UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended April 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File Number 0-18146
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State of organization)
13-3293754
(IRS Employer Identification No.)
2 World Trade Center, New York, NY
(Address of principal executive offices)
10048
(Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
Former name, former address and former fiscal year, if changed since
last report: not applicable
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 X No <PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 30, October 31,
1995 1994
ASSETS
<S> <C> <C>
Cash and cash equivalents, at cost
which approximates market $ 5,910,580 $ 5,683,026
Real estate, at cost:
Land 21,043,309 21,043,309
Buildings 140,518,663 140,320,824
161,561,972 161,364,133
Accumulated depreciation 32,513,376 30,244,746
129,048,596 131,119,387
Investments in joint ventures 54,968,759 54,767,448
Deferred expenses, net 1,114,478 952,951
Other assets 2,517,010 2,827,188
$193,559,423 $195,350,000
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 820,701 $ 788,033
Security deposits 225,863 238,537
1,046,564 1,026,570
Partners' capital (deficiency):
General partners (4,764,311) (4,583,254)
Limited partners ($500 per Unit,
534,020 Units issued) 197,277,170 198,906,684
Total partners' capital 192,512,859 194,323,430
$193,559,423 $195,350,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF INCOME
Three and six months ended April 30, 1995 and 1994
<CAPTION>
Three months ended Six months ended
April 30, April 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental $4,302,875 $4,181,886 $8,421,991 $7,963,071
Equity in earnings of joint ventures 854,581 944,599 1,672,081 1,823,175
Interest 59,583 36,867 111,956 73,811
Other 40,215 43,737 122,974 120,679
5,257,254 5,207,089 10,329,002 9,980,736
Expenses:
Property operating 1,397,425 1,288,890 2,739,327 2,455,644
Depreciation 1,136,994 1,109,366 2,268,630 2,170,224
Amortization 67,094 51,312 133,349 93,242
General and administrative 259,539 260,022 508,440 520,951
2,861,052 2,709,590 5,649,746 5,240,061
Net income $2,396,202 $2,497,499 $4,679,256 $4,740,675
Net income per Unit of limited
partnership interest $4.04 $4.21 $7.89 $7.99
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Six months ended April 30, 1995
<CAPTION>
Limited General
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at November 1, 1994 $198,906,684 $(4,583,254) $194,323,430
Net income 4,211,330 467,926 4,679,256
Cash distributions (5,840,844) (648,983) (6,489,827)
Partners' capital (deficiency)
at April 30, 1995 $197,277,170 $(4,764,311) $192,512,859
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended April 30, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,679,256 $ 4,740,675
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,268,630 2,170,224
Amortization 133,349 93,242
Equity in earnings of joint ventures (1,672,081) (1,823,175)
(Increase) decrease in operating assets:
Deferred expenses (294,876) (194,084)
Other assets 310,178 569,199
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities 32,668 (55,800)
Security deposits (12,674) 16,896
Net cash provided by operating activities 5,444,450 5,517,177
Cash flows from investing activities:
Additions to real estate (197,839) (1,224,266)
Investments in joint ventures (1,271,677) (644,920)
Distributions from joint ventures 2,742,447 2,650,081
Net cash provided by investing
activities 1,272,931 780,895
Cash flows from financing activities:
Cash distributions (6,489,827) (5,933,556)
Increase in cash and cash equivalents 227,554 364,516
Cash and cash equivalents at beginning
of period 5,683,026 5,238,000
Cash and cash equivalents at end
of period $ 5,910,580 $ 5,602,516
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Income Partnership III, L.P. (the "Partnership") is
a limited partnership organized under the laws of the State of Delaware
in 1985. The Partnership's fiscal year ends on October 31.
The financial statements include the accounts of the Partnership, Part
Six Associates and Laurel-Vincent Place Associates Limited Partnership
on a consolidated basis. The Partnership's interests in Taxter Corporate
Park, Tech Park Reston and the partnership which owns an interest in
Chesterbrook Corporate Center are accounted for on the equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes.
Net income per Unit of limited partnership amounts are calculated by
dividing net income allocated to Limited Partners, in accordance with the
Partnership Agreement, by the weighted average number of Units
outstanding.
In the opinion of management, the accompanying financial statements,
which have not been audited, include all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the results for
the interim period.
2. Related Party Transactions
An affiliate of the Managing General Partner provided property management
services for eight properties and five buildings at the Chesterbrook
Corporate Center. The Partnership incurred management fees of
approximately $243,000 and $247,000 for the six months ended April 30,
1995 and 1994, respectively.
Another affiliate of the Managing General Partner performs administrative
functions, processes investor transactions and prepares tax information
for the Partnership. For each of the six-month periods ended April 30,
1995 and 1994, the Partnership incurred approximately $379,000 for these
services.
As of April 30, 1995, the affiliates were owed a total of approximately
$99,000 for these services.
3. Subsequent Event
On May 30, 1995, the Partnership paid a cash distribution of
approximately $5.94 per Unit to the partners. The total cash
distribution amounted to $3,523,049, with $3,170,744 distributed to the
Limited Partners and $352,305 to the General Partners.<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Partnership raised $267,010,000 in a public offering of 534,020 units
which was terminated in 1987. The Partnership has no plans to raise
additional capital.
The Partnership has purchased eight properties and has made three
investments in partnerships on an all-cash basis. The Partnership's
acquisition program has been completed. No additional investments are
planned.
Many real estate markets are stabilizing, primarily due to the continued
absence of significant construction activity. However, the recovery of
the office market has been, and may continue to be slow, because tenant
demand is weak, as a result of continued downsizing by many major
corporations. Increased consumer spending has helped the retail property
market although increased interest rates have slowed spending.
Real estate markets are generally divided into sub-markets by geographic
location and property type. Not all sub-markets have been affected
equally by the above factors.
The Partnership's liquidity depends upon cash flow from operations of its
properties and expenditures for tenant improvements and leasing
commissions in connection with the leasing of vacant space. During the
six months ended April 30, 1995, all of the Partnership's properties
generated positive cash flow from operations, and it is anticipated that
they will continue to do so.
During the six months ended April 30, 1995, Partnership cash flow from
operations and distributions received from its joint ventures exceeded
distributions to investors and capital expenditures. The Partnership
expects that such cash flows for the remainder of 1995 will be sufficient
to fund capital expenditures and cash distributions. The Partnership
increased its cash distribution rate from 4.00% to 4.75% per Unit,
beginning with the first quarter cash distribution paid February 28,
1995.
The Vanguard Group vacated its space in two of the buildings at the
Chesterbrook property in fiscal 1994, and will vacate its remaining space
upon the expiration of its leases in November 1995. In September 1994,
the partnership which owns the property signed leases with two new
tenants to fill a significant portion of the space vacated to date. The
Partnership's share of capital expenditures which resulted from these new
leases during the six months ended April 30, 1995 was approximately
$1,081,000.
During the six months ended April 30, 1995, the Partnership also incurred
approximately $493,000 of tenant improvements and leasing commissions on
its owned properties.
On May 30, 1995, the Partnership paid the second quarter distribution of
approximately $5.94 per Unit to the Limited Partners. The total cash
distribution amounted to $3,523,049, with $3,170,744 distributed to the
Limited Partners and $352,305 to the General Partners.
Operations
Fluctuations in the Partnership's operating results for the three and
six-month periods ended April 30, 1995 compared to 1994 are primarily
attributable to the following:
The increases in rental income are primarily due to higher occupancies
at the Glenhardie, Holcomb Woods and Hall Road properties and increased
pass-through income at Laurel Lakes Centre, partially offset by decreased
pass-through income at Westland Crossing.
The decreases in equity in earnings of joint ventures are primarily due
to higher depreciation and amortization costs which result from increased
capital expenditures at the Chesterbrook property.
The increases in property operating expenses are primarily due to
increased repair costs at Laurel Lakes, most of which were passed through
to tenants, and write-offs of certain uncollectible tenant receivables.
A summary of the markets in which the Partnership's office properties are
located, and the leasing status of each property, is as follows:
The office market in suburban Atlanta, the location of Business Park at
Holcomb Woods, has a current vacancy rate of approximately 9%. During
the second quarter of 1995, occupancy at the property decreased from 88%
to 81%. A tenant, which occupies approximately 9% of the property's
space, vacated upon expiration of its lease in May 1995. Other leases
on approximately 17% and 20% of the property's space are scheduled to
expire during the remainder of 1995 and in 1996, respectively.
Chesterbrook Corporate Center is located in Valley Forge, Pennsylvania,
a market in which the vacancy rate is approximately 14%. During the
second quarter of 1995, occupancy at the property increased to 93%.
Vanguard has been vacating its space to move into its own newly-
constructed space in this market. This, and other new construction in
the Valley Forge area, may cause the office market to weaken. Leases
totaling 14% of the property's space are scheduled to expire in 1996.
Glenhardie Corporate Center III and IV are also located in Valley Forge,
Pennsylvania. During the second quarter of 1995, occupancy at the
property increased to 84%. Leases totaling 16% of the property's space
are scheduled to expire during the remainder of 1995 and in 1996.
The office market in Westchester County, New York, the location of Taxter
Corporate Park, has a current vacancy level of approximately 22%. It is
unlikely that this vacant space will be absorbed in the market for
several years. During the second quarter of 1995, average occupancy at
the property decreased slightly to 98%. Leases covering 23% of the
property's space expire in 1996.
The Reston market in Virginia, the location of Tech Park Reston, has a
vacancy rate of 16% due to the contraction of the high-tech and defense
firms which are the major tenants in the market. The leases with Sprint
Communications, which occupies 100% of the space, expire in 2003. Sprint
has the option to terminate the leases on two of the three buildings
beginning in 1997 and 1998.
A summary of the markets in which the Partnership's retail properties are
located, and the leasing status of each property, is as follows:
Laurel Lakes Centre is located in a suburb of Baltimore and Washington,
D.C. Retail centers in this market have generally experienced lower net
rental rates and, currently, a vacancy rate of approximately 16%.
However, the property's design, location and tenant mix has enabled it
to retain relatively stable rental rates and maintain an occupancy rate
of 95% during the six months ended April 30, 1995. No significant leases
are scheduled to expire in the near future.
The Partnership owns four shopping centers in Michigan. Sterling
Heights, the location of Hall Road Crossing, is currently a strong and
expanding market with a vacancy rate of 5%. During the second quarter
of 1995, occupancy at the property remained at 95%. No significant
leases are scheduled to expire before 1997.
Saginaw, Michigan, the location of Fashion Corners, has a vacancy rate
of 12%. During the second quarter of 1995, occupancy remained at 96%.
Leases totaling 21% of the property's space are scheduled to expire in
1996.
Construction of a "power" retail center has been proposed for an area
near Fashion Corners. If built, this center will compete with Fashion
Corners for larger tenants.
Lansing, Michigan, the location of Delta Center, has a vacancy rate of
approximately 9%. During the six months ended April 30, 1995, occupancy
at the property remained at 98%. Leases for smaller tenants totaling 19%
of the property's space are scheduled to expire during the remainder of
1995 and in 1996.
Westland Crossing is situated outside downtown Detroit and is in an
overbuilt market with a current vacancy rate of approximately 17%.
During the six months ended April 30, 1995, occupancy at the property
remained at 90%. Leases for approximately 38% of the property's space
are scheduled to expire in 1996.
A significant amount of new retail space is under construction in this
market. When complete, this space will compete with Westland Crossing
for tenants.
Inflation
Inflation has been consistently low during the period presented in the
financial statements and, as a result, has not had a significant effect
on the operations of the Partnership or its properties.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - not applicable
b) Reports on Form 8-K -
Report dated April 3, 1995 of the Valuation per Unit of
Limited Partnership Interest at December 31, 1994.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
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.
Dean Witter Realty Income
Partnership III, L.P.
By: Dean Witter Realty Income
Properties III Inc.
Managing General Partner
Date: June 14, 1995 By: /s/E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: June 14, 1995 By: /s/Lawrence Volpe
Lawrence Volpe
Controller
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<CIK> 0000784161
<NAME> DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<CASH> 5,910,580
<SECURITIES> 0
<RECEIVABLES> 1,933,942
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 193,559,423<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 192,512,859<F2>
<TOTAL-LIABILITY-AND-EQUITY> 193,559,423<F3>
<SALES> 0
<TOTAL-REVENUES> 10,329,002<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,649,746
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,679,256
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,679,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,679,256
<EPS-PRIMARY> 7.89<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $129,048,596, investment in joint ventures of $54,968,759,
net deferred expenses of $1,114,478 and other assets of $583,068.
<F2>Other Stockholders' Equity represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of
$820,701, and security deposits of $225,863.
<F4>Total revenue includes rent of $8,421,991, equity in earnings of joint
ventures of $1,672,081, interest of $111,956 and other revenues of
$122,974.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
