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, 2000 Commission file number 33-00152
AMRECORP REALTY FUND III
(Exact name of registrant as specified in it's 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, 2000 and
December 31, 1999. Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2000 and 1999. Page 4
Consolidated Statements of Cash Flows for the Nine months
Ended September 30, 2000 and 1999. Page 5
Item 2. Results of Operations and Management's Discussion
and Analysis ofFinancial Condition. Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent to
December 31, 1999 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Balance Sheets
Septembe 30,2000 December 30,1999
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,000,000 $1,000,000
Buildings and improvements $6,517,060 $6,517,060
$7,517,060 $7,517,060
Less: Accumulated ($3,840,944) ($3,624,944)
depreciation
$3,676,116 $3,892,116
Cash including cash investments $38,249 $44,453
Restricted Cash 59,000 52,000
Escrow deposits 99,611 144,366
Replacement Reserve 37,796 42,928
Liquidity reserve 94,712 90,503
Other assets 25,283 11,450
TOTAL ASSETS $4,030,767 $4,277,816
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes payable $2,891,427 $2,941,638
Note Payable - Affiliates 133,355 122,513
Real estate taxes payable 111,250 117,361
Security deposits 53,689 51,441
Accounts payable & accrued 52,325 52,780
expenses
$3,242,046 $3,285,733
Partners Capital (Deficit)
Limited Partners (372,012) (185,534)
Special Limited Partner 1,300,231 1,315,231
General Partner (139,498) (137,614)
Total Partners Capital $788,721 $992,083
(Deficit)
Total Liability and $4,030,767 $4,277,816
Partners Equity
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2000 1999 2000 1999
Rental income $368,318 $381,666 $1,110,938 $1,106,525
Other property 29,420 30,008 85,738 79,451
Total revenues $397,738 $411,674 $1,196,676 $1,185,976
EXPENSES
Salaries & wages 78,007 60,292 211,534 169,778
Maintenance & repairs 146,149 47,856 363,596 156,927
Utilities 34,571 31,287 94,833 91,081
Real estate taxes 36,250 31,400 111,250 88,100
General administrative 18,965 14,456 53,303 47,431
Contract services 17,178 22,713 55,334 62,117
Insurance 10,969 7,322 26,119 22,000
Interest 59,145 60,371 178,459 182,062
Depreciation and 76,926 88,779 230,778 236,779
amortization
Property management fees 19,888 20,604 59,832 59,273
Total expenses $498,048 $385,080 $1,385,038 $1,115,548
NET INCOME (LOSS) ($100,310) $26,594 ($188,362) $70,428
NET INCOME PER SHARE $(42.11) $(11.16) $(79.08) $(29.57)
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($188,362) $70,428
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 216,000 261,000
Net Effect of changes in operating accounts
Restricted Cash (7,000) 0
Escrow deposits 44,755 34,335
Capital replacement reserve 5,132 (23,420)
Liquidity Reserve ($4,209) 0
Accrued real estate taxes ($6,111) (29,713)
Security deposits 2,248 7,839
Accounts payable (455) (3,788)
Other assets (13,833) (7,287)
Net cash provided by operating activities 48,165 309,394
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (50,211) (46,608)
Note payable - affiliates 10,842 (122,83)
Distribution to special limited partner (15,000) (105,000)
Net cash used by investing activities (54,369) (274,446)
NET INCREASE (DECREASE) IN CASH AND CASH (6,204) 34,948
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 44,453 36,249
CASH AND CASH EQUIVALENTS, END OF PERIOD $38,249 $71,197
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 there to 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
At September 30, 2000 the Partnership owned Las Brisas Apartments,
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.
THIRD QUARTER 2000 COMPARED TO THIRD QUARTER 1999
Revenue from property operations decreased $13,936, or 4.46%, for the
third quarter of 2000, as compared to the third quarter of 1999. Decreased
occupancy to 94.0% in the third quarter of 2000 from 97.3 % in the third
quarter of 1999 accounted for the decrease in rental income of $13,348 or
4.52%. Other property income decreased $588 or 3.40% mainly due to
decreased fee collections. The following table illustrates the components:
Increase Per Cent
(Decrease) (Change)
Rental income $(13,348) 4.52%
Other property $(588) 3.40%
Net Increase (Decrease) $(13,936) 4.46%
Property operating expenses: increased by $112,968 or 32.71% for the third
quarter of 2000 compared to the third quarter of 1999 due primarily to
increased maintenance & repairs. Maintenance and repairs increased $98,293
or 175.63%, due to major carpentry repairs to the property. Contract
services decreased $5,535 or 77.48% due to reduce lawn care expenses.
Insurance increased $3,647 or 54.51% with the annual policy renewal. Real
estate taxes increased $4,850 or 15.40% due to higher assessments of the
property. Salaries & wages increased $17,715 or 24.92 due to increased
staffing levels on the property. General and administrative expenses
increased $4,509 or 36.50% mainly due to increased mailing and postage
costs. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Salaries & wages 17,715 24.92%
Maintenance & repairs 98,293 175.63%
Utilities 3,284 8.81%
Real estate taxes 4,850 15.40%
General administrative 4,509 36.50%
Contract services (5,535) 77.48%
Insurance 3,647 54.51%
Interest (1,226) 2.91%
Depreciation and amortization (11,853) 18.26%
Property management fees (716) 4.39%
Net Increase (Decreased) 112,968 32.71%
FIRST NINE MONTHS 2000 COMPARED TO FIRST NINE MONTHS 1999
Revenue from property operations increased $10,700, or 0.9%, for the
first nine months of 2000, as compared to the first nine months of 1999.
Increased rents accounted for the increase in rental income of $4,413
or 0.40%. Other property income increased $6,287 or 7.91% mainly due to
increased fee collections. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income $4,413 0.40%
Other property $6,287 7.91%
$10,700 0.90%
Property operating expenses: increased by $269,490 or 24.16% for the first
nine months of 2000 compared to the first nine months of 1999 due primarily
to increased maintenance & repairs of $206,669 or 131.70%, this increase
was due to major carpentry repairs to the property. Contract services
decreased $6,783 or 10.92% due to reduce lawn care expenses. Insurance
increased $4,119 or 18.72% with the annual policy renewal. Real estate
taxes increased $23,150 or 26.28% mainly due to higher assessments on the
property. Salaries & wages increased $41,756 or 24.59% due to increased
staffing levels on the property. The following table illustrates the
components:
Increase Per Cent
(Decrease) Change
Salaries & wages 41,756 24.59%
Maintenance & repairs 206,669 131.70%
Utilities 3,752 4.12%
Real estate taxes 23,150 26.28%
General administrative 5,872 12.38%
Contract services (6,783) 10.92%
Insurance 4,119 18.72%
Interest (3,603) 1.98%
Depreciation and amortization (6,001) 2.53%
Property management fees 559 0.94%
Net Increase (Decrease) 269,490 24.16%
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 September 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 31,1 983. 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 its major creditors. In June,
1989 an affiliate of the individual General Partner provided $401,910.77 to
bring the Aetna notes current. At t he 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, CEO.
On November 12, 1993 the Partnership refinanced the property's
secured debt with an 8.15%, ten year, mortgage loan from Lexington Mortgage
Company. The $3,250,000 mortgage loan provides for monthly payments of
$415,000. 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 holly 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 September 30, 2000, the Partnership had $38,249 in cash and cash
equivalents as compared to $44,453 as of December 31, 1999. The net
decrease in cash of $6,204 was due to cash spent on maintenance and repairs.
The property is encumbered by a non-recourse mortgage with a principal
balance of $2,908,505 as of September 30,2000. 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 three years
ending December 31, 2002, are $67,640, $73,363, and $79,571, 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 $1,300,231 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 Secial 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 1999
and 1998, the Special Limited Partner received distributions from the
Partnership totaling $265,000 and $65,000, respectively.
PART II
Other Information
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 ofSecurity 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, 2000.
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.
AMRECORP REALTY FUND III
a Texas limited partnership
By: /s/Robert J. Werra
Robert J. Werra,General Partner
Date:November 1, 2000
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30,2000 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
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-END] SEP-30-2000
[CASH] 38,249
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 7,517,060
[DEPRECIATION] 3,840,944
[TOTAL-ASSETS] 4,030,767
[CURRENT-LIABILITIES] 0
[BONDS] 2,891,427
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 788,721
[TOTAL-LIABILITY-AND-EQUITY] 4,030,767
[SALES] 0
[TOTAL-REVENUES] 397,738
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 438,903
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 59,145
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (100,310)
[EPS-BASIC] (42.11)
[EPS-DILUTED] 0
</TABLE>
