8
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 September 30, 1996
Commission filenumber 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:
(972)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
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Consolidated Balance Sheet as of September 30, 1996 and
December 31, 1995 Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1996 and 1995
Page 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 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.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Balance Sheets
September 30, 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 (2,671,835) (2,479,835)
Real Estate, net 4,412,170 4,604,170
Cash including cash investments 75,234 35,124
Escrow deposits 147,028 135,501
Capital replacement reserve 0 144,515
Liquidity reserve 78,833 78,833
Other assets 21,685 12,220
TOTAL ASSETS $4,734,950 $5,010,363
LIABILITIES AND PARTNERS'
EQUITY:
LIABILITIES
Mortgage and notes payable $3,126,859 $3,163,388
Note payable - affiliates 121,456 126,510
Real estate taxes payable 70,200 89,159
Security deposits 34,836 34,193
Accounts payable & accrued 57,411 47,783
expenses
Total liabilities 3,410,762 3,461,033
Partners Capital (Deficit)
Limited Partners 1,465,081 1,688,451
General Partner (140,893) (139,121)
Total Partners Capital (Deficit) 1,324,188 1,549,330
Total Liability And Partners $4,734,950 $5,010,363
Equity
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1995 1996 1995
Rental income $356,134 $342,330 $1,057,513 $973,226
Other income 9,878 $16,917 $48,555 $46,920
Total revenues 366,012 359,247 1,106,068 1,020,146
Salaries & wages 61,395 65,026 194,098 205,845
Maintenance & repairs 61,776 62,214 188,977 185,823
Utilities 32,290 35,080 103,374 113,029
Real estate taxes 23,400 23,835 70,200 71,670
General administrative 15,866 12,944 46,482 34,105
Contract services 23,419 13,113 68,005 28,499
Insurance 8,471 6,791 24,435 20,467
Interest 64,186 64,768 339,612 194,991
Depreciation &
amortization 64,000 66,926 192,000 200,778
Property management fees 18,679 17,844 56,113 50,888
Total expenses 373,482 368,541 1,283,296 1,106,095
NET INCOME (LOSS) ($7,470) ($9,294) ($177,228) ($85,949)
NET INCOME PER SHARE $(3.14) $(3.90) $(74.40) $(36.08)
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Cash Flows
Nine Months Ended
September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($177,228) ($85,949)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization $192,000 $186,000
Net Effect of changes in operating
accounts:
Escrow deposits ($11,527) ($137,529)
Capital replacement reserve $144,515 $84,606
Other assets ($9,465) ($6,698)
Accrued real estate taxes ($18,959) $71,670
Security deposits $643 $4,024
Accounts payable & accrued expenses $9,628 $1,787
Net cash used by operating activities $129,607 $117,911
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable ($36,529) ($33,680)
Increase in note payable - affiliates $0 $16,074
Decrease in note payable - affiliates ($5,054) $0
Distribution to special limited partner ($47,914) ($124,998)
Net cash provided by investing activities($89,497) ($142,604)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $40,110 ($24,693)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 35,124 72,051
CASH AND CASH EQUIVALENTS, END OF
PERIOD 75,234 47,358
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.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
Results of Operations
THIRD QUARTER 1996 COMPARED TO THIRD QUARTER 1995
Revenue from property operations increased $6,765 or 1.88%,
for the third quarter of 1996, as compared to the 1995 third
quarter. The following table illustrates the components:
Increase
(Decrease)
Rental income 13,804
Other income (7,039)
Net Increase (Decrease) 6,765
Property operating expenses increased $4,941 or 1.34%, for
the third quarter of 1996, as compared to the same period in
1995, primarily due to the increase in contract services,
which is substantially the result of absorbing the cost of
cable television provided to residents. The following table
illustrates the components by category:
Increase
(Decrease)
Salaries & wages (3,631)
Maintenance & repairs (438)
Utilities (2,790)
Real estate taxes (435)
General administrative 2,922
Contract services 10,306
Insurance 1,680
Interest (582)
Depreciation and amortization (2,926)
Property management fees 835
Net Increase (Decrease) 4,941
NINE MONTHS ENDED SEPTEMBER 1996 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 1995
Revenue from property operations increased $85,922 or 8.42%,
for the first Nine months of 1996, as compared to the first
Nine months of 1995. The following tables illustrates the
components:
Increase
(Decrease)
Rental income 84,287
Other income 1,635
Net Increase (Decrease) 85,922
Property operating expenses increased $177,201 or 16.02%,
for the first Nine months of 1996, as compared to the same
period in 1995. Increases in contract services, were the
result of absorbing the cost of cable television provided to
residents. Interest expense increased, due to a payoff of
interest on a partnership note. The follows table
illustrates the components by category:
Increase
(Decrease)
Salaries & wages (11,747)
Maintenance & repairs 3,154
Utilities (9,655)
Real estate taxes (1,470)
General administrative 12,377
Contract services 39,506
Insurance 3,968
Interest 144,621
Depreciation and amortization (8,778)
Property management fees 5,225
Net Increase (Decrease) 177,201
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, 1996 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.
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 September 30,1996.
1. None
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.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: November 11, 1996
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30, 1996 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<NAME> AMRECORP REALTY FUND III
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