<PAGE>
UNITED
STATES SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended October
31, 1999
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
13-3293754
(State of organization)
(IRS Employer
Identification No.)
2 World Trade Center, New York, NY
10048
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area
code: (212) 392-1054
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Name of each
exchange on
which registered
None
None
Securities registered pursuant to Section 12(g)
of the Act:
Units of Limited Partnership
Interest
(Title of Class)
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
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and
will not be contained, to the best of
registrant's knowledge, in definitive proxy or
information statements incorporated by
reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [X]
State the aggregate market value of the voting
stock held by
non-affiliates of the registrant. N/A
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I.
ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Income
Partnership III, L.P. (the "Partnership"), is a
limited partnership formed in August 1985 under
the Uniform Limited Partnership Act of the State
of Delaware for the purpose of investing
primarily in income-producing office,
industrial and retail properties.
The Managing General Partner of the
Partnership is Dean Witter Realty Income
Properties III Inc. (the "Managing General
Partner"), a Delaware corporation which is
wholly owned by Dean Witter Realty Inc.
("Realty"). The Associate General Partner is
Dean Witter Realty Income Associates III, L.P.
(the "Associate General Partner"), a Delaware
limited partnership, the general partner of
which is the Managing General Partner. The
Managing General Partner manages and controls
all aspects of the business of the
Partnership. The terms of transactions between
the Partnership and its affiliates are set
forth below in Note 6 to the consolidated
financial statements included in Item 8 and in
Item 13.
The Partnership issued 534,020 units of limited
partnership interest (the "Units") with gross
proceeds from the offering of $267,010,000.
The offering has been terminated and no
additional Units will be sold.
The proceeds from the offering were used to
make equity investments in six office
properties and five retail properties which
were acquired without mortgage debt. All
but two properties were sold by October 31,
1999; one of these was sold in November
1999. The Partnership's properties as of
October 31, 1999 are described in Item 2
below.
As of November 17, 1999, the Partnership's
interest in the Taxter property is the
Partnership's sole property interest. The
Partnership which owns the Taxter Corporate
Park property (the "Taxter
Partnership") has identified
unaffiliated parties who are interested in
buying the property, and will attempt to sell
the property after it has completed its current
efforts to lease approximately 20% of the
property's space. However, there can be no
assurance that the property will be sold.
The Partnership considers its business to
include one industry segment, investment in
real property. Financial information
regarding the Partnership is in the
Partnership's financial statements in Item 8
below.
<PAGE>
The Partnership's real property investments are
subject to competition from similar types
of properties in the
vicinities in which they are located. Further
information regarding competition and market
conditions where the
Partnership's properties are located is set
forth in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of
Operations."
The Partnership has no employees.
All of the Partnership's business is conducted
in the United States.
ITEM 2. PROPERTIES
The Partnership's principal offices are located
at Two World Trade Center, New York, New York
10048. The Partnership has no other offices.
As of October 31, 1999, the Partnership owned
directly or through partnership interests the
following two property interests. One of the
properties was sold in November 1999. None of
the two properties is encumbered by
indebtedness. Generally, the leases pertaining
to the properties provide for pass-throughs to
the tenants of their pro-rata share of certain
operating expenses. In the opinion of the
Managing General Partner, all of the
properties are adequately covered by
insurance.
Year Acquisition Net
Rentable
Type of
Completed/ Cost
Area Ownership of land
Property and Location Acquired ($000)
(000 sq. ft.) and Improvements
Westland Crossing1 1986/1986 $13,225
137 Fee interest
Westland, MI
Shopping Center
Taxter Corporate Park, 1987-1988/ $23,063
345 44.6% General
Westchester, NY 1986-1988
Partnership
2 Office Buildings
interest2
1 The property was sold on
November 16,
1999.
2 The remaining GP interests
are held by
Dean Witter Realty Income Partnership II, L.P.
(14.8%)
and Dean Witter Realty Income Partnership IV,
L.P.
(40.6%), affiliates of the Partnership.
The total cost of the property was $51.8
million.
Each property was built with on-site parking
facilities.
<PAGE>
In the fourth quarter of fiscal 1999, the
Partnership sold the Laurel Lakes Shopping
Centre property, which is located in Laurel,
Massachusetts. In November 1999, the
Partnership sold the Westland Crossing Shopping
Center, which is located in Westland, Michigan.
An affiliate of the Partnership was the property
manager for Taxter Corporate Park until
December 31, 1998 and was the property manager
for Westland Crossing until it was sold.
Further information relating to the
Partnership's properties is included in Item
7 and footnotes 4 and 5 to the
consolidated financial statements in Item 8.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
No matter was submitted during the fourth
quarter of the fiscal year to a vote of Unit
holders.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS
An established public trading market for the
Units does not exist, and it is not
anticipated that such a market will develop
in the future. Accordingly, information as to
the market value of a Unit at any given date is
not available. However, the Partnership does
allow its limited partners (the "Limited
Partners") to transfer their Units if a
suitable buyer can be located.
As of January 19, 2000, there were 33,740
holders of limited partnership interests.
The Partnership is a limited partnership and,
accordingly, does not pay dividends. It
does, however, make distributions of cash
to its partners. Pursuant to the partnership
agreement, distributable cash, as defined, is
paid 90% to the Limited Partners and 10% to
the general partners (the "General Partners").
<PAGE>
During the year ended October 31, 1999, the
Partnership paid cash distributions aggregating
$73.79 per Unit (including $67.13 of
proceeds from the sale of the Laurel Lakes
property). Total distributions were
$39,800,512, with $39,405,337 distributed to
Limited Partners and $395,175 to the General
Partners. During the year ended October 31,
1998, the Partnership paid cash distributions
aggregating $147.42 per Unit (including (a)
$35.06 per Unit from the net proceeds from the
sale of the Holcomb Woods property, and (b)
$105.09 per Unit from the net proceeds from the
sale of the Glenhardie III and IV properties,
its share of proceeds from the sale of the
Chesterbrook property and $7.27 per Unit from
the remaining proceeds from the sale of the
Technology Park property). Total
distributions were $79,156,575, with
$78,725,205 distributed to the Limited
Partners and $431,370 to the General
Partners. The
distributions of proceeds from the
sales of the
Partnership's property interests in both years
were paid 100% to the Limited Partners.
In December 1999, the Partnership paid a cash
distribution of $17.21 per Unit from the net
proceeds from the sale in November of the
Westland Crossing property.
The
distribution, which totaled $9,190,484 was paid
100% to the Limited Partners. The
Partnership does not anticipate making
regular distributions to its partners in the
future. Generally, future cash distributions
and any remaining capital expenditures will
be paid from cash reserves and from proceeds
received from the Taxter Corporate Park
property sale.
Sale proceeds will be distributed, to the
extent available, first, to each Limited
Partner, until there has been a return of
the Limited Partner's capital contribution plus
cumulative distributions of distributable
cash and sale proceeds in an amount
sufficient to provide a 9% cumulative annual
return on the Limited Partner's adjusted
capital contribution. Thereafter, any remaining
sale proceeds will be distributed 85% to the
Limited Partners and 15% to the General
Partners after the Managing General Partner
receives a brokerage fee, if earned, of up to 3%
of the selling price of any equity investment.
Taxable income generally will be allocated
in the same proportions as distributions of
distributable cash or sale proceeds (except
that the General Partners must be allocated at
least 1% of taxable income from the sale). In
the event there is no distributable cash or
sale proceeds, taxable income will be allocated
90% to the Limited Partners and 10% to the
General Partners. Any tax loss will be allocated
90% to the Limited Partners and 10% to the
General Partners.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of
selected financial data for the Partnership:
<CAPTION>
For the years ended October
31,
19991 19982
19973 19964 1995
<S> <C> <C> <C> <C>
<C>
Total revenues $ 1,854,601 $
41,694,717 $
14,751,226 $ 16,198,761 $ 8,946,798
Net income (loss) $ (2,255,285) $
36,838,054 $ 6,739,122 $ (4,954,508)
$ (3,564,379)5
Net income
(loss) per
Unit of
limited
partnership
interest $ (4.80) $
68.22 $
11.53 $ (8.35) $ (6.24)
Cash distribu-
tions paid
per Unit of
limited
partnership
interest6 $ 73.79 $
147.42 $
49.95 $ 87.98 $ 22.81
Total assets at
October 31 $18,950,640 $
61,013,479
$103,790,868 $124,778,502
$177,988,847
1 Revenues and net loss include the effect
of the sale
of the Laurel Lakes property and write-down
of the Westland Crossing property.
2 Revenues and net income include the effect
of the sales
of the Holcomb Woods property, the
Glenhardie III and IV properties, and the
Partnership's interest in the Chesterbrook
property.
3 Revenues and net income include the effect of
the sale of
the Tech Park property.
4 Revenues and net loss include the effect of
the sale of
the Delta Center, Fashion Corners, and Hall
Road shopping centers. Net loss also includes
losses on impairment of the Glenhardie and
Holcomb Woods properties of $4.7 million
and $7.7 million, respectively.
5 Includes a $1.3 million writedown of real
estate held for
sale and the Partnership's share ($11.5
million) of loss on impairment of the
Chesterbrook property.
6Distributions paid to limited partners
include returns of capital per Unit of
limited partnership interest of $73.79,
$82.26, $49.95, $87.98 and $22.81, for the
years ended October 31, 1999, 1998, 1997,
1996, and 1995 respectively, calculated
as the excess of cash distributed per
Unit over accumulated earnings per Unit not
previously distributed.
The above financial data should be read in
conjunction with the consolidated financial
statements and the related notes in Item 8.
</TABLE>
<PAGE>
ITEM 7. 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 purchased, directly or through a
partnership interest, six office properties and
five retail properties. Through October 31,
1999, five of the six office properties and
four of the five retail properties have been
sold. One retail property was sold after the
end of fiscal 1999. The Partnership's
acquisition program has been completed.
No
additional investments are planned.
On September 24, 1999, the Partnership sold the
Laurel Lakes property. See Note 4 to the
consolidated financial statements.
On October 14, 1999, the Partnership
distributed $35.8 million ($67.13 per Unit) of
net proceeds from the sale, representing a
return of invested capital. The distribution
was paid 100% to Limited Partners.
As a result of the property's sale,
Partnership cash flow from operations decreased
in 1999 compared to 1998.
On November 16, 1999, the Partnership sold
the Westland Crossing property. See Note 4 to
the consolidated financial statements.
On December 20, 1999, the Partnership
distributed $9.2 million ($17.21 per Unit) of
net proceeds from the sale of the Westland
crossing property. The
distribution was paid 100% to Limited Partners.
As of November 17, 1999, the Partnership's
interest in the Taxter property is the
Partnership's sole property interest. The
Partnership which owns the Taxter Corporate
Park property (the "Taxter Partnership")
has identified unaffiliated parties who are
interested in buying the property, and will
attempt to sell the property after it has
completed its current efforts to lease
approximately 20% of the property's space.
However, there can be no assurance that the
property will be sold.
On February 8, 1999, an affiliate of the
Managing General Partner, as an
accommodation to the Taxter Partnership,
purchased the leasehold interest of KLM Royal
Dutch Airlines in approximately 20% of the
property's space. See Note 5 to the consolidated
financial statements.
<PAGE>
The Taxter Partnership expects to buy and
immediately sell the former KLM leasehold
interest at the time the property is sold,
using a portion of the proceeds from the sale
of the Taxter property. The Taxter
Partnership may incur material capital
expenditures to lease additional vacant space.
The amount of such expenditures is uncertain at
this time. Any unfunded costs at the time the
property is sold may be deducted from sale
proceeds. As of October 31, 1999, the
Partnership has commitments to fund
approximately $125,000 for its share of tenant
improvements and leasing commissions at the
Taxter property.
The office markets in Westchester County, New
York and the west Westchester sub-market in
which Taxter Corporate Park is located, have
recently improved as both occupancy levels and
rental rates increased during the last three
months of fiscal 1999. During the year
ended October 31, 1999, average occupancy at
the property was approximately 84% and, at
October 31, 1999, the property was 72%
occupied as compared to 98% at October 31,
1998. The property is leased to
16 tenants. The lease of Fuji Photo Film
(for
approximately 28% of the property's space)
expires in fiscal 2001. No other tenants
occupy more than 10% of the property.
During the year ended October 31, 1999,
all of the
Partnership's properties generated positive cash
flow from operations, and it is anticipated
that the Taxter property will continue to
do so during the period that the
Partnership continues to own its interest in it.
In 1999, Partnership cash flow from
operations and
distributions received from the Taxter
Partnership exceeded Partnership distributions
to investors (excluding sales proceeds
distributions), capital expenditures,
leasing commissions, and contributions to the
Taxter Partnership. The Partnership believes
remaining cash reserves will be sufficient for
its future needs.
In fiscal 1999, the Partnership incurred
approximately $1,164,000 of tenant improvements
and leasing commissions, primarily relating to
the Westland Crossing property. The
Partnership also contributed approximately
$123,000 to the Taxter joint venture for its
share of capital expenditures and leasing
commissions.
During fiscal 1999, the Partnership made
distributions of cash reserves and proceeds
from sale of the Laurel Lakes
property. See Item 5. Generally, future cash
distributions will be paid from proceeds from
sale of the Taxter property and cash reserves.
<PAGE>
Other assets decreased in 1999 because of the
sale of the Laurel Lakes property.
Except as described above and in the
consolidated financial statements, the Managing
General Partner is not aware of any trends or
events, commitments or uncertainties that may
impact liquidity in a material way.
Operations
Fluctuations in the Partnership's operating
results for the year ended October 31, 1999
compared to 1998 and for the year ended
October 31, 1998 compared to 1997 were primarily
attributable to the following:
The loss on sales of real estate in 1999 was
attributable to the sale of the Laurel Lakes
property. The gains on sales of real estate in
1998 were attributable to the sales of the
Holcomb Woods and Glenhardie III and IV
properties.
Rental revenue decreased in 1999 compared to
1998 primarily due to the sale of the Laurel
Lakes property. Depreciation and
amortization expenses decreased in 1999
primarily
because the Partnership ceased recording these
expenses on properties when they were
classified to real estate held for sale. See
Note 4 to the consolidated financial statements.
Property operating expenses increased in 1999
compared to 1998 primarily because bad debt
expense increased by approximately $300,000
in 1999 at the Laurel Lakes property.
Rental revenues, operating expenses and
depreciation and amortization expenses
decreased in 1998 compared to 1997 primarily
due to the sale of the Holcomb Woods
and
Glenhardie III and IV properties in 1998.
Property operating expenses also decreased in
1998 because of the recovery of approximately
$335,000 of rents receivable from a tenant at
the Laurel Lakes Centre which had previously
been reserved.
Equity in earnings of joint ventures was higher
in 1998 than in 1999 or 1997 primarily because
the Chesterbrook Corporate Park was sold at a
gain in 1998.
Other income was higher in 1998 than in
1999 or 1997 primarily because the Partnership
received lease termination fees at the
Glenhardie properties and Laurel Lakes Centre in
1998.
<PAGE>
The 1999 impairment writedown of real estate
was due to the writedown of the Westland
Crossing property and related assets to its
sale price net of closing and other costs of
sale.
General and administrative expenses
decreased in 1999 compared to 1998 and in
1998 compared to 1997, respectively, primarily
due to decreased level of Partnership
activities because of the sales of properties.
A summary of the retail markets in which the
Partnership's retail property is located and
the performance of the property is as
follows:
Westland Crossing is situated outside downtown
Detroit and is in an improving retail market
with stable rental rates. During the twelve
months ended October 31, 1999, occupancy at
the property remained at approximately at
82%. The
property was sold on November 16, 1999. As of
October 31, 1999, the Partnership had
commitments to fund $373,800 of capital
expenditures and leasing commissions relating to
the Michaels store at the Westland property.
This amount was deducted from the sale
proceeds.
Inflation
Inflation has been consistently low during
the periods 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>
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
INDEX
Page Independent Auditors' Report
Consolidated Balance Sheets at October 31,
1999 and 1998 Consolidated Statements of
Operations for the years ended
October 31, 1999, 1998 and 1997
Consolidated Statements of Partners' Capital
for the
years ended October 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the
years ended
October 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
Real Estate and Accumulated Depreciation
Schedule
III
All schedules other than those indicated above
have been omitted because either the
required information is not applicable or
the information is shown in the consolidated
financial statements or notes thereto.
<PAGE>
Independent Auditors' Report
To The Partners of
Dean Witter Realty Income Partnership III, L.P.:
We have audited the accompanying consolidated
balance sheets of Dean Witter Realty Income
Partnership III, L.P. and consolidated
partnerships (the "Partnership") as of October
31, 1999 and 1998 and the related consolidated
statements of operations, partners' capital and
cash flows for each of the three years in the
period ended October 31, 1999. Our
audits also included the financial statement
schedule listed in the Index at Item 8.
These financial statements and financial
statement schedule are the responsibility of
the Partnership's management. Our
responsibility is to express an
opinion on the financial statements and
financial
statement schedule based on our audits.
We conducted our audits in accordance
with generally accepted auditing standards.
Those standards require that we plan and
perform the audit to obtain reasonable assurance
about whether the financial statements are free
of material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. An audit also includes assessing
the accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial
statements present fairly, in all material
respects, the financial position of Dean
Witter Realty Income Partnership III, L.P. and
consolidated partnerships as of October 31,
1999 and 1998 and the results of their
operations and their cash flows for each of
the three years in the period ended October
31, 1999 in conformity with generally
accepted accounting principles. Also, in our
opinion, such financial statement schedule, when
considered in relation to the basic consolidated
financial statements taken as a whole, presents
fairly in all material respects the
information set forth therein.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
January 14, 2000
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED BALANCE SHEETS
As of October 31, 1999 and 1998
<CAPTION>
1999 1998
<S> <C>
<C>
ASSETS
Cash and cash equivalents $
1,744,447 $ 1,919,694
Real estate, at cost:
Land
- -
8,823,904
Buildings and improvements
-
55,274,320
- -
64,098,224
Accumulated depreciation
- -
(14,356,686)
- -
49,741,538
Real estate held for sale
9,457,148
- -
Investments in joint ventures
6,962,579
7,095,604
Deferred leasing commissions, net
- -
333,488
Other assets
786,466
1,923,155
$
18,950,640 $ 61,013,479
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $
343,550 $ 350,592
Partners' capital (deficiency):
General partners
(8,561,045)
(8,476,231)
Limited partners ($500 per Unit 534,020 Units
issued) 27,168,135
69,139,118
Total partners' capital
18,607,090
60,662,887
$
18,950,640 $ 61,013,479
See accompanying notes to consolidated financial
statements. </TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 31, 1999, 1998 and
1997
<CAPTION>
1999
1998
1997
<S> <C>
<C>
<C>
Revenues:
Rental $
5,312,776
$ 6,945,820 $10,824,205
Equity in earnings of joint ventures
815,395
18,538,476 3,599,828
Interest 272,182
245,759 243,119
Other
10,953
237,126 84,074
(Losses) gains on sales of real estate
(4,556,705)
15,727,536 -
1,854,601
41,694,717 14,751,226
Expenses:
Property operating 2,295,355
2,129,425 3,530,892
Depreciation 669,855
1,778,077 3,133,640
Amortization 30,229
95,786 308,136
General and administrative 312,253
853,375 1,039,436
Impairment writedown of real estate
802,194
- - -
4,109,886 4,856,663
8,012,104
Net (loss) income
$(2,255,285)
$36,838,054
$ 6,739,122
Net (loss) income allocated to:
Limited partners
$(2,565,646)
$36,429,685
$ 6,158,166
General partners 310,361
408,369 580,956
$(2,255,285) $36,838,054
$ 6,739,122
Net (loss) income per Unit of
limited
partnership interest $
(4.80) $
68.22 $ 11.53
See accompanying notes to consolidated
financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
For the years ended October 31, 1999, 1998 and
1997
Limited
General
Partners
Partners
Total
<S> <C>
<C>
<C>
Partners' capital (deficiency) at
November 1, 1996 $131,950,456
$(7,942,412)
$124,008,044
Net income 6,158,166
580,956 6,739,122
Cash distributions
(26,673,984) (1,091,774)
(27,765,758)
Partners' capital (deficiency)
at
October 31, 1997
111,434,638 (8,453,230)
102,981,408
Net income 36,429,685
408,369 36,838,054
Cash distributions
(78,725,205) (431,370)
(79,156,575)
Partners' capital (deficiency)
at
October 31, 1998 69,139,118
(8,476,231)
60,662,887
Net (loss) income
(2,565,646) 310,361
(2,255,285)
Cash distributions
(39,405,337) (395,175)
(39,800,512)
Partners' capital (deficiency)
at
October 31, 1999 $
27,168,135 $(8,561,045)
$ 18,607,090
See accompanying notes to consolidated financial
statements. </TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1999, 1998 and
1997
1999
1998 1997
<S>
<C> <C>
<C>
Cash flows from operating activities:
Net (loss)income $
(2,255,285) $
36,838,054 $ 6,739,122
Adjustments to reconcile net
(loss) income
to net cash provided by
operating activities:
Depreciation
669,855
1,778,077 3,133,640
Amortization
30,229
95,786
308,136
Equity in earnings of joint ventures
(815,395)
(18,538,476) (3,599,828)
Losses (gains) on sales of real estate
4,556,705 (15,727,536) -
Impairment writedown of real estate
802,194 -
- -
(Increase) decrease in operating assets:
Deferred leasing commissions -
(409,177)
(169,703)
Other assets
1,048,045
316,671
286,238
(Decrease)increase in operating liabilities:
Accounts payable and accrued
liabilities (117,298)
(394,628)
39,002
Net cash provided by operating
activities
3,919,050
3,985,771 6,736,607
Cash flows from investing activities:
Proceeds from sale of real estate
35,921,942
40,487,606 -
Additions to real estate
(1,164,147)
(908,072) (583,614)
Investment in joint ventures (123,207)
(598,049) (578,613)
Distributions from joint ventures 1,071,627
36,168,903 21,777,876
Net cash provided by investing
activities
35,706,215
75,150,388 20,615,649
Cash flows from financing activities:
Cash distributions
(39,800,512)
(79,156,575) (27,765,758)
Decrease in cash and cash equivalents (175,247)
(47,416) (413,502)
Cash and cash equivalents at beginning of year
1,919,694 1,967,110
2,380,612
Cash and cash equivalents at end of year $ 1,744,477
$ 1,919,694 $ 1,967,110
(continued)
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1999, 1998
and 1997 (continued)
<CAPTION>
1999 1998
1997
<S> <C>
<C> <C>
Supplemental disclosure of non-cash investing
activities:
Reclassification of real estate held for sale
and writeoff of related assets and liabilities:
Real estate, at cost
Land $ 1,023,904 $
- - $
1,240,000
Buildings and improvements 10,173,674
- - 18,111,954
Accumulated depreciation (1,051,109)
- - (7,410,136)
Deferred leasing commissions, net 112,873
- - -
Impairment writedown (802,194)
- - -
Real estate held for sale $ 9,457,148
- - $11,941,818
See accompanying notes to consolidated financial
statements. </TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS October 31, 1999, 1998
and 1997
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 is
managed by Dean Witter Realty Income
Properties III Inc. (the "Managing General
Partner"). The Partnership's fiscal year ends
on October 31.
In 1986 and 1987, the Partnership issued
534,020 units of limited partnership interest
(the "Units") for $267,010,000. No additional
Units will be sold. The proceeds of the
offering were used to make investments in
income-producing office, industrial and retail
properties which were not encumbered by debt.
The Partnership expects to sell its investment
in Taxter Corporate Park in 2000. Pursuant
to the Partnership Agreement, the sale of
the Partnership's last investment will cause
the dissolution of the Partnership. Thereafter,
the Partnership will wind up its affairs, make
a final cash distribution, and terminate.
2. Summary of Significant Accounting Policies
The consolidated financial statements include
the accounts of the Partnership, Part Six
Associates (owner of Glenhardie IV) and Laurel-
Vincent Place Associates Limited Partnership
(owner of the Laurel Lakes Centre) on a
consolidated basis. The Partnership owned a
99.9% General Partnership interest in Part Six
Associates until the sale of Glenhardie IV in
April 1998 and owns a 99.999% General
Partnership interest in Laurel-Vincent Place
Associates Limited Partnership. The remaining
interests in these partnerships are held by
the Managing General Partner.
The equity method of accounting has been
applied to the Partnership's 44.6% general
partnership interest in Taxter Corporate
Park, its 26.7% general partnership interest
in the partnership which owned interests in
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chesterbrook Corporate Center (sold in April
1998), and its 30% general partnership
interest in Tech Park Reston (sold in December
1996).
The Partnership's records are maintained on
the accrual basis of accounting for
financial reporting and
tax
purposes. The preparation of financial
statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions that affect the
reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities
at the date of the financial statements
and the reported amounts of revenues and
expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents consist of cash and
highly liquid investments with maturities, when
purchased, of three months or less.
The carrying value of real estate includes
the purchase price paid by the Partnership
and acquisition fees and expenses. Costs of
improvements to the properties are
capitalized, and repairs are expensed.
Depreciation is recorded on the straight-line
method. The Partnership stops recording
depreciation on a property when it is
reclassified as held for sale.
At least annually, and more often if
circumstances dictate, the Partnership
evaluates the recoverability of the net
carrying value of its real estate and any
related assets. As part of this evaluation,
the Partnership assesses, among other things,
whether there has been a significant decrease in
the market value of any of its properties. If
events or circumstances indicate that the net
carrying value of a property may not be
recoverable, the expected future net cash
flows from the property are estimated for a
period of approximately five years (or a
shorter period if the Partnership expects
that the property may be disposed of sooner),
along with estimated sales proceeds at the end
of the period. If the total of these future
undiscounted cash flows were less than the
carrying amount of the property, the property
would be written down to its fair value as
determined (in some cases with the assistance
of outside real estate consultants) based on
discounted cash flows, and a loss on impairment
recognized by a charge to earnings.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Because the determination of fair value is
based upon projections of future economic
events such as property occupancy rates,
rental rates, operating cost inflation and
market capitalization rates which are inherently
subjective, the amounts ultimately realized at
disposition may differ materially from the
net carrying values as of October 31, 1999.
The cash flows used to evaluate the
recoverability of the assets and to determine
fair value are based on good faith estimates
and assumptions developed by the Managing
General Partner. Unanticipated events and
circumstances may
occur and some assumptions may not
materialize; therefore actual results may vary
from the estimates and the variances may be
material. The Partnership may provide
additional write-downs, which could be material,
in subsequent years if real estate markets or
local economic conditions change.
Deferred leasing commissions are amortized
over the applicable lease terms.
Rental income is accrued on a straight-line
basis over the terms of the leases. Accruals
in excess of amounts payable by tenants
pursuant to their leases (resulting from rent
concessions or rents which periodically
increase over the term of a lease) are
recorded as receivables and included in other
assets.
Net income (loss) per Unit amounts are
calculated by dividing net income (loss)
allocated to Limited Partners, in accordance
with the Partnership Agreement, by the weighted
average number of Units outstanding.
No provision for income taxes has been made in
the financial statements, since the liability
for such taxes is that of the partners rather
than the Partnership.
For income tax purposes, Partnership results
are reported for the calendar year. The
accounting policies used for tax reporting
purposes differ from those used for
financial reporting as follows: a)
<PAGE>
depreciation is calculated using accelerated
methods; (b) rental income is recognized based
on the payment terms in the applicable leases;
and (c) writedowns for impairment of real
estate are not deductible.
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, offering costs are treated
differently for tax and financial reporting
purposes. The tax basis of the Partnership's
assets and liabilities is approximately $31.2
million higher than the amounts reported
for financial statement purposes.
The implementation in 1999 of Statement
of Financial Accounting Standards Statement
No. 130, "Reporting Comprehensive Income"
and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related
Information" did not have any effect on
the Partnership's financial
statements.
3. Partnership Agreement
The Partnership Agreement provides that
distributable cash, as defined, will be paid 90%
to the Limited Partners and 10% to the General
Partners.
Sale proceeds will be distributed, to the
extent available, first, to each Limited
Partner, until there has been a return of
the Limited Partner's capital contribution plus
cumulative distributions of distributable
cash and sale proceeds in an amount
sufficient to provide a 9% cumulative annual
return on the Limited Partner's adjusted
capital contribution. Thereafter, any remaining
sale proceeds will be distributed 85% to the
Limited Partners and 15% to the General
Partners after the Managing General Partner
receives
a brokerage fee, if earned, of up to 3% of the
selling price of any equity investment.
Taxable income generally is allocated in
the same proportion as distributions of
distributable cash or sale proceeds (except that
the General Partners must be allocated at
least 1% of taxable income from sales). In the
event there is no distributable cash or sale
proceeds, taxable income is allocated 90%
to the Limited Partners and 10% to the General
Partners. Any tax loss will be allocated 90%
to the Limited Partners and 10% to the general
Partners.
Distributions paid to Limited Partners include
returns of capital per Unit of limited
partnership interest of $73.79, $82.26, and
$49.95 for the years ended October 31, 1999,
1998 and 1997, respectively, calculated
as the excess of cash distributed per Unit over
accumulated earnings per Unit not previously
distributed.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Real Estate Investments and Sales
The location, year of acquisition and net
carrying values of the properties are as
follows:
Year of
October 31,
Property Acquisition
1999
1998
Westland Crossing, Westland, MI
1986
9,457,148 9,226,382
Laurel Lakes Centre, Laurel, MD
1987
- - 40,515,156
$
9,457,148 $49,741,538
Pursuant to a Purchase and Sale Agreement
dated as of February 16, 1999, the
Partnership entered into an
agreement, as amended, to sell the
Westland Crossing property, for a negotiated
sale price of $10.2 million, to New Plan
Excel Realty Trust, Inc., an unaffiliated
party. As permitted by the contract, New Plan
assigned its purchase rights to its affiliate,
Landamerica Exchange Company. As
part of the Agreement, Dean Witter Realty Income
Partnership II, L.P. an affiliate of the
Partnership, sold a property to New Plan. The
aggregate purchase price of the properties sold
was approximately $24.2 million, of which $10.2
million was allocated in the Agreement to the
Westland Crossing Property.
The closing of the sale of the Westland
Crossing took place on November 16, 1999.
At closing: a) the Partnership received
proceeds of approximately $9.2 million, net
of closing costs and other deductions
(including $373,800 of capital expenditure
commitments) and a $250,000 escrow to secure
the Partnership's obligations, if any, pursuant
to representations and warranties in the
Agreement; and b) New Plan
discontinued a lawsuit which it had commenced
against the Partnership in September 1999 to
compel the Partnership to
sell the property to it.
The net carrying value of the Westland Crossing
property was reclassified to Real Estate
Held for Sale and the
Partnership wrote down its carrying
value to the amount expected to be received
from the sale (including the return of the
escrow), resulting in a loss of approximately
$802,000.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On September 24, 1999, the Partnership sold the
Laurel Lakes property to an unaffiliated party
for $37.5 million, and recognized a loss of
approximately $4.6 million. The
purchase price was paid in cash, and the
Partnership received proceeds, net of
closing costs and other deductions, of
approximately $35.9 million. Pursuant to the
sale agreement, an escrow of $500,000 was
established to secure the Partnership's
obligations, if any, pursuant to
representations and warranties in the sale
agreement. On
October 19, 1999, the Partnership
distributed the net proceeds ($67.13 per Unit)
100% to Limited Partners.
On April 1, 1998, the Partnership sold
the land and buildings which comprise the
Glenhardie Corporate Center III and IV
properties ("Glenhardie III and IV") and an
affiliated partnership sold its interest in
the remaining properties at Glenhardie
Corporate Center. In addition, the Partnership,
another affiliated partnership and an affiliate
of the Managing General Partner sold the
Chesterbrook Corporate Center, in which the
Partnership has a 26.7%
interest through a joint venture, to an
unaffiliated entity. The aggregate price of the
properties sold was approximately $168 million,
of which approximately $22.1 million was
allocated to Glenhardie III and IV, and
approximately $126.1 million (of which the
Partnership's share was approximately $33.7
million) was allocated to the Chesterbrook
Corporate Center.
The purchase price was paid in cash
at closing.
The Partnership received proceeds, net of
closing costs and other deductions, of
approximately $22 million and $33.4 million,
respectively, for the sale of the Glenhardie
III and IV properties and its share of the
proceeds from the sale of the Chesterbrook
Corporate Center. On April 14, 1998, the
Partnership distributed $56.1 million ($105.09
per Unit) of net proceeds from the sale of the
Glenhardie III and IV properties, its share of
the proceeds from the sale of the
Chesterbrook Corporate Center and the
remaining proceeds from the sale of the
Technology Park property. The distribution was
paid 100% to Limited Partners.
Pursuant to the sale agreement for the
Glenhardie and Chesterbrook properties,
escrows were established for the costs of
certain building improvements and tenant
improvements (the "Improvements"). In addition
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to payment of the purchase price, at closing
the purchasers deposited into these escrows
approximately $3.9 million, of which
approximately $2.3 million related to the
Chesterbrook Corporate Center. The joint
venture did not include the
amount of the escrowed sale proceeds in its
calculation of the gain on the sale of
the property because of the uncertainty of
its realization. During 1999, approximately
$363,000 was returned to the joint venture from
the escrow and in settlement of various
property operating matters. The Partnership's
share of this amount, approximately $97,000,
was recorded in equity in earnings of joint
ventures.
On November 7, 1997 the Partnership sold the
Holcomb Woods property to an unaffiliated
party for approximately $19.1 million. The
purchase price was paid in cash, and the
Partnership received proceeds, net of closing
costs, of approximately $18.7 million. On
November 26, 1997, the Partnership
distributed these net proceeds ($35.06 per Unit)
100% to Limited Partners.
5. Investments in Joint Ventures
Taxter Corporate Park, Westchester County, New
York
The Partnership owns a 44.6% interest in
the general partnership ("Taxter Partnership")
which owns the property. Affiliates of the
Partnership, Dean Witter Realty Income
Partnership II, L.P., and Dean Witter
Realty Income Partnership IV, L.P., own the
remaining interests of 14.8%
and 40.6%, respectively. The partners receive
cash flow and profits and losses according to
their interests.
In 1987, the Taxter Partnership sold a leasehold
interest in approximately 20% of the
property's space at Taxter Corporate Park
to KLM Royal Dutch Airlines. In 1998, KLM
accepted a $6.75 million purchase offer for
the leasehold interest, which the Taxter
Partnership had the right to match. The
partners of the Taxter Partnership believe that
inclusion of the KLM space improves the value
and salability of the property; however,
the partners did not have sufficient cash
to fund the purchase. Therefore, an
affiliate of the Managing General Partner (the
"Affiliate"), as an accommodation,
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
purchased the leasehold interest on February
8, 1999 for $6.75 million and assumed the
rights and obligations of KLM thereunder.
On February 4, 1999, Associates and KLM entered
into a new lease which allows KLM to continue
to occupy 50% of the space subject to the
leasehold interest. On February 8, 1999, the
Affiliate also assumed the rights and
obligations of Associates under this new lease.
As part of the purchase of the
leasehold interest, Associates received an
option to purchase the leasehold interest and
assume the new lease from the Affiliate for a
purchase price of $6.75 million plus the cost
of any tenant improvements, leasing commissions
and capital expenditures incurred by the
Affiliate in connection with the leasehold
interest (collectively, the "Resale Price").
Associates also granted the Affiliate an option
to require Associates to purchase the
leasehold interest and assume the new lease for
the Resale Price. When the property is sold,
Associates will be obligated to purchase the
leasehold interest and assume the new lease
from the Affiliate for the new Resale
Price.
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized balance sheet information of the
Taxter joint venture is as follows:
<CAPTION>
October
31, 1999 1998
<S>
<C> <C>
Land and buildings, net $15,680,607
$16,630,575
Other 1,670,760 913,738
Total assets $17,351,367
$17,544,313
Liabilities $ 214,272 $ 124,622
Partners' capital
17,137,095
17,419,691
Total liabilities and capital $17,351,367
$17,544,313
Summarized results of operations of the joint
venture are as follows:
Years ended
October 31,
1999 1998 1997
Rental income $ 5,860,022
$5,158,170
$5,511,684
Other income 45,245 67,779
181,367
5,905,267 5,225,949
5,693,051
Property operating expenses 3,054,679 2,455,628
3,111,753
Depreciation and amortization 1,238,539 1,241,470
1,164,659
4,293,218 3,697,098
4,276,412
Net income $ 1,612,049
$1,528,851
$1,416,639
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chesterbrook Corporate Center, Valley Forge,
Pennsylvania
The Partnership, Dean Witter Realty Income
Partnership IV, L.P. and an affiliate of the
Managing General Partner owned 26.7%, 41.2% and
32.1% interests in the general partnership which
owned the property until its sale in April 1998
(see
Note 4).
The partners received cash flow and profits
and losses according to their interests.
Summarized results of operations of the
Chesterbrook joint venture are as follows:
<CAPTION> <C> Years ended
October 31,
<S> 1999 1998 1997
Rental income $ - $
5,797,344
$14,128,854
Gain on sale of property 363,375
63,770,914 -
Other income - 44,301
43,550
363,375
69,612,559 14,172,404
Property operating expenses -
1,873,518
4,323,012
Depreciation and amortization - 860,360
3,305,764___
363,375
2,733,878 7,628,776
Net income $ 363,375
$66,878,681 $ 6,543,628
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tech Park Reston, Reston, Virginia
In 1987, the Partnership purchased a 35%
partnership interest in the general
partnership ("TPA") which owned three office
buildings in the Technology Park Reston office
park. The remaining 65% interest in TPA is
owned by Dean Witter Realty Income Partnership
IV, L.P.
The partners received cash flow and profits
and losses according to their interests.
On December 31, 1996, TPA and an affiliate of
the Managing General Partner (the
"Affiliate"), which owned the fourth building
at the property, sold the property to
Sprint Communications Company L.P., the sole
tenant at the property, for a negotiated
sale price of $76,300,000. $51,483,000 of
the sales price was allocated to TPA and
$24,817,000 was allocated to the Affiliate,
based on the relative square footage of the
buildings each owned at the property.
The sale price was received in cash at
closing. The Partnership received
approximately $17.7 million of such cash,
representing its 35% share of the cash
received by TPA, net of closing costs.
In February 1997, the Partnership
distributed $16,848,016 of the net proceeds from
the sale ($31.55 per Unit). The distribution
was paid 100%
to Limited Partners.
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activity in investments in joint ventures is as
follows: <CAPTION>
Years ended
October 31,
1999 1998
1997
<S> <C>
<C> <C>
Investments at beginning of year $
7,095,604 $24,127,982 $
41,727,417
Equity in earnings
815,395
18,538,476 3,599,828
Distributions
(1,071,627)
(36,168,903) (21,777,876)
Contributions
123,207
598,049 578,613
Investments at end of year $
6,962,579
$7,095,604 $ 24,127,982
The accounting policies of the Joint Ventures
are the same as those of the Partnership.
6. Related Party Transactions
In fiscal 1999, an affiliate of the Managing
General Partner managed the real estate held
for sale, and managed the Taxter property
through December 1998. The affiliate
provided property management services for five
properties in fiscal 1998 and 1997 (until the
sales of the Holcomb Woods and Glenhardie III
and IV properties in November 1997 and April
1998, respectively), and for five buildings at
the Chesterbrook Corporate Center (until its
sale in April 1998). The Partnership
incurred management fees to the affiliate of
approximately $107,000, $223,000 and $244,000
for the years ended October 31, 1999, 1998
and 1997, respectively. These amounts are
included in property operating expenses.
Another affiliate of the Managing General
Partner performs administrative functions,
processes investor transactions and prepares
tax information for the Partnership. For the
years ended October 31, 1999, 1998 and 1997, the
Partnership incurred approximately $150,000,
$503,000 and $630,000 respectively, for
these services. These amounts are
included in general and administrative expenses.
As of October 31, 1999, the affiliates were
owed a total of approximately $2,000 for these
services.
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT
The Partnership is a limited partnership
which has no directors or officers.
The directors and executive officers of the
Managing General Partner are as follows:
Position
with the
Name Managing
General Partner
William B. Smith Chairman of
the Board of
Directors
E. Davisson Hardman, Jr. President and
Director Ronald T. Carman Secretary and
Director
Lewis A. Raibley, III Director
All of the directors have been elected to
serve until the next annual meeting of the
shareholder of the Managing General Partner
or until their successors are elected and
qualify. Each of the executive officers has
been elected to serve until his successor is
elected and qualifies.
William B. Smith, age 56, has been a Managing
Director of Morgan Stanley Dean Witter & Co.
("MWD") and Co-Head of Morgan Stanley
Realty Incorporated since the merger of
Morgan Stanley and Dean Witter Discover &
Co. in 1997. Prior to the merger, Mr.
Smith was an Executive Vice President of
Dean Witter Reynolds, Inc. and Director of its
Investment Banking Department since January
1987. Mr. Smith joined Dean Witter in 1982 as
Co-Director of Dean Witter Realty.
E. Davisson Hardman, Jr., age 50, has been
a Managing Director of Morgan Stanley Asia,
Ltd. since 1997, and a Managing Director of
Dean Witter Realty Inc., which he joined in
1982.
<PAGE>
Ronald T. Carman, age 48, is a Director and the
Secretary of Dean Witter Realty Inc. He has
been an Assistant Secretary of MWD and a
Managing Director of Morgan Stanley & Co. Inc.,
since July 1998. Previously, he was a Senior
Vice President and Associate General Counsel of
Dean Witter Reynolds Inc., which he joined in
1984.
Lewis A. Raibley, III, age 38 is a Senior Vice
President and Controller in the Individual Asset
Management Group of MWD. From July 1997 to
May 1998, Mr. Raibley was Senior Vice
President and Director in the Internal
Reporting Department of MSDW; from 1992 to
1997, he served as Senior Vice President and
Director in the Financial Reporting and Policy
Division of MWD. He has been with MWD and its
affiliates since 1986.
There is no family relationship among any of
the foregoing
persons.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to
receive cash
distributions, when and as cash distributions
are made to the Limited Partners, and a share
of taxable income or tax loss.
Descriptions of such distributions and
allocations
are in Item 5 above. The General Partners
received cash distributions of $395,175,
$431,370, and $1,091,774 during the years
ended October 31, 1999, 1998 and 1997,
respectively.
The General Partners and their affiliates were
paid certain fees and reimbursed for certain
expenses. Information concerning such fees and
reimbursements is contained in Note 6 to the
consolidated financial statements in Item 8
above.
The directors and officers of the
Partnership's Managing General Partner
received no remuneration from the
Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND
MANAGEMENT
(a) No person is known to the
Partnership to be the beneficial owner of more
than five percent of the Units.
(b) The directors and executive
officers of the Managing General Partner own
the following Units as of December 31, 1999:
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Amount and
Title of Name of
Nature
of
Class Beneficial Owner
Beneficial
Ownership
Limited All directors and
*
Partnership executive officers of
Interests the Managing General
Partner, as a group
* Own, by virtue of ownership of limited
partnership
interests in the Associate General Partner, less
than 1% of the Units of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
As a result of their being partners of a limited
partnership which is the Limited Partner of
the Associate General Partner, certain
current and former officers and directors of
the Managing General Partner also own
indirect partnership interests in the
Partnership. The Partnership Agreement of
the Partnership provides that cash
distributions and allocations of income and
loss to the General Partners shall be
distributed or allocated 50% to the Managing
General Partner and 50% to the Associate
General Partner. The General Partners'
share of cash distributions and income or
loss is described in Item 5 above.
All of the outstanding shares of common
stock of the Managing General Partner are
owned by Dean Witter Realty Inc. ("Realty"), a
Delaware corporation which is a whollyowned
subsidiary of Morgan Stanley Dean Witter & Co. The
general partner of the Associate General
Partner is the Managing General Partner.
The limited partner of the Associate General
Partner is LSA 86 L.P., a Delaware limited
partnership. Realty and certain current and
former officers and directors
of the
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Managing General Partner are partners of
LSA 86 L.P. Additional information with
respect to the directors and executive
officers and compensation of the Managing
General Partner and affiliates is contained in
Items 10 and 11 above.
The General Partners and their affiliates were
paid certain fees and reimbursed for certain
expenses. Information concerning such fees and
reimbursements is contained in Note 6 to the
consolidated financial statements in Item 8
above. The Partnership believes that the payment
of fees and the reimbursement of expenses to
the General Partners and their affiliates are
on terms as favorable as would be obtained from
unrelated third parties.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as
part of this Annual Report:
1. Financial Statements (see
Index of
Financial Statements filed as part of
Item 8 of this Annual Report).
2. Financial Statement
Schedules (see Index
to Financial Statements filed as part
of Item 8 of this Annual Report).
3. Exhibits
(3)(a) Certificate of Limited
Partnership
included in the Registration Statement
Number 331912 is incorporated by
reference.
(3)(b) Amended and Restated
Agreement of
Limited Partnership dated as of
February 11, 1986 set forth in
Exhibit A to the Prospectus in the
Registration Statement Number
33-1912 is
incorporated herein by reference.
(4)(a) Certificate of Limited
Partnership
included in the Registration Statement
Number 331912 is incorporated by
reference.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
(4)(b) Amended and Restated
Agreement of
Limited Partnership dated as of February 11, 1986 set forth
in Exhibit A to the Prospectus included in the Registration
Statement Number 33-1912 is incorporated herein by
reference.
(10)(a) Purchase and Sale Agreements for
properties purchased filed as Exhibits to Form 8-K on June
27, 1986, December 29, 1986, December 29, 1986,
December 29, 1986, December 29, 1986,
December 30, 1986, December 30, 1986k, June 1, 1987,
December 7, 1987, and December 15, 1987 are incorporated
herein by reference.
(b) Purchase and Sale Agreement, dated October
19, 1995 between Dean Witter Realty Income Partnership II,
L.P., Midway Crossing Limited Partnership, Dean Witter
Realty Income Partnership III, L.P., Genesee Crossing
Limited Partnership, Farmington/9 Mile Associates, a
Michigan Limited Partnership, Hampton Crossing
Associates, Rochester Hills Limited Partnership, Dean
Witter Realty Yield Plus, L.P. and New Plan Realty Trust
(including Exhibit J thereto) filed as exhibit to Form 8-K
on December 11, 1995 is incorporated herein by reference.
(c) First Amendment to Agreement of Purchase and Sale
by and between Dean Witter Realty Income Partnership II,
L.P., Midway Crossing Limited Partnership, Dean Witter
Realty Income Partnership III, L.P., Genesee Crossing
Limited Partnership, Farmington/9 Mile Associates, a
Michigan Limited Partnership, Hampton Crossing
Associates, Rochester Hills Limited Partnership, Dean
Witter Realty Yield Plus, L.P. and New Plan Realty Trust
(including Exhibit J thereto) filed as exhibit to Form 8-K
on December 11, 1995 is incorporated herein by reference.
(d) Purchase and Sale Agreement between Technology Park
Associates, Dean Witter/Technology Park II Associates, L.P., and
Sprint Communications Company, L.P. a Delaware Limited Partnership
filed as exhibit 2 to the Registrant's Report on Form 8-K on
December 31, 1996 is incorporated herein by reference.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
(e) Purchase and Sale Agreement, dated as of October 1,
1997, First Amendment to Purchase and Sale Agreement dated as
of October 15, 1997 and Second Amendment to Purchase and Sale
Agreement dated as of October 27, 1997 between Dean Witter
Realty Income Partnership III, L.P., as Seller and LPC
Commercial Services, Inc. as Purchaser, filed as Exhibit 2 to
the Registrant's Report on Form 8-K on November 7, 1997 is
incorporated herein by reference.
(f) Purchase and Sale Agreement, dated as of
February 10, 1998, between DWR Chesterbrook
Associates, Glenhardie Corporation, Dean Witter
Realty Income Partnership II, L.P., the Partnership
and Part Six Associates, as Sellers, and FV Office Partners,
L.P. as Purchaser, filed as Exhibit 2(a) to the Registrant's
Report on Form
8-K on April 1, 1998 is incorporated herein by
reference.
(g) Purchase and sale Agreement, dated as of June 2, 1999,
between Laurel-Vincent Place Associates L.P., as Seller and
Urban Investment Group, Inc., as Purchaser, filed as Exhibit
2 to the Registrant's Report on Form 8-K on September 24,
1999 is incorporated herein by reference.
(h) Purchase and Sale Agreement, dated as of February 16,
1999 between Dean Witter Realty Income Partnership IV L.P.,
Dean Witter Realty Income Partnership II L.P., as Seller and
New Plan Excel Realty Trust, Inc. as Purchaser, filed as
Exhibit 2 to the Registrant's Report on Form 8-K on November
16, 1999 is incorporated herein by reference.
(21) Subsidiaries: Park Six Associates, a
Pennsylvania limited partnership. Laurel Vincent
Place Associates, a Maryland limited partnership.
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
SCHEDULE III
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Real Estate and Accumulated Depreciation October
31, 1999
Initial cost to Partnership
<CAPTION>
Cost
Capital-
ized
Subsequent
Description Land Improvements Total
To Acquisition
<S> <C> <C> <C> <C>
Westland Crossing
Westland, MI 1,376,659 12,389,933
13,766,592 1,383,161
Laurel Lakes Centre
Laurel, MD 7,800,000 45,536,882
53,336,882 630,056
$ 9,176,659 $57,926,815
$67,103,474 $2,013,217
Gross Amount at which
Carried at End of Period
(A)
Building and
Description Reductions Land
Improvements Total
Westland Crossing
Westland, MI $15,149,7531 - -
- -
Laurel Lakes Centre
Laurel, MD $53,966,9382 - -
- -
$69,116,691 $ - $ -
$ -
1 $3,952,175 represents reduction to new carrying value when
property was classified as real estate held for sale in
1995; Property was reclassified to real estate in 1996.
Remaining reduction represents carrying value
reclassified to real estate held for sale in 1999; property
was sold in November 1999.
2 Real estate sold during year.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
(SCHEDULE III (continued)
<CAPTION>
Life on
which
Depreciation in
Latest
Income
Accumulated Date of Statement
is
Description Depreciation(B) Construction Date
Acquired Computed
<S> <C> <C> <C> <C>
Westland Crossing
Westland, MI 970,892 1986 December
1986 up to 40 years
Notes:
(A) Reconciliation of real estate owned at October 31:
1999 1998 1997
Balance at beginning of year $64,098,224
$82,951,460 $102,185,637
Additions (deletions) during period:
Improvements 1,066,292
908,072 583,614
Write-offs due to lease expirations
(400,772) (465,837)
Real estate sold (53,966,938)
(19,360,536) - Reclass to real
estate held
for sale (11,197,578) -
(19,351,954)
Balance at end of period $ -
$64,098,224 $ 82,951,460
Except for losses on impairment of real estate and the
adjustment to Westland Crossing for accumulated depreciation
described in note 1, there is no difference between cost for
financial reporting purposes and cost for federal income tax
purposes.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
(SCHEDULE III (continued)
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
(B)Reconciliation of accumulated
depreciation:
Balance at beginning of period $ 14,356,686
$20,484,407 $25,226,740
Depreciation expense 669,855
1,778,077 3,133,640
Write-offs due to lease
expirations -
(295,616) (465,837)
Real estate sold (13,975,432)
(7,610,182) -
Reclass to real estate held for
sale (1,051,109) -
(7,410,136)
Balance end of period $ - $14,356,686
$20,484,407
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/E. Davisson Hardman, Jr. Date:
January 26, 2000
E. Davisson Hardman, Jr.
President
By: /s/Charles M. Charrow Date:
January 26, 2000
Charles M. Charrow
Controller
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.
DEAN WITTER REALTY INCOME PROPERTIES III INC.
Managing General Partner
/s/William B. Smith Date:
January 26, 2000
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date:
January 26, 2000
E. Davisson Hardman, Jr.
Director
/s/Ronald T. Carman Date:
January 26, 2000
Ronald T. Carman
Director
/s/Lewis A. Raibley, III Date:
January 26, 2000
Lewis A. Raibley, III
Director
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Year Ended October 31, 1999
Exhibit Index
Exhibit
No.
27 Financial Data Schedule
E1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate joint
vewntures. In accordance with industry practice, its balance sheet is
unclassified. For full information, refer to the accompanying unaudited
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 1,744,447
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,950,640<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,607,090<F2>
<TOTAL-LIABILITY-AND-EQUITY> 18,950,640<F3>
<SALES> 0
<TOTAL-REVENUES> 1,854,601<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,109,886
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,255,285)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,255,285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,255,285)
<EPS-BASIC> (4.80)<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash, total assets include real estate held for sale of
$9,457,148 investments in joint venture of $6,962,579 and other assets of
$786,466.
<F2>Other Stockholders' Equity represents partners' capital.
<F3>Liabilities include accounts payable and accrued liabilities of $343,550.
<F4>Total revenue includes rent of $5,312,776 equity in earnings of joint
ventures of $815,395 interest of $272,182, other revenues of $10,953 and
losses on real estate of $4,556,705.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
