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 June 30, 2000 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: (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 June 30, 2000 and
December 31, 1999 Page 3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 2000 and 1999 Page 4
Consolidated Statements of Cash Flows for the Three months Ended
June 30, 2000 and 1999 Page 5
Item 2. Results of Operations and Management's Discussion
and Analysis of Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 10
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
June 30, December 31,
2000 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 depreciation (3,768,944) (3,624,944)
3,748,116 3,892,116
Cash including cash investments 20,476 44,453
Restricted Cash 52,000 52,000
Escrow deposits 62,406 144,366
Replacement Reserve 45,183 42,928
Liquidity reserve 94,712 90,503
Other assets 29,946 11,450
TOTAL ASSETS $4,052,839 $4,277,816
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes payable $2,908,505 $2,941,638
Note Payable - Affiliates 133,355 122,513
Real estate taxes payable 75,000 117,361
Security deposits 56,649 51,441
Accounts payable & accrued expenses 50,299 52,780
3,223,808 3,285,733
Partners Capital (Deficit)
Limited Partners (272,705) (185,534)
Special Limited Partner 1,240,231 1,315,231
General Partner (138,495) (137,614)
Total Partners Capital 829,031 992,083
(Deficit)
Total Liability And $4,052,839 $4,277,816
Partners Equity
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Operations
(Unaudited)
Three Six Months Ended
Months Ended June 30,
June 30,
REVENUES 2000 1999 2000 1999
Rental income 376,342 $371,729 $742,620 $724,859
Other property 30,645 27,945 56,318 49,443
Total revenues 406,987 399,674 798,938 774,302
EXPENSES
Salaries & wages 64,700 59,217 133,527 109,486
Maintenance & repairs 169,476 73,386 217,447 109,071
Utilities 24,106 26,948 60,262 59,794
Real estate taxes 37,500 28,350 75,000 56,700
General administrative 19,860 16,504 34,338 32,975
Contract services 21,553 21,831 38,156 39,404
Insurance 7,828 7,208 15,150 14,678
Interest 59,600 60,689 119,314 121,691
Depreciation and 76,926 69,074 153,852 148,000
amortization
Property management 20,345 19,939 39,944 38,669
fees
Total expenses 501,894 383,146 886,990 730,468
NET INCOME (LOSS) ($94,907) $16,528 ($88,052) $43,834
NET INCOME PER SHARE $(39.84) $6.94 $(36.97) $18.40
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND III
Condensed Consolidated Statement of Cash Flows
Unaudited
Three Months Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($88,052) $43,834
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 144,000 174,000
Net Effect of changes in operating accounts
Escrow deposits 81,960 69,144
Capital replacement reserve (2,255) (3,066)
Liquidity Reserve (4,209) 0
Accrued real estate taxes (42,361) (61,113)
Security deposits 5,208 6,461
Accounts payable (2,481) (15,678)
Other assets (18,496) (14,609)
Net cash provided by operating activities 73,314 198,973
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (33,133) (30,756)
Note payable - affiliates 10,842 (124,539)
Distribution to special limited partner (75,000) (25,000)
Net cash used by investing activities (97,291) (180,295)
NET INCREASE (DECREASE) IN CASH AND CASH (23,977) 18,678
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 44,453 36,249
CASH AND CASH EQUIVALENTS, END OF PERIOD $20,476 $54,927
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
At June 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.
SECOND QUARTER 2000 COMPARED TO SECOND QUARTER 1999
Revenue from property operations increased $7,313, or 2.34%,
for the second quarter of 2000, as compared to the second
quarter of 1999. Decreased occupancy to 96.4% in the
second quarter of 2000 from 97.0 % in the second quarter
of 1999 was offset by higher rental rates accounting for the
increase in rental income of $4,613 or 1.56%. Other
property income increased $2,700 or 15.63% mainly due to
increased fee collections. The following table illustrates
the components:
Increase Per Cent
(Decrease) Change
Rental income 4,613 1.56%
Other property 2,700 15.63%
Net Increase 7,313 2.34%
(Decrease)
Property operating expenses: increased by $118,748 or 34.39%
for the second quarter of 2000 compared to the second
quarter of 1999 due primarily to increased maintenance &
repairs $96,090 or 171.7%, this increase was due to major
carpentry repairs to the property. Real estate taxes
increased $9,150 or 29.05% due to higher assessments of the
property. Salaries & wages increased $5,483 or 7.71 due to
increased staffing levels on the property. General and
administrative expenses increased $3,356 or 27.17% mainly
due to increased mailing and postage costs The following
table illustrates the components:
Increase Percent
(Decrease) Change
Salaries & wages 5,483 7.71%
Maintenance & repairs 96,090 171.70%
Utilities (2,842) 7.63%
Real estate taxes 9,150 29.05%
General administrative 3,356 27.17%
Contract services (278) 3.89%
Insurance 620 9.27%
Interest (1,089) 2.59%
Depreciation and 7,852 12.09%
amortization
Property management fees 406 2.49%
Net Increase 118,748 34.39%
(Decrease)
FIRST SIX MONTHS 2000 COMPARED TO FIRST SIX MONTHS 1999
Revenue from property operations increased $24,636, or
3.18%, for the first six months of 2000, as compared to the
first six months of 1999. Increased rents accounted for the
increase in rental income of $17,761 or 2.45%. Other
property income increased $6,875 or 13.9% mainly due to
increased fee collections. The following table illustrates
the components:
Increase Percent
Change
Rental income 17,761 2.45%
Other property 6,875 13.90%
24,636 3.18%
Property operating expenses: increased by $156,522or 21.43%
for the first six months of 2000 compared to the first six
months of 1999 due primarily to increased maintenance &
repairs of $108,376 or 99.36%, this increase was due to
major carpentry repairs to the property. Real estate taxes
increased $18,300 or 32.28% mainly due to higher assessments
on the property. Salaries & wages increased $24,041 or
21.96% due to increased staffing levels on the property.
The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Salaries & wages 24,041 21.96%
Maintenance & repairs 108,376 99.36%
Utilities 468 0.78%
Real estate taxes 18,300 32.28%
General administrative 1,363 4.13%
Contract services (1,248) 3.17%
Insurance 472 3.22%
Interest (2,377) 1.95%
Depreciation and 5,852 3.95%
amortization
Property management fees 1,275 3.30%
Net Increase (Decrease) 156,522 21.43%
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 31,1983. 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 its
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, 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
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 June 30, 2000, the Partnership had $20,476 in
cash and cash equivalents as compared to $44,453 as of
December 31, 1999. The net decrease in cash of $23,977 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 June 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 $1,240,231 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
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 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 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 June 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: August 3, 2000
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 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] JUN-30-2000
[CASH] 20,476
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 7,517,060
[DEPRECIATION] 3,768,944
[TOTAL-ASSETS] 4,052,839
[CURRENT-LIABILITIES] 0
[BONDS] 2,908,505
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 829,031
[TOTAL-LIABILITY-AND-EQUITY] 4,052,839
[SALES] 0
[TOTAL-REVENUES] 406,987
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 442,294
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 59,600
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (94,907)
[EPS-BASIC] (39.84)
[EPS-DILUTED] 0
</TABLE>
