11
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, 1997 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
incorporation or organization) (IRS Employer
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
<PAGE>
TABLE OF CONTENTS
Item 1. Financial Statements
- -------
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of March 31, 1997 and
December 31, 1996 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1997 and 1996 Page 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 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, 1996 are Unaudited.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------------------
AMRECORP REALTY FUND III
Condensed Consolidated Balance Sheets
March 31, December 31,
1997 1996
----- ------
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,000,000 $1,000,000
Buildings and improvements 6,198,619 6,198,619
---------- ---------
7,198,619 7,198,619
Less: Accumulated depreciation (2,812,375) (2,746,375)
---------- ---------
4,386,244 4,452,244
Cash including cash investments 116,618 40,820
Restricted Cash 30,000 30,000
Escrow deposits 46,864 114,755
Capital replacement reserve 63,301 92,957
Liquidity reserve 82,588 82,588
Other assets 4,542 13,015
TOTAL ASSETS ---------- ----------
$4,730,157 $4,826,379
========== ==========
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $3,101,572 $3,114,512
Note Payable - Affiliates 132,886 122,785
Real estate taxes payable 25,800 98,416
Security deposits 36,302 35,060
Accounts payable & accrued expenses 47,520 45,429
---------- ----------
3,344,080 3,416,202
---------- ----------
Partners Capital (Deficit)
Limited Partners 1,524,881 1,548,740
General Partner (138,804) (138,563)
---------- ----------
Total Partners Capital (Deficit) 1,386,077 1,410,177
---------- ----------
Total Liability And Partners Equity $4,730,157 $4,826,379
========== ==========
See notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
------------------
REVENUES 1997 1996
---- ----
Rental income $332,912 $350,895
Other property 15,255 14,327
-------- --------
Total revenues 348,167 365,222
EXPENSES
Salaries & wages 56,734 62,876
Maintenance & repairs 56,401 65,255
Utilities 39,576 35,705
Real estate taxes 25,800 23,400
General administrative 14,595 15,598
Contract services 19,068 19,561
Insurance 8,475 6,791
Interest 63,284 64,293
Depreciation and amortization 70,926 64,000
Property management fees 17,408 19,067
-------- --------
Total expenses 372,267 376,546
-------- --------
NET INCOME (LOSS) ($24,100) ($11,324)
======== ========
NET INCOME PER SHARE $ (10.12) $(4.75)
========= ========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Three Months Ended
March 31,
------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($24,100) ($11,324)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 66,000 64,000
Net Effect of changes in operating accounts
Escrow deposits 67,891 62,137
Capital replacement reserve 29,656 42,677
Accrued real estate taxes (72,616) (66,021)
Security deposits 1,242 2,439
Accounts payable 2,091 4,603
Other assets 8,473 6,790
------- -------
Net cash provided by operating activities 78,637 105,301
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (12,940) (11,930)
Note payable - affiliates 10,101 (16,633)
Distribution to special limited partner 0 (47,914)
------- -------
Net cash used by investing activities (2,839) (76,477)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 75,798 28,824
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 40,820 35,124
------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $116,618 $63,948
======== =======
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, 1997 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 1997 COMPARED TO FIRST QUARTER 1996
- -------------------------------------------------
Revenue from property operations decreased $17,055, or
5.45%, for the first quarter of 1997, as compared to the
first quarter of 1996. Decreased occupancy from 80.4% in
the first quarter of 1995 to 90.2% in the first quarter of
1996 accounted for this decrease in rental income of $17,983
or 6.08%.. The following table illustrates the components
Increase
(Decrease)
---------
Rental income (17,983)
Other property 928
-------
Net Increase (Decrease) (17,055)
=======
Property operating expenses: decreased by $4,279 or 1.24%
from the first quarter of 1996 to the first quarter of 1997 due
primarily to decreased salary and wages. Maintenance and
repair decreased by $8,854 or 15.82% due primarily to a
reduction in "make ready" expenditures due to decreased
occupancy. The decrease in property management fees of
$1,659 or 10.17% is related to the decrease in rental
income. The following table illustrates the components:
Salaries & wages (6,142)
Maintenance & repairs (8,854)
Utilities 3,871
Real estate taxes 2,400
General administrative (1,003)
Contract services (493)
Insurance 1,684
Interest (1,009)
Depreciation and amortization 6,926
Property management fees (1,659)
-------
Net Increase (Decrease) (4,279)
=======
<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 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 $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.
<PAGE>
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, 1997, the Partnership had $116,618 in
cash and cash equivalents as compared to $40,820 as of
December 31, 1996. The net increase in cash of $75,798 is
principally due to increases in the escrow balance and
capital replacement reserve, offset by increased accrued
real estate taxes and repayment of mortgage notes.
The property is encumbered by a non-recourse mortgage with a
principal balance of $3,101,572 as of March 31, 1997. 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 $53,012,
$57,498, $62,363, $67,640 and $73,363 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 $1,524,881 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 1996 and 1995, the Special Limited
Partner received distributions from the Partnership totaling
$195,002 and $170,000, 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 31,1997.
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.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: May 17, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 116,618
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,198,619
<DEPRECIATION> 2,812,375
<TOTAL-ASSETS> 4,730,157
<CURRENT-LIABILITIES> 47,520
<BONDS> 3,101,572
0
0
<COMMON> 0
<OTHER-SE> 1,386,077
<TOTAL-LIABILITY-AND-EQUITY> 4,730,157
<SALES> 0
<TOTAL-REVENUES> 332,912
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 308,983
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,284
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,100)
<EPS-PRIMARY> (10.12)
<EPS-DILUTED> 0
</TABLE>
