obligations in
August, 1988. The Partnership was forced to seek protection
under Chapter 11 of the United States Bankruptcy Code in
December, 1988 when negotiations with Aetna Life Insurance
Company, ("Aetna") the holder of the two underlying first
mortgage notes and Las Brisas Apartments, Ltd. And Abilene
Associates, Ltd., the holders of respective wrap mortgage
notes ("Wrap Note Holders") failed to provide any relief.
The Partnership emerged from bankruptcy on May 15,
1990, having negotiated a modification of its debt with it's
major creditors. In June, 1989 an affiliate of the
individual General Partner provided $401,910.77 to bring the
Aetna notes current. At the same time the Wrap Note Holders
agreed to reduced to reduced the payments due on their
respective wrap notes in order to mirror the payments made
on the underlying Aetna notes. The term of each wrap note
will be extended from July 31, 1995 to July 1, 2002 and July
1, 2007 respectively. The $401,910.77 note is collateralized
by junior mortgage on the property. In addition, the
affiliate has the option to purchase the wrap notes for
$85,000 at any time prior to the respective maturity dates
of the wrap notes.
Commencing on July 1,1992, payments on the notes
reverted to the original amounts of $19,442 and $15,454.
During the prior two years the Partnership deferred $214,460
in debit service payments The modification gave the
Partnership room to deal with the economic difficulties
experienced in the market at the time.
In February, 1991, Amrecorp Realty Inc., resigned as
the Managing General Partner of the Partnership. As was
communicated to all limited partners, this step was taken in
order to minimize any effect that Amrecorp's financial
difficulties might have on the partnership. Management of
the Partnership's assets is performed by Univesco, Inc., a
Texas corporation, Robert J. Werra, President.
On November 12, 1993 the Partnership refinanced the
property's secured debt with a 8.15%, ten year, mortgage
loan from Lexington Mortgage Company. The loan proceeds a
Real Estate Mortgage Investment Contract sponsored by
Donaldson, Lufkin & Jenrette. The $3,250,000 mortgage loan
provides for monthly payments of $41,5000 based on an
amortized schedule of 300 months with a final payment of the
entire remaining principal balance in December, 2003. The
proceeds of this new loan were used to pay off the
$2,500,000 and $2,300,000 mortgage notes which previously
held the first mortgage position. The old first mortgagee
provided a discount of approximately ten percent of the
outstanding principal balances of two old notes. The balance
of funds needed to retire the old notes (approximately
$100,000) were provided by Robert J. Werra. In addition
Robert J. Werra exercised his option in the property's wrap
mortgage notes. The new lender prohibited subordinate debt.
To meet this requirement the subordinate debt held by Mr.
Werra was converted to a class of equity with the same terms
and conditions as it possessed as debt. The wrap mortgage
lender would not agree to the change in status so Mr. Werra
paid $85,000 to complete his purchase of the wrap notes and
now holds an equity position in the partnership as a special
limited partner.
The partnership agreement was amended by vote of the
limited partners to include the appointment of a new
corporate general partner, LBAL, Inc., A Texas corporation
wholly owned by Robert J. Werra.
While it is the General Partners primary intention to
operate and manage the existing real estate investment, the
General Partner also continually evaluates this investment
in light of current economic conditions and trends to
determine if this assets should be considered for disposal.
At this time, there is no plan to dispose of Las Brisas
Apartments.
As of March 31, 1996, the Partnership had $63,948 in
cash and cash equivalents as compared to $35,124 as of
December 31, 1995. The net increase in cash of $28,824 is
principally due to positive cash flow from operations,
decreased in the escrow balance and capital replacement
reserve, offset by increased in accrued real estate taxes,
repayment of mortgage notes and amounts due to affiliates,
as well as distributions on special limited partner equity
The property is encumbered by a non-recourse mortgage
with a principal balance of $3,151,458 as of March 31, 1996.
The mortgage payable bears interest at 8.15% and is payable
in monthly installments of principal and interest until
December 2003 when a lump-sum payment of approximately
$2,642,000 is due. The required principal reductions for
the five years ending December 31, 2000, are $48,877,
$53,012, $57,498, $62,363 and $67,640, respectively.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments ( excluding balloon mortgage
payments), improvements and capital expenditures will be
funded by net cash from operations. The primary source of
capital to fund future Partnership acquisitions and balloon
mortgage payments will be proceeds from the sale financing
or refinancing of the Property.
The $2,023,233 in Special Limited Partner equity is the
result of previous funding for operating deficits and other
partner loans made to the Partnership by a related entity.
These loans were reclassified to equity during 1993. The
Special Limited Partner has first right to all net operating
cash flows and net proceeds from disposals of assets to the
extent of the Special Limited Partners distribution
preference. During 1995 and 1994, the Special Limited
Partner received distributions from the Partnership totaling
$170,000 and $75,000, respectively.
<PAGE>
PART II
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(A) The following documents are filed herewith or
incorporated herein by reference as indicated as Exhibits:
Exhibit Designation Document Description
3 Certificate of Limited Partnership,
incorporated by reference
to Registration Statement
No. 33-00152 effective November 26, 1985.
4 Certificate of Limited Partnership,
incorporated by reference
to Registration Statement
No. 33-00152 effective November 26, 1985
9 Not Applicable.
10 None.
11 Not Applicable.
12 Not Applicable.
13 Not Applicable.
18 Not Applicable.
19 Not Applicable.
22 Not Applicable.
23 Not Applicable.
24 Not Applicable.
25 Power of Attorney, incorporated by
reference to Registration Statement
No. 33-00152 effective November 26, 1985
28 None.
(B) Reports on Form 8-K for quarter ended March 31, 1996.
1. None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
AMERCORP REALTY FUND III
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: April 9, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1996 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000776813
<NAME> AMRECORP REALTY FUND III
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 63,948
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,084,005
<DEPRECIATION> 2,543,835
<TOTAL-ASSETS> 4,863,583
<CURRENT-LIABILITIES> 52,386
<BONDS> 3,151,458
0
0
<COMMON> 0
<OTHER-SE> 1,490,092
<TOTAL-LIABILITY-AND-EQUITY> 4,863,583
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<TOTAL-REVENUES> 350,895
<CGS> 0
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<OTHER-EXPENSES> 312,253
<LOSS-PROVISION> 0
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<NET-INCOME> (11,324)
<EPS-PRIMARY> (4.75)
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